-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MWFqimz9q0mzxHESbpCwRoMVXhIlxTR0rwcI7RF5rwWremGQwG6gh9i2w3g5ysEy zxCCs5bGsaLMCq58LzHF9g== 0000935069-05-003046.txt : 20051108 0000935069-05-003046.hdr.sgml : 20051108 20051108162938 ACCESSION NUMBER: 0000935069-05-003046 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050831 FILED AS OF DATE: 20051108 DATE AS OF CHANGE: 20051108 EFFECTIVENESS DATE: 20051108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RBB FUND INC CENTRAL INDEX KEY: 0000831114 IRS NUMBER: 510312196 STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-05518 FILM NUMBER: 051186636 BUSINESS ADDRESS: STREET 1: 400 BELLEVUE PKWY STE 100 CITY: WILMINGTON STATE: DE ZIP: 19809 BUSINESS PHONE: 3027911700 MAIL ADDRESS: STREET 1: 400 BELLEVUE PKWY STREET 2: SUITE 152 CITY: WILMINGTON STATE: DE ZIP: 19809 FORMER COMPANY: FORMER CONFORMED NAME: FUND INC /DE/ DATE OF NAME CHANGE: 19600201 N-CSR 1 g17289rbb_ncsr05.txt THE RBB FUND N-CSR 2005 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-05518 -------------------- The RBB Fund, Inc. ------------------------------------------------------------ (Exact name of registrant as specified in charter) 400 Bellevue Parkway, 4th Floor Wilmington, DE 19809 ------------------------------------------------------------ (Address of principal executive offices) (Zip code) Edward J. Roach, President & Treasurer 400 Bellevue Parkway, 4th Floor Wilmington, DE 19809 ------------------------------------------------------------ (Name and address of agent for service) Registrant's telephone number, including area code: 302-792-2555 ------------- Date of fiscal year end: August 31 ---------- Date of reporting period: August 31, 2005 ---------------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. The Report to Shareholders is attached herewith. ================================================================================ THE BEDFORD CLASS OF THE RBB FUND, INC. MONEY MARKET PORTFOLIO ANNUAL REPORT AUGUST 31, 2005 ================================================================================ THE RBB FUND, INC. MONEY MARKET PORTFOLIO PRIVACY NOTICE (UNAUDITED) The RBB Fund, Inc. MONEY MARKET PORTFOLIO (the "Portfolio") 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 (800) 533-7719. NOT PART OF THE ANNUAL REPORT THE RBB FUND, INC. MONEY MARKET PORTFOLIO FUND EXPENSE EXAMPLES (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees, distribution fees, and other expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. These examples are based on an investment of $1,000 invested at the beginning of the period and held for the six-month period from March 1, 2005 through August 31, 2005. ACTUAL EXPENSES The first line of the accompanying tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the accompanying tables provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees that may be incurred by shareholders of other Funds. Therefore, the second line of the accompanying tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
MONEY MARKET PORTFOLIO - BEDFORD CLASS ----------------------------------------------------------- BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* --------------- ----------------- --------------- Actual $1,000.00 $1,010.90 $4.92 Hypothetical (5% return before expenses) 1,000.00 1,020.25 4.95 MONEY MARKET PORTFOLIO - SANSOM STREET CLASS ----------------------------------------------------------- BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* --------------- ----------------- --------------- Actual $1,000.00 $1,014.80 $1.02 Hypothetical (5% return before expenses) 1,000.00 1,024.18 1.02 * Expenses are equal to the Fund's annualized expense ratio of 0.97% for the Bedford Class shares and 0.20% for the Sansom Street Class shares, which includes waived fees or reimbursed expenses, multiplied by the average account value over the period, multiplied by the number of days (184) in the most recent fiscal half-year, then divided by 365 to reflect the one-half year period. The Fund's ending account value on the first line in each table is based on the actual total return for each class of 1.09% for the Bedford Class shares and 1.48% for the Sansom Street Class shares.
2 THE RBB FUND, INC. MONEY MARKET PORTFOLIO PORTFOLIO HOLDINGS SUMMARY TABLE (UNAUDITED)
SECURITY % OF NET TYPE ASSETS VALUE -------- --------- ------------ Short Term Investments: Commercial Paper ............................................................ 58.3% $114,729,274 Variable Rate Obligations ................................................... 14.7 29,000,000 Repurchase Agreements ....................................................... 10.5 20,600,000 Master Notes ................................................................ 7.1 14,000,000 Certificates of Deposit ..................................................... 4.1 8,064,993 Agency Obligations .......................................................... 4.1 7,999,855 Municipal Bonds ............................................................. 1.2 2,330,000 Other Assets in Excess of Liabilities .......................................................... 0.0 75,046 ------- ------------ NET ASSETS 100.0% $196,799,168 ======= ============
3 THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS AUGUST 31, 2005 PAR (000) VALUE ------- ------------ CERTIFICATES OF DEPOSIT--4.1% DOMESTIC CERTIFICATES OF DEPOSIT--4.1% Washington Mutual Bank 3.540%, 09/19/05 .............................. $ 8,065 $ 8,064,993 ------------ TOTAL CERTIFICATES OF DEPOSIT (Cost $8,064,993) ......................... 8,064,993 ------------ COMMERCIAL PAPER--58.3% ASSET BACKED SECURITIES--22.1% Beta Finance, Inc. 3.400%, 09/29/05 .............................. 10,902 10,873,170 Cancara Asset Securitisation, Ltd. 3.715%, 11/18/05 .............................. 1,999 1,982,910 Concord Minutemen Capital Co. 3.530%, 09/02/05 .............................. 2,740 2,739,731 Emerald Certificates MBNA Credit Card Master Trust 3.560%, 10/18/05 .............................. 10,000 9,953,522 Liberty Street Funding Corp. 3.400%, 09/23/05 .............................. 4,480 4,470,692 Newcastle Certificates 6.590%, 09/16/05 .............................. 10,000 9,985,042 Ticonderoga Funding LLC 3.540%, 09/16/05 .............................. 3,460 3,454,896 ------------ 43,459,963 ------------ BANKS--25.4% Alliance & Leicester 3.260%, 09/19/05 .............................. 10,000 9,983,700 Banco Santander Puerto Rico 3.540%, 09/07/05 .............................. 4,605 4,602,283 Bank of America Corp. 3.670%, 10/24/05 .............................. 5,000 4,972,985 Deutsche Bank Financial LLC 3.525%, 09/20/05 .............................. 11,500 11,478,605 Eurohypo AG 3.700%, 11/09/05 .............................. 10,000 9,929,083 Westpac Trust Securities, Ltd. 3.400%, 09/26/05 .............................. 9,000 8,978,750 ------------ 49,945,406 ------------ LIFE INSURANCE--4.9% Irish Life & Permanent 3.430%, 09/28/05 .............................. 9,700 9,675,047 ------------ PAR (000) VALUE ------- ------------ COMMERCIAL PAPER--(CONTINUED) MORTGAGE BANKERS & CORRESPONDENTS--5.9% Countrywide Financial Corp. 3.530%, 09/02/05 .............................. $11,650 $ 11,648,858 ------------ TOTAL COMMERCIAL PAPER (Cost $114,729,274) ....................... 114,729,274 ------------ MUNICIPAL BONDS--1.2% PENNSYLVANIA--1.2% Franklin County, PA IDR 3.690%, 09/01/05 .............................. 2,330 2,330,000 ------------ TOTAL MUNICIPAL BONDS (Cost $2,330,000) ......................... 2,330,000 ------------ VARIABLE RATE OBLIGATIONS--14.7% ASSET BACKED SECURITIES--3.1% Racers Trust ++ 3.861%, 11/28/05 .............................. 5,000 5,000,000 Racers Trust 2004-6++ 3.609%, 09/22/05 .............................. 1,000 1,000,000 ------------ 6,000,000 ------------ BANKS--9.1% Citigroup Global Markets 3.494%, 09/06/05 .............................. 8,000 8,000,000 HBOS Treasury Services P.L.C.++ 3.510%, 09/26/05 .............................. 8,000 8,000,000 Westpac Banking Corp.++ 3.400%, 09/12/05 .............................. 2,000 2,000,000 ------------ 18,000,000 ------------ LIFE INSURANCE--2.5% Met Life Global Funding, Inc.++ 3.740%, 09/28/05 .............................. 5,000 5,000,000 ------------ TOTAL VARIABLE RATE OBLIGATIONS (Cost $29,000,000) ........................ 29,000,000 ------------ U.S. GOVERNMENT AGENCY OBLIGATIONS--4.1% Federal Home Loan Bank 3.265%, 09/12/05 .............................. 8,000 7,999,855 ------------ TOTAL AGENCY OBLIGATIONS (Cost $7,999,855) ......................... 7,999,855 ------------ See Accompanying Notes to Financial Statements. 4 THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS (CONCLUDED) AUGUST 31, 2005 PAR (000) VALUE ------- ------------ MASTER NOTES--7.1% Merrill Lynch Mortgage Capital, Inc. 3.630%, 09/06/05 .............................. $ 8,000 $ 8,000,000 Morgan Stanley Mortgage Capital, Inc. 3.733%, 09/01/05 .............................. 6,000 6,000,000 ------------ TOTAL MASTER NOTES (Cost $14,000,000) ........................ 14,000,000 ------------ REPURCHASE AGREEMENTS--10.5% Morgan Stanley & Co. (Tri-Party Agreement dated 8/31/05 to be repurchased at $18,0001,795 collaterized by $18,930,000 Federal National Mortgage Association Medium Term Notes at a rate of 2.20% to 5.52%, due 12/04/06 to 03/09/20. Market Value of collateral is $18,636,619.) 3.590%, 09/01/05 .............................. 18,000 18,000,000 Morgan Stanley & Co. (Tri-Party Agreement dated 8/31/05 to be repurchased at $2,600,255 collateralized by $2,637,000 Federal National Mortgage Association Bonds and U.S. Treasury Notes at a rate of 4.00%, due 11/15/12. Market Value of Collateral is $2,665,899.) 3.530%, 09/01/05 .............................. 2,600 2,600,000 ------------ TOTAL REPURCHASE AGREEMENTS (Cost $20,600,000) ........................ 20,600,000 ------------ TOTAL INVESTMENTS AT VALUE--100.0% (Cost $196,724,122) ........................... 196,724,122 ------------ VALUE ------------ OTHER ASSETS IN EXCESS OF LIABILITIES--0.0% .......................... $ 75,046 ------------ NET ASSETS (APPLICABLE TO 109,496,743 BEDFORD SHARES AND 87,306,099 SANSOM STREET SHARES )--100.0% ....................... $196,799,168 ============ NET ASSET VALUE, Offering and Redemption Price Per Share ($196,799,168 / 196,802,842) .................. $1.00 ===== NET ASSET VALUE, Offering and Redemption Price Per Bedford Share ($109,494,713 / 109,496,743) .................. $1.00 ===== NET ASSET VALUE, Offering and Redemption Price Per Sansom Street Share ($87,304,455 / 87,306,099) .................... $1.00 ===== ++ Variable Rate Obligations -- The interest rate shown is the rate as of August 31, 2005 and the maturity date shown is the next interest rate readjustment date or the maturity date. INVESTMENT ABBREVIATIONS IDR -- Industrial Development Revenue See Accompanying Notes to Financial Statements. 5 THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2005 Investment Income Interest ..................................................... $5,443,667 ---------- Expenses Investment advisory and administration fees .................. 935,881 Distribution and service fees ................................ 672,807 Printing fees ................................................ 64,011 Custodian fees ............................................... 60,690 Directors' and Officer's fees ................................ 42,052 Legal fees ................................................... 36,552 Regulatory administration fees ............................... 31,803 Transfer agent fees .......................................... 27,825 Audit fees ................................................... 21,795 Registration fees ............................................ 14,400 Insurance fees ............................................... 13,718 Service organization fees .................................... 4,013 Miscellaneous ................................................ 4,180 ---------- Total Expenses .......................................... 1,929,727 Less fees waived ............................................. (783,584) ---------- Net total expenses ...................................... 1,146,143 ---------- Net investment income ........................................... 4,297,524 ---------- Realized loss on investments .................................... (1,655) ---------- Net increase in net assets resulting from operations ............ $4,295,869 ========== See Accompanying Notes to Financial Statements. 6 THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 --------------- --------------- Increase (decrease) in net assets: Operations: Net investment income ........................................................ $ 4,297,524 $ 1,865,672 Net loss on investments ...................................................... (1,655) (2,019) ------------ ------------ Net increase in net assets resulting from operations ......................... 4,295,869 1,863,653 ------------ ------------ Distributions to shareholders: Dividends to shareholders from Net Investment Income: Bedford shares ............................................................. (1,591,534) (202,921) Sansom Street shares ....................................................... (2,705,990) (1,662,751) Distributions to shareholders from Net realized short-term gains: Bedford shares ............................................................. -- (1,077) Sansom Street shares ....................................................... -- (2,545) ------------ ------------ Total distributions to shareholders ...................................... (4,297,524) (1,869,294) ------------ ------------ Net capital share transactions (See Note 3) .................................... (16,571,764) (65,400,496) ------------ ------------ Total decrease in net assets ................................................... (16,573,419) (65,406,137) Net Assets: Beginning of year ............................................................ 213,372,587 278,778,724 ------------ ------------ End of year .................................................................. $196,799,168 $213,372,587 ============ ============
See Accompanying Notes to Financial Statements. 7 THE RBB FUND, INC. MONEY MARKET PORTFOLIO FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
THE BEDFORD CLASS --------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED AUGUST 31, 2005 AUGUST 31, 2004 AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2001 --------------- --------------- --------------- --------------- --------------- Net asset value, beginning of year ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income ................ 0.0162 0.0025 0.0046 0.0157 0.0460 Net gains/(losses) on securities ..... -- -- 0.0005 -- -- -------- -------- -------- -------- -------- Total from investment operations ....................... 0.0162 0.0025 0.0051 0.0157 0.0460 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) ............................ (0.0162) (0.0025) (0.0046) (0.0157) (0.0460) Distributions (from capital gains) ... -- -- (0.0005) -- -- -------- -------- -------- -------- -------- Total distributions ................ (0.0162) (0.0025) (0.0051) (0.0157) (0.0460) -------- -------- -------- -------- -------- Net asset value, end of year ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return ............................ 1.63% 0.25% 0.53% 1.59% 4.70% Ratios /Supplemental Data Net assets, end of year (000) ........ $109,495 $ 72,001 $ 80,406 $ 52,878 $676,964 Ratios of expenses to average net assets(a) ...................... .97% .94% .98% 1.00% 1.00% Ratios of net investment income to average net assets .............. 1.68% .24% .46% 1.75% 4.46% (a) Without the waiver of advisory, administration and transfer agent fees and without the reimbursement of certain operating expenses, the ratios of expenses to average net assets for the Bedford Class of the Money Market Portfolio would have been 1.23%, 1.34%, 1.30%, 1.25% and 1.19% for the years ended August 31, 2005, 2004, 2003, 2002 and 2001, respectively.
See Accompanying Notes to Financial Statements. 8 THE RBB FUND, INC. MONEY MARKET PORTFOLIO FINANCIAL HIGHLIGHTS (CONTINUED) (FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
THE SANSOM STREET CLASS --------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED AUGUST 31, 2005 AUGUST 31, 2004 AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2001 --------------- --------------- --------------- --------------- --------------- Net asset value, beginning of year ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income ................ 0.0239 0.0100 0.0114 0.0209 0.0511 Net gains/(losses) on securities ..... -- -- 0.0005 -- -- -------- -------- -------- -------- -------- Total net income from investment operations ....................... 0.0239 0.0100 0.0119 0.0209 0.0511 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) ............................ (0.0239) (0.0100) (0.0114) (0.0209) (0.0511) Distributions (from capital gains) ... -- -- (0.0005) -- -- -------- -------- -------- -------- -------- Total distributions ................ (0.0239) (0.0100) (0.0119) (0.0209) (0.0511) -------- -------- -------- -------- -------- Net asset value, end of year ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return ....................... 2.41% 1.00% 1.21% 2.11% 5.23% Ratios/Supplemental Data Net assets, end of year (000) ........ $ 87,304 $141,372 $198,373 $244,212 $201,632 Ratios of expenses to average net assets(a) ...................... .20% .20% .30% .49% .49% Ratios of net investment income to average net assets ................. 2.39% .98% 1.14% 2.10% 5.23% (a) Without the waiver of advisory fees and reimbursement of certain operating expenses, the ratios of expenses to average net assets for the Sansom Street Class of the Money Market Portfolio would have been .67%, .59%, .57%, .64% and .61% for the years ended August 31, 2005, 2004, 2003, 2002 and 2001, respectively.
See Accompanying Notes to Financial Statements. 9 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2005 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The RBB Fund, Inc. ("RBB" or "Company") 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 "1940 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 1940 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 seventeen active investment portfolios, including the Money Market Portfolio ("Portfolio"), which comprise the RBB family of funds. RBB has authorized capital of thirty billion shares of common stock of which 26.473 billion shares are currently classified into one hundred and three classes of Common Stock. The Portfolio has issued shares with a par value of $0.001. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into seven separate "families," six of which have begun investment operations. A) SECURITY VALUATION -- Securities held in the Portfolio are valued under the amortized cost method, which approximates current market value. Under this method, securities are valued at cost when purchased and thereafter assumes constant accretion of discount or amortization of premium is recorded until maturity of the security. Regular review and monitoring of the valuation is performed to ensure that cost continues to approximate market value and to avoid dilution or other unfair results to shareholders. The Portfolio seeks to maintain net asset value per share at $1.00. B) SECURITY TRANSACTIONS, INVESTMENT INCOME, AND EXPENSES -- Security 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. Interest income is accrued when earned. Certain expenses, such as distribution, transfer agency and printing, are class specific expenses and vary by class. Expenses not directly attributable to a specific portfolio or class are allocated based on relative net assets of each portfolio and class, respectively. 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 portfolios within the RBB family of funds (such as director or professional fees) are charged to all portfolios in proportion to their average net assets. C) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income are declared daily, recorded on the ex-date and paid monthly. All distributions from net investment income are taxed as ordinary income. Any net realized capital gains are distributed at least annually. Income subject to distributions and capital gain subject to distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. The following permanent differences as of August 31, 2005, primarily attributable to distribution reclass from ordinary income to short-term gain were reclassified to the following accounts: INCREASE DECREASE ACCUMULATED ACCUMULATED NET INVESTMENT NET REALIZED LOSS LOSS ---------------- -------------- Money Market Portfolio $831 $(831) 10 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2005 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D) FEDERAL INCOME TAXES -- No provision is made for federal income taxes. It is the Company's intention to have each portfolio continue to qualify for and elect the tax treatment applicable to regulated investment companies under the Internal Revenue Code and make the requisite distributions to its shareholders which will be sufficient to relieve it from Federal income and excise taxes. E) REPURCHASE AGREEMENTS -- Money market instruments may be purchased subject to the seller's agreement to repurchase them at an agreed upon date and price. The seller will be required on a daily basis to maintain the value of the securities subject to the agreement at not less than the repurchase price plus accrued interest. If the value of the underlying securities falls below 102% of the value of the repurchase price plus accrued interest, the Portfolio will require the seller to deposit additional collateral by the next Portfolio business day. In the event that the seller under the agreement defaults on its repurchase obligation or fails to deposit sufficient collateral, the Portfolio has the contractual right, subject to the requirements of applicable bankruptcy and insolvency laws, to sell the underlying securities and may claim any resulting loss from the seller. The agreements are conditioned upon the collateral being deposited under the Federal Reserve Book Entry System or with the Portfolio's custodian or a third party sub-custodian. F) 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. These estimates and assumptions 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 reporting period. Actual results could differ from those estimates. G) OTHER -- In the normal course of business, the Fund may enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and, therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote. NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Pursuant to Investment Advisory Agreements, BlackRock Institutional Management Corp. (the "Adviser" or "BIMC"), an indirect majority-owned subsidiary of The PNC Financial Services Group, Inc., serves as investment adviser and as administrator for the Portfolio. BIMC and PFPC Inc. ("PFPC") have entered into a delegation agreement on behalf of the Portfolio, wherein PFPC has agreed to perform Administration and Accounting services for an annual fee of ..10% of the average net assets of the Portfolio, paid out of the fee paid to BIMC. For its advisory services, BIMC is entitled to receive the following fees, computed daily and payable monthly, and based on the Portfolio's average daily net assets: PORTFOLIO ANNUAL RATE ------------------------- ---------------------------------------------- Money Market Portfolio .45% of first $250 million of net assets; .40% of next $250 million of net assets; .35% of net assets in excess of $500 million. 11 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2005 NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) BIMC may, at its discretion, voluntarily waive all or any portion of its advisory fee for the Portfolio. For each class of shares within the Portfolio, the net advisory fee charged to each class is the same on a relative basis. For the year ended August 31, 2005, advisory fees and waivers for the investment portfolio were as follows: GROSS NET ADVISORY ADVISORY FEE WAIVER FEE ---------- ----------- ---------- Money Market Portfolio $935,881 $(726,915) $208,966 As of August 31, 2005, the Portfolio owed BIMC $16,990 in advisory fees. The Funds will not pay BIMC at a later time for any amounts it may waive or any amounts that BIMC has assumed. For providing regulatory administrative services to RBB, PFPC is entitled to receive compensation as agreed to by the Company and PFPC. This fee is allocated among all funds in proportion to their net assets of the RBB funds. The Portfolio's portion of this fee for the period September 1, 2004 to August 31, 2005 was $31,803. The investment adviser/administrator may voluntarily waive and/or reimburse the Portfolio for the amount, if any, by which the total operating and management expenses exceed the expense cap. For the year ended August 31, 2005, the expense caps were as follows: PORTFOLIO CLASS OF SHARES EXPENSE CAP ---------- ----------------- ------------- Money Market Portfolio Bedford 0.97% Sansom Street 0.20% The Fund, on behalf of each class of shares within the investment portfolio, has adopted Distribution Plans pursuant to Rule 12b-1 under the 1940 Act (the "Plans"). The Fund has entered into a Distribution Contract with PFPC Distributors, Inc. ("PFPC Distributors"). PFPC Distributors is a wholly-owned subsidiary of PFPC Worldwide Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. The Plans provide for each class to make monthly payments, based on average net assets, to PFPC Distributors of up to .65% on an annualized basis for the Bedford Class and up to .05% on an annualized basis for the Sansom Street Class. For the year ended August 31, 2005, distribution fees paid to PFPC Distributors for each class were as follows:
GROSS NET DISTRIBUTION DISTRIBUTION FEE WAIVER FEE ---------------- ------------ ---------------- Money Market Portfolio Bedford Class $616,138 -- $616,138 Sansom Street Class 56,669 $(56,669) -- -------- -------- -------- Total Money Market Portfolio $672,807 $(56,669) $616,138 ======== ======== ========
12 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2005 NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) PFPC serves as the transfer and dividend disbursing agent for each class. Both PFPC Trust Co. and PFPC are wholly-owned subsidiaries of PFPC Worldwide Inc., an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. PFPC may, at its discretion, voluntarily waive all or any portion of its transfer agency fee for any class of shares. For the year ended August 31, 2005, transfer agency fees for each class of shares within the investment portfolio were as follows: TRANSFER AGENCY BASIS FEE POINTS --------------- -------- Money Market Portfolio Bedford Class $ 2,379 0.25 Sansom Street Class 25,446 2.25 ------- Total Money Market Portfolio $27,825 ======= PFPC Trust Co. provides certain custodial services to the Portfolio. As compensation for such custodial services, PFPC Trust Co. is entitled to receive the following fees, computed daily and payable monthly, and based on the Portfolio's average gross assets: PORTFOLIO ANNUAL RATE ----------------------- ------------------------------------------------ Money Market Portfolio .025% of first $50 million of gross assets; .020% of next $50 million of gross assets; .015% of gross assets in excess of $100 million. The Fund has entered into service agreements with banks affiliated with PNC who render support services to customers who are the beneficial owners of the Sansom Street Class in consideration of the payment of .10% of the daily net asset value of such shares. For the year ended August 31, 2005, service organization fees were $4,013 for the Money Market Portfolio. As of August 31, 2005, the Portfolio owed PFPC and its affiliates $71,817 for their services. 13 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2005 NOTE 3. CAPITAL SHARES Transactions in capital shares (at $1 per capital share) for each year were as follows:
FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 ----------------- ----------------- Shares sold: Bedford Class 442,206,980 386,514,072 Sansom Street Class 1,616,798,271 1,920,438,260 --------------- --------------- Total Shares Sold 2,059,005,251 2,306,952,332 Shares issued on reinvestment of dividends: Bedford Class 1,524,066 198,103 Sansom Street Class 135,455 77,190 --------------- --------------- Total Shares Reinvested 1,659,521 275,293 Shares repurchased: Bedford Class (406,236,164) (395,118,572) Sansom Street Class (1,671,000,372) (1,977,508,749) --------------- --------------- Total Shares Repurchased (2,077,236,536) (2,372,627,321) Refund of deposit of capital for intent of share purchase:* -- (800) --------------- --------------- Net decrease (16,571,764) (65,400,496) =============== =============== Bedford Shares authorized 1,500,000,000 1,500,000,000 =============== =============== Sansom Street Shares authorized 1,500,000,000 1,500,000,000 =============== =============== * This class of shares was never operational and is now closed.
NOTE 4. NET ASSETS At August 31, 2005, net assets consisted of the following: MONEY MARKET PORTFOLIO ------------ Paid-in capital $196,802,842 Accumulated net realized loss on investments (3,674) ------------ Total net assets $196,799,168 ============ 14 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS (CONCLUDED) AUGUST 31, 2005 NOTE 5. FEDERAL INCOME TAX INFORMATION At August 31, 2005, Federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows:
FEDERAL TAX UNREALIZED UNREALIZED NET UNREALIZED COST APPRECIATION DEPRECIATION APPRECIATION -------------- -------------- -------------- ---------------- Money Market Portfolio $196,724,122 $ -- $ -- $ --
As of August 31, 2005, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM INCOME GAINS --------------- --------------- $149,562 $ -- At August 31, 2005, the Fund had capital loss carryforwards of $3,587 which expires August 31, 2013 and is 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, 2005, the Fund incurred post-October capital losses of $917. 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 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 ------------ ----------- ------- Money Market Portfolio 2005 $4,297,524 -- -- 2004 $1,865,672 -- -- 15 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of The RBB Fund, Inc.: We have audited the accompanying statement of net assets of Money Market Portfolio, a series of The RBB Fund, Inc. (the "Portfolio"), as of August 31, 2005 and the related statement of operations for the year then ended, the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The financial highlights of the Portfolio for the periods ended, August 31, 2001, August 31, 2002 and August 31, 2003 were audited by other auditors whose report, dated October 27, 2003, expressed an unqualified opinion on those financial statements and financial highlights. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Portfolio is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Portfolio's internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of August 31, 2005, by correspondence with the custodian and brokers. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Portfolio as of August 31, 2005, the results of its operations, the changes in its net assets, and its financial highlights for the respective stated period, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Philadelphia, Pennsylvania November 3, 2005 16 ADDITIONAL INFORMATION (UNAUDITED) 1. PROXY VOTING Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling the numbers shown below and on the Securities and Exchange Commission's website at http://www.sec.gov. Bedford (800) 533-7719 Sansom Street (888) 261-4073 2. QUARTERLY PORTFOLIO SCHEDULES The Company files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third fiscal quarter of each fiscal year (quarters ended November 30 and May 31) on Form N-Q. The Company's Form N-Q is available on the Securities and Exchange Commission's website at http://www.sec.gov and may be reviewed and copied at the Securities and Exchange Commission's Public Reference Room in Washington, D.C. Information on the operation of the Securities and Exchange Commission's Public Reference Room may be obtained by calling 1-800-SEC-0330. 3. APPROVAL OF INVESTMENT ADVISORY AGREEMENT As required by the 1940 Act, the Board of Directors (the "Board") of the Company, including all of the Directors who are not "interested persons" of the Company, as that term is defined in the 1940 Act (the "Independent Directors"), considered the renewal of the investment advisory and sub-advisory agreements between BIMC and the Company (each an "Advisory Agreement" and collectively the "Advisory Agreements") on behalf of the Portfolio at a meeting of the Board held on May 25, 2005. At this meeting, the Board approved the Advisory Agreements for an additional one-year term. The Board's decision to approve the Agreements reflects the exercise of its business judgment to continue the existing arrangement. In approving the Agreements, the Board considered information provided by the Adviser with the assistance and advice of counsel to the Independent Directors and the Company. In considering the renewal of and approval of the Advisory Agreements, the Directors took into account all the materials provided prior to and during the meeting, the presentations made during the meeting, and the discussions during the meeting. The Directors discussed the materials from the Adviser mailed in advance of the meeting that addressed most, if not all, of the factors listed below. The Adviser also made a presentation during the meeting and responded to questions from the Directors. Among other things, the Directors considered (i) the nature, extent, and quality of the Adviser's services provided to the Portfolio; (ii) descriptions of the experience and qualifications of the personnel providing those services; (iii) the Adviser's investment philosophies and processes; (iv) the Adviser's assets under management and client descriptions; (v) the Adviser's soft dollar commission and trade allocations policies, including information on the types of research and services obtained in connection with soft dollar commissions; (vi) the current and proposed advisory fee arrangements with the Company and other similarly managed clients; (vii) compliance procedures; (viii) the Adviser's financial information, insurance coverage and profitability analysis related to providing advisory services to the Portfolio; (ix) the extent to which economies of scale are relevant to the Portfolio; (x) a report comparing the Portfolio's proposed or current advisory fees and expenses to those of its peer group; and (xi) a report comparing the performance of the Portfolio to the performance of its applicable benchmark index and peer group. No one factor was determinative in the Board's consideration of the Advisory Agreements. 17 ADDITIONAL INFORMATION (CONCLUDED) (UNAUDITED) The Directors then met in executive session with counsel to discuss and consider information presented in connection with the continuation of the Advisory Agreements as well as the Directors' responsibilities and duties in approving the Agreements. During the course of its deliberations, the Directors, meeting in executive session, reached the following conclusions, among others, regarding BIMC and the Advisory and Sub-Advisory Agreements, with respect to the Portfolio. The Directors considered that the Portfolio's gross advisory fees for the Bedford Class and Sansom Class were higher in comparison to that of their peer group average and that both Classes' net advisory fees after waivers were significantly less when compared to their peer group average. It was noted that the fees BIMC charges for managing assets for other clients are lower than the fees charged to the Portfolio. The Board noted that BIMC has agreed to voluntarily waive its advisory fee and reimburse expenses to limit annual operating expenses of the Portfolio. In addition, the Directors considered the Portfolio's gross and net expense ratios, which were higher than ratios for the Bedford Class peer group average and lower than the ratios for the Sansom Class peer group average. The Directors noted the reasons for the Bedford Class' higher expense ratio, including, among other reasons, that last spring, Bear Stearns liquidated its position in the Bedford Class, which in turn decreased the Class' overall assets. The Directors reviewed the Portfolio's performance, discussing that the performance for the Bedford Class was below that of its peer group composite for the year-to-date and one year periods ended March 31, 2005, while the performance of the Sansom Class exceeded that of its peer group composite for the same period. The Directors then determined that the nature, extent and quality of services provided by BIMC in advising the Portfolio was satisfactory; the profits earned by BIMC seemed reasonable; and the benefits derived by BIMC from managing the Portfolio, including the method BIMC uses to select brokers, seemed reasonable. The Directors also discussed economies-of-scale associated with asset growth and decline of each Class of the Portfolio. Based on all of the information presented to the Board and its consideration of relevant factors, the Board concluded that the fees paid to the Adviser by the Portfolio were reasonable, and in the exercise of its business judgment, determined that BIMC's Advisory and Sub-Advisory Agreements be continued for another one-year period ending August 16, 2006. 18 THE RBB FUND, INC. MONEY MARKET PORTFOLIO FUND MANAGEMENT (UNAUDITED) The business and affairs of the Company are managed under the direction of the Company's Board of Directors. The Company is organized under and managed pursuant to Maryland law. The Directors and executive officers of the Company, their dates of birth, business addresses and principal occupations during the past five years are set forth below. The Statement of Additional Information ("SAI") includes additional information about the Directors and is available without charge, upon request, by calling (800) 533-7719 for Bedford and (888) 261-4073 for Sansom Street.
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN OTHER TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST OVERSEEN BY HELD BY AND DATE OF BIRTH WITH FUND TIME SERVED 1 5 YEARS DIRECTOR* DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS - ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director 1988 to present Since 1969, Director and Vice Chairman, 17 Director, Comcast Corporation Comcast Corporation (cable television Comcast 1500 Market Street, 35th Fl. and communications); Director, NDS Group Corporation. Philadelphia, PA 19102 PLC (provider of systems and DOB: 7/16/33 applications for digital pay TV). - ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director 1988 to present Since 2000, Vice President, Fox Chase 17 None Fox Chase Cancer Center Cancer Center (biomedical research and 333 Cottman Avenue medical care); prior to 2000, Philadelphia, PA 19111 Executive Vice President, Fox Chase DOB: 12/06/35 Cancer Center. - ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director 1991 to present Since December 2000, Director, Gabelli 17 None 106 Pierrepont Street Group Capital Partners, L.P. (an Brooklyn, NY 11201 investment partnership); Chief Operating DOB: 5/21/48 Officer and member of the Board of Directors of Outercurve Technologies (wireless 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; Prior to 1997, Managing Director of Warburg Pincus Asset Management, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director 1991 to present Since 1974, Chairman, Director and 17 Director, Moyco Moyco Technologies, Inc. President, Moyco Technologies, Inc. Technologies, 200 Commerce Drive (manufacturer of precision coated and Inc. Montgomeryville, PA 18936 industrial abrasives); Since 1999, DOB: 3/24/34 Director, Pennsylvania Business Bank. - ------------------------------------------------------------------------------------------------------------------------------------ * Each Director oversees seventeen portfolios of the Company that are currently offered for sale. The Company is authorized to offer two additional portfolios that had not commenced operations as of the date of this report. 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified.
19 THE RBB FUND, INC. MONEY MARKET PORTFOLIO FUND MANAGEMENT (CONTINUED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN OTHER TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST OVERSEEN BY HELD BY AND DATE OF BIRTH WITH FUND TIME SERVED 1 5 YEARS DIRECTOR* DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS 2 - ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director 1991 to present Since July 2002, Senior Vice President 17 None Oppenheimer & Company, Inc. and prior thereto, Executive Vice 200 Park Avenue President of Oppenheimer & Company, Inc. New York, NY 10166 (formerly Fahnestock & Co., Inc., a DOB:4/16/38 registered broker-dealer). - ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director 2002 to present Director of PFPC Inc. from January 1987 17 Director, 400 Bellevue Parkway to April 2002; Chairman and Chief Cornerstone Wilmington, DE 19809 Executive Officer of PFPC Inc. until Bank DOB: 9/25/38 April 2002; Executive Vice President of PNC Bank, National Association from October 1981 to April 2002; Director of PFPC International Ltd. (financial services) from August 1993 to April 2002; Director of PFPC International (Cayman) Ltd. (financial services) from September 1996 to April 2002; Governor of the Investment Company Institute (investment company industry trade organization) from July 1996 to January 2002; Director of PNC Asset Management, Inc. (investment advisory) from September 1994 to March 1998; Director of PNC National Bank from October 1995 to November 1997; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984, Director of Cornerstone Bank since March 2004. - ------------------------------------------------------------------------------------------------------------------------------------ * Each Director oversees seventeen portfolios of the Company that are currently offered for sale. The Company is authorized to offer two additional portfolios that had not commenced operations as of the date of this report. 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified. 2 Messrs. Carnall and Sablowsky are considered "interested persons" of the Company as that term is defined in the 1940 Act. Mr. Carnall is 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. Sablowsky is considered an "interested Director" of the Company by virtue of his position as an officer of a registered broker-dealer.
20 THE RBB FUND, INC. MONEY MARKET PORTFOLIO FUND MANAGEMENT (CONCLUDED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN OTHER TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST OVERSEEN BY HELD BY AND DATE OF BIRTH WITH FUND TIME SERVED 5 YEARS DIRECTOR DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS - ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President 1991 to present Certified Public Accountant; Vice N/A N/A 400 Bellevue Parkway and and Chairman of the Board, Fox Chase Cancer 4th Floor Treasurer 1988 to present Center; Trustee Emeritus, Pennsylvania Wilmington, DE 19809 School for the Deaf; Trustee Emeritus, DOB: 6/29/24 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, President since 2002, Treasurer since 1981 and Chief Compliance Officer since September 2004 of Chestnut Street Exchange Fund; and Director of the Bradford Funds, Inc. from 1996 to 2000. - ------------------------------------------------------------------------------------------------------------------------------------ Tina M. Payne Secretary 2005 to present Since 2003, Vice President and Associate N/A N/A 301 Bellevue Parkway Counsel, PFPC Inc. (financial services 2nd Floor company); Associate, Stradley, Ronon, Wilmington, DE 19809 Stevens & Young, LLC (law firm) from 2001 DOB: 5/19/74 to 2003. - ------------------------------------------------------------------------------------------------------------------------------------ Salvatore Faia, Esquire, CPA Chief 2004 to present President, Vigilant Compliance Services, N/A N/A Vigilant Compliance Compliance Since 2004. Senior Legal Counsel, PFPC 186 Dundee Drive, Suite 700 Officer Inc. from 2002 to 2004; Chief Legal Williamstown, NJ 08094 Counsel, Corviant Corporation (Investment DOB: 12/25/62 Adviser, Broker/Dealer and Service Provider to Investment Advisers and Separate Accountant Providers) from 2001 to 2002; Partner, Pepper Hamilton LLP (law firm) from 1997 to 2001. - ------------------------------------------------------------------------------------------------------------------------------------
21 [THIS PAGE INTENTIONALLY LEFT BLANK.] [THIS PAGE INTENTIONALLY LEFT BLANK.] INVESTMENT ADVISER BlackRock Institutional Management Corporation 100 Bellevue Parkway Wilmington, DE 19809 TRANSFER AGENT PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 DISTRIBUTOR PFPC Distributors, Inc. 760 Moore Road King of Prussia, PA 19406 CUSTODIAN PFPC Trust Company 8800 Tinicum Blvd. Suite 200 Philadelphia, PA 19153 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Deloitte & Touche LLP 1700 Market Street Philadelphia, PA 19103-3984 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 Portfolio. It is not authorized for distribution unless preceded or accompanied by a prospectus for the Fund. ShareBuilder Bedford Shares of The RBB Money Market Portfolio - -------------------------------------------------------------------------------- Managed by BlackRock Institutional Management Corporation SHAREBUILDER(R) ANNUAL REPORT AUGUST 31, 2005 www.sharebuilder.com THE RBB FUND, INC. MONEY MARKET PORTFOLIO PRIVACY NOTICE (UNAUDITED) The RBB Fund, Inc. MONEY MARKET PORTFOLIO (the "Portfolio") 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 (800) 533-7719. NOT PART OF THE ANNUAL REPORT THE RBB FUND, INC. MONEY MARKET PORTFOLIO FUND EXPENSE EXAMPLES (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees, distribution fees, and other expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. These examples are based on an investment of $1,000 invested at the beginning of the period and held for the six-month period from March 1, 2005 through August 31, 2005. ACTUAL EXPENSES The first line of the accompanying tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the accompanying tables provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees that may be incurred by shareholders of other Funds. Therefore, the second line of the accompanying tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
MONEY MARKET PORTFOLIO - BEDFORD CLASS ----------------------------------------------------------- BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* --------------- ----------------- --------------- Actual $1,000.00 $1,010.90 $4.92 Hypothetical (5% return before expenses) 1,000.00 1,020.25 4.95 MONEY MARKET PORTFOLIO - SANSOM STREET CLASS ----------------------------------------------------------- BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* --------------- ----------------- --------------- Actual $1,000.00 $1,014.80 $1.02 Hypothetical (5% return before expenses) 1,000.00 1,024.18 1.02 * Expenses are equal to the Fund's annualized expense ratio of 0.97% for the Bedford Class shares and 0.20% for the Sansom Street Class shares, which includes waived fees or reimbursed expenses, multiplied by the average account value over the period, multiplied by the number of days (184) in the most recent fiscal half-year, then divided by 365 to reflect the one-half year period. The Fund's ending account value on the first line in each table is based on the actual total return for each class of 1.09% for the Bedford Class shares and 1.48% for the Sansom Street Class shares.
2 THE RBB FUND, INC. MONEY MARKET PORTFOLIO PORTFOLIO HOLDINGS SUMMARY TABLE (UNAUDITED)
SECURITY % OF NET TYPE ASSETS VALUE -------- --------- ------------ Short Term Investments: Commercial Paper ............................................................ 58.3% $114,729,274 Variable Rate Obligations ................................................... 14.7 29,000,000 Repurchase Agreements ....................................................... 10.5 20,600,000 Master Notes ................................................................ 7.1 14,000,000 Certificates of Deposit ..................................................... 4.1 8,064,993 Agency Obligations .......................................................... 4.1 7,999,855 Municipal Bonds ............................................................. 1.2 2,330,000 Other Assets in Excess of Liabilities .......................................................... 0.0 75,046 ------- ------------ NET ASSETS 100.0% $196,799,168 ======= ============
3 THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS AUGUST 31, 2005 PAR (000) VALUE ------- ------------ CERTIFICATES OF DEPOSIT--4.1% DOMESTIC CERTIFICATES OF DEPOSIT--4.1% Washington Mutual Bank 3.540%, 09/19/05 .............................. $ 8,065 $ 8,064,993 ------------ TOTAL CERTIFICATES OF DEPOSIT (Cost $8,064,993) ......................... 8,064,993 ------------ COMMERCIAL PAPER--58.3% ASSET BACKED SECURITIES--22.1% Beta Finance, Inc. 3.400%, 09/29/05 .............................. 10,902 10,873,170 Cancara Asset Securitisation, Ltd. 3.715%, 11/18/05 .............................. 1,999 1,982,910 Concord Minutemen Capital Co. 3.530%, 09/02/05 .............................. 2,740 2,739,731 Emerald Certificates MBNA Credit Card Master Trust 3.560%, 10/18/05 .............................. 10,000 9,953,522 Liberty Street Funding Corp. 3.400%, 09/23/05 .............................. 4,480 4,470,692 Newcastle Certificates 6.590%, 09/16/05 .............................. 10,000 9,985,042 Ticonderoga Funding LLC 3.540%, 09/16/05 .............................. 3,460 3,454,896 ------------ 43,459,963 ------------ BANKS--25.4% Alliance & Leicester 3.260%, 09/19/05 .............................. 10,000 9,983,700 Banco Santander Puerto Rico 3.540%, 09/07/05 .............................. 4,605 4,602,283 Bank of America Corp. 3.670%, 10/24/05 .............................. 5,000 4,972,985 Deutsche Bank Financial LLC 3.525%, 09/20/05 .............................. 11,500 11,478,605 Eurohypo AG 3.700%, 11/09/05 .............................. 10,000 9,929,083 Westpac Trust Securities, Ltd. 3.400%, 09/26/05 .............................. 9,000 8,978,750 ------------ 49,945,406 ------------ LIFE INSURANCE--4.9% Irish Life & Permanent 3.430%, 09/28/05 .............................. 9,700 9,675,047 ------------ PAR (000) VALUE ------- ------------ COMMERCIAL PAPER--(CONTINUED) MORTGAGE BANKERS & CORRESPONDENTS--5.9% Countrywide Financial Corp. 3.530%, 09/02/05 .............................. $11,650 $ 11,648,858 ------------ TOTAL COMMERCIAL PAPER (Cost $114,729,274) ....................... 114,729,274 ------------ MUNICIPAL BONDS--1.2% PENNSYLVANIA--1.2% Franklin County, PA IDR 3.690%, 09/01/05 .............................. 2,330 2,330,000 ------------ TOTAL MUNICIPAL BONDS (Cost $2,330,000) ......................... 2,330,000 ------------ VARIABLE RATE OBLIGATIONS--14.7% ASSET BACKED SECURITIES--3.1% Racers Trust ++ 3.861%, 11/28/05 .............................. 5,000 5,000,000 Racers Trust 2004-6++ 3.609%, 09/22/05 .............................. 1,000 1,000,000 ------------ 6,000,000 ------------ BANKS--9.1% Citigroup Global Markets 3.494%, 09/06/05 .............................. 8,000 8,000,000 HBOS Treasury Services P.L.C.++ 3.510%, 09/26/05 .............................. 8,000 8,000,000 Westpac Banking Corp.++ 3.400%, 09/12/05 .............................. 2,000 2,000,000 ------------ 18,000,000 ------------ LIFE INSURANCE--2.5% Met Life Global Funding, Inc.++ 3.740%, 09/28/05 .............................. 5,000 5,000,000 ------------ TOTAL VARIABLE RATE OBLIGATIONS (Cost $29,000,000) ........................ 29,000,000 ------------ U.S. GOVERNMENT AGENCY OBLIGATIONS--4.1% Federal Home Loan Bank 3.265%, 09/12/05 .............................. 8,000 7,999,855 ------------ TOTAL AGENCY OBLIGATIONS (Cost $7,999,855) ......................... 7,999,855 ------------ See Accompanying Notes to Financial Statements. 4 THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS (CONCLUDED) AUGUST 31, 2005 PAR (000) VALUE ------- ------------ MASTER NOTES--7.1% Merrill Lynch Mortgage Capital, Inc. 3.630%, 09/06/05 .............................. $ 8,000 $ 8,000,000 Morgan Stanley Mortgage Capital, Inc. 3.733%, 09/01/05 .............................. 6,000 6,000,000 ------------ TOTAL MASTER NOTES (Cost $14,000,000) ........................ 14,000,000 ------------ REPURCHASE AGREEMENTS--10.5% Morgan Stanley & Co. (Tri-Party Agreement dated 8/31/05 to be repurchased at $18,0001,795 collaterized by $18,930,000 Federal National Mortgage Association Medium Term Notes at a rate of 2.20% to 5.52%, due 12/04/06 to 03/09/20. Market Value of collateral is $18,636,619.) 3.590%, 09/01/05 .............................. 18,000 18,000,000 Morgan Stanley & Co. (Tri-Party Agreement dated 8/31/05 to be repurchased at $2,600,255 collateralized by $2,637,000 Federal National Mortgage Association Bonds and U.S. Treasury Notes at a rate of 4.00%, due 11/15/12. Market Value of Collateral is $2,665,899.) 3.530%, 09/01/05 .............................. 2,600 2,600,000 ------------ TOTAL REPURCHASE AGREEMENTS (Cost $20,600,000) ........................ 20,600,000 ------------ TOTAL INVESTMENTS AT VALUE--100.0% (Cost $196,724,122) ........................... 196,724,122 ------------ VALUE ------------ OTHER ASSETS IN EXCESS OF LIABILITIES--0.0% .......................... $ 75,046 ------------ NET ASSETS (APPLICABLE TO 109,496,743 BEDFORD SHARES AND 87,306,099 SANSOM STREET SHARES )--100.0% ....................... $196,799,168 ============ NET ASSET VALUE, Offering and Redemption Price Per Share ($196,799,168 / 196,802,842) .................. $1.00 ===== NET ASSET VALUE, Offering and Redemption Price Per Bedford Share ($109,494,713 / 109,496,743) .................. $1.00 ===== NET ASSET VALUE, Offering and Redemption Price Per Sansom Street Share ($87,304,455 / 87,306,099) .................... $1.00 ===== ++ Variable Rate Obligations -- The interest rate shown is the rate as of August 31, 2005 and the maturity date shown is the next interest rate readjustment date or the maturity date. INVESTMENT ABBREVIATIONS IDR -- Industrial Development Revenue See Accompanying Notes to Financial Statements. 5 THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2005 Investment Income Interest ..................................................... $5,443,667 ---------- Expenses Investment advisory and administration fees .................. 935,881 Distribution and service fees ................................ 672,807 Printing fees ................................................ 64,011 Custodian fees ............................................... 60,690 Directors' and Officer's fees ................................ 42,052 Legal fees ................................................... 36,552 Regulatory administration fees ............................... 31,803 Transfer agent fees .......................................... 27,825 Audit fees ................................................... 21,795 Registration fees ............................................ 14,400 Insurance fees ............................................... 13,718 Service organization fees .................................... 4,013 Miscellaneous ................................................ 4,180 ---------- Total Expenses .......................................... 1,929,727 Less fees waived ............................................. (783,584) ---------- Net total expenses ...................................... 1,146,143 ---------- Net investment income ........................................... 4,297,524 ---------- Realized loss on investments .................................... (1,655) ---------- Net increase in net assets resulting from operations ............ $4,295,869 ========== See Accompanying Notes to Financial Statements. 6 THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 --------------- --------------- Increase (decrease) in net assets: Operations: Net investment income ........................................................ $ 4,297,524 $ 1,865,672 Net loss on investments ...................................................... (1,655) (2,019) ------------ ------------ Net increase in net assets resulting from operations ......................... 4,295,869 1,863,653 ------------ ------------ Distributions to shareholders: Dividends to shareholders from Net Investment Income: Bedford shares ............................................................. (1,591,534) (202,921) Sansom Street shares ....................................................... (2,705,990) (1,662,751) Distributions to shareholders from Net realized short-term gains: Bedford shares ............................................................. -- (1,077) Sansom Street shares ....................................................... -- (2,545) ------------ ------------ Total distributions to shareholders ...................................... (4,297,524) (1,869,294) ------------ ------------ Net capital share transactions (See Note 3) .................................... (16,571,764) (65,400,496) ------------ ------------ Total decrease in net assets ................................................... (16,573,419) (65,406,137) Net Assets: Beginning of year ............................................................ 213,372,587 278,778,724 ------------ ------------ End of year .................................................................. $196,799,168 $213,372,587 ============ ============
See Accompanying Notes to Financial Statements. 7 THE RBB FUND, INC. MONEY MARKET PORTFOLIO FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
THE BEDFORD CLASS --------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED AUGUST 31, 2005 AUGUST 31, 2004 AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2001 --------------- --------------- --------------- --------------- --------------- Net asset value, beginning of year ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income ................ 0.0162 0.0025 0.0046 0.0157 0.0460 Net gains/(losses) on securities ..... -- -- 0.0005 -- -- -------- -------- -------- -------- -------- Total from investment operations ....................... 0.0162 0.0025 0.0051 0.0157 0.0460 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) ............................ (0.0162) (0.0025) (0.0046) (0.0157) (0.0460) Distributions (from capital gains) ... -- -- (0.0005) -- -- -------- -------- -------- -------- -------- Total distributions ................ (0.0162) (0.0025) (0.0051) (0.0157) (0.0460) -------- -------- -------- -------- -------- Net asset value, end of year ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return ............................ 1.63% 0.25% 0.53% 1.59% 4.70% Ratios /Supplemental Data Net assets, end of year (000) ........ $109,495 $ 72,001 $ 80,406 $ 52,878 $676,964 Ratios of expenses to average net assets(a) ...................... .97% .94% .98% 1.00% 1.00% Ratios of net investment income to average net assets .............. 1.68% .24% .46% 1.75% 4.46% (a) Without the waiver of advisory, administration and transfer agent fees and without the reimbursement of certain operating expenses, the ratios of expenses to average net assets for the Bedford Class of the Money Market Portfolio would have been 1.23%, 1.34%, 1.30%, 1.25% and 1.19% for the years ended August 31, 2005, 2004, 2003, 2002 and 2001, respectively.
See Accompanying Notes to Financial Statements. 8 THE RBB FUND, INC. MONEY MARKET PORTFOLIO FINANCIAL HIGHLIGHTS (CONTINUED) (FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
THE SANSOM STREET CLASS --------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED AUGUST 31, 2005 AUGUST 31, 2004 AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2001 --------------- --------------- --------------- --------------- --------------- Net asset value, beginning of year ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income ................ 0.0239 0.0100 0.0114 0.0209 0.0511 Net gains/(losses) on securities ..... -- -- 0.0005 -- -- -------- -------- -------- -------- -------- Total net income from investment operations ....................... 0.0239 0.0100 0.0119 0.0209 0.0511 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) ............................ (0.0239) (0.0100) (0.0114) (0.0209) (0.0511) Distributions (from capital gains) ... -- -- (0.0005) -- -- -------- -------- -------- -------- -------- Total distributions ................ (0.0239) (0.0100) (0.0119) (0.0209) (0.0511) -------- -------- -------- -------- -------- Net asset value, end of year ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return ....................... 2.41% 1.00% 1.21% 2.11% 5.23% Ratios/Supplemental Data Net assets, end of year (000) ........ $ 87,304 $141,372 $198,373 $244,212 $201,632 Ratios of expenses to average net assets(a) ...................... .20% .20% .30% .49% .49% Ratios of net investment income to average net assets ................. 2.39% .98% 1.14% 2.10% 5.23% (a) Without the waiver of advisory fees and reimbursement of certain operating expenses, the ratios of expenses to average net assets for the Sansom Street Class of the Money Market Portfolio would have been .67%, .59%, .57%, .64% and .61% for the years ended August 31, 2005, 2004, 2003, 2002 and 2001, respectively.
See Accompanying Notes to Financial Statements. 9 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2005 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The RBB Fund, Inc. ("RBB" or "Company") 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 "1940 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 1940 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 seventeen active investment portfolios, including the Money Market Portfolio ("Portfolio"), which comprise the RBB family of funds. RBB has authorized capital of thirty billion shares of common stock of which 26.473 billion shares are currently classified into one hundred and three classes of Common Stock. The Portfolio has issued shares with a par value of $0.001. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into seven separate "families," six of which have begun investment operations. A) SECURITY VALUATION -- Securities held in the Portfolio are valued under the amortized cost method, which approximates current market value. Under this method, securities are valued at cost when purchased and thereafter assumes constant accretion of discount or amortization of premium is recorded until maturity of the security. Regular review and monitoring of the valuation is performed to ensure that cost continues to approximate market value and to avoid dilution or other unfair results to shareholders. The Portfolio seeks to maintain net asset value per share at $1.00. B) SECURITY TRANSACTIONS, INVESTMENT INCOME, AND EXPENSES -- Security 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. Interest income is accrued when earned. Certain expenses, such as distribution, transfer agency and printing, are class specific expenses and vary by class. Expenses not directly attributable to a specific portfolio or class are allocated based on relative net assets of each portfolio and class, respectively. 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 portfolios within the RBB family of funds (such as director or professional fees) are charged to all portfolios in proportion to their average net assets. C) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income are declared daily, recorded on the ex-date and paid monthly. All distributions from net investment income are taxed as ordinary income. Any net realized capital gains are distributed at least annually. Income subject to distributions and capital gain subject to distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. The following permanent differences as of August 31, 2005, primarily attributable to distribution reclass from ordinary income to short-term gain were reclassified to the following accounts: INCREASE DECREASE ACCUMULATED ACCUMULATED NET INVESTMENT NET REALIZED LOSS LOSS ---------------- -------------- Money Market Portfolio $831 $(831) 10 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2005 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D) FEDERAL INCOME TAXES -- No provision is made for federal income taxes. It is the Company's intention to have each portfolio continue to qualify for and elect the tax treatment applicable to regulated investment companies under the Internal Revenue Code and make the requisite distributions to its shareholders which will be sufficient to relieve it from Federal income and excise taxes. E) REPURCHASE AGREEMENTS -- Money market instruments may be purchased subject to the seller's agreement to repurchase them at an agreed upon date and price. The seller will be required on a daily basis to maintain the value of the securities subject to the agreement at not less than the repurchase price plus accrued interest. If the value of the underlying securities falls below 102% of the value of the repurchase price plus accrued interest, the Portfolio will require the seller to deposit additional collateral by the next Portfolio business day. In the event that the seller under the agreement defaults on its repurchase obligation or fails to deposit sufficient collateral, the Portfolio has the contractual right, subject to the requirements of applicable bankruptcy and insolvency laws, to sell the underlying securities and may claim any resulting loss from the seller. The agreements are conditioned upon the collateral being deposited under the Federal Reserve Book Entry System or with the Portfolio's custodian or a third party sub-custodian. F) 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. These estimates and assumptions 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 reporting period. Actual results could differ from those estimates. G) OTHER -- In the normal course of business, the Fund may enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and, therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote. NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Pursuant to Investment Advisory Agreements, BlackRock Institutional Management Corp. (the "Adviser" or "BIMC"), an indirect majority-owned subsidiary of The PNC Financial Services Group, Inc., serves as investment adviser and as administrator for the Portfolio. BIMC and PFPC Inc. ("PFPC") have entered into a delegation agreement on behalf of the Portfolio, wherein PFPC has agreed to perform Administration and Accounting services for an annual fee of ..10% of the average net assets of the Portfolio, paid out of the fee paid to BIMC. For its advisory services, BIMC is entitled to receive the following fees, computed daily and payable monthly, and based on the Portfolio's average daily net assets: PORTFOLIO ANNUAL RATE ------------------------- ---------------------------------------------- Money Market Portfolio .45% of first $250 million of net assets; .40% of next $250 million of net assets; .35% of net assets in excess of $500 million. 11 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2005 NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) BIMC may, at its discretion, voluntarily waive all or any portion of its advisory fee for the Portfolio. For each class of shares within the Portfolio, the net advisory fee charged to each class is the same on a relative basis. For the year ended August 31, 2005, advisory fees and waivers for the investment portfolio were as follows: GROSS NET ADVISORY ADVISORY FEE WAIVER FEE ---------- ----------- ---------- Money Market Portfolio $935,881 $(726,915) $208,966 As of August 31, 2005, the Portfolio owed BIMC $16,990 in advisory fees. The Funds will not pay BIMC at a later time for any amounts it may waive or any amounts that BIMC has assumed. For providing regulatory administrative services to RBB, PFPC is entitled to receive compensation as agreed to by the Company and PFPC. This fee is allocated among all funds in proportion to their net assets of the RBB funds. The Portfolio's portion of this fee for the period September 1, 2004 to August 31, 2005 was $31,803. The investment adviser/administrator may voluntarily waive and/or reimburse the Portfolio for the amount, if any, by which the total operating and management expenses exceed the expense cap. For the year ended August 31, 2005, the expense caps were as follows: PORTFOLIO CLASS OF SHARES EXPENSE CAP ---------- ----------------- ------------- Money Market Portfolio Bedford 0.97% Sansom Street 0.20% The Fund, on behalf of each class of shares within the investment portfolio, has adopted Distribution Plans pursuant to Rule 12b-1 under the 1940 Act (the "Plans"). The Fund has entered into a Distribution Contract with PFPC Distributors, Inc. ("PFPC Distributors"). PFPC Distributors is a wholly-owned subsidiary of PFPC Worldwide Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. The Plans provide for each class to make monthly payments, based on average net assets, to PFPC Distributors of up to .65% on an annualized basis for the Bedford Class and up to .05% on an annualized basis for the Sansom Street Class. For the year ended August 31, 2005, distribution fees paid to PFPC Distributors for each class were as follows:
GROSS NET DISTRIBUTION DISTRIBUTION FEE WAIVER FEE ---------------- ------------ ---------------- Money Market Portfolio Bedford Class $616,138 -- $616,138 Sansom Street Class 56,669 $(56,669) -- -------- -------- -------- Total Money Market Portfolio $672,807 $(56,669) $616,138 ======== ======== ========
12 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2005 NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) PFPC serves as the transfer and dividend disbursing agent for each class. Both PFPC Trust Co. and PFPC are wholly-owned subsidiaries of PFPC Worldwide Inc., an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. PFPC may, at its discretion, voluntarily waive all or any portion of its transfer agency fee for any class of shares. For the year ended August 31, 2005, transfer agency fees for each class of shares within the investment portfolio were as follows: TRANSFER AGENCY BASIS FEE POINTS --------------- -------- Money Market Portfolio Bedford Class $ 2,379 0.25 Sansom Street Class 25,446 2.25 ------- Total Money Market Portfolio $27,825 ======= PFPC Trust Co. provides certain custodial services to the Portfolio. As compensation for such custodial services, PFPC Trust Co. is entitled to receive the following fees, computed daily and payable monthly, and based on the Portfolio's average gross assets: PORTFOLIO ANNUAL RATE ----------------------- ------------------------------------------------ Money Market Portfolio .025% of first $50 million of gross assets; .020% of next $50 million of gross assets; .015% of gross assets in excess of $100 million. The Fund has entered into service agreements with banks affiliated with PNC who render support services to customers who are the beneficial owners of the Sansom Street Class in consideration of the payment of .10% of the daily net asset value of such shares. For the year ended August 31, 2005, service organization fees were $4,013 for the Money Market Portfolio. As of August 31, 2005, the Portfolio owed PFPC and its affiliates $71,817 for their services. 13 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2005 NOTE 3. CAPITAL SHARES Transactions in capital shares (at $1 per capital share) for each year were as follows:
FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 ----------------- ----------------- Shares sold: Bedford Class 442,206,980 386,514,072 Sansom Street Class 1,616,798,271 1,920,438,260 --------------- --------------- Total Shares Sold 2,059,005,251 2,306,952,332 Shares issued on reinvestment of dividends: Bedford Class 1,524,066 198,103 Sansom Street Class 135,455 77,190 --------------- --------------- Total Shares Reinvested 1,659,521 275,293 Shares repurchased: Bedford Class (406,236,164) (395,118,572) Sansom Street Class (1,671,000,372) (1,977,508,749) --------------- --------------- Total Shares Repurchased (2,077,236,536) (2,372,627,321) Refund of deposit of capital for intent of share purchase:* -- (800) --------------- --------------- Net decrease (16,571,764) (65,400,496) =============== =============== Bedford Shares authorized 1,500,000,000 1,500,000,000 =============== =============== Sansom Street Shares authorized 1,500,000,000 1,500,000,000 =============== =============== * This class of shares was never operational and is now closed.
NOTE 4. NET ASSETS At August 31, 2005, net assets consisted of the following: MONEY MARKET PORTFOLIO ------------ Paid-in capital $196,802,842 Accumulated net realized loss on investments (3,674) ------------ Total net assets $196,799,168 ============ 14 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS (CONCLUDED) AUGUST 31, 2005 NOTE 5. FEDERAL INCOME TAX INFORMATION At August 31, 2005, Federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows:
FEDERAL TAX UNREALIZED UNREALIZED NET UNREALIZED COST APPRECIATION DEPRECIATION APPRECIATION -------------- -------------- -------------- ---------------- Money Market Portfolio $196,724,122 $ -- $ -- $ --
As of August 31, 2005, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM INCOME GAINS --------------- --------------- $149,562 $ -- At August 31, 2005, the Fund had capital loss carryforwards of $3,587 which expires August 31, 2013 and is 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, 2005, the Fund incurred post-October capital losses of $917. 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 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 ------------ ----------- ------- Money Market Portfolio 2005 $4,297,524 -- -- 2004 $1,865,672 -- -- 15 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of The RBB Fund, Inc.: We have audited the accompanying statement of net assets of Money Market Portfolio, a series of The RBB Fund, Inc. (the "Portfolio"), as of August 31, 2005 and the related statement of operations for the year then ended, the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The financial highlights of the Portfolio for the periods ended, August 31, 2001, August 31, 2002 and August 31, 2003 were audited by other auditors whose report, dated October 27, 2003, expressed an unqualified opinion on those financial statements and financial highlights. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Portfolio is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Portfolio's internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of August 31, 2005, by correspondence with the custodian and brokers. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Portfolio as of August 31, 2005, the results of its operations, the changes in its net assets, and its financial highlights for the respective stated period, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Philadelphia, Pennsylvania November 3, 2005 16 ADDITIONAL INFORMATION (UNAUDITED) 1. PROXY VOTING Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling the numbers shown below and on the Securities and Exchange Commission's website at http://www.sec.gov. Bedford (800) 533-7719 Sansom Street (888) 261-4073 2. QUARTERLY PORTFOLIO SCHEDULES The Company files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third fiscal quarter of each fiscal year (quarters ended November 30 and May 31) on Form N-Q. The Company's Form N-Q is available on the Securities and Exchange Commission's website at http://www.sec.gov and may be reviewed and copied at the Securities and Exchange Commission's Public Reference Room in Washington, D.C. Information on the operation of the Securities and Exchange Commission's Public Reference Room may be obtained by calling 1-800-SEC-0330. 3. APPROVAL OF INVESTMENT ADVISORY AGREEMENT As required by the 1940 Act, the Board of Directors (the "Board") of the Company, including all of the Directors who are not "interested persons" of the Company, as that term is defined in the 1940 Act (the "Independent Directors"), considered the renewal of the investment advisory and sub-advisory agreements between BIMC and the Company (each an "Advisory Agreement" and collectively the "Advisory Agreements") on behalf of the Portfolio at a meeting of the Board held on May 25, 2005. At this meeting, the Board approved the Advisory Agreements for an additional one-year term. The Board's decision to approve the Agreements reflects the exercise of its business judgment to continue the existing arrangement. In approving the Agreements, the Board considered information provided by the Adviser with the assistance and advice of counsel to the Independent Directors and the Company. In considering the renewal of and approval of the Advisory Agreements, the Directors took into account all the materials provided prior to and during the meeting, the presentations made during the meeting, and the discussions during the meeting. The Directors discussed the materials from the Adviser mailed in advance of the meeting that addressed most, if not all, of the factors listed below. The Adviser also made a presentation during the meeting and responded to questions from the Directors. Among other things, the Directors considered (i) the nature, extent, and quality of the Adviser's services provided to the Portfolio; (ii) descriptions of the experience and qualifications of the personnel providing those services; (iii) the Adviser's investment philosophies and processes; (iv) the Adviser's assets under management and client descriptions; (v) the Adviser's soft dollar commission and trade allocations policies, including information on the types of research and services obtained in connection with soft dollar commissions; (vi) the current and proposed advisory fee arrangements with the Company and other similarly managed clients; (vii) compliance procedures; (viii) the Adviser's financial information, insurance coverage and profitability analysis related to providing advisory services to the Portfolio; (ix) the extent to which economies of scale are relevant to the Portfolio; (x) a report comparing the Portfolio's proposed or current advisory fees and expenses to those of its peer group; and (xi) a report comparing the performance of the Portfolio to the performance of its applicable benchmark index and peer group. No one factor was determinative in the Board's consideration of the Advisory Agreements. 17 ADDITIONAL INFORMATION (CONCLUDED) (UNAUDITED) The Directors then met in executive session with counsel to discuss and consider information presented in connection with the continuation of the Advisory Agreements as well as the Directors' responsibilities and duties in approving the Agreements. During the course of its deliberations, the Directors, meeting in executive session, reached the following conclusions, among others, regarding BIMC and the Advisory and Sub-Advisory Agreements, with respect to the Portfolio. The Directors considered that the Portfolio's gross advisory fees for the Bedford Class and Sansom Class were higher in comparison to that of their peer group average and that both Classes' net advisory fees after waivers were significantly less when compared to their peer group average. It was noted that the fees BIMC charges for managing assets for other clients are lower than the fees charged to the Portfolio. The Board noted that BIMC has agreed to voluntarily waive its advisory fee and reimburse expenses to limit annual operating expenses of the Portfolio. In addition, the Directors considered the Portfolio's gross and net expense ratios, which were higher than ratios for the Bedford Class peer group average and lower than the ratios for the Sansom Class peer group average. The Directors noted the reasons for the Bedford Class' higher expense ratio, including, among other reasons, that last spring, Bear Stearns liquidated its position in the Bedford Class, which in turn decreased the Class' overall assets. The Directors reviewed the Portfolio's performance, discussing that the performance for the Bedford Class was below that of its peer group composite for the year-to-date and one year periods ended March 31, 2005, while the performance of the Sansom Class exceeded that of its peer group composite for the same period. The Directors then determined that the nature, extent and quality of services provided by BIMC in advising the Portfolio was satisfactory; the profits earned by BIMC seemed reasonable; and the benefits derived by BIMC from managing the Portfolio, including the method BIMC uses to select brokers, seemed reasonable. The Directors also discussed economies-of-scale associated with asset growth and decline of each Class of the Portfolio. Based on all of the information presented to the Board and its consideration of relevant factors, the Board concluded that the fees paid to the Adviser by the Portfolio were reasonable, and in the exercise of its business judgment, determined that BIMC's Advisory and Sub-Advisory Agreements be continued for another one-year period ending August 16, 2006. 18 THE RBB FUND, INC. MONEY MARKET PORTFOLIO FUND MANAGEMENT (UNAUDITED) The business and affairs of the Company are managed under the direction of the Company's Board of Directors. The Company is organized under and managed pursuant to Maryland law. The Directors and executive officers of the Company, their dates of birth, business addresses and principal occupations during the past five years are set forth below. The Statement of Additional Information ("SAI") includes additional information about the Directors and is available without charge, upon request, by calling (800) 533-7719 for Bedford and (888) 261-4073 for Sansom Street.
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN OTHER TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST OVERSEEN BY HELD BY AND DATE OF BIRTH WITH FUND TIME SERVED 1 5 YEARS DIRECTOR* DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS - ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director 1988 to present Since 1969, Director and Vice Chairman, 17 Director, Comcast Corporation Comcast Corporation (cable television Comcast 1500 Market Street, 35th Fl. and communications); Director, NDS Group Corporation. Philadelphia, PA 19102 PLC (provider of systems and DOB: 7/16/33 applications for digital pay TV). - ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director 1988 to present Since 2000, Vice President, Fox Chase 17 None Fox Chase Cancer Center Cancer Center (biomedical research and 333 Cottman Avenue medical care); prior to 2000, Philadelphia, PA 19111 Executive Vice President, Fox Chase DOB: 12/06/35 Cancer Center. - ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director 1991 to present Since December 2000, Director, Gabelli 17 None 106 Pierrepont Street Group Capital Partners, L.P. (an Brooklyn, NY 11201 investment partnership); Chief Operating DOB: 5/21/48 Officer and member of the Board of Directors of Outercurve Technologies (wireless 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; Prior to 1997, Managing Director of Warburg Pincus Asset Management, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director 1991 to present Since 1974, Chairman, Director and 17 Director, Moyco Moyco Technologies, Inc. President, Moyco Technologies, Inc. Technologies, 200 Commerce Drive (manufacturer of precision coated and Inc. Montgomeryville, PA 18936 industrial abrasives); Since 1999, DOB: 3/24/34 Director, Pennsylvania Business Bank. - ------------------------------------------------------------------------------------------------------------------------------------ * Each Director oversees seventeen portfolios of the Company that are currently offered for sale. The Company is authorized to offer two additional portfolios that had not commenced operations as of the date of this report. 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified.
19 THE RBB FUND, INC. MONEY MARKET PORTFOLIO FUND MANAGEMENT (CONTINUED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN OTHER TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST OVERSEEN BY HELD BY AND DATE OF BIRTH WITH FUND TIME SERVED 1 5 YEARS DIRECTOR* DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS 2 - ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director 1991 to present Since July 2002, Senior Vice President 17 None Oppenheimer & Company, Inc. and prior thereto, Executive Vice 200 Park Avenue President of Oppenheimer & Company, Inc. New York, NY 10166 (formerly Fahnestock & Co., Inc., a DOB:4/16/38 registered broker-dealer). - ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director 2002 to present Director of PFPC Inc. from January 1987 17 Director, 400 Bellevue Parkway to April 2002; Chairman and Chief Cornerstone Wilmington, DE 19809 Executive Officer of PFPC Inc. until Bank DOB: 9/25/38 April 2002; Executive Vice President of PNC Bank, National Association from October 1981 to April 2002; Director of PFPC International Ltd. (financial services) from August 1993 to April 2002; Director of PFPC International (Cayman) Ltd. (financial services) from September 1996 to April 2002; Governor of the Investment Company Institute (investment company industry trade organization) from July 1996 to January 2002; Director of PNC Asset Management, Inc. (investment advisory) from September 1994 to March 1998; Director of PNC National Bank from October 1995 to November 1997; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984, Director of Cornerstone Bank since March 2004. - ------------------------------------------------------------------------------------------------------------------------------------ * Each Director oversees seventeen portfolios of the Company that are currently offered for sale. The Company is authorized to offer two additional portfolios that had not commenced operations as of the date of this report. 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified. 2 Messrs. Carnall and Sablowsky are considered "interested persons" of the Company as that term is defined in the 1940 Act. Mr. Carnall is 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. Sablowsky is considered an "interested Director" of the Company by virtue of his position as an officer of a registered broker-dealer.
20 THE RBB FUND, INC. MONEY MARKET PORTFOLIO FUND MANAGEMENT (CONCLUDED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN OTHER TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST OVERSEEN BY HELD BY AND DATE OF BIRTH WITH FUND TIME SERVED 5 YEARS DIRECTOR DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS - ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President 1991 to present Certified Public Accountant; Vice N/A N/A 400 Bellevue Parkway and and Chairman of the Board, Fox Chase Cancer 4th Floor Treasurer 1988 to present Center; Trustee Emeritus, Pennsylvania Wilmington, DE 19809 School for the Deaf; Trustee Emeritus, DOB: 6/29/24 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, President since 2002, Treasurer since 1981 and Chief Compliance Officer since September 2004 of Chestnut Street Exchange Fund; and Director of the Bradford Funds, Inc. from 1996 to 2000. - ------------------------------------------------------------------------------------------------------------------------------------ Tina M. Payne Secretary 2005 to present Since 2003, Vice President and Associate N/A N/A 301 Bellevue Parkway Counsel, PFPC Inc. (financial services 2nd Floor company); Associate, Stradley, Ronon, Wilmington, DE 19809 Stevens & Young, LLC (law firm) from 2001 DOB: 5/19/74 to 2003. - ------------------------------------------------------------------------------------------------------------------------------------ Salvatore Faia, Esquire, CPA Chief 2004 to present President, Vigilant Compliance Services, N/A N/A Vigilant Compliance Compliance Since 2004. Senior Legal Counsel, PFPC 186 Dundee Drive, Suite 700 Officer Inc. from 2002 to 2004; Chief Legal Williamstown, NJ 08094 Counsel, Corviant Corporation (Investment DOB: 12/25/62 Adviser, Broker/Dealer and Service Provider to Investment Advisers and Separate Accountant Providers) from 2001 to 2002; Partner, Pepper Hamilton LLP (law firm) from 1997 to 2001. - ------------------------------------------------------------------------------------------------------------------------------------
21 [THIS PAGE INTENTIONALLY LEFT BLANK.] [THIS PAGE INTENTIONALLY LEFT BLANK.] CUSTOMER CARE For questions regarding your ShareBuilder account please call 1-800-SHRBLDR (1-800-747-2537) or visit ShareBuilder online at ShareBuilder.com. Please be aware that ShareBuilder Customer Care Agents are NOT able to place a trade for you over the phone, open your account over the phone, or provide any type of financial advice or recommendations. WRITTEN CORRESPONDENCE Post Office Address: ShareBuilder -- Bedford Shares of The RBB Money Market Portfolio c/o ShareBuilder Securities Corporation PO Box 1728 Bellevue, WA 98009 Street Address: ShareBuilder -- Bedford Shares of The RBB Money Market Portfolio c/o ShareBuilder Securities Corporation 1445 -- 120th Avenue Northeast Bellevue, WA 98005 INVESTMENT COMPANY ACT FILE NO. 811-05518 ================================================================================ THE SANSOM STREET CLASS OF THE RBB FUND, INC. MONEY MARKET PORTFOLIO Annual Report August 31, 2005 ================================================================================ THE RBB FUND, INC. MONEY MARKET PORTFOLIO PRIVACY NOTICE (UNAUDITED) The RBB Fund, Inc. MONEY MARKET PORTFOLIO (the "Portfolio") 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 (800) 533-7719. NOT PART OF THE ANNUAL REPORT THE RBB FUND, INC. MONEY MARKET PORTFOLIO FUND EXPENSE EXAMPLES (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees, distribution fees, and other expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. These examples are based on an investment of $1,000 invested at the beginning of the period and held for the six-month period from March 1, 2005 through August 31, 2005. ACTUAL EXPENSES The first line of the accompanying tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the accompanying tables provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees that may be incurred by shareholders of other Funds. Therefore, the second line of the accompanying tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
MONEY MARKET PORTFOLIO - BEDFORD CLASS ----------------------------------------------------------- BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* --------------- ----------------- --------------- Actual $1,000.00 $1,010.90 $4.92 Hypothetical (5% return before expenses) 1,000.00 1,020.25 4.95 MONEY MARKET PORTFOLIO - SANSOM STREET CLASS ----------------------------------------------------------- BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* --------------- ----------------- --------------- Actual $1,000.00 $1,014.80 $1.02 Hypothetical (5% return before expenses) 1,000.00 1,024.18 1.02 * Expenses are equal to the Fund's annualized expense ratio of 0.97% for the Bedford Class shares and 0.20% for the Sansom Street Class shares, which includes waived fees or reimbursed expenses, multiplied by the average account value over the period, multiplied by the number of days (184) in the most recent fiscal half-year, then divided by 365 to reflect the one-half year period. The Fund's ending account value on the first line in each table is based on the actual total return for each class of 1.09% for the Bedford Class shares and 1.48% for the Sansom Street Class shares.
2 THE RBB FUND, INC. MONEY MARKET PORTFOLIO PORTFOLIO HOLDINGS SUMMARY TABLE (UNAUDITED)
SECURITY % OF NET TYPE ASSETS VALUE -------- --------- ------------ Short Term Investments: Commercial Paper ............................................................ 58.3% $114,729,274 Variable Rate Obligations ................................................... 14.7 29,000,000 Repurchase Agreements ....................................................... 10.5 20,600,000 Master Notes ................................................................ 7.1 14,000,000 Certificates of Deposit ..................................................... 4.1 8,064,993 Agency Obligations .......................................................... 4.1 7,999,855 Municipal Bonds ............................................................. 1.2 2,330,000 Other Assets in Excess of Liabilities .......................................................... 0.0 75,046 ------- ------------ NET ASSETS 100.0% $196,799,168 ======= ============
3 THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS AUGUST 31, 2005 PAR (000) VALUE ------- ------------ CERTIFICATES OF DEPOSIT--4.1% DOMESTIC CERTIFICATES OF DEPOSIT--4.1% Washington Mutual Bank 3.540%, 09/19/05 .............................. $ 8,065 $ 8,064,993 ------------ TOTAL CERTIFICATES OF DEPOSIT (Cost $8,064,993) ......................... 8,064,993 ------------ COMMERCIAL PAPER--58.3% ASSET BACKED SECURITIES--22.1% Beta Finance, Inc. 3.400%, 09/29/05 .............................. 10,902 10,873,170 Cancara Asset Securitisation, Ltd. 3.715%, 11/18/05 .............................. 1,999 1,982,910 Concord Minutemen Capital Co. 3.530%, 09/02/05 .............................. 2,740 2,739,731 Emerald Certificates MBNA Credit Card Master Trust 3.560%, 10/18/05 .............................. 10,000 9,953,522 Liberty Street Funding Corp. 3.400%, 09/23/05 .............................. 4,480 4,470,692 Newcastle Certificates 6.590%, 09/16/05 .............................. 10,000 9,985,042 Ticonderoga Funding LLC 3.540%, 09/16/05 .............................. 3,460 3,454,896 ------------ 43,459,963 ------------ BANKS--25.4% Alliance & Leicester 3.260%, 09/19/05 .............................. 10,000 9,983,700 Banco Santander Puerto Rico 3.540%, 09/07/05 .............................. 4,605 4,602,283 Bank of America Corp. 3.670%, 10/24/05 .............................. 5,000 4,972,985 Deutsche Bank Financial LLC 3.525%, 09/20/05 .............................. 11,500 11,478,605 Eurohypo AG 3.700%, 11/09/05 .............................. 10,000 9,929,083 Westpac Trust Securities, Ltd. 3.400%, 09/26/05 .............................. 9,000 8,978,750 ------------ 49,945,406 ------------ LIFE INSURANCE--4.9% Irish Life & Permanent 3.430%, 09/28/05 .............................. 9,700 9,675,047 ------------ PAR (000) VALUE ------- ------------ COMMERCIAL PAPER--(CONTINUED) MORTGAGE BANKERS & CORRESPONDENTS--5.9% Countrywide Financial Corp. 3.530%, 09/02/05 .............................. $11,650 $ 11,648,858 ------------ TOTAL COMMERCIAL PAPER (Cost $114,729,274) ....................... 114,729,274 ------------ MUNICIPAL BONDS--1.2% PENNSYLVANIA--1.2% Franklin County, PA IDR 3.690%, 09/01/05 .............................. 2,330 2,330,000 ------------ TOTAL MUNICIPAL BONDS (Cost $2,330,000) ......................... 2,330,000 ------------ VARIABLE RATE OBLIGATIONS--14.7% ASSET BACKED SECURITIES--3.1% Racers Trust ++ 3.861%, 11/28/05 .............................. 5,000 5,000,000 Racers Trust 2004-6++ 3.609%, 09/22/05 .............................. 1,000 1,000,000 ------------ 6,000,000 ------------ BANKS--9.1% Citigroup Global Markets 3.494%, 09/06/05 .............................. 8,000 8,000,000 HBOS Treasury Services P.L.C.++ 3.510%, 09/26/05 .............................. 8,000 8,000,000 Westpac Banking Corp.++ 3.400%, 09/12/05 .............................. 2,000 2,000,000 ------------ 18,000,000 ------------ LIFE INSURANCE--2.5% Met Life Global Funding, Inc.++ 3.740%, 09/28/05 .............................. 5,000 5,000,000 ------------ TOTAL VARIABLE RATE OBLIGATIONS (Cost $29,000,000) ........................ 29,000,000 ------------ U.S. GOVERNMENT AGENCY OBLIGATIONS--4.1% Federal Home Loan Bank 3.265%, 09/12/05 .............................. 8,000 7,999,855 ------------ TOTAL AGENCY OBLIGATIONS (Cost $7,999,855) ......................... 7,999,855 ------------ See Accompanying Notes to Financial Statements. 4 THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS (CONCLUDED) AUGUST 31, 2005 PAR (000) VALUE ------- ------------ MASTER NOTES--7.1% Merrill Lynch Mortgage Capital, Inc. 3.630%, 09/06/05 .............................. $ 8,000 $ 8,000,000 Morgan Stanley Mortgage Capital, Inc. 3.733%, 09/01/05 .............................. 6,000 6,000,000 ------------ TOTAL MASTER NOTES (Cost $14,000,000) ........................ 14,000,000 ------------ REPURCHASE AGREEMENTS--10.5% Morgan Stanley & Co. (Tri-Party Agreement dated 8/31/05 to be repurchased at $18,0001,795 collaterized by $18,930,000 Federal National Mortgage Association Medium Term Notes at a rate of 2.20% to 5.52%, due 12/04/06 to 03/09/20. Market Value of collateral is $18,636,619.) 3.590%, 09/01/05 .............................. 18,000 18,000,000 Morgan Stanley & Co. (Tri-Party Agreement dated 8/31/05 to be repurchased at $2,600,255 collateralized by $2,637,000 Federal National Mortgage Association Bonds and U.S. Treasury Notes at a rate of 4.00%, due 11/15/12. Market Value of Collateral is $2,665,899.) 3.530%, 09/01/05 .............................. 2,600 2,600,000 ------------ TOTAL REPURCHASE AGREEMENTS (Cost $20,600,000) ........................ 20,600,000 ------------ TOTAL INVESTMENTS AT VALUE--100.0% (Cost $196,724,122) ........................... 196,724,122 ------------ VALUE ------------ OTHER ASSETS IN EXCESS OF LIABILITIES--0.0% .......................... $ 75,046 ------------ NET ASSETS (APPLICABLE TO 109,496,743 BEDFORD SHARES AND 87,306,099 SANSOM STREET SHARES )--100.0% ....................... $196,799,168 ============ NET ASSET VALUE, Offering and Redemption Price Per Share ($196,799,168 / 196,802,842) .................. $1.00 ===== NET ASSET VALUE, Offering and Redemption Price Per Bedford Share ($109,494,713 / 109,496,743) .................. $1.00 ===== NET ASSET VALUE, Offering and Redemption Price Per Sansom Street Share ($87,304,455 / 87,306,099) .................... $1.00 ===== ++ Variable Rate Obligations -- The interest rate shown is the rate as of August 31, 2005 and the maturity date shown is the next interest rate readjustment date or the maturity date. INVESTMENT ABBREVIATIONS IDR -- Industrial Development Revenue See Accompanying Notes to Financial Statements. 5 THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2005 Investment Income Interest ..................................................... $5,443,667 ---------- Expenses Investment advisory and administration fees .................. 935,881 Distribution and service fees ................................ 672,807 Printing fees ................................................ 64,011 Custodian fees ............................................... 60,690 Directors' and Officer's fees ................................ 42,052 Legal fees ................................................... 36,552 Regulatory administration fees ............................... 31,803 Transfer agent fees .......................................... 27,825 Audit fees ................................................... 21,795 Registration fees ............................................ 14,400 Insurance fees ............................................... 13,718 Service organization fees .................................... 4,013 Miscellaneous ................................................ 4,180 ---------- Total Expenses .......................................... 1,929,727 Less fees waived ............................................. (783,584) ---------- Net total expenses ...................................... 1,146,143 ---------- Net investment income ........................................... 4,297,524 ---------- Realized loss on investments .................................... (1,655) ---------- Net increase in net assets resulting from operations ............ $4,295,869 ========== See Accompanying Notes to Financial Statements. 6 THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 --------------- --------------- Increase (decrease) in net assets: Operations: Net investment income ........................................................ $ 4,297,524 $ 1,865,672 Net loss on investments ...................................................... (1,655) (2,019) ------------ ------------ Net increase in net assets resulting from operations ......................... 4,295,869 1,863,653 ------------ ------------ Distributions to shareholders: Dividends to shareholders from Net Investment Income: Bedford shares ............................................................. (1,591,534) (202,921) Sansom Street shares ....................................................... (2,705,990) (1,662,751) Distributions to shareholders from Net realized short-term gains: Bedford shares ............................................................. -- (1,077) Sansom Street shares ....................................................... -- (2,545) ------------ ------------ Total distributions to shareholders ...................................... (4,297,524) (1,869,294) ------------ ------------ Net capital share transactions (See Note 3) .................................... (16,571,764) (65,400,496) ------------ ------------ Total decrease in net assets ................................................... (16,573,419) (65,406,137) Net Assets: Beginning of year ............................................................ 213,372,587 278,778,724 ------------ ------------ End of year .................................................................. $196,799,168 $213,372,587 ============ ============
See Accompanying Notes to Financial Statements. 7 THE RBB FUND, INC. MONEY MARKET PORTFOLIO FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
THE BEDFORD CLASS --------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED AUGUST 31, 2005 AUGUST 31, 2004 AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2001 --------------- --------------- --------------- --------------- --------------- Net asset value, beginning of year ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income ................ 0.0162 0.0025 0.0046 0.0157 0.0460 Net gains/(losses) on securities ..... -- -- 0.0005 -- -- -------- -------- -------- -------- -------- Total from investment operations ....................... 0.0162 0.0025 0.0051 0.0157 0.0460 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) ............................ (0.0162) (0.0025) (0.0046) (0.0157) (0.0460) Distributions (from capital gains) ... -- -- (0.0005) -- -- -------- -------- -------- -------- -------- Total distributions ................ (0.0162) (0.0025) (0.0051) (0.0157) (0.0460) -------- -------- -------- -------- -------- Net asset value, end of year ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return ............................ 1.63% 0.25% 0.53% 1.59% 4.70% Ratios /Supplemental Data Net assets, end of year (000) ........ $109,495 $ 72,001 $ 80,406 $ 52,878 $676,964 Ratios of expenses to average net assets(a) ...................... .97% .94% .98% 1.00% 1.00% Ratios of net investment income to average net assets .............. 1.68% .24% .46% 1.75% 4.46% (a) Without the waiver of advisory, administration and transfer agent fees and without the reimbursement of certain operating expenses, the ratios of expenses to average net assets for the Bedford Class of the Money Market Portfolio would have been 1.23%, 1.34%, 1.30%, 1.25% and 1.19% for the years ended August 31, 2005, 2004, 2003, 2002 and 2001, respectively.
See Accompanying Notes to Financial Statements. 8 THE RBB FUND, INC. MONEY MARKET PORTFOLIO FINANCIAL HIGHLIGHTS (CONTINUED) (FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
THE SANSOM STREET CLASS --------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED AUGUST 31, 2005 AUGUST 31, 2004 AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2001 --------------- --------------- --------------- --------------- --------------- Net asset value, beginning of year ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income ................ 0.0239 0.0100 0.0114 0.0209 0.0511 Net gains/(losses) on securities ..... -- -- 0.0005 -- -- -------- -------- -------- -------- -------- Total net income from investment operations ....................... 0.0239 0.0100 0.0119 0.0209 0.0511 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) ............................ (0.0239) (0.0100) (0.0114) (0.0209) (0.0511) Distributions (from capital gains) ... -- -- (0.0005) -- -- -------- -------- -------- -------- -------- Total distributions ................ (0.0239) (0.0100) (0.0119) (0.0209) (0.0511) -------- -------- -------- -------- -------- Net asset value, end of year ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return ....................... 2.41% 1.00% 1.21% 2.11% 5.23% Ratios/Supplemental Data Net assets, end of year (000) ........ $ 87,304 $141,372 $198,373 $244,212 $201,632 Ratios of expenses to average net assets(a) ...................... .20% .20% .30% .49% .49% Ratios of net investment income to average net assets ................. 2.39% .98% 1.14% 2.10% 5.23% (a) Without the waiver of advisory fees and reimbursement of certain operating expenses, the ratios of expenses to average net assets for the Sansom Street Class of the Money Market Portfolio would have been .67%, .59%, .57%, .64% and .61% for the years ended August 31, 2005, 2004, 2003, 2002 and 2001, respectively.
See Accompanying Notes to Financial Statements. 9 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2005 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The RBB Fund, Inc. ("RBB" or "Company") 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 "1940 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 1940 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 seventeen active investment portfolios, including the Money Market Portfolio ("Portfolio"), which comprise the RBB family of funds. RBB has authorized capital of thirty billion shares of common stock of which 26.473 billion shares are currently classified into one hundred and three classes of Common Stock. The Portfolio has issued shares with a par value of $0.001. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into seven separate "families," six of which have begun investment operations. A) SECURITY VALUATION -- Securities held in the Portfolio are valued under the amortized cost method, which approximates current market value. Under this method, securities are valued at cost when purchased and thereafter assumes constant accretion of discount or amortization of premium is recorded until maturity of the security. Regular review and monitoring of the valuation is performed to ensure that cost continues to approximate market value and to avoid dilution or other unfair results to shareholders. The Portfolio seeks to maintain net asset value per share at $1.00. B) SECURITY TRANSACTIONS, INVESTMENT INCOME, AND EXPENSES -- Security 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. Interest income is accrued when earned. Certain expenses, such as distribution, transfer agency and printing, are class specific expenses and vary by class. Expenses not directly attributable to a specific portfolio or class are allocated based on relative net assets of each portfolio and class, respectively. 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 portfolios within the RBB family of funds (such as director or professional fees) are charged to all portfolios in proportion to their average net assets. C) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income are declared daily, recorded on the ex-date and paid monthly. All distributions from net investment income are taxed as ordinary income. Any net realized capital gains are distributed at least annually. Income subject to distributions and capital gain subject to distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. The following permanent differences as of August 31, 2005, primarily attributable to distribution reclass from ordinary income to short-term gain were reclassified to the following accounts: INCREASE DECREASE ACCUMULATED ACCUMULATED NET INVESTMENT NET REALIZED LOSS LOSS ---------------- -------------- Money Market Portfolio $831 $(831) 10 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2005 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D) FEDERAL INCOME TAXES -- No provision is made for federal income taxes. It is the Company's intention to have each portfolio continue to qualify for and elect the tax treatment applicable to regulated investment companies under the Internal Revenue Code and make the requisite distributions to its shareholders which will be sufficient to relieve it from Federal income and excise taxes. E) REPURCHASE AGREEMENTS -- Money market instruments may be purchased subject to the seller's agreement to repurchase them at an agreed upon date and price. The seller will be required on a daily basis to maintain the value of the securities subject to the agreement at not less than the repurchase price plus accrued interest. If the value of the underlying securities falls below 102% of the value of the repurchase price plus accrued interest, the Portfolio will require the seller to deposit additional collateral by the next Portfolio business day. In the event that the seller under the agreement defaults on its repurchase obligation or fails to deposit sufficient collateral, the Portfolio has the contractual right, subject to the requirements of applicable bankruptcy and insolvency laws, to sell the underlying securities and may claim any resulting loss from the seller. The agreements are conditioned upon the collateral being deposited under the Federal Reserve Book Entry System or with the Portfolio's custodian or a third party sub-custodian. F) 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. These estimates and assumptions 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 reporting period. Actual results could differ from those estimates. G) OTHER -- In the normal course of business, the Fund may enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and, therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote. NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Pursuant to Investment Advisory Agreements, BlackRock Institutional Management Corp. (the "Adviser" or "BIMC"), an indirect majority-owned subsidiary of The PNC Financial Services Group, Inc., serves as investment adviser and as administrator for the Portfolio. BIMC and PFPC Inc. ("PFPC") have entered into a delegation agreement on behalf of the Portfolio, wherein PFPC has agreed to perform Administration and Accounting services for an annual fee of ..10% of the average net assets of the Portfolio, paid out of the fee paid to BIMC. For its advisory services, BIMC is entitled to receive the following fees, computed daily and payable monthly, and based on the Portfolio's average daily net assets: PORTFOLIO ANNUAL RATE ------------------------- ---------------------------------------------- Money Market Portfolio .45% of first $250 million of net assets; .40% of next $250 million of net assets; .35% of net assets in excess of $500 million. 11 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2005 NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) BIMC may, at its discretion, voluntarily waive all or any portion of its advisory fee for the Portfolio. For each class of shares within the Portfolio, the net advisory fee charged to each class is the same on a relative basis. For the year ended August 31, 2005, advisory fees and waivers for the investment portfolio were as follows: GROSS NET ADVISORY ADVISORY FEE WAIVER FEE ---------- ----------- ---------- Money Market Portfolio $935,881 $(726,915) $208,966 As of August 31, 2005, the Portfolio owed BIMC $16,990 in advisory fees. The Funds will not pay BIMC at a later time for any amounts it may waive or any amounts that BIMC has assumed. For providing regulatory administrative services to RBB, PFPC is entitled to receive compensation as agreed to by the Company and PFPC. This fee is allocated among all funds in proportion to their net assets of the RBB funds. The Portfolio's portion of this fee for the period September 1, 2004 to August 31, 2005 was $31,803. The investment adviser/administrator may voluntarily waive and/or reimburse the Portfolio for the amount, if any, by which the total operating and management expenses exceed the expense cap. For the year ended August 31, 2005, the expense caps were as follows: PORTFOLIO CLASS OF SHARES EXPENSE CAP ---------- ----------------- ------------- Money Market Portfolio Bedford 0.97% Sansom Street 0.20% The Fund, on behalf of each class of shares within the investment portfolio, has adopted Distribution Plans pursuant to Rule 12b-1 under the 1940 Act (the "Plans"). The Fund has entered into a Distribution Contract with PFPC Distributors, Inc. ("PFPC Distributors"). PFPC Distributors is a wholly-owned subsidiary of PFPC Worldwide Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. The Plans provide for each class to make monthly payments, based on average net assets, to PFPC Distributors of up to .65% on an annualized basis for the Bedford Class and up to .05% on an annualized basis for the Sansom Street Class. For the year ended August 31, 2005, distribution fees paid to PFPC Distributors for each class were as follows:
GROSS NET DISTRIBUTION DISTRIBUTION FEE WAIVER FEE ---------------- ------------ ---------------- Money Market Portfolio Bedford Class $616,138 -- $616,138 Sansom Street Class 56,669 $(56,669) -- -------- -------- -------- Total Money Market Portfolio $672,807 $(56,669) $616,138 ======== ======== ========
12 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2005 NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) PFPC serves as the transfer and dividend disbursing agent for each class. Both PFPC Trust Co. and PFPC are wholly-owned subsidiaries of PFPC Worldwide Inc., an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. PFPC may, at its discretion, voluntarily waive all or any portion of its transfer agency fee for any class of shares. For the year ended August 31, 2005, transfer agency fees for each class of shares within the investment portfolio were as follows: TRANSFER AGENCY BASIS FEE POINTS --------------- -------- Money Market Portfolio Bedford Class $ 2,379 0.25 Sansom Street Class 25,446 2.25 ------- Total Money Market Portfolio $27,825 ======= PFPC Trust Co. provides certain custodial services to the Portfolio. As compensation for such custodial services, PFPC Trust Co. is entitled to receive the following fees, computed daily and payable monthly, and based on the Portfolio's average gross assets: PORTFOLIO ANNUAL RATE ----------------------- ------------------------------------------------ Money Market Portfolio .025% of first $50 million of gross assets; .020% of next $50 million of gross assets; .015% of gross assets in excess of $100 million. The Fund has entered into service agreements with banks affiliated with PNC who render support services to customers who are the beneficial owners of the Sansom Street Class in consideration of the payment of .10% of the daily net asset value of such shares. For the year ended August 31, 2005, service organization fees were $4,013 for the Money Market Portfolio. As of August 31, 2005, the Portfolio owed PFPC and its affiliates $71,817 for their services. 13 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2005 NOTE 3. CAPITAL SHARES Transactions in capital shares (at $1 per capital share) for each year were as follows:
FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 ----------------- ----------------- Shares sold: Bedford Class 442,206,980 386,514,072 Sansom Street Class 1,616,798,271 1,920,438,260 --------------- --------------- Total Shares Sold 2,059,005,251 2,306,952,332 Shares issued on reinvestment of dividends: Bedford Class 1,524,066 198,103 Sansom Street Class 135,455 77,190 --------------- --------------- Total Shares Reinvested 1,659,521 275,293 Shares repurchased: Bedford Class (406,236,164) (395,118,572) Sansom Street Class (1,671,000,372) (1,977,508,749) --------------- --------------- Total Shares Repurchased (2,077,236,536) (2,372,627,321) Refund of deposit of capital for intent of share purchase:* -- (800) --------------- --------------- Net decrease (16,571,764) (65,400,496) =============== =============== Bedford Shares authorized 1,500,000,000 1,500,000,000 =============== =============== Sansom Street Shares authorized 1,500,000,000 1,500,000,000 =============== =============== * This class of shares was never operational and is now closed.
NOTE 4. NET ASSETS At August 31, 2005, net assets consisted of the following: MONEY MARKET PORTFOLIO ------------ Paid-in capital $196,802,842 Accumulated net realized loss on investments (3,674) ------------ Total net assets $196,799,168 ============ 14 THE RBB FUND, INC. MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS (CONCLUDED) AUGUST 31, 2005 NOTE 5. FEDERAL INCOME TAX INFORMATION At August 31, 2005, Federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows:
FEDERAL TAX UNREALIZED UNREALIZED NET UNREALIZED COST APPRECIATION DEPRECIATION APPRECIATION -------------- -------------- -------------- ---------------- Money Market Portfolio $196,724,122 $ -- $ -- $ --
As of August 31, 2005, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM INCOME GAINS --------------- --------------- $149,562 $ -- At August 31, 2005, the Fund had capital loss carryforwards of $3,587 which expires August 31, 2013 and is 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, 2005, the Fund incurred post-October capital losses of $917. 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 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 ------------ ----------- ------- Money Market Portfolio 2005 $4,297,524 -- -- 2004 $1,865,672 -- -- 15 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of The RBB Fund, Inc.: We have audited the accompanying statement of net assets of Money Market Portfolio, a series of The RBB Fund, Inc. (the "Portfolio"), as of August 31, 2005 and the related statement of operations for the year then ended, the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The financial highlights of the Portfolio for the periods ended, August 31, 2001, August 31, 2002 and August 31, 2003 were audited by other auditors whose report, dated October 27, 2003, expressed an unqualified opinion on those financial statements and financial highlights. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Portfolio is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Portfolio's internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of August 31, 2005, by correspondence with the custodian and brokers. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Portfolio as of August 31, 2005, the results of its operations, the changes in its net assets, and its financial highlights for the respective stated period, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Philadelphia, Pennsylvania November 3, 2005 16 ADDITIONAL INFORMATION (UNAUDITED) 1. PROXY VOTING Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling the numbers shown below and on the Securities and Exchange Commission's website at http://www.sec.gov. Bedford (800) 533-7719 Sansom Street (888) 261-4073 2. QUARTERLY PORTFOLIO SCHEDULES The Company files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third fiscal quarter of each fiscal year (quarters ended November 30 and May 31) on Form N-Q. The Company's Form N-Q is available on the Securities and Exchange Commission's website at http://www.sec.gov and may be reviewed and copied at the Securities and Exchange Commission's Public Reference Room in Washington, D.C. Information on the operation of the Securities and Exchange Commission's Public Reference Room may be obtained by calling 1-800-SEC-0330. 3. APPROVAL OF INVESTMENT ADVISORY AGREEMENT As required by the 1940 Act, the Board of Directors (the "Board") of the Company, including all of the Directors who are not "interested persons" of the Company, as that term is defined in the 1940 Act (the "Independent Directors"), considered the renewal of the investment advisory and sub-advisory agreements between BIMC and the Company (each an "Advisory Agreement" and collectively the "Advisory Agreements") on behalf of the Portfolio at a meeting of the Board held on May 25, 2005. At this meeting, the Board approved the Advisory Agreements for an additional one-year term. The Board's decision to approve the Agreements reflects the exercise of its business judgment to continue the existing arrangement. In approving the Agreements, the Board considered information provided by the Adviser with the assistance and advice of counsel to the Independent Directors and the Company. In considering the renewal of and approval of the Advisory Agreements, the Directors took into account all the materials provided prior to and during the meeting, the presentations made during the meeting, and the discussions during the meeting. The Directors discussed the materials from the Adviser mailed in advance of the meeting that addressed most, if not all, of the factors listed below. The Adviser also made a presentation during the meeting and responded to questions from the Directors. Among other things, the Directors considered (i) the nature, extent, and quality of the Adviser's services provided to the Portfolio; (ii) descriptions of the experience and qualifications of the personnel providing those services; (iii) the Adviser's investment philosophies and processes; (iv) the Adviser's assets under management and client descriptions; (v) the Adviser's soft dollar commission and trade allocations policies, including information on the types of research and services obtained in connection with soft dollar commissions; (vi) the current and proposed advisory fee arrangements with the Company and other similarly managed clients; (vii) compliance procedures; (viii) the Adviser's financial information, insurance coverage and profitability analysis related to providing advisory services to the Portfolio; (ix) the extent to which economies of scale are relevant to the Portfolio; (x) a report comparing the Portfolio's proposed or current advisory fees and expenses to those of its peer group; and (xi) a report comparing the performance of the Portfolio to the performance of its applicable benchmark index and peer group. No one factor was determinative in the Board's consideration of the Advisory Agreements. 17 ADDITIONAL INFORMATION (CONCLUDED) (UNAUDITED) The Directors then met in executive session with counsel to discuss and consider information presented in connection with the continuation of the Advisory Agreements as well as the Directors' responsibilities and duties in approving the Agreements. During the course of its deliberations, the Directors, meeting in executive session, reached the following conclusions, among others, regarding BIMC and the Advisory and Sub-Advisory Agreements, with respect to the Portfolio. The Directors considered that the Portfolio's gross advisory fees for the Bedford Class and Sansom Class were higher in comparison to that of their peer group average and that both Classes' net advisory fees after waivers were significantly less when compared to their peer group average. It was noted that the fees BIMC charges for managing assets for other clients are lower than the fees charged to the Portfolio. The Board noted that BIMC has agreed to voluntarily waive its advisory fee and reimburse expenses to limit annual operating expenses of the Portfolio. In addition, the Directors considered the Portfolio's gross and net expense ratios, which were higher than ratios for the Bedford Class peer group average and lower than the ratios for the Sansom Class peer group average. The Directors noted the reasons for the Bedford Class' higher expense ratio, including, among other reasons, that last spring, Bear Stearns liquidated its position in the Bedford Class, which in turn decreased the Class' overall assets. The Directors reviewed the Portfolio's performance, discussing that the performance for the Bedford Class was below that of its peer group composite for the year-to-date and one year periods ended March 31, 2005, while the performance of the Sansom Class exceeded that of its peer group composite for the same period. The Directors then determined that the nature, extent and quality of services provided by BIMC in advising the Portfolio was satisfactory; the profits earned by BIMC seemed reasonable; and the benefits derived by BIMC from managing the Portfolio, including the method BIMC uses to select brokers, seemed reasonable. The Directors also discussed economies-of-scale associated with asset growth and decline of each Class of the Portfolio. Based on all of the information presented to the Board and its consideration of relevant factors, the Board concluded that the fees paid to the Adviser by the Portfolio were reasonable, and in the exercise of its business judgment, determined that BIMC's Advisory and Sub-Advisory Agreements be continued for another one-year period ending August 16, 2006. 18 THE RBB FUND, INC. MONEY MARKET PORTFOLIO FUND MANAGEMENT (UNAUDITED) The business and affairs of the Company are managed under the direction of the Company's Board of Directors. The Company is organized under and managed pursuant to Maryland law. The Directors and executive officers of the Company, their dates of birth, business addresses and principal occupations during the past five years are set forth below. The Statement of Additional Information ("SAI") includes additional information about the Directors and is available without charge, upon request, by calling (800) 533-7719 for Bedford and (888) 261-4073 for Sansom Street.
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN OTHER TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST OVERSEEN BY HELD BY AND DATE OF BIRTH WITH FUND TIME SERVED 1 5 YEARS DIRECTOR* DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS - ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director 1988 to present Since 1969, Director and Vice Chairman, 17 Director, Comcast Corporation Comcast Corporation (cable television Comcast 1500 Market Street, 35th Fl. and communications); Director, NDS Group Corporation. Philadelphia, PA 19102 PLC (provider of systems and DOB: 7/16/33 applications for digital pay TV). - ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director 1988 to present Since 2000, Vice President, Fox Chase 17 None Fox Chase Cancer Center Cancer Center (biomedical research and 333 Cottman Avenue medical care); prior to 2000, Philadelphia, PA 19111 Executive Vice President, Fox Chase DOB: 12/06/35 Cancer Center. - ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director 1991 to present Since December 2000, Director, Gabelli 17 None 106 Pierrepont Street Group Capital Partners, L.P. (an Brooklyn, NY 11201 investment partnership); Chief Operating DOB: 5/21/48 Officer and member of the Board of Directors of Outercurve Technologies (wireless 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; Prior to 1997, Managing Director of Warburg Pincus Asset Management, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director 1991 to present Since 1974, Chairman, Director and 17 Director, Moyco Moyco Technologies, Inc. President, Moyco Technologies, Inc. Technologies, 200 Commerce Drive (manufacturer of precision coated and Inc. Montgomeryville, PA 18936 industrial abrasives); Since 1999, DOB: 3/24/34 Director, Pennsylvania Business Bank. - ------------------------------------------------------------------------------------------------------------------------------------ * Each Director oversees seventeen portfolios of the Company that are currently offered for sale. The Company is authorized to offer two additional portfolios that had not commenced operations as of the date of this report. 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified.
19 THE RBB FUND, INC. MONEY MARKET PORTFOLIO FUND MANAGEMENT (CONTINUED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN OTHER TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST OVERSEEN BY HELD BY AND DATE OF BIRTH WITH FUND TIME SERVED 1 5 YEARS DIRECTOR* DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS 2 - ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director 1991 to present Since July 2002, Senior Vice President 17 None Oppenheimer & Company, Inc. and prior thereto, Executive Vice 200 Park Avenue President of Oppenheimer & Company, Inc. New York, NY 10166 (formerly Fahnestock & Co., Inc., a DOB:4/16/38 registered broker-dealer). - ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director 2002 to present Director of PFPC Inc. from January 1987 17 Director, 400 Bellevue Parkway to April 2002; Chairman and Chief Cornerstone Wilmington, DE 19809 Executive Officer of PFPC Inc. until Bank DOB: 9/25/38 April 2002; Executive Vice President of PNC Bank, National Association from October 1981 to April 2002; Director of PFPC International Ltd. (financial services) from August 1993 to April 2002; Director of PFPC International (Cayman) Ltd. (financial services) from September 1996 to April 2002; Governor of the Investment Company Institute (investment company industry trade organization) from July 1996 to January 2002; Director of PNC Asset Management, Inc. (investment advisory) from September 1994 to March 1998; Director of PNC National Bank from October 1995 to November 1997; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984, Director of Cornerstone Bank since March 2004. - ------------------------------------------------------------------------------------------------------------------------------------ * Each Director oversees seventeen portfolios of the Company that are currently offered for sale. The Company is authorized to offer two additional portfolios that had not commenced operations as of the date of this report. 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified. 2 Messrs. Carnall and Sablowsky are considered "interested persons" of the Company as that term is defined in the 1940 Act. Mr. Carnall is 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. Sablowsky is considered an "interested Director" of the Company by virtue of his position as an officer of a registered broker-dealer.
20 THE RBB FUND, INC. MONEY MARKET PORTFOLIO FUND MANAGEMENT (CONCLUDED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN OTHER TERM OF OFFICE FUND COMPLEX DIRECTORSHIPS NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST OVERSEEN BY HELD BY AND DATE OF BIRTH WITH FUND TIME SERVED 5 YEARS DIRECTOR DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS - ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President 1991 to present Certified Public Accountant; Vice N/A N/A 400 Bellevue Parkway and and Chairman of the Board, Fox Chase Cancer 4th Floor Treasurer 1988 to present Center; Trustee Emeritus, Pennsylvania Wilmington, DE 19809 School for the Deaf; Trustee Emeritus, DOB: 6/29/24 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, President since 2002, Treasurer since 1981 and Chief Compliance Officer since September 2004 of Chestnut Street Exchange Fund; and Director of the Bradford Funds, Inc. from 1996 to 2000. - ------------------------------------------------------------------------------------------------------------------------------------ Tina M. Payne Secretary 2005 to present Since 2003, Vice President and Associate N/A N/A 301 Bellevue Parkway Counsel, PFPC Inc. (financial services 2nd Floor company); Associate, Stradley, Ronon, Wilmington, DE 19809 Stevens & Young, LLC (law firm) from 2001 DOB: 5/19/74 to 2003. - ------------------------------------------------------------------------------------------------------------------------------------ Salvatore Faia, Esquire, CPA Chief 2004 to present President, Vigilant Compliance Services, N/A N/A Vigilant Compliance Compliance Since 2004. Senior Legal Counsel, PFPC 186 Dundee Drive, Suite 700 Officer Inc. from 2002 to 2004; Chief Legal Williamstown, NJ 08094 Counsel, Corviant Corporation (Investment DOB: 12/25/62 Adviser, Broker/Dealer and Service Provider to Investment Advisers and Separate Accountant Providers) from 2001 to 2002; Partner, Pepper Hamilton LLP (law firm) from 1997 to 2001. - ------------------------------------------------------------------------------------------------------------------------------------
21 [THIS PAGE INTENTIONALLY LEFT BLANK.] [THIS PAGE INTENTIONALLY LEFT BLANK.] INVESTMENT ADVISER BlackRock Institutional Management Corporation 100 Bellevue Parkway Wilmington, DE 19809 TRANSFER AGENT PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 DISTRIBUTOR PFPC Distributors, Inc. 760 Moore Road King of Prussia, PA 19406 CUSTODIAN PFPC Trust Company 8800 Tinicum Blvd. Suite 200 Philadelphia, PA 19153 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Deloitte & Touche LLP 1700 Market Street Philadelphia, PA 19103-3984 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 Portfolio. It is not authorized for distribution unless preceded or accompanied by a prospectus for the Fund. [LOGO OMITTED] n/i numeric investors family of funds [LOGO OMITTED] n/i numeric investors Emerging Growth Fund [LOGO OMITTED] n/i numeric investors Growth Fund [LOGO OMITTED] n/i numeric investors Mid Cap Fund [LOGO OMITTED] n/i numeric investors Small Cap Value Fund Annual Report August 31, 2005 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND ADVISER'S REPORT (UNAUDITED) Dear Fellow Shareholder: We are delighted to inform you that all four of the n/i numeric investors mutual funds experienced positive absolute returns and positive benchmark-relative returns during the fiscal year ended August 2005. This was a fruitful period for our shareholders, our Mid Cap Fund had the largest absolute return, driven by this segment of the market's exceptional return, plus the value-added of our quantitative investment process. Examining the equity market's return over the full year reveals that a majority of the return occurred during the first six months of the period, with the second half accounting for about one-quarter of the full year's return. Investors became increasingly comfortable that the economic expansion had become broad based and sustainable. In addition, the US presidential election overhang, with all its uncertainty, was lifted. November in particular proved to be among the best months for equity returns over this twelve-month period. There was some concern regarding the onset of inflation, but these fears were allayed by the "measured pace policy" of the US Federal Reserve. Specifically, the Fed tightened monetary policy by raising the Fed Funds rate eight separate times, each by 25bps. This tightening action brought the Fed Funds rate from 1.5% to 3.5% over the course of the year. Perhaps most importantly, the market incorporated four quarters worth of healthy earnings results, which in aggregate generally met or exceeded analysts' forecasts. The sustained earnings growth further convinced investors that the economic expansion has worked its way down the corporate income statement. Although the equity market posted positive returns during the second half of the fiscal year, the returns were achieved with some down-side volatility. There were several periods where risk aversion on the part of investors ran high, leading to a sell-off of equities. The pull back in equities was often prompted by some weaker than expected economic data release, such as weaker retail sales or lower than expected GDP values. The sell-off was particularly acute for the smaller capitalization and growth style issues, while the traditional safe-haven investments such as US Treasury bonds rallied. In fact, over this one year period, the yield on a 10-year Treasury bond actually declined despite the significant increase in short-maturity yields following the Fed's rate hikes. A disconcerting issue for central bankers is that the long-short maturity yield spread has compressed with every rate hike, standing at only 20bps at the end of August. Given the current trajectory, we believe the yield curve may be inverted by calendar year end; which is traditionally a harbinger for a recession. 1 Lastly, it is worth mentioning that the price of oil has captured the attention of many investors over the past year, with a resulting inverse impact on equity returns. During the fiscal year, the price of oil has appreciated over 63%, but only after following a circuitous route with significant volatility. Nonetheless, the US equity markets experienced sizable positive returns over the period. We believe the meteoric rise in oil prices has not dimmed equity returns for two primary reasons. First, this increase in prices is driven more by an ever increasing demand, particularly from developing nations, than from a supply shock like the OPEC embargo of the 1970's. The latter case is fundamentally disruptive to economic growth while the former is actually a symptom of robust economic growth. Second, while the rising cost of oil certainly represents a burden for the consumer, the fact remains that our economy in aggregate has become far less dependent on oil over the past 25 years. For this reason alone the impact of higher oil prices is somewhat muted relative to past occurrences. Inspecting the market's return in greater detail over the past fiscal year reveals that investors demonstrated a significant preference for smaller and mid-sized companies over their large and mega-cap counterparts. Specifically, using the Russell style indices, mega-caps and large caps as measured by the Russell Top 200(R) Index and the Russell 1000(R) Index were up 9.9% and 14.6%, respectively. This is to be compared with the 27.5% and 23.1% return for the Russell Mid-Cap(R) Index and the Russell 2000(R) Index, respectively. The value-growth spread over the past year was very narrow for both mid-cap and small cap stocks. Value stocks outpaced growth stocks by 1.6% in the mid-cap domain, while growth out-performed value by 0.9% in the small cap domain. In the large cap space, the spread was more significant at about 4.5% in favor of value over growth. As you will recall, we construct our portfolios using a bottom-up stock selection process that is based on our proprietary quantitative stock-selection models. These models allow us to formulate a view on the fair price for a stock, considering its growth and stability, and take into account analysts' estimate revisions, and the quality of a company's earnings. In addition, while always seeking to have strong absolute performance, we are primarily focused on the benchmark-relative return of each Fund. For this reason, we seek to mitigate unnecessary risks by managing portfolios that are effectively economic-sector neutral with respect to their benchmark. Namely, we seek to maintain sector weights that are only a few percentage points away from their respective benchmark sector weights. Furthermore, we try to avoid large stock-specific risk by broadly diversifying the portfolio across many stocks and by preventing any one holding from exceeding approximately 2% of a Fund's overall weight. An attribution analysis of each Fund's return over the past year reveals that our proprietary Estrend model, which utilizes an analysts' earnings revision trend following approach, added significant value across the Fund family. We believe that this model tends to work well in periods of stable economic activity, much like the recent period. In a similar fashion, our Quality of Earnings model also added value across our Fund family, with the exception of our Small Cap Value Fund where it lost value. This overall efficacy for our Quality of Earnings model represents a reversal of fortune from the first half of the fiscal year. If you recall, at that point it was actually losing value across the Fund family. We postulated then that an investor focus on a firm's quality of earnings would return; indeed, it has. The one laggard has been our Fair Value model, which lost value across the Fund family except for in the Small Cap Value Fund, where it was beneficial. The lack of efficacy for the Fair Value model is not altogether surprising given that the valuation disparities across the market have compressed significantly over the past five years. The fact is, value based strategies have enjoyed a tremendous period of success following the equity bubble's excesses. Our Short Interest model has also made positive contributions to the returns of our funds, with more significant value added coming in the Emerging Growth and Mid Cap Funds. Lastly, the addition of cash flow has generally augmented the performance of our Fair Value model. 2 The following table summarizes which economic sectors made the largest positive contribution to the benchmark-relative performance for each Fund during the past fiscal year.
FUND LARGEST CONTRIBUTING SECTORS SECTOR'S RETURN - ------------------------------------------------------------------------------------------- Emerging Growth Industrials 35.4% Consumer Non-Cyclicals 29.2% Growth Industrials 34.2% Consumer Cyclicals 27.7% Mid Cap Technology 35.7% Consumer Non-Cyclicals 36.3% Small Cap Value Real Estate Investment Trusts 25.0% Technology 32.0%
All nine economic sectors, in each of the four Funds, had positive absolute returns during the past year. Examining the return at the individual security level for the Emerging Growth Fund, the medical HMO, Wellcare Health Plans (+56bps contribution to the Fund's total return), and the transportation services provider, Hub Group (+58bps), were among the largest positive contributors to the Fund's relative return during the year. The largest detractors included Catapult Communications (-39bps), the telecom equipment company, and Volterra Semiconductor (-36bps). The Growth Fund's largest positive contributors to the relative return include the stock exchange, Nasdaq Stock Market (+55bps), and the medical diagnostic equipment company, Immucor (+58bps). On the downside, Doral Financial (-65bps), the mortgage bank, and Volterra Semiconductor (-35bps), were among the largest detractors to return. Reviewing the Mid Cap Fund, the largest contributors to the relative return included the oil and gas exploration and production company, Ultra Petroleum Corp. (+72bps), and the wireless communication tower company, Crown Castle International Corp. (+66bps). The largest detractors included Medicis Pharmaceutical Corp., Class A (-32bps) and Tessera Technologies Inc. (-29bps), the semiconductor equipment manufacturer. Lastly, for the Small Cap Value Fund, the largest positive contributors included the diversified industrial company, Walter Industries (+97bps), and the oil and gas exploration and development company, Vintage Petroleum (+84bps). The holdings which most negatively impacted the relative return included Doral Financial (-34bps), the mortgage bank, and Agilysys Inc. (-30bps), the computer systems distributor and re-seller. 3 Thank you for being a shareholder in the n/i numeric investors family of funds. We are grateful for your business and for the confidence you have placed in us to manage a portion of your wealth. We hope that you are pleased with the results of the past fiscal year, as we are pleased in creating value across all of our Funds. Sincerely, /s/ Langdon B. Wheeler /s/ Joseph Schirripa Langdon B. Wheeler, CFA Joseph Schirripa, CFA President and Chief Investment Officer Co-Portfolio Manager Numeric Investors LLC n/i Mid Cap Fund - ---------- Small-cap funds typically carry additional risks, since smaller companies generally have a higher risk of failure than well-established larger companies. Historically, stocks of smaller companies have experienced a greater degree of market volatility than stocks on average. Mid-sized company stocks are generally more volatile than large company stocks. Foreign securities may involve additional risks, social and political instability, reduced market liquidity and currency volatility. Portfolio holdings may be subject to change at any time. In addition to historical information, this report contains forward-looking statements that may concern, among other things, the domestic market, industry and economic trends and developments and government regulation and their potential impact on each Fund's investment portfolio. These statements are subject to risks and uncertainties and actual trends, developments and regulations in the future and their impact on the Funds could be materially different from those projected, anticipated or implied. The Funds have no obligation to update or revise forward-looking statements. Funds are distributed by PFPC Distributors, Inc., 760 Moore Road, King of Prussia, PA 19406. To be preceded or accompanied by a prospectus. 4 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND (unaudited) Comparison of Change in Value of $10,000 Investment in N/I NUMERIC INVESTORS Emerging Growth Fund vs. Russell 2000(R) Growth Index [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: Emerging Growth Fund Russell 2000(R) Growth Index 6/3/96 $10,000.00 $10,000.00 8/31/96 9,725.00 8,815.78 11/30/96 11,392.00 9,116.86 2/28/97 11,426.00 8,951.58 5/31/97 12,194.00 9,459.02 8/31/97 15,405.00 10,588.80 11/30/97 15,547.00 10,490.90 2/28/98 16,354.00 11,272.10 5/31/98 16,188.60 10,958.10 8/31/98 12,209.80 7,803.93 11/30/98 16,225.30 9,745.00 2/28/99 16,109.00 10,089.00 5/31/99 17,588.80 11,372.80 8/31/99 19,058.10 11,167.80 11/30/99 20,974.70 12,908.80 2/29/00 27,971.00 18,544.10 5/31/00 24,620.10 13,612.10 8/31/00 29,429.10 15,531.90 11/30/00 22,517.80 11,099.70 2/28/01 22,942.30 10,987.00 5/31/01 24,381.90 11,470.50 8/31/01 23,496.00 10,105.00 11/30/01 23,034.60 10,065.20 2/28/02 23,828.20 9,644.14 5/31/02 25,378.60 9,655.97 8/31/02 21,797.90 7,475.47 11/30/02 22,296.30 8,008.63 2/28/03 20,875.10 7,060.34 5/31/03 24,954.10 8,729.66 8/31/03 29,180.80 10,084.60 11/30/03 33,555.00 11,027.00 2/29/04 36,748.00 11,640.00 5/31/04 35,186.00 11,328.00 8/31/04 32,890.00 10,425.00 11/30/04 38,235.00 12,222.00 2/28/05 39,105.00 12,256.00 5/31/05 37,621.00 11,825.00 8/31/05 41,460.00 12,876.00 - ---------- The chart assumes a hypothetical $10,000 initial investment in the Fund on June 3, 1996 (commencement of operations) and reflects Fund expenses.Investors should note that the Fund is an aggressively managed mutual fund while the index is unmanaged, does not incur expenses and is not available for investment. ------------------------------------------------ Value on August 31, 2005 --------------- Emerging Growth Fund $41,460 Russell 2000(R) Growth Index $12,876 ------------------------------------------------
- ------------------------------------------------------------------------------------- Average Annual Total Returns at August 31, 2005 ----------------------------------------------- ONE YEAR FIVE YEARS SINCE INCEPTION(1) -------- ---------- ------------------ Emerging Growth Fund 26.06% 7.10% 16.62% Russell 2000(R) Growth Index 23.51% (3.68)% 2.79% - -------------------------------------------------------------------------------------
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. NUMERIC INVESTORS LLC(R) WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE (CALL 1-800-348-5013 OR VISIT OUR WEB SITE AT WWW.NUMERIC.COM). (1) For the period June 3, 1996 (commencement of operations) through August 31, 2005. 5 [LOGO OMITTED] n/i numeric investors family of funds GROWTH FUND (unaudited) Comparison of Change in Value of $10,000 Investment in N/I NUMERIC INVESTORS Growth Fund vs. Russell 2500(R) Growth Index [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: Growth Fund Russell 2500 Growth Index 6/3/96 $10,000.00 $10,000.00 8/31/96 9,867.00 9,144.23 11/30/96 10,925.00 9,672.72 2/28/97 10,575.00 9,572.28 5/31/97 11,384.00 10,059.70 8/31/97 13,585.00 11,326.70 11/30/97 13,402.00 11,195.70 2/28/98 13,754.00 11,953.80 5/31/98 13,111.50 11,707.00 8/31/98 9,640.78 8,434.27 11/30/98 11,930.90 10,489.80 2/28/99 12,039.70 10,872.50 5/31/99 13,385.20 12,413.50 8/31/99 14,730.60 12,738.50 11/30/99 16,998.70 15,044.10 2/29/00 23,591.20 22,342.20 5/31/00 20,132.70 16,929.20 8/31/00 24,027.40 19,890.30 11/30/00 16,929.40 14,128.40 2/28/01 15,982.40 13,511.00 5/31/01 16,579.80 14,248.80 8/31/01 15,268.50 12,599.30 11/30/01 15,079.10 12,683.20 2/28/02 15,254.00 12,016.00 5/31/02 15,807.60 11,920.20 8/31/02 13,214.30 9,477.83 11/30/02 13,287.10 10,126.10 2/28/03 12,471.20 9,062.90 5/31/03 14,714.90 11,041.50 8/31/03 16,798.30 12,664.10 11/30/03 19,289.00 13,865.00 2/29/04 20,834.00 14,593.00 5/31/04 19,959.00 14,315.00 8/31/04 18,925.00 13,244.00 11/30/04 21,941.00 15,178.00 2/28/05 22,392.00 15,649.00 5/31/05 21,722.00 15,354.00 8/31/05 23,427.00 16,589.00 - ---------- The chart assumes a hypothetical $10,000 initial investment in the Fund on June 3, 1996 (commencement of operations) and reflects Fund expenses.Investors should note that the Fund is an aggressively managed mutual fund while the index is unmanaged, does not incur expenses and is not available for investment. ------------------------------------------------ Value On August 31, 2005 --------------- Growth Fund $23,427 Russell 2500(R) Growth Index $16,589 ------------------------------------------------
- ------------------------------------------------------------------------------------- Average Annual Total Returns at August 31, 2005 ----------------------------------------------- ONE YEAR FIVE YEARS SINCE INCEPTION(1) -------- ---------- ------------------ Growth Fund 23.79% (0.50)% 9.64% Russell 2000(R) Growth Index 25.25% (3.57)% 5.62% - -------------------------------------------------------------------------------------
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. NUMERIC INVESTORS LLC(R) WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE (CALL 1-800-348-5013 OR VISIT OUR WEB SITE AT WWW.NUMERIC.COM). (1) For the period June 3, 1996 (commencement of operations) through August 31, 2005. 6 [LOGO OMITTED] n/i numeric investors family of funds MID CAP FUND (unaudited) Comparison of Change in Value of $10,000 Investment in N/I NUMERIC INVESTORS Mid Cap Fund vs. S&P MidCap 400(R) Index and Russell MidCap(R) Index [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: Mid Cap Fund Russell MidCap(R) Index S&P MidCap 400(R) Index 6/3/96 $10,000.00 $10,000.00 $10,000.00 8/31/96 9,633.00 9,680.00 9,713.02 11/30/96 11,158.00 10,863.00 10,738.20 2/28/97 11,334.00 11,138.00 11,061.90 5/31/97 12,397.00 11,728.00 11,814.80 8/31/97 14,364.00 12,978.00 13,333.30 11/30/97 14,732.00 13,500.00 13,687.60 2/28/98 16,232.00 14,676.00 15,103.50 5/31/98 16,684.70 14,934.00 15,350.20 8/31/98 13,076.40 12,112.00 12,084.40 11/30/98 15,492.00 14,427.00 15,108.60 2/28/99 16,127.80 14,738.00 15,421.30 5/31/99 18,002.70 16,276.00 17,177.30 8/31/99 18,518.00 15,962.00 17,105.10 11/30/99 19,355.20 16,595.00 18,336.10 2/29/00 20,491.50 18,800.00 20,198.70 5/31/00 21,665.30 18,436.00 20,862.10 8/31/00 24,000.40 20,567.00 23,903.20 11/30/00 20,722.90 18,164.00 21,204.10 2/28/01 20,783.10 18,651.00 22,003.80 5/31/01 21,521.10 19,344.00 23,141.70 8/31/01 19,819.30 17,898.00 21,962.50 11/30/01 19,243.10 17,734.00 21,576.40 2/28/02 20,408.90 18,141.00 22,601.30 5/31/02 21,181.10 18,644.00 23,697.50 8/31/02 18,137.90 15,783.00 19,935.10 11/30/02 17,811.80 16,094.00 20,229.70 2/28/03 16,683.30 14,948.00 18,383.50 5/31/03 19,489.30 17,674.00 21,529.90 8/31/03 21,166.80 19,241.00 23,600.60 11/30/03 23,119.00 21,025.00 25,867.00 2/29/04 24,788.00 22,766.00 27,519.00 5/31/04 24,573.00 22,478.00 27,284.00 8/31/04 24,266.00 22,187.00 26,533.00 11/30/04 27,656.00 24,973.00 29,410.00 2/28/05 28,295.00 26,176.00 30,864.00 5/31/05 28,635.00 26,345.00 31,100.00 8/31/05 31,188.00 28,280.00 33,117.00 - ---------- The chart assumes a hypothetical $10,000 initial investment in the Fund on June 3, 1996 (commencement of operations) and reflects Fund expenses.Investors should note that the Fund is an aggressively managed mutual fund while the indices are unmanaged, does not incur expenses and are not available for investment. ------------------------------------------------ Value on August 31, 2005 --------------- Mid Cap Fund $31,188 Russell MidCap(R) Index 2 $28,280 S&P MidCap 400(R) Index 2 $33,117 ------------------------------------------------
- ------------------------------------------------------------------------------------- Average Annual Total Returns at August 31, 2005 ----------------------------------------------- ONE YEAR FIVE YEARS SINCE INCEPTION(1) -------- ---------- ------------------ Mid Cap Fund 28.52% 5.38% 13.08% Russell MidCap(R) Index 2 27.47% 6.58% 11.90% S&P MidCap 400(R) Index 2 24.81% 6.73% 13.81% - -------------------------------------------------------------------------------------
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. NUMERIC INVESTORS LLC(R) WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE (CALL 1-800-348-5013 OR VISIT OUR WEB SITE AT WWW.NUMERIC.COM). (1) FOR THE PERIOD JUNE 3, 1996 (COMMENCEMENT OF OPERATIONS) THROUGH AUGUST 31, 2005. (2) THE ADVISER HAS ELECTED TO CHANGE THE BENCHMARK INDEX FROM THE S&P MIDCAP 400 (R) INDEX TO THE RUSSELL MIDCAP (R) INDEX BECAUSE THE RUSSELL MIDCAP(R) INDEX MORE APPROPRIATELY REFLECTS THE TYPES OF SECURITIES HELD IN THE FUND AND PROVIDES THE BEST COMPARATIVE PERFORMANCE INFORMATION. 7 [LOGO OMITTED] n/i numeric investors family of funds SMALL CAP VALUE FUND (unaudited) Comparison of Change in Value of $10,000 Investment in N/I NUMERIC INVESTORS Small Cap Value Fund vs. Russell 2000(R) Value IndeX [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: Small Cap Value Fund Russell 2000(R) Value Index 11/30/98 ** $10,000.00 $10,000.00 02/28/99 ** 9,383.33 9,349.65 05/31/99 ** 10,866.70 10,430.10 08/31/99 ** 10,716.70 10,165.60 11/30/99 ** 10,044.40 9,813.83 02/28/2000 ** 9,353.96 10,451.90 05/31/2000 ** 10,772.70 10,401.40 08/31/2000 ** 12,210.30 11,556.10 11/30/2000** 12,503.30 11,216.70 02/28/2001** 14,560.00 12,747.20 05/31/2001** 15,975.90 13,460.70 08/31/2001** 16,846.40 13,640.90 11/30/2001** 16,688.30 13,346.80 02/28/2002** 19,145.20 14,440.20 05/31/2002** 21,568.00 15,535.60 08/31/2002** 19,088.60 12,877.10 11/30/2002** 18,159.80 13,105.60 02/28/2003** 17,396.20 11,782.60 05/31/2003** 20,586.40 14,370.90 08/31/2003** 23,003.90 15,926.00 11/30/03 26,020.00 17,681.00 2/29/04 28,516.00 19,321.00 5/31/04 27,351.00 18,799.00 8/31/04 27,941.00 19,030.00 11/30/04 32,166.00 21,873.00 2/28/05 33,373.00 21,957.00 5/31/05 32,595.00 21,639.00 8/31/05 35,309.00 23,332.00 - ---------- The chart assumes a hypothetical $10,000 initial investment in the Fund on November 30, 1998 (commencement of operations) and reflects Fund expenses.Investors should note that the Fund is an aggressively managed mutual fund while the index is unmanaged, does not incur expenses and is not available for investment. ------------------------------------------------ Value on August 31, 2005 --------------- Small Cap Value Fund $35,309 Russell 2000(R) Value Index $23,332 ------------------------------------------------
- ------------------------------------------------------------------------------------- Average Annual Total Returns at August 31, 2005 ----------------------------------------------- ONE YEAR FIVE YEARS SINCE INCEPTION(1) -------- ---------- ------------------ Small Cap Value Fund 26.37% 23.66% 20.55% Russell 2000(R) Value Index 22.61% 15.09% 13.45% - -------------------------------------------------------------------------------------
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. NUMERIC INVESTORS LLC(R) WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE (CALL 1-800-348-5013 OR VISIT OUR WEB SITE AT WWW.NUMERIC.COM). (1) For the period November 30, 1998 (commencement of operations) through August 31, 2005. 8 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND FUND EXPENSE EXAMPLES (UNAUDITED) As a shareholder of the Fund(s), you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees, and other expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund(s) and to compare these costs with the ongoing costs of investing in other mutual funds. These examples are based on an investment of $1,000 invested at the beginning of the period and held for the period from March 1, 2005 through August 31, 2005. ACTUAL EXPENSES The first line of the accompanying tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the accompanying tables provides information about hypothetical account values and hypothetical expenses based on your Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the accompanying tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. 9 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND FUND EXPENSE EXAMPLES (UNAUDITED) (CONCLUDED)
EMERGING GROWTH FUND ------------------------------------------------------------------------- BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* --------------- ----------------- --------------- Actual $1,000.00 $1,060.20 $6.13 Hypothetical (5% return before expenses) 1,000.00 1,019.18 6.02 GROWTH FUND ------------------------------------------------------------------------- BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* --------------- ----------------- --------------- Actual $1,000.00 $1,046.20 $5.42 Hypothetical (5% return before expenses) 1,000.00 1,019.84 5.36 MID CAP FUND ------------------------------------------------------------------------- BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* --------------- ----------------- --------------- Actual $1,000.00 $1,102.30 $6.52 Hypothetical (5% return before expenses) 1,000.00 1,018.92 6.28 SMALL CAP VALUE FUND ------------------------------------------------------------------------- BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* --------------- ----------------- --------------- Actual $1,000.00 $1,058.00 $6.07 Hypothetical (5% return before expenses) 1,000.00 1,019.23 5.97
*Expenses are equal to the Funds' annualized expense ratios in the table below, which include waived fees, multiplied by the number of days (184) in the most recent fiscal half-year, then divided by 365 to reflect the one-year half period. EXPENSE RATIO --------------- Emerging Growth Fund 1.18% Growth Fund 1.05% Mid Cap Fund 1.23% Small Cap Value Fund 1.17% 10 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND PORTFOLIO HOLDINGS SUMMARY TABLE AUGUST 31, 2005 - ------------------------------------------------------------------------------- SECURITY TYPE/ % OF VALUE INDUSTRY CLASSIFICATION NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------- COMMON STOCKS Semiconductors ................................ 6.3% $ 9,819,647 Medical Instruments & Supplies ................ 4.9 7,608,079 Oil & Gas Field Exploration ................... 4.9 7,596,117 Biotech ....................................... 4.6 7,250,816 Computer Software ............................. 4.6 7,162,103 Machinery ..................................... 4.5 7,011,147 Retail - Specialty ............................ 4.3 6,760,436 Telecommunications Equipment & Services ................................. 3.7 5,841,447 Medical & Medical Services .................... 3.5 5,499,792 Health Care ................................... 3.0 4,749,734 Apparel ....................................... 2.8 4,406,365 Pharmaceuticals ............................... 2.7 4,290,443 Transportation ................................ 2.5 3,924,676 Banks ......................................... 2.3 3,638,523 Real Estate Investment Trusts ................. 2.3 3,524,130 Leisure & Entertainment ....................... 2.2 3,465,596 Airlines ...................................... 2.0 3,197,700 Food & Agriculture ............................ 2.0 3,114,949 Chemicals - Specialty ......................... 1.9 3,019,112 Restaurants ................................... 1.9 2,972,617 Manufacturing ................................. 1.9 2,963,940 Computer Services ............................. 1.7 2,724,357 Residential Construction ...................... 1.7 2,584,319 Commercial Services ........................... 1.6 2,530,005 Business Services ............................. 1.6 2,497,859 Financial Services ............................ 1.5 2,386,377 Internet Content .............................. 1.5 2,344,926 Electronic Measurements - Instruments ................................ 1.5 2,316,261 Insurance - Property & Casualty ............... 1.5 2,307,864 Oil Refining .................................. 1.4 2,233,945 Oil & Gas Equipment & Services ................ 1.4 2,228,487 Electronic Components & Accessories .............................. 1.3 2,109,929 Automobile Parts & Equipment .................. 1.2 1,843,286 Metals ........................................ 1.1 1,789,240 Energy & Raw Materials ........................ 1.1 1,646,439 Data Processing ............................... 1.0 1,554,999 Building & Building Materials ................. 1.0 1,492,849 Hospitals ..................................... 0.9 1,425,132 Packaging ..................................... 0.8 1,198,378 - ------------------------------------------------------------------------------- SECURITY TYPE/ % OF VALUE INDUSTRY CLASSIFICATION NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------- COMMON STOCKS--(CONTINUED) Aerospace & Defense ........................... 0.8% $ 1,172,741 Internet Software ............................. 0.7 1,081,095 Mortgage ...................................... 0.6 944,748 Paper & Allied Products ....................... 0.5 809,725 Computer Components ........................... 0.5 767,280 Office Furnishings ............................ 0.4 559,908 Cellular Communications ....................... 0.3 489,712 Services - Employment Agencies ................ 0.3 463,800 Consumer Products ............................. 0.2 353,814 Savings & Loan Associations ................... 0.2 271,258 Funeral Services .............................. 0.2 235,976 Insurance - Health & Life ..................... 0.1 231,450 Services - Management Consulting .................................. 0.1 162,737 Office Equipment .............................. 0.1 148,770 REPURCHASE AGREEMENTS ............................ 3.8 5,905,725 LIABILITIES IN EXCESS OF OTHER ASSETS ............................... (1.4) (2,146,234) ----- ------------ NET ASSETS ....................................... 100.0% $156,484,526 ===== ============ The accompanying notes are an integral part of the financial statements. 11 [LOGO OMITTED] n/i numeric investors family of funds GROWTH FUND PORTFOLIO HOLDINGS SUMMARY TABLE AUGUST 31, 2005 - ------------------------------------------------------------------------------- SECURITY TYPE/ % OF VALUE INDUSTRY CLASSIFICATION NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------- COMMON STOCKS Computer Software ............................. 6.9% $ 3,058,106 Oil & Gas Field Exploration ................... 5.8 2,578,212 Semiconductors ................................ 5.3 2,374,932 Retail - Specialty ............................ 4.4 1,954,617 Medical Instruments & Supplies ................ 4.3 1,919,103 Transportation ................................ 4.0 1,796,881 Insurance - Property & Casualty ............... 3.9 1,736,644 Pharmaceuticals ............................... 3.6 1,622,662 Machinery ..................................... 3.4 1,529,499 Manufacturing ................................. 3.3 1,451,201 Medical & Medical Services .................... 3.2 1,405,497 Food & Agriculture ............................ 2.9 1,280,331 Telecommunications Equipment & Services ................................. 2.7 1,184,750 Leisure & Entertainment ....................... 2.4 1,059,103 Biotech ....................................... 2.2 960,557 Multimedia/Publishing ......................... 2.1 953,370 Apparel ....................................... 2.1 937,807 Real Estate Investment Trusts ................. 2.0 889,565 Automobile Parts & Equipment .................. 1.9 853,590 Chemicals - Specialty ......................... 1.9 832,303 Health Care ................................... 1.8 811,193 Oil & Gas Equipment & Services ................ 1.6 734,009 Financial Services ............................ 1.5 689,552 Residential Construction ...................... 1.5 654,837 Banks ......................................... 1.4 650,762 Internet Content .............................. 1.2 539,633 Savings & Loan Associations ................... 1.2 532,600 Electronic Components & Accessories .............................. 1.2 531,732 Restaurants ................................... 1.2 519,734 Oil Refining .................................. 1.1 513,330 Data Processing ............................... 1.1 471,376 Electronic Measurements - Instruments ................................ 1.0 460,844 Airlines ...................................... 1.0 450,375 Energy & Raw Materials ........................ 1.0 439,437 Schools ....................................... 1.0 428,895 Computer Services ............................. 0.8 381,315 Services - Employment Agencies ................ 0.8 374,864 Hospitals ..................................... 0.8 373,522 Utilities ..................................... 0.8 367,872 - ------------------------------------------------------------------------------- SECURITY TYPE/ % OF VALUE INDUSTRY CLASSIFICATION NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------- COMMON STOCKS--(CONTINUED) Packaging ..................................... 0.8% $ 361,320 Hotels & Motels ............................... 0.8 343,784 Computer Networking Products .................. 0.8 338,561 Mortgage ...................................... 0.8 337,736 Internet Software ............................. 0.7 293,079 Commercial Services ........................... 0.4 171,251 Paper & Allied Products ....................... 0.4 169,050 Food .......................................... 0.3 145,597 Engineering ................................... 0.3 143,184 Insurance - Health & Life ..................... 0.3 131,296 Computer Components ........................... 0.3 131,056 Building & Building Materials ................. 0.3 117,740 Consumer Products ............................. 0.2 101,290 Aerospace & Defense ........................... 0.2 94,165 Office Furnishings ............................ 0.2 83,430 Funeral Services .............................. 0.1 46,274 Metals ........................................ 0.1 28,432 REPURCHASE AGREEMENTS ............................ 4.2 1,858,363 LIABILITIES IN EXCESS OF OTHER ASSETS ............................... (1.5) (674,876) ----- ----------- NET ASSETS ....................................... 100.0% $44,525,344 ===== =========== The accompanying notes are an integral part of the financial statements. 12 [LOGO OMITTED] n/i numeric investors family of funds MID CAP FUND PORTFOLIO HOLDINGS SUMMARY TABLE AUGUST 31, 2005 - ------------------------------------------------------------------------------- SECURITY TYPE/ % OF VALUE INDUSTRY CLASSIFICATION NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------- COMMON STOCKS Real Estate Investment Trusts ................. 5.7% $ 2,037,481 Banks ......................................... 5.5 1,957,521 Pharmaceuticals ............................... 5.1 1,819,783 Utilities ..................................... 4.9 1,768,138 Insurance - Property & Casualty ............... 4.6 1,656,347 Transportation ................................ 4.0 1,448,474 Computer Software ............................. 3.8 1,346,727 Apparel ....................................... 3.7 1,308,322 Oil & Gas Field Exploration ................... 3.6 1,303,296 Medical Instruments & Supplies ................ 3.4 1,215,696 Telecommunications Equipment & Services ................................. 3.3 1,166,230 Retail - Specialty ............................ 3.2 1,129,075 Multimedia/Publishing ......................... 3.0 1,088,672 Semiconductors ................................ 2.9 1,024,944 Manufacturing ................................. 2.7 960,092 Leisure & Entertainment ....................... 2.7 957,812 Financial Services ............................ 2.6 923,618 Automobile Parts & Equipment .................. 2.4 875,553 Energy ........................................ 2.2 799,680 Building & Building Materials ................. 2.1 768,895 Commercial Services ........................... 2.1 760,834 Insurance ..................................... 2.1 757,586 Insurance - Health & Life ..................... 2.1 754,376 Chemicals - Specialty ......................... 2.0 706,616 Computer Networking Products .................. 1.9 668,879 Health Care ................................... 1.6 589,778 Food & Agriculture ............................ 1.5 535,738 Computer Services ............................. 1.2 445,500 Computers ..................................... 1.2 427,063 Wholesale - Distribution ...................... 1.2 417,600 Hazardous Waste Management .................... 1.2 413,022 Electronic Components & Accessories .............................. 1.1 408,315 Machinery ..................................... 1.1 404,874 Oil & Gas Equipment & Services ................ 1.1 394,680 Biotech ....................................... 1.1 378,400 Aerospace & Defense ........................... 1.0 364,585 Hotels & Motels ............................... 1.0 343,784 Chemicals - Diversified ....................... 0.9 331,534 Residential Construction ...................... 0.3 115,320 - ------------------------------------------------------------------------------- SECURITY TYPE/ % OF VALUE INDUSTRY CLASSIFICATION NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------- COMMON STOCKS--(CONTINUED) Tobacco ....................................... 0.2% $ 69,498 Internet Software ............................. 0.1 49,040 REPURCHASE AGREEMENTS ............................ 6.7 2,416,493 LIABILITIES IN EXCESS OF OTHER ASSETS ............................... (4.1) (1,477,393) ----- ----------- NET ASSETS ....................................... 100.0% $35,832,478 ===== =========== The accompanying notes are an integral part of the financial statements. 13 [LOGO OMITTED] n/i numeric investors family of funds SMALL CAP VALUE FUND PORTFOLIO HOLDINGS SUMMARY TABLE AUGUST 31, 2005 - ------------------------------------------------------------------------------- SECURITY TYPE/ % OF VALUE INDUSTRY CLASSIFICATION NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------- COMMON STOCKS Real Estate Investment Trusts ................. 10.2% $ 24,713,052 Insurance - Property & Casualty ............... 5.6 13,547,542 Banks ......................................... 5.4 12,998,051 Transportation ................................ 4.6 11,112,952 Retail - Specialty ............................ 4.3 10,561,036 Oil & Gas Field Exploration ................... 4.3 10,353,355 Semiconductors ................................ 4.1 9,871,061 Machinery ..................................... 3.9 9,593,489 Utilities ..................................... 3.6 8,856,078 Chemicals - Specialty ......................... 3.3 8,016,603 Financial Services ............................ 3.1 7,562,235 Manufacturing ................................. 3.1 7,457,852 Food & Agriculture ............................ 2.9 7,110,870 Computer Software ............................. 2.7 6,673,583 Telecommunications Equipment & Services ................................. 2.5 6,081,495 Mortgage ...................................... 2.4 5,952,457 Savings & Loan Associations ................... 2.4 5,789,716 Apparel ....................................... 2.3 5,568,631 Insurance - Health & Life ..................... 2.1 5,056,132 Multimedia/Publishing ......................... 1.8 4,706,969 Restaurants ................................... 1.8 4,350,354 Medical & Medical Services .................... 1.7 4,182,563 Residential Construction ...................... 1.3 3,158,943 Oil Refining .................................. 1.3 3,137,240 Health Care ................................... 1.3 3,074,015 Packaging ..................................... 1.3 3,044,904 Computer Networking Products .................. 1.1 2,776,335 Hotels & Motels ............................... 1.1 2,756,411 Pharmaceuticals ............................... 1.1 2,650,457 Airlines ...................................... 1.1 2,579,530 Data Processing ............................... 1.0 2,545,408 Insurance ..................................... 1.0 2,466,240 Automobile Parts & Equipment .................. 0.9 2,218,353 Leisure & Entertainment ....................... 0.8 2,009,004 Electronic Components & Accessories .............................. 0.8 1,898,310 Oil & Gas Equipment & Services ................ 0.7 1,810,060 Paper & Allied Products ....................... 0.7 1,768,550 Building & Building Materials ................. 0.6 1,433,363 Food .......................................... 0.6 1,369,441 Commercial Services ........................... 0.5 1,126,189 - ------------------------------------------------------------------------------- SECURITY TYPE/ % OF VALUE INDUSTRY CLASSIFICATION NET ASSETS (NOTE 1) - ------------------------------------------------------------------------------- COMMON STOCKS--(CONTINUED) Electronic Measurements - Instruments ................................ 0.4% $ 1,084,333 Engineering ................................... 0.4 987,216 Computer Services ............................. 0.4 946,707 Internet Content .............................. 0.3 824,167 Aerospace & Defense ........................... 0.3 676,043 Internet Software ............................. 0.3 639,012 Metals ........................................ 0.2 490,452 Computer Components ........................... 0.2 477,048 Office Furnishings ............................ 0.2 404,172 Energy & Raw Materials ........................ 0.1 192,241 Printing ...................................... 0.1 179,211 Medical Instruments & Supplies ................ 0.1 148,536 Consumer Products ............................. 0.1 140,790 Office & Business Equipment ................... 0.1 122,089 REPURCHASE AGREEMENTS ............................ 2.5 6,016,151 WARRANTS ......................................... --* 701 LIABILITIES IN EXCESS OF OTHER ASSETS ............................... (1.0) (2,438,065) ----- ------------ NET ASSETS ....................................... 100.0% $242,829,633 ===== ============ * Amount is less than 0.1% of net assets. The accompanying notes are an integral part of the financial statements. 14 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 2005 - -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - -------------------------------------------------------------------------------- COMMON STOCKS--97.6% AEROSPACE & DEFENSE--0.8% 23,700 Allied Defense Group, Inc. (The)* ............. $ 537,990 2,200 K&F Industries Holdings, Inc.*+ ............... 37,400 24,900 Kaman Corp., Class A .......................... 597,351 ------------ 1,172,741 ------------ AIRLINES--2.0% 17,500 Continental Airlines, Inc., Class B* .......... 233,975 86,100 ExpressJet Holdings, Inc.* .................... 818,811 83,967 Republic Airways Holdings, Inc.* .............. 1,126,837 101,100 World Air Holdings, Inc.*+ .................... 1,018,077 ------------ 3,197,700 ------------ APPAREL--2.8% 28,200 Buckle, Inc. (The) ............................ 1,107,132 32,900 Children's Place Retail Stores, Inc. (The)* ... 1,345,939 34,700 Maidenform Brands, Inc.* ...................... 572,550 14,100 Tarrant Apparel Group*+ ....................... 49,068 28,600 True Religion Apparel, Inc.* .................. 435,864 22,800 UniFirst Corp. ................................ 895,812 ------------ 4,406,365 ------------ AUTOMOBILE PARTS & EQUIPMENT--1.2% 6,900 Accuride Corp.* ............................... 103,155 58,956 Audiovox Corp., Class A* ...................... 1,065,925 28,600 Commercial Vehicle Group, Inc.* ............... 592,878 2,600 LKQ Corp.* .................................... 81,328 ------------ 1,843,286 ------------ BANKS--2.3% 7,600 Community Bancorp*+ ........................... 260,300 45,300 First BanCorp ................................. 836,238 10,100 First Regional Bancorp* ....................... 877,084 10,400 Preferred Bank ................................ 424,424 14,566 PremierWest Bancorp*+ ......................... 205,381 70,800 Wilshire Bancorp, Inc. ........................ 1,035,096 ------------ 3,638,523 ------------ BIOTECH--4.6% 30,600 Alkermes, Inc.*+ .............................. 574,668 12,000 Amylin Pharmaceuticals, Inc.*+ ................ 393,000 5,989 Anika Therapeutics, Inc.* ..................... 76,060 19,400 Arena Pharmaceuticals, Inc.* .................. 162,378 27,800 Array BioPharma, Inc.* ........................ 183,480 40,100 BioMarin Pharmaceutical, Inc.* ................ 346,063 12,000 Cotherix, Inc.*+ .............................. 167,280 5,700 CV Therapeutics, Inc.* ........................ 154,869 40,100 Gene Logic, Inc.* ............................. 202,906 - -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - -------------------------------------------------------------------------------- BIOTECH--(CONTINUED) 17,500 Human Genome Sciences, Inc.*+ ................. $ 225,925 7,100 ICOS Corp.*+ .................................. 185,523 27,000 Kosan Biosciences, Inc.* ...................... 198,450 10,417 Maxygen, Inc.*+ ............................... 92,607 68,800 Medarex, Inc.* ................................ 691,440 19,000 Momenta Pharmaceutical, Inc.* ................. 481,650 5,700 Myogen, Inc.* ................................. 117,990 8,000 Myriad Genetics, Inc.*+ ....................... 158,160 4,800 Neurocrine Biosciences, Inc.* ................. 219,840 27,199 Regeneron Pharmaceuticals, Inc.* .............. 203,177 30,000 StemCells, Inc.*+ ............................. 163,500 15,300 Strategic Diagnostics, Inc.*+ ................. 57,528 74,700 SuperGen, Inc.*+ .............................. 504,972 11,200 Vertex Pharmaceuticals, Inc.* ................. 206,080 2,700 Vicuron Pharmaceuticals, Inc.* ................ 77,787 69,054 ViroPharma, Inc.*+ ............................ 1,162,869 14,407 ZymoGenetics, Inc.*+ .......................... 242,614 ------------ 7,250,816 ------------ BUILDING & BUILDING MATERIALS--1.0% 45,209 Builders FirstSource, Inc.* ................... 917,743 17,152 Cavco Industries, Inc.* ....................... 575,106 ------------ 1,492,849 ------------ BUSINESS SERVICES--1.6% 51,450 Barrett Business Services, Inc.* .............. 1,060,899 49,700 Fargo Electronics* ............................ 904,540 18,000 Forrester Research, Inc.*+ .................... 376,020 6,800 Marlin Business Services, Inc.*+ .............. 156,400 ------------ 2,497,859 ------------ CELLULAR COMMUNICATIONS--0.3% 10,000 Centennial Communications Corp.* .............. 119,900 23,600 Syniverse Holdings, Inc.*+ .................... 369,812 ------------ 489,712 ------------ CHEMICALS - SPECIALTY--1.9% 20,000 Balchem Corp. ................................. 618,000 95,100 Hercules, Inc.* ............................... 1,212,525 69,265 UAP Holding Corp. ............................. 1,188,587 ------------ 3,019,112 ------------ COMMERCIAL SERVICES--1.6% 52,000 Jackson Hewitt Tax Service, Inc. .............. 1,330,680 38,500 PeopleSupport, Inc.* .......................... 324,555 28,374 Steiner Leisure, Ltd.* ........................ 874,770 ------------ 2,530,005 ------------ The accompanying notes are an integral part of the financial statements. 15 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 2005 - -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - -------------------------------------------------------------------------------- COMPUTER COMPONENTS--0.5% 23,000 Komag, Inc.* .................................. $ 767,280 ------------ COMPUTER SERVICES--1.7% 47,600 Entrust, Inc.* ................................ 284,172 19,700 PAR Technology Corp.*+ ........................ 491,712 95,035 Radiant Systems, Inc.* ........................ 1,122,363 36,900 Sykes Enterprises, Inc.* ...................... 392,985 23,100 Syntel, Inc. .................................. 433,125 ------------ 2,724,357 ------------ COMPUTER SOFTWARE--4.6% 49,700 American Reprographics, Co.* .................. 844,403 51,400 Blackboard, Inc.* ............................. 1,241,824 131,494 Informatica Corp.* ............................ 1,501,661 4,249 InterVideo, Inc.* ............................. 42,533 17,700 ManTech International Corp., Class A* ......... 548,877 36,100 Micromuse, Inc.* .............................. 240,787 232,900 Parametric Technology Corp.* .................. 1,411,374 43,400 Progress Software Corp.* ...................... 1,330,644 ------------ 7,162,103 ------------ CONSUMER PRODUCTS--0.2% 32,700 Playtex Products, Inc.*+ ...................... 353,814 ------------ DATA PROCESSING--1.0% 18,100 infoUSA, Inc. ................................. 194,575 50,800 Transaction Systems Architects, Inc.* ......... 1,360,424 ------------ 1,554,999 ------------ ELECTRONIC COMPONENTS & ACCESSORIES--1.3% 16,600 Bel Fuse, Inc., Class B ....................... 534,022 69,800 Exar Corp.* ................................... 1,089,578 3,100 Multi-Fineline Electronix, Inc.* .............. 79,205 19,800 Planar Systems, Inc.* ......................... 151,866 17,400 Technitrol, Inc. .............................. 255,258 ------------ 2,109,929 ELECTRONIC MEASUREMENTS - INSTRUMENTS--1.5% 30,100 Itron, Inc.*+ ................................. 1,392,727 22,405 MTS Systems Corp. ............................. 923,534 ------------ 2,316,261 ------------ ENERGY & RAW MATERIALS--1.1% 109,351 Distributed Energy Systems Corp.*+ ............ 739,213 95,800 TransMontaigne, Inc.*+ ........................ 907,226 ------------ 1,646,439 ------------ - -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - -------------------------------------------------------------------------------- FINANCIAL SERVICES--1.5% 15,000 Asset Acceptance Capital Corp.* ............... $ 433,050 31,285 GFI Group, Inc.* .............................. 1,034,908 13,100 Hercules Technology Growth Capital, Inc.* ..... 174,099 12,655 Nicholas Financial, Inc. ...................... 126,550 5,400 optionsXpress Holdings, Inc.* ................. 92,610 19,000 United PanAm Financial Corp.*+ ................ 525,160 ------------ 2,386,377 ------------ FOOD & AGRICULTURE--2.0% 66,300 Gold Kist, Inc.*+ ............................. 1,225,224 2,900 J & J Snack Foods Corp.* ...................... 173,884 14,300 Nash Finch Co.+ ............................... 600,600 10,900 Sanderson Farms, Inc.+ ........................ 402,537 69,600 Spartan Stores, Inc.* ......................... 712,704 ------------ 3,114,949 ------------ FUNERAL SERVICES--0.2% 14,666 Alderwoods Group, Inc.* ....................... 235,976 ------------ HEALTH CARE--3.0% 64,919 Allied Healthcare International, Inc.* ........ 340,176 32,890 IntegraMed America, Inc.*+ .................... 411,783 50,087 Kendle International, Inc.* ................... 1,212,105 31,700 Magellan Health Services, Inc.* ............... 1,123,765 61,463 Odyssey HealthCare, Inc.*+ .................... 1,026,432 10,700 Sunrise Senior Living, Inc.* .................. 635,473 ------------ 4,749,734 ------------ HOSPITALS--0.9% 37,200 United Surgical Partners International, Inc.*+ 1,425,132 ------------ INSURANCE - HEALTH & LIFE--0.1% 7,500 UICI .......................................... 231,450 ------------ INSURANCE - PROPERTY & CASUALTY--1.5% 84,950 Capital Title Group, Inc. ..................... 664,309 900 James River Group, Inc.* ...................... 18,000 6,200 National Atlantic Holdings Corp.* ............. 68,138 1,744 Navigators Group, Inc.(The)* .................. 64,633 16,800 PXRE Group, Ltd. .............................. 391,272 31,400 Safety Insurance Group, Inc.+ ................. 1,101,512 ------------ 2,307,864 ------------ INTERNET CONTENT--1.5% 81,700 TriZetto Group, Inc. (The)* ................... 1,281,873 81,585 United Online, Inc. ........................... 1,063,053 ------------ 2,344,926 ------------ The accompanying notes are an integral part of the financial statements. 16 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 2005 - -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - -------------------------------------------------------------------------------- INTERNET SOFTWARE--0.7% 199,500 AsiaInfo Holdings, Inc.* ...................... $ 1,003,485 13,000 SonicWALL, Inc.* .............................. 77,610 ------------ 1,081,095 ------------ LEISURE & ENTERTAINMENT--2.2% 65,200 Bluegreen Corp.*+ ............................. 1,150,128 44,471 Century Casinos, Inc.* ........................ 300,179 59,900 Dover Downs Gaming & Entertainment, Inc. ...... 797,868 6,800 MTR Gaming Group, Inc.* ....................... 62,832 187,738 Youbet.com, Inc.* ............................. 1,154,589 ------------ 3,465,596 ------------ MACHINERY--4.5% 57,800 Columbus McKinnon Corp.* ...................... 1,115,540 32,184 DXP Enterprises, Inc.* ........................ 528,461 135,300 Flow International Corp.*+ .................... 1,181,169 50,100 JLG Industries, Inc.+ ......................... 1,642,779 24,100 Terex Corp.* .................................. 1,175,598 52,600 Wabtec Corp.+ ................................. 1,367,600 ------------ 7,011,147 ------------ MANUFACTURING--1.9% 10,300 Lancaster Colony Corp. ........................ 471,225 75,700 LSI Industries, Inc. .......................... 1,161,238 40,500 Stanley Furniture Co., Inc. ................... 1,085,805 5,600 Walter Industries, Inc. ....................... 245,672 ------------ 2,963,940 ------------ MEDICAL & MEDICAL SERVICES--3.5% 79,888 AMICAS, Inc.* ................................. 443,378 52,700 Durect Corp.*+ ................................ 313,565 12,100 Kindred Healthcare, Inc.*+ .................... 370,260 20,900 Pediatrix Medical Group, Inc.* ................ 1,549,317 34,700 Per-Se Technologies, Inc.*+ ................... 669,016 42,000 PRA International*+ ........................... 1,234,800 48,700 U.S. Physical Therapy, Inc.* .................. 919,456 ------------ 5,499,792 ------------ MEDICAL INSTRUMENTS & SUPPLIES--4.9% 44,817 AngioDynamics, Inc.* .......................... 968,047 129,563 Cerus Corp.* .................................. 875,846 65,097 Cholestech Corp.* ............................. 670,499 48,900 Cutera, Inc.*+ ................................ 1,187,781 28,700 HealthTronics, Inc.* .......................... 319,718 23,800 ICU Medical, Inc.* ............................ 722,806 - -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - -------------------------------------------------------------------------------- MEDICAL INSTRUMENTS & SUPPLIES--(CONTINUED) 34,226 Lifecore Biomedical, Inc.* .................... $ 376,486 19,500 Neurometrix, Inc.*+ ........................... 543,075 18,800 Owens & Minor, Inc. ........................... 538,808 129,100 Quidel Corp.*+ ................................ 1,050,874 7,875 Vital Signs, Inc. ............................. 354,139 ------------ 7,608,079 ------------ METALS--1.1% 9,500 Cleveland-Cliffs, Inc.+ ....................... 675,260 109,000 Earle M. Jorgensen Co.* ....................... 1,113,980 ------------ 1,789,240 ------------ MORTGAGE--0.6% 41,400 Fremont General Corp. ......................... 944,748 ------------ OFFICE EQUIPMENT--0.1% 5,700 Acco Brands Corp.*+ ........................... 148,770 ------------ OFFICE FURNISHINGS--0.4% 30,200 Knoll, Inc. ................................... 559,908 ------------ OIL & GAS EQUIPMENT & SERVICES--1.4% 900 Dresser-Rand Group, Inc.*+ .................... 21,591 12,691 Gulf Island Fabrication, Inc. ................. 342,657 56,800 Mitcham Industries, Inc.*+ .................... 524,832 24,900 Parker Drilling Co.* .......................... 200,943 35,400 Veritas DGC, Inc.* ............................ 1,138,464 ------------ 2,228,487 ------------ OIL & GAS FIELD EXPLORATION--4.9% 22,600 Berry Petroleum Co., Class A .................. 1,397,358 34,400 Cabot Oil & Gas Corp.+ ........................ 1,485,736 37,600 Callon Petroleum Co.* ......................... 694,848 25,900 Petroleum Development Corp.* .................. 984,200 18,300 Remington Oil & Gas Corp.* .................... 705,099 31,800 Todco, Class A* ............................... 1,104,096 44,700 W&T Offshore, Inc. ............................ 1,224,780 ------------ 7,596,117 ------------ OIL REFINING--1.4% 49,800 Frontier Oil Corp. ............................ 1,825,170 8,300 Giant Industries, Inc.*+ ...................... 408,775 ------------ 2,233,945 ------------ PACKAGING--0.8% 19,900 Silgan Holdings, Inc. ......................... 1,198,378 ------------ The accompanying notes are an integral part of the financial statements. 17 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 2005 - -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - -------------------------------------------------------------------------------- PAPER & ALLIED PRODUCTS--0.5% 66,100 Xerium Technologies, Inc.* .................... $ 809,725 ------------ PHARMACEUTICALS--2.7% 52,900 Albany Molecular Research, Inc.* .............. 882,372 27,900 Alpharma, Inc., Class A+ ...................... 742,698 19,300 Anadys Pharmaceuticals, Inc.* ................. 235,460 9,300 DOV Pharmaceutical, Inc.*+ .................... 139,686 1,300 Kos Pharmaceuticals, Inc.* .................... 88,556 11,700 LifeCell Corp.* ............................... 280,566 10,200 Nektar Therapeutics* .......................... 174,216 14,900 New River Pharmaceuticals, Inc.* .............. 642,041 8,400 Panacos Pharmaceuticals, Inc.* ................ 76,860 26,000 PetMed Express, Inc.* ......................... 271,700 102,600 Savient Pharmaceuticals, Inc.* ................ 414,504 66,495 SciClone Pharmaceuticals, Inc.*+ .............. 341,784 ------------ 4,290,443 ------------ REAL ESTATE INVESTMENT TRUSTS--2.3% 16,200 Education Realty Trust, Inc. .................. 298,890 24,300 Equity Lifestyle Properties, Inc.+ ............ 1,097,388 71,100 OMEGA Healthcare Investors, Inc. .............. 944,208 42,700 Tanger Factory Outlet Centers, Inc.+ .......... 1,183,644 ------------ 3,524,130 ------------ RESIDENTIAL CONSTRUCTION--1.7% 24,900 Brookfield Homes Corp. ........................ 1,274,880 33,289 Comstock Homebuilding Cos., Inc., Class A* .................................... 709,056 19,900 WCI Communities, Inc.*+ ....................... 600,383 ------------ 2,584,319 ------------ RESTAURANTS--1.9% 49,400 Domino's Pizza, Inc. .......................... 1,136,200 22,290 Famous Dave's of America, Inc.* ............... 269,709 76,300 Luby's, Inc.* ................................. 1,002,582 100,200 Main Street Restaurant Group, Inc.* ........... 564,126 ------------ 2,972,617 ------------ RETAIL - SPECIALTY--4.3% 18,500 Asbury Automotive Group, Inc.*+ ............... 315,610 58,250 EZCORP, Inc., Class A* ........................ 951,223 6,900 FTD Group, Inc.* .............................. 77,625 52,200 Gottschalks, Inc.* ............................ 526,176 44,683 Pacific Sunwear of California, Inc.* .......... 1,067,030 12,900 REX Stores Corp.* ............................. 198,789 31,000 Shoe Carnival, Inc.* .......................... 507,160 47,800 Sportsman's Guide, Inc. (The)* ................ 1,201,214 - -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - -------------------------------------------------------------------------------- RETAIL - SPECIALTY--(CONTINUED) 17,000 Steven Madden, Ltd.* .......................... $ 398,650 50,300 Yankee Candle Company, Inc. (The)+ ............ 1,381,741 4,100 Zumiez, Inc.* ................................. 135,218 ------------ 6,760,436 ------------ SAVINGS & LOAN ASSOCIATIONS--0.2% 4,200 Berkshire Hills Bancorp, Inc. ................. 135,450 2,100 PFF Bancorp, Inc. ............................. 62,433 2,500 Provident Financial Holdings, Inc. ............ 73,375 ------------ 271,258 ------------ SEMICONDUCTORS--6.3% 5,500 Actel Corp.* .................................. 75,680 2,600 ATMI, Inc.* ................................... 80,158 73,000 Cirrus Logic, Inc.* ........................... 576,700 5,000 Coherent, Inc.* ............................... 158,950 46,051 Cohu, Inc. .................................... 1,124,566 39,148 Cymer, Inc.* .................................. 1,311,458 15,300 EMCORE Corp.*+ ................................ 78,795 80,800 Emulex Corp.* ................................. 1,741,240 34,300 Kopin Corp.* .................................. 221,921 104,800 Micrel, Inc.* ................................. 1,320,480 41,012 MKS Instruments, Inc.* ........................ 728,373 7,502 Netlogic Microsystems, Inc.* .................. 155,066 25,700 Photronics, Inc.* ............................. 533,789 45,900 Standard Microsystems Corp.* .................. 1,195,695 11,800 Tessera Technologies, Inc.* ................... 391,524 24,087 White Electronic Designs Corp.* ............... 125,252 ------------ 9,819,647 ------------ SERVICES - EMPLOYMENT AGENCIES--0.3% 30,000 AMN Healthcare Services, Inc.* ................ 463,800 ------------ SERVICES - MANAGEMENT CONSULTING--0.1% 5,313 American Dental Partners, Inc.* ............... 162,737 ------------ TELECOMMUNICATIONS EQUIPMENT & SERVICES--3.7% 139,200 Arris Group, Inc.*+ ........................... 1,460,208 22,451 CalAmp Corp.* ................................. 186,119 37,187 Comtech Telecommunications Corp.* ............. 1,305,264 37,370 InterDigital Communications Corp.* ............ 664,438 118,400 Lightbridge, Inc.* ............................ 893,920 80,000 Radyne Corp.* ................................. 862,400 23,800 Tekelec*+ ..................................... 469,098 ------------ 5,841,447 ------------ The accompanying notes are an integral part of the financial statements. 18 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) AUGUST 31, 2005 - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- TRANSPORTATION--2.5% 26,500 Atlas Air Worldwide Holding-Wi* ............... $ 871,850 3,100 Celadon Group, Inc.* .......................... 63,457 16,300 Maritrans, Inc. ............................... 477,916 19,100 Overseas Shipholding Group, Inc.+ ............. 1,167,965 51,200 Pacer International, Inc.*+ ................... 1,343,488 ------------ 3,924,676 ------------ Total Common Stocks (Cost $139,871,578) ......................... 152,725,035 ------------ PRINCIPAL AMOUNT (000'S) - -------------- REPURCHASE AGREEMENTS--3.8% $1,295 Bear, Stearns & Co. Inc. (Agreement dated 08/31/05 to be repurchased at $1,295,155), 1.78%, 09/01/05, collateralized by $1,336,944 in U.S. Government Securities (Note 7) (Cost $1,295,091)** ..... 1,295,091 4,611 Bear, Stearns & Co. Inc. (Agreement dated 08/31/05 to be repurchased at $4,611,086), 3.53%, 09/01/05, collateralized by $4,747,956 in U.S. Government Securities (Note 7) (Cost $4,610,634) ....... 4,610,634 ------------ Total Repurchase Agreements (Cost $5,905,725) ........................... 5,905,725 ------------ Total Investments -- 101.4% (Cost $145,777,303) ................................... 158,630,760 ------------ Liabilities in Excess of Other Assets -- (1.4)% .......... (2,146,234) ------------ Net Assets -- 100.0% $156,484,526 ============ - ---------- * Non-income producing. ** Investment purchased with cash collateral received for securities on loan. + Security position is either entirely or partially out on loan. The accompanying notes are an integral part of the financial statements. 19 [LOGO OMITTED] n/i numeric investors family of funds GROWTH FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 2005 - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- COMMON STOCKS--97.3% AEROSPACE & DEFENSE--0.2% 600 K&F Industries Holdings, Inc.*+ ............... $ 10,200 3,500 Kaman Corp., Class A .......................... 83,965 ------------ 94,165 ------------ AIRLINES--1.0% 1,600 Continental Airlines, Inc., Class B* .......... 21,392 14,900 ExpressJet Holdings, Inc.* .................... 141,699 7,000 Republic Airways Holdings, Inc.* .............. 93,940 19,200 World Air Holdings, Inc.* ..................... 193,344 ------------ 450,375 ------------ APPAREL--2.1% 1,600 American Eagle Outfitters, Inc. ............... 45,808 7,700 Buckle, Inc. (The) ............................ 302,302 8,949 Children's Place Retail Stores, Inc. (The)* ... 366,104 4,400 Maidenform Brands, Inc.* ...................... 72,600 1,400 True Religion Apparel, Inc.* .................. 21,336 3,300 UniFirst Corp. ................................ 129,657 ------------ 937,807 ------------ AUTOMOBILE PARTS & EQUIPMENT--1.9% 1,400 Accuride Corp.* ............................... 20,930 7,000 ArvinMeritor, Inc. ............................ 129,850 11,969 Audiovox Corp., Class A* ...................... 216,399 5,200 Commercial Vehicle Group, Inc.* ............... 107,796 12,900 TRW Automotive Holdings Corp.* ................ 378,615 ------------ 853,590 ------------ BANKS--1.4% 4,607 BOK Financial Corp. ........................... 216,483 12,300 First BanCorp ................................. 227,058 6,700 TCF Financial Corp. ........................... 189,677 1,200 Wilshire Bancorp, Inc. ........................ 17,544 ------------ 650,762 ------------ BIOTECH--2.2% 3,700 Alkermes, Inc.*+ .............................. 69,486 2,563 Anika Therapeutics, Inc.* ..................... 32,550 2,800 Arena Pharmaceuticals, Inc.* .................. 23,436 3,100 ArQule, Inc.* ................................. 23,684 4,300 Charles River Laboratories International, Inc.* ........................ 218,526 1,700 Kendle International, Inc.* ................... 41,140 18,200 Medarex, Inc.* ................................ 182,910 3,700 Momenta Pharmaceutical, Inc.* ................. 93,795 1,500 Myriad Genetics, Inc.*+ ....................... 29,655 5,808 Regeneron Pharmaceuticals, Inc.* .............. 43,386 - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- BIOTECH--(CONTINUED) 10,200 StemCells, Inc.*+ ............................. $ 55,590 3,500 SuperGen, Inc.*+ .............................. 23,660 4,000 Vertex Pharmaceuticals, Inc.* ................. 73,600 2,918 ZymoGenetics, Inc.*+ .......................... 49,139 ------------ 960,557 ------------ BUILDING & BUILDING MATERIALS--0.3% 5,800 Builders FirstSource, Inc.* ................... 117,740 ------------ CHEMICALS - SPECIALTY--1.9% 17,206 Hercules, Inc.* ............................... 219,376 8,100 Lubrizol Corp. (The) .......................... 334,935 16,200 UAP Holding Corp. ............................. 277,992 ------------ 832,303 ------------ COMMERCIAL SERVICES--0.4% 200 PeopleSupport, Inc.* .......................... 1,686 5,500 Steiner Leisure, Ltd.* ........................ 169,565 ------------ 171,251 ------------ COMPUTER COMPONENTS--0.3% 2,600 Komag, Inc.* .................................. 86,736 3,200 Western Digital Corp.* ........................ 44,320 ------------ 131,056 ------------ COMPUTER NETWORKING PRODUCTS--0.8% 7,879 Black Box Corp.+ .............................. 338,561 ------------ COMPUTER SERVICES--0.8% 16,381 Radiant Systems, Inc.* ........................ 193,460 5,500 Reynolds and Reynolds Co. (The), Class A+ ..... 156,970 2,900 Sykes Enterprises, Inc.* ...................... 30,885 ------------ 381,315 ------------ COMPUTER SOFTWARE--6.9% 22,623 Activision, Inc.* ............................. 505,624 6,242 American Reprographics Co.* ................... 106,052 13,800 Blackboard, Inc.* ............................. 333,408 19,600 BMC Software, Inc.* ........................... 392,000 26,100 Cadence Design Systems, Inc.*+ ................ 417,861 48,200 Compuware Corp.* .............................. 436,692 5,100 Informatica Corp.* ............................ 58,242 871 InterVideo, Inc.* ............................. 8,719 1,741 ManTech International Corp., Class A* ......... 53,988 62,300 Parametric Technology Corp.* .................. 377,538 3,118 Progress Software Corp.* ...................... 95,598 14,336 Synopsys, Inc.* ............................... 272,384 ------------ 3,058,106 ------------ The accompanying notes are an integral part of the financial statements. 20 [LOGO OMITTED] n/i numeric investors family of funds GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 2005 - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- CONSUMER PRODUCTS--0.2% 3,300 Playtex Products, Inc.*+ ...................... $ 35,706 800 Scotts Co. (The), Class A*+ ................... 65,584 ------------ 101,290 ------------ DATA PROCESSING--1.1% 1,000 infoUSA, Inc. ................................. 10,750 2,400 Thermo Electron Corp.* ........................ 66,960 14,700 Transaction Systems Architects, Inc.* ......... 393,666 ------------ 471,376 ------------ ELECTRONIC COMPONENTS & ACCESSORIES--1.2% 15,300 Avnet, Inc.*+ ................................. 383,265 9,511 Exar Corp.* ................................... 148,467 ------------ 531,732 ------------ ELECTRONIC MEASUREMENTS - INSTRUMENTS--1.0% 8,000 Itron, Inc.* .................................. 370,160 2,200 MTS Systems Corp. ............................. 90,684 ------------ 460,844 ------------ ENERGY & RAW MATERIALS--1.0% 24,800 Distributed Energy Systems Corp.* ............. 167,648 28,700 TransMontaigne, Inc.* ......................... 271,789 ------------ 439,437 ------------ ENGINEERING--0.3% 3,800 URS Corp.*+ ................................... 143,184 ------------ FINANCIAL SERVICES--1.5% 1,400 BISYS Group, Inc. (The)* ...................... 20,902 9,383 GFI Group, Inc.* .............................. 310,390 14,000 Jackson Hewitt Tax Service, Inc. .............. 358,260 ------------ 689,552 ------------ FOOD--0.3% 10,062 Premium Standard Farms, Inc.*+ ................ 145,597 ------------ FOOD & AGRICULTURE--2.9% 19,218 Gold Kist, Inc.*+ ............................. 355,149 7,900 Nash Finch Co. ................................ 331,800 10,000 Pilgrim's Pride Corp. ......................... 339,000 2,236 Sanderson Farms, Inc. ......................... 82,575 16,778 Spartan Stores, Inc.* ......................... 171,807 ------------ 1,280,331 FUNERAL SERVICES--0.1% 1,114 Alderwoods Group, Inc.* ....................... 17,924 4,085 Stewart Enterprises, Inc., Class A ............ 28,350 ------------ 46,274 ------------ - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- HEALTH CARE--1.8% 9,300 Magellan Health Services, Inc.* ............... $ 329,685 17,810 Odyssey HealthCare, Inc.* ..................... 297,427 1,900 Sunrise Senior Living, Inc.* .................. 112,841 6,500 WebMD Corp.* .................................. 71,240 ------------ 811,193 ------------ HOSPITALS--0.8% 9,750 United Surgical Partners International, Inc.*+ 373,522 ------------ HOTELS & MOTELS--0.8% 5,600 Choice Hotels International, Inc. ............. 343,784 ------------ INSURANCE - HEALTH & LIFE--0.3% 3,200 Protective Life Corp. ......................... 131,296 ------------ INSURANCE - PROPERTY & CASUALTY--3.9% 7,500 Allmerica Financial Corp.* .................... 305,325 3,300 American Financial Group, Inc. ................ 110,649 7,500 Arch Capital Group, Ltd.* ..................... 325,875 6,300 IPC Holdings, Ltd. ............................ 247,527 300 James River Group, Inc.* ...................... 6,000 9,800 Platinum Underwriters Holdings, Ltd. .......... 318,304 7,400 PXRE Group, Ltd. .............................. 172,346 6,436 Safety Insurance Group, Inc.+ ................. 225,775 700 W. R. Berkley Corp. ........................... 24,843 ------------ 1,736,644 ------------ INTERNET CONTENT--1.2% 23,614 TriZetto Group, Inc. (The)* ................... 370,504 12,980 United Online, Inc. ........................... 169,129 ------------ 539,633 ------------ INTERNET SOFTWARE--0.7% 8,300 AsiaInfo Holdings, Inc.* ...................... 41,749 8,200 McAfee, Inc.* ................................. 251,330 ------------ 293,079 ------------ LEISURE & ENTERTAINMENT--2.4% 20,000 Bluegreen Corp.* .............................. 352,800 15,800 GTECH Holdings Corp.*+ ........................ 451,564 2,100 MTR Gaming Group, Inc.* ....................... 19,404 1,300 Penn National Gaming, Inc.* ................... 44,304 31,062 Youbet.com, Inc.* ............................. 191,031 ------------ 1,059,103 ------------ MACHINERY--3.4% 11,437 Columbus McKinnon Corp.* ...................... 220,734 16,000 Flow International Corp.*+ .................... 139,680 12,900 JLG Industries, Inc.+ ......................... 422,991 The accompanying notes are an integral part of the financial statements. 21 [LOGO OMITTED] n/i numeric investors family of funds GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 2005 - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- MACHINERY--(CONTINUED) 7,300 Terex Corp.* .................................. $ 356,094 15,000 Wabtec Corp. .................................. 390,000 ------------ 1,529,499 ------------ MANUFACTURING--3.3% 3,600 Crane Co.+ .................................... 106,596 19,900 Earle M. Jorgensen Co.* ....................... 203,378 7,361 Fargo Electronics* ............................ 133,970 5,700 LSI Industries, Inc. .......................... 87,438 8,600 Roper Industries, Inc.+ ....................... 331,272 3,500 Stanley Furniture Co., Inc. ................... 93,835 3,900 Stanley Works (The) ........................... 178,425 2,300 Teleflex, Inc.+ ............................... 158,355 3,600 Walter Industries, Inc. ....................... 157,932 ------------ 1,451,201 ------------ MEDICAL & MEDICAL SERVICES--3.2% 2,000 Durect Corp.* ................................. 11,900 4,000 HEALTHSOUTH Corp.* ............................ 21,280 4,500 Kindred Healthcare, Inc.*+ .................... 137,700 7,500 Lincare Holdings, Inc.* ....................... 317,550 800 Millipore Corp.*+ ............................. 51,160 5,200 Pediatrix Medical Group, Inc.* ................ 385,476 1,000 Per-Se Technologies, Inc.* .................... 19,280 1,800 Pharmaceutical Product Development, Inc.* ..... 101,286 10,216 PRA International*+ ........................... 300,350 2,700 Res-Care, Inc.* ............................... 40,635 1,000 U.S. Physical Therapy, Inc.* .................. 18,880 ------------ 1,405,497 ------------ MEDICAL INSTRUMENTS & SUPPLIES--4.3% 9,937 AngioDynamics, Inc.* .......................... 214,639 11,500 Cutera, Inc.*+ ................................ 279,335 6,200 DENTSPLY International, Inc. .................. 328,414 8,123 HealthTronics, Inc.* .......................... 90,490 1,300 Hillenbrand Industries, Inc. .................. 64,701 3,291 ICU Medical, Inc.* ............................ 99,948 7,760 Lifecore Biomedical, Inc.* .................... 85,360 3,790 Neurometrix, Inc.*+ ........................... 105,551 6,224 Owens & Minor, Inc. ........................... 178,380 2,100 PerkinElmer, Inc. ............................. 43,470 11,800 Quidel Corp.*+ ................................ 96,052 6,700 Respironics, Inc.* ............................ 262,372 4,300 Thoratec Corp.* ............................... 70,391 ------------ 1,919,103 ------------ - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- METALS--0.1% 400 Cleveland-Cliffs, Inc.+ ....................... $ 28,432 ------------ MORTGAGE--0.8% 14,800 Fremont General Corp. ......................... 337,736 ------------ MULTIMEDIA/PUBLISHING--2.1% 8,800 John Wiley & Sons, Inc., Class A .............. 384,120 3,600 Meredith Corp. ................................ 176,760 6,105 R.H. Donnelley Corp.*+ ........................ 392,490 ------------ 953,370 ------------ OFFICE FURNISHINGS--0.2% 4,500 Knoll, Inc. ................................... 83,430 ------------ OIL & GAS EQUIPMENT & SERVICES--1.6% 300 Dresser-Rand Group, Inc.* ..................... 7,197 1,400 McDermott International, Inc.* ................ 48,370 3,000 Parker Drilling Co.* .......................... 24,210 14,800 Pride International, Inc.*+ ................... 374,440 8,700 Veritas DGC, Inc.* ............................ 279,792 ------------ 734,009 ------------ OIL & GAS FIELD EXPLORATION--5.8% 6,200 Berry Petroleum Co., Class A .................. 383,346 9,100 Cabot Oil & Gas Corp.+ ........................ 393,029 2,300 Callon Petroleum Co.* ......................... 42,504 4,400 Forest Oil Corp.* ............................. 197,780 6,600 Helmerich & Payne, Inc. ....................... 392,172 2,200 Petroleum Development Corp.* .................. 83,600 3,700 Remington Oil & Gas Corp.* .................... 142,561 7,500 Todco, Class A* ............................... 260,400 8,000 Vintage Petroleum, Inc.+ ...................... 307,440 13,700 W&T Offshore, Inc. ............................ 375,380 ------------ 2,578,212 ------------ OIL REFINING--1.1% 13,200 Frontier Oil Corp. ............................ 483,780 600 Giant Industries, Inc.*+ ...................... 29,550 ------------ 513,330 ------------ PACKAGING--0.8% 6,000 Silgan Holdings, Inc. ......................... 361,320 ------------ PAPER & ALLIED PRODUCTS--0.4% 13,800 Xerium Technologies, Inc.* .................... 169,050 ------------ The accompanying notes are an integral part of the financial statements. 22 [LOGO OMITTED] n/i numeric investors family of funds GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 2005 - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- PHARMACEUTICALS--3.6% 1,500 Albany Molecular Research, Inc.* .............. $ 25,020 8,000 Alpharma Inc., Class A+ ....................... 212,960 1,300 DOV Pharmaceutical, Inc.*+ .................... 19,526 13,600 Endo Pharmaceuticals Holdings, Inc.* .......... 408,000 25,700 King Pharmaceuticals, Inc.* ................... 377,790 1,535 Kos Pharmaceuticals, Inc.* .................... 104,564 2,620 New River Pharmaceuticals, Inc.* .............. 112,896 4,100 Savient Pharmaceuticals, Inc.* ................ 16,564 3,300 SciClone Pharmaceuticals, Inc.* ............... 16,962 19,500 ViroPharma, Inc.*+ ............................ 328,380 ------------ 1,622,662 ------------ REAL ESTATE INVESTMENT TRUSTS--2.0% 3,700 CBL & Associates Properties, Inc. ............. 156,954 4,100 Equity Lifestyle Properties, Inc. ............. 185,156 6,600 Mills Corp. (The) ............................. 386,364 4,800 Tanger Factory Outlet Centers, Inc.+ .......... 133,056 900 Ventas, Inc. .................................. 28,035 ------------ 889,565 ------------ RESIDENTIAL CONSTRUCTION--1.5% 7,000 Brookfield Homes Corp. ........................ 358,400 2,447 Comstock Homebuilding Cos., Inc., Class A* .................................... 52,121 4,600 Standard Pacific Corp. ........................ 202,078 1,400 WCI Communities, Inc.*+ ....................... 42,238 ------------ 654,837 ------------ RESTAURANTS--1.2% 15,700 Domino's Pizza, Inc. .......................... 361,100 5,400 Famous Dave's of America, Inc.* ............... 65,340 7,100 Luby's, Inc.* ................................. 93,294 ------------ 519,734 ------------ RETAIL - SPECIALTY--4.4% 4,500 Advance Auto Parts, Inc.*+ .................... 274,185 3,500 Barnes & Noble, Inc.* ......................... 132,195 16,500 Claire's Stores, Inc. ......................... 387,420 11,307 EZCORP, Inc., Class A* ........................ 184,643 600 Hibbett Sporting Goods, Inc.* ................. 20,184 8,800 Pacific Sunwear of California, Inc.* .......... 210,144 5,100 Rent-A-Center, Inc.* .......................... 103,020 3,000 Shoe Carnival, Inc.* .......................... 49,080 12,900 Sonic Automotive, Inc. ........................ 302,505 1,650 Sportsman's Guide, Inc. (The)* ................ 41,465 2,100 Steven Madden, Ltd.* .......................... 49,245 7,300 Yankee Candle Company, Inc. (The)* ............ 200,531 ------------ 1,954,617 ------------ - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- SAVINGS & LOAN ASSOCIATIONS--1.2% 3,500 Downey Financial Corp.+ ....................... $ 221,830 5,400 FirstFed Financial Corp.*+ .................... 310,770 ------------ 532,600 ------------ SCHOOLS--1.0% 3,050 Career Education Corp.*+ ...................... 119,560 9,133 Education Management Corp.* ................... 309,335 ------------ 428,895 ------------ SEMICONDUCTORS--5.3% 4,400 Cirrus Logic, Inc.* ........................... 34,760 1,200 Coherent, Inc.* ............................... 38,148 10,794 Cohu, Inc. .................................... 263,589 11,000 Cymer, Inc.* .................................. 368,500 300 EMCOR Group, Inc.+ ............................ 16,542 19,600 Emulex Corp.* ................................. 422,380 2,500 Lam Research Corp.*+ .......................... 79,250 40,200 LSI Logic Corp.* .............................. 387,528 22,600 Micrel, Inc.* ................................. 284,760 9,500 MKS Instruments, Inc.* ........................ 168,720 6,200 Photronics, Inc.* ............................. 128,774 5,330 Standard Microsystems Corp.* .................. 138,847 1,300 Tessera Technologies, Inc.* ................... 43,134 ------------ 2,374,932 ------------ SERVICES - EMPLOYMENT AGENCIES--0.8% 56 AMN Healthcare Services, Inc.* ................ 866 8,300 Manpower, Inc.+ ............................... 373,998 ------------ 374,864 ------------ TELECOMMUNICATIONS EQUIPMENT & SERVICES--2.7% 38,400 Arris Group, Inc.* ............................ 402,816 10,100 Comtech Telecommunications Corp.* ............. 354,510 1,700 Harris Corp. .................................. 65,637 6,853 InterDigital Communications Corp.* ............ 121,847 1,100 Syniverse Holdings, Inc.* ..................... 17,237 12,331 Talk America Holdings, Inc.*+ ................. 113,075 3,400 Tekelec* ...................................... 67,014 1,100 West Corp.* ................................... 42,614 ------------ 1,184,750 ------------ TRANSPORTATION--4.0% 3,200 Atlas Air Worldwide Holding-Wi* ............... 105,280 2,000 CNF, Inc. ..................................... 100,940 4,400 General Maritime Corp.* ....................... 164,384 13,400 Laidlaw International, Inc.* .................. 331,650 5,900 Overseas Shipholding Group, Inc.+ ............. 360,785 13,730 Pacer International, Inc.*+ ................... 360,275 The accompanying notes are an integral part of the financial statements. 23 [LOGO OMITTED] n/i numeric investors family of funds GROWTH FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) AUGUST 31, 2005 - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- TRANSPORTATION--(CONTINUED) 1,300 Ryder System, Inc. ............................ $ 45,617 7,000 Yellow Roadway Corp.* ......................... 327,950 ----------- 1,796,881 ----------- UTILITIES--0.8% 9,600 Energen Corp. ................................. 367,872 ----------- Total Common Stocks (Cost $40,438,251) .......................... 43,341,857 ----------- PRINCIPAL AMOUNT (000'S) - -------------- REPURCHASE AGREEMENTS--4.2% $ 800 Bear, Stearns & Co. Inc. (Agreement dated 08/31/05 to be repurchased at $800,422), 1.78%, 09/01/05, collateralized by $823,846 in U.S. Government Securities (Note 7) (Cost $800,382)** ....... 800,382 1,058 Bear, Stearns & Co. Inc. (Agreement dated 08/31/05 to be repurchased at $1,058,084), 3.53%, 09/01/05, collateralized by $1,091,235 in U.S. Government Securities (Note 7) (Cost $1,057,981) ....... 1,057,981 ----------- Total Repurchase Agreements (Cost $1,858,363) ........................... 1,858,363 ----------- Total Investments -- 101.5% (Cost $42,297,615) .................................... 45,200,220 ----------- Liabilities In Excess Of Other Assets -- (1.5)% .......... (674,876) ----------- Net Assets -- 100.0% ..................................... $44,525,344 =========== - ---------- * Non-income producing. ** Investment purchased with cash collateral received for securities on loan. + Security position is either entirely or partially out on loan. The accompanying notes are an integral part of the financial statements. 24 [LOGO OMITTED] n/i numeric investors family of funds MID CAP FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 2005 - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- COMMON STOCKS--97.4% AEROSPACE & DEFENSE--1.0% 6,500 Northrop Grumman Corp. ........................ $ 364,585 ----------- APPAREL--3.7% 15,400 Coach, Inc.* .................................. 511,126 9,600 Liz Claiborne, Inc. ........................... 393,888 6,800 VF Corp. ...................................... 403,308 ----------- 1,308,322 ----------- AUTOMOBILE PARTS & EQUIPMENT--2.4% 7,600 Johnson Controls, Inc.+ ....................... 455,848 14,300 TRW Automotive Holdings Corp.* ................ 419,705 ----------- 875,553 ----------- BANKS--5.5% 6,200 Comerica, Inc. ................................ 375,038 9,800 National City Corp. ........................... 358,974 17,700 North Fork Bancorporation, Inc. ............... 486,573 4,700 SunTrust Banks, Inc. .......................... 330,316 6,000 UnionBanCal Corp. ............................. 406,620 ----------- 1,957,521 ----------- BIOTECH--1.1% 8,800 Gilead Sciences, Inc.*+ ....................... 378,400 BUILDING & BUILDING MATERIALS--2.1% 5,500 Lafarge North America, Inc.+ .................. 379,225 6,200 USG Corp.*+ ................................... 389,670 ----------- 768,895 ----------- CHEMICALS - DIVERSIFIED--0.9% 5,800 Celanese Corp., Series A ...................... 106,894 5,200 Dow Chemical Co. (The) ........................ 224,640 ----------- 331,534 ----------- CHEMICALS - SPECIALTY--2.0% 6,800 Eastman Chemical Co. .......................... 326,196 9,200 Lubrizol Corp. (The) .......................... 380,420 ----------- 706,616 ----------- COMMERCIAL SERVICES--2.1% 17,900 Cendant Corp. ................................. 364,086 12,700 Monster Worldwide, Inc.* ...................... 396,748 ----------- 760,834 ----------- - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- COMPUTER NETWORKING PRODUCTS--1.9% 18,100 Seagate Technology* ........................... $ 300,279 19,400 Synopsys, Inc.* ............................... 368,600 ----------- 668,879 ----------- COMPUTER SERVICES--1.2% 10,000 Computer Sciences Corp.* ...................... 445,500 ----------- COMPUTER SOFTWARE--3.8% 18,800 Activision, Inc.* ............................. 420,180 25,500 Cadence Design Systems, Inc.*+ ................ 408,255 45,100 Compuware Corp.* .............................. 408,606 18,100 Parametric Technology Corp.* .................. 109,686 ----------- 1,346,727 ----------- COMPUTERS--1.2% 9,100 Apple Computer, Inc.* ......................... 427,063 ----------- ELECTRONIC COMPONENTS & ACCESSORIES--1.1% 16,300 Avnet, Inc.*+ ................................. 408,315 ----------- ENERGY--2.2% 9,800 NRG Energy, Inc.* ............................. 392,196 4,200 TXU Corp.+ .................................... 407,484 ----------- 799,680 ----------- FINANCIAL SERVICES--2.6% 9,800 CIT Group, Inc. ............................... 443,744 1,600 Countrywide Financial Corp.+ .................. 54,064 15,800 H&R Block, Inc.+ .............................. 425,810 ----------- 923,618 ----------- FOOD & AGRICULTURE--1.5% 23,800 Archer-Daniels-Midland Co. .................... 535,738 ----------- HAZARDOUS WASTE MANAGEMENT--1.2% 11,400 Republic Services, Inc. ....................... 413,022 ----------- HEALTH CARE--1.6% 7,600 Caremark Rx, Inc.* ............................ 355,148 3,300 WellChoice, Inc.* ............................. 234,630 ----------- 589,778 ----------- HOTELS & MOTELS--1.0% 5,600 Choice Hotels International, Inc. ............. 343,784 ----------- INSURANCE--2.1% 9,100 Allmerica Financial Corp.* .................... 370,461 7,564 Radian Group, Inc.+ ........................... 387,125 ----------- 757,586 ----------- The accompanying notes are an integral part of the financial statements. 25 [LOGO OMITTED] n/i numeric investors family of funds MID CAP FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 2005 - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- INSURANCE - HEALTH & LIFE--2.1% 10,200 Nationwide Financial Services, Inc., Class A .. $ 393,312 8,800 Protective Life Corp. ......................... 361,064 ----------- 754,376 ----------- INSURANCE - PROPERTY & CASUALTY--4.6% 8,100 ACE Ltd. ...................................... 359,721 2,300 Everest Re Group Ltd. ......................... 212,957 8,900 IPC Holdings Ltd. ............................. 349,681 15,300 Old Republic International Corp. .............. 385,101 7,700 RenaissanceRe Holdings Ltd. ................... 348,887 ----------- 1,656,347 ----------- INTERNET SOFTWARE--0.1% 1,600 McAfee, Inc.* ................................. 49,040 ----------- LEISURE & ENTERTAINMENT--2.7% 9,100 GTECH Holdings Corp.+ ......................... 260,078 6,900 Harley-Davidson, Inc. ......................... 339,894 10,500 Penn National Gaming, Inc.* ................... 357,840 ----------- 957,812 ----------- MACHINERY--1.1% 8,300 Terex Corp.* .................................. 404,874 ----------- MANUFACTURING--2.7% 7,000 Eaton Corp. ................................... 447,440 4,600 Ingersoll Rand Co. Ltd., Class A .............. 366,252 3,200 Stanley Works (The) ........................... 146,400 ----------- 960,092 ----------- MEDICAL INSTRUMENTS & SUPPLIES--3.4% 9,200 Baxter International, Inc. .................... 371,036 6,500 Becton, Dickinson & Co. ....................... 342,095 1,100 Hillenbrand Industries, Inc. .................. 54,747 5,400 McKesson Corp. ................................ 252,018 5,000 Respironics, Inc.* ............................ 195,800 ----------- 1,215,696 ----------- MULTIMEDIA/PUBLISHING--3.0% 4,100 Gannett Co., Inc. ............................. 298,152 8,500 John Wiley & Sons, Inc., Class A .............. 371,025 1,100 McGraw-Hill Cos., Inc. (The) .................. 53,042 5,700 R.H. Donnelley Corp.*+ ........................ 366,453 ----------- 1,088,672 ----------- - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- OIL & GAS EQUIPMENT & SERVICES--1.1% 15,600 Pride International, Inc.* .................... $ 394,680 ----------- OIL & GAS FIELD EXPLORATION--3.6% 5,700 Burlington Resources, Inc. .................... 420,603 4,700 Cabot Oil & Gas Corp.+ ........................ 202,993 2,200 Devon Energy Corp. ............................ 133,694 9,400 Ultra Petroleum Corp.* ........................ 415,856 1,500 Unit Corp.* ................................... 78,090 1,900 W&T Offshore, Inc. ............................ 52,060 ----------- 1,303,296 ----------- PHARMACEUTICALS--5.1% 1,200 AmerisourceBergen Corp. ....................... 89,604 12,700 Endo Pharmaceuticals Holdings, Inc.* .......... 381,000 7,700 Express Scripts, Inc.* ........................ 445,522 10,600 Hospira, Inc.* ................................ 422,304 29,300 King Pharmaceuticals, Inc.* ................... 430,710 900 Pharmaceutical Product Development, Inc.* ..... 50,643 ----------- 1,819,783 ----------- REAL ESTATE INVESTMENT TRUSTS--5.7% 9,200 CBL & Associates Properties, Inc. ............. 390,264 10,200 General Growth Properties, Inc. ............... 459,918 24,100 Host Marriott Corp.+ .......................... 421,509 30,100 HRPT Properties Trust ......................... 385,280 6,500 Mills Corp. (The) ............................. 380,510 ----------- 2,037,481 ----------- RESIDENTIAL CONSTRUCTION--0.3% 2,400 Toll Brothers, Inc.*+ ......................... 115,320 ----------- RETAIL - SPECIALTY--3.2% 6,300 Advance Auto Parts, Inc.*+ .................... 383,859 16,400 Claire's Stores, Inc. ......................... 385,072 16,400 Staples, Inc. ................................. 360,144 ----------- 1,129,075 ----------- SEMICONDUCTORS--2.9% 10,400 Broadcom Corp., Class A* ...................... 452,400 13,500 Lam Research Corp.*+ .......................... 427,950 5,800 National Semiconductor Corp. .................. 144,594 ----------- 1,024,944 ----------- The accompanying notes are an integral part of the financial statements. 26 [LOGO OMITTED] n/i numeric investors family of funds MID CAP FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) AUGUST 31, 2005 - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- TELECOMMUNICATIONS EQUIPMENT & SERVICES--3.3% 19,800 Crown Castle International Corp.* ............. $ 490,248 2,000 Leap Wireless International, Inc.* ............ 68,320 11,700 Scientific-Atlanta, Inc.+ ..................... 447,642 18,000 Tellabs, Inc.* ................................ 160,020 ----------- 1,166,230 ----------- TOBACCO--0.2% 1,800 Loews Corp.-Carolina Group .................... 69,498 ----------- TRANSPORTATION--4.0% 3,300 Burlington Northern Santa Fe Corp. ............ 174,966 9,900 CSX Corp. ..................................... 434,907 13,400 Norfolk Southern Corp. ........................ 477,174 10,300 Ryder System, Inc. ............................ 361,427 ----------- 1,448,474 ----------- UTILITIES--4.9% 2,800 Alliant Energy Corp. .......................... 84,140 9,600 DTE Energy Co.+ ............................... 439,392 11,000 Energen Corp. ................................. 421,520 12,700 National Fuel Gas Co.+ ........................ 382,397 10,100 Northeast Utilities ........................... 201,192 5,100 UGI Corp.+ .................................... 141,015 4,100 Westar Energy, Inc. ........................... 98,482 ----------- 1,768,138 ----------- WHOLESALE - DISTRIBUTION--1.2% 12,000 SUPERVALU, Inc.+ .............................. 417,600 ----------- Total Common Stocks (Cost $32,306,989) 34,893,378 ----------- REPURCHASE AGREEMENTS--6.7% $1,026 Bear, Stearns & Co. Inc. (Agreement dated 08/31/05 to be repurchased at $1,025,743), 1.78%, 09/01/05, collateralized by $1,062,328 in U.S. Government Securities (Note 7) (Cost $1,025,692)** ..... $ 1,025,692 ----------- 1,391 Bear, Stearns & Co. Inc. (Agreement dated 08/31/05 to be repurchased at $1,390,937), 3.53%, 09/01/05, collateralized by $1,438,118 in U.S. Government Securities (Note 7) (Cost $1,390,801) ....... 1,390,801 ----------- Total Repurchase Agreements (Cost $2,416,493) ........................... 2,416,493 ----------- Total Investments -- 104.1% (Cost $34,723,482) .................................... 37,309,871 ----------- Liabilities in Excess of Other Assets -- (4.1)% .......... (1,477,393) ----------- Net Assets -- 100.0% ..................................... $35,832,478 =========== - ---------- * Non-income producing. ** Investment purchased with cash collateral received for securities on loan. + Security position is either entirely or partially out on loan. The accompanying notes are an integral part of the financial statements. 27 [LOGO OMITTED] n/i numeric investors family of funds SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 2005 - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- COMMON STOCKS--98.5% AEROSPACE & DEFENSE--0.3% 3,500 K&F Industries Holdings, Inc.*+ ............... $ 59,500 25,700 Kaman Corp., Class A .......................... 616,543 ----------- 676,043 ----------- AIRLINES--1.1% 69,200 ExpressJet Holdings, Inc.* .................... 658,092 66,700 Republic Airways Holdings, Inc.* .............. 895,114 101,919 World Air Holdings, Inc.* ..................... 1,026,324 ----------- 2,579,530 ----------- APPAREL--2.3% 72,400 Buckle, Inc. (The) ............................ 2,842,424 35,800 Children's Place Retail Stores, Inc. (The)* ... 1,464,578 28,600 Maidenform Brands, Inc.* ...................... 471,900 20,100 UniFirst Corp. ................................ 789,729 ----------- 5,568,631 ----------- AUTOMOBILE PARTS & EQUIPMENT--0.9% 35,200 ArvinMeritor, Inc.+ ........................... 652,960 40,401 Commercial Vehicle Group, Inc.* ............... 837,513 24,800 TRW Automotive Holdings Corp.* ................ 727,880 ----------- 2,218,353 ----------- BANKS--5.4% 7,100 BancFirst Corp. ............................... 605,275 2,400 Bank of Hawaii Corp. .......................... 121,800 13,300 BankFinancial Corp.* .......................... 189,525 7,823 BOK Financial Corp. ........................... 367,603 4,828 Community Bancorp* ............................ 165,359 17,200 Cullen/Frost Bankers, Inc.+ ................... 840,564 36,000 Digital Insight Corp.* ........................ 973,440 132,800 First BanCorp ................................. 2,451,488 44,500 First Midwest Bancorp, Inc. ................... 1,688,330 12,000 First Regional Bancorp* ....................... 1,042,080 3,826 First State Bancorporation* ................... 86,429 9,728 Glacier Bancorp, Inc.+ ........................ 289,700 12,000 MainSource Financial Group, Inc.+ ............. 218,520 11,477 Mid-State Bancshares+ ......................... 326,980 20,600 Preferred Bank ................................ 840,686 34,620 Southwest Bancorp, Inc. ....................... 800,068 3,400 Virginia Financial Group, Inc. ................ 117,130 6,623 WesBanco, Inc. ................................ 201,935 114,305 Wilshire Bancorp, Inc. ........................ 1,671,139 ----------- 12,998,051 ----------- BUILDING & BUILDING MATERIALS--0.6% 70,609 Builders FirstSource, Inc.* ................... 1,433,363 ----------- - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- CHEMICALS - SPECIALTY--3.3% 11,600 Balchem Corp. ................................. $ 358,440 130,700 Hercules, Inc.* ............................... 1,666,425 69,700 Lubrizol Corp. (The) .......................... 2,882,095 176,800 UAP Holding Corp. ............................. 3,033,888 10,900 Wellman, Inc.+ ................................ 75,755 ----------- 8,016,603 ----------- COMMERCIAL SERVICES--0.5% 36,529 Steiner Leisure, Ltd.* ........................ 1,126,189 ----------- COMPUTER COMPONENTS--0.2% 14,300 Komag, Inc.* .................................. 477,048 ----------- COMPUTER NETWORKING PRODUCTS--1.1% 64,611 Black Box Corp.+ .............................. 2,776,335 ----------- COMPUTER SERVICES--0.4% 5,900 PAR Technology Corp.* ......................... 147,264 31,800 Radiant Systems, Inc.* ........................ 375,558 22,900 Sykes Enterprises, Inc.* ...................... 243,885 9,600 Syntel, Inc. .................................. 180,000 ----------- 946,707 ----------- COMPUTER SOFTWARE--2.7% 58,500 American Reprographics, Co.* .................. 993,915 56,200 Informatica Corp.* ............................ 641,804 25,600 InterVideo, Inc.* ............................. 256,256 18,477 ManTech International Corp., Class A* ......... 572,972 21,800 Micromuse, Inc.* .............................. 145,406 229,716 Parametric Technology Corp.* .................. 1,392,079 39,789 Progress Software Corp.* ...................... 1,219,931 76,380 Synopsys, Inc.* ............................... 1,451,220 ----------- 6,673,583 ----------- CONSUMER PRODUCTS--0.1% 3,900 CSS Industries, Inc. .......................... 140,790 ----------- DATA PROCESSING--1.0% 19,400 infoUSA, Inc. ................................. 208,550 26,800 Reynolds and Reynolds Co. (The), Class A+ ..... 764,872 58,700 Transaction Systems Architects, Inc.* ......... 1,571,986 ----------- 2,545,408 ----------- ELECTRONIC COMPONENTS & ACCESSORIES--0.8% 10,000 Bel Fuse, Inc., Class B ....................... 321,700 101,000 Exar Corp.* ................................... 1,576,610 ----------- 1,898,310 ----------- ELECTRONIC MEASUREMENTS - INSTRUMENTS--0.4% 26,306 MTS Systems Corp. ............................. 1,084,333 ----------- The accompanying notes are an integral part of the financial statements. 28 [LOGO OMITTED] n/i numeric investors family of funds SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 2005 - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- ENERGY & RAW MATERIALS--0.1% 20,300 TransMontaigne, Inc.* ......................... $ 192,241 ----------- ENGINEERING--0.4% 26,200 URS Corp.*+ ................................... 987,216 ----------- FINANCIAL SERVICES--3.1% 55,642 Asset Acceptance Capital Corp.* ............... 1,606,385 12,900 Hercules Technology Growth Capital, Inc.* ..... 171,441 103,100 Jackson Hewitt Tax Service, Inc. .............. 2,638,329 5,200 Marlin Business Services, Inc.* ............... 119,600 20,600 Nelnet, Inc., Class A* ........................ 737,480 18,550 Nicholas Financial, Inc. ...................... 185,500 42,000 optionsXpress Holdings, Inc. .................. 720,300 22,400 Westcorp ...................................... 1,383,200 ----------- 7,562,235 ----------- FOOD--0.6% 94,640 Premium Standard Farms, Inc.*+ ................ 1,369,441 ----------- FOOD & AGRICULTURE--2.9% 97,508 Gold Kist, Inc.*+ ............................. 1,801,948 76,400 Nash Finch Co.+ ............................... 3,208,800 26,700 Pilgrim's Pride Corp.+ ........................ 905,130 4,049 Sanderson Farms, Inc. ......................... 149,529 102,096 Spartan Stores, Inc.* ......................... 1,045,463 ----------- 7,110,870 ----------- HEALTH CARE--1.3% 51,100 Magellan Health Services, Inc.* ............... 1,811,495 75,600 Odyssey HealthCare, Inc.* ..................... 1,262,520 ----------- 3,074,015 ----------- HOTELS & MOTELS--1.1% 44,900 Choice Hotels International, Inc. ............. 2,756,411 ----------- INSURANCE--1.0% 110,100 Assured Guaranty, Ltd.+ ....................... 2,466,240 ----------- INSURANCE - HEALTH & LIFE--2.1% 29,800 FBL Financial Group, Inc., Class A ............ 893,106 52,800 Protective Life Corp. ......................... 2,166,384 64,700 UICI .......................................... 1,996,642 ----------- 5,056,132 ----------- INSURANCE - PROPERTY & CASUALTY--5.6% 23,000 Allmerica Financial Corp.* .................... 936,330 25,100 American Financial Group, Inc. ................ 841,603 31,200 Arch Capital Group, Ltd.* ..................... 1,355,640 26,400 Capital Title Group, Inc. ..................... 206,448 18,761 EMC Insurance Group, Inc. ..................... 337,698 59,752 IPC Holdings, Ltd. ............................ 2,347,656 - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- INSURANCE - PROPERTY & CASUALTY--(CONTINUED) 1,400 James River Group, Inc.* ...................... $ 28,000 41,940 National Atlantic Holdings Corp.* ............. 460,920 84,200 Platinum Underwriters Holdings, Ltd. .......... 2,734,816 105,400 PXRE Group, Ltd. .............................. 2,454,766 44,347 Safety Insurance Group, Inc.+ ................. 1,555,693 16,043 United America Indemnity, Ltd., Class A*+ ..... 287,972 ----------- INTERNET CONTENT--0.3% 7,600 TriZetto Group, Inc. (The)* ................... 119,244 54,100 United Online, Inc. ........................... 704,923 ----------- 824,167 ----------- INTERNET SOFTWARE--0.3% 96,300 AsiaInfo Holdings, Inc.* ...................... 484,389 25,900 SonicWALL, Inc.* .............................. 154,623 ----------- 639,012 ----------- LEISURE & ENTERTAINMENT--0.8% 91,500 Bluegreen Corp.* .............................. 1,614,060 4,400 Dover Downs Gaming & Entertainment, Inc. ...... 58,608 36,400 MTR Gaming Group, Inc.* ....................... 336,336 ----------- 2,009,004 ----------- MACHINERY--3.9% 78,713 Columbus McKinnon Corp.* ...................... 1,519,161 29,800 DXP Enterprises, Inc.* ........................ 489,316 24,618 Flow International Corp.*+ .................... 214,915 92,300 JLG Industries, Inc.+ ......................... 3,026,517 31,000 Terex Corp.* .................................. 1,512,180 108,900 Wabtec Corp. .................................. 2,831,400 ----------- 9,593,489 ----------- MANUFACTURING--3.1% 2,800 Cavco Industries, Inc.* ....................... 93,884 18,900 CIRCOR International, Inc. .................... 496,314 23,500 Crane Co.+ .................................... 695,835 139,100 Earle M. Jorgensen Co.* ....................... 1,421,602 54,046 Fargo Electronics* ............................ 983,637 8,600 Kadant, Inc.* ................................. 167,700 56,829 LSI Industries, Inc. .......................... 871,757 24,930 Stanley Furniture Co., Inc. ................... 668,373 21,300 Teleflex, Inc.+ ............................... 1,466,505 13,500 Walter Industries, Inc. ....................... 592,245 ----------- 7,457,852 ----------- MEDICAL & MEDICAL SERVICES--1.7% 26,100 Kendle International, Inc.* ................... 631,620 19,200 Kindred Healthcare, Inc.*+ .................... 587,520 The accompanying notes are an integral part of the financial statements. 29 [LOGO OMITTED] n/i numeric investors family of funds SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 2005 - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- MEDICAL & MEDICAL SERVICES--(CONTINUED) 19,400 Pediatrix Medical Group, Inc.* ................ $ 1,438,122 51,881 PRA International* ............................ 1,525,301 ----------- 4,182,563 ----------- MEDICAL INSTRUMENTS & SUPPLIES--0.1% 14,421 Cholestech Corp.* ............................. 148,536 ----------- METALS--0.2% 6,900 Cleveland-Cliffs, Inc.+ ....................... 490,452 ----------- MORTGAGE--2.4% 154,200 Fremont General Corp. ......................... 3,518,844 61,100 IndyMac Bancorp, Inc. ......................... 2,433,613 ----------- 5,952,457 ----------- MULTIMEDIA/PUBLISHING--1.8% 65,600 John Wiley & Sons, Inc., Class A .............. 2,863,440 7,300 Meredith Corp. ................................ 358,430 23,100 R.H. Donnelley Corp.*+ ........................ 1,485,099 ----------- 4,706,969 ----------- OFFICE & BUSINESS EQUIPMENT--0.1% 12,100 IKON Office Solutions, Inc. ................... 122,089 ----------- OFFICE FURNISHINGS--0.2% 21,800 Knoll, Inc. ................................... 404,172 ----------- OIL & GAS EQUIPMENT & SERVICES--0.7% 1,400 Dresser-Rand Group, Inc.*+ .................... 33,586 48,300 Northwest Natural Gas Co. ..................... 1,776,474 ----------- 1,810,060 ----------- OIL & GAS FIELD EXPLORATION--4.3% 43,900 Berry Petroleum Co., Class A .................. 2,714,337 78,800 Cabot Oil & Gas Corp.+ ........................ 3,403,372 3,800 Callon Petroleum Co.* ......................... 70,224 3,600 Petroleum Development Corp.* .................. 136,800 27,400 Vintage Petroleum, Inc.+ ...................... 1,052,982 108,600 W&T Offshore, Inc. ............................ 2,975,640 ----------- 10,353,355 ----------- OIL REFINING--1.3% 85,600 Frontier Oil Corp. ............................ 3,137,240 ----------- PACKAGING--1.3% 50,563 Silgan Holdings, Inc. ......................... 3,044,904 ----------- PAPER & ALLIED PRODUCTS--0.7% 8,800 Rayonier, Inc. ................................ 477,400 105,400 Xerium Technologies, Inc.* .................... 1,291,150 ----------- 1,768,550 ----------- - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- PHARMACEUTICALS--1.1% 8,200 Albany Molecular Research, Inc.* .............. $ 136,776 43,500 Alpharma Inc., Class A+ ....................... 1,157,970 27,100 Savient Pharmaceuticals, Inc.* ................ 109,484 74,004 ViroPharma, Inc.*+ ............................ 1,246,227 ----------- 2,650,457 ----------- PRINTING--0.1% 2,932 Cadmus Communications Corp. ................... 59,520 3,100 Consolidated Graphics, Inc.* .................. 119,691 ----------- 179,211 ----------- REAL ESTATE INVESTMENT TRUSTS--10.2% 70,600 Associated Estates Realty Corp. ............... 696,822 19,300 Brandywine Realty Trust ....................... 615,670 66,800 CBL & Associates Properties, Inc. ............. 2,833,656 71,900 Digital Realty Trust, Inc. .................... 1,367,538 43,100 Education Realty Trust, Inc. .................. 795,195 62,800 Equity Lifestyle Properties, Inc. ............. 2,836,048 22,900 Essex Property Trust, Inc.+ ................... 2,014,055 228,700 HRPT Properties Trust ......................... 2,927,360 86,900 Innkeepers USA Trust .......................... 1,364,330 15,700 Lexington Corporate Properties Trust+ ......... 361,100 23,200 LTC Properties, Inc. .......................... 469,336 8,200 Mack-Cali Realty Corp. ........................ 361,210 75,200 OMEGA Healthcare Investors, Inc. .............. 998,656 67,700 PS Business Parks, Inc.-CA .................... 3,080,350 16,600 SL Green Realty Corp. ......................... 1,097,758 104,400 Tanger Factory Outlet Centers, Inc.+ .......... 2,893,968 ----------- 24,713,052 ----------- RESIDENTIAL CONSTRUCTION--1.3% 59,400 Brookfield Homes Corp. ........................ 3,041,280 3,900 WCI Communities, Inc.*+ ....................... 117,663 ----------- 3,158,943 ----------- RESTAURANTS--1.8% 136,800 Domino's Pizza, Inc. .......................... 3,146,400 45,400 Luby's, Inc.* ................................. 596,556 107,886 Main Street Restaurant Group, Inc.* ........... 607,398 ----------- 4,350,354 ----------- RETAIL - SPECIALTY--4.3% 17,200 Asbury Automotive Group, Inc.*+ ............... 293,432 16,200 Barnes & Noble, Inc.* ......................... 611,874 114,300 Claire's Stores, Inc. ......................... 2,683,764 32,018 Pacific Sunwear of California, Inc.* .......... 764,590 21,200 Rent-A-Center, Inc.* .......................... 428,240 9,800 REX Stores Corp.* ............................. 151,018 25,100 Shoe Carnival, Inc.* .......................... 410,636 The accompanying notes are an integral part of the financial statements. 30 [LOGO OMITTED] n/i numeric investors family of funds SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) AUGUST 31, 2005 - ------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) - ------------------------------------------------------------------------------- RETAIL - SPECIALTY--(CONTINUED) 124,000 Sonic Automotive, Inc. ........................ $ 2,907,800 32,500 Sportsman's Guide, Inc. (The)* ................ 816,725 15,800 Steven Madden, Ltd.* .......................... 370,510 19,372 Trans World Entertainment Corp.* .............. 144,515 35,600 Yankee Candle Company, Inc. (The) ............. 977,932 ----------- 10,561,036 ----------- SAVINGS & LOAN ASSOCIATIONS--2.4% 43,000 Downey Financial Corp.+ ....................... 2,725,340 10,100 First Place Financial Corp. ................... 214,322 31,600 FirstFed Financial Corp.*+ .................... 1,818,580 10,295 ITLA Capital Corp.* ........................... 553,356 16,082 PFF Bancorp, Inc. ............................. 478,118 ----------- 5,789,716 ----------- SEMICONDUCTORS--4.1% 46,400 Cirrus Logic, Inc.* ........................... 366,560 97,564 Cohu, Inc. .................................... 2,382,513 47,000 Cymer, Inc.* .................................. 1,574,500 4,900 EMCOR Group, Inc.*+ ........................... 270,186 82,000 Emulex Corp.* ................................. 1,767,100 117,200 Micrel, Inc.* ................................. 1,476,720 23,653 MKS Instruments, Inc.* ........................ 420,077 22,883 Photronics, Inc.* ............................. 475,280 43,690 Standard Microsystems Corp.* .................. 1,138,125 ----------- 9,871,061 ----------- TELECOMMUNICATIONS EQUIPMENT & SERVICES--2.5% 7,300 Audiovox Corp., Class A* ...................... 131,984 132,400 Cincinnati Bell, Inc.*+ ....................... 573,292 32,000 Commonwealth Telephone Enterprises, Inc. ...... 1,287,680 44,840 Comtech Telecommunications Corp.* ............. 1,573,884 39,800 Iowa Telecommunications Services, Inc. ........ 740,678 156,700 Talk America Holdings, Inc.*+ ................. 1,436,939 8,700 West Corp.* ................................... 337,038 ----------- 6,081,495 ----------- TRANSPORTATION--4.6% 31,800 Atlas Air Worldwide Holding-Wi* ............... 1,046,220 24,200 General Maritime Corp.* ....................... 904,112 118,900 Laidlaw International, Inc.* .................. 2,942,775 7,900 Maritrans, Inc. ............................... 231,628 49,400 Overseas Shipholding Group, Inc.+ ............. 3,020,810 57,917 Pacer International, Inc.*+ ................... 1,519,742 30,900 Yellow Roadway Corp.* ......................... 1,447,665 ----------- 11,112,952 ----------- - ------------------------------------------------------------------------------- VALUE SHARES/UNITS (NOTE 1) - ------------------------------------------------------------------------------- UTILITIES--3.6% 20,100 Avista Corp. .................................. $ 390,744 86,200 Energen Corp. ................................. 3,303,184 58,000 National Fuel Gas Co.+ ........................ 1,746,380 129,000 Northeast Utilities ........................... 2,569,680 30,600 UGI Corp.+ .................................... 846,090 ------------ 8,856,078 ------------ Total Common Stocks (Cost $225,244,301) ......................... 239,250,846 ------------ WARRANTS--0.0% SAVINGS & LOAN ASSOCIATIONS--0.0% 4,100 Dime Community Bancshares, Litigation Tracking Warrants* ............... 701 ------------ Total Warrants (Cost $768) ................................. 701 ------------ PRINCIPAL AMOUNT (000'S) - -------------- REPURCHASE AGREEMENTS--2.5% $1,332 Bear, Stearns & Co. Inc. (Agreement dated 08/31/05 to be repurchased at $1,332,418), 1.78%, 09/01/05, collateralized by $1,373,077 in U.S. Government Securities (Note 7) (Cost $1,332,352)** ..... 1,332,352 4,684 Bear, Stearns & Co. Inc. (Agreement dated 08/31/05 to be repurchased at $4,684,258), 3.53%, 09/01/05, collateralized by $4,820,224 in U.S. Government Securities (Note 7) (Cost $4,683,799) ....... 4,683,799 ------------ Total Repurchase Agreements (Cost $6,016,151) ........................... 6,016,151 ------------ Total Investments -- 101.0% (Cost $231,261,220) ................................... 245,267,698 ------------ Liabilities in Excess of Other Assets -- (1.0)% .......... (2,438,065) ------------ Net Assets -- 100.0% ..................................... $242,829,633 ============ - ---------- * Non-income producing. ** Investment purchased with cash collateral received for securities on loan. + Security position is either entirely or partially out on loan. The accompanying notes are an integral part of the financial statements. 31 [LOGO OMITTED] n/i numeric investors family of funds STATEMENTS OF ASSETS AND LIABILITIES AUGUST 31, 2005
EMERGING GROWTH GROWTH MID CAP SMALL CAP VALUE FUND FUND FUND FUND ------------ ----------- ----------- ------------ ASSETS Investments, at value including securities on loan (Note 6) (Cost -- $145,777,303, $42,297,615, $34,723,482 and $231,261,220, respectively) .................................... $158,630,760 $45,200,220 $37,309,871 $245,267,698 Receivable for investments sold ..................... 3,964,608 1,378,515 769,809 6,317,895 Dividends and interest receivable ................... 54,821 20,581 34,157 235,690 Receivable for Fund shares sold ..................... 18,500 70,000 -- 220,283 Prepaid expenses and other assets ................... 15,188 10,425 9,995 14,008 ------------ ----------- ----------- ------------ Total assets ..................................... 162,683,877 46,679,741 38,123,832 252,055,574 ------------ ----------- ----------- ------------ LIABILITIES Payable for investments purchased ................... 4,594,420 1,299,230 1,207,072 7,385,584 Payable upon return of securities loaned (Note 7) ... 1,295,091 800,382 1,025,692 1,332,352 Payable for Fund shares redeemed .................... 113,210 -- 9,176 213,178 Investment advisory fee payable ..................... 99,579 12,037 10,374 149,795 Accrued expenses and other liabilities .............. 97,051 42,748 39,040 145,032 ------------ ----------- ----------- ------------ Total liabilities ................................ 6,199,351 2,154,397 2,291,354 9,225,941 ------------ ----------- ----------- ------------ NET ASSETS Capital stock, $0.001 par value ..................... 9,660 2,769 1,778 11,888 Additional paid-in capital .......................... 119,743,232 38,938,733 27,892,911 188,382,003 Undistributed net investment income ................. -- -- 43,897 638,828 Accumulated net realized gain from investments ...... 23,878,177 2,680,237 5,307,503 39,790,436 Net unrealized appreciation on investments .......... 12,853,457 2,903,605 2,586,389 14,006,478 ------------ ----------- ----------- ------------ Net assets applicable to shares outstanding ......... $156,484,526 $44,525,344 $35,832,478 $242,829,633 ============ =========== =========== ============ Shares outstanding ..................................... 9,660,120 2,768,733 1,777,614 11,887,515 ------------ ----------- ----------- ------------ Net asset value, offering and redemption price per share ........................................... $16.20 $16.08 $20.16 $20.43 ====== ====== ====== ======
The accompanying notes are an integral part of the financial statements. 32 [LOGO OMITTED] n/i numeric investors family of funds STATEMENTS OF OPERATIONS FOR THE FISCAL YEAR ENDED AUGUST 31, 2005
EMERGING GROWTH GROWTH MID CAP SMALL CAP VALUE FUND FUND FUND FUND ------------ ----------- ----------- ------------ INVESTMENT INCOME Dividends* .......................................... $ 596,129 $ 190,621 $ 417,613 $ 3,154,663 Interest ............................................ 99,264 29,930 27,724 136,234 Securities lending (Note 6) ......................... 44,196 11,068 6,400 38,050 ------------ ----------- ----------- ------------ Total investment income ............................. 739,589 231,619 451,737 3,328,947 ------------ ----------- ----------- ------------ EXPENSES Investment advisory fees (Note 2) ................... 1,118,554 231,031 166,006 1,451,659 Co-Administration fees and expenses (Note 2) ........ 297,902 112,718 105,669 431,974 Administrative services fees ........................ 223,711 60,702 49,882 352,557 Transfer agent fees and expenses .................... 68,655 51,285 60,370 93,942 Audit and legal fees ................................ 49,410 21,935 19,697 71,681 Printing ............................................ 67,000 15,990 14,043 78,226 Custodian fees and expenses ......................... 47,242 12,890 10,826 75,011 Shareholder service fees (Note 3) ................... 51,043 20,439 17,613 46,684 Directors' and officer's fees and expenses .......... 34,147 17,353 17,066 47,433 Federal and state registration fees ................. 19,084 15,429 16,289 21,270 Other ............................................... 11,456 2,944 2,641 17,892 ------------ ----------- ----------- ------------ Total expenses before waivers .................... 1,988,204 562,716 480,102 2,688,329 Less: waivers .................................... (227,440) (78,649) (72,304) (358,433) ------------ ----------- ----------- ------------ Net expenses after waivers ....................... 1,760,764 484,067 407,798 2,329,896 ------------ ----------- ----------- ------------ Net investment income/(loss) ..................... (1,021,175) (252,448) 43,939 999,051 ------------ ----------- ----------- ------------ NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain from investments .................. 26,328,257 6,841,103 6,385,458 45,589,269 Net change in unrealized appreciation on investments ...................................... 8,725,455 1,811,661 1,831,144 7,367,445 ------------ ----------- ----------- ------------ Net realized and unrealized gain on investments ..... 35,053,712 8,652,764 8,216,602 52,956,714 ------------ ----------- ----------- ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ..................................... $ 34,032,537 $ 8,400,316 $ 8,260,541 $ 53,955,765 ============ =========== =========== ============
- ----------- * Net of foreign withholding taxes of $2,162, $681, $388 and $926 for the Emerging Growth Fund, Growth Fund, Mid Cap Fund and Small Cap Value Fund, respectively. The accompanying notes are an integral part of the financial statements. 33 [LOGO OMITTED] n/i numeric investors family of funds STATEMENTS OF CHANGES IN NET ASSETS
EMERGING GROWTH GROWTH FUND FUND ------------------------------ ----------------------------- FOR THE FISCAL YEARS FOR THE FISCAL YEARS ENDED AUGUST 31, ENDED AUGUST 31, ------------------------------ ----------------------------- 2005 2004 2005 2004 ------------- ------------- ------------ ------------ INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS: Net investment income/(loss) ........................ $ (1,021,175) $ (840,218) $ (252,448) $ (249,358) Net realized gain from investments .................. 26,328,257 38,873,967 6,841,103 8,575,883 Net change in unrealized appreciation/(depreciation) on investments ................................... 8,725,455 (20,887,368) 1,811,661 (3,978,325) ------------- ------------- ------------ ------------ Net increase in net assets resulting from operations ....................................... 34,032,537 17,146,381 8,400,316 4,348,200 ------------- ------------- ------------ ------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ............................... -- -- -- -- Net realized capital gains .......................... (35,927,417) (2,757,588) -- -- ------------- ------------- ------------ ------------ Total dividends and distributions to shareholders ... (35,927,417) (2,757,588) -- -- ------------- ------------- ------------ ------------ INCREASE/(DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 5) ................. 24,848,186 (11,143,293) 48,952 (2,081,318) ------------- ------------- ------------ ------------ Total increase in net assets ........................ 22,953,306 3,245,500 8,449,268 2,266,882 NET ASSETS Beginning of year ................................... 133,531,220 130,285,720 36,076,076 33,809,194 ------------- ------------- ------------ ------------ End of year* ........................................ $ 156,484,526 $ 133,531,220 $ 44,525,344 $ 36,076,076 ============= ============= ============ ============
- ----------- * Includes undistributed net investment income as follows:
FOR THE FISCAL YEARS ENDED AUGUST 31, ----------------------------- 2005 2004 ----------------------------- Mid Cap Fund ........................................ $ 43,897 $138,858 Small Cap Value Fund ................................ 638,828 463,033
The accompanying notes are an integral part of the financial statements. 34
MID CAP SMALL CAP VALUE FUND FUND ------------------------------ ----------------------------- FOR THE FISCAL YEARS FOR THE FISCAL YEARS ENDED AUGUST 31, ENDED AUGUST 31, ------------------------------ ----------------------------- 2005 2004 2005 2004 ------------ ------------ ------------ ------------ INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS: Net investment income/(loss) ........................ $ 43,939 $ 138,893 $ 999,051 $ 901,615 Net realized gain from investments .................. 6,385,458 5,375,698 45,589,269 47,499,697 Net change in unrealized appreciation/(depreciation) on investments ................................... 1,831,144 (1,692,107) 7,367,445 (11,111,657) ------------ ------------ ------------ ------------ Net increase in net assets resulting from operations ....................................... 8,260,541 3,822,484 53,955,765 37,289,655 ------------ ------------ ------------ ------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ............................... (138,900) (158,675) (823,256) (878,687) Net realized capital gains .......................... (156,081) -- (38,374,363) (21,277,125) ------------ ------------ ------------ ------------ Total dividends and distributions to shareholders ... (294,981) (158,675) (39,197,619) (22,155,812) ------------ ------------ ------------ ------------ INCREASE/(DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 5) ................. (2,954,817) 1,046,142 30,776,859 1,664,203 ------------ ------------ ------------ ------------ Total increase in net assets ........................ 5,010,743 4,709,951 45,535,005 16,798,046 NET ASSETS Beginning of year ................................... 30,821,735 26,111,784 197,294,628 180,496,582 ------------ ------------ ------------ ------------ End of year* ........................................ $ 35,832,478 $ 30,821,735 $242,829,633 $197,294,628 ============ ============ ============ ============
35 [LOGO OMITTED] n/i numeric investors family of funds 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 respective years. This information has been derived from information provided in the financial statements. - --------------------------------------------------------------------------------
EMERGING GROWTH FUND ---------------------------------------------------------------------------- FOR THE FISCAL YEARS ENDED AUGUST 31, ---------------------------------------------------------------------------- 2005 2004 2003 2002 2001 ------- -------- -------- ------- ------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of year ............... $ 17.48 $ 15.81 $ 11.81 $ 12.73 $ 20.99 ------- -------- -------- ------- -------- Net investment loss .............................. (0.11) (0.11)(1) (0.07)(1) (0.10) (0.07) Net realized and unrealized gain/(loss) on investments (2) ............................... 3.53 2.12 4.07 (0.82) (3.58) ------- -------- -------- ------- -------- Net increase/(decrease) in net assets resulting from operations ............................... 3.42 2.01 4.00 (0.92) (3.65) ------- -------- -------- ------- -------- Distributions to shareholders from: Net realized capital gains ....................... (4.70) (0.34) -- -- (4.61) ------- -------- -------- ------- -------- Redemption fees (Note 5)* ........................ -- -- -- -- -- ------- -------- -------- ------- -------- Net asset value, end of year ..................... $ 16.20 $ 17.48 $ 15.81 $ 11.81 $ 12.73 ======= ======== ======== ======= ======== Total investment return (3) ...................... 26.06% 12.71% 33.87% (7.23)% (20.16)% ======= ======== ======== ======= ======== RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) .......... $156,485 $133,531 $130,286 $96,865 $139,927 Ratio of expenses to average net assets (4) ...... 1.18% 1.15% 1.20% 1.12% 1.07% Ratio of expenses to average net assets without waivers, if any ....................... 1.33% 1.31% 1.36% 1.26% 1.25% Ratio of net investment loss to average net assets (4) ................................ (0.68)% (0.58)% (0.55)% (0.75)% (0.67)% Portfolio turnover rate .......................... 318.36% 269.90% 227.46% 216.40% 280.00%
- ----------- * Amount is less than $0.01 per share. (1) Calculated based on average shares outstanding for the year. (2) The amounts shown for a share outstanding throughout the respective years are not in accord with the changes in the aggregate gains and losses on investments during the respective years because of the timing of the sales and repurchases of fund shares in relation to fluctuating net asset values during the respective years. (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 year reported and includes reinvestment of dividends and distributions, if any. (4) Reflects waivers and expense reimbursements, if any. The accompanying notes are an integral part of the financial statements. 36
GROWTH FUND ---------------------------------------------------------------------------- FOR THE FISCAL YEARS ENDED AUGUST 31, ---------------------------------------------------------------------------- 2005 2004 2003 2002 2001 ------- -------- -------- ------- ------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of year ............... $ 12.99 $ 11.53 $ 9.07 $ 10.48 $ 23.69 ------- -------- -------- ------- ------- Net investment loss .............................. (0.09)(1) (0.09)(1) (0.08)(1) (0.10) (0.10) Net realized and unrealized gain/(loss) on investments (2) ............................... 3.18 1.55 2.54 (1.31) (6.59) ------- -------- -------- ------- ------- Net increase/(decrease) in net assets resulting from operations ............................... 3.09 1.46 2.46 (1.41) (6.69) ------- -------- -------- ------- ------- Distributions to shareholders from: Net realized capital gains ....................... -- -- -- -- (6.52) ------- -------- -------- ------- ------- Redemption fees (Note 5)* ........................ -- -- -- -- -- ------- -------- -------- ------- ------- Net asset value, end of year ..................... $ 16.08 $ 12.99 $ 11.53 $ 9.07 $ 10.48 ======= ======== ======== ======= ======= Total investment return (3) ...................... 23.79% 12.66% 27.12% (13.45)% (36.45)% ======= ======== ======== ======= ======= RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) .......... $44,525 $ 36,076 $ 33,809 $34,034 $39,930 Ratio of expenses to average net assets (4) ...... 1.20% 1.36% 1.49% 1.35% 1.08% Ratio of expenses to average net assets without waivers, if any ....................... 1.39% 1.59% 1.79% 1.54% 1.36% Ratio of net investment loss to average net assets (4) ................................ (0.62)% (0.65)% (0.81)% (0.96)% (0.70)% Portfolio turnover rate .......................... 343.20% 291.02% 237.59% 241.28% 271.29%
37 [LOGO OMITTED] n/i numeric investors family of funds FINANCIAL HIGHLIGHTS (CONCLUDED) - -------------------------------------------------------------------------------- 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 respective years. This information has been derived from information provided in the financial statements. - --------------------------------------------------------------------------------
MID CAP FUND ---------------------------------------------------------------------------- FOR THE FISCAL YEARS ENDED AUGUST 31, ---------------------------------------------------------------------------- 2005 2004 2003 2002 2001 ------- -------- -------- ------- ------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of year ............... $ 15.82 $ 13.88 $ 11.98 $ 13.16 $ 19.22 ------- -------- -------- ------- ------- Net investment income/(loss) 0.02 (1) 0.07 0.08 0.08 0.06 Net realized and unrealized gain/(loss) on investments (2) ............................... 4.47 1.96 1.90 (1.22) (2.98) ------- -------- -------- ------- ------- Net increase/(decrease) in net assets resulting from operations ............................... 4.49 2.03 1.98 (1.14) (2.92) ------- -------- -------- ------- ------- Dividends and distributions to shareholders from: Net investment income ............................ (0.07) (0.09) (0.08) (0.06) (0.08) Net realized capital gains ....................... (0.08) -- -- -- (3.06) ------- -------- -------- ------- ------- Total dividends and distributions to shareholders (0.15) (0.09) (0.08) (0.06) (3.14) ------- -------- -------- ------- ------- Redemption fees (Note 5) ......................... --* --* --* 0.02 --* ------- -------- -------- ------- ------- Net asset value, end of year ..................... $ 20.16 $ 15.82 $ 13.88 $ 11.98 $ 13.16 ======= ======== ======== ======= ======= Total investment return (3) ...................... 28.52% 14.64% 16.70% (8.48)% (17.42)% ======= ======== ======== ======= ======= RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) .......... $35,832 $ 30,822 $ 26,112 $25,109 $31,198 Ratio of expenses to average net assets (4) ...... 1.23% 0.97% 1.00% 0.85% 0.91% Ratio of expenses to average net assets without waivers, if any ............................... 1.44% 1.35% 1.52% 1.27% 1.39% Ratio of net investment income/(loss) to average net assets (4) ................................ 0.13% 0.47% 0.66% 0.59% 0.39% Portfolio turnover rate .......................... 321.41% 292.78% 227.20% 270.77% 318.28%
- ----------- * Amount is less than $0.01 per share. (1) Calculated based on average shares outstanding for the year. (2) The amounts shown for a share outstanding throughout the respective years are not in accord with the changes in the aggregate gains and losses on investments during the respective years because of the timing of the sales and repurchases of fund shares in relation to fluctuating net asset values during the respective years. (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 year reported and includes reinvestment of dividends and distributions, if any. (4) Reflects waivers and expense reimbursements, if any. The accompanying notes are an integral part of the financial statements. 38
SMALL CAP VALUE FUND ---------------------------------------------------------------------------- FOR THE FISCAL YEARS ENDED AUGUST 31, ---------------------------------------------------------------------------- 2005 2004 2003 2002 2001 ------- -------- -------- ------- ------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of year ............... $ 19.90 $ 18.46 $ 16.86 $ 17.61 $ 12.91 -------- -------- -------- -------- ------- Net investment income/(loss) ..................... 0.08(1) 0.09 0.05 (0.05) 0.02 Net realized and unrealized gain/(loss) on investments (2) ............................... 4.29 3.67 2.90 1.71 4.79 -------- -------- -------- -------- ------- Net increase/(decrease) in net assets resulting from operations ............................... 4.37 3.76 2.95 1.66 4.81 -------- -------- -------- -------- ------- Dividends and distributions to shareholders from: Net investment income ............................ (0.08) (0.09) -- (0.02) (0.14) Net realized capital gains ....................... (3.76) (2.24) (1.41) (2.58) -- -------- -------- -------- -------- ------- Total dividends and distributions to shareholders (3.84) (2.33) (1.41) (2.60) (0.14) -------- -------- -------- -------- ------- Redemption fees (Note 5) ......................... --* 0.01 0.06 0.19 0.03 -------- -------- -------- -------- ------- Net asset value, end of year ..................... $ 20.43 $ 19.90 $ 18.46 $ 16.86 $ 17.61 ======== ======== ======== ======== ======= Total investment return (3) ...................... 26.37% 21.46% 20.51% 13.31% 37.97% ======== ======== ======== ======== ======= RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's omitted) .......... $242,830 $197,295 $180,497 $130,380 $35,564 Ratio of expenses to average net assets (4) ...... 0.99% 0.92% 1.55% 1.73% 1.67% Ratio of expenses to average net assets without waivers, if any ............................... 1.14% 1.07% 1.70% 1.88% 2.14% Ratio of net investment income/(loss) to average net assets (4) ................................ 0.43% 0.45% 0.33% (0.35)% 0.17% Portfolio turnover rate .......................... 348.63% 366.70% 268.07% 275.73% 277.28%
39 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The RBB Fund, Inc. ("RBB" or "Company") 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 seventeen active investment portfolios, including the N/I NUMERIC INVESTORS FAMILY OF FUNDS ("n/i numeric investors Family") which consists of four diversified portfolios: N/I NUMERIC INVESTORS Emerging Growth Fund ("Emerging Growth Fund"), N/I NUMERIC INVESTORS Growth Fund ("Growth Fund"), N/I NUMERIC INVESTORS Mid Cap Fund ("Mid Cap Fund") and N/I NUMERIC INVESTORS Small Cap Value Fund ("Small Cap Value Fund") (each, a "Fund," and collectively, the "Funds"). RBB has authorized capital of thirty billion shares of common stock of which 26.473 billion are currently classified into one hundred and three classes of common stock. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into seven separate "families," six of which have begun investment operations. 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. PORTFOLIO VALUATION -- The Funds' net asset value ("NAV") is calculated once daily at the close of regular trading hours on the NYSE (generally 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by the Funds are valued using the closing price or the last sale price on a national securities exchange or on the National Association of Securities Dealers Automatic Quotation System ("NASDAQ") market system where they are primarily traded. If there were no sales on that day or the securities are traded on other over-the-counter markets, the mean of the last bid and ask prices prior to the market close are used. Short-term debt securities having a remaining maturity of 60 days or less are amortized to maturity based on their cost. Debt securities having a remaining maturity of greater than 60 days are valued at the mean between the bid and ask prices. With the approval of the Company's Board of Directors, the Funds may use a pricing service, bank or broker/dealer experience in providing valuations to value the Funds' securities. If market quotations are unavailable or deemed unreliable, securities will be valued by the Funds' Valuation Committee following procedures adopted by the Board of Directors. REPURCHASE AGREEMENTS -- Each 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 each Fund enters into repurchase agreements are banks and broker/dealers, which Numeric Investors LLC(R) (the Funds' "Adviser" or "Numeric") 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. 40 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) Numeric marks to market daily the value of the collateral, and, if necessary, requires the seller to deposit additional collateral by the next business day, so that the value of the collateral is not less than the repurchase price. Default by or bankruptcy of the seller would, however, expose each Fund to possible loss because of adverse market action or delays in connection with the disposition of the underlying securities. INVESTMENT TRANSACTIONS, INVESTMENT INCOME AND EXPENSES -- The Funds record security transactions 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 when earned. Dividend income is recorded on the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Expenses incurred on behalf of a specific fund or fund family are charged directly to the fund or fund family (in proportion to net assets). Expenses incurred for all of the RBB families (such as director or professional fees) are charged to all funds in proportion to their net assets of the RBB Funds, or in such other manner as the Board of Directors deems fair or equitable. 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 Funds. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income and from net realized capital gains, if any, will be declared and recorded on the ex-dividend 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 accounting principles generally accepted in the United States of America. These differences can include the treatment of non-taxable dividends, expiring capital loss carryforwards, foreign currency gain/loss, 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 within the composition of net assets. The following permanent differences as of August 31, 2005, primarily attributable to net investment losses were reclassified to the following accounts: U.S. TAX STATUS -- No provision is made for U.S. income taxes as it is each 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 all or substantially all U.S. federal income and excise taxes. OTHER -- In the normal course of business, the Funds may enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is dependent on claims that may be made against the Funds in the future, and, therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote. 41 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Numeric serves as each Fund's investment adviser. Numeric is entitled to a performance based fee for its advisory services for the Growth, Mid Cap and Small Cap Value Funds calculated at the end of each month using a basic fee of 0.85% of average daily net assets and a performance fee adjustment based upon each Fund's performance during the last rolling 12-month period. Each Fund's net performance is compared with the performance of its benchmark index during that same rolling 12-month period. When a Fund's performance is between 4.00% and 4.99% better than its benchmark, it would pay Numeric the basic fee. When a Fund's performance is at least 5.00% better than its benchmark, it would pay Numeric more than the basic fee. If a Fund did not perform at least 4.00% better than its benchmark, Numeric would be paid less than the basic fee. Each 1.00% of the difference in performance between a Fund and its benchmark plus 4.00% during the performance period would result in a 0.10% adjustment to the basic fee. The benchmark index for the Growth Fund is the Russell 2500(R) Growth Index. On November 12, 2004, during a special meeting, shareholders of the Mid Cap Fund approved a proposal to change the Fund's benchmark from the S&P MidCap 400(R) Index to the Russell MidCap(R) Index. The Adviser elected to change the benchmark index because the Russell MidCap(R) Index more appropriately reflects the types of securities held in the Fund's portfolio and provides the best comparative performance information. Effective December 1, 2004 throughNovember 30, 2005, the performance fee will be compared to both the S&P MidCap 400(R) Index and the Russell MidCap(R) Index separately each month. Each month during this period, the Fund will pay the advisory fee based upon whichever performance fee calculation results in a lower advisory fee. Effective December 1, 2005, the Fund will pay an advisory fee based solely on the performance fee calculation of the Russell MidCap(R) Index. The benchmark index for the Small Cap Value Fund is the Russell 2000(R) Value Index. The maximum annualized performance adjustment rate would be + or - 0.50% of average daily net assets which would be added to or deducted from the basic fee if a Fund outperformed its benchmark index over a rolling 12-month period by 9.00% or more or if it underperformed its benchmark index over a rolling 12-month period. The chart below shows what the management fee rate would be if a Fund exceeds its benchmark by the stated amount.
PERCENTAGE POINT DIFFERENCE BETWEEN FUND PERFORMANCE PERFORMANCE TOTAL (NET OF EXPENSES INCLUDING ADVISORY FEES) AND ADJUSTMENT ADVISORY FEE CHANGE IN TOTAL BENCHMARK INDEX BASIC FEE RATE RATE - -------------------------------------------------- --------- ----------- ------------ +9% or more ......................................... 0.85% 0.50% 1.35% +8% or more but less than +9% ....................... 0.85% 0.40% 1.25% +7% or more but less than +8% ....................... 0.85% 0.30% 1.15% +6% or more but less than +7% ....................... 0.85% 0.20% 1.05% +5% or more but less than +6% ....................... 0.85% 0.10% 0.95% +4% or more but less than +5% ....................... 0.85% None 0.85% +3% or more but less than +4% ....................... 0.85% (0.10)% 0.75% +2% or more but less than +3% ....................... 0.85% (0.20)% 0.65% +1% or more but less than +2% ....................... 0.85% (0.30)% 0.55% +0% or more but less than +1% ....................... 0.85% (0.40)% 0.45% Less than 0% ........................................ 0.85% (0.50)% 0.35%
42 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) At the end of each month, the management fee rate is applied to the net assets averaged over the same 12-month rolling period over which the investment performance of a Fund was measured to determine the monthly management fee. Numeric is entitled to receive 0.75% of the Emerging Growth Fund's average daily net assets, computed daily and payable monthly for its advisory services. The Adviser contractually agreed to limit the Emerging Growth, Growth, Mid Cap, and Small Cap Value Fund's total operating expenses (other than investment advisory fees, shareholder servicing fees, brokerage commissions, extraordinary items, interest and taxes) through December 31, 2004 to the extent that such expenses exceed 1.25%, 0.50%, 0.50%, and 0.50%, respectively, of the average daily net assets. As necessary, this limitation is effected in waivers of advisory fees and reimbursements of expenses exceeding the advisory fee. The Funds will not pay Numeric at a later time for any amounts it may waive or any amounts that Numeric has assumed. For the year ended August 31, 2005, investment advisory fees and waivers were as follows:
ADVISORY NET FUND ADVISORY FEES WAIVERS ADVISORY FEES - ---- ------------- ---------- ------------- Emerging Growth Fund ......................................... $1,118,554 $ -- $1,118,554 Growth Fund .................................................. 231,031 (21,040) 209,991 Mid Cap Fund ................................................. 166,006 (24,072) 141,934 Small Cap Value Fund ......................................... 1,451,659 -- 1,451,659
During the fiscal year ended August 31, 2004, the Staff of the Securities and Exchange Commission (the "SEC" or "Staff") notified RBB that the methodology used to calculate the performance-based investment advisory fee for the Small Cap Value Fund, the Growth Fund and the Mid Cap Fund managed by Numeric did not comply with the rules under the Investment Advisers Act of 1940, as amended, (the "Advisers Act") concerning performance fees. The rules under the Advisers Act require the performance rate to be applied to the average net assets over the performance period (a twelve-month rolling period for these Funds) rather than the average daily net assets in the most recent month, as was done previously. Applying the revised methodology to the Small Cap Value Fund for the period since the inception of the performance fee (January 2001) indicates that the Small Cap Value Fund overpaid Numeric by approximately $920,000. In addition, the Staff has indicated that interest of approximately $110,000 is also due from Numeric on this amount. With respect to the Growth Fund and the Mid Cap Fund, application of the revised methodology indicated that these funds had underpaid Numeric since the inception of the performance fee. Numeric has agreed to waive repayment of the underpaid fees. Commencing on September 1, 2004, the performance for all three aforementioned funds began to be calculated in accordance with the Advisers Act. RBB and Numeric are currently awaiting a final order from the Staff which will stipulate the repayment of the $920,000 plus interest by Numeric. The Funds will not pay Numeric at a later time for any amounts it may waive or any amounts which Numeric has assumed. 43 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) PFPC Inc. ("PFPC"), a wholly-owned subsidiary of PFPC Worldwide, Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc., and Bear Stearns Funds Management Inc. ("BSFM"), a wholly-owned subsidiary of The Bear Stearns Companies Inc., serve as co-administrators for each Fund. For providing administrative services PFPC is entitled to receive a monthly fee equal to an annual rate of 0.125% of each Fund's average daily net assets subject to a minimum monthly fee of $6,250 per Fund. BSFM is entitled to receive a monthly fee equal to an annual rate of 0.05% on the first $150 million and 0.02% of each Fund's average daily net assets thereafter. For providing regulatory administrative services to RBB, PFPC is entitled to receive compensation as agreed to by the Company and PFPC. This fee is allocated to each portfolio of RBB based on each portfolio's average net assets as a percentage of the total RBB related net assets. For the fiscal year ended August 31, 2005, PFPC, voluntarily agreed to waive a portion of its administration fees. During such period, co-administration fees and related waivers were as follows:
TOTAL NET CO-ADMINISTRATION FEES CO-ADMINISTRATION FEES FUND AND EXPENSES WAIVERS AND EXPENSES - ---- ---------------------- ---------- ----------------------- Emerging Growth Fund ......................................... $ 297,902 $ (33,557) $ 264,345 Growth Fund .................................................. 112,718 (5,000) 107,718 Mid Cap Fund ................................................. 105,669 (5,000) 100,669 Small Cap Value Fund ......................................... 431,974 (52,884) 379,090
In addition, PFPC serves as each Fund's transfer and dividend disbursing agent. For the fiscal year ended August 31, 2005, transfer agency fees and expenses were $68,655, $51,285, $60,370, and $93,942 for the Emerging Growth Fund, Growth Fund, Mid Cap Fund and Small Cap Value Fund, respectively. PFPC Distributors, Inc. ("PFPC Distributors"), a wholly-owned subsidiary of PFPC Worldwide, Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc., provides certain administrative services to each Fund. As compensation for such administrative services, PFPC Distributors received a monthly fee equal to an annual rate of 0.15% of each Fund's average daily net assets. 44 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) For the fiscal year ended August 31, 2005, PFPC Distributors, voluntarily agreed to waive a portion of its administrative services fees for each Fund. During such period, administrative services fees were as follows:
TOTAL ADMINISTRATIVE NET ADMINISTRATIVE FUND SERVICES FEES WAIVERS SERVICES FEES - ---- ---------------- ---------- ------------------- Emerging Growth Fund ......................................... $ 223,711 $(193,883) $ 29,828 Growth Fund .................................................. 60,702 (52,609) 8,093 Mid Cap Fund ................................................. 49,882 (43,232) 6,650 Small Cap Value Fund ......................................... 352,557 (305,549) 47,008
The Emerging Growth Fund, Growth Fund,Mid Cap Fund and Small Cap Value Fund owed PFPC and its affiliates $27,690, $14,081, $13,862 and $39,419, respectively, for their services as of August 31, 2005. 3. SHAREHOLDER SERVICES PLAN The Board of Directors approved a Shareholder Services Plan which permits the Funds to pay fees to certain Shareholder Organizations of up to 0.25% of the average daily net assets of each Fund for which such Shareholder Organizations provide services for the benefit of customers. 4. INVESTMENT IN SECURITIES For the fiscal year ended August 31, 2005, aggregate purchases and sales of investment securities (excluding short-term investments) were as follows:
FUND PURCHASES SALES - ---- ------------ ------------ Emerging Growth Fund .................................. $457,832,943 $469,310,700 Growth Fund ........................................... 133,201,614 134,077,813 Mid Cap Fund .......................................... 103,336,862 106,008,216 Small Cap Value Fund .................................. 795,375,721 802,702,700
45 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) 5. CAPITAL SHARE TRANSACTIONS As of August 31, 2005, each Fund has 50,000,000 shares of $0.001 par value capital stock authorized. Transactions in capital shares for the respective periods were as follows:
EMERGING GROWTH FUND ----------------------------------------------------------------- FOR THE FOR THE FISCAL YEAR ENDED FISCAL YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 ----------------------------- ---------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ Sales .................. 704,511 $ 9,877,760 661,507 $ 12,007,872 Repurchases ............ (1,394,220) (20,393,052) (1,417,033) (25,890,530) Redemption fees ........ -- 12,804 -- 18,386 Reinvestments .......... 2,708,864 35,350,674 155,841 2,720,979 ----------- ----------- ---------- ------------ Net increase/(decrease) 2,019,155 $24,848,186 (599,685) $(11,143,293) =========== =========== ========== ============
GROWTH FUND ----------------------------------------------------------------- FOR THE FOR THE FISCAL YEAR ENDED FISCAL YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 ----------------------------- ---------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ Sales .................. 503,921 $ 7,450,691 450,488 $ 6,107,468 Repurchases ............ (513,224) (7,409,914) (603,709) (8,199,105) Redemption fees ........ -- 8,175 -- 10,319 ----------- ----------- --------- ------------ Net increase/(decrease) (9,303) $ 48,952 (153,221) $ (2,081,318) =========== =========== ========= ============
MID CAP FUND ----------------------------------------------------------------- FOR THE FOR THE FISCAL YEAR ENDED FISCAL YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 ----------------------------- ---------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ Sales .................. 128,560 $ 2,321,750 309,072 $ 4,753,551 Repurchases ............ (314,940) (5,571,383) (251,600) (3,865,645) Redemption fees ........ -- 8,265 -- 5,688 Reinvestments .......... 15,506 286,551 10,217 152,548 ----------- ----------- --------- ------------ Net increase/(decrease) (170,874) $(2,954,817) 67,689 $ 1,046,142 =========== =========== ========= ============
46 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SMALL CAP VALUE FUND ----------------------------------------------------------------- FOR THE FOR THE FISCAL YEAR ENDED FISCAL YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 ----------------------------- ----------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ----------- ------------ Sales .................. 2,901,655 $50,936,546 1,217,424 $ 23,769,320 Repurchases ............ (3,073,233) (56,570,385) (2,173,217) (42,397,307) Redemption fees ........ -- 58,247 -- 132,053 Reinvestments .......... 2,142,655 36,352,451 1,092,619 20,160,137 ----------- ----------- ---------- ------------ Net increase ........... 1,971,077 $30,776,859 136,826 $ 1,664,203 =========== =========== ========== ============
There is a 2.00% redemption fee on shares redeemed which have been held for less than one year on each of the Funds. The redemption fees are collected and retained by each Fund for the benefit of the remaining shareholders and recorded as additional paid-in capital. As of August 31, 2005, the following shareholders held 10% or more of the outstanding shares of the Funds. These shareholders may be omnibus accounts which are comprised of many individual shareholders. Emerging Growth Fund (3 shareholders) .......... 49% Growth Fund (2 shareholders) ................... 59% Mid Cap Fund (1 shareholder) ................... 21% Small Cap Value Fund (1 shareholder) 51% 6. SECURITIES LENDING Loans of securities are required at all times to be secured by collateral equal to at least 100% of the market value of the securities on loan. However, in the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral may be subject to legal proceedings. In the event that the borrower fails to return securities, and collateral being maintained by the lender is insufficient to cover the value of loaned securities, the borrower is obligated to pay the amount of the shortfall (and interest thereon) to the Funds. However, there can be no assurance the Funds can recover this amount. The value of securities on loan to brokers and the aggregate value of collateral by the Funds and pledged to borrowers at August 31, 2005, were as follows:
VALUE OF FUND SECURITIES ON LOAN VALUE OF COLLATERAL - ---- ------------------ ------------------- Emerging Growth Fund ......................... $15,248,467 $15,696,440 Growth Fund .................................. 3,943,506 4,061,418 Mid Cap Fund ................................. 3,055,729 3,158,078 Small Cap Value Fund ......................... 6,639,234 6,836,479
47 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) Collateral pledged by borrowers for securities out on loan to broker/dealers is in the form of U.S. Treasury securities. Cash collateral received by the Funds is invested into repurchase agreements with Bear, Stearns & Co. Inc., which in turn are collateralized by various U.S. Treasury securities. The stated interest rate on repurchase agreements is net of rebate paid to the borrower on securities loaned. 7. COLLATERAL FOR REPURCHASE AGREEMENTS Collateral for repurchase agreements in connection with securities lending at August 31, 2005 are listed below:
EMERGING GROWTH FUND ----------------------------------------------------------------------------- PRINCIPAL AMOUNT ACCRUED ISSUER (000'S) INTEREST RATE MATURITY MARKET VALUE INTEREST TOTAL VALUE - ------ --------- ------------- -------- ------------ -------- ----------- Related Collateral: United States Treasury Bond ........... $925 8.875% 8/15/17 $ 1,333,295 $ 3,649 $1,336,944 GROWTH FUND ----------------------------------------------------------------------------- PRINCIPAL AMOUNT ACCRUED ISSUER (000'S) INTEREST RATE MATURITY MARKET VALUE INTEREST TOTAL VALUE - ------ --------- ------------- -------- ------------ -------- ----------- Related Collateral: United States Treasury Bond ........... $570 8.875% 8/15/17 $ 821,598 $ 2,248 $ 823,846 MID CAP FUND ----------------------------------------------------------------------------- PRINCIPAL AMOUNT ACCRUED ISSUER (000'S) INTEREST RATE MATURITY MARKET VALUE INTEREST TOTAL VALUE - ------ --------- ------------- -------- ------------ -------- ----------- Related Collateral: United States Treasury Bond ........... $735 8.875% 8/15/17 $1,059,429 $ 2,899 $1,062,328 SMALL CAP VALUE FUND ------------------------------------------------------------------------------ PRINCIPAL AMOUNT ACCRUED ISSUER (000'S) INTEREST RATE MATURITY MARKET VALUE INTEREST TOTAL VALUE - ------ --------- ------------- -------- ------------ -------- ----------- Related Collateral: United States Treasury Bond ........... $950 8.875% 8/15/17 $ 1,369,330 $ 3,747 $1,373,077
48 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) Listed below is the collateral associated with the repurchase agreements with Bear, Stearns & Co. Inc., outstanding at August 31, 2005:
EMERGING GROWTH FUND ----------------------------------------------------------------------------- PRINCIPAL AMOUNT ACCRUED ISSUER (000'S) INTEREST RATE MATURITY MARKET VALUE INTEREST TOTAL VALUE - ------ --------- ------------- -------- ------------ -------- ----------- Related Collateral: United States Treasury Bond ........... $3,825 8.875% 8/15/17 $ 4,734,999 $12,957 $4,747,956 GROWTH FUND ---------------------------------------------------------------------------------- PRINCIPAL AMOUNT ACCRUED ISSUER (000'S) INTEREST RATE MATURITY MARKET VALUE INTEREST TOTAL VALUE - ------ --------- ------------- -------- ------------ -------- ----------- Related Collateral: United States Treasury Bond ........... $ 755 8.875% 8/15/17 $1,088,257 $ 2,978 $1,091,235 MID CAP FUND ---------------------------------------------------------------------------------- PRINCIPAL AMOUNT ACCRUED ISSUER (000'S) INTEREST RATE MATURITY MARKET VALUE INTEREST TOTAL VALUE - ------ --------- ------------- -------- ------------ -------- ----------- Related Collateral: United States Treasury Bond ........... $ 995 8.875% 8/15/17 $1,434,193 $ 3,925 $1,438,118 SMALL CAP VALUE FUND ---------------------------------------------------------------------------------- PRINCIPAL AMOUNT ACCRUED ISSUER (000'S) INTEREST RATE MATURITY MARKET VALUE INTEREST TOTAL VALUE - ------ --------- ------------- -------- ------------ -------- ----------- Related Collateral: United States Treasury Bond ........... $3,335 8.875% 8/15/17 $4,807,069 $13,155 $4,820,224
8. FEDERAL INCOME TAX INFORMATION At August 31, 2005, Federal tax cost, aggregate gross unrealized appreciation and depreciation, and net unrealized appreciation of securities held by each Fund were as follows:
FEDERAL TAX UNREALIZED UNREALIZED NET UNREALIZED FUND COST APPRECIATION DEPRECIATION APPRECIATION - ---- ------------ ------------ ------------ -------------- Emerging Growth Fund ............................. $146,335,594 $16,065,806 $(3,770,639) $12,295,167 Growth Fund ...................................... 42,507,444 3,592,776 (898,999) 2,693,777 Mid Cap Fund ..................................... 34,744,088 2,990,725 (424,942) 2,565,783 Small Cap Value Fund ............................. 232,101,988 18,109,421 (4,943,711) 13,165,710
49 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONCLUDED) The following permanent differences as of August 31, 2005, primarily attributable to net investment losses were reclassified to the following accounts:
UNDISTRIBUTED ACCUMULATED ADDITIONAL NET INVESTMENT NET REALIZED PAID-IN FUND INCOME GAIN/(LOSS) CAPITAL - ---- -------------- ------------ ---------- Emerging Growth Fund ............................. $1,021,175 $(1,021,175) -- Growth Fund ...................................... 252,448 (252,448) -- Mid Cap Fund ..................................... -- 2 $ (2)
As of August 31, 2005, the components of distributable earnings on a tax basis were as follows:
UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM FUND INCOME GAINS - ---- ------------- ------------- Emerging Growth Fund ............................. $19,013,702 $5,422,766 Growth Fund ...................................... 1,247,347 1,642,717 Mid Cap Fund ..................................... 4,801,535 570,471 Small Cap Value Fund ............................. 37,915,404 3,354,628
At August 31, 2005, the Funds had no capital loss carryforwards available to offset future capital gains. During the year ended August 31, 2005, the Growth Fund and Mid Cap Fund utilized $3,738,541 and $755,983, respectively, of prior year capital loss carryforwards. The tax character of dividends and distributions paid during the last two fiscal years were as follows:
ORDINARY LONG-TERM FUND YEAR INCOME GAINS TOTAL - ---- ---- ----------- ------------ ----------- Emerging Growth Fund 2005 $24,741,834 $11,185,583 $35,927,417 2004 2,757,588 -- 2,757,588 Growth Fund 2005 -- -- -- 2004 -- -- -- Mid Cap Fund 2005 138,900 156,081 294,981 2004 158,675 -- 158,675 Small Cap Value Fund 2005 36,867,260 2,330,359 39,197,619 2004 19,379,463 2,776,349 22,155,812
50 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF THE RBB FUND, INC.: In our opinion, the accompanying statements of assets and liabilities, including the portfolios 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 n/i numeric investors Emerging Growth Fund, n/i numeric investors Growth Fund, n/i numeric investors Mid Cap Fund and n/i numeric investors Small Cap Value Fund, separately managed portfolios of The RBB Fund, Inc. (the "Fund"), at August 31, 2005, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Philadelphia, Pennsylvania October 28, 2005 51 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND 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) 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, 2005, the following dividends and distributions per share were paid by each of the Funds:
ORDINARY INCOME ---------------------------- NET INVESTMENT SHORT-TERM LONG-TERM FUND INCOME GAINS GAINS - ---- -------------- ---------- ---------- Emerging Growth Fund ......................................... -- $3.25 $1.45 Growth Fund .................................................. -- -- -- Mid Cap Fund ................................................. $0.07 -- $0.08 Small Cap Value Fund ......................................... $0.08 $3.53 $0.23
The percentage of total ordinary income dividends from the Emerging Growth, Mid Cap and Small Cap Value Funds qualifying for the corporate dividend received deduction is 2.65%, 100% and 5.35%, respectively. The percentage of total ordinary dividends from the Emerging Growth, Mid Cap and Small Cap Value Funds qualifying for the 15% dividend income tax rate is 2.04%, 100% and 4.01%, respectively. These amounts were reported to shareholders as income in 2004. Because each Fund's fiscal year is not the calendar year, another notification will be sent with respect to calendar year 2005. 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 2006. 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. IRA's 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. 52 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND OTHER INFORMATION (UNAUDITED) 1. PROXY VOTING Policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities, as well as information regarding how the Funds voted proxies relating to portfolio securities for the most recent 12-month period ended June 30, are available without charge, upon request, by calling (800) 348-5031 and on the Securities and Exchange Commission's website at http://www.sec.gov. 2. QUARTERLY PORTFOLIO SCHEDULES The Company files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third fiscal quarters of each fiscal year (quarters ended November 30 and May 31) on Form N-Q. The Company's Form N-Q is available on the Securities and Exchange Commission's website at http://www.sec.gov and may be reviewed and copied at the Securities and Exchange Commission's Public Reference Room in Washington, D.C. Information on the operation of the Securities and Exchange Commission's Public Reference Room may be obtained by calling 1-800-SEC-0330. 3. APPROVALS OF INVESTMENT MANAGEMENT AGREEMENTS As required by the Investment Company Act, the Board of Directors (the "Board") of the Company, including all of the Directors who are not "interested persons" of the Company, as that term is defined in the Investment Company Act (the "Independent Directors"), considered the renewal of the investment advisory agreements, and amendments thereto, between Numeric Investors LLC (the "Adviser" or "Numeric") and the Company (each an "Advisory Agreement" and collectively, the "Advisory Agreements") on behalf of the n/i numeric investors Emerging Growth Fund, Growth Fund, Mid Cap Fund, and Small Cap Value Fund (each a "Fund" and collectively, the "Funds") at a meeting of the Board held on May 25, 2005. At this meeting, the Board approved the Advisory Agreements, and amendments thereto, for an additional one-year term. The Board's decision to approve the Agreements reflects the exercise of its business judgment to continue the existing arrangement. In approving the Agreements, the Board considered information provided by the Adviser with the assistance and advice of counsel to the Independent Directors and the Company. In considering the renewal of and approval of the Advisory Agreements, the Directors took into account all the materials provided prior to and during the meeting, the presentations made during the meeting, and the discussions during the meeting. The Directors discussed the materials from the Adviser mailed in advance of the meeting that addressed most, if not all, of the factors listed below. The Adviser also made a presentation during the meeting and responded to questions from the Directors. Among other things, the Directors considered (i) the nature, extent, and quality of the Adviser's services provided to the Funds; (ii) descriptions of the experience and qualifications of the personnel providing those services; (iii) the Adviser's investment philosophies and processes; (iv) the Adviser's assets under management and client descriptions; (v) the Adviser's soft dollar commission and trade allocations policies, including information on the types of 53 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND OTHER INFORMATION (UNAUDITED) (CONTINUED) research and services obtained in connection with soft dollar commissions; (vi) the current and proposed advisory fee arrangements with the Company and other similarly managed clients; (vii) compliance procedures; (viii) the Adviser's financial information, insurance coverage and profitability analysis related to providing advisory services to the Funds; (ix) the extent to which economies of scale are relevant to each Fund; (x) a report comparing each Fund's proposed or current advisory fees and expenses to those of its peer group; and (xi) a report comparing the performance of each Fund to the performance of its applicable benchmark index and peer group. No one factor was determinative in the Board's consideration of the Advisory Agreements. The Directors then met in executive session with counsel to discuss and consider information presented in connection with the continuation of the Advisory Agreements as well as the Directors' responsibilities and duties in approving the Agreements. During the course of its deliberations, the Board reached the following conclusions, among others, regarding Numeric and the Advisory Agreements with respect to the Funds. The Directors considered the Funds' gross and net advisory fees, and gross and net expense ratios in comparison to that of each Fund's peer group average as well as each Fund's performance in comparison to the performance of that Fund's peer group average and benchmark. The Directors also reviewed the gross advisory fees in comparison to the fees Numeric charges for managing assets for other clients. The Directors began with an evaluation of the Emerging Growth Fund, considering that both the gross and net advisory fees were lower than the peer group average as of March 31, 2005 while the gross and net expenses were higher and lower, respectively, than the peer group average for the same period. For the year-to-date and one-year periods ended March 31, 2005, the Fund performed better than the Fund's peer group composite average and benchmark. The Directors reviewed the advisory fees charged by Numeric to manage other clients' assets in a similar strategy as that of the Fund and found the fees to be higher in comparison to the fees charged to the Fund. The Directors then noted that Numeric discontinued its expense limitation arrangement for the Fund effective January 1, 2005. The Directors then considered and assessed the reasons for the higher gross expense ratio of the Fund; and the impact of the discontinuation of the expense limitation on the Fund. The Directors continued with an evaluation of the Growth Fund, considering that both the gross and net advisory fees were lower than the peer group average as of March 31, 2005 while the gross and net expense ratios were higher and lower, respectively, than the peer average for the same period. For the year-to-date and one-year periods ended March 31, 2005, the Fund performed better than the peer group composite. The Directors noted that when compared to the Fund's benchmark, the Fund performed worse during the year-to-date period and better during the one-year period. The Directors then noted that Numeric discontinued the Fund's expense limitation arrangement for the Fund effective January 1, 2005. The Directors considered and assessed the reasons for the higher gross expense ratio of the Fund; and the impact of the discontinuation of the expense limitation on the Fund. 54 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND OTHER INFORMATION (UNAUDITED) (CONCLUDED) The Directors continued with an evaluation of the Mid Cap Fund, considering that the gross and net advisory fees were lower and higher, respectively, than the peer group average as of March 31, 2005 while the gross and net expense ratios were higher than the peer average for the same period. For the year-to-date period ended March 31, 2005, the Fund performed worse than the peer group composite and benchmark. The Directors noted that for the one-year period ended March 31, 2005, the Fund performed better than the peer group composite but worse than the benchmark. The Directors then noted that Numeric discontinued the Fund's expense limitation arrangement for the Fund effective January 1, 2005. The Directors considered and assessed the reasons for the higher net advisory fee and expense ratios of the Fund; and the impact of the discontinuation of the expense limitation on the Fund. The Directors continued with an evaluation of the Small Cap Value Fund, considering that both the gross and net advisory fees and expense ratios were lower than the peer group averages as of March 31, 2005. For the year-to-date period ended March 31, 2005, the Fund performed worse than the peer group composite but better than the benchmark. The Directors noted that for the one-year period ended March 31, 2005, the Fund performed better than both the peer group composite and benchmark. The Directors then noted that Numeric discontinued the Fund's expense limitation effective January 1, 2005. The Directors considered and assessed the reasons for and the impact of the discontinuation of the expense limitation on the Fund. At this time, the Directors considered and evaluated the performance fee information presented with respect to the Growth, Mid Cap, and Small Cap Value Funds. The Directors noted that the maximum advisory fee for these Funds may be 1.35% of average daily net assets before waivers or reimbursements if a Fund outperforms its benchmark over a rolling 12-month period by 9.00% or more. A lengthy discussion ensued regarding the use of performance fees and the impact of performance on the amount of advisory fees. The Directors noted that as a result of this arrangement, the advisory fees charged by Numeric to manage other clients' assets in a similar strategy may be higher, lower or the same as the fees charged to these Funds depending on a Fund's performance versus its benchmark. The Directors also evaluated the Amendments to the Advisory Agreements, relating to the calculation of a Fund's performance fee, for these three Funds. The Directors then determined that the nature, extent and quality of services provided by Numeric in advising the Funds was satisfactory; the profits earned by Numeric seemed reasonable; and the benefits derived by Numeric from managing the Funds, including its use of soft dollars and the way it selects brokers, seemed reasonable. The Directors discussed and considered any economies-of-scale realized by each Fund as a result of asset growth. Based on all of the information presented to the Board and its consideration of relevant factors, the Board concluded that the fee paid to the Adviser by each Fund was reasonable, and in the exercise of its business judgment, determined that Numeric's Advisory Agreements, on behalf of each Fund, be continued for another one-year period ending August 16, 2006 and the three Amendments to those agreements for the Growth, Mid Cap, and Small Cap Value Funds be approved. 55 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND PRIVACY NOTICE -- (UNAUDITED) The N/I NUMERIC INVESTORS FAMILY OF FUNDS 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 (800) 348-5031. 56 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND FUND MANAGEMENT (UNAUDITED) The business and affairs of the Company are managed under the direction of the Company's Board of Directors. The Company is organized under and managed pursuant to Maryland law. The Directors and executive officers of the Company, their dates of birth, business addresses and principal occupations during the past five years are set forth below. The statement of Additional Information ("SAI") includes additional information about the Company's Directors and is available without charge, upon request, by calling (800) 348-5031.
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF OTHER NAME, ADDRESS, POSITION(S) TERM OF OFFICE PRINCIPAL OCCUPATION(S) DURING PAST PORTFOLIOS IN DIRECTORSHIPS AND DATE OF BIRTH HELD AND LENGTH OF 5 YEARS FUND COMPLEX HELD BY WITH FUND TIME SERVED 1 OVERSEEN BY DIRECTOR DIRECTOR* - ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS - ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director 1988 to present Since 1969, Director and Vice Chairman, Comcast 17 Director, Comcast Corporation Corporation (cable television and communications); Comcast 1500 Market Street, Director, NDS Group PLC (provider of systems and Corporation 35th Floor applications for digital pay TV). Philadelphia, PA 19102 DOB: 7/16/33 - ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director 1988 to present Since 2000, Vice President, Fox Chase Cancer 17 None Fox Chase Cancer Center Center (biomedical research and medical care); 333 Cottman Avenue prior to 2000, Executive Vice President, Fox Philadelphia, PA 19111 Chase Cancer Center. DOB: 12/06/35 - ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director 1991 to present Since December 2000, Director, Gabelli Group 17 None 106 Pierrepont Street Capital Partners, L.P. (an investment Brooklyn, NY 11201 partnership); Chief Operating Officer and member DOB: 5/21/48 of the Board of Directors of Outercurve Technologies (wireless 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; Prior to 1997, Managing Director of Warburg Pincus Asset Management, Inc. - ------------------------------------------------------------------------------------------------------------------------------------
* Each Director oversees seventeen portfolios of the Company that are currently offered for sale. The Company is authorized to offer two additional portfolios that had not commenced operations as of the date of this report. 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified. 57 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND FUND MANAGEMENT (UNAUDITED) (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF OTHER NAME, ADDRESS, POSITION(S) TERM OF OFFICE PRINCIPAL OCCUPATION(S) DURING PAST PORTFOLIOS IN DIRECTORSHIPS AND DATE OF BIRTH HELD AND LENGTH OF 5 YEARS FUND COMPLEX HELD BY WITH FUND TIME SERVED 1 OVERSEEN BY DIRECTOR DIRECTOR* - ----------------------------------------------------------------------------------------------------------------------------------- DISINTERESTED DIRECTORS (continued) - ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director 1991 to present Since 1974, Chairman, Director and President, 17 Director, Moyco Technologies, Inc. Moyco Technologies, Inc. (manufacturer of Moyco 200 Commerce Drive precision coated and industrial abrasives). Since Technologies, Montgomeryville, PA 18936 1999, Director, Pennsylvania Business Bank. Inc. DOB: 3/24/34 - ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS 2 - ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director 1991 to present Since July 2002, Senior Vice President and prior 17 None Oppenheimer & Company, Inc. thereto, Executive Vice President of Oppenheimer 200 Park Avenue & Co., Inc., formerly Fahnestock & Co., Inc. (a New York, NY 10166 registered broker-dealer). DOB: 4/16/38 - ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director 2002 to present Director of PFPC Inc. from January 1987 to April 17 Director, 400 Bellevue Parkway 2002, Chairman and Chief Executive Officer of Cornerstone Wilmington, DE 19809 PFPC Inc. until April 2002, Executive Vice Bank DOB: 9/25/38 President of PNC Bank, National Association from October 1981 to April 2002, Director of PFPC International Ltd. (financial services) from August 1993 to April 2002, Director of PFPC International (Cayman) Ltd. (financial services) from September 1996 to April 2002; Governor of the Investment Company Institute (investment company industry trade organization) from July 1996 to January 2002; Director of PNC Asset Management, Inc. (investment advisory) from September 1994 to March 1998; Director of PNC National Bank from October 1995 to November 1997; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984; Director of Cornerstone Bank since March 2004. - ------------------------------------------------------------------------------------------------------------------------------------
* Each Director oversees seventeen portfolios of the Company that are currently offered for sale. The Company is authorized to offer two additional portfolios that had not commenced operations as of the date of this report. 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified. 2 Messrs. Sablowsky and Carnall are considered "interested persons" of the Company as that term is defined in the 1940 Act. Mr. Sablowsky is considered an "interested Director" of the Company by virtue of his position as an officer of a registered broker-dealer. Mr. Carnall is 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. 58 [LOGO OMITTED] n/i numeric investors family of funds EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND FUND MANAGEMENT (UNAUDITED) (CONCLUDED)
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF OTHER NAME, ADDRESS, POSITION(S) TERM OF OFFICE PRINCIPAL OCCUPATION(S) DURING PAST PORTFOLIOS IN DIRECTORSHIPS AND DATE OF BIRTH HELD AND LENGTH OF 5 YEARS FUND COMPLEX HELD BY WITH FUND TIME SERVED OVERSEEN BY DIRECTOR DIRECTOR* - ----------------------------------------------------------------------------------------------------------------------------------- DISINTERESTED DIRECTORS (continued) - ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President 1991 to present Certified Public Accountant; Vice Chairman of the N/A N/A 400 Bellevue Parkway and and Board, Fox Chase Cancer Center; Trustee 4th Floor Treasurer 1988 to present Emeritus, Pennsylvania School for the Deaf; Wilmington, DE 19809 Trustee Emeritus, Immaculata University; DOB: 6/29/24 President or Vice President and Treasurer of various investment companies advised by subsidiaries of PNC Bank Corp. from 1981 to 1997; Managing General Partner, President since 2002, Treasurer since 1981 and Chief Compliance Officer since September 2004 of Chestnut Street Exchange Fund; and Director of the Bradford Funds, Inc. from 1996 to 2000. - ----------------------------------------------------------------------------------------------------------------------------------- Tina M. Payne Secretary 2005 to present Since 2003, Vice President and Associate Counsel, N/A N/A 301 Bellevue Parkway PFPC Inc. (financial services company); 2nd Floor Associate, Stradley, Ronon, Stevens & Young, LLC Wilmington, DE 19809 (law firm) from 2001 to 2003. DOB: 5/19/74 - ----------------------------------------------------------------------------------------------------------------------------------- Salvatore Faia, Esquire, CPA Chief 2004 to present President, Vigilant Compliance Services, since N/A N/A Vigilant Compliance Compliance 2004; Senior Legal Counsel, PFPC Inc. from 2002 186 Dundee Drive, Suite 700 Officer to 2004; Chief Legal Counsel, Corviant Williamstown, NJ 08094 Corporation (Investment Adviser, Broker/Dealer DOB: 12/25/62 and Service Provider to Investment Advisers and Separate Accountant Providers) from 2001 to 2002; Partner, Pepper Hamilton LLP (law firm) from 1997 to 2001. - ------------------------------------------------------------------------------------------------------------------------------------
* Each Director oversees seventeen portfolios of the Company that are currently offered for sale. The Company is authorized to offer two additional portfolios that had not commenced operations as of the date of this report. 59 [THIS PAGE INTENTIONALLY LEFT BLANK.] [THIS PAGE INTENTIONALLY LEFT BLANK.] [THIS PAGE INTENTIONALLY LEFT BLANK.] [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS One Memorial Drive Cambridge, MA 02142 1-800-numeric [686-3742] http://www.numeric.com [LOGO OMITTED] n/i numeric investors family of funds One Memorial Drive Cambridge, MA 02142 1-800-numeric [686-3742] http://www.numeric.com INVESTMENT ADVISER Numeric Investors LLC(R) One Memorial Drive Cambridge, MA 02142 CO-ADMINISTRATORS Bear Stearns Funds Management Inc. 383 Madison Avenue New York, NY 10179 PFPC Inc. Bellevue Corporate Center 301 Bellevue Parkway Wilmington, DE 19809 DISTRIBUTOR PFPC Distributors,Inc. 760 Moore Road King of Prussia, PA 19406 CUSTODIAN Custodial Trust Company 101 Carnegie Center Princeton, NJ 08540 TRANSFER AGENT PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PricewaterhouseCoopers LLP Two Commerce Square Philadelphia, PA 19103 COUNSEL Drinker Biddle & Reath LLP One Logan Square 18th and Cherry Streets Philadelphia, PA 19103 This report is submitted for the general information of the shareholders of each Fund.It is not authorized for distribution unless preceded or accompanied by a current prospectus for the Funds. ================================================================================ - -------------------------------------------------------------------------------- ROBECO INVESTMENT FUNDS OF THE RBB FUND, INC. - -------------------------------------------------------------------------------- ANNUAL REPORT AUGUST 31, 2005 ROBECO BOSTON PARTNERS SMALL CAP VALUE FUND II ROBECO BOSTON PARTNERS LONG/SHORT EQUITY FUND ROBECO BOSTON PARTNERS LARGE CAP VALUE FUND ROBECO BOSTON PARTNERS MID CAP VALUE FUND ROBECO BOSTON PARTNERS ALL-CAP VALUE FUND ROBECO WPG TUDOR FUND ROBECO WPG LARGE CAP GROWTH FUND ROBECO WPG CORE BOND FUND [LOGO OMITTED] ROBECO ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PRIVACY NOTICE (unaudited) - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS SMALL CAP VALUE FUND II ROBECO BOSTON PARTNERS LONG/SHORT EQUITY FUND ROBECO BOSTON PARTNERS LARGE CAP VALUE FUND ROBECO BOSTON PARTNERS MID CAP VALUE FUND ROBECO BOSTON PARTNERS ALL-CAP VALUE FUND ROBECO WPG TUDOR FUND ROBECO WPG LARGE CAP GROWTH FUND ROBECO WPG CORE BOND FUND The Robeco Investment Funds 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) 261-4073. NOT PART OF THE ANNUAL REPORT ANNUAL REPORT 2005 | 1 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- GENERAL MARKET COMMENTARY - -------------------------------------------------------------------------------- Dear Shareholder: The Robeco Investment Funds welcomed three new Funds into the family this year. The three Funds that were added are as follows: Robeco WPG Tudor Fund Robeco WPG Large Cap Growth Fund Robeco WPG Core Bond Fund The Robeco WPG Tudor Fund is a small cap value fund which focuses on companies with market caps of less than $2 billion. The Robeco WPG Large Cap Growth Fund is a U.S based Large Cap Growth Fund that seeks to provide long-term growth of capital. The Robeco WPG Core Bond Fund has a diversified portfolio of U.S dollar denominated bonds issued by domestic or foreign corporations or government entities. The Fund buys different kinds of fixed income securities, including notes, mortgage backed securities, asset backed securities, short-term debt, convertible debt, and preferred stock. If you would like to learn more about these funds, please call 888-261-4073 and talk to a customer representative. The following pages contain investment discussion on each of the Robeco Investment Funds. Please take a minute to review them and feel free to contact us with any comments or questions. Warm Regards, Robeco Investment Funds This report is submitted for the general information of the shareholders of the Funds. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the Funds. Shares of Robeco Investment Funds are distributed by PFPC Distributors, Inc., 760 Moore Road, King of Prussia, PA 19406. 2 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS SMALL CAP VALUE FUND II (Unaudited) - -------------------------------------------------------------------------------- Dear Shareholder: The Robeco Boston Partners Small Cap Value Fund II Institutional Class returned 22.65% for the year ended August 31, 2005 outperforming the Russell 2000(R) Value Index. All sectors contributed to the positive performance for the Fund. Consumer Services, Finance, and the Capital Goods sectors were the greatest contributors. Consumer Services, Finance and the Capital Goods sectors were the greatest contributors. The Fund's underweight in the Energy sector detracted from performance. There are a limited number of energy investments in the small cap market that meet our investment criteria. The Fund continues to be well-diversified with approximately 200 stocks in the portfolio. Small cap value stocks continue to outperform large cap stocks for the sixth straight year. We have continued to seek to construct the Fund to have more attractive valuation and profitability characteristics than the benchmark. Sincerely, David Dabora BP Small Cap Value Fund II Portfolio Manager ---------- Small-cap stocks are generally riskier than large company stocks due to greater volatility and less liquidity. - ------------------------------------------------------------ TOP TEN POSITIONS % OF PORTFOLIO - ------------------------------------------------------------ IPC Holdings Ltd. 2.24% - ------------------------------------------------------------ Platinum Underwriters Holdings Ltd. 1.84% - ------------------------------------------------------------ Assured Guaranty Ltd. 1.66% - ------------------------------------------------------------ Sierra Pacific Resources 1.31% - ------------------------------------------------------------ Advanta Corp., Class B 1.28% - ------------------------------------------------------------ Scottish Re Group Ltd. 1.26% - ------------------------------------------------------------ Gevity HR, Inc. 1.16% - ------------------------------------------------------------ Navigators Group, Inc., (The) 1.16% - ------------------------------------------------------------ Champion Enterprises, Inc. 1.15% - ------------------------------------------------------------ URS Corp. 1.14% - ------------------------------------------------------------ - ------------------------------------------------------------ SECTOR BREAKDOWN % OF PORTFOLIO - ------------------------------------------------------------ Basic Industries 3.3% - ------------------------------------------------------------ Capital Goods 13.0% - ------------------------------------------------------------ Communications 1.7% - ------------------------------------------------------------ Consumer Durables 3.1% - ------------------------------------------------------------ Consumer Non-Durables 6.7% - ------------------------------------------------------------ Consumer Services 23.8% - ------------------------------------------------------------ Energy 2.7% - ------------------------------------------------------------ Finance 18.6% - ------------------------------------------------------------ Health Care 7.6% - ------------------------------------------------------------ Technology 4.9% - ------------------------------------------------------------ Transportation 2.7% - ------------------------------------------------------------ Utilities 1.3% - ------------------------------------------------------------ Other 10.6% - ------------------------------------------------------------ TOTAL 100.0% - ------------------------------------------------------------ - ------------------------------------------------------------ PORTFOLIO REVIEW - ------------------------------------------------------------ P/E: Price/Earnings* 15.3x - ------------------------------------------------------------ P/B: Price/Book 1.7x - ------------------------------------------------------------ Holdings 196 - ------------------------------------------------------------ Wtd. Average Mkt. Cap (mil) $946 - ------------------------------------------------------------ ROE: Return on Equity 12.4 - ------------------------------------------------------------ OROA: Operating Return on Operating Assets* 41.8 - ------------------------------------------------------------ * For the trailing one year period. Portfolio holdings are subject to change at any time. ANNUAL REPORT 2005 | 3 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS SMALL CAP VALUE FUND II (unaudited) (continued) - -------------------------------------------------------------------------------- Comparison of Change in Value of $10,000 Investment in Robeco Boston Partners Small Cap Value Fund II Institutional Class vs. Russell Indices [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: Small Cap Value Fund II-- Russell Russell Institutional 2000(R) 2000(R) Class Value Index Index ------------------- ----------- ------- 7/1/98 $10,000 $10,000 $10,000 7/31/98 9,280 9,217 9,190 8/31/98 7,620 7,774 7,405 11/30/98 7,930 8,686 8,746 2/28/99 7,640 8,157 8,649 5/31/99 8,670 9,099 9,711 8/31/99 8,670 8,868 9,506 11/30/99 8,450 8,561 10,117 2/29/00 8,714 9,118 12,911 5/31/00 9,854 9,074 10,673 8/31/00 11,395 10,081 12,087 11/30/00 11,225 9,784 10,057 2/28/01 14,382 11,118 10,736 5/31/01 16,926 11,741 11,281 8/31/01 17,613 11,898 10,682 11/30/01 17,172 11,641 10,542 2/28/02 17,995 12,594 10,773 5/31/02 19,739 13,550 11,224 8/31/02 16,312 11,232 9,034 11/30/02 15,939 11,431 9,426 2/28/03 14,437 10,277 8,393 5/31/03 18,135 12,535 10,306 8/31/03 20,970 13,892 11,660 11/30/03 22,943 15,422 12,846 2/29/04 25,689 16,854 13,799 5/31/04 24,956 16,399 13,427 8/31/04 23,897 16,600 12,984 11/30/04 26,748 19,080 15,062 2/28/05 27,522 19,153 15,113 5/31/05 27,107 18,876 14,746 8/31/05 29,298 20,353 15,985 The chart assumes a hypothetical $10,000 initial investment in the Fund made on July 1, 1998 (commencement of operations) and reflects Fund expenses. Investors should note that the Fund is an aggressively managed mutual fund while the Russell indices are unmanaged, do not incur expenses and are not available for investment.
- --------------------------------------------------------------------------------------------- For Period Ended August 31, 2005 Average Annual Total Return SINCE 1 YEAR 3 YEAR 5 YEAR INCEPTION(1) ------ ------ ------ ------------ Small Cap Value Fund II -- Institutional Class 22.65% 21.57% 20.80% 16.18% Russell 2000(R) Value Index 22.61% 21.91% 15.09% 10.42% Russell 2000(R) Index(2) 23.10% 20.95% 5.75% 6.76% - ---------------------------------------------------------------------------------------------
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. BOSTON PARTNERS ASSET MANAGEMENT, LLC WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE (CALL 1-888-261-4073 OR VISIT OUR WEB SITE AT WWW.ROBECOINVEST.COM). 1 For the period July 1, 1998 (commencement of operations) through August 31, 2005. 2 This is not a benchmark of the Fund. Results of index performance are presented for general comparative purposes. 4 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS SMALL CAP VALUE FUND II (unaudited) (continued) - -------------------------------------------------------------------------------- Comparison of Change in Value of $10,000 Investment in Robeco Boston Partners Small Cap Value Fund II Investor Class vs. Russell Indices [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: Small Cap Value Fund II-- Russell RUSSELL Investor 2000(R) 2000(R) Class Value Index Index ---------------- ----------- ------- 7/1/98 $10,000 $10,000 $10,000 7/31/98 9,290 9,217 9,190 8/31/98 7,630 7,774 7,405 11/30/98 7,940 8,686 8,746 2/28/99 7,640 8,157 8,649 5/31/99 8,660 9,099 9,711 8/31/99 8,650 8,868 9,506 11/30/99 8,440 8,561 10,117 2/29/00 8,700 9,118 12,911 5/31/00 9,830 9,074 10,673 8/31/00 11,360 10,081 12,087 11/30/00 11,180 9,784 10,057 2/28/01 14,325 11,118 10,736 5/31/01 16,858 11,741 11,281 8/31/01 17,525 11,898 10,682 11/30/01 17,084 11,641 10,542 2/28/02 17,896 12,594 10,773 5/31/02 19,619 13,550 11,224 8/31/02 16,204 11,232 9,034 11/30/02 15,809 11,431 9,426 2/28/03 14,318 10,277 8,393 5/31/03 17,973 12,535 10,306 8/31/03 20,766 13,892 11,660 11/30/03 22,708 15,422 12,846 2/29/04 25,401 16,854 13,799 5/31/04 24,668 16,399 13,427 8/31/04 23,609 16,600 12,984 11/30/04 26,407 19,080 15,062 2/28/05 27,159 19,153 15,113 5/31/05 26,720 18,876 14,746 8/31/05 28,878 20,353 15,985 The chart assumes a hypothetical $10,000 initial investment in the Fund made on July 1, 1998 (commencement of operations) and reflects Fund expenses. Investors should note that the Fund is an aggressively managed mutual fund while the Russell indices are unmanaged, do not incur expenses and are not available for investment.
- ------------------------------------------------------------------------------------- For Period Ended August 31, 2005 Average Annual Total Return SINCE 1 YEAR 3 YEAR 5 YEAR INCEPTION(1) ------ ------ ------ ------------ Small Cap Value Fund II -- Investor Class 22.32% 21.24% 20.51% 15.94% Russell 2000(R) Value Index 22.61% 21.91% 15.09% 10.42% Russell 2000(R) Index(2) 23.10% 20.95% 5.75% 6.76% - -------------------------------------------------------------------------------------
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. BOSTON PARTNERS ASSET MANAGEMENT, LLC WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE (CALL 1-888-261-4073 OR VISIT OUR WEB SITE AT WWW.ROBECOINVEST.COM). 1 For the period July 1, 1998 (commencement of operations) through August 31, 2005. 2 This is not a benchmark of the Fund. Results of index performance are presented for general comparative purposes. ANNUAL REPORT 2005 | 5 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LONG/SHORT EQUITY FUND (unaudited) (continued) - -------------------------------------------------------------------------------- Dear Shareholder: The Robeco Boston Partners Long/Short Equity Fund Institutional Shares returned 21.70% for the one year period ended August 31, 2005 outperforming the S&P 500(R) Index by over 9%. With regard to performance attribution, the portfolio benefited from stock selection on both the long side and short side of the portfolio. Consumer Services, Technology and Energy sectors were the primary contributors to performance on the long side for the year. Our bottom-up analysis has led us to what we believe are higher quality, mid to larger capitalized companies on the long side. Conversely, the short focus has been on companies with smaller capitalization which have become "frothy" in recent months. As we look ahead, we anticipate the fiscal fourth quarter earnings season to be challenging for some, as expectations are high and stock valuations appear to be full. The long portfolio is attractively positioned relative to the short portfolio from both a valuation and profitability standpoint. The long portfolio has attractive valuation characteristics trading at 13.9x earnings and 1.7x price-to-book value. The short portfolio trades at 20.3x earnings and 8.1x price-to-book value. We believe that consistently positioning the portfolio with these characteristics increases the probability of success over the long-term and continues to be the focus of our efforts. Sincerely, Robert T. Jones BP Long/Short Equity Portfolio Manager ---------- Long/Short Equity is an absolute return product that balances long and short portfolio strategies and seeks to achieve stable absolute returns with approximately half the risk of the S&P 500. However, this product is not risk neutral. It is exposed to style, capitalization, sector and short-implementation risk. Use of the S&P index is for comparative purposes only since Long/Short returns are not correlated to equity market returns. An absolute return benchmark of 15% is the more appropriate measure for this product. - ------------------------------------------------------------- % OF PORTFOLIO TOP TEN HOLDINGS LONG - ------------------------------------------------------------- MBIA, Inc. 1.97% - ------------------------------------------------------------- American Dental Partners, Inc. 1.77% - ------------------------------------------------------------- Pfizer, Inc. 1.72% - ------------------------------------------------------------- Allied Defense Group, Inc., (The) 1.58% - ------------------------------------------------------------- Cadmus Communications Corp. 1.56% - ------------------------------------------------------------- Johnson & Johnson 1.53% - ------------------------------------------------------------- Knot, Inc., (The) 1.48% - ------------------------------------------------------------- Matthews International Corp., Class A 1.44% - ------------------------------------------------------------- M & F Worldwide Corp. 1.35% - ------------------------------------------------------------- Shire Pharmaceuticals Group PLC - ADR 1.32% - ------------------------------------------------------------- - -------------------------------------------------------------- % OF PORTFOLIO - -------------------------------------------------------------- SECTOR BREAKDOWN LONG SHORT - ------------------------------------------------------------- Basic Industries 6.4% 2.8% - -------------------------------------------------------------- Capital Goods 9.1% 12.0% - ------------------------------------------------------------- Communications 4.8% 6.2% - ------------------------------------------------------------- Consumer Durables 0.9% 0.7% - ------------------------------------------------------------- Consumer Non-Durables 9.6% 9.4% - -------------------------------------------------------------- Consumer Services 22.1% 17.5% - -------------------------------------------------------------- Energy 5.1% 0.9% - ------------------------------------------------------------- Finance 15.9% 2.4% - ------------------------------------------------------------- Health Care 11.3% 14.5% - -------------------------------------------------------------- Technology 12.5% 29.5% - -------------------------------------------------------------- Transportation 1.2% 1.8% - ------------------------------------------------------------- Utilities 0.0% 0.6% - ------------------------------------------------------------- Other 1.1% 1.7% - ------------------------------------------------------------- TOTAL 100.0% 100.0% - ------------------------------------------------------------- - -------------------------------------------------------------- PORTFOLIO REVIEW LONG SHORT - ------------------------------------------------------------- P/E: Price/Earnings* 13.9x 20.3x - -------------------------------------------------------------- P/B: Price/Book 1.7x 8.1x - -------------------------------------------------------------- Holdings 140 199 - ------------------------------------------------------------- Wtd. Average Mkt. Cap (mil) $14,447 $1,004 - ------------------------------------------------------------- OROA: Operating Return on Operating Assets* 46.3 15.6 - ------------------------------------------------------------- * For the trailing one year period. Portfolio holdings are subject to change at any time. 6 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LONG/SHORT EQUITY FUND (unaudited) (continued) - -------------------------------------------------------------------------------- Comparison of Change in Value of $10,000 Investment in Robeco Boston Partners Long/Short Equity Fund Institutional Class vs. S&P 500(R) Index [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: Long/Short Equity Fund-- S&P 500(R) Institutional Class Index ------------------- ----------- 11/17/98 $10,000 $10,000 11/30/98 9,580 10,000 2/28/99 9,080 10,675 5/31/99 9,500 11,260 8/31/99 9,460 11,457 11/30/99 8,100 12,088 2/29/00 8,154 11,928 5/31/00 10,312 12,440 8/31/00 10,760 13,328 11/30/00 11,798 11,581 2/28/01 14,559 10,951 5/31/01 15,094 11,128 8/31/01 16,339 10,078 11/30/01 16,081 10,165 2/28/02 16,371 9,909 5/31/02 17,457 9,587 8/31/02 16,147 8,265 11/30/02 16,477 8,487 2/28/03 16,109 7,662 5/31/03 16,221 8,815 8/31/03 15,964 9,262 11/30/03 15,909 9,768 2/29/04 16,054 10,614 5/31/04 15,328 10,430 8/31/04 16,399 10,322 11/30/04 16,957 11,023 2/28/05 18,329 11,353 5/31/05 18,742 11,288 8/31/05 19,958 11,617 The chart assumes a hypothetical $10,000 initial investment in the Fund made on November 17, 1998 (commencement of operations) and reflects Fund expenses. Investors should note that the Fund is an aggressively managed mutual fund while the S&P 500(R) Index is unmanaged, does not incur expenses and is not available for investment.
- ---------------------------------------------------------------------------------------- For Period Ended August 31, 2005 Average Annual Total Return SINCE 1 YEAR 3 YEAR 5 YEAR INCEPTION(1) ------ ------ ------ ------------ Long/Short Equity Fund -- Institutional Class 21.70% 7.32% 13.15% 10.72% S&P 500(R) Index 12.56% 12.03% (2.71)% 2.23% - ----------------------------------------------------------------------------------------
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. BOSTON PARTNERS ASSET MANAGEMENT, LLC WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE (CALL 1-888-261-4073 OR VISIT OUR WEB SITE AT WWW.ROBECOINVEST.COM). 1 For the period November 17, 1998 (commencement of operations) through August 31, 2005. ANNUAL REPORT 2005 | 7 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LONG/SHORT EQUITY FUND (unaudited) (continued) - -------------------------------------------------------------------------------- Comparison of Change in Value of $10,000 Investment in Robeco Boston Partners Long/Short Equity Fund Investor Class vs. S&P 500(R) Index [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: Long/Short Equity Fund-- S&P 500(R) Investor Class Index -------------- ----------- 11/17/98 $10,000 $10,000 11/30/98 9,580 10,000 2/28/99 9,090 10,675 5/31/99 9,520 11,260 8/31/99 9,430 11,457 11/30/99 8,070 12,088 2/29/00 8,147 11,928 5/31/00 10,291 12,440 8/31/00 10,738 13,328 11/30/00 11,774 11,581 2/28/01 14,515 10,951 5/31/01 15,038 11,128 8/31/01 16,268 10,078 11/30/01 16,002 10,165 2/28/02 16,277 9,909 5/31/02 17,348 9,587 8/31/02 16,034 8,265 11/30/02 16,352 8,487 2/28/03 15,966 7,662 5/31/03 16,077 8,815 8/31/03 15,822 9,262 11/30/03 15,755 9,768 2/29/04 15,888 10,614 5/31/04 15,156 10,430 8/31/04 16,210 10,322 11/30/04 16,753 11,023 2/28/05 18,083 11,353 5/31/05 18,483 11,288 8/31/05 19,669 11,617 The chart assumes a hypothetical $10,000 initial investment in the Fund made on November 17, 1998 (commencement of operations) and reflects Fund expenses. Investors should note that the Fund is an aggressively managed mutual fund while the S&P 500(R) Index is unmanaged, does not incur expenses and is not available for investment.
- ------------------------------------------------------------------------------------- For Period Ended August 31, 2005 Average Annual Total Return SINCE 1 YEAR 3 YEAR 5 YEAR INCEPTION(1) ------ ------ ------ ------------ Long/Short Equity Fund -- Investor Class 21.34% 7.05% 12.87% 10.48% S&P 500(R) Index 12.56% 12.03% (2.71)% 2.23% - -------------------------------------------------------------------------------------
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. BOSTON PARTNERS ASSET MANAGEMENT, LLC WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE (CALL 1-888-261-4073 OR VISIT OUR WEB SITE AT WWW.ROBECOINVEST.COM). 1 For the period November 17, 1998 (commencement of operations) through August 31, 2005. 8 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LARGE CAP VALUE FUND (unaudited) - -------------------------------------------------------------------------------- Dear Shareholder: The Robeco Boston Partners Large Cap Value Fund Institutional Class returned 19.30% for the one year period ended August 31, 2005 outperforming the S&P 500(R) Index. Every sector contributed to the positive performance except for Health Care. Energy, Consumer Services, and Technology were the largest contributors. We continue to be overweight in the Energy sector, but we have changed the composition of our energy holdings. We have trimmed our exposure to oil service and refining stocks, and we are buying companies with natural gas sensitivity. There has been such a focus on oil in the first six months of the year, that natural gas stocks have lagged. Fundamentals in the natural gas sector are stronger and the inventory dynamics for natural gas are far more compelling. We also like the fact that natural gas is a self contained, North American story, and world politics do not come into play. Given all of these factors, we believe our current position in the Energy Sector is a good source of out-performance against the benchmark. Sincerely, Mark Donovan BP Large Cap Value Fund Portfolio Manager - ------------------------------------------------------------- TOP TEN POSITIONS % OF PORTFOLIO - ------------------------------------------------------------- Citigroup, Inc. 2.80% - ------------------------------------------------------------- Berkshire Hathaway, Inc., Class B 2.66% - ------------------------------------------------------------- MBIA, Inc. 2.56% - ------------------------------------------------------------- Chevron Corp. 2.47% - ------------------------------------------------------------- Northrup Grumman Corp. 2.36% - ------------------------------------------------------------- Marathon Oil Corp. 2.22% - ------------------------------------------------------------- Time Warner, Inc. 2.22% - ------------------------------------------------------------- Shire Pharmaceuticals Group PLC - ADR 2.16% - ------------------------------------------------------------- Pfizer, Inc. 2.04% - ------------------------------------------------------------- Exxon Mobil Corp. 2.04% - ------------------------------------------------------------- - ------------------------------------------------------------- SECTOR BREAKDOWN % OF PORTFOLIO - ------------------------------------------------------------- Basic Industries 3.7% - ------------------------------------------------------------- Capital Goods 6.7% - ------------------------------------------------------------- Communications 5.2% - ------------------------------------------------------------- Consumer Durables 0.0% - ------------------------------------------------------------- Consumer Non-Durables 5.2% - ------------------------------------------------------------- Consumer Services 12.0% - ------------------------------------------------------------- Energy 16.9% - ------------------------------------------------------------- Finance 26.0% - ------------------------------------------------------------- Health Care 5.5% - ------------------------------------------------------------- Technology 14.4% - ------------------------------------------------------------- Transportation 0.0% - ------------------------------------------------------------- Utilities 1.2% - ------------------------------------------------------------- Other 3.2% - ------------------------------------------------------------- TOTAL 100.0% - ------------------------------------------------------------- - ------------------------------------------------------------- PORTFOLIO REVIEW - ------------------------------------------------------------- P/E: Price/Earnings* 13.3x - ------------------------------------------------------------- P/B: Price/Book 2.1x - ------------------------------------------------------------- Holdings 86 - ------------------------------------------------------------- Wtd. Average Mkt. Cap (mil) $56,992 - ------------------------------------------------------------- ROE: Return on Equity 17.4 - ------------------------------------------------------------- OROA: Operating Return on Operating Assets* 45.3 - ------------------------------------------------------------- * For the trailing one year period. Portfolio holdings are subject to change at any time. ANNUAL REPORT 2005 | 9 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LARGE CAP VALUE FUND (unaudited) (continued) - -------------------------------------------------------------------------------- Comparison of Change in Value of $10,000 Investment in Robeco Boston Partners Large Cap Value Institutional Class vs. Various Indices [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: Large Cap Value Fund-- Russell 1000(R) Institutional S&P 500(R) Value Stock Class Index Index ------------- ----------- --------------- 1/2/97 $10,000 $10,000 $10,000 1/31/97 10,440 10,625 10,485 2/28/97 10,620 10,708 10,639 5/31/97 11,360 11,543 11,284 8/31/97 12,460 12,291 12,203 11/30/97 12,810 13,112 13,135 2/28/98 13,786 14,458 14,223 5/31/98 13,828 15,088 14,970 8/31/98 11,185 13,286 12,677 11/30/98 12,729 16,214 15,117 2/28/99 12,383 17,309 15,534 5/31/99 13,678 18,257 17,145 8/31/99 13,100 18,575 16,490 11/30/99 13,282 19,600 16,699 2/29/00 11,902 19,340 15,026 5/31/00 13,882 20,170 16,838 8/31/00 14,671 21,610 17,174 11/30/00 15,312 18,776 17,100 2/28/01 16,230 17,756 17,524 5/31/01 16,825 18,043 18,134 8/31/01 16,088 16,340 16,985 11/30/01 16,302 16,481 16,563 2/28/02 16,402 16,067 16,850 5/31/02 16,633 15,544 17,127 8/31/02 14,049 13,401 14,754 11/30/03 14,022 13,760 14,972 2/28/03 12,786 12,423 13,602 5/31/03 14,830 14,292 15,782 8/31/03 14,968 15,017 16,471 11/30/03 15,935 15,837 17,543 2/29/04 17,880 17,209 19,357 5/31/04 17,435 16,912 18,909 8/31/04 17,644 16,737 19,354 11/30/04 19,092 17,872 20,991 2/28/05 19,969 18,407 22,013 5/31/05 19,618 18,302 21,837 8/31/05 21,049 18,836 22,615 The chart assumes a hypothetical $10,000 initial investment in the Fund made on January 2, 1997 (commencement of operations) and reflects Fund expenses. Investors should note that the Fund is an aggressively managed mutual fund while the indices are unmanaged, do not incur expenses and are not available for investment.
- -------------------------------------------------------------------------------------- For Period Ended August 31, 2005 Average Annual Total Return SINCE 1 YEAR 3 YEAR 5 YEAR INCEPTION(1) ------ ------ ------ ------------ Large Cap Value Fund -- Institutional Class 19.30% 14.43% 7.49% 8.97% S&P 500(R) Index 12.56% 12.03% (2.71)% 7.59% Russell 1000(R) Value Index(2) 16.86% 15.30% 5.66% 9.87% - --------------------------------------------------------------------------------------
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. BOSTON PARTNERS ASSET MANAGEMENT, LLC WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE (CALL 1-888-261-4073 OR VISIT OUR WEB SITE AT WWW.ROBECOINVEST.COM). 1 For the period January 2, 1997 (commencement of operations) through August 31, 2005. 2 This is not a primary benchmark of the Fund. Results of index performance are presented for general comparative purposes. 10 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LARGE CAP VALUE FUND (unaudited) (continued) - -------------------------------------------------------------------------------- Comparison of Change in Value of $10,000 Investment in Robeco Boston Partners Large Cap Value Investor Class vs. Various Indices [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: Large Cap Value Fund-- S&P 500(R) Russell 1000(R Investor Class Stock Index Value Index -------------- ----------- -------------- 1/2/97 $10,000 $10,000 $10,000 1/31/97 10,235 10,134 10,120 2/28/97 10,412 10,213 10,269 5/31/97 11,128 11,010 10,892 8/31/97 12,206 11,723 11,778 11/30/97 12,549 12,506 12,678 2/28/98 13,500 13,790 13,728 5/31/98 13,551 14,391 14,449 8/31/98 10,951 12,672 12,236 11/30/98 12,456 15,465 14,591 2/28/99 12,114 16,509 14,993 5/31/99 13,367 17,413 16,549 8/31/99 12,797 17,717 15,916 11/30/99 12,963 18,694 16,117 2/29/00 11,602 18,446 14,503 5/31/00 13,534 19,238 16,252 8/31/00 14,291 20,611 16,576 11/30/00 14,906 17,909 16,504 2/28/01 15,790 16,936 16,914 5/31/01 16,359 17,209 17,503 8/31/01 15,642 15,585 16,393 11/30/01 15,835 15,719 15,986 2/28/02 15,925 15,324 16,263 5/31/02 16,133 14,826 16,531 8/31/02 13,628 12,781 14,240 11/30/03 13,589 13,125 14,451 2/28/03 12,372 11,849 13,129 5/31/03 14,344 13,632 15,233 8/31/03 14,476 14,323 15,897 11/30/03 15,409 15,105 16,932 2/29/04 17,264 16,414 18,683 5/31/04 16,841 16,130 18,251 8/31/04 17,013 15,963 18,680 11/30/04 18,402 17,046 20,260 2/28/05 19,241 17,557 21,247 5/31/05 18,895 17,456 21,077 8/31/05 20,252 17,966 21,828 The chart assumes a hypothetical $10,000 initial investment in the Fund made on January 16, 1997 (commencement of operations) and reflects Fund expenses. Investors should note that the Fund is an aggressively managed mutual fund while the indices are unmanaged, do not incur expenses and are not available for investment.
- ------------------------------------------------------------------------------------- For Period Ended August 31, 2005 Average Annual Total Return SINCE 1 YEAR 3 YEAR 5 YEAR INCEPTION(1) ------ ------ ------ ------------ Large Cap Value Fund -- Investor Class 19.04% 14.12% 7.22% 8.53% S&P 500(R) Index 12.56% 12.03% (2.71)% 7.03% Russell 1000(R) Value Index(2) 16.86% 15.30% 5.66% 9.47% - -------------------------------------------------------------------------------------
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. BOSTON PARTNERS ASSET MANAGEMENT, LLC WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE (CALL 1-888-261-4073 OR VISIT OUR WEB SITE AT WWW.ROBECOINVEST.COM). 1 For the period January 16, 1997 (commencement of operations) through August 31, 2005. 2 This is not a primary benchmark of the Fund. Results of index performance are presented for general comparative purposes. ANNUAL REPORT 2005 | 11 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS MID CAP VALUE FUND (unaudited) - -------------------------------------------------------------------------------- Dear Shareholder: The Robeco Boston Partners Mid Cap Value Fund Institutional and Investor Classes outperformed the Russell 2500(R) Value Index for the one year period ended August 31, 2005. The Mid Cap asset class continued to outperform most equity indexes. Areas of strength in the portfolio were Technology, Finance, and Consumer Services. Consumer Durables was the only negative impact on returns. Our current focus in the Mid Cap Value Fund is centered on stocks in the Consumer and Energy Sectors. Despite recent poor performance in the Consumer related sectors, we believe we have found pockets of attractive opportunities in a few industries including gaming, personal care, and business services. Our overweight position in the Energy Sector is primarily driven by our holdings in the oil services sector. Spending continues to increase in the oil industry, and deep water drillers will be the primary beneficiaries. The Fund continues to be significantly underweight in both REITs and the Utility sectors given the rich and unsustainable valuations and the fact that we see more compelling opportunities elsewhere in the market. We are constantly focused on constructing a Fund with more attractive valuation and profitability characteristics than the mid cap value benchmarks and broader markets. Sincerely, Steven Pollack BP Mid Cap Value Fund Portfolio Manager ---------- Mid-company stocks are generally riskier than large company stocks due to greater volatility and less liquidity. - ----------------------------------------------------------------- TOP TEN POSITIONS % OF PORTFOLIO - ----------------------------------------------------------------- Gtech Holdings Corp. 2.05% - ----------------------------------------------------------------- Apollo Investment Corp. 1.93% - ----------------------------------------------------------------- Radian Group, Inc. 1.92% - ----------------------------------------------------------------- Vintage Petroleum, Inc. 1.82% - ----------------------------------------------------------------- W. W. Grainger, Inc. 1.81% - ----------------------------------------------------------------- Assured Guaranty Ltd. 1.73% - ----------------------------------------------------------------- Federal Signal 1.69% - ----------------------------------------------------------------- Terex Corp. 1.65% - ----------------------------------------------------------------- Sierra Pacific Resources 1.64% - ----------------------------------------------------------------- Apria Healthcare Group, Inc. 1.54% - ----------------------------------------------------------------- - ----------------------------------------------------------------- SECTOR BREAKDOWN % OF PORTFOLIO - ----------------------------------------------------------------- Basic Industries 5.0% - ----------------------------------------------------------------- Capital Goods 6.9% - ----------------------------------------------------------------- Communications 3.6% - ----------------------------------------------------------------- Consumer Durables 1.3% - ----------------------------------------------------------------- Consumer Non-Durables 9.3% - ----------------------------------------------------------------- Consumer Services 20.4% - ----------------------------------------------------------------- Energy 5.2% - ----------------------------------------------------------------- Finance 19.8% - ----------------------------------------------------------------- Health Care 6.3% - ----------------------------------------------------------------- Technology 11.6% - ----------------------------------------------------------------- Transportation 0.8% - ----------------------------------------------------------------- Utilities 2.1% - ----------------------------------------------------------------- Other 7.7% - ----------------------------------------------------------------- TOTAL 100.0% - ----------------------------------------------------------------- - ----------------------------------------------------------------- PORTFOLIO REVIEW - ----------------------------------------------------------------- P/E: Price/Earnings* 16.3x - ----------------------------------------------------------------- P/B: Price/Book 2.0x - ----------------------------------------------------------------- Holdings 101 - ----------------------------------------------------------------- Wtd. Average Mkt. Cap (mil) $3,004 - ----------------------------------------------------------------- ROE: Return on Equity 15.1 - ----------------------------------------------------------------- OROA: Operating Return on Operating Assets* 44.1 - ----------------------------------------------------------------- * For the trailing one year period. Portfolio holdings are subject to change at any time. 12 |ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS MID CAP VALUE FUND (unaudited) (continued) - -------------------------------------------------------------------------------- Comparison of Change in Value of $10,000 Investment in Robeco Boston Partners Mid Cap Value Institutional Class vs. Russell Indices [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: Mid Cap Russell Russell Value Fund-- 2500(R) Russell Midcap(R) Institutional Value 2500(R) Value Class Index Index Index ------------- ------- ------- --------- 6/2/97 $10,000 $10,000 $10,000 $10,000 6/30/97 10,330 10,471 10,409 10,367 8/31/97 11,010 11,099 11,172 11,007 11/30/97 11,250 11,670 11,420 11,716 2/28/98 12,639 12,638 12,289 12,726 5/31/98 12,872 12,837 12,280 12,996 8/31/98 9,608 10,092 9,289 10,636 11/30/98 10,713 11,519 11,013 12,408 2/28/99 10,569 10,942 10,894 12,212 5/31/99 11,695 12,248 12,311 13,617 8/31/99 11,634 11,955 12,299 12,963 11/30/99 10,802 11,653 13,080 12,439 2/29/00 9,762 11,749 16,211 11,506 5/30/00 11,379 12,586 14,379 13,175 8/31/00 12,007 13,482 16,219 13,776 11/30/00 11,513 13,223 13,919 13,989 2/28/01 12,208 14,635 14,609 15,104 5/31/01 13,192 15,543 15,479 15,933 8/31/01 12,995 15,455 14,640 15,372 11/30/01 12,964 15,114 14,489 14,958 2/28/02 13,746 16,320 14,848 15,992 5/31/02 14,332 17,340 15,370 16,772 8/31/02 11,829 14,872 12,811 14,623 11/30/02 12,012 14,860 13,175 14,419 2/28/03 11,097 13,619 11,951 13,459 5/31/03 13,185 16,335 14,432 15,809 8/31/03 14,125 18,046 16,217 16,998 11/30/03 15,309 20,074 17,911 18,628 2/29/04 16,636 21,976 19,269 20,439 5/31/04 16,587 21,413 18,831 20,107 8/31/04 16,157 21,635 18,271 20,587 11/30/04 18,367 24,582 20,840 23,141 2/28/05 18,916 25,160 21,403 24,298 5/31/05 19,119 25,221 21,245 24,560 8/31/05 20,353 27,047 22,874 26,363 The chart assumes a hypothetical $10,000 initial investment in the Fund made on June 2, 1997 (commencement of operations) and reflects Fund expenses. Investors should note that the Fund is an aggressively managed mutual fund while the Russell indices are unmanaged, do not incur expenses and are not available for investment.
- -------------------------------------------------------------------------------------- For Period Ended August 31, 2005 Average Annual Total Return SINCE 1 YEAR 3 YEAR 5 YEAR INCEPTION(1) ------ ------ ------ ------------ Mid Cap Value Fund -- Institutional Class 25.97% 19.83% 11.13% 9.00% Russell 2500(R) Value Index 25.01% 22.07% 14.94% 12.82% Russell 2500(R) Index 25.19% 21.31% 7.11% 10.55% Russell Midcap(R) Value Index(2) 28.06% 21.71% 13.86% 12.47% - --------------------------------------------------------------------------------------
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. BOSTON PARTNERS ASSET MANAGEMENT, LLC WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE (CALL 1-888-261-4073 OR VISIT OUR WEB SITE AT WWW.ROBECOINVEST.COM). 1 For the period June 2, 1997 (commencement of operations) through August 31, 2005. 2 This is not a benchmark of the Fund. Results of index performance are presented for general comparative purposes. ANNUAL REPORT 2005 | 13 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS MID CAP VALUE FUND (unaudited) (continued) - -------------------------------------------------------------------------------- Comparison of Change in Value of $10,000 Investment in Robeco Boston Partners Mid Cap Value Investor Class vs. Russell Indices [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: Mid Cap Russell Russell Value Fund-- 2500(R) Russell Midcap(R) Investor Value 2500(R) Value Class Index Index Index ------------ ------- ------- --------- 6/2/97 $10,000 $10,000 $10,000 $10,000 6/30/97 10,330 10,471 10,409 10,367 8/31/97 11,010 11,099 11,172 11,007 11/30/97 11,240 11,670 11,420 11,716 2/28/98 12,632 12,638 12,289 12,726 5/31/98 12,857 12,837 12,280 12,996 8/31/98 9,604 10,092 9,289 10,636 11/30/98 10,695 11,519 11,013 12,408 2/28/99 10,553 10,942 10,894 12,212 5/31/99 11,664 12,248 12,311 13,617 8/31/99 11,603 11,955 12,299 12,963 11/30/99 10,757 11,653 13,080 12,439 2/29/00 9,728 11,749 16,211 11,506 5/31/00 11,330 12,586 14,379 13,175 8/31/00 11,940 13,482 16,219 13,776 11/30/00 11,444 13,223 13,919 13,989 2/28/01 12,133 14,635 14,609 15,104 5/31/01 13,097 15,543 15,479 15,933 8/31/01 12,890 15,455 14,640 15,372 11/30/01 12,859 15,114 14,489 14,958 2/28/02 13,625 16,320 14,848 15,992 5/31/02 14,199 17,340 15,370 16,772 8/31/02 11,696 14,872 12,811 14,623 11/30/02 11,879 14,860 13,175 14,419 2/28/03 10,976 13,619 11,951 13,459 5/31/03 13,027 16,335 14,432 15,809 8/31/03 13,955 18,046 16,217 16,998 11/30/03 15,115 20,074 17,911 18,628 2/29/04 16,409 21,976 19,269 20,439 5/31/04 16,360 21,413 18,831 20,107 8/31/04 15,919 21,635 18,271 20,587 11/30/04 18,087 24,582 20,840 23,141 2/28/05 18,612 25,160 21,403 24,298 5/31/05 18,801 25,221 21,245 24,560 8/31/05 20,004 27,047 22,874 26,363 The chart assumes a hypothetical $10,000 initial investment in the Fund made on June 2, 1997 (commencement of operations) and reflects Fund expenses. Investors should note that the Fund is an aggressively managed mutual fund while the Russell indices are unmanaged, do not incur expenses and are not available for investment.
- -------------------------------------------------------------------------------------- For Period Ended August 31, 2005 Average Annual Total Return SINCE 1 YEAR 3 YEAR 5 YEAR INCEPTION(1) ------ ------ ------ ------------ Mid Cap Value Fund -- Investor Class 25.47% 19.59% 10.87% 8.77% Russell 2500(R) Value Index 25.01% 22.07% 14.94% 12.82% Russell 2500(R) Index 25.19% 21.31% 7.11% 10.55% Russell Midcap(R) Value Index(2) 28.06% 21.71% 13.86% 12.47% - --------------------------------------------------------------------------------------
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. BOSTON PARTNERS ASSET MANAGEMENT, LLC WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE (CALL 1-888-261-4073 OR VISIT OUR WEB SITE AT WWW.ROBECOINVEST.COM). 1 For the period June 2, 1997 (commencement of operations) through August 31, 2005. 2 This is not a benchmark of the Fund. Results of index performance are presented for general comparative purposes. 14 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS ALL-CAP VALUE FUND (unaudited) - -------------------------------------------------------------------------------- Dear Shareholder: The Robeco Boston Partners All-Cap Value Fund Institutional Class returned 22.33% for the one year period ended August 31, 2005 outperforming the Russell 3000(R) Value Index. The Fund also celebrated its 3 year anniversary on July 1, 2005. All sectors contributed positively to performance, except for Transportation, with Energy, Consumer Non-Durables and Consumer Services leading the way. The All-Cap Value Fund invests in companies of various sizes that meet our value-based investment discipline. The Fund's positions within the primary market capitalization groupings (large, mid, small) all contributed to the year's positive performance. Although the All-Cap Value Fund's market cap profile is currently centered within mid to large cap spheres, we continue to find stock-specific opportunities across all capitalizations. In addition to attractive valuation characteristics, a common denominator of the Fund has been a quality bias. Given the convergence of valuations among companies of disparate fundamentals, we have, stock by stock, sought to upgrade the portfolio's quality without compromising on value. Our efforts are captured in the favorable valuation and profitability characteristics of the current portfolio. Sincerely, Harry Rosenbluth BP Portfolio Manager All-Cap Value Fund ---------- Small and mid-company stocks are generally riskier than large company stocks due to greater volatility and less liquidity. - ---------------------------------------------------------------- TOP TEN POSITIONS % OF PORTFOLIO Loews Corp. 3.46% - ---------------------------------------------------------------- Pfizer, Inc. 3.30% - ---------------------------------------------------------------- ACE Ltd. 3.13% - ---------------------------------------------------------------- MBIA, Inc. 3.05% - ---------------------------------------------------------------- UST, Inc. 2.71% - ---------------------------------------------------------------- White Mountains Insurance Group 2.50% - ---------------------------------------------------------------- Occidental Petroleum Corp. 2.37% - ---------------------------------------------------------------- Anadarko Petroleum Corp. 2.08% - ---------------------------------------------------------------- Renal Care Group, Inc. 1.88% - ---------------------------------------------------------------- Freddie Mac 1.84% - ---------------------------------------------------------------- - ---------------------------------------------------------------- SECTOR BREAKDOWN % OF PORTFOLIO - ---------------------------------------------------------------- Basic Industries 1.2% - ---------------------------------------------------------------- Capital Goods 2.5% - ---------------------------------------------------------------- Communications 3.7% - ---------------------------------------------------------------- Consumer Durables 0.8% - ---------------------------------------------------------------- Consumer Non-Durables 14.0% - ---------------------------------------------------------------- Consumer Services 10.2% - ---------------------------------------------------------------- Energy 12.9% - ---------------------------------------------------------------- Finance 29.5% - ---------------------------------------------------------------- Health Care 11.8% - ---------------------------------------------------------------- Technology 5.9% - ---------------------------------------------------------------- Transportation 0.3% - ---------------------------------------------------------------- Utilities 1.2% - ---------------------------------------------------------------- Other 6.0% - ---------------------------------------------------------------- TOTAL 100.0% - ---------------------------------------------------------------- - ---------------------------------------------------------------- PORTFOLIO REVIEW - ---------------------------------------------------------------- P/E: Price/Earnings* 13.3x - ---------------------------------------------------------------- P/B: Price/Book 1.8x - ---------------------------------------------------------------- Holdings 126 - ---------------------------------------------------------------- Wtd. Average Mkt. Cap (mil) $32,023 - ---------------------------------------------------------------- ROE: Return on Equity 15.9 - ---------------------------------------------------------------- OROA: Operating Return on Operating Assets* 62.2 - ---------------------------------------------------------------- * For the trailing one year period. Portfolio holdings are subject to change at any time. ANNUAL REPORT 2005 | 15 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS ALL-CAP VALUE FUND (unaudited) (continued) - -------------------------------------------------------------------------------- Comparison of Change in Value of $10,000 Investment in Robeco Boston Partners All-Cap Value Fund Institutional Class vs. Russell Indices [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: All-Cap Russell Value Fund-- 3000(R) Russell Institutional Value 3000(R) Class Index Index ------------- ------- ------- 7/1/02 $10,000 $10,000 $10,000 7/31/02 9,240 9,029 9,205 8/31/02 9,450 9,089 9,248 11/30/02 9,410 9,226 9,476 2/28/03 8,666 8,376 8,577 5/31/03 10,350 9,752 9,942 8/31/03 10,852 10,222 10,536 11/30/03 11,925 10,922 11,204 2/29/04 13,382 12,042 12,122 5/31/04 13,240 11,760 11,900 8/31/04 13,402 12,024 11,726 11/30/04 14,703 13,106 12,664 2/28/05 15,391 13,692 13,047 5/31/05 15,465 13,575 13,024 8/31/05 16,394 14,110 13,523 The chart assumes a hypothetical $10,000 initial investment in the Fund made on July 1, 2002 (commencement of operations) and reflects Fund expenses. Investors should note that the Fund is an aggressively managed mutual fund while the Russell indices are unmanaged, do not incur expenses and are not available for investment.
- -------------------------------------------------------------------------------------- For Period Ended August 31, 2005 Average Annual Total Return SINCE 1 YEAR 3 YEAR INCEPTION(1) ------ ------ ------------ All-Cap Value Fund -- Institutional Class 22.33% 20.16% 16.88% Russell 3000(R) Value Index 17.33% 15.79% 11.47% Russell 3000(R) Index(2) 15.32% 13.50% 9.99% - --------------------------------------------------------------------------------------
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. BOSTON PARTNERS ASSET MANAGEMENT, LLC WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE (CALL 1-888-261-4073 OR VISIT OUR WEB SITE AT WWW.ROBECOINVEST.COM). 1 For the period July 1, 2002 (commencement of operations) through August 31, 2005. 2 This is not a benchmark of the Fund. Results of index performance are presented for general comparative purposes. 16 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS ALL-CAP VALUE FUND (unaudited) (continued) - -------------------------------------------------------------------------------- Comparison of Change in Value of $10,000 Investment in Robeco Boston Partners All-Cap Value Fund Investor Class vs. Russell Indices [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: All-Cap Value Fund-- Russell 3000(R) Russell 3000(R) Investor Class Value Index Index -------------- --------------- --------------- 7/1/02 $10,000 $10,000 $10,000 7/31/02 9,230 9,029 9,205 8/31/02 9,440 9,089 9,248 11/30/02 9,390 9,226 9,476 2/28/03 8,637 8,376 8,577 5/31/03 10,330 9,752 9,942 8/31/03 10,821 10,222 10,536 11/30/03 11,873 10,922 11,204 2/29/04 13,324 12,042 12,122 5/31/04 13,173 11,760 11,900 8/31/04 13,324 12,024 11,726 11/30/04 14,610 13,106 12,664 2/28/05 15,297 13,692 13,047 5/31/05 15,360 13,575 13,024 8/31/05 16,263 14,110 13,523 The chart assumes a hypothetical $10,000 initial investment in the Fund made on July 1, 2002 (commencement of operations) and reflects Fund expenses. Investors should note that the Fund is an aggressively managed mutual fund while the Russell indices are unmanaged, do not incur expenses and are not available for investment.
- ------------------------------------------------------------------------------------- For Period Ended August 31, 2005 Average Annual Total Return SINCE 1 YEAR 3 YEAR INCEPTION(1) ------ ------ ------------ All-Cap Value Fund -- Investor Class 22.06% 19.88% 16.58% Russell 3000(R) Value Index 17.33% 15.79% 11.47% Russell 3000(R) Index(2) 15.32% 13.50% 9.99% - -------------------------------------------------------------------------------------
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. BOSTON PARTNERS ASSET MANAGEMENT, LLC WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE (CALL 1-888-261-4073 OR VISIT OUR WEB SITE AT WWW.ROBECOINVEST.COM). 1 For the period July 1, 2002 (commencement of operations) through August 31, 2005. 2 This is not a benchmark of the Fund. Results of index performance are presented for general comparative purposes. ANNUAL REPORT 2005 | 17 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO WPG TUDOR FUND (unaudited) - -------------------------------------------------------------------------------- Dear Shareholder: The Robeco WPG Tudor Fund returned 15.16% for the one year period ended August 31, 2005 trailing the Russell 2000(R) Value Index. The underperformance for the year was attributable to several factors. The Fund was positioned with a conservative bias given our concern of many valuation levels and fundamentals within the market and small cap sector. The Robeco WPG Tudor Fund is a small cap value strategy predicated on the belief that hands-on, proprietary fundamental research can uncover overlooked companies in key value sectors. Pursuing superior small companies on the cusp of the positive change and at attractive valuations, the Tudor Fund investment team seeks to exploit market anomalies through both traditional value investments and special situations. Taking an event-driven approach, the Tudor Fund team only invests in a company when a near-term, positive price target has been met. Risk control is managed through stock selection, portfolio construction, and a disciplined investment process with rigorous buy criteria. Portfolio companies will exhibit excellent cash flow characteristics, strong management teams and identifiable positive catalysts as well as high return on invested capital, dominant market shares and compelling valuations. In summary, the Fund is a fundamental, bottom up value, research driven strategy that seeks to outperform the Russell 2000(R) Value Index. Regards, Richard Shuster WPG Tudor Fund Portfolio Manager ---------- Small and mid-company stocks are generally riskier than large company stocks due to greater volatility and less liquidity. - -------------------------------------------------------------- TOP TEN POSITIONS % OF PORTFOLIO - -------------------------------------------------------------- MDC Partners, Inc. 2.85% - -------------------------------------------------------------- First Consulting Group, Inc. 2.63% - -------------------------------------------------------------- WatchGuard Technologies, Inc. 2.62% - -------------------------------------------------------------- GrafTech International Ltd. 2.22% - -------------------------------------------------------------- NBTY, Inc. 2.03% - -------------------------------------------------------------- SafeNet, Inc. 1.83% - -------------------------------------------------------------- Marlin Business Services, Inc. 1.59% - -------------------------------------------------------------- Del Monte Foods Co. 1.58% - -------------------------------------------------------------- Aspen Insurance Holdings Ltd. 1.57% - -------------------------------------------------------------- Uranium Resources, Inc. 1.53% - -------------------------------------------------------------- - -------------------------------------------------------------- SECTOR BREAKDOWN % OF PORTFOLIO - -------------------------------------------------------------- Basic Industries 13.7% - -------------------------------------------------------------- Capital Goods 2.6% - -------------------------------------------------------------- Communications 5.1% - -------------------------------------------------------------- Consumer Durables 1.5% - -------------------------------------------------------------- Consumer Non-Durables 5.4% - -------------------------------------------------------------- Consumer Services 9.8% - -------------------------------------------------------------- Energy 4.1% - -------------------------------------------------------------- Finance 18.9% - -------------------------------------------------------------- Health Care 6.9% - -------------------------------------------------------------- Technology 8.7% - -------------------------------------------------------------- Transportation 3.9% - -------------------------------------------------------------- Utilities 4.5% - -------------------------------------------------------------- Other 14.9% - -------------------------------------------------------------- TOTAL 100.0% - -------------------------------------------------------------- - -------------------------------------------------------------- PORTFOLIO REVIEW - -------------------------------------------------------------- P/E: Price/Earnings* 24.6x - -------------------------------------------------------------- P/B: Price/Book 1.8 - -------------------------------------------------------------- Holdings 108 - -------------------------------------------------------------- Wtd. Average Mkt. Cap (mil) $811 - -------------------------------------------------------------- ROE: Return on Equity 10.4 - -------------------------------------------------------------- OROA: Operating Return on Operating Assets* 24.3 - -------------------------------------------------------------- * For the trailing one year period. Portfolio holdings are subject to change at any time. 18 |ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO WPG TUDOR FUND (unaudited) - -------------------------------------------------------------------------------- Comparison of Change in Value of $10,000 Investment in Robeco WPG Tudor Fund Institutional Class vs. Russell Index [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: WPG Tudor Fund-- Russell 2000(R) Institutional Class Value Index ------------------- --------------- Aug-95 $10,000 $10,000 Sep-95 10,418 10,149 Oct-95 10,043 9,744 Nov-95 10,731 10,131 Dec-95 11,068 10,445 Jan-96 11,172 10,514 Feb-96 11,572 10,679 Mar-96 12,021 10,903 Apr-96 13,125 11,201 May-96 13,603 11,484 Jun-96 13,029 11,349 Jul-96 11,437 10,745 Aug-96 12,402 11,211 Sep-96 13,147 11,517 Oct-96 12,710 11,651 Nov-96 13,210 12,278 Dec-96 13,151 12,677 Jan-97 13,151 12,872 Feb-97 13,151 12,994 Mar-97 11,564 12,646 Apr-97 11,185 12,832 May-97 12,790 13,853 Jun-97 13,281 14,554 Jul-97 13,999 15,166 Aug-97 14,343 15,407 Sep-97 15,524 16,431 Oct-97 14,773 15,985 Nov-97 14,784 16,160 Dec-97 14,613 16,708 Jan-98 14,159 16,406 Feb-98 15,354 17,398 Mar-98 15,741 18,105 Apr-98 15,934 18,193 May-98 15,000 17,549 Jun-98 14,553 17,451 Jul-98 13,125 16,085 Aug-98 9,982 13,566 Sep-98 10,282 14,332 Oct-98 10,463 14,758 Nov-98 11,030 15,158 Dec-98 11,394 15,634 Jan-99 11,568 15,279 Feb-99 10,272 14,235 Mar-99 10,649 14,117 Apr-99 11,821 15,406 May-99 11,966 15,879 Jun-99 12,951 16,454 Jul-99 13,066 16,064 Aug-99 12,704 15,476 Sep-99 13,088 15,167 Oct-99 14,239 14,863 Nov-99 15,781 14,940 Dec-99 18,602 15,399 Jan-00 18,496 14,996 Feb-00 22,889 15,912 Mar-00 20,672 15,987 Apr-00 18,618 16,081 May-00 17,148 15,835 Jun-00 19,828 16,297 Jul-00 18,878 16,840 Aug-00 21,395 17,593 Sep-00 20,567 17,493 Oct-00 19,065 17,430 Nov-00 16,247 17,074 Dec-00 17,635 18,908 Jan-01 18,497 19,430 Feb-01 15,384 19,402 Mar-01 13,746 19,092 Apr-01 15,652 19,976 May-01 16,073 20,489 Jun-01 15,796 21,313 Jul-01 14,685 20,836 Aug-01 14,139 20,763 Sep-01 12,117 18,470 Oct-01 13,142 18,953 Nov-01 14,206 20,315 Dec-01 15,029 21,558 Jan-02 14,159 21,845 Feb-02 12,904 21,978 Mar-02 13,952 23,625 Apr-02 13,843 24,456 May-02 13,062 23,647 Jun-02 12,638 23,124 Jul-02 10,829 19,688 Aug-02 11,274 19,601 Sep-02 10,207 18,202 Oct-02 10,513 18,475 Nov-02 11,887 19,949 Dec-02 11,106 19,097 Jan-03 10,889 18,559 Feb-03 10,493 17,935 Mar-03 10,404 18,127 Apr-03 11,116 19,849 May-03 12,400 21,876 Jun-03 12,885 22,245 Jul-03 13,764 23,355 Aug-03 14,139 24,243 Sep-03 13,922 23,964 Oct-03 14,841 25,917 Nov-03 15,384 26,912 Dec-03 16,145 27,887 Jan-04 16,896 28,852 Feb-04 17,183 29,411 Mar-04 17,420 29,817 Apr-04 16,728 28,276 May-04 16,580 28,618 Jun-04 17,479 30,071 Jul-04 16,521 28,688 Aug-04 16,610 28,969 Sep-04 16,946 30,117 Oct-04 16,985 30,583 Nov-04 18,339 33,296 Dec-04 19,270 34,092 Jan-05 18,721 32,772 Feb-05 19,434 33,425 Mar-05 18,556 32,736 Apr-05 17,491 31,047 May-05 18,018 32,941 Jun-05 18,699 34,397 Jul-05 19,522 36,354 Aug-05 19,127 35,518 The chart assumes a hypothetical $10,000 initial investment in the Fund made on September 1, 1995 and reflects Fund expenses. investors should note that the Fund is an aggressively managed mutual fund while the Russell index is unmanaged, does not incur expenses and is not available for investment. - -------------------------------------------------------------------------------- For Period Ended August 31, 2005 Average Annual Total Return 1 YEAR 3 YEAR 5 YEAR 10 YEAR ------ ------ ------- ------- WPG Tudor Fund -- Institutional Class 15.16% 19.27% (2.22)% 6.70% Russell 2000(R) Value Index 22.61% 21.91% 15.09% 13.51% - -------------------------------------------------------------------------------- THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. WEISS, PECK & GREER AGREED TO WAIVE A PORTION OF ITS ADVISORY FEE AND REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE (CALL 1-888-261-4073 OR VISIT OUR WEB SITE AT WWW.ROBECOINVEST.COM). ANNUAL REPORT 2005 | 19 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO WPG LARGE CAP GROWTH FUND (unaudited) - -------------------------------------------------------------------------------- Dear Shareholder: The Robeco WPG Large Cap Growth Fund returned 12.51% for the one year period ended August 31, 2005 outperforming the Russell 1000(R) Growth Index. Stock selection was a strong contributor to performance. Sectors that contributed most to performance were Technology, Basic Materials and Consumer Cyclicals. Major detractors to performance were Commercial Services and Health Care. The Robeco WPG Large Cap Growth Fund seeks to identify stocks that are quantitatively attractive due to rising earnings expectations, low relative valuations, and high share buybacks. The earnings momentum factors seek to capture rising earnings expectations in four ways: the magnitude of the change in expectations, the breadth (both positive and negative) of the change, and surprises in reported earnings. The value factors use price relationships to identify undervalued securities; forecasted earnings to price ratio, cash flow to price ratio and return on equity. Share buybacks represent an attractive use of capital by management. A sector specific model is used for technology stocks. All stocks in the selection universe are scored according to their exposure to each factor. These scores are calculated to be sector specific. Using a dynamic weighting process, factor scores are combined into a composite score or alpha used to select stocks. The team then selects attractively ranked stocks within economic sectors. Regards, Easton Ragsdale WPG Large Cap Growth Portfolio Manager - --------------------------------------------------------------- TOP TEN POSITIONS % OF PORTFOLIO - --------------------------------------------------------------- Home Depot, Inc., (The) 3.97% - --------------------------------------------------------------- Microsoft Corp. 3.63% - --------------------------------------------------------------- Hewlett Packard Co. 3.14% - --------------------------------------------------------------- Intel Corp. 2.97% - --------------------------------------------------------------- GlaxoSmithKline PLC - ADR 2.62% - --------------------------------------------------------------- Hershey Co., (The) 2.49% - --------------------------------------------------------------- Coach, Inc. 2.41% - --------------------------------------------------------------- Johnson & Johnson 2.37% - --------------------------------------------------------------- Gilead Sciences, Inc. 2.36% - --------------------------------------------------------------- UnitedHealth Group, Inc. 2.35% - --------------------------------------------------------------- - --------------------------------------------------------------- SECTOR BREAKDOWN % OF PORTFOLIO - --------------------------------------------------------------- Basic Industries 3.3% - --------------------------------------------------------------- Capital Goods 6.7% - --------------------------------------------------------------- Communications 0.9% - --------------------------------------------------------------- Consumer Durables 1.3% - --------------------------------------------------------------- Consumer Non-Durables 10.4% - --------------------------------------------------------------- Consumer Services 14.2% - --------------------------------------------------------------- Energy 3.2% - --------------------------------------------------------------- Finance 8.4% - --------------------------------------------------------------- Health Care 20.9% - --------------------------------------------------------------- Technology 27.1% - --------------------------------------------------------------- Transportation 2.6% - --------------------------------------------------------------- Utilities 0.7% - --------------------------------------------------------------- Other 0.3% - --------------------------------------------------------------- TOTAL 100.0% - --------------------------------------------------------------- - --------------------------------------------------------------- PORTFOLIO REVIEW - --------------------------------------------------------------- P/E: Price/Earnings* 18.4x - --------------------------------------------------------------- P/B: Price/Book 3.6x - --------------------------------------------------------------- Holdings 60 - --------------------------------------------------------------- Wtd. Average Mkt. Cap (mil) $63,832 - --------------------------------------------------------------- ROE: Return on Equity 33.6 - --------------------------------------------------------------- OROA: Operating Return on Operating Assets* 54.9 - --------------------------------------------------------------- * For the trailing one year period. Portfolio holdings are subject to change at any time. 20 |ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO WPG LARGE CAP GROWTH FUND (unaudited) - -------------------------------------------------------------------------------- Comparison of Change in Value of $10,000 Investment in Robeco WPG Large Cap Growth Fund Institutional Class vs. Russell Index [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: WPG Large Cap Growth Fund-- Russell 1000(R) Institutional Class Growth Index ------------------- -------------- Aug-95 $10,000 $10,000 Sep-95 10,584 10,461 Oct-95 10,505 10,468 Nov-95 10,853 10,876 Dec-95 11,015 10,938 Jan-96 11,394 11,303 Feb-96 11,534 11,510 Mar-96 11,541 11,525 Apr-96 11,635 11,828 May-96 12,000 12,241 Jun-96 12,191 12,258 Jul-96 11,672 11,539 Aug-96 11,944 11,837 Sep-96 12,720 12,699 Oct-96 12,900 12,775 Nov-96 13,744 13,734 Dec-96 13,705 13,465 Jan-97 14,611 14,409 Feb-97 14,406 14,311 Mar-97 13,878 13,537 Apr-97 14,572 14,436 May-97 15,530 15,478 Jun-97 16,628 16,097 Jul-97 17,917 17,520 Aug-97 16,849 16,495 Sep-97 17,879 17,307 Oct-97 17,699 16,666 Nov-97 18,291 17,375 Dec-97 18,675 17,569 Jan-98 18,872 18,095 Feb-98 20,137 19,455 Mar-98 21,281 20,232 Apr-98 21,734 20,511 May-98 21,377 19,928 Jun-98 22,170 21,148 Jul-98 21,834 21,008 Aug-98 18,441 17,855 Sep-98 19,892 19,226 Oct-98 21,014 20,772 Nov-98 22,281 22,353 Dec-98 23,813 24,369 Jan-99 23,989 25,800 Feb-99 22,858 24,621 Mar-99 22,922 25,918 Apr-99 23,098 25,952 May-99 22,676 25,155 Jun-99 23,632 26,916 Jul-99 23,109 26,060 Aug-99 23,044 26,485 Sep-99 22,591 25,929 Oct-99 24,245 27,886 Nov-99 24,527 29,392 Dec-99 26,833 32,449 Jan-00 25,501 30,927 Feb-00 25,784 32,439 Mar-00 28,388 34,762 Apr-00 27,540 33,107 May-00 26,531 31,439 Jun-00 27,944 33,822 Jul-00 27,325 32,411 Aug-00 29,807 35,345 Sep-00 28,334 32,001 Oct-00 27,587 30,487 Nov-00 25,145 25,993 Dec-00 26,382 25,172 Jan-01 26,240 26,911 Feb-01 23,249 22,342 Mar-01 21,419 19,911 Apr-01 23,045 22,430 May-01 23,108 22,100 Jun-01 22,597 21,587 Jul-01 21,930 21,048 Aug-01 20,038 19,326 Sep-01 18,310 17,397 Oct-01 19,354 18,311 Nov-01 20,925 20,070 Dec-01 20,988 20,032 Jan-02 20,908 19,678 Feb-02 20,313 18,861 Mar-02 21,265 19,514 Apr-02 19,996 17,921 May-02 19,338 17,488 Jun-02 17,498 15,870 Jul-02 16,340 14,997 Aug-02 16,014 15,042 Sep-02 14,309 13,482 Oct-02 15,650 14,719 Nov-02 17,038 15,518 Dec-02 15,197 14,446 Jan-03 15,071 14,095 Feb-03 15,063 14,030 Mar-03 15,245 14,291 Apr-03 16,665 15,347 May-03 17,395 16,112 Jun-03 17,236 16,335 Jul-03 17,894 16,742 Aug-03 18,664 17,158 Sep-03 18,093 16,975 Oct-03 19,195 17,929 Nov-03 19,449 18,117 Dec-03 20,044 18,744 Jan-04 20,306 19,126 Feb-04 20,520 19,249 Mar-04 20,218 18,891 Apr-04 19,615 18,672 May-04 20,012 19,019 Jun-04 20,234 19,257 Jul-04 18,965 18,169 Aug-04 18,703 18,080 Sep-04 18,981 18,251 Oct-04 19,195 18,536 Nov-04 20,187 19,174 Dec-04 20,809 19,925 Jan-05 20,242 19,262 Feb-05 20,458 19,466 Mar-05 19,882 19,112 Apr-05 19,341 18,749 May-05 20,224 19,656 Jun-05 20,233 19,583 Jul-05 21,278 20,541 Aug-05 21,044 20,276 The chart assumes a hypothetical $10,000 initial investment in the Fund made on September 1, 1995 and reflects Fund expenses. Investors should note that the Fund is an aggressively managed mutual fund while the Russell index is unmanaged, does not incur expenses and is not available for investment. - -------------------------------------------------------------------------------- For Period Ended August 31, 2005 Average Annual Total Return 1 YEAR 3 YEAR 5 YEAR 10 YEAR ------ ------ -------- ------- WPG Large Cap Growth Fund -- Institutional Class 12.51% 9.53% (6.73)% 7.72% Russell 1000(R) Growth Index 12.14% 10.46% (10.52)% 7.32% - -------------------------------------------------------------------------------- THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. WEISS, PECK & GREER WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE (CALL 1-888-261-4073 OR VISIT OUR WEB SITE AT WWW.ROBECOINVEST.COM). ANNUAL REPORT 2005 | 21 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO WPG COREBOND FUND (unaudited) - -------------------------------------------------------------------------------- Dear Shareholder: The Robeco WPG Core Bond Fund returned 4.01% for the year ended August 31, 2005 trailing the Lehman Brothers Aggregate Index by 0.14% The investment process for the Core Bond Fund is driven by a team of professionals who collaboratively make decisions with respect to three primary components. These are the portfolio's exposure to the yield curve, how the portfolio is allocated among fixed income asset classes, and what specific securities are selected for investment. The Fund seeks high current income and capital preservation through investments in debt securities including: notes, bills, bonds, commercial paper, mortgage backed securities, convertibles and money market instruments. These securities may be issued by the U.S. Government, its agencies or instrumentalities or by corporate issuers. In the fixed income markets we have seen in the last year the FOMC continue to raise short-term interest rates. The FOMC concluded following their June 30th meeting that the pace of tightening would be required to remove monetary policy accommodation. At this point, we see no reason why the FOMC should pause their tightening campaign and that the balance of the year will witness further raises in the interest rates. If inflation turns out to be more problematic than anticipated, we could see some near term steepening of the yield curve. Regards, Daniel Vandivort - -------------------------------------------------------------- TOP TEN POSITIONS % OF PORTFOLIO - -------------------------------------------------------------- FNMA Discount Note 3.25% 09/14/05 28.30% - -------------------------------------------------------------- FNMA 6.00% 09/15/35 13.01% - -------------------------------------------------------------- US Treasury Note 3.75% 05/15/08 12.42% - -------------------------------------------------------------- FNMA 5.00% 09/15/35 9.85% - -------------------------------------------------------------- FNMA 5.50% 09/15/35 6.97% - -------------------------------------------------------------- US Treasury Note 4.25% 08/15/15 4.99% - -------------------------------------------------------------- US Treasury Note 2.625% 05/15/08 4.43% - -------------------------------------------------------------- FNMA 4.50% 09/15/20 3.74% - -------------------------------------------------------------- US Treasury Inflationary Index 3.375% 04/15/32 3.12% - -------------------------------------------------------------- US Treasury Note 3.125% 04/15/09 2.92% - -------------------------------------------------------------- - -------------------------------------------------------------- SECTOR BREAKDOWN % OF PORTFOLIO - -------------------------------------------------------------- U.S. Treasury 36.6% - -------------------------------------------------------------- U.S. Agency Obligations 3.2% - -------------------------------------------------------------- Corporate 13.3% - -------------------------------------------------------------- Mortgage Backed Securities 42.0% - -------------------------------------------------------------- Asset Backed Securities 4.9% - -------------------------------------------------------------- TOTAL 100.0% - -------------------------------------------------------------- * For the trailing one year period. Portfolio holdings are subject to change at any time. 22 |ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO WPG CORE BOND FUND (unaudited) - -------------------------------------------------------------------------------- Comparison of Change in Value of $10,000 Investment in Robeco WPG Core Bond Fund Institutional Class vs. Lehmen Brothers Aggregate Index [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: WPG Core Bond Fund-- Lehman Brothers Institutional Class Aggregate Index ------------------- --------------- Aug-95 $10,000 $10,000 Sep-95 10,075 10,097 Oct-95 10,167 10,229 Nov-95 10,273 10,382 Dec-95 10,379 10,528 Jan-96 10,451 10,597 Feb-96 10,344 10,438 Mar-96 10,304 10,365 Apr-96 10,284 10,307 May-96 10,275 10,286 Jun-96 10,382 10,424 Jul-96 10,410 10,453 Aug-96 10,396 10,435 Sep-96 10,536 10,617 Oct-96 10,690 10,852 Nov-96 10,834 11,038 Dec-96 10,778 10,935 Jan-97 10,827 10,969 Feb-97 10,842 10,996 Mar-97 10,759 10,874 Apr-97 10,882 11,037 May-97 10,973 11,141 Jun-97 11,059 11,274 Jul-97 11,280 11,578 Aug-97 11,225 11,479 Sep-97 11,347 11,648 Oct-97 11,463 11,817 Nov-97 11,485 11,872 Dec-97 11,573 11,991 Jan-98 11,729 12,145 Feb-98 11,757 12,135 Mar-98 11,813 12,176 Apr-98 11,881 12,239 May-98 12,003 12,356 Jun-98 12,098 12,461 Jul-98 12,118 12,487 Aug-98 12,304 12,690 Sep-98 12,527 12,988 Oct-98 12,420 12,919 Nov-98 12,583 12,992 Dec-98 12,644 13,031 Jan-99 12,744 13,124 Feb-99 12,511 12,895 Mar-99 12,640 12,967 Apr-99 12,705 13,008 May-99 12,565 12,894 Jun-99 12,503 12,853 Jul-99 12,446 12,798 Aug-99 12,425 12,792 Sep-99 12,594 12,940 Oct-99 12,633 12,988 Nov-99 12,657 12,987 Dec-99 12,629 12,924 Jan-00 12,546 12,882 Feb-00 12,708 13,038 Mar-00 12,860 13,209 Apr-00 12,731 13,172 May-00 12,690 13,166 Jun-00 13,019 13,439 Jul-00 13,137 13,561 Aug-00 13,311 13,758 Sep-00 13,441 13,845 Oct-00 13,501 13,936 Nov-00 13,677 14,164 Dec-00 13,975 14,427 Jan-01 14,239 14,663 Feb-01 14,365 14,790 Mar-01 14,450 14,865 Apr-01 14,410 14,803 May-01 14,547 14,892 Jun-01 14,579 14,949 Jul-01 14,916 15,283 Aug-01 15,067 15,458 Sep-01 15,265 15,638 Oct-01 15,570 15,965 Nov-01 15,406 15,745 Dec-01 15,322 15,645 Jan-02 15,438 15,772 Feb-02 15,583 15,925 Mar-02 15,277 15,660 Apr-02 15,569 15,963 May-02 15,735 16,099 Jun-02 15,869 16,238 Jul-02 16,117 16,434 Aug-02 16,395 16,711 Sep-02 16,625 16,982 Oct-02 16,582 16,905 Nov-02 16,615 16,900 Dec-02 16,988 17,249 Jan-03 17,035 17,264 Feb-03 17,305 17,503 Mar-03 17,287 17,490 Apr-03 17,480 17,634 May-03 17,803 17,963 Jun-03 17,777 17,927 Jul-03 17,187 17,324 Aug-03 17,307 17,439 Sep-03 17,759 17,901 Oct-03 17,599 17,734 Nov-03 17,636 17,776 Dec-03 17,844 17,957 Jan-04 17,985 18,102 Feb-04 18,192 18,298 Mar-04 18,330 18,435 Apr-04 17,846 17,955 May-04 17,747 17,883 Jun-04 17,845 17,984 Jul-04 18,010 18,163 Aug-04 18,380 18,509 Sep-04 18,429 18,559 Oct-04 18,582 18,715 Nov-04 18,456 18,566 Dec-04 18,625 18,736 Jan-05 18,745 18,854 Feb-05 18,671 18,743 Mar-05 18,554 18,647 Apr-05 18,787 18,899 May-05 18,952 19,103 Jun-05 19,044 19,208 Jul-05 18,883 19,033 Aug-05 19,118 19,277 The chart assumes a hypothetical $10,000 initial investment in the Fund made on September 1, 1995 and reflects Fund expenses. Investors should note that the Fund is an aggressively managed mutual fund while the Lehman Brothers Aggregate Index is unmanaged, does not incur expenses and is not available for investment. - -------------------------------------------------------------------------------- For Period Ended August 31, 2005 Average Annual Total Return 1 YEAR 3 YEAR 5 YEAR 10 YEAR ------ ----- ----- ------- WPG Core Bond Fund -- Institutional Class 4.01% 5.26% 7.51% 6.69% Lehman Brothers Aggregate Index 4.15% 4.88% 6.98% 6.78% - -------------------------------------------------------------------------------- THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. WEISS, PECK & GREER WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE (CALL 1-888-261-4073 OR VISIT OUR WEB SITE AT WWW.ROBECOINVEST.COM). ANNUAL REPORT 2005 | 23 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FUND EXPENSE EXAMPLES (unaudited) - -------------------------------------------------------------------------------- As a shareholder of the Fund(s), you incur two types of costs: (1) transaction costs, redemption fees; and (2) ongoing costs, including management fees, distribution fees, and other expenses. The examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund(s) and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 invested at the beginning of the period and held for the six-month period from March 1, 2005 through August 31, 2005. ACTUAL EXPENSES The first line of the accompanying tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the accompanying tables provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the accompanying tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
BP SMALL CAP VALUE FUND II -- INSTITUTIONAL CLASS ------------------------------------------------------------- BEGINNING ACCOUNT ENDING ACCOUNT VALUE VALUE EXPENSES PAID DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* ----------------- --------------- -------------------- Actual .............................................. $1,000.00 $1,067.10 $8.08 Hypothetical (5% return before expenses) ............ $1,000.00 $1,017.29 $7.91 BP SMALL CAP VALUE FUND II -- INVESTOR CLASS ------------------------------------------------------------- BEGINNING ACCOUNT ENDING ACCOUNT VALUE VALUE EXPENSES PAID DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* ----------------- --------------- -------------------- Actual .............................................. $1,000.00 $1,065.10 $9.37 Hypothetical (5% return before expenses) ............ $1,000.00 $1,016.01 $9.19 - --------------------------------------------------------------------------------------------------------------------------- BP LONG/SHORT EQUITY FUND -- INSTITUTIONAL CLASS ------------------------------------------------------------- BEGINNING ACCOUNT ENDING ACCOUNT VALUE VALUE EXPENSES PAID DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* ----------------- --------------- -------------------- Actual .............................................. $1,000.00 $1,089.50 $14.11 Hypothetical (5% return before expenses) ............ $1,000.00 $1,011.52 $13.68
24 |ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FUND EXPENSE EXAMPLES (unaudited) (continued) - --------------------------------------------------------------------------------
BP LONG/SHORT EQUITY FUND -- INVESTOR CLASS ------------------------------------------------------------- BEGINNING ACCOUNT ENDING ACCOUNT VALUE VALUE EXPENSES PAID DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* ----------------- --------------- -------------------- Actual .......................................... $1,000.00 $1,088.30 $15.42 Hypothetical (5% return before expenses) ........ $1,000.00 $1,010.24 $14.96 - --------------------------------------------------------------------------------------------------------------------------- BP LARGE CAP VALUE FUND -- INSTITUTIONAL CLASS ------------------------------------------------------------- BEGINNING ACCOUNT ENDING ACCOUNT VALUE VALUE EXPENSES PAID DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* ----------------- --------------- -------------------- Actual .......................................... $1,000.00 $1,054.10 $5.18 Hypothetical (5% return before expenses) ........ $1,000.00 $1,020.10 $5.10 BP LARGE CAP VALUE FUND -- INVESTOR CLASS ------------------------------------------------------------- BEGINNING ACCOUNT ENDING ACCOUNT VALUE VALUE EXPENSES PAID DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* ----------------- --------------- -------------------- Actual .......................................... $1,000.00 $1,052.60 $6.47 Hypothetical (5% return before expenses) ........ $1,000.00 $1,018.82 $6.38 - --------------------------------------------------------------------------------------------------------------------------- BP MID CAP VALUE FUND -- INSTITUTIONAL CLASS ------------------------------------------------------------- BEGINNING ACCOUNT ENDING ACCOUNT VALUE VALUE EXPENSES PAID DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* ----------------- --------------- -------------------- Actual .......................................... $1,000.00 $1,076.00 $5.23 Hypothetical (5% return before expenses) ........ $1,000.00 $1,020.10 $5.10 BP MID CAP VALUE FUND -- INVESTOR CLASS ------------------------------------------------------------- BEGINNING ACCOUNT ENDING ACCOUNT VALUE VALUE EXPENSES PAID DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* ----------------- --------------- -------------------- Actual .......................................... $1,000.00 $1,074.80 $6.54 Hypothetical (5% return before expenses) ........ $1,000.00 $1,018.82 $6.38 - --------------------------------------------------------------------------------------------------------------------------- BP ALL-CAP VALUE FUND -- INSTITUTIONAL CLASS ------------------------------------------------------------- BEGINNING ACCOUNT ENDING ACCOUNT VALUE VALUE EXPENSES PAID DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* ----------------- --------------- -------------------- Actual .......................................... $1,000.00 $1,064.40 $6.50 Hypothetical (5% return before expenses) ........ $1,000.00 $1,018.82 $6.38 BP ALL-CAP VALUE FUND -- INVESTOR CLASS ------------------------------------------------------------- BEGINNING ACCOUNT ENDING ACCOUNT VALUE VALUE EXPENSES PAID DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* ----------------- --------------- -------------------- Actual .......................................... $1,000.00 $1,063.10 $7.80 Hypothetical (5% return before expenses) ........ $1,000.00 $1,017.54 $7.66 - ---------------------------------------------------------------------------------------------------------------------------
ANNUAL REPORT 2005 | 25 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FUND EXPENSE EXAMPLES (unaudited) (concluded) - --------------------------------------------------------------------------------
WPG TUDOR FUND -- INSTITUTIONAL CLASS ------------------------------------------------------------- BEGINNING ACCOUNT ENDING ACCOUNT VALUE VALUE EXPENSES PAID DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* ----------------- --------------- -------------------- Actual ............................................... $1,000.00 $ 984.20 $7.75 Hypothetical (5% return before expenses) ............. $1,000.00 1,017.29 $7.91 WPG LARGE CAP GROWTH FUND -- INSTITUTIONAL CLASS ------------------------------------------------------------- BEGINNING ACCOUNT ENDING ACCOUNT VALUE VALUE EXPENSES PAID DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* ----------------- --------------- -------------------- Actual ............................................... $1,000.00 $1,028.60 $7,16 Hypothetical (5% return before expenses) ............. $1,000.00 $1,018.06 $7,15 WPG CORE BOND FUND -- INSTITUTIONAL CLASS ------------------------------------------------------------- BEGINNING ACCOUNT ENDING ACCOUNT VALUE VALUE EXPENSES PAID DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* ----------------- --------------- -------------------- Actual ............................................... $1,000.00 $1,023.90 $2.19 Hypothetical (5% return before expenses) ............. $1,000.00 $1,023.01 $2.19 - --------------------------------------------------------------------------------------------------------------------------- * Expenses are equal to the Fund's annualized expense ratios in the table below, which include waived fees or reimbursed expenses, multiplied by the average account value over the period, multiplied by the number of days (184) in the most recent fiscal half-year, then divided by 365 to reflect the one-year half period.
INSTITUTIONAL INVESTOR ------------- -------- Robeco Boston Partners Small Cap Value Fund II .. 1.55% 1.80% Robeco Boston Partners Long/Short Equity Fund ... 2.68% (1) 2.93% (1) Robeco Boston Partners Large Cap Value Fund ..... 1.00% 1.25% Robeco Boston Partners Mid Cap Value Fund ....... 1.00% 1.25% Robeco Boston Partners All-Cap Value Fund ....... 1.25% 1.50% Robeco WPG Tudor Fund ........................... 1.55% N/A Robeco WPG Large Cap Growth Fund ................ 1.40% N/A Robeco WPG Core Bond Fund ....................... 0.43% N/A (1) These amounts include dividends on securities which the Fund has sold short ("short-sale dividends"). Short-sale dividends generally reduce the market value of the securities by the amount of the dividend declared -- thus increasing the Fund's unrealized gain or reducing the Fund's unrealized loss on the securities sold short. Short-sale dividends are treated as an expense, and increase the Fund's total expense ratio, although no cash is received or paid by the Fund. The amount of short-sale dividend was 0.18% of average net assets for the most recent fiscal half-year. 26 |ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS SMALL CAP VALUE FUND II PORTFOLIO HOLDINGS SUMMARY TABLE - -------------------------------------------------------------------------------- % of Net Security Type/Industry Classification Assets Value ------------------------------------- -------- ------------ COMMON STOCK Insurance - Other ........................ 12.2% $ 50,240,708 Apparel .................................. 5.9 24,436,448 Real Estate Investment Trust (REIT) ................................. 5.8 24,108,071 Services - Business ...................... 5.7 23,347,116 Health Care - Services ................... 5.6 22,905,581 Manufacturing ............................ 4.0 16,622,415 Building & Construction .................. 3.6 14,758,063 Financial Services ....................... 3.1 12,734,129 Foods .................................... 2.8 11,379,339 Engineering & Construction ............... 2.7 11,348,768 Publishing & Information Services ........ 2.7 10,976,987 Computer Equipment & Services ............ 2.4 9,942,374 Leisure & Lodging ........................ 2.1 8,636,171 Building Materials ....................... 1.9 7,885,447 Medical Equipment and Supplies ........... 1.9 7,791,197 Oil & Gas - Exploration .................. 1.8 7,577,612 Machinery ................................ 1.7 7,147,278 Business & Public Services ............... 1.7 7,098,063 Insurance - Life ......................... 1.7 7,045,140 Internet Services ........................ 1.7 6,960,234 Consulting Services ...................... 1.6 6,449,798 Air Transport ............................ 1.5 6,205,503 Electronics .............................. 1.5 6,191,835 Utilities - Electric ..................... 1.3 5,432,508 Chemicals - Specialty .................... 1.3 5,379,464 Office Equipment & Supplies .............. 1.3 5,254,014 Commercial Services ...................... 1.0 4,281,205 Real Estate .............................. 1.0 4,279,275 Retail - Hard Goods ...................... 1.0 4,115,522 Consumer Products ........................ 1.0 4,048,632 Building Products-Air & Heating .......... 0.9 3,899,961 % of Net Security Type/Industry Classification Assets Value ------------------------------------- -------- ------------ Industrial Equipment & Supplies .......... 0.9% $ 3,744,881 Health Care - Supplies ................... 0.9 3,685,910 Oil Services ............................. 0.9 3,576,443 Environmental Services ................... 0.8 3,220,076 Travel Services .......................... 0.7 2,959,130 Automotive & Trucks ...................... 0.7 2,934,504 Containers ............................... 0.7 2,866,472 Paper Forest Products & Packaging ........ 0.7 2,713,596 Motor Homes .............................. 0.6 2,636,722 Banks - Regional ......................... 0.6 2,565,645 Tobacco .................................. 0.5 2,053,858 Trucking ................................. 0.5 1,922,817 Savings & Loans .......................... 0.5 1,910,304 Transport - Services ..................... 0.4 1,791,480 Aerospace & Defense ...................... 0.4 1,642,541 Semiconductor Equipment & Products ............................... 0.4 1,608,202 Iron & Steel ............................. 0.3 1,328,938 Railroad & Bulk Shipping ................. 0.3 1,302,808 Diversified Operations ................... 0.3 1,236,616 Consumer Non-Cyclical .................... 0.3 1,202,250 Media & Entertainment .................... 0.3 1,155,235 Manufacturing ............................ 0.1 501,866 SHORT TERM INVESTMENTS ...................... 4.0 16,532,130 INVESTMENT COMPANY .......................... 0.8 3,384,480 LIABILITIES IN EXCESS OF OTHER ASSETS ............................. (1.0) (4,164,403) ----- ------------ NET ASSETS .................................. 100.0% $412,791,359 ===== ============ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 27 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LONG/SHORT EQUITY FUND PORTFOLIO HOLDINGS SUMMARY TABLE - -------------------------------------------------------------------------------- % of Net Security Type/Industry Classification Assets Value ------------------------------------- -------- ------------ COMMON STOCK Insurance - Other ........................ 13.0% $ 16,170,745 Computer Equipment & Services ............ 5.6 6,967,841 Health Care - Services ................... 4.0 4,918,689 Manufacturing ............................ 3.8 4,763,123 Electronics .............................. 3.6 4,520,134 Health Care - Drugs ...................... 3.6 4,476,765 Consulting Services ...................... 3.4 4,257,251 Aerospace & Defense ...................... 3.3 4,142,617 Media & Entertainment .................... 3.2 3,934,570 Internet Services ........................ 2.9 3,616,265 Containers ............................... 2.9 3,592,657 Foods .................................... 2.6 3,196,218 Commercial Services ...................... 2.2 2,747,251 Chemicals - Specialty .................... 2.1 2,660,397 Financial Services ....................... 2.1 2,659,962 Oil & Gas - Exploration .................. 2.1 2,639,464 Office Equipment & Supplies .............. 2.1 2,555,553 Retail ................................... 2.0 2,482,541 Metals & Mining .......................... 1.9 2,398,353 Business & Public Services ............... 1.9 2,334,942 Leisure & Lodging ........................ 1.9 2,326,025 Printing Services ........................ 1.9 2,323,056 Telecommunications ....................... 1.8 2,281,892 Telecommunications Equipment ............. 1.7 2,075,417 Apparel .................................. 1.6 1,967,614 Health & Personal Care ................... 1.5 1,908,039 Telephone - Integrated ................... 1.5 1,905,465 Travel Services .......................... 1.4 1,789,029 Oil Services ............................. 1.3 1,607,866 Machinery ................................ 1.2 1,542,391 Air Transport ............................ 1.2 1,532,417 Publishing & Information Services ........ 1.1 1,475,117 Vitamins & Nutrition Products ............ 1.2 1,462,669 Retail - Hard Goods ...................... 1.1 1,380,154 Energy Equipment & Services .............. 0.9 1,107,191 Real Estate .............................. 0.8 1,009,866 Restaurants .............................. 0.8 973,336 Computer Software ........................ 0.7 876,800 Retail - Soft Goods ...................... 0.7 814,189 Agriculture .............................. 0.6 765,332 Medical Equipment and Supplies ........... 0.6 761,927 Tobacco .................................. 0.6 752,895 Paper Forest Products & Packaging ........ 0.6 746,501 Insurance - Life ......................... 0.6 716,868 Hazardous Waste Disposal ................. 0.6 682,474 Oil & Gas - Integrated Majors ............ 0.5 643,357 Services - Consumer ...................... 0.5 640,946 Communications Equipment ................. 0.4 504,140 Savings & Loans .......................... 0.4 488,430 Health Care - Supplies ................... 0.3 304,140 Human Resources .......................... 0.1 107,317 Home Products ............................ 0.1 94,469 Automotive & Trucks ...................... --* 44,531 % of Net Security Type/Industry Classification Assets Value ------------------------------------- -------- ------------ SHORT TERM INVESTMENTS ...................... 7.3% $ 9,080,141 PREFERRED STOCK ............................. 0.5 653,520 CORPORATE BONDS ............................. 0.1 117,557 CONVERTIBLE BONDS ........................... 0.1 75,000 SECURITIES SOLD SHORT Building Materials ....................... --* (121) Oil Field Machinery & Equipment .............................. (0.1) (72,865) Consulting Services ...................... (0.1) (82,369) Oil & Gas - Exploration .................. (0.1) (106,548) Environmental Services ................... (0.1) (128,735) Data Processing Services ................. (0.1) (165,890) Business & Public Services ............... (0.2) (231,183) Consumer Products ........................ (0.2) (252,532) Diversified Operation .................... (0.2) (256,800) Health & Personal Care ................... (0.2) (272,401) Electronics .............................. (0.3) (329,360) Airlines ................................. (0.3) (334,408) Marine ................................... (0.3) (339,077) Industrial Equipment & Supplies .......... (0.3) (340,829) Audio & Video Products ................... (0.3) (362,109) Health Care - Biotech .................... (0.3) (391,950) Computers & Peripherals .................. (0.3) (419,733) Oil Services ............................. (0.4) (442,400) Textiles & Apparel ....................... (0.4) (508,463) Schools .................................. (0.4) (552,420) Retail - Food & Drug ..................... (0.5) (586,365) Oil & Gas - Refining & Marketing ......... (0.5) (590,477) Biotechnology ............................ (0.5) (640,006) Automotive & Trucks ...................... (0.5) (650,385) Real Estate .............................. (0.6) (714,858) Metals & Mining .......................... (0.6) (719,774) Tobacco .................................. (0.6) (750,400) Broadcasting ............................. (0.7) (827,414) Machinery ................................ (0.7) (858,799) Technology Hardware & Equipment .......... (0.7) (863,164) Transport - Services ..................... (0.7) (867,858) Foods .................................... (0.7) (906,299) Aerospace & Defense ...................... (0.8) (968,304) Retail - Hard Goods ...................... (0.8) (990,740) Leisure & Lodging ........................ (0.8) (1,007,714) Apparel .................................. (0.9) (1,102,883) Restaurants .............................. (0.9) (1,153,359) Metals - Steel ........................... (1.0) (1,255,940) Telecommunications ....................... (1.1) (1,395,632) Commercial Services ...................... (1.2) (1,531,601) Media & Entertainment .................... (1.3) (1,577,808) Electronic Components & Instruments ............................ (1.5) (1,928,002) Pharmaceuticals & Biotechnology .......... (1.5) (1,932,367) * amount is less than 0.1%. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 28 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LONG/SHORT EQUITY FUND (concluded) PORTFOLIO HOLDINGS SUMMARY TABLE - -------------------------------------------------------------------------------- % of Net Security Type/Industry Classification Assets Value ------------------------------------- -------- ------------ SECURITIES SOLD SHORT--(continued) Health Care - Services ................... (1.7)% $ (2,134,566) Financial Services ....................... (1.7) (2,171,492) Telecommunications Equipment ............. (1.8) (2,251,761) Semiconductor Equipment & Products ............................... (1.9) (2,320,868) Manufacturing ............................ (2.1) (2,579,976) Computer Software ........................ (2.2) (2,740,067) Computer Equipment & Services ............ (3.0) (3,778,283) Energy ................................... (3.5) (4,307,984) Electronic Equipment & Products .......... (4.0) (5,027,136) Internet Services ........................ (4.1) (5,105,700) Medical Equipment and Supplies ........... (4.2) (5,219,999) OTHER ASSETS IN EXCESS OF LIABILITIES ........................... 47.4 58,938,871 ------ ------------ NET ASSETS .................................. 100.0% $124,464,113 ====== ============ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 29 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LARGE CAP VALUE FUND PORTFOLIO HOLDINGS SUMMARY TABLE - -------------------------------------------------------------------------------- % of Net Security Type/Industry Classification Assets Value ------------------------------------- -------- ----------- COMMON STOCK Insurance - Other ........................ 12.8% $ 5,119,252 Oil & Gas - Integrated Majors ............ 10.0 4,025,531 Financial Services ....................... 8.7 3,463,055 Telecommunications Equipment ............. 4.4 1,762,100 Media & Entertainment .................... 4.2 1,696,497 Health Care - Drugs ...................... 4.2 1,680,165 Computer Equipment & Services ............................... 4.0 1,609,900 Telecommunications ....................... 3.9 1,571,886 Banks - Major ............................ 3.9 1,561,783 Retail - Hard Goods ...................... 3.4 1,338,510 Manufacturing ............................ 3.2 1,293,301 Oil & Gas - Exploration .................. 2.6 1,051,429 Oil Services ............................. 2.6 1,031,066 Apparel .................................. 2.6 1,023,483 Aerospace & Defense ...................... 2.4 942,312 Tobacco .................................. 2.2 859,957 Chemicals - Specialty .................... 2.0 818,457 Semiconductor Equipment & Products ............................... 2.0 789,937 Oil & Gas - Refining & Marketing .............................. 1.9 738,390 Office Equipment & Supplies .............. 1.8 720,439 % of Net Security Type/Industry Classification Assets Value ------------------------------------- -------- ----------- Computer Software ........................ 1.5% $ 613,185 Food & Household Products ................ 1.4 568,623 Consulting Services ...................... 1.3 507,520 Leisure & Lodging ........................ 1.2 482,859 Savings & Loans .......................... 1.0 403,750 Printing Services ........................ 1.0 399,752 Utilities - Electric ..................... 1.0 393,675 Metals & Mining .......................... 1.0 389,103 Electronics .............................. 1.0 378,714 Health & Personal Care ................... 0.9 352,195 Business & Public Services ............... 0.8 319,926 Real Estate .............................. 0.7 297,436 Containers ............................... 0.7 297,264 Restaurants .............................. 0.7 290,784 Building Materials ....................... 0.6 256,546 Distribution ............................. 0.6 225,120 Health Care - Services ................... 0.5 215,109 Utilities - Gas & Water .................. 0.2 88,136 SHORT TERM INVESTMENTS ...................... 2.8 1,098,848 LIABILITIES IN EXCESS OF OTHER ASSETS .......................... (1.7) (677,155) ------ ----------- NET ASSETS .................................. 100.0% $39,998,840 ====== =========== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 30 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS MID CAP VALUE FUND PORTFOLIO HOLDINGS SUMMARY TABLE - -------------------------------------------------------------------------------- % of Net Security Type/Industry Classification Assets Value ------------------------------------- -------- ----------- COMMON STOCK Insurance - Other ........................ 11.0% $ 6,431,533 Retail - Hard Goods ...................... 5.9 3,463,136 Apparel .................................. 5.6 3,306,909 Computer Equipment & Services ............................... 5.4 3,185,087 Health Care - Services ................... 4.3 2,495,545 Financial Services ....................... 4.1 2,396,029 Foods .................................... 3.8 2,238,090 Manufacturing ............................ 3.6 2,092,230 Leisure & Lodging ........................ 3.3 1,953,657 Business & Public Services ............... 3.2 1,855,216 Oil & Gas - Exploration .................. 2.7 1,583,554 Electronics .............................. 2.7 1,563,606 Oil Services ............................. 2.5 1,448,660 Utilities - Electric ..................... 2.1 1,253,426 Real Estate Investment Trust (REIT) ................................. 1.9 1,138,196 Containers ............................... 1.9 1,127,187 Internet Services ........................ 1.9 1,116,839 Distribution ............................. 1.8 1,060,958 Machinery ................................ 1.7 966,820 Publishing & Information Services ........ 1.4 847,740 Marketing ................................ 1.4 825,858 Media .................................... 1.4 801,494 Chemicals - Specialty .................... 1.3 782,496 Computer Software ........................ 1.3 767,898 Insurance - Life ......................... 1.3 755,484 % of Net Security Type/Industry Classification Assets Value ------------------------------------- -------- ----------- Savings & Loans .......................... 1.3% $ 761,940 Automotive Parts & Equipment ............. 1.3 739,718 Paper Forest Products & Packaging .............................. 1.3 733,260 Restaurants .............................. 1.1 661,599 Health Care - Drugs ...................... 1.0 593,616 Telecommunications ....................... 1.0 585,170 Banks - Regional ......................... 1.0 559,725 Travel Services .......................... 0.9 515,942 Advertising .............................. 0.8 490,885 Transport - Services ..................... 0.8 482,625 Data Processing Services ................. 0.8 473,048 Semiconductor Equipment & Products ............................... 0.8 462,000 Telecommunications Equipment ............. 0.6 355,818 Engineering & Construction ............... 0.5 317,188 Tobacco .................................. 0.5 285,714 Chemicals - Commodity .................... 0.4 253,890 Health Care - Supplies ................... 0.3 180,124 Broadcasting ............................. 0.3 168,805 SHORT-TERM INVESTMENTS ...................... 6.4 3,720,157 INVESTMENT COMPANY .......................... 1.9 1,134,339 LIABILITIES IN EXCESS OF OTHER ASSETS ............................. (0.5) (284,238) ------ ----------- NET ASSETS .................................. 100.0% $58,648,973 ====== =========== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 31 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS ALL-CAP VALUE FUND PORTFOLIO HOLDINGS SUMMARY TABLE - -------------------------------------------------------------------------------- % of Net Security Type/Industry Classification Assets Value ------------------------------------- -------- ----------- COMMON STOCK Insurance - Other ........................ 25.6% $ 2,604,228 Oil & Gas - Exploration .................. 8.4 855,768 Apparel .................................. 5.9 602,681 Health Care - Drugs ...................... 4.9 496,484 Financial Services ....................... 4.2 426,820 Real Estate Investment Trust (REIT) ................................. 4.1 419,909 Oil & Gas - Integrated Majors ............ 4.0 407,249 Tobacco .................................. 3.3 334,038 Health Care - Services ................... 3.1 311,573 Telecommunications ....................... 2.8 280,412 Services - Business ...................... 2.6 265,706 Medical Equipment and Supplies ........... 2.6 260,341 Computer Equipment & Services ............................... 2.2 221,920 Media & Entertainment .................... 2.0 201,161 Manufacturing ............................ 2.0 200,039 Retail - Hard Goods ...................... 1.7 170,990 Computer Software ........................ 1.7 168,717 Leisure & Lodging ........................ 1.4 146,187 Telecommunications Equipment ............. 1.4 139,266 Utilities - Electric ..................... 1.2 120,536 Distribution ............................. 1.1 116,644 Chemicals - Specialty .................... 1.1 114,810 Insurance - Life ......................... 0.9 93,954 Consumer Non-Cyclical .................... 0.9 93,029 % of Net Security Type/Industry Classification Assets Value ------------------------------------- -------- ----------- Finance .................................. 0.8% $ 80,640 Savings & Loans .......................... 0.7 70,375 Office Equipment & Supplies .............. 0.7 69,886 Electronic Components & Instruments ............................ 0.6 66,727 Food & Household Products ................ 0.6 57,436 Health Care - Biotech .................... 0.5 49,841 Foods .................................... 0.5 46,502 Real Estate .............................. 0.4 43,875 Travel Services .......................... 0.4 42,386 Health & Personal Care ................... 0.4 40,570 Diversified Operation .................... 0.4 40,068 Internet Services, Inc. .................. 0.4 39,648 Airlines ................................. 0.3 32,429 Marketing ................................ 0.3 26,831 SHORT TERM INVESTMENTS ...................... 3.1 317,164 INVESTMENT COMPANY .......................... 0.8 82,795 PREFERRED STOCK ............................. 1.0 96,901 OPTIONS ..................................... (0.5) (53,387) LIABILITIES IN EXCESS OF OTHER ASSETS ............................. (0.5) (47,816) ------ ----------- NET ASSETS .................................. 100.0% $10,155,333 ====== =========== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 32 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO WPG TUDOR FUND PORTFOLIO HOLDINGS SUMMARY TABLE - -------------------------------------------------------------------------------- % of Net Security Type/Industry Classification Assets Value ------------------------------------- -------- ----------- COMMON STOCK: Banks - Regional ......................... 10.5% $ 5,513,718 Real Estate Investment Trust (REIT) ........................... 7.8 4,083,623 Internet Services ........................ 5.9 3,065,613 Insurance - Other ........................ 5.4 2,827,700 Chemicals - Commodity .................... 5.0 2,610,735 Publishing & Information Services ............................... 4.4 2,296,501 Manufacturing ............................ 3.7 1,918,726 Foods .................................... 3.6 1,889,738 Metals & Mining .......................... 3.6 1,889,258 Consulting Services ...................... 3.6 1,873,670 Oil & Gas - Exploration .................. 3.3 1,749,799 Services - Business ...................... 2.8 1,474,653 Consumer Durables ........................ 2.7 1,393,032 Health Care - Services ................... 2.6 1,379,433 Computer Equipment & Services ............................... 2.5 1,281,892 Utilities - Electric ..................... 2.4 1,276,108 Financial Services ....................... 2.4 1,235,204 Transport - Services ..................... 2.2 1,158,111 Gas Utilities ............................ 2.2 1,124,408 Paper Forest Products & Packaging .............................. 2.0 1,029,199 Health Care - Drugs ...................... 1.7 911,639 Electronic Components & Instruments ............................ 1.4 756,700 % of Net Security Type/Industry Classification Assets Value ------------------------------------- -------- ----------- Diversified Operations ................... 1.3% $ 691,364 Telecommunications Equipment .............................. 1.3 671,406 Apparel .................................. 1.2 638,648 Media & Entertainment .................... 1.1 570,636 Retail ................................... 1.1 563,179 Airlines ................................. 1.0 534,116 Data Processing Services ................. 1.0 527,304 Consumer Products ........................ 1.0 524,729 Gaming ................................... 0.8 442,600 Oil Services ............................. 0.8 422,364 Broadcasting ............................. 0.8 418,798 Semiconductor Equipment & Products ............................... 0.8 413,688 Trucking ................................. 0.7 352,764 Computer Software ........................ 0.4 186,966 Automotive & Trucks ...................... 0.2 127,280 SHORT-TERM INVESTMENTS ...................... 6.1 3,215,514 RIGHTS/WARRANTS ............................. 0.7 377,734 INVESTMENT COMPANY .......................... 0.6 320,565 LIABILITIES IN EXCESS OF OTHER ASSETS ............................. (2.6) (1,371,347) ------ ----------- NET ASSETS .................................. 100.0% $52,367,768 ====== =========== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 33 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO WPG LARGE CAP GROWTH FUND PORTFOLIO HOLDINGS SUMMARY TABLE - -------------------------------------------------------------------------------- % of Net Security Type/Industry Classification Assets Value ------------------------------------- -------- ----------- COMMON STOCK: Healthcare Facilities/Supplies ........... 16.1% $ 3,325,740 Computer Equipment & Services ............ 9.8 2,016,789 Technology ............................... 9.7 1,997,843 Consumer Cyclical Services ............... 8.1 1,663,214 Semiconductor Equipment & Products ............................... 7.5 1,554,047 Financial Services ....................... 6.1 1,251,094 Foods .................................... 4.7 973,263 Consumer Non-Cyclical .................... 4.4 916,403 Services - Business ...................... 3.5 730,139 Retail ................................... 2.9 599,811 Transportation - Shipping ................ 2.6 540,980 Oil & Gas - Exploration .................. 2.1 433,576 Health Care - Services ................... 2.1 423,470 Broadcasting ............................. 1.9 385,407 Manufacturing ............................ 1.8 380,938 % of Net Security Type/Industry Classification Assets Value ------------------------------------- -------- ----------- Diversified Operation .................... 1.7% $ 356,266 Aerospace/Defense ........................ 1.7 343,770 Chemicals - Commodity .................... 1.7 341,217 Metals ................................... 1.6 333,343 Manufacturing ............................ 1.5 319,200 Restaurants .............................. 1.5 303,232 Health Care - Supplies ................... 1.5 301,400 Construction & Housing ................... 1.3 271,000 Internet Software ........................ 1.2 240,170 Oil & Gas - Refining & Marketing ......... 1.1 231,516 Insurance - Other ........................ 0.9 184,943 Energy ................................... 0.7 145,530 OTHER ASSETS IN EXCESS OF LIABILITIES ........................... 0.3 61,386 ------ ----------- NET ASSETS .................................. 100.0% $20,625,687 ====== =========== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 34 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO WPG CORE BOND FUND PORTFOLIO HOLDINGS SUMMARY TABLE - -------------------------------------------------------------------------------- % of Net Security Type/Industry Classification Assets Value ------------------------------------- -------- ------------ GOVERNMENT AGENCIES ......................... 45.0% $ 72,738,385 SHORT TERM INVESTMENTS ...................... 38.5 62,303,688 U.S. TREASURY OBLIGATIONS ................... 55.0 88,975,452 CORPORATE BONDS ............................. 13.2 21,420,373 ASSET BACKED SECURITIES ..................... 10.0 16,181,283 LIABILITIES IN EXCESS OF OTHER ASSETS ............................. (61.7) (99,858,183) ------ ------------ NET ASSETS .................................. 100.0% $161,760,998 ====== ============ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 35 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS SMALL CAP VALUE FUND II PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ COMMON STOCK--96.2% AEROSPACE & DEFENSE--0.4% DRS Technologies, Inc. ................... 31,925 $ 1,642,541 ------------ AIR TRANSPORT--1.5% EGL, Inc.* ............................... 152,700 3,831,243 ExpressJet Holdings, Inc.* ............... 49,745 473,075 Pinnacle Airlines Corp.* ................. 196,810 1,901,185 ------------ 6,205,503 ------------ APPAREL--5.9% Brown Shoe Co., Inc. ..................... 93,350 3,341,930 Charming Shoppes, Inc.* .................. 257,000 3,104,560 Dress Barn, Inc., (The)* ................. 126,300 3,031,200 Finish Line, Inc., (The), Class A ........ 134,520 1,939,778 Gymboree Corp., (The)* ................... 93,400 1,435,558 Kellwood Co. ............................. 72,670 1,778,962 Kenneth Cole Productions, Inc., Class A ................................ 40,400 1,157,460 Oxford Industries, Inc. .................. 94,230 4,395,830 Steven Madden Ltd.* ...................... 93,600 2,194,920 Warnaco Group, Inc., (The)* .............. 82,250 2,056,250 ------------ 24,436,448 ------------ AUTOMOTIVE & TRUCKS--0.7% Group 1 Automotive, Inc.* ................ 38,555 1,141,228 Lithia Motors, Inc., Class A ............. 60,400 1,793,276 ------------ 2,934,504 ------------ BANKS - REGIONAL--0.6% Bancorp, Inc., (The)* .................... 47,425 790,575 First Community Bancorp .................. 11,100 523,920 UMB Financial Corp. ...................... 19,000 1,251,150 ------------ 2,565,645 ------------ BUILDING & CONSTRUCTION--3.6% Champion Enterprises, Inc.* .............. 356,910 4,757,610 Dycom Industries, Inc.* .................. 47,800 847,016 Granite Construction, Inc. ............... 26,500 987,920 Infrasource Services, Inc.* .............. 167,000 2,505,000 Palm Harbor Homes, Inc.* ................. 122,943 2,270,757 Perini Corp.* ............................ 174,820 3,389,760 ------------ 14,758,063 ------------ BUILDING MATERIALS--1.9% Drew Industries, Inc.* ................... 104,900 4,704,765 ElkCorp .................................. 89,345 3,180,682 ------------ 7,885,447 ------------ BUILDING PRODUCTS - AIR & HEATING--0.9% Lennox International, Inc. ............... 159,900 3,899,961 ------------ Number of Shares Value --------- ------------ BUSINESS & PUBLIC SERVICES--1.7% Gevity HR, Inc. .......................... 216,000 $ 4,816,800 Service Corporation International .......................... 268,700 2,281,263 ------------ 7,098,063 ------------ CHEMICALS - SPECIALTY--1.3% Spartech Corp. ........................... 35,715 683,942 UAP Holding Corp. ........................ 259,100 4,446,156 Wellman, Inc. ............................ 35,880 249,366 ------------ 5,379,464 ------------ COMMERCIAL SERVICES--1.0% CBIZ, Inc.* .............................. 294,900 1,368,336 Steiner Leisure Ltd.* .................. 40,900 1,260,947 Sykes Enterprises, Inc.* ............... 155,110 1,651,922 ------------ 4,281,205 ------------ COMPUTER EQUIPMENT & SERVICES--2.4% Adaptec, Inc.* ........................... 17,900 59,428 Imation Corp. ............................ 63,300 2,665,563 Insight Enterprises, Inc.* ............... 223,685 4,211,989 Keane, Inc.* ............................. 143,900 1,654,850 Pomeroy IT Solutions, Inc.* .............. 59,596 769,384 Tier Technologies, Inc., Class B* ........ 66,800 581,160 ------------ 9,942,374 ------------ CONSULTING SERVICES--1.6% FTI Consulting, Inc.* .................... 62,000 1,543,800 MAXIMUS, Inc. ............................ 69,250 2,607,955 Watson Wyatt & Co. Holdings .............. 84,270 2,298,043 ------------ 6,449,798 ------------ CONSUMER NON-CYCLICAL--0.3% Natuzzi S.p.A. - ADR ..................... 137,400 1,202,250 ------------ CONSUMER PRODUCTS--1.0% Playtex Products, Inc.* .................. 295,350 3,195,687 Spectrum Brands, Inc.* ................... 30,300 852,945 ------------ 4,048,632 ------------ CONTAINERS--0.7% Silgan Holdings, Inc. .................... 47,600 2,866,472 ------------ DIVERSIFIED OPERATIONS--0.3% Olin Corp. ............................... 66,200 1,236,616 ------------ ELECTRONICS--1.5% Bell Microproducts, Inc.* ................ 7,100 71,923 Hypercom Corp.* .......................... 175,300 1,113,155 Paxar Corp.* ............................. 106,500 2,003,265 Planar Systems, Inc.* .................... 85,700 657,319 Technitrol, Inc. ......................... 159,930 2,346,173 ------------ 6,191,835 ------------ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 36 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS SMALL CAP VALUE FUND II (continued) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ ENGINEERING & CONSTRUCTION--2.7% Engineered Support Systems, Inc. ......... 90,200 $ 3,075,820 Integrated Electrical Services, Inc.* .... 256,000 750,080 URS Corp.* ............................... 124,914 4,706,760 Washington Group International, Inc.* .................................. 53,295 2,816,108 ------------ 11,348,768 ------------ ENVIRONMENTAL SERVICES--0.8% Tetra Tech, Inc.* ........................ 204,190 3,220,076 ------------ FINANCIAL SERVICES--3.1% Advanta Corp., Class B ................... 184,200 5,314,170 Affiliated Managers Group, Inc.* ......... 16,500 1,198,065 Bay View Capital Corp.* .................. 24,170 378,502 BKF Capital Group, Inc. .................. 16,000 518,080 CMET Finance Holdings, Inc. 144A*++ ................................ 15,000 619,800 Federal Agricultural Mortgage Corp., Class C ......................... 169,300 3,954,848 MCG Capital Corp. ........................ 41,200 750,664 ------------ 12,734,129 ------------ FOODS--2.8% Chiquita Brands International, Inc. ...... 74,200 1,869,840 NBTY, Inc.* .............................. 119,680 2,619,795 Performance Food Group Co.* .............. 145,100 4,493,747 Premium Standard Farms, Inc. ............. 165,581 2,395,957 ------------ 11,379,339 ------------ HEALTH CARE - SERVICES--5.6% Amedisys, Inc.* .......................... 98,100 3,837,672 Apria Healthcare Group, Inc.* ............ 58,800 2,012,724 First Consulting Group, Inc.* ............ 70,340 376,319 Icon PLC - ADR* .......................... 36,600 1,483,764 Kendle International, Inc.* .............. 55,300 1,338,260 Kindred Healthcare, Inc.* ................ 143,630 4,395,078 LifePoint Hospitals, Inc.* ............... 40,090 1,823,293 Option Care, Inc. ........................ 223,725 3,024,762 Radiation Therapy Services, Inc.* ........ 71,765 1,927,608 RehabCare Group, Inc.* ................... 75,470 1,695,811 Res-Care, Inc.* .......................... 65,800 990,290 ------------ 22,905,581 ------------ HEALTH CARE - SUPPLIES--0.9% Herbalife Ltd.* .......................... 97,510 2,886,296 Owens & Minor, Inc. ...................... 27,900 799,614 ------------ 3,685,910 ------------ INDUSTRIAL EQUIPMENT & SUPPLIES--0.9% Nordson Corp. ............................ 90,500 3,214,560 Rofin-Sinar Technologies, Inc.* .......... 14,670 530,321 ------------ 3,744,881 ------------ Number of Shares Value --------- ------------ INSURANCE - LIFE--1.7% AmerUs Group Co. ......................... 32,800 $ 1,814,496 Scottish Re Group Ltd. ................... 217,400 5,230,644 ------------ 7,045,140 ------------ INSURANCE - OTHER--12.2% Allmerica Financial Corp.* ............... 28,390 1,155,757 Arch Capital Group Ltd.* ................. 13,700 595,265 Aspen Insurance Holdings Ltd. ............ 62,015 1,683,707 Assured Guaranty Ltd. .................... 307,300 6,883,520 Bristol West Holdings, Inc. .............. 57,425 1,002,066 CNA Surety Corp.* ........................ 173,725 2,171,562 Hilb, Rogal & Hobbs Co. .................. 33,200 1,169,304 Hub International Ltd. ................... 134,400 2,962,176 Infinity Property & Casualty Corp. ....... 33,200 1,079,664 IPC Holdings Ltd. ........................ 235,600 9,256,724 KMG America Corp.* ....................... 257,460 2,299,118 Max Re Capital Ltd. ...................... 111,400 2,561,086 Navigators Group, Inc., (The)* ........... 129,570 4,801,864 Odyssey Re Holdings Corp. ................ 39,120 987,780 Platinum Underwriters Holdings Ltd .................................... 234,160 7,605,517 Quanta Capital Holdings Ltd.* ............ 293,000 1,848,830 Seabright Insurance Holdings* ............ 55,730 781,335 United America Indemnity Ltd., Class A* ............................... 77,740 1,395,433 ------------ 50,240,708 ------------ INTERNET SERVICES--1.7% EarthLink, Inc.* ......................... 265,900 2,595,184 United Online, Inc. ...................... 335,000 4,365,050 ------------ 6,960,234 ------------ IRON & STEEL--0.3% Ryerson Tull, Inc. ....................... 64,700 1,328,938 ------------ LEISURE & LODGING--2.1% Alliance Gaming Corp.* ................... 87,300 1,047,600 Argosy Gaming Co.* ....................... 41,100 1,917,726 Interstate Hotels & Resorts, Inc.* ....... 87,850 440,129 Intrawest Corp. .......................... 82,100 2,146,915 La Quinta Corp.* ......................... 139,665 1,180,169 MTR Gaming Group, Inc.* .................. 50,860 469,946 Pinnacle Entertainment, Inc.* ............ 71,900 1,433,686 ------------ 8,636,171 ------------ MACHINERY--1.7% Actuant Corp., Class A* .................. 18,700 792,880 CIRCOR International, Inc. ............... 32,000 840,320 Manitowoc Co., Inc., (The) ............... 28,200 1,314,120 Terex Corp.* ............................. 86,100 4,199,958 ------------ 7,147,278 ------------ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 37 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS SMALL CAP VALUE FUND II (continued) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ MANUFACTURING--4.0% Acco Brands Corp* ........................ 130,325 $ 3,401,482 Acuity Brands, Inc. ...................... 74,100 2,188,173 EnerSys* ................................. 69,325 960,151 Federal Signal Corp. ..................... 163,015 2,787,557 Griffon Corp.* ........................... 62,000 1,589,680 Modtech Holdings, Inc.* .................. 50,100 453,906 Monaco Coach Corp. ....................... 109,900 1,689,163 NN, Inc. ................................. 88,800 1,086,024 RBC Bearings, Inc.* ...................... 153,185 2,466,279 ------------ 16,622,415 ------------ MANUFACTURING--0.1% Tempur-Pedic International, Inc.* ........ 31,230 501,866 ------------ MEDIA & ENTERTAINMENT--0.3% 4Kids Entertainment, Inc.* ............... 47,300 814,506 Liberty Corp., (The) ..................... 7,100 340,729 ------------ 1,155,235 ------------ MEDICAL EQUIPMENT AND SUPPLIES--1.9% Analogic Corp. ........................... 20,700 1,031,895 CONMED Corp.* ............................ 141,200 4,131,512 Medical Action Industries, Inc.* ......... 107,800 1,845,536 PAREXEL International Corp.* ............. 40,364 782,254 ------------ 7,791,197 ------------ MOTOR HOMES--0.6% Winnebago Industries, Inc. ............... 86,535 2,636,722 ------------ OFFICE EQUIPMENT & SUPPLIES--1.3% Ennis, Inc. .............................. 111,300 1,936,620 Global Imaging Systems, Inc.* ............ 100,375 3,317,394 ------------ 5,254,014 ------------ OIL & GAS - EXPLORATION--1.8% InterOil Corp.* .......................... 32,800 780,640 Stone Energy Corp.* ...................... 45,400 2,378,506 Swift Energy Co.* ........................ 96,200 4,418,466 ------------ 7,577,612 ------------ OIL SERVICES--0.9% Key Energy Services, Inc.* ............... 181,265 2,583,026 Parker Drilling Co.* ..................... 123,100 993,417 ------------ 3,576,443 ------------ PAPER FOREST PRODUCTS & PACKAGING--0.7% Neenah Paper, Inc. ....................... 59,700 1,808,910 Schweitzer-Mauduit International, Inc. ................................... 39,300 904,686 ------------ 2,713,596 ------------ PUBLISHING & INFORMATION SERVICES--2.7% Banta Corp. .............................. 60,600 2,966,370 Bowne & Co., Inc. ........................ 237,100 3,366,820 Journal Register Co.* .................... 111,900 2,098,125 Number of Shares Value --------- ------------ PUBLISHING & INFORMATION SERVICES--(CONTINUED) Reader's Digest Association, Inc., (The) .................................. 105,900 $ 1,721,934 Scholastic Corp.* ........................ 17,900 652,813 Value Line, Inc. ......................... 4,300 170,925 ------------ 10,976,987 ------------ RAILROAD & BULK SHIPPING--0.3% RailAmerica, Inc.* ....................... 112,895 1,302,808 ------------ REAL ESTATE--1.0% Trammell Crow Co.* ....................... 157,500 4,279,275 ------------ REAL ESTATE INVESTMENT TRUST (REIT)--5.8% American Financial Realty Trust .......... 216,025 3,065,395 Ashford Hospitality Trust ................ 38,325 440,354 Bimini Mortgage Management, Inc., Class A 144A ........................... 129,725 1,618,968 Capital Lease Funding, Inc. .............. 169,375 1,739,481 Digital Realty Trust, Inc. ............... 148,400 2,822,568 Fieldstone Investment Corp. 144A ......... 84,700 1,065,526 Gladstone Commercial Corp. ............... 94,075 1,580,460 Government Properties Trust, Inc. ........ 101,075 980,427 Jer Investors Trust, Inc. ................ 34,300 619,458 Lexington Corporate Properties Trust .................................. 56,850 1,307,550 Medical Properties Trust, Inc. 144A ................................... 87,500 962,500 Medical Properties Trust, Inc. ........... 111,600 1,227,600 MFA Mortgage Investments, Inc. ........... 198,850 1,340,249 Origen Financial, Inc. ................... 330,325 2,424,586 Redwood Trust, Inc. ...................... 57,900 2,912,949 ------------ 24,108,071 ------------ RETAIL - HARD GOODS--1.0% GameStop Corp., Class A* ................. 72,115 2,433,881 School Specialty, Inc.* .................. 35,100 1,681,641 ------------ 4,115,522 ------------ SAVINGS & LOANS--0.5% Franklin Bank Corp.* ..................... 105,600 1,910,304 ------------ SEMICONDUCTOR EQUIPMENT & PRODUCTS--0.4% OmniVision Technologies, Inc.* ........... 109,700 1,608,202 ------------ SERVICES - BUSINESS--5.7% Clark, Inc. .............................. 220,850 3,591,021 Cornell Companies, Inc.* ................. 65,980 946,153 Geo Group, Inc., (The)* .................. 37,100 1,035,090 Harland (John H.) Co. .................... 51,430 2,157,488 Integrated Alarm Services Group, Inc.* .................................. 499,613 2,013,440 Kforce, Inc.* ............................ 101,176 1,021,878 MPS Group, Inc.* ......................... 312,200 3,452,932 PRG-Schultz International, Inc.* ......... 408,900 1,337,103 ProQuest Co.* ............................ 16,150 580,916 Spherion Corp.* .......................... 160,100 1,179,937 Standard Parking Corp.* .................. 123,255 2,169,288 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 38 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS SMALL CAP VALUE FUND II (concluded) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ SERVICES - BUSINESS--(CONTINUED) World Fuel Services Corp. ................ 118,100 $ 3,861,870 ------------ 23,347,116 ------------ TOBACCO--0.5% Alliance One International, Inc. ......... 296,000 1,184,000 Universal Corp. .......................... 20,900 869,858 ------------ 2,053,858 ------------ TRANSPORT - SERVICES--0.4% Quintana Maritime Ltd.* .................. 115,605 1,287,840 Stonepath Group, Inc.*++ ................. 559,600 503,640 ------------ 1,791,480 ------------ TRAVEL SERVICES--0.7% Ambassadors International, Inc. .......... 17,300 276,800 Navigant International, Inc.* ............ 222,600 2,682,330 ------------ 2,959,130 ------------ TRUCKING--0.5% Marten Transport Ltd.* ................... 13,300 327,180 Quality Distribution, Inc.* .............. 86,905 716,097 SCS Transportation, Inc.* ................ 54,800 879,540 ------------ 1,922,817 ------------ UTILITIES - ELECTRIC--1.3% Sierra Pacific Resources* ................ 372,600 5,432,508 ------------ TOTAL COMMON STOCK (Cost $315,222,821) .................. 397,039,152 ------------ Number of Shares Value --------- ------------ INVESTMENT COMPANY--0.8% FINANCIAL SERVICES--0.8% Apollo Investment Corp. .................. 176,000 $ 3,384,480 ------------ TOTAL INVESTMENT COMPANY (Cost $2,640,000) .................... 3,384,480 ------------ SHORT TERM INVESTMENTS--4.0% PNC Bank Money Market Deposit Account 3.130% 09/01/05 ........................ 16,532,130 16,532,130 ------------ TOTAL SHORT TERM INVESTMENTS (Cost $16,532,130) ................... 16,532,130 ------------ TOTAL INVESTMENTS--101.0% (Cost $334,394,951) ...................... 416,955,762 ------------ LIABILITIES IN EXCESS OF OTHER ASSETS--(1.0)% ..................... (4,164,403) ------------ NET ASSETS--100.0% ......................... $412,791,359 ============ - ---------- * -- Non-income producing. ++ -- Illiquid Security. Total Market Value of illiquid securities is $1,123,440 and represents 0.27% of net assets as of August 31, 2005. ADR -- American Depository Receipt. 144A -- Security was purchased pursuant to Rule 144A under Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. As of August 31, 2005, these securities amounted to 1.03% of net assets. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 39 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LONG/SHORT EQUITY FUND PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ LONG POSITIONS--106.5% COMMON STOCK--98.5% AEROSPACE & DEFENSE--3.3% Aerosonic Corp.* ......................... 43,900 $ 302,910 Allied Defense Group, Inc., (The) +* ............................... 86,495 1,963,437 Orbital Sciences Corp.* .................. 55,000 658,900 Triumph Group, Inc.* ................... 31,000 1,217,370 ------------ 4,142,617 ------------ AGRICULTURE--0.6% Hines Horticulture, Inc.* ................ 217,424 765,332 ------------ AIR TRANSPORT--1.2% ExpressJet Holdings, Inc. +* ............. 57,200 543,972 Kitty Hawk, Inc.* ........................ 364,915 401,407 Pinnacle Airlines Corp.* ................. 60,770 587,038 ------------ 1,532,417 ------------ APPAREL--1.6% Benetton Group S.p.A. - ADR .............. 18,600 367,908 Haggar Corp. + ........................... 44,163 1,021,932 Orange 21, Inc.* ......................... 90,845 577,774 ------------ 1,967,614 ------------ AUTOMOTIVE & TRUCKS--0.0% Strattec Security Corp.* ................. 861 44,531 ------------ BUSINESS & PUBLIC SERVICES--1.9% BB Holdings Ltd. ......................... 119,337 793,591 Manpower, Inc. ........................... 10,690 481,692 On Assignment, Inc. +* ................... 152,909 1,059,659 ------------ 2,334,942 ------------ CHEMICALS - SPECIALTY--2.1% Agrium, Inc. + ........................... 35,235 757,552 Ashland, Inc. + .......................... 12,900 784,191 ICO, Inc.* ............................... 134,477 359,054 Texas Petrochemicals, Inc. +* ............ 42,200 759,600 ------------ 2,660,397 ------------ COMMERCIAL SERVICES--2.2% NCO Group, Inc.* ......................... 36,400 763,672 Steiner Leisure Ltd. +* .................. 47,625 1,468,279 Sykes Enterprises, Inc.* ................. 48,385 515,300 ------------ 2,747,251 ------------ COMMUNICATIONS EQUIPMENT--0.4% TESSCO Technologies, Inc.* ............... 38,780 504,140 ------------ COMPUTER EQUIPMENT & SERVICES--5.6% Acxiom Corp. ............................. 28,600 566,852 Carreker Corp.* .......................... 133,680 851,542 Dynamics Research Corp.* ................. 24,670 379,918 Ness Technologies, Inc.* ................. 145,600 1,262,352 Parametric Technology Corp. +* ........... 94,800 574,488 Perot Systems Corp., Class A +* .......... 91,500 1,317,600 ------------ Number of Shares Value --------- ------------ COMPUTER EQUIPMENT & SERVICES--(CONTINUED) Pomeroy IT Solutions, Inc. +* ............ 50,695 $ 654,472 Rimage Corp. +* .......................... 13,225 319,252 Segue Software, Inc.* .................... 72,640 461,264 SimpleTech, Inc.* ........................ 121,870 580,101 ------------ 6,967,841 ------------ COMPUTER SOFTWARE--0.7% Microsoft Corp. .......................... 32,000 876,800 ------------ CONSULTING SERVICES--3.4% Accenture Ltd., Class A +* ............... 54,495 1,329,678 MAXIMUS, Inc. + .......................... 43,700 1,645,742 Opinion Research Corp. +* ................ 168,662 1,281,831 ------------ 4,257,251 ------------ CONTAINERS--2.9% AEP Industries, Inc. +* .................. 72,579 1,486,418 Crown Holdings, Inc. +* .................. 67,300 1,136,697 Silgan Holdings, Inc. + .................. 16,100 969,542 ------------ 3,592,657 ------------ ELECTRONICS--3.6% PerkinElmer, Inc. ........................ 33,880 701,316 Spectrum Control, Inc. +* ................ 80,150 569,065 Stoneridge, Inc.* ........................ 110,960 1,066,326 Superior Essex, Inc. +* .................. 70,575 1,329,633 Technitrol, Inc. ......................... 58,200 853,794 ------------ 4,520,134 ------------ ENERGY EQUIPMENT & SERVICES--0.9% Mikron Infrared, Inc.* ................... 51,620 335,530 Powell Industries, Inc.* ................. 34,901 771,661 ------------ 1,107,191 ------------ FINANCIAL SERVICES--2.1% BKF Capital Group, Inc. + ................ 11,700 378,846 Federal Agricultural Mortgage Corp., Class C ......................... 46,540 1,087,174 Tac Acquisition Corp.* ................... 60,600 362,388 U.S. Global Investors, Inc., Class A* ............................... 144,367 831,554 ------------ 2,659,962 ------------ FOODS--2.6% Interstate Bakeries Corp.* ............... 65,600 783,920 M & F Worldwide Corp. +* ................. 113,855 1,685,054 Nestle S.A. - ADR + ...................... 10,400 727,244 ------------ 3,196,218 ------------ HAZARDOUS WASTE DISPOSAL--0.6% Synagro Techonologies, Inc. .............. 131,245 682,474 ------------ HEALTH & PERSONAL CARE--1.5% Johnson & Johnson ........................ 30,100 1,908,039 ------------ HEALTH CARE - DRUGS--3.6% Pfizer, Inc. + ........................... 83,900 2,136,933 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 40 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LONG/SHORT EQUITY FUND (continued) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ HEALTH CARE - DRUGS--(CONTINUED) Shire Pharmaceuticals Group PLC - ADR + ............................ 43,200 $ 1,646,784 Watson Pharmaceuticals, Inc. +* .......... 20,100 693,048 ------------ 4,476,765 ------------ HEALTH CARE - SERVICES--4.0% American Dental Partners, Inc. +* ........ 71,855 2,200,919 Hanger Orthopedic Group, Inc.* ........... 33,165 265,652 IntegraMed America, Inc. +* .............. 33,306 416,991 National Dentex Corp.* ................... 4,885 97,798 National Home Health Care Corp. .................................. 34,586 396,701 RehabCare Group, Inc. +* ................. 59,200 1,330,224 Sun Healthcare Group, Inc.* .............. 32,025 210,404 ------------ 4,918,689 ------------ HEALTH CARE - SUPPLIES--0.3% Unilens Vision, Inc.* .................... 88,800 304,140 ------------ HOME PRODUCTS--0.1% Mity Enterprises, Inc.* .................. 5,502 94,469 ------------ HUMAN RESOURCES--0.1% Carlisle Group Ltd.* (United Kingdom) ....................... 47,735 107,317 ------------ INSURANCE - LIFE--0.6% Scottish Re Group Ltd. + ................. 29,795 716,868 ------------ INSURANCE - OTHER--13.0% American International Group, Inc. + .......................... 20,000 1,184,000 Aspen Insurance Holdings Ltd. + .......... 42,500 1,153,875 Assured Guaranty Ltd. + .................. 50,992 1,142,221 Bristol West Holdings, Inc. + ............ 45,900 800,955 Hooper Holmes, Inc. ...................... 205,145 865,712 Investors Title Co. ...................... 12,880 508,889 IPC Holdings Ltd. + ...................... 25,400 997,966 MBIA, Inc. + ............................. 42,200 2,446,334 Nationwide Financial Services, Inc., Class A + ........................ 13,900 535,984 PartnerRe Ltd. + ......................... 26,800 1,626,760 Platinum Underwriters Holdings Ltd. + ........................ 44,740 1,453,155 Protective Life Corp. + .................. 24,200 992,926 Radian Group, Inc. + ..................... 31,700 1,622,406 Wesco Financial Corp. + .................. 2,375 839,562 ------------ 16,170,745 ------------ INTERNET SERVICES--2.9% Corillian Corp.* ......................... 112,485 365,576 EarthLink, Inc. +* ....................... 73,600 718,336 Knot, Inc., (The) +* ..................... 180,642 1,842,548 Pacific Internet Ltd.* ................... 108,802 689,805 ------------ 3,616,265 ------------ LEISURE & LODGING--1.9% Escalade, Inc. +* ........................ 37,165 483,145 Number of Shares Value --------- ------------ LEISURE & LODGING--(CONTINUED) GameTech International, Inc. ............. 81,408 $ 224,686 Interstate Hotels & Resorts, Inc.* ....... 248,875 1,246,864 Intrawest Corp. + ........................ 14,200 371,330 ------------ 2,326,025 ------------ MACHINERY--1.2% K-Tron International, Inc.* .............. 27,864 895,271 Key Technology, Inc.* .................... 51,075 647,120 ------------ 1,542,391 ------------ MANUFACTURING--3.8% Bolt Technology Corp.* ................... 135,270 1,083,513 Chart Industries, Inc. +* ................ 6,938 441,430 Matthews International Corp., Class A + .............................. 44,675 1,787,000 Velcro Industries N.V .................... 103,990 1,451,180 ------------ 4,763,123 ------------ MEDIA & ENTERTAINMENT--3.2% CanWest Global Communications Corp. +* ............................... 72,815 930,576 Clear Channel Communications, Inc. + ................................. 27,100 902,430 New Frontier Media, Inc.* ................ 80,405 583,740 Time Warner, Inc. + ...................... 84,700 1,517,824 ------------ 3,934,570 ------------ MEDICAL EQUIPMENT AND SUPPLIES--0.6% MTS Medication Technologies +* ........... 149,105 761,927 ------------ METALS & MINING--1.9% Haynes International, Inc.* .............. 19,380 387,600 ICG, Inc.* ............................... 57,000 790,875 Ladish Co., Inc.* ........................ 40,033 720,994 Wolverine Tube, Inc.* .................... 70,965 498,884 ------------ 2,398,353 ------------ OFFICE EQUIPMENT & SUPPLIES--2.1% Ennis, Inc. + ............................ 88,915 1,547,121 Xerox Corp. +* ........................... 75,200 1,008,432 ------------ 2,555,553 ------------ OIL & GAS - EXPLORATION--2.1% Chaparral Resources, Inc.* ............... 190,480 1,104,784 InterOil Corp. +* ........................ 22,600 537,880 Pogo Producing Co. + ..................... 17,800 996,800 ------------ 2,639,464 ------------ OIL & GAS - INTEGRATED MAJORS--0.5% Marathon Oil Corp. + ..................... 10,004 643,357 OIL SERVICES--1.3% T-3 Energy Services, Inc.* ............... 50,247 728,582 Todco, Class A +* ........................ 25,325 879,284 ------------ 1,607,866 ------------ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 41 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LONG/SHORT EQUITY FUND (continued) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ PAPER FOREST PRODUCTS & PACKAGING--0.6% Graphic Packaging Corp.* ................. 226,900 $ 746,501 ------------ PRINTING SERVICES--1.9% Cadmus Communications Corp. + ............ 95,350 1,935,605 Outlook Group Corp. ...................... 38,060 387,451 ------------ 2,323,056 ------------ PUBLISHING & INFORMATION SERVICES--1.1% Bowne & Co., Inc. + ...................... 56,255 798,821 Gannett Co., Inc. + ...................... 9,300 676,296 ------------ 1,475,117 ------------ REAL ESTATE--0.8% United Capital Corp. +* .................. 41,730 1,009,866 ------------ RESTAURANTS--0.8% Benihana, Inc., Class A +* ............... 50,721 973,336 ------------ RETAIL--2.0% Children's Place Retail Stores, Inc., (The)* ................................ 12,700 519,557 Kenneth Cole Productions, Inc., Class A + .............................. 49,110 1,407,002 Party City Corp.* ........................ 42,735 555,982 ------------ 2,482,541 ------------ RETAIL - HARD GOODS--1.1% Claire's Stores, Inc. + .................. 58,780 1,380,154 ------------ RETAIL - SOFT GOODS--0.7% Charlotte Russe Holding, Inc. +* ......... 59,300 814,189 ------------ SAVINGS & LOANS--0.4% Franklin Bank Corp. +* ................... 27,000 488,430 ------------ SERVICES - CONSUMER--0.5% Coinstar, Inc.* .......................... 33,400 640,946 ------------ TELECOMMUNICATIONS--1.8% Premiere Global Services, Inc. +* ........ 92,805 846,381 West Corp. +* ............................ 37,055 1,435,511 ------------ 2,281,892 ------------ TELECOMMUNICATIONS EQUIPMENT--1.7% Communications Systems, Inc. ............. 53,440 552,035 Nokia Oyj - ADR + ...................... 96,600 1,523,382 ------------ 2,075,417 ------------ TELEPHONE - INTEGRATED--1.5% CT Communications, Inc. .................. 56,670 651,705 Telefonos de Mexico SA de CV - ADR + .................................. 65,300 1,253,760 ------------ 1,905,465 ------------ TOBACCO--0.6% Loews Corp. - Carolina Group ............. 19,500 752,895 ------------ Number of Shares Value --------- ------------ TRAVEL SERVICES--1.4% Navigant International, Inc. +* .......... 66,972 $ 807,013 Sabre Holdings Corp., Class A + ........ 51,200 982,016 ------------ 1,789,029 ------------ VITAMINS & NUTRITION PRODUCTS--1.2% Nutraceutical International Corp.* ....... 99,164 1,462,669 ------------ TOTAL COMMON STOCK (Cost $110,321,944) .................. 122,647,198 ------------ PREFERRED STOCK--0.5% OIL & GAS - EXPLORATION--0.5% Whittier Energy Corp. 144A*++ ............ 10,892 653,520 ------------ TOTAL PREFERRED STOCK (Cost $653,520) ...................... 653,520 ------------ Par (000) ------- CONVERTIBLE BONDS--0.1% Interpool, Inc. .......................... 9.25% 12/27/22 ......................... $ 75 75,000 ------------ TOTAL CONVERTIBLE BONDS--0.1% (Cost $75,000) ....................... 75,000 ------------ CORPORATE BONDS--0.1% Mueller Industries, Inc. Senior Subordinated Debentures 6.00% 11/01/14 ......................... 118 117,557 ------------ TOTAL CORPORATE BONDS--0.1% (Cost $118,000) ...................... 117,557 ------------ Number of Shares --------- SHORT TERM INVESTMENTS--7.3% SHORT-TERM INVESTMENTS--7.3% PNC Bank Money Market Deposit Account 3.130% 09/01/05 ........................ 9,080,141 9,080,141 ------------ TOTAL SHORT TERM INVESTMENTS (Cost $9,080,141) .................... 9,080,141 ------------ TOTAL LONG POSITIONS--106.5% (Cost $120,248,605) ...................... 132,573,416 ------------ SECURITIES SOLD SHORT--(53.9%) AEROSPACE & DEFENSE--(0.8%) ARGON ST, Inc.* .......................... (8,430) (259,476) Innovative Solutions and Support, Inc.* ......................... (42,042) (708,828) ------------ (968,304) ------------ AIRLINES--(0.3%) Northwest Airlines Corp.* ................ (46,725) (235,027) UAL Corp.* ............................. (74,165) (99,381) ------------ (334,408) ------------ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 42 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LONG/SHORT EQUITY FUND (continued) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ APPAREL--(0.9%) Guess?, Inc.* ............................ (24,500) $ (529,935) True Religion Apparel, Inc.* ............. (37,595) (572,948) ------------ (1,102,883) ------------ AUDIO & VIDEO PRODUCTS--(0.3%) Digital Theater Systems, Inc.* ........... (19,755) (362,109) ------------ AUTOMOTIVE & TRUCKS--(0.5%) A.S.V., Inc.* ............................ (13,080) (303,325) Sonic Automotive, Inc. ................... (14,800) (347,060) ------------ (650,385) ------------ BIOTECHNOLOGY--(0.5%) Crucell NV - ADR* ........................ (15,100) (333,106) Orchid Cellmark, Inc.* ................... (34,100) (306,900) ------------ (640,006) ------------ BROADCASTING--(0.7%) Sirius Satellite Radio, Inc.* ............ (80,300) (552,464) XM Satellite Radio Holdings, Inc., Class A* ............................... (7,800) (274,950) ------------ (827,414) ------------ BUILDING MATERIALS--0.0% Trex Co., Inc.* .......................... (5) (121) ------------ BUSINESS & PUBLIC SERVICES--(0.2%) 51job, Inc. - ADR* ....................... (15,300) (231,183) ------------ COMMERCIAL SERVICES--(1.2%) Cash Systems, Inc.* ...................... (61,800) (432,600) Labor Ready, Inc.* ....................... (19,400) (440,768) LML Payment Systems, Inc.* ............... (19,210) (105,655) Team, Inc. ............................... (27,560) (552,578) ------------ (1,531,601) ------------ COMPUTER EQUIPMENT & SERVICES--(3.0%) 3D Systems Corp.* ........................ (20,024) (450,540) ConSyGen, Inc.* .......................... (200) 0 DataTRAK International, Inc.* ............ (28,800) (412,416) Global ePoint, Inc.* ..................... (50,701) (238,295) Komag, Inc.* ............................. (7,400) (246,864) Mobility Electronics, Inc.* .............. (28,412) (311,111) PDF Solutions, Inc.* ..................... (20,160) (316,310) Research In Motion Ltd.* ................. (6,100) (477,569) Satellite Enterprises Corp.* ............. (8,615) (948) Sigma Designs, Inc.* ..................... (37,000) (364,080) Stratasys, Inc.* ......................... (11,000) (311,630) Trident Microsystems, Inc.* .............. (18,415) (646,735) Xybernaut Corp.* ......................... (35,000) (1,785) ------------ (3,778,283) ------------ COMPUTER SOFTWARE--(2.2%) Ants Software, Inc.* ..................... (26,885) (71,245) Computer Associates International, Inc. .................... (17,500) (471,800) Convera Corp.* ........................... (64,572) (648,303) Number of Shares Value --------- ------------ COMPUTER SOFTWARE--(CONTINUED) Nestor, Inc.* ............................ (23,200) $ (147,320) Peregrine Systems, Inc.* ................. (11,500) (221,605) The9 Ltd. - ADR* ......................... (23,300) (435,011) Ultimate Software Group, Inc., (The)* ................................. (40,810) (744,783) ------------ (2,740,067) ------------ COMPUTERS & PERIPHERALS--(0.3%) Cambridge Display Technology, Inc.* .................................. (21,310) (167,710) Immersion Corp.* ......................... (44,685) (252,023) ------------ (419,733) ------------ CONSULTING SERVICES--(0.1%) Access Integrated Technologies, Inc.* .................................. (6,170) (82,369) ------------ CONSUMER PRODUCTS--(0.2%) Mannatech, Inc. .......................... (20,300) (252,532) ------------ DATA PROCESSING SERVICES--(0.1%) FalconStor Software, Inc.* ............... (26,500) (165,890) ------------ DIVERSIFIED OPERATION--(0.2%) Seaboard Corp. ........................... (200) (256,800) ------------ ELECTRONIC COMPONENTS & INSTRUMENTS--(1.5%) Electro Scientific Industries, Inc.* ..... (17,600) (390,368) International DisplayWorks, Inc.* ........ (54,490) (359,634) Multi-Fineline Electronix, Inc.* ......... (13,200) (337,260) SiRF Technology Holdings, Inc.* .......... (33,100) (840,740) ------------ (1,928,002) ------------ ELECTRONIC EQUIPMENT & PRODUCTS--(4.0%) American Science & Engineering, Inc.* .................................. (9,900) (626,175) Electro Rent Corp.* ...................... (33,237) (447,702) Fiberstars, Inc.* ........................ (55,945) (673,578) Garmin Ltd. .............................. (10,000) (579,000) ICOS Vision Systems Corp., N.V.* ......... (9,072) (274,428) Ionatron, Inc.* .......................... (79,785) (658,226) Measurement Specialties, Inc.* ........... (16,800) (379,176) NVE Corp.* ............................... (13,805) (199,206) QSound Labs, Inc.* ....................... (26,140) (85,217) SpatiaLight, Inc.* ....................... (34,460) (168,509) Taser International, Inc.* ............... (15,400) (133,210) Tiger Telematics, Inc.* .................. (10,965) (197,370) Veeco Instruments, Inc.* ................. (16,110) (295,941) Video Display Corp. ...................... (23,800) (309,398) ------------ (5,027,136) ------------ ELECTRONICS--(0.3%) SonoSite, Inc.* .......................... (9,200) (329,360) ------------ ENERGY--(3.5%) Beacon Power Corp.* ...................... (52,600) (172,002) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 43 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LONG/SHORT EQUITY FUND (continued) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ ENERGY--(CONTINUED) Distributed Energy Systems Corp.* ................................. (48,500) $ (327,860) Energy Conversion Devices, Inc.* ......... (22,600) (784,446) Evergreen Solar, Inc.* ................... (78,100) (550,605) FuelCell Energy, Inc.* ................... (23,000) (261,970) KFx, Inc.* ............................... (70,150) (1,125,907) Medis Technologies Ltd.* ................. (23,524) (382,265) Plug Power, Inc.* ........................ (40,550) (298,854) Ultralife Batteries, Inc.* ............... (24,130) (319,481) Valence Technology, Inc.* ................ (30,650) (84,594) ------------ (4,307,984) ------------ ENVIRONMENTAL SERVICES--(0.1%) Pure Cycle Corp.* ........................ (17,515) (128,735) ------------ FINANCIAL SERVICES--(1.7%) First Marblehead Corp., (The)* ........... (20,600) (595,958) Franklin Credit Managment Corp.* ................................. (20,805) (217,620) Harris & Harris Group, Inc. .............. (35,600) (409,400) LaBranche & Co., Inc.* ................... (110,100) (944,658) Ladenburg Thalmann Financial Services, Inc.* ........................ (1) (1) NextCard, Inc.* .......................... (128,500) (3,855) ------------ (2,171,492) ------------ FOODS--(0.7%) Hansen Natural Corp.* .................... (8,800) (436,920) Wimm-Bill-Dann Foods OJSC - ADR* ................................... (26,730) (469,379) ------------ (906,299) ------------ HEALTH & PERSONAL CARE--(0.2%) Parlux Fragrances, Inc.* ................. (4,815) (151,047) Tasker Capital Corp.* .................... (47,590) (121,354) ------------ (272,401) ------------ HEALTH CARE - BIOTECH--(0.3%) ICOS Corp.* .............................. (15,000) (391,950) ------------ HEALTH CARE - SERVICES--(1.7%) Allscripts Healthcare Solutions, Inc.* .................................. (22,900) (407,162) CPC of America, Inc.* .................... (4,560) (104,880) Eclipsys Corp.* .......................... (25,800) (435,504) Hythiam, Inc.* ........................... (11,700) (75,114) Patient Infosystems, Inc.* ............... (4,790) (26,105) USANA Health Sciences, Inc.* ............. (11,700) (608,400) VCA Antech, Inc.* ........................ (19,900) (477,401) ------------ (2,134,566) ------------ INDUSTRIAL EQUIPMENT & SUPPLIES--(0.3%) Sun Hydraulics Corp. ..................... (17,050) (340,829) ------------ INTERNET SERVICES--(4.1%) aQuantive, Inc.* ......................... (12,900) (232,974) Number of Shares Value --------- ------------ INTERNET SERVICES--(CONTINUED) Concur Technologies, Inc.* ............... (27,400) $ (324,690) drugstore.com, Inc.* ..................... (101,120) (403,469) GuruNet Corp.* ........................... (17,475) (250,242) INTAC International, Inc.* ............... (4,175) (24,382) Interchange Corp.* ....................... (23,850) (163,134) Interliant, Inc.* ........................ (600) 0 Marchex, Inc., Class B* .................. (28,435) (417,426) Overstock.com, Inc.* ..................... (5,400) (217,836) Provide Commerce, Inc.* .................. (8,600) (219,472) Redback Networks, Inc.* .................. (72,200) (652,688) Rediff.com India Ltd. - ADR* ............. (23,420) (318,980) RightNow Technologies, Inc.* ............. (43,600) (502,708) Terremark Worldwide, Inc.* ............... (87,500) (436,625) Travelzoo, Inc.* ......................... (13,310) (307,860) WebSideStory, Inc.* ...................... (32,400) (539,136) WorldGate Communications, Inc.* .......... (28,595) (94,078) ------------ (5,105,700) ------------ LEISURE & LODGING--(0.8%) Aldila, Inc. ............................. (14,945) (371,682) Gaming Partners International Corp.* ................................. (12,490) (238,184) Scientific Games Corp., Class A* ......... (13,200) (397,848) ------------ (1,007,714) ------------ MACHINERY--(0.7%) Intevac, Inc.* ........................... (18,100) (236,567) SureBeam Corp., Class A* ................. (111,800) (123) TurboChef Technologies, Inc.* ............ (36,833) (622,109) ------------ (858,799) ------------ MANUFACTURING--(2.1%) Ceradyne, Inc.* .......................... (11,300) (356,854) Charles & Colvard Ltd.* .................. (46,305) (888,130) Imax Corp.* .............................. (46,500) (425,010) Nanophase Technologies Corp.* ............ (49,000) (302,330) NS Group, Inc.* .......................... (14,600) (607,652) ------------ (2,579,976) ------------ MARINE--(0.3%) Odyssey Marine Exploration, Inc.* ........ (83,930) (339,077) ------------ MEDIA & ENTERTAINMENT--(1.3%) CKX, Inc.* ............................... (47,705) (663,099) Martha Stewart Living Omnimedia, Inc., Class A* ......................... (22,930) (740,639) TiVo, Inc.* .............................. (33,800) (174,070) ------------ (1,577,808) ------------ MEDICAL EQUIPMENT AND SUPPLIES--(4.2%) Abaxis, Inc.* ............................ (39,360) (451,459) Advanced Medical Optics, Inc.* ........... (8,800) (346,368) Aspect Medical Systems, Inc.* ............ (7,700) (233,772) Digene Corp.* ............................ (8,790) (254,207) Isonics Corp.* ........................... (29,125) (80,968) Kopin Corp. .............................. (48,900) (316,383) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 44 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LONG/SHORT EQUITY FUND (continued) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ MEDICAL EQUIPMENT AND SUPPLIES--(CONTINUED) Laserscope* .............................. (5,900) $ (172,575) LCA-Vision, Inc. ......................... (15,100) (619,855) Luminex Corp.* ........................... (26,300) (267,208) Microvision, Inc.* ....................... (57,130) (318,785) Penwest Pharmaceuticals Co.* ............. (23,640) (345,853) Schick Technologies, Inc.* ............... (16,600) (423,300) Stereotaxis, Inc.* ....................... (36,200) (310,234) ThermoGenesis Corp.* ..................... (79,910) (432,313) TriPath Imaging, Inc. .................... (25,000) (198,250) Vision-Sciences, Inc.* ................... (66,740) (128,141) Zila, Inc.* .............................. (90,488) (320,328) ------------ (5,219,999) ------------ METALS & MINING--(0.6%) Dynamic Materials Corp.* ................. (17,825) (719,774) ------------ METALS - STEEL--(1.0%) IPSCO, Inc. .............................. (9,620) (617,508) Oregon Steel Mills, Inc.* ................ (28,400) (638,432) ------------ (1,255,940) ------------ OIL & GAS - EXPLORATION--(0.1%) Eden Energy Corp.* ....................... (15,715) (106,548) ------------ OIL & GAS - REFINING & MARKETING--(0.5%) SulphCo, Inc.* ........................... (134,505) (590,477) ------------ OIL FIELD MACHINERY & EQUIPMENT--(0.1%) Flotek Industries, Inc.* ................. (3,835) (72,865) ------------ OIL SERVICES--(0.4%) Lone Star Technologies, Inc.* ............ (8,000) (442,400) ------------ PHARMACEUTICALS & BIOTECHNOLOGY--(1.5%) BioMarin Pharmaceutical, Inc.* ........... (35,415) (305,631) Compugen Ltd.* ........................... (12,155) (45,703) Geron Corp.* ............................. (23,600) (256,060) Immtech International, Inc.* ............. (23,910) (271,618) Ista Pharmaceuticals, Inc.* .............. (24,900) (181,272) Northfield Laboratories, Inc.* ........... (18,170) (246,022) Nuvelo, Inc.* ............................ (24,100) (226,058) Oncolytics Biotech, Inc.* ................ (11,480) (28,585) Progenics Pharmaceuticals, Inc.* ......... (13,800) (325,404) RegeneRX Biopharmaceuticals, Inc.* .................................. (1,500) (5,175) Tapestry Pharmaceuticals, Inc.* .......... (94,100) (40,839) ------------ (1,932,367) ------------ REAL ESTATE--(0.6%) MortgageIT Holdings, Inc. (REIT) ......... (12,500) (201,875) ZipRealty, Inc.* ......................... (40,520) (512,983) ------------ (714,858) ------------ RESTAURANTS--(0.9%) Buffalo Wild Wings, Inc.* ................ (11,000) (314,600) Cosi, Inc.* .............................. (49,300) (449,123) Number of Shares Value --------- ------------ RESTAURANTS--(CONTINUED) Texas Roadhouse, Inc., Class A* .......... (11,800) $ (389,636) ------------ (1,153,359) ------------ RETAIL - FOOD & DRUG--(0.5%) Wild Oats Markets, Inc.* ................. (48,500) (586,365) ------------ RETAIL - HARD GOODS--(0.8%) REX Stores Corp.* ........................ (45,100) (694,991) Select Comfort Corp.* .................... (15,300) (295,749) ------------ (990,740) ------------ SCHOOLS--(0.4%) Laureate Education, Inc.* ................ (13,200) (552,420) ------------ SEMICONDUCTOR EQUIPMENT & PRODUCTS--(1.9%) FormFactor, Inc.* ........................ (10,200) (277,134) MEMC Electronic Materials, Inc.* ......... (31,300) (527,718) Nano-Proprietary, Inc.* .................. (46,685) (114,378) PortalPlayer, Inc.* ...................... (23,400) (620,802) Power Intergrations, Inc.* ............... (16,400) (362,768) Tessera Technologies, Inc.* .............. (12,600) (418,068) ------------ (2,320,868) ------------ TECHNOLOGY HARDWARE & EQUIPMENT--(0.7%) Altair Nanotechnologies, Inc.* ........... (51,180) (148,422) Amerityre Corp.* ......................... (12,385) (87,314) Cogent, Inc.* ............................ (12,500) (336,000) On Track Innovations Ltd.* ............... (15,800) (197,658) ParkerVision, Inc.* ...................... (18,495) (93,770) ------------ (863,164) ------------ TELECOMMUNICATIONS--(1.1%) Choice One Communications, Inc. o* ................................ (37,790) (4) CTC Communications Group, Inc. o* .................................. (98,900) (10) First Avenue Networks, Inc.* ............. (61,239) (364,372) Global Crossing Ltd.* .................... (18,700) (322,949) Level 3 Communications, Inc.* ............ (101,540) (200,034) Telkonet, Inc.* .......................... (55,325) (210,788) Vyyo, Inc.* .............................. (62,540) (296,440) WorldCom, Inc. - WorldCom Group o* ................................. (147,900) (1,035) ------------ (1,395,632) ------------ TELECOMMUNICATIONS EQUIPMENT--(1.8%) Alvarion Ltd.* ........................... (22,600) (194,812) Endwave Corp.* ........................... (25,705) (797,369) InterDigital Communications Corp.* ................................. (17,600) (312,928) JAMDAT Mobile, Inc.* ..................... (11,300) (268,827) Phazar Corp.* ............................ (23,091) (388,160) Sonus Networks, Inc.* .................... (61,500) (289,665) ------------ (2,251,761) ------------ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 45 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LONG/SHORT EQUITY FUND (concluded) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ TEXTILES & APPAREL--(0.4%) Casual Male Retail Group, Inc.* .......... (16,590) $ (117,955) Forward Industries, Inc.* ................ (15,095) (390,508) ------------ (508,463) ------------ TOBACCO--(0.6%) Vector Group Ltd. ........................ (37,520) (750,400) ------------ TRANSPORT - SERVICES--(0.7%) OMI Corp. ................................ (27,000) (516,510) Top Tankers, Inc. ........................ (22,800) (351,348) ------------ (867,858) ------------ TOTAL SECURITIES SOLD SHORT (Proceeds $64,938,152) ............... (67,048,174) ------------ OTHER ASSETS IN EXCESS OF LIABILITIES--47.4% .................... 58,938,871 ------------ NET ASSETS--100.0% ......................... $124,464,113 ============ - ---------- * -- Non-income producing. + -- Security position is either entirely or partially held in a segregated account as collateral for securities sold short. ++ -- Illiquid Security. Total Market Value of illiquid securities is $653,520 and represents 0.53% of net assets as of August 31, 2005. o -- Security is illiquid and has been valued at fair market value as determined in good faith by or under the direction of RBB's Board of Directors. ADR -- American Depository Receipt. 144A -- Security was purchased pursuant to Rule 144A under Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. As of August 31, 2005, these securities amounted to 0.53% of net assets. REIT -- Real Estate Investment Trust. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 46 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LARGE CAP VALUE FUND PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ----------- COMMON STOCK--98.9% AEROSPACE & DEFENSE--2.4% Northrop Grumman Corp. ................... 16,800 $ 942,312 ----------- APPAREL--2.6% Gap, Inc., (The) ......................... 18,500 351,685 Jones Apparel Group, Inc. ................ 10,600 298,708 Liz Claiborne, Inc. ...................... 4,862 199,488 NIKE, Inc., Class B ...................... 2,200 173,602 ----------- 1,023,483 ----------- BANKS - MAJOR--3.9% Bank of New York Co., Inc., (The) ........ 22,500 687,825 Comerica, Inc. ........................... 8,709 526,808 Mellon Financial Corp. ................... 10,698 347,150 ----------- 1,561,783 ----------- BUILDING MATERIALS--0.6% Masco Corp. .............................. 8,362 256,546 ----------- BUSINESS & PUBLIC SERVICES--0.8% Manpower, Inc. ........................... 7,100 319,926 ----------- CHEMICALS - SPECIALTY--2.0% Agrium, Inc. ............................. 14,600 313,900 Ashland, Inc. ............................ 8,300 504,557 ----------- 818,457 ----------- COMPUTER EQUIPMENT & SERVICES--4.0% Hewlett-Packard Co. ...................... 20,953 581,655 Ingram Micro, Inc., Class A* ............. 24,500 428,995 Lexmark International, Inc., Class A* ............................... 4,000 251,920 Storage Technology Corp.* ................ 9,400 347,330 ----------- 1,609,900 ----------- COMPUTER SOFTWARE--1.5% Microsoft Corp. .......................... 22,379 613,185 ----------- CONSULTING SERVICES--1.3% Accenture Ltd., Class A* ................. 20,800 507,520 ----------- CONTAINERS--0.7% Crown Holdings, Inc.* .................... 17,600 297,264 ----------- DISTRIBUTION--0.6% W.W. Grainger, Inc. ...................... 3,500 225,120 ----------- ELECTRONICS--1.0% Arrow Electronics, Inc.* ................. 12,700 378,714 ----------- FINANCIAL SERVICES--8.7% Amvescap PLC- ADR ........................ 32,800 438,208 Citigroup, Inc. .......................... 25,633 1,121,957 Countrywide Financial Corp. .............. 12,106 409,062 Fannie Mae ............................... 3,354 171,188 Freddie Mac .............................. 13,127 792,608 Goldman Sachs Group, Inc., (The) ......... 3,072 341,545 Number of Shares Value --------- ------------ FINANCIAL SERVICES--(CONTINUED) State Street Corp. ....................... 3,900 $ 188,487 ----------- 3,463,055 ----------- FOOD & HOUSEHOLD PRODUCTS--1.4% Hormel Foods Corp. ....................... 5,700 181,773 Pilgrim's Pride Corp. .................... 5,900 200,010 Unilever NV- NY Shares ................... 2,700 186,840 ----------- 568,623 ----------- HEALTH & PERSONAL CARE--0.9% Johnson & Johnson ........................ 5,556 352,195 ----------- HEALTH CARE - DRUGS--4.2% Pfizer, Inc. ............................. 32,082 817,128 Shire Pharmaceuticals Group PLC - ADR .................................. 22,640 863,037 ----------- 1,680,165 ----------- HEALTH CARE - SERVICES--0.5% Aetna, Inc. .............................. 2,700 215,109 ----------- INSURANCE - OTHER--12.8% ACE Ltd. ................................. 15,139 672,323 Ambac Financial Group, Inc. .............. 5,215 357,645 American International Group, Inc. ....... 9,398 556,361 Assurant, Inc. ........................... 5,400 201,582 Berkshire Hathaway, Inc., Class B* ....... 383 1,063,208 Conseco, Inc.* ........................... 14,500 302,760 MBIA, Inc. ............................... 17,636 1,022,359 Nationwide Financial Services, Inc., Class A ................................ 9,044 348,737 Radian Group, Inc. ....................... 5,776 295,616 St. Paul Travelers Cos., Inc., (The) ..... 6,944 298,661 ----------- 5,119,252 ----------- LEISURE & LODGING--1.2% GTECH Holdings Corp. ..................... 16,895 482,859 ----------- MANUFACTURING--3.2% Ingersoll-Rand Company Ltd., Class A ................................ 9,000 716,580 Tyco International Ltd. .................. 20,723 576,721 ----------- 1,293,301 ----------- MEDIA & ENTERTAINMENT--4.2% Liberty Media International, Inc., Class A* ............................... 60,044 498,965 Time Warner, Inc. ........................ 49,566 888,223 Viacom, Inc., Class B (Non Voting Shares) ................................ 9,100 309,309 ----------- 1,696,497 ----------- METALS & MINING--1.0% Freeport-McMoRan Copper & Gold, Inc., Class B ...................... 9,227 389,103 ----------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 47 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS LARGE CAP VALUE FUND (concluded) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ OFFICE EQUIPMENT & SUPPLIES--1.8% Xerox Corp.* ............................. 53,724 $ 720,439 ----------- OIL & GAS - EXPLORATION--2.6% Burlington Resources, Inc. ............... 6,300 464,877 Chesapeake Energy Corp. .................. 12,200 385,642 PetroKazakhstan, Inc., Class A ........... 3,700 200,910 ----------- 1,051,429 ----------- OIL & GAS - INTEGRATED MAJORS--10.0% Chevron Corp. ............................ 16,116 989,522 ConocoPhillips ........................... 9,800 646,212 Exxon Mobil Corp. ........................ 13,614 815,479 Marathon Oil Corp. ....................... 13,832 889,536 Petroleo Brasileiro S.A. - ADR ........... 10,946 684,782 ----------- 4,025,531 ----------- OIL & GAS - REFINING & MARKETING--1.9% Premcor, Inc. ............................ 7,915 738,390 ----------- OIL SERVICES--2.6% Diamond Offshore Drilling, Inc. .......... 3,800 224,428 Tenaris S.A. - ADR ....................... 2,500 286,200 Transocean, Inc.* ........................ 8,815 520,438 ----------- 1,031,066 ----------- PRINTING SERVICES--1.0% R. R. Donnelley & Sons Co. ............... 10,700 399,752 ----------- REAL ESTATE--0.7% CB Richard Ellis Group, Inc., Class A* ............................... 6,100 297,436 ----------- RESTAURANTS--0.7% McDonald's Corp. ......................... 8,961 290,784 ----------- RETAIL - HARD GOODS--3.4% Claire's Stores, Inc. .................... 8,400 197,232 Federated Department Stores, Inc. ................................... 5,400 372,492 J.C. Penney Company, Inc. (Holding Co.) .......................... 10,200 496,026 Office Depot, Inc.* ...................... 9,092 272,760 ----------- 1,338,510 ----------- SAVINGS & LOANS--1.0% Hudson City Bancorp, Inc. ................ 32,300 403,750 ----------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--2.0% Freescale Semiconductor, Inc., Class A* ............................... 19,994 477,457 Teradyne, Inc.* .......................... 18,600 312,480 ----------- 789,937 ----------- TELECOMMUNICATIONS--3.9% BellSouth Corp. .......................... 9,800 257,642 SBC Communications, Inc. ................. 29,200 703,136 Number of Shares Value --------- ------------ TELECOMMUNICATIONS--(CONTINUED) Vodafone Group PLC - ADR* ................ 22,426 $ 611,108 ----------- 1,571,886 ----------- TELECOMMUNICATIONS EQUIPMENT--4.4% Motorola, Inc. ........................... 29,500 645,460 Nokia Oyj - ADR .......................... 13,538 213,494 Scientific-Atlanta, Inc. ................. 9,100 348,166 Sprint Nextel Corp. ...................... 21,403 554,980 ----------- 1,762,100 ----------- TOBACCO--2.2% Altria Group, Inc. ....................... 6,792 480,194 UST, Inc. .............................. 8,923 379,763 ----------- 859,957 ----------- UTILITIES - ELECTRIC--1.0% Scottish Power PLC - ADR ................. 10,866 393,675 ----------- UTILITIES - GAS & WATER--0.2% Energen Corp. ............................ 2,300 88,136 ----------- TOTAL COMMON STOCK (Cost $34,195,692) ................... 39,577,147 ----------- SHORT TERM INVESTMENTS--2.8% PNC Bank Money Market Deposit Account 3.130% 09/01/05 ................ 1,098,848 1,098,848 ----------- TOTAL SHORT TERM INVESTMENTS (Cost $1,098,848) .................... 1,098,848 ----------- TOTAL INVESTMENTS--101.7% (Cost $35,294,540) ....................... 40,675,995 ----------- LIABILITIES IN EXCESS OF OTHER ASSETS--(1.7)% ........................... (677,155) ----------- NET ASSETS--100.0% .......................... $39,998,840 =========== - ---------- * -- Non-income producing. ADR -- American Depository Receipt. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 48 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS MID CAP VALUE FUND PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ COMMON STOCK--92.2% ADVERTISING--0.8% Lamar Advertising Co., Class A* .......... 12,205 $ 490,885 ----------- APPAREL--5.6% Aeropostale, Inc.* ....................... 14,400 367,776 Finish Line, Inc., (The), Class A ...... 50,800 732,536 Foot Locker, Inc. ........................ 25,300 552,552 Jones Apparel Group, Inc. ................ 16,000 450,880 Polo Ralph Lauren Corp. .................. 17,100 847,305 V. F. Corp. .............................. 6,000 355,860 ----------- 3,306,909 ----------- AUTOMOTIVE PARTS & EQUIPMENT--1.3% BorgWarner, Inc. ......................... 9,300 543,678 Lear Corp. ............................... 5,200 196,040 ----------- 739,718 ----------- BANKS - REGIONAL--1.0% UMB Financial Corp. ...................... 8,500 559,725 ----------- BROADCASTING--0.3% Hearst-Argyle Television, Inc., Class A ................................ 6,500 168,805 ----------- BUSINESS & PUBLIC SERVICES--3.2% G & K Services, Inc., Class A ............ 7,900 339,463 Manpower, Inc. ........................... 17,100 770,526 Valassis Communications, Inc.* ........... 18,900 745,227 ----------- 1,855,216 ----------- CHEMICALS - COMMODITY--0.4% Georgia Gulf Corp.* ...................... 9,100 253,890 ----------- CHEMICALS - SPECIALTY--1.3% UAP Holding Corp. ........................ 45,600 782,496 ----------- COMPUTER EQUIPMENT & SERVICES--5.4% BISYS Group, Inc., (The)* ................ 52,800 788,304 DST Systems, Inc.* ....................... 7,000 375,900 Imation Corp. ............................ 13,900 585,329 Ingram Micro, Inc., Class A* ............. 45,900 803,709 Storage Technology Corp.* ................ 17,100 631,845 ----------- 3,185,087 ----------- COMPUTER SOFTWARE--1.3% McAfee, Inc.* ............................ 15,987 490,001 Sybase, Inc.* ............................ 12,445 277,897 ----------- 767,898 ----------- CONTAINERS--1.9% Crown Holdings, Inc.* .................... 43,300 731,337 Sealed Air Corp.* ........................ 7,800 395,850 ----------- 1,127,187 ----------- DATA PROCESSING SERVICES--0.8% CSG Systems International, Inc.* ......... 23,200 473,048 ----------- Number of Shares Value --------- ------------ DISTRIBUTION--1.8% W.W. Grainger, Inc. ...................... 16,495 $ 1,060,958 ----------- ELECTRONICS--2.7% AMIS Holdings, Inc.* ..................... 16,600 198,702 Amphenol Corp., Class A .................. 7,500 318,075 Arrow Electronics, Inc.* ................. 15,700 468,174 Avnet, Inc.* ............................. 23,100 578,655 ----------- 1,563,606 ----------- ENGINEERING & CONSTRUCTION--0.5% Dycom Industries, Inc.* .................. 17,900 317,188 ----------- FINANCIAL SERVICES--4.1% A.G. Edwards, Inc. ....................... 11,400 515,394 Affiliated Managers Group, Inc.* ......... 9,450 686,165 Student Loan Corp., (The) .............. 600 135,600 TNS, Inc.* ............................... 19,000 429,020 Westcorp ................................. 10,200 629,850 ----------- 2,396,029 ----------- FOODS--3.8% Bunge Ltd. ............................... 6,200 364,064 Corn Products International, Inc. ........ 28,600 644,072 NBTY, Inc.* .............................. 22,600 494,714 Smithfield Foods, Inc.* .................. 26,400 735,240 ----------- 2,238,090 ----------- HEALTH CARE - DRUGS--1.0% Hospira, Inc.* ........................... 14,900 593,616 ----------- HEALTH CARE - SERVICES--4.3% Apria Healthcare Group, Inc.* ............ 26,405 903,843 LifePoint Hospitals, Inc.* ............... 17,600 800,448 Lincare Holdings, Inc.* .................. 6,100 258,274 Manor Care, Inc. ......................... 9,000 355,230 WellChoice, Inc.* ........................ 2,500 177,750 ----------- 2,495,545 ----------- HEALTH CARE - SUPPLIES--0.3% C.R. Bard, Inc. .......................... 2,800 180,124 ----------- INSURANCE - LIFE--1.3% Scottish Re Group Ltd. ................... 31,400 755,484 ----------- INSURANCE - OTHER--11.0% Allmerica Financial Corp.* ............... 13,170 536,151 Assurant, Inc. ........................... 10,300 384,499 Assured Guaranty Ltd. .................... 45,400 1,016,960 Conseco, Inc.* ........................... 39,600 826,848 Bristol West Holdings, Inc. .............. 37,200 649,140 Max Re Capital Ltd. ...................... 9,600 220,704 MBIA, Inc. ............................... 6,300 365,211 Platinum Underwriters Holdings Ltd .................................... 8,100 263,088 PMI Group, Inc., (The) ................... 17,800 720,188 Radian Group, Inc. ....................... 22,000 1,125,960 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 49 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS MID CAP VALUE FUND (continued) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ INSURANCE - OTHER--(CONTINUED) White Mountains Insurance Group Ltd. ............................. 155 $ 102,284 Willis Group Holdings Ltd. ............... 6,300 220,500 ----------- 6,431,533 ----------- INTERNET SERVICES--1.9% InfoSpace, Inc.* ......................... 18,800 469,248 United Online, Inc. ...................... 49,700 647,591 ----------- 1,116,839 ----------- LEISURE & LODGING--3.3% Argosy Gaming Co.* ....................... 6,400 298,624 GTECH Holdings Corp. ..................... 42,100 1,203,218 Hilton Hotels Corp. ...................... 19,500 451,815 ----------- 1,953,657 ----------- MACHINERY--1.7% Terex Corp.* ............................. 19,820 966,820 ----------- MANUFACTURING--3.6% Dover Corp. .............................. 10,300 419,210 Federal Signal Corp. ..................... 57,800 988,380 ITT Industries, Inc. ..................... 2,500 272,800 Pall Corp. ............................... 14,400 411,840 ----------- 2,092,230 ----------- MARKETING--1.4% Nu Skin Enterprises, Inc., Class A ....... 38,700 825,858 ----------- MEDIA--1.4% Media General, Inc., Class A ............. 3,600 236,844 Meredith Corp. ........................... 11,500 564,650 ----------- 801,494 ----------- OIL & GAS - EXPLORATION--2.7% Pogo Producing Co. ....................... 9,200 515,200 Vintage Petroleum, Inc. .................. 27,800 1,068,354 ----------- 1,583,554 ----------- OIL SERVICES--2.5% Diamond Offshore Drilling, Inc. .......... 10,000 590,600 ENSCO International, Inc. ................ 21,000 858,060 ----------- 1,448,660 ----------- PAPER FOREST PRODUCTS & PACKAGING--1.3% Neenah Paper, Inc. ....................... 24,200 733,260 ----------- PUBLISHING & INFORMATION SERVICES--1.4% Bowne & Co., Inc. ........................ 59,700 847,740 ----------- Number of Shares Value --------- ------------ REAL ESTATE INVESTMENT TRUST (REIT)--1.9% American Financial Realty Trust .......... 23,800 $ 337,722 Maguire Properties, Inc. ................. 10,425 304,410 Ventas, Inc. ............................. 15,925 496,064 ----------- 1,138,196 ----------- RESTAURANTS--1.1% Outback Steakhouse, Inc. ................. 15,900 661,599 ----------- RETAIL - HARD GOODS--5.9% Claire's Stores, Inc. .................... 35,900 842,932 Electronics Boutique Holdings Corp.* ................................. 5,300 339,730 Fossil, Inc.* ............................ 20,100 441,999 GameStop Corp., Class A* ................. 24,700 833,625 Michaels Stores, Inc. .................... 24,100 874,830 OfficeMax, Inc. .......................... 4,400 130,020 ----------- 3,463,136 ----------- SAVINGS & LOANS--1.3% Hudson City Bancorp, Inc. ................ 46,800 585,000 People's Bank ............................ 6,000 176,940 ----------- 761,940 ----------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--0.8% Teradyne, Inc.* .......................... 27,500 462,000 ----------- TELECOMMUNICATIONS--1.0% CenturyTel, Inc. ......................... 16,300 585,170 ----------- TELECOMMUNICATIONS EQUIPMENT--0.6% Scientific-Atlanta, Inc. ................. 9,300 355,818 ----------- TOBACCO--0.5% Loews Corp. - Carolina Group ............. 7,400 285,714 ----------- TRANSPORT - SERVICES--0.8% Laidlaw International, Inc. .............. 19,500 482,625 ----------- TRAVEL SERVICES--0.9% Sabre Holdings Corp., Class A ............ 26,900 515,942 ----------- UTILITIES - ELECTRIC--2.1% NSTAR .................................... 9,800 289,688 Sierra Pacific Resources* ................ 66,100 963,738 ----------- 1,253,426 ----------- TOTAL COMMON STOCK (Cost $43,641,724) ................... 54,078,715 ----------- INVESTMENT COMPANY--1.9% FINANCIAL SERVICES--1.9% Apollo Investment Corp. .................. 58,988 1,134,339 ----------- TOTAL INVESTMENT COMPANY (Cost $866,988) ...................... 1,134,339 ----------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 50 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS MID CAP VALUE FUND (concluded) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ SHORT-TERM INVESTMENTS--6.4% PNC Bank Money Market Deposit Account 3.130% 09/01/05 ................ 3,720,157 $ 3,720,157 ----------- TOTAL SHORT-TERM INVESTMENTS (Cost $3,720,157) .................... 3,720,157 ----------- TOTAL INVESTMENTS--100.5% (Cost $48,228,869) ....................... 58,933,211 ----------- LIABILITIES IN EXCESS OF OTHER ASSETS--(0.5)% ..................... (284,238) ----------- NET ASSETS--100.0% .......................... $58,648,973 =========== - ---------- * -- Non-income producing. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 51 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS ALL-CAP VALUE FUND PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ COMMON STOCK--95.8% AIRLINES--0.3% ExpressJet Holdings, Inc.* ............... 3,410 $ 32,429 ----------- APPAREL--5.9% Jones Apparel Group, Inc. ................ 2,555 72,000 Liz Claiborne, Inc. ...................... 2,490 102,165 Pacific Sunwear of California, Inc.* ..... 5,870 140,176 Polo Ralph Lauren Corp. .................. 1,390 68,874 Reebok International Ltd. ................ 2,555 143,846 V. F. Corp. .............................. 1,275 75,620 ----------- 602,681 ----------- CHEMICALS - SPECIALTY--1.1% Ashland, Inc. ............................ 1,360 82,674 Sigma-Aldrich Corp. ...................... 515 32,136 ----------- 114,810 ----------- COMPUTER EQUIPMENT & SERVICES--2.2% Hewlett-Packard Co. ...................... 5,605 155,595 Storage Technology Corp.* ................ 1,795 66,325 ----------- 221,920 ----------- COMPUTER SOFTWARE--1.7% Geac Computer Corp. Ltd.* ................ 3,320 33,087 Microsoft Corp. .......................... 4,950 135,630 ----------- 168,717 ----------- CONSUMER NON-CYCLICAL--0.9% Blyth, Inc. .............................. 2,030 50,446 National Presto Industries, Inc. ......... 955 42,583 ----------- 93,029 ----------- DISTRIBUTION--1.1% W.W. Grainger, Inc. ...................... 900 57,888 Watsco, Inc. ............................. 1,205 58,756 ----------- 116,644 ----------- DIVERSIFIED OPERATION--0.4% Leggett & Platt, Inc. .................... 1,655 40,068 ----------- ELECTRONIC COMPONENTS & INSTRUMENTS--0.6% Amphenol Corp., Class A .................. 940 39,865 Bel Fuse, Inc., Class B .................. 835 26,862 ----------- 66,727 ----------- FINANCE--0.8% CBRE Realty Finance, Inc. 144A*++ ........ 4,310 64,650 Peoples Choice Financial Corp. ........... 144A++ ................................. 1,640 15,990 ----------- 80,640 ----------- Number of Shares Value --------- ------------ FINANCIAL SERVICES--4.2% Countrywide Financial Corp. .............. 2,549 $ 86,131 BKF Capital Group, Inc. .................. 895 28,980 Fannie Mae ............................... 1,445 73,753 Freddie Mac .............................. 3,100 187,178 MCG Capital Corp. ........................ 455 8,290 Tac Acquisition Corp.* ................... 7,105 42,488 ----------- 426,820 ----------- FOOD & HOUSEHOLD PRODUCTS--0.6% Unilever NV- NY Shares ................... 830 57,436 ----------- FOODS--0.5% Nestle S.A. - ADR ........................ 665 46,502 ----------- HEALTH & PERSONAL CARE--0.4% Johnson & Johnson ........................ 640 40,570 ----------- HEALTH CARE - BIOTECH--0.5% Vicuron Pharmaceuticals, Inc.* ........... 1,730 49,841 ----------- HEALTH CARE - DRUGS--4.9% Bristol-Myers Squibb Co. ................. 2,195 53,712 Pfizer, Inc. ............................. 13,156 335,083 Shire Pharmaceuticals Group PLC - ADR .................................. 2,825 107,689 ----------- 496,484 ----------- HEALTH CARE - SERVICES--3.1% Laboratory Corp. of America Holdings* .............................. 600 29,592 Lincare Holdings, Inc.* .................. 2,150 91,031 Renal Care Group, Inc.* .................. 4,055 190,950 ----------- 311,573 ----------- INSURANCE - LIFE--0.9% Scottish Re Group Ltd. ................... 3,905 93,954 INSURANCE - OTHER--25.6% ACE Ltd. ................................. 7,165 318,198 Alleghany Corp.* ......................... 622 185,201 Allmerica Financial Corp.* ............... 2,610 106,253 Ambac Financial Group, Inc. .............. 735 50,406 American International Group, Inc. ................................... 1,750 103,600 Assurant, Inc. ........................... 2,440 91,085 Assured Guaranty Ltd. .................... 5,568 124,723 Everest Re Group Ltd. .................... 555 51,387 IPC Holdings Ltd. ........................ 3,150 123,763 Loews Corp. .............................. 4,010 351,637 MBIA, Inc. ............................... 5,340 309,560 Merchants Group, Inc. .................... 95 2,536 Millea Holdings, Inc. - ADR .............. 390 28,509 National Atlantic Holdings Corp., Class A* ............................... 2,315 25,442 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 52 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS ALL-CAP VALUE FUND (continued) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ INSURANCE - OTHER--(CONTINUED) PartnerRe Ltd. ........................... 925 $ 56,148 Quanta Capital Holdings Ltd.* ............ 11,910 75,152 Radian Group, Inc. ....................... 2,215 113,364 Specialty Underwriters' Alliance, Inc.* .................................. 1,825 15,038 St. Paul Travelers Cos., Inc., (The) ..... 1,345 57,848 Torchmark Corp. .......................... 575 30,326 Wesco Financial Corp. .................... 240 84,840 White Mountains Insurance Group Ltd .................................... 385 254,062 Willis Group Holdings Ltd. ............... 1,290 45,150 ----------- 2,604,228 ----------- INTERNET SERVICES, INC.--0.4% IAC/InterActiveCorp.* .................... 1,615 39,648 ----------- LEISURE & LODGING--1.4% GTECH Holdings Corp. ..................... 5,115 146,187 ----------- MANUFACTURING--2.0% Lancaster Colony Corp. ................... 1,490 68,167 Makita Corp. - ADR ....................... 4,800 95,136 Tyco International Ltd. .................. 1,320 36,736 ----------- 200,039 ----------- MARKETING--0.3% FTD Group, Inc.* ......................... 2,385 26,831 ----------- MEDIA & ENTERTAINMENT--2.0% 4Kids Entertainment, Inc.* ............... 1,120 19,286 GameStop Corp., Class B* ................. 1,194 35,987 Liberty Global, Inc., Class A* ........... 1,659 84,194 Liberty Media International, Inc., Class A* ............................... 7,424 61,694 ----------- 201,161 ----------- MEDICAL EQUIPMENT AND SUPPLIES--2.6% Becton, Dickinson and Co. ................ 1,880 98,945 C.R. Bard, Inc. .......................... 1,045 67,225 Guidant Corp. ............................ 800 56,512 STERIS Corp. ............................. 1,510 37,659 ----------- 260,341 ----------- OFFICE EQUIPMENT & SUPPLIES--0.7% OfficeMax, Inc. .......................... 2,365 69,886 ----------- OIL & GAS - EXPLORATION--8.4% Anadarko Petroleum Corp. ................. 2,325 211,273 Burlington Resources, Inc. ............... 1,525 112,530 CNX Gas Corp. 144A*++ .................... 1,315 21,040 EOG Resources, Inc. ...................... 2,095 133,724 Kerr-McGee Corp. ......................... 823 72,448 Mariner Energy, Inc. 144A* ............... 1,875 31,406 Occidental Petroleum Corp. ............... 2,900 240,787 Rosetta Resources, Inc. 144A*++ .......... 2,035 32,560 ----------- 855,768 ----------- Number of Shares Value --------- ------------ OIL & GAS - INTEGRATED MAJORS--4.0% Eni S.p.A. - ADR ......................... 705 $ 104,516 Marathon Oil Corp. ....................... 1,201 77,237 Petroleo Brasileiro S.A. - ADR ........... 2,130 133,253 Royal Dutch Shell PLC, Class A - ADR .................................... 1,420 92,243 ----------- 407,249 ----------- REAL ESTATE--0.4% Consolidated-Tomoka Land Co. ............. 585 43,875 ----------- REAL ESTATE INVESTMENT TRUST (REIT)--4.1% American Financial Realty Trust .......... 8,655 122,814 Ashford Hospitality Trust ................ 2,355 27,059 Diamondrock Hospitality Co. 144A*++ ................................ 2,070 24,716 Fieldstone Investment Corp. .............. 145 1,824 Fieldstone Investment Corp. 144A ................................... 1,175 14,781 Friedman, Billings, Ramsey Group, Inc., Class A .......................... 3,115 36,446 KKR Financial Corp. 144A++ ............... 790 18,478 Luminent Mortgage Capital, Inc. .......... 1,920 17,395 Medical Properties Trust, Inc. 144A ................................... 2,225 24,475 National Health Investors, Inc. .......... 2,075 60,113 Saxon Capital, Inc.* ..................... 755 9,566 Taberna Realty Finance Trust* 144A++ ................................. 2,970 35,640 Ventas, Inc. ............................. 854 26,602 ----------- 419,909 ----------- RETAIL - HARD GOODS--1.7% Borders Group, Inc. ...................... 2,090 47,715 Claire's Stores, Inc. .................... 4,280 100,494 Home Depot, Inc., (The) .................. 565 22,781 ----------- 170,990 ----------- SAVINGS & LOANS--0.7% Hudson City Bancorp, Inc. ................ 5,630 70,375 ----------- SERVICES - BUSINESS--2.6% Deluxe Corp. ............................. 1,760 69,943 Dun & Bradstreet Corp., (The)* ......... 1,075 68,445 Harland (John H.) Co. .................. 3,035 127,318 ----------- 265,706 ----------- TELECOMMUNICATIONS--2.8% CenturyTel, Inc. ......................... 1,290 46,311 Vodafone Group PLC - ADR* .............. 5,250 143,062 West Corp.* ............................ 2,350 91,039 ----------- 280,412 ----------- TELECOMMUNICATIONS EQUIPMENT--1.4% Motorola, Inc. ........................... 6,365 139,266 ----------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 53 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO BOSTON PARTNERS ALL-CAP VALUE FUND (concluded) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ TOBACCO--3.3% Universal Corp. .......................... 1,420 $ 59,100 UST, Inc. ................................ 6,460 274,938 ----------- 334,038 ----------- TRAVEL SERVICES--0.4% Sabre Holdings Corp., Class A ............ 2,210 42,386 ----------- UTILITIES - ELECTRIC--1.2% Korea Electric Power Corp. (KEPCO) - ADR .......................... 7,510 120,536 ----------- TOTAL COMMON STOCK (Cost $7,983,873) .................... 9,759,676 ----------- PREFERRED STOCK--1.0% FOODS--0.1% Constellation Brands, Inc. 5.75% 09/01/06 ............................... 290 11,977 ----------- INSURANCE - OTHER--0.7% Hartford Financial Services Group, Inc., (The) 7.00% 8/16/06 .............. 240 16,018 Scottish Re Group 5.875% 05/21/07 ............................... 360 10,061 UnumProvident Corp. 8.25% 5/15/06 ................................ 1,140 42,465 ----------- 68,544 ----------- OFFICE EQUIPMENT & SUPPLIES--0.2% Xerox Corp. 6.25% 07/01/06 ............... 140 16,380 ----------- TOTAL PREFERRED STOCK (Cost $81,895) ....................... 96,901 ----------- Par Value (000) ------- INVESTMENT COMPANY--0.8% Apollo Investment Corp. .................. $3,925 75,478 Morgan Stanley Asia-Pacific Fund, Inc .................................... 540 7,317 ----------- TOTAL INVESTMENT COMPANY (Cost $89,436) ....................... 82,795 ----------- Number of Shares --------- SHORT TERM INVESTMENTS--3.1% PNC Bank Money Market Deposit Account 3.130% 09/01/05 ........................ 317,164 $ 317,164 ----------- TOTAL SHORT TERM INVESTMENTS (Cost $317,164) ...................... 317,164 ----------- TOTAL INVESTMENTS--101.0% (Cost $8,472,368) ........................ 10,256,536 ----------- Number of Contracts ------------ OPTIONS WRITTEN--(0.5%) GTECH Holdings Corp. Call Options Expire 01/21/06 $23.50 ................................. (22) (11,660) MBIA, Inc. Call Options Expire 01/24/06 $50.00 ........................ (10) (10,127) Motorola, Inc. Call Options Expire 01/21/06 $15.00 ........................ (32) (22,580) Pacific Sunwear of California, Inc. Call Options Expire 06/17/06 $22.50 ................................. (25) (9,020) ----------- TOTAL OPTIONS WRITTEN (Premiums Received $(31,116) ......... (53,387) ----------- TOTAL INVESTMENTS, NET OF OPTIONS WRITTEN--100.5% (Cost $8,441,252) ........................ 10,203,149 ----------- LIABILITIES IN EXCESS OF OTHER ASSETS--(0.5)% ..................... (47,816) ----------- NET ASSETS--100.0% .......................... $10,155,333 =========== - ---------- * -- Non-income producing. ++ -- Illiquid Security. Total Market Value of illiquid securities is $213,074 and represents 2.10% of net assets as of August 31, 2005. ADR -- American Depository Receipt. 144A -- Security was purchased pursuant to Rule 144A under Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. As of August 31, 2005, these securities amounted to 2.79% of net assets. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 54 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO WPG TUDOR FUND PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ----------- COMMON STOCK--95.2% AIRLINES--1.0% Republic Airways Holdings, Inc.* ......... 39,800 $ 534,116 ----------- APPAREL--1.2% Lakeland Industries, Inc. #* ............. 41,150 638,648 ----------- AUTOMOTIVE & TRUCKS--0.2% Aftermarket Technology Corp.* ............ 7,400 127,280 ----------- BANKS - REGIONAL--10.5% AMCORE Financial, Inc. ................... 12,800 395,264 Bank Mutual Corp. ........................ 55,000 602,250 BankFinancial Corp.* ..................... 18,300 260,775 BankUnited Financial Corp., Class A ................................ 20,200 476,720 Berkshire Hills Bancorp, Inc. ............ 13,050 420,863 Commercial Capital Bancorp, Inc. ......... 22,600 405,218 First Financial Bankshares, Inc. ......... 17,000 589,050 Jefferson Bancshares, Inc. ............... 30,800 408,100 Macatawa Bank Corp. ...................... 16,099 575,539 PFF Bancorp, Inc. ........................ 19,300 573,789 SNB Bancshares, Inc.* .................... 23,420 263,475 Synergy Financial Group, Inc. ............ 44,300 542,675 ----------- 5,513,718 ----------- BROADCASTING--0.8% Westwood One, Inc. ....................... 20,600 418,798 ----------- CHEMICALS - COMMODITY--5.0% Albemarle Corp. .......................... 13,300 482,923 Hercules, Inc.* .......................... 31,800 405,450 Lubrizol Corp. (The) ..................... 7,000 289,450 Methanex Corp. ........................... 47,500 722,000 Rockwood Holdings, Inc.* ................. 23,200 450,080 UAP Holding Corp. ........................ 15,200 260,832 ----------- 2,610,735 ----------- COMPUTER EQUIPMENT & SERVICES--2.5% Lipman* .................................. 6,600 210,738 Neoware Systems, Inc. #* ................. 73,100 799,714 Tier Technologies, Inc., Class B* ........ 31,200 271,440 ----------- 1,281,892 ----------- COMPUTER SOFTWARE--0.4% Borland Software Corp.* .................. 30,600 186,966 ----------- CONSULTING SERVICES--3.6% First Consulting Group, Inc.* ............ 257,600 1,378,160 FTI Consulting, Inc.* .................... 19,900 495,510 ----------- 1,873,670 ----------- CONSUMER DURABLES--2.7% Applica, Inc.* ........................... 325,200 656,904 Design Within Reach, Inc.* ............... 63,900 736,128 ----------- 1,393,032 ----------- Number of Shares Value --------- ----------- CONSUMER PRODUCTS--1.0% Flanders Corp.* .......................... 48,903 $ 524,729 ----------- DATA PROCESSING SERVICES--1.0% MoneyGram International, Inc. ............ 25,400 527,304 ----------- DIVERSIFIED OPERATIONS--1.3% Corn Products International, Inc. ........ 30,700 691,364 ----------- ELECTRONIC COMPONENTS & INSTRUMENTS--1.4% Pemstar, Inc. #* ......................... 198,300 210,198 Tektronix, Inc. .......................... 10,600 267,862 Vishay Intertechnology, Inc.* ............ 21,600 278,640 ----------- 756,700 ----------- FINANCIAL SERVICES--2.4% Ares Capital Corp. ....................... 35,322 628,378 Gladstone Capital Corp. # ................ 15,000 352,800 Technology Investment Capital Corp ................................... 15,700 254,026 ----------- 1,235,204 ----------- FOODS--3.6% Del Monte Foods Co.* ..................... 76,400 825,884 NBTY, Inc.* .............................. 48,600 1,063,854 ----------- 1,889,738 ----------- GAMING--0.8% Alliance Gaming Corp.* ................... 18,100 217,200 Mikohn Gaming Corp.* ..................... 19,600 225,400 ----------- 442,600 ----------- GAS UTILITIES--2.2% New Jersey Resources Corp. ............... 9,600 451,008 UGI Corp. ................................ 12,000 331,800 Vectren Corp. ............................ 12,200 341,600 ----------- 1,124,408 ----------- HEALTH CARE - DRUGS--1.7% Advanced Life Sciences Holdings, Inc.* .................................. 17,900 93,796 Durect Corp. #* .......................... 32,012 190,471 Valeant Pharmaceuticals International .......................... 31,400 627,372 ----------- 911,639 ----------- HEALTH CARE - SERVICES--2.6% Air Methods Corp.* ....................... 36,900 374,535 Apria Healthcare Group, Inc.* ............ 8,600 294,378 HEALTHSOUTH Corp.* ....................... 99,400 526,820 Odyssey Healthcare, Inc.* ................ 11,000 183,700 ----------- 1,379,433 ----------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 55 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO WPG TUDOR FUND (continued) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ----------- INSURANCE - OTHER--5.4% Aspen Insurance Holdings Ltd. ............ 30,300 $ 822,645 Brooke Corp. ............................. 34,400 401,448 Max Re Capital Ltd. ...................... 22,600 519,574 National Interstate Corp.* ............... 19,300 307,063 ProAssurance Corp.* ...................... 6,150 270,908 Quanta Capital Holdings Ltd.* ............ 80,200 506,062 ----------- 2,827,700 ----------- INTERNET SERVICES--5.9% SafeNet, Inc.* ........................... 30,000 960,000 Tumbleweed Communications Corp.* ................................. 48,500 160,050 WatchGuard Technologies, Inc.* ........... 311,700 1,371,480 webMethods, Inc.* ........................ 84,300 574,083 ----------- 3,065,613 ----------- MANUFACTURING--3.7% Aaon, Inc.* .............................. 11,400 206,568 GrafTech International Ltd.* ............. 196,100 1,164,834 Olin Corp. ............................... 29,300 547,324 ----------- 1,918,726 ----------- MEDIA & ENTERTAINMENT--1.1% New Frontier Media, Inc.* ................ 78,600 570,636 ----------- METALS & MINING--3.6% Apex Silver Mines Ltd. #* ................ 15,160 198,899 Coeur d'Alene Mines Corp. * .............. 141,300 515,745 Hecla Mining Co.* ........................ 105,000 373,800 Uranium Resources, Inc.* ................. 953,350 800,814 ----------- 1,889,258 ----------- OIL & GAS - EXPLORATION--3.3% Bronco Drilling Co., Inc.* ............... 14,800 288,600 InterOil Corp. #* ........................ 19,200 456,960 Rosetta Resources, Inc. 144A*++ .......... 27,100 433,600 Warren Resources, Inc.* .................. 50,100 570,639 ----------- 1,749,799 ----------- OIL SERVICES--0.8% Newpark Resources, Inc.* ................. 47,510 422,364 ----------- PAPER FOREST PRODUCTS & PACKAGING--2.0% Glatfelter ............................... 18,300 250,893 Schweitzer-Mauduit International, Inc .................................... 33,810 778,306 ----------- 1,029,199 ----------- PUBLISHING & INFORMATION SERVICES--4.4% Banta Corp. .............................. 8,500 416,075 MDC Partners, Inc.* ...................... 204,600 1,491,534 Princeton Review, Inc. (The)* ............ 64,600 388,892 ----------- 2,296,501 ----------- Number of Shares Value --------- ----------- REAL ESTATE INVESTMENT TRUST (REIT)--7.8% BRE Properties, Inc., Class A ............ 11,400 $ 471,960 CenterPoint Properties Trust ............. 10,000 421,600 Colonial Properties Trust ................ 12,500 551,250 Deerfield Triarc Captial Corp. ........... 36,600 516,426 Education Realty Trust, Inc. ............. 23,500 433,575 Federal Realty Investment Trust .......... 8,780 543,657 KKR Financial Corp.* ..................... 16,800 392,952 MFA Mortgage Investments, Inc. ........... 19,720 132,913 Newcastle Investment Corp. ............... 21,000 619,290 ----------- 4,083,623 ----------- RETAIL--1.1% Brown Shoe Co., Inc. ..................... 8,800 315,040 Casual Male Retail Group, Inc.* .......... 34,900 248,139 ----------- 563,179 ----------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--0.8% Atmel Corp.* ............................. 112,300 231,338 Brooks Automation, Inc.* ................. 8,900 126,380 Credence Systems Corp.* .................. 6,310 55,970 ----------- 413,688 ----------- SERVICES - BUSINESS--2.8% Fortress America Acquisition Corp.* ................................. 37,000 222,000 IDT Corp., Class B* ...................... 31,750 420,053 Marlin Business Services, Inc.* .......... 36,200 832,600 ----------- 1,474,653 ----------- TELECOMMUNICATIONS EQUIPMENT--1.3% Axesstel, Inc.* .......................... 211,800 671,406 ----------- TRANSPORT - SERVICES--2.2% Excel Maritime Carriers Ltd. #* .......... 47,200 686,760 Navios Maritime Holdings, Inc.* .......... 8,800 52,404 OMI Corp. ................................ 21,900 418,947 ----------- 1,158,111 ----------- TRUCKING--0.7% Marten Transport Ltd.* ................... 14,340 352,764 ----------- UTILITIES - ELECTRIC--2.4% El Paso Electric Co.* .................... 27,400 574,304 Great Plains Energy, Inc. ................ 12,000 373,080 Hawaiian Electric Industries, Inc. ....... 12,400 328,724 ----------- 1,276,108 ----------- TOTAL COMMON STOCK (Cost $45,822,760) ................... 49,825,302 ----------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 56 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO WPG TUDOR FUND (concluded) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ----------- INVESTMENT COMPANY--0.6% DIVERSIFIED OPERATION--0.6% Gladstone Investment Corp. ............... 21,500 $ 320,565 ----------- TOTAL INVESTMENT COMPANY (Cost $322,644) ...................... 320,565 ----------- RIGHTS/WARRANTS--0.7% TRANSPORT SERVICES--0.7% Navios Maritime Holdings, Inc. $5.00 expire 12/9/08* .................. 322,850 377,734 ----------- TOTAL RIGHTS/WARRANTS (Cost $0) ............................ 377,734 ----------- SHORT TERM INVESTMENTS--6.1% Dreyfus Gov't Cash Mgmt. Fund 3.311% 09/01/05 ........................ 3,215,514 3,215,514 ----------- TOTAL SHORT TERM INVESTMENTS (Cost $3,215,514) .................... 3,215,514 ----------- TOTAL INVESTMENTS--102.6% (Cost $49,360,918) ....................... 53,739,115 ----------- LIABILITIES IN EXCESS OF OTHER ASSETS--(2.6)% ..................... (1,371,347) ----------- NET ASSETS--100.0% .......................... $52,367,768 =========== - ---------- * -- Non-income producing. ++ -- Illiquid security. Total Market Value of illiquid securities is $433,600 and represents 0.35% of net assets as of August 31, 2005. # -- Portion of security out on loan (See Note 4). 144A -- Security was purchased pursuant to Rule 144A under Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. As of August 31, 2005, these securities amounted to 0.83% of net assets. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 57 BOSTON PARTNERS FAMILY OF FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO WPG LARGE CAP GROWTH FUND PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ----------- COMMON STOCK--99.7% AEROSPACE/DEFENSE--1.7% General Dynamics Corp. ................... 3,000 $ 343,770 ----------- BROADCASTING--1.9% Walt Disney Co. (The) .................... 15,300 385,407 ----------- CHEMICALS - COMMODITY--1.7% Potash Corp. of Saskatchewan, Inc. ................................... 3,100 341,217 ----------- COMPUTER EQUIPMENT & SERVICES--9.8% Allstate Corp. (The) ..................... 5,200 292,292 Apple Computer, Inc.* .................... 7,300 342,589 BMC Software, Inc.* ...................... 16,600 332,000 Hewlett-Packard Co. ...................... 23,300 646,808 International Business Machines Corp. .................................. 5,000 403,100 ----------- 2,016,789 ----------- CONSTRUCTION & HOUSING--1.3% Centex Corp. ............................. 4,000 271,000 ----------- CONSUMER CYCLICAL SERVICES--8.1% Black & Decker Corp. (The) ............... 1,800 153,540 Coach, Inc.* ............................. 15,000 497,850 Home Depot, Inc., (The) .................. 20,300 818,496 Wal Mart Stores, Inc. .................... 4,300 193,328 ----------- 1,663,214 ----------- CONSUMER NON-CYCLICAL--4.4% Gillette Co. (The) ....................... 8,900 479,443 Pepsi Bottling Group, Inc. (The) ......... 8,800 259,424 Procter & Gamble Co., (The) .............. 3,200 177,536 ----------- 916,403 ----------- DIVERSIFIED OPERATION--1.7% General Electric Co. ..................... 10,600 356,266 ----------- ENERGY--0.7% TXU Corp. ................................ 1,500 145,530 ----------- FINANCIAL SERVICES--6.1% American Express Co. ..................... 7,900 436,396 Capital One Financial Corp. .............. 4,900 402,976 Genworth Financial, Inc., Class A ........ 5,000 160,850 Legg Mason, Inc. ......................... 2,400 250,872 ----------- 1,251,094 ----------- FOODS--4.7% Altria Group, Inc. ....................... 3,000 212,100 Hershey Co. (The) ........................ 8,700 514,083 SUPERVALU, Inc. .......................... 7,100 247,080 ----------- 973,263 ----------- Number of Shares Value --------- ----------- HEALTH CARE - SERVICES--2.1% Amgen, Inc.* ............................. 5,300 $ 423,470 ----------- HEALTH CARE - SUPPLIES--1.5% Kinetic Concepts, Inc.* .................. 5,500 301,400 ----------- HEALTHCARE FACILITIES/SUPPLIES--16.1% Gilead Sciences, Inc.* ................... 11,300 485,900 GlaxoSmithKline PLC - ADR ................ 11,100 540,792 HCA, Inc. ................................ 7,000 345,100 Hospira, Inc.* ........................... 6,200 247,008 IMS Health, Inc. ......................... 11,000 299,200 Johnson & Johnson ........................ 7,700 488,103 Pfizer, Inc. ............................. 17,100 435,537 UnitedHealth Group, Inc. ................. 9,400 484,100 ----------- 3,325,740 ----------- INSURANCE - OTHER--0.9% St. Paul Travelers Cos., Inc., (The) ..... 4,300 184,943 ----------- INTERNET SOFTWARE--1.2% Novell, Inc.* ............................ 36,500 240,170 ----------- MANUFACTURING--1.5% American Standard Companies, Inc.* .................................. 7,000 319,200 ----------- MANUFACTURING--1.8% McGraw-Hill Cos., Inc. (The) ............. 7,900 380,938 ----------- METALS--1.6% Phelps Dodge Corp. ....................... 3,100 333,343 ----------- OIL & GAS - EXPLORATION--2.1% Canadian Natural Resources ............... 8,800 433,576 OIL & GAS - REFINING & MARKETING--1.1% Marathon Oil Corp. ....................... 3,600 231,516 RESTAURANTS--1.5% Yum! Brands, Inc. ........................ 6,400 303,232 RETAIL--2.9% Best Buy Co., Inc.* ...................... 3,300 157,278 J.C. Penney Company, Inc. (Holding Co.) .......................... 9,100 442,533 ----------- 599,811 ----------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--7.5% Advanced Micro Devices, Inc.* ............ 15,300 317,781 Freescale Semiconductor, Inc., Class A* ............................... 12,900 308,052 Freescale Semiconductor, Inc., Class B* ............................... 2,225 53,578 Intel Corp. .............................. 23,800 612,136 Intersil Corp., Class A .................. 12,500 262,500 ----------- 1,554,047 ----------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 58 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO WPG LARGE CAP GROWTH FUND (concluded) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Number of Shares Value --------- ----------- SERVICES - BUSINESS--3.5% Accenture Ltd., Class A* ................. 12,000 $ 292,800 BCE, Inc. ................................ 6,800 178,160 Waters Corp.* ............................ 5,700 259,179 ----------- 730,139 ----------- TECHNOLOGY--9.7% Harris Corp. ............................. 6,200 239,382 Microsoft Corp. .......................... 27,300 748,020 Motorola, Inc. ........................... 19,600 428,848 Seagate Technology* ...................... 22,700 376,593 United Technologies Corp. ................ 4,100 205,000 ----------- 1,997,843 ----------- TRANSPORTATION - SHIPPING--2.6% Burlington Northern Santa Fe Corp. .................................. 6,100 323,422 Ryder System, Inc. ....................... 6,200 217,558 ----------- 540,980 ----------- TOTAL COMMON STOCK (Cost $17,778,368) ................... 20,564,301 ----------- TOTAL INVESTMENTS--99.7% (Cost $17,778,368) ....................... 20,564,301 ----------- OTHER ASSETS IN EXCESS OF LIABILITIES--0.3% ..................... 61,386 ----------- NET ASSETS--100.0% .......................... $20,625,687 =========== - ---------- * -- Non-income producing. ADR -- American Depository Receipt. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 59 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO WPG CORE BOND FUND PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Moody's/ S&P Par (Unaudited) (000's) Value ----------- ------- ------------- GOVERNMENT AGENCIES--45.0% FEDERAL HOME LOAN MORTGAGE CORP.--3.8% 3.350% 04/01/08 ........... Aaa/AAA $ 570 $ 560,246 3.500% 04/01/08 ........... Aaa/AAA 1,330 1,312,088 4.125% 09/01/09 ........... Aaa/AAA 635 633,920 6.500% 12/01/14 ........... Aaa/AAA 583 604,849 5.500% 09/01/19 ........... Aaa/AAA 2,892 2,955,622 7.500% 02/01/31 ........... Aaa/AAA 67 71,344 7.500% 02/01/31 ........... Aaa/AAA 28 30,215 7.500% 02/01/31 ........... Aaa/AAA 19 20,673 ------------- 6,188,957 ------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION--40.5% 2.125% 06/05/06(d) ........ Aaa/AAA 1,455 1,435,536 3.250% 08/15/08 ........... Aaa/AAA 700 684,348 9.000% 11/01/10 ........... Aaa/AAA 81 87,566 4.500% 09/15/20(c) ........ Aaa/AAA 6,105 6,053,486 5.000% 09/15/20(c) ........ Aaa/AAA 4,255 4,284,253 5.500% 07/01/34(d) ........ Aaa/AAA 4,619 4,668,259 5.000% 09/15/35(c) ........ Aaa/AAA 16,050 15,939,656 5.500% 09/15/35(c) ........ Aaa/AAA 11,170 11,281,700 6.000% 09/15/35(c) ........ Aaa/AAA 20,565 21,040,566 ------------- 65,475,370 ------------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--0.7% 7.500% 09/15/07 ........... Aaa/AAA 93 98,680 6.500% 02/15/24 ........... Aaa/AAA 292 304,867 6.500% 04/15/24 ........... Aaa/AAA 173 180,171 6.500% 10/15/24 ........... Aaa/AAA 470 490,340 ------------- 1,074,058 ------------- TOTAL GOVERNMENT AGENCIES (Cost $72,173,461) ............. 72,738,385 ------------- ASSET BACKED SECURITIES--10.0% BANKS - MAJOR--0.4% First Union-Lehman Brothers-Bank of America Series 1998-C2 Class A2 6.560% 11/18/35 ........ Aaa/AAA 638 667,166 ------------- CREDIT CARDS--3.3% Citibank Credit Card Issuance Trust Series 2003-A11 Class A11 3.650% 10/15/09(d) ..... Aaa/AAA 1,200 1,200,791 Citibank Credit Card Issuance Trust Series 2003-A3 Class A3 3.100% 03/10/10(d) ..... Aaa/AAA 1,750 1,704,231 Citibank Credit Card Issuance Trust Series 2003-A6 Class A6 2.900% 05/17/10(d) ..... Aaa/AAA 1,000 967,188 Citibank Credit Card Issuance Trust Series 2003-A7 Class A7 4.150% 07/07/17(d) ..... Aaa/AAA 1,000 970,313 Moody's/ S&P Par (Unaudited) (000's) Value ----------- ------- ------------- Fleet Credit Card Master Trust II Series 2002-C Class A 2.750% 04/15/08(d) ..... Aaa/AAA $ 500 $ 499,248 ------------- 5,341,771 ------------- FINANCE--0.3% BMW Vehicle Owner Trust Series 2003-A Class A4 2.530% 02/25/08(d) ..... Aaa/AAA 500 495,006 ------------- MORTGAGE BACKED SECURITIES--6 0% Aames Mortgage Investment Trust 3.690% 10/25/35 ........ Aaa/AAA 1,895 1,895,000 AEGIS 2005-4 3.780% 10/25/35(a) ..... Aaa/AAA 803 803,000 Banc Of America Commericial Mortgage Inc. Series 2004-4 ClassA6 4.877% 07/10/42(e) ..... Aaa/AAA 1,920 1,950,947 Commerical Mortgage Asset Trust Series 1999-C2 Class A2 7.546% 11/17/32 ........ Aaa/AAA 325 358,393 Greenpoint Mortgage Funding Trust 3.780% 07/25/30 ........ Aaa/AAA 1,600 1,600,000 Gsamp Trust 2005-HE4 3.761% 07/25/45(a) ..... Aaa/AAA 760 760,000 Long Beach Mortgage Loan Trust 3.750% 09/25/35 ........ Aaa/AAA 1,400 1,400,000 Specialty Underwriting Residential Finance 3.730% 06/25/36 ........ Aaa/AAA 910 910,000 ------------- 9,677,340 ------------- TOTAL ASSET BACKED SECURITIES (Cost $16,303,380) ............. 16,181,283 ------------- CORPORATE BONDS--13.2% AGRICULTURE--0.4% Yara International ASA 5.250% 12/15/14 ........ Baa2/BBB 700 709,330 ------------- ALCOHOL--0.0% Diageo Capital PLC 3.375% 03/20/08 ........ A2/A 95 93,078 ------------- BANKING--4.9% Bank of America Corp. 5.875% 02/15/09 ........ Aa2/AA- 1,625 1,706,562 Barclays Bank PLC 6.278% 12/15/49(d) ..... Aa3e/A+ 1,065 1,092,009 Credit Suisse First Boston USA Global Senior Note 5.125% 08/15/15 ........ Aa3e/A+ 730 742,968 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 60 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO WPG CORE BOND FUND (continued) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Moody's/ S&P Par (Unaudited) (000's) Value ----------- ------- ------------- Credit Suisse First Boston USA Inc. 6.125% 11/15/11 ........ Aa3/A+ $ 515 $ 557,216 Dresdner Funding Trust I 8.151% 06/30/31 ........ A3/BBB+ 600 767,412 HSBC Bank Usa 5.625% 08/15/35 ........ Aa3e/A+ 1,250 1,289,591 JP Morgan Chase & Co. 7.000% 11/15/09 ........ A1/A 465 511,595 JP Morgan Chase Capital XVII 5.850% 08/01/35 ........ A1e/A- 400 405,137 RBS Capital Trust I 4.709% 12/29/49(a) (d) . A1/A 570 560,891 Skandinaviska Enskilda 5.471% 03/29/49(a) (b) . A2/BBB+ 330 338,227 ------------- 7,971,608 ------------- CHEMICALS - SPECIALTY--0.4% Methanex Corp. Senior Note 6.000% 08/15/15 ........ Bbb 690 692,684 ------------- ELECTRIC--0.6% Dominion Resources, Inc. 6.750% 12/15/32 ........ Baa1/BBB+ 245 283,028 Pepco Holdings, Inc. 7.450% 08/15/32 ........ Baa2/BBB 540 664,184 ------------- 947,212 ------------- FINANCE--1.1% American General Finance 4.875% 05/15/10 ........ A1/A+ 660 668,391 Countrywide Home Loan 2.875% 02/15/07 ........ A3/A 125 122,531 Goldman Sachs Capital I 6.345% 02/15/34 ........ A1/A- 365 394,471 Resona Preferred Global Securities 7.191% 07/30/15(a) (b) . Baa3/BBB- 550 582,032 ------------- 1,767,425 ------------- FINANCIAL SERVICES--0.4% Amvescap PLC 5.375% 12/15/14 ........ A2/BBB+ 200 202,089 Radian Group, Inc. 5.375% 06/15/15 ........ A2/A 385 386,972 ------------- 589,061 ------------- HOME BUILDERS--1.0% Pulte Homes, Inc. ......... 6.375% 05/15/33 ........ Baa3/BBB- 265 263,836 Pulte Homes, Inc. 6.000% 02/15/35 ........ Baa3/BBB- 505 477,715 Ryland Group 5.375% 05/15/12 ........ Baa3/BBB- 890 893,099 ------------- 1,634,650 ------------- Moody's/ S&P Par (Unaudited) (000's) Value ----------- ------- ------------- INSURANCE - OTHER--1.0% Cincinnati Financial Corp. Senior Note 6.125% 11/01/34 ........ A2/A $ 860 $ 938,885 Phoenix Life Insurance 7.150% 12/15/34(b) ..... Baa2/BBB+ 620 650,571 ------------- 1,589,456 ------------- LIFE & HEALTH INSURANCE--0.2% Amerus Group Co. Senior Note 5.950% 08/15/15 ........ Baa3/BBB+ 320 327,055 ------------- METALS--0.4% Noranda, Inc. 6.200% 06/15/35 ........ Baa3/BBB- 595 607,266 ------------- OIL & GAS - EXPLORATION--0.2% Pemex Project Funding Master Trust 6.625% 06/15/35(b) ..... Baa1e /BBB 270 267,975 ------------- REAL ESTATE--0.7% First Industrial LP 7.600% 07/15/28 ........ Baa2/BBB 550 652,660 Liberty Property LP 5.125% 03/02/15 ........ Baa2/BBB 475 473,750 ------------- 1,126,410 ------------- REAL ESTATE INVESTMENT TRUST (REIT)--0.5% Brandywine Operating Partners 5.400% 11/01/14 ........ Baa3/BBB- 265 267,678 Brandywine Realty Trust 4.500% 11/01/09 ........ Baa3/BBB- 525 515,776 ------------- 783,454 ------------- REINSURANCE--0.4% Axis Capital Holdings Ltd 5.750% 12/01/14 ........ Baa1/BBB+ 645 665,590 ------------- SPECIAL PURPOSE ENTITY--0.2% Glencore Funding LLC 6.000% 04/15/14(b) ..... Baa3/BBB- 430 411,061 ------------- TELEPHONE - INTEGRATED--0.8% GTE Corp. 6.940% 04/15/28 ........ A3/A+ 685 786,500 Telecom Italia Capital 4.950% 09/30/14(b) ..... Baa2/BBB+ 255 253,209 Verizon Virginia, Inc. 4.625% 03/15/13 ........ A1/A+ 200 197,349 ------------- 1,237,058 ------------- TOTAL CORPORATE BONDS (Cost $21,037,599) ............. 21,420,373 ------------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 61 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROBECO WPG CORE BOND FUND (concluded) PORTFOLIO OF INVESTMENTS - -------------------------------------------------------------------------------- Moody's/ S&P Par (Unaudited) (000's) Value ----------- ------- ------------- U.S. TREASURY OBLIGATIONS--55 0% U.S. TREASURY BONDS--19.8% 6.250% 08/15/23(f) ..... Aaa/AAA $ 3,380 $ 4,198,051 5.375% 02/15/31 ........ Aaa/AAA 1,045 1,225,181 Strip 0.000% 11/15/21(f) ..... Aaa/AAA 50,863 25,123,779 0.000% 11/15/27(f) ..... Aaa/AAA 3,881 1,486,113 ------------- 32,033,124 ------------- U.S. TREASURY NOTES--35.2% 5.750% 11/15/05 ........ Aaa/AAA 580 582,515 2.375% 08/15/06 ........ Aaa/AAA 700 690,785 3.625% 06/30/07# ....... Aaa/AAA 4,060 4,044,458 3.875% 07/31/07 ........ Aaa/AAA 385 385,226 2.625% 05/15/08# ....... Aaa/AAA 7,385 7,158,546 3.750% 05/15/08# ....... Aaa/AAA 20,140 20,090,436 3.375% 12/15/08# ....... Aaa/AAA 2,975 2,932,118 3.125% 04/15/09 ........ Aaa/AAA 4,835 4,717,336 4.125% 05/15/15# ....... Aaa/AAA 1,515 1,524,764 4.250% 08/15/15 ........ Aaa/AAA 7,925 8,074,830 Inflationary Index 3.875% 01/15/09 ........ Aaa/AAA 1,310 1,689,306 3.375% 04/15/32 ........ Aaa/AAA 3,425 5,052,008 ------------- 56,942,328 ------------- TOTAL U.S. TREASURY OBLIGATIONS (Cost $88,846,681) ............. 88,975,452 ------------- SHORT TERM INVESTMENTS--38.5% ASSET BACKED SECURITIES--1.0% CREDIT CARDS--1.0% American Express Master Trust Series 2000-5 Class A 3.711% 04/15/08(a) (d) Aaa/AAA 340 340,004 Bank One Issuance Trust Series 2002-A4 Class A4 2.940% 06/16/08(a) (d) Aaa/AAA 300 299,636 Citibank Credit Card Master Trust Series 2002-A5 Class A5 3.450% 09/17/07(a) (d) Aaa/AAA 450 449,923 First USA Credit Card Master Trust Series 2001-3 Class A 3.730% 11/19/08(a) (d) Aaa/AAA 590 590,466 ------------- 1,680,029 ------------- Moody's/ S&P Par (Unaudited) (000's) Value ----------- ------- ------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION--33.1% 3.250% 09/14/05 ........ Aaa/AAA $51,345 $ 51,284,741 3.370% 09/14/05 ........ Aaa/AAA 1,730 1,727,901 5.500% 05/27/15 ........ Aaa/AAA 520 513,995 ------------- 53,526,637 ------------- Shares ------ SHORT-TERM INVESTMENTS--4.4% Dreyfus Government Cash Management 3.311% 09/01/05 ........ 7,097,022 7,097,022 ------------- TOTAL SHORT TERM INVESTMENTS (Cost $62,311,170) ............. 62,303,688 ------------- TOTAL INVESTMENTS--161.7% (Cost $260,672,291) ................ 261,619,181 ------------- LIABILITIES IN EXCESS OF OTHER ASSETS--(61.7)% .............. (99,858,183) ------------- NET ASSETS--100.0% .................... $ 161,760,998 ============= # Portion of security out on loan (See Note 4). (a) Adjustable rate security. (b) 144A Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. As of August 31, 2005, these securities amounted to 1.34% of net assets. (c) When issued security. (d) Callable security. (e) Fitch rating. (f) Collateral acquired in conjunction with securities on loan. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 62 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES - --------------------------------------------------------------------------------
BP SMALL CAP BP LONG/SHORT BP LARGE CAP BP MID CAP BP ALL-CAP VALUE FUND II EQUITY FUND VALUE FUND VALUE FUND VALUE FUND ------------- ------------- ------------ ----------- ----------- ASSETS Investments, at fair value (cost--$334,394,951, $120,248,605, $35,294,540, $48,228,869 and $8,472,368 respectively) ........................ $416,955,762 $132,573,416 $40,675,995 $58,933,211 $10,256,536 Cash .............................................. 1 4,170 -- 1 -- Receivable from Investment Advisor ................ 49,398 -- -- -- 9,044 Deposits with brokers for securities sold short ... -- 57,551,830 -- -- -- Receivable for investments sold ................... 562,988 3,623,233 173,301 -- -- Receivable for Fund shares sold ................... 32,792 111,061 14,789 114,048 1,535 Dividends and interest receivable ................. 297,005 127,744 70,719 50,405 11,892 Prepaid expenses and other assets ................. 26,708 18,269 13,471 15,863 14,648 ------------ ------------ ----------- ----------- ----------- Total assets .................................... 417,924,654 194,009,723 40,948,275 59,113,528 10,293,655 ------------ ------------ ----------- ----------- ----------- LIABILITIES Payable for investments purchased ................. 2,560,808 2,121,694 279,671 383,461 39,169 Securities sold-short, at fair value (proceeds $64,938,152) .......................... -- 67,048,174 -- -- -- Options written, at fair value (premiums received $31,116) ............................... -- -- -- -- 53,387 Payable to Investment Adviser ..................... 441,041 223,783 14,462 28,155 -- Payable for Fund shares redeemed .................. 1,885,801 34,784 608,961 -- 10,000 Other accrued expenses and liabilities ............ 245,645 102,637 46,341 52,939 35,766 Payable for dividends on securities sold-short .... -- 14,538 -- -- -- ------------ ------------ ----------- ----------- ----------- Total liabilities ............................... 5,133,295 69,545,610 949,435 464,555 138,322 ------------ ------------ ----------- ----------- ----------- NET ASSETS Capital stock, $0.001 par value ................... 16,965 6,970 2,654 4,239 655 Paid-in capital ................................... 285,924,433 108,893,222 29,718,285 42,638,379 7,741,815 Undistributed net investment income -- -- 325,835 -- 15,059 Accumulated net realized gain/(loss) from investments and foreign exchange transactions, if any .......................................... 44,289,150 5,349,132 4,570,611 5,302,013 635,907 Net unrealized appreciation on investments and foreign exchange transactions, if any ........... 82,560,811 12,324,811 5,381,455 10,704,342 1,761,897 Net unrealized appreciation on investments sold short ...................................... -- (2,110,022) -- -- -- ------------ ------------ ----------- ----------- ----------- Net assets ........................................ $412,791,359 $124,464,113 $39,998,840 $58,648,973 $10,155,333 ============ ============ =========== =========== =========== INSTITUTIONAL CLASS Net assets ........................................ $138,143,106 $ 99,748,437 $27,171,930 $54,186,772 $ 7,315,232 ------------ ------------ ----------- ----------- ----------- Shares outstanding ................................ 5,582,002 5,576,768 1,811,086 3,863,728 470,852 ------------ ------------ ----------- ----------- ----------- Net asset value, offering and redemption price per share ................................. $24.75 $17.89 $15.00 $14.02 $15.54 ============ ============ =========== =========== =========== INVESTOR CLASS Net assets ........................................ $274,648,253 $ 24,715,676 $12,826,910 $ 4,462,201 $ 2,840,101 ------------ ------------ ----------- ----------- ----------- Shares outstanding ................................ 11,278,427 1,393,189 842,549 323,245 183,295 ------------ ------------ ----------- ----------- ----------- Net asset value, offering and redemption price per share ................................. $24.35 $17.74 $15.22 $13.80 $15.49 ============ ============ =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 63 ROBECO INVESTMENT FUNDS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES - --------------------------------------------------------------------------------
WPG WPG LARGE CAP WPG TUDOR FUND GROWTH FUND CORE BOND FUND ----------- ----------- -------------- ASSETS Investments, at value (cost--$49,360,918, $17,778,368, and $260,672,291, respectively)(1) .. $53,739,115 $20,564,301 $261,619,181 Cash ............................................... -- 66,634 -- Receivable for investment securities sold .......... 1,341,462 -- 13,263,075 Dividends and interest receivable .................. 40,987 31,179 916,192 Prepaid expenses and other assets .................. 10,798 8,428 11,235 ----------- ----------- ------------ Total assets ..................................... 55,132,362 20,670,542 275,809,683 ----------- ----------- ------------ LIABILITIES Payable for investments purchased .................. 2,574,188 -- 82,926,464 Payable upon return of securities loaned (Note 4) .. -- -- 30,817,332 Payable to Investment Adviser ...................... 40,278 1,615 17,780 Payable to Custodian ............................... 89,816 -- -- Payable for Fund shares redeemed ................... 4,960 -- 218,715 Payable for distribution ........................... -- -- 14,240 Other accrued expenses and liabilities ............. 55,352 43,240 54,154 ----------- ----------- ------------ Total liabilities ................................ 2,764,594 44,855 114,048,685 ----------- ----------- ------------ NET ASSETS Capital stock, $0.33 1/3, $1.00 and $0.001 par value, respectively .............................. 1,002,251 883,005 14,916 Paid-in capital .................................... 42,901,455 15,006,626 163,681,657 Undistributed net investment income/(accumulated loss) ............................................ -- -- (8,966) Accumulated net realized gain/(loss) from investments and foreign exchange transactions, if any ........................................... 4,085,865 1,950,123 (2,873,499) Net unrealized appreciation on investments and foreign exchange transactions, if any ............ 4,378,197 2,785,933 946,890 ----------- ----------- ------------ Net assets ......................................... $52,367,768 $20,625,687 $161,760,998 =========== =========== ============ INSTITUTIONAL CLASS Net assets ......................................... $52,367,768 $20,625,687 $161,760,998 ----------- ----------- ------------ Shares outstanding. ................................ 3,006,756 883,005 14,915,965 ----------- ----------- ------------ Net asset value, offering and redemption price per share. ................................. $17.42 $23.36 $10.84 =========== =========== ============ - ---------- 1 Includes value of securities on loan as of August 31, 2005 of $2,590,318 and $29,799,621 for the WPG Tudor Fund and WPG Core Bond Fund, respectively.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 64 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS FOR THE YEAR ENDED AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS - --------------------------------------------------------------------------------
BP SMALL CAP BP LONG/SHORT BP LARGE CAP BP MID CAP BP ALL-CAP VALUE FUND II EQUITY FUND VALUE FUND VALUE FUND VALUE FUND ----------- ---------- ---------- ----------- --------- INVESTMENT INCOME Dividends(1) ................................... $ 4,757,565 $ 1,051,230 $ 761,194 $ 498,721 $ 139,292 Interest ....................................... 272,979 207,471 25,493 45,729 8,860 ----------- ----------- ----------- ----------- ---------- 5,030,544 1,258,701 786,687 544,450 148,152 ----------- ----------- ----------- ----------- ---------- EXPENSES Advisory fees .................................. 5,553,173 2,170,944 325,038 421,550 83,834 Administration fees and expenses ............... 536,990 138,241 82,931 85,032 78,536 Administrative services fees ................... 43,032 9,355 4,197 5,103 812 Transfer agent fees and expenses ............... 190,325 91,230 75,322 76,908 75,192 Custodian fees and expenses .................... 69,242 43,033 20,518 17,646 26,120 Printing ....................................... 146,850 34,623 6,300 8,009 8,405 Federal and state registration fees ............ 56,693 28,805 24,865 25,604 23,805 Audit and legal fees ........................... 125,575 32,226 21,918 26,077 14,003 Distribution fees .............................. 762,236 47,442 27,425 8,498 4,154 Directors' fees and expenses ................... 87,071 23,821 19,823 20,268 12,688 Insurance ...................................... 34,518 5,599 3,443 3,697 457 Dividend expense on securities sold short ...... -- 200,489 -- -- -- Interest expense ............................... -- 403,477 -- -- -- Other .......................................... 1,413 913 1,330 675 1,215 ----------- ----------- ----------- ----------- ---------- Total expenses before waivers and reimbursements ............................. 7,607,118 3,230,198 613,110 699,067 329,221 Less: waivers and reimbursements ............. (33,847) (166,629) (152,258) (163,631) (220,274) ----------- ----------- ----------- ----------- ---------- Total expenses after waivers and reimbursements ............................. 7,573,271 3,063,569 460,852 535,436 108,947 ----------- ----------- ----------- ----------- ---------- Net investment income/(loss) ................... (2,542,727) (1,804,868) 325,835 9,014 39,205 ----------- ----------- ----------- ----------- ---------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS Net realized gain/(loss) from: Investments .................................. 60,395,040 12,194,263 9,009,617(2) 6,790,336 667,012 Investments sold short ....................... -- 3,068,445 -- -- -- Foreign currency related transactions ........ -- -- -- -- -- Net change in unrealized appreciation/ (depreciation) on investments ................ 32,864,575 4,977,472 (1,228,931) 4,972,704 906,034 ----------- ----------- ----------- ----------- ---------- Net realized and unrealized gain/(loss) from investments .................................. 93,259,615 20,240,180 7,780,686 11,763,040 1,573,046 ----------- ----------- ----------- ----------- ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................... $90,716,888 $18,435,312 $ 8,106,521 $11,772,054 $1,612,251 =========== =========== =========== =========== ========== - ---------- 1 Net of foreign taxes of $9,490, $4,410, $8,576, $0 and $4,745 for the Small Cap Value Fund II, Long/Short Equity Fund, Large Cap Value Fund, Mid Cap Value Fund and All-Cap Value Fund, respectively. 2 Includes realized gains of $1,185,294 as a result of an in-kind redemption (see note 9).
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. ANNUAL REPORT 2005 | 65 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS - --------------------------------------------------------------------------------
WPG WPG WPG LARGE CAP CORE BOND TUDOR FUND GROWTH FUND FUND ------------------------ -------------------------- ------------------------- 1/1/05- 1/1/04- 1/1/05- 1/1/04- 1/1/05- 1/1/04- 8/31/05 12/31/04 8/31/05 12/31/04 8/31/05 12/31/04 ---------- ----------- ----------- ----------- ---------- ----------- INVESTMENT INCOME Dividends(1) ............................... $ 428,647 $ 562,399 $ 144,381 $ 596,407 $ -- $ -- Interest ................................... 114 19,578 -- -- 4,019,780 5,181,275 Income from securities loaned net -- Note 4 ................................... 6,871 10,919 -- -- 17,239 23,887 ---------- ----------- ----------- ----------- ---------- ----------- 435,632 592,896 144,381 596,407 4,037,019 5,205,162 ---------- ----------- ----------- ----------- ---------- ----------- EXPENSES Advisory fees .............................. 321,986 531,807 110,768 335,674 460,221 702,806 Administration fees and expenses ........... 68,049 61,469 65,155 52,525 144,539 -- Fund Accounting fees and expenses .......... -- 48,919 -- 43,315 -- 117,879 Administrative services fees ............... 1,666 -- 1,667 -- 1,667 -- Transfer agent fees and expenses ........... 85,870 102,847 59,168 81,323 33,787 55,041 Custodian fees and expenses ................ 13,913 21,741 15,485 14,592 30,106 34,414 Printing ................................... 10,420 10,695 10,533 8,001 7,010 5,694 Federal and state registration fees ........ 7,349 21,793 8,741 23,187 7,398 18,845 Audit and legal fees ....................... 15,218 66,949 10,642 58,371 39,664 115,776 Distribution fees .......................... 7,716 4,660 2,588 4,418 1,134 1,371 Trustee fees and expenses .................. 12,432 17,811 6,609 17,601 12,380 21,024 Directors and Officer's fees and expenses ................................. 9,347 3,927 7,472 3,927 14,717 3,927 Insurance .................................. 3,579 11,051 3,320 9,896 8,496 24,464 Other ...................................... 3,984 14,789 4,485 15,123 2,467 16,052 ---------- ----------- ----------- ----------- ---------- ----------- Total expenses before waivers, reimbursements and fees payed indirectly .............. 561,529 918,458 306,633 667,953 763,586 1,117,293 Less: waivers and reimbursements ......... -- -- (99,468) (42,989) (318,082) (441,413) Less: fees paid indirectly -- Note 6 ..... (240) (3,567) (353) (628) (5,684) (4,303) ---------- ----------- ----------- ----------- ---------- ----------- Total expenses after waivers, reimbursements and fees paid indirectly ............... 561,289 914,891 206,812 624,336 439,820 671,577 ---------- ----------- ----------- ----------- ---------- ----------- Net investment income/(loss) ............. (125,657) (321,995) (62,431) (27,929) 3,597,199 4,533,585 ---------- ----------- ----------- ----------- ---------- ----------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS Net realized gain/(loss) from: Investments .............................. 3,615,810 8,271,211 1,419,150 4,122,924 441,009 3,861,876 Net change in unrealized appreciation/ (depreciation) on investments ............ (4,058,296) 2,202,592 (1,322,168) (4,019,027) 260,838 (1,049,105) ---------- ----------- ----------- ----------- ---------- ----------- Net realized and unrealized gain from investments .............................. (442,486) 10,473,803 96,982 103,897 701,847 2,812,771 ---------- ----------- ----------- ----------- ---------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................... $ (568,143) $10,151,808 $ 34,551 $ 75,968 $4,299,046 $ 7,346,356 ========== =========== =========== =========== ========== =========== - ---------- 1 Net of foreign taxes of $418 for the period ended August 31, 2005 for the WPG Large Cap Growth Fund and $996 for the year ended December 31, 2004 for the WPG Tudor Fund.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 66 | ANNUAL REPORT 2005 [THIS PAGE INTENTIONALLY LEFT BLANK] ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
BP SMALL CAP VALUE FUND II BP LONG/SHORT EQUITY FUND ------------------------------- -------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 AUGUST 31, 2005 AUGUST 31, 2004 --------------- --------------- --------------- --------------- INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income/(loss) .......................... $ (2,542,727) $ (3,328,246) $ (1,804,868) $(1,665,932) Net realized gain/(loss) from investments and foreign currency related transactions ............... 60,395,040 52,836,308 15,262,708 5,205,893 Net change in unrealized appreciation/(depreciation) from investments and foreign currency related transactions ........................................ 32,864,575 3,428,711 4,977,472 (1,907,109) ------------ ------------ ------------ ----------- Net increase/(decrease) in net assets resulting from operations .......................................... 90,716,888 52,936,773 18,435,312 1,632,852 ------------ ------------ ------------ ----------- LESS DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Institutional shares ............ -- -- -- -- Net investment income Investor shares ................. -- -- -- -- Net realized capital gains Institutional shares ....... (16,833,864) (1,196,652) -- -- Net realized capital gains Investor shares ............ (40,433,524) (2,970,276) -- -- ------------ ------------ ------------ ----------- Total dividends and distributions to shareholders ..... (57,267,388) (4,166,928) -- -- ------------ ------------ ------------ ----------- INCREASE/(DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 7) ................. (81,287,042) 33,882,663 33,413,538 (1,749,267) ------------ ------------ ------------ ----------- Total increase/(decrease) in net assets ............... (47,837,542) 82,652,508 51,848,850 (116,415) ------------ ------------ ------------ ----------- NET ASSETS Beginning of period ................................... 460,628,901 377,976,393 72,615,263 72,731,678 ------------ ------------ ------------ ----------- End of period* ........................................ $412,791,359 $460,628,901 $124,464,113 $72,615,263 ============ ============ ============ =========== BP LARGE CAP VALUE FUND BP MID CAP VALUE FUND -------------------------------- ---------------------- --------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 AUGUST 31, 2005 AUGUST 31, 2004 --------------- --------------- --------------- --------------- INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income/(loss) .......................... $ 325,835 $ 355,717 $ 9,014 $ 30,376 Net realized gain/(loss) from investments and foreign currency related transactions ............... 9,009,617(1) 4,311,506 6,790,336 10,307,118 Net change in unrealized appreciation/(depreciation) from investments and foreign currency related transactions ........................................ (1,228,931) 4,174,456 4,972,704 (2,720,095) ------------ ----------- ----------- ------------ Net increase/(decrease) in net assets resulting from operations .......................................... 8,106,521 8,841,679 11,772,054 7,617,399 ------------ ----------- ----------- ------------ LESS DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Institutional shares ............ (298,564) (415,914) (53,180) (282,692) Net investment income Investor shares ................. (57,149) (40,176) -- (10,717) Net realized capital gains Institutional shares ....... -- -- (7,602,216) -- Net realized capital gains Investor shares ............ -- -- (520,862) -- ------------ ----------- ----------- ------------ Total dividends and distributions to shareholders ..... (355,713) (456,090) (8,176,258) (293,409) ------------ ----------- ----------- ------------ INCREASE/(DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 7) ................. (17,930,254) (7,045,262) 9,994,214 (22,476,157) ------------ ----------- ----------- ------------ Total increase/(decrease) in net assets ............... (10,179,446) 1,340,327 13,590,010 (15,152,167) ------------ ----------- ----------- ------------ NET ASSETS Beginning of period ................................... 50,178,286 48,837,959 45,058,963 60,211,130 ------------ ----------- ----------- ------------ End of period* ........................................ $ 39,998,840 $50,178,286 $58,648,973 $ 45,058,963 ============ =========== =========== ============ BP ALL-CAP VALUE FUND --------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 --------------- --------------- INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income/(loss) .......................... $ 39,205 $ 21,492 Net realized gain/(loss) from investments and foreign currency related transactions ............... 667,012 315,617 Net change in unrealized appreciation/(depreciation) from investments and foreign currency related transactions ........................................ 906,034 461,867 ----------- ---------- Net increase/(decrease) in net assets resulting from operations .......................................... 1,612,251 798,976 ----------- ---------- LESS DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Institutional shares ............ (22,144) (20,303) Net investment income Investor shares ................. (2,806) (385) Net realized capital gains Institutional shares ....... (254,040) -- Net realized capital gains Investor shares ............ (50,080) -- ----------- ---------- Total dividends and distributions to shareholders ..... (329,070) (20,688) ----------- ---------- INCREASE/(DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 7) ................. 3,045,417 2,052,711 ----------- ---------- Total increase/(decrease) in net assets ............... 4,328,598 2,830,999 ----------- ---------- NET ASSETS Beginning of period ................................... 5,826,735 2,995,736 ----------- ---------- End of period* ........................................ $10,155,333 $5,826,735 =========== ========== *Includes undistributed net investment income/(loss) as follows: FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 --------------- --------------- BP Small Cap Value Fund II ............................ $ (--) $ -- BP Long/Short Equity Fund ............................. -- -- BP Large Cap Value Fund ............................... 325,835 355,715 BP Mid Cap Value Fund Fund ............................ -- 30,352 BP All-Cap Value Fund ................................. 15,059 9,757 - ---------- 1 Includes realized gains of $1,185,294 as a result of an in-kind redemption (see note 9).
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 68 and 69 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS (continued) - --------------------------------------------------------------------------------
WPG TUDOR FUND ------------------------------------------------------------- FOR THE PERIOD FOR THE FOR THE JANUARY 1, 2005 TO YEAR ENDED YEAR ENDED AUGUST 31, 2005 DECEMBER 31, 2004 DECEMBER 31, 2003 ------------------- ----------------- ----------------- INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income/(loss) .................................. $ (125,657) $ (321,995) $ (431,704) Net realized gain/(loss) from investments and foreign exchange transactions, if any ....................... 3,615,810 8,271,211 15,641,291 Net change in unrealized appreciation/(depreciation) from investments ................................................. (4,058,296) 2,202,592 4,672,884 ----------- ----------- ----------- Net increase/(decrease) in net assets resulting from operations .................................................. (568,143) 10,151,808 19,882,471 ----------- ----------- ----------- LESS DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Institutional shares .................... -- -- -- Net realized capital gains Institutional shares ............... -- (5,773,811) -- ----------- ----------- ----------- Total dividends and distributions to shareholders ............. -- (5,773,811) -- ----------- ----------- ----------- INCREASE/(DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 8) ......................... (4,851,034) (4,872,647) (9,306,237) ----------- ----------- ----------- Total increase/(decrease) in net assets ....................... (5,419,177) (494,650) 10,576,234 ----------- ----------- ----------- NET ASSETS Beginning of period ........................................... 57,786,945 58,281,595 47,705,361 ----------- ----------- ----------- End of period* ................................................ $52,367,768 $57,786,945 $58,281,595 =========== =========== =========== WPG LARGE CAP GROWTH FUND ----------------------------------------------------------- FOR THE PERIOD FOR THE FOR THE JANUARY 1, 2005 TO YEAR ENDED YEAR ENDED AUGUST 31, 2005 DECEMBER 31, 2004 DECEMBER 31, 2003 ------------------ ----------------- ----------------- INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income/(loss) .................................. $ (62,431) $ (27,929) $ (245,554) Net realized gain/(loss) from investments and foreign exchange transactions, if any ....................... 1,419,150 4,122,924 3,459,056 Net change in unrealized appreciation/(depreciation) from investments ................................................. (1,322,168) (4,018,355) 9,881,924 ----------- ------------ ----------- Net increase/(decrease) in net assets resulting from operations .................................................. 34,551 76,640 13,095,426 ----------- ------------ ----------- LESS DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Institutional shares .................... -- -- -- Net realized capital gains Institutional shares ............... -- (3,205,905) -- ----------- ------------ ----------- Total dividends and distributions to shareholders ............. -- (3,205,905) -- ----------- ------------ ----------- INCREASE/(DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 8) ......................... (5,630,987) (23,003,796) (4,152,135) ----------- ------------ ----------- Total increase/(decrease) in net assets ....................... (5,596,436) (26,133,061) 8,943,291 ----------- ------------ ----------- NET ASSETS Beginning of period ........................................... 26,222,123 52,355,184 43,411,893 ----------- ------------ ----------- End of period* ................................................ $20,625,687 $ 26,222,123 $52,355,184 =========== ============ =========== WPG CORE BOND FUND ---------------------------------------------------------- FOR THE PERIOD FOR THE FOR THE ANUARY 1, 2005 TO YEAR ENDED YEAR ENDED AUGUST 31, 2005 DECEMBER 31, 2004 DECEMBER 31, 2003 ----------------- ----------------- ----------------- INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income/(loss) .................................. $ 3,597,199 $ 4,533,585 $ 3,340,117 Net realized gain/(loss) from investments and foreign exchange transactions, if any ....................... 441,009 3,861,876 2,945,818 Net change in unrealized appreciation/(depreciation) from investments ................................................. 260,838 (1,049,105) (1,071,335) ------------ ------------ ------------ Net increase/(decrease) in net assets resulting from operations .................................................. 4,299,046 7,346,356 5,214,600 ------------ ------------ ------------ LESS DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Institutional shares .................... (3,597,722) (4,533,585) (3,340,117) Net realized capital gains Institutional shares ............... -- -- -- ------------ ------------ ------------ Total dividends and distributions to shareholders ............. (3,597,722) (4,533,585) (3,340,117) ------------ ------------ ------------ INCREASE/(DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 8) ......................... 16,711,133 (4,281,995) 38,682,577 ------------ ------------ ------------ Total increase/(decrease) in net assets ....................... 17,412,457 (1,469,224) 40,557,060 ------------ ------------ ------------ NET ASSETS Beginning of period ........................................... 144,348,541 145,817,765 105,260,705 ------------ ------------ ------------ End of period* ................................................ $161,760,998 $144,348,541 $145,817,765 ============ ============ ============ * Includes undistributed net investment income/(loss) as follows: FOR THE FOR THE FOR THE PERIOD ENDED YEAR ENDED YEAR ENDED AUGUST 31, 2005 DECEMBER 31, 2004 DECEMBER 31, 2003 --------------- ----------------- ----------------- WPG Tudor Fund ................................................ $ -- $(3,686) $ -- WPG Large Cap Growth Fund ..................................... -- -- -- WPG Core Bond Fund ............................................ (8,966) (8,443) --
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 70 and 71 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS PER SHARE OPERATING PERFORMANCE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Contained below is per share operating performance data for each class of shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. This information has been derived from information provided in the financial statements. - --------------------------------------------------------------------------------
NET NET REALIZED DIVIDENDS DISTRIBUTIONS DISTRIBUTIONS ASSET AND TO TO TO NET VALUE, NET UNREALIZED SHAREHOLDERS SHAREHOLDERS SHAREHOLDERS ASSET BEGINNING INVESTMENT GAIN/(LOSS) FROM NET FROM NET FROM VALUE, OF INCOME/ ON INVESTMENT REALIZED TAX RETURN REDEMPTION END OF PERIOD (LOSS) INVESTMENTS INCOME GAINS OF CAPITAL FEES PERIOD - ---------------------------------------------------------------------------------------------------------------------------------- BP SMALL CAP VALUE FUND II - -------------------------- INSTITUTIONAL CLASS 8/31/05 $22.80 $(0.10) $5.07 $ -- $(3.03) $ -- $0.01 $24.75 8/31/04 20.19 (0.12)** 2.92** -- (0.20) -- 0.01** 22.80 8/31/03 15.71 (0.09)** 4.55** -- --(3) -- 0.02** 20.19 8/31/02 17.17 (0.13)** (1.23)** -- (0.21) -- 0.11** 15.71 8/31/01 11.39 (0.05)** 6.05** -- (0.29) -- 0.07** 17.17 INVESTOR CLASS 8/31/05 $22.53 $(0.17) $5.01 $ -- $(3.03) $ -- $0.01 $24.35 8/31/04 20.00 (0.18)** 2.90** -- (0.20) -- 0.01** 22.53 8/31/03 15.61 (0.12)** 4.49** -- --(3) -- 0.02** 20.00 8/31/02 17.09 (0.17)** (1.21)** -- (0.21) -- 0.11** 15.61 8/31/01 11.36 (0.09)** 6.04** -- (0.29) -- 0.07** 17.09 - ---------------------------------------------------------------------------------------------------------------------------------- BP LONG/SHORT EQUITY FUND - ------------------------- INSTITUTIONAL CLASS 8/31/05 $14.70 $(0.25) $3.43 $ -- $ -- $ -- $0.01 $17.89 8/31/04 14.31 (0.32)** 0.69** -- -- -- 0.02** 14.70 8/31/03 15.17 (0.28)** 0.10** -- (0.51) (0.20) 0.03** 14.31 8/31/02 15.88 0.05** (0.31)** (0.02) (0.50) -- 0.07** 15.17 8/31/01 10.57 0.07** 5.14** (0.13) -- -- 0.23** 15.88 INVESTOR CLASS 8/31/05 $14.62 $(0.28) $3.39 $ -- $ -- $ -- $0.01 $17.74 8/31/04 14.27 (0.36)** 0.69** -- -- -- 0.02** 14.62 8/31/03 15.13 (0.31)** 0.10** -- (0.51) (0.17) 0.03** 14.27 8/31/02 15.87 0.04** (0.33)** (0.01) (0.50) -- 0.06** 15.13 8/31/01 10.57 0.03** 5.18** (0.11) -- -- 0.20** 15.87 - ---------------------------------------------------------------------------------------------------------------------------------- BP LARGE CAP VALUE FUND - ----------------------- INSTITUTIONAL CLASS 8/31/05 $12.67 $ 0.11** $ 2.33** $(0.11) $ -- $ -- $ -- $15.00 8/31/04 10.84 0.09** 1.84** (0.10) -- -- -- 12.67 8/31/03 10.33 0.09** 0.57** (0.06) (0.09) -- -- 10.84 8/31/02 13.52 0.08** (1.54)** (0.12) (1.61) -- -- 10.33 8/31/01 12.82 0.12** 1.10** (0.13) (0.39) -- -- 13.52 INVESTOR CLASS 8/31/05 $12.86 $ 0.08** $ 2.36** $(0.08) $ -- $ -- $ -- $15.22 8/31/04 11.01 0.05** 1.88** (0.08) -- -- -- 12.86 8/31/03 10.50 0.07** 0.57** (0.04) (0.09) -- -- 11.01 8/31/02 13.73 0.04** (1.56)** (0.10) (1.61) -- -- 10.50 8/31/01 13.02 0.09** 1.13** (0.12) (0.39) -- -- 13.73 - ---------------------------------------------------------------------------------------------------------------------------------- RATIO OF RATIO OF EXPENSES TO EXPENSES TO AVERAGE NET AVERAGE NET NET ASSETS WITH ASSETS WITH ASSETS, WAIVERS AND WAIVERS AND TOTAL END OF REIMBURSEMENTS REIMBURSEMENTS INVESTMENT PERIOD (INCLUDING (EXCLUDING RETURN(1,2) (000) DIVIDEND EXPENSE) DIVIDEND EXPENSE) - ----------------------------------------------------------------------------------------- BP SMALL CAP VALUE FUND II - -------------------------- INSTITUTIONAL CLASS 8/31/05 22.65% $138,143 1.53% --% 8/31/04 13.96 133,060 1.49 -- 8/31/03 28.55 98,383 1.55 -- 8/31/02 (7.39) 40,475 1.55 -- 8/31/01 54.57 21,547 1.55 -- INVESTOR CLASS 8/31/05 22.32% $274,648 1.78% --% 8/31/04 13.69 327,569 1.74 -- 8/31/03 28.16 279,593 1.80 -- 8/31/02 (7.54) 253,838 1.79 -- 8/31/01 54.27 230,507 1.77 -- - ----------------------------------------------------------------------------------------- BP LONG/SHORT EQUITY FUND - ------------------------- INSTITUTIONAL CLASS 8/31/05 21.70% $ 99,748 3.13% 2.92% 8/31/04 2.73 58,293 3.02 2.50 8/31/03 (1.13) 57,351 3.05 2.50 8/31/02 (1.17) 65,951 3.04 2.50 8/31/01 51.85 25,857 3.22 2.50 INVESTOR CLASS 8/31/05 21.34% $ 24,716 3.37% 3.17% 8/31/04 2.45 14,322 3.27 2.75 8/31/03 (1.32) 15,381 3.32 2.75 8/31/02 (1.44) 49,284 3.29 2.75 8/31/01 51.51 11,244 3.44 2.72 - ----------------------------------------------------------------------------------------- BP LARGE CAP VALUE FUND - ----------------------- INSTITUTIONAL CLASS 8/31/05 19.30% $ 27,172 1.00% % 8/31/04 17.87 42,066 1.00 -- 8/31/03 6.54 43,722 1.00 -- 8/31/02 (12.67) 45,067 1.00 -- 8/31/01 9.65 40,368 1.00 -- INVESTOR CLASS 8/31/05 19.04% $ 12,827 1.25% --% 8/31/04 17.53 8,112 1.25 -- 8/31/03 6.22 5,116 1.25 -- 8/31/02 (12.87) 7,893 1.25 8/31/01 9.45 3,746 1.22 -- - ----------------------------------------------------------------------------------------- RATIO OF RATIO OF RATIOS OF NET EXPENSES TO EXPENSES TO INVESTMENT AVERAGE NET AVERAGE NET INCOME TO ASSETS WITHOUT ASSETS WITHOUT AVERAGE WAIVERS AND WAIVERS AND NET ASSETS REIMBURSEMENTS REIMBURSEMENTS WITH WAIVERS PORTFOLIO (EXCLUDING (INCLUDING AND TURNOVER DIVIDEND EXPENSE) DIVIDEND EXPENSE) REIMBURSEMENTS RATE - ----------------------------------------------------------------------------------------------- BP SMALL CAP VALUE FUND II - -------------------------- INSTITUTIONAL CLASS 8/31/05 --% 1.54% (0.42)% 37.61% 8/31/04 -- 1.49 (0.53) 47.06 8/31/03 -- 1.79 (0.54) 72.72 8/31/02 -- 1.71 (0.76) 119.30 8/31/01 -- 2.03 (0.32) 35.50 INVESTOR CLASS 8/31/05 --% 1.79% (0.64)% 37.61% 8/31/04 -- 1.74 (0.77) 47.06 8/31/03 -- 2.04 (0.77) 72.72 8/31/02 -- 1.92 (1.00) 119.30 8/31/01 -- 2.13 (0.54) 35.50 - ----------------------------------------------------------------------------------------------- BP LONG/SHORT EQUITY FUND - ------------------------- INSTITUTIONAL CLASS 8/31/05 3.09% 3.30% (1.82)% 107.14% 8/31/04 2.68 3.20 (2.26) 239.06 8/31/03 2.90 3.44 (1.94) 282.36 8/31/02 2.85 3.39 0.30 219.52 8/31/01 4.25 4.97 0.46 332.25 INVESTOR CLASS 8/31/05 3.34% 3.55% (2.07)% 107.14% 8/31/04 2.93 3.45 (2.50) 239.06 8/31/03 3.12 3.69 (2.13) 282.36 8/31/02 3.06 3.60 0.27 219.52 8/31/01 4.35 5.07 0.24 332.25 - ----------------------------------------------------------------------------------------------- BP LARGE CAP VALUE FUND - ----------------------- INSTITUTIONAL CLASS 8/31/05 % 1.35% 0.83% 76.91% 8/31/04 -- 1.22 0.73 47.21 8/31/03 -- 1.41 0.94 81.13 8/31/02 -- 1.40 0.62 88.65 8/31/01 -- 1.43 0.89 105.71 INVESTOR CLASS 8/31/05 --% 1.61% 0.53% 76.91% 8/31/04 -- 1.47 0.43 47.21 8/31/03 -- 1.66 0.66 81.13 8/31/02 -- 1.61 0.37 88.65 8/31/01 -- 1.53 0.67 105.71 - ----------------------------------------------------------------------------------------------- ** Calculated based on average shares outstanding for the period. 1 Total 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. 2 Redemption fees are reflected in total return calculations.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 72 AND 73 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (continued) PER SHARE OPERATING PERFORMANCE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Contained below is per share operating performance data for each class of shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. This information has been derived from information provided in the financial statements. - --------------------------------------------------------------------------------
NET NET REALIZED DIVIDENDS DISTRIBUTIONS DISTRIBUTIONS ASSET AND TO TO TO NET VALUE, NET UNREALIZED SHAREHOLDERS SHAREHOLDERS SHAREHOLDERS ASSET BEGINNING INVESTMENT GAIN/(LOSS) FROM NET FROM NET FROM VALUE, OF INCOME/ ON INVESTMENT REALIZED TAX RETURN REDEMPTION END OF PERIOD (LOSS) INVESTMENTS INCOME GAINS OF CAPITAL FEES PERIOD - ---------------------------------------------------------------------------------------------------------------------------------- BP MID CAP VALUE FUND - --------------------- INSTITUTIONAL CLASS 8/31/05 $13.16 $ --(2) $ 3.22 $(0.01) $(2.35) $ -- $ -- $14.02 8/31/04 11.57 0.01** 1.65** (0.07) -- -- -- 13.16 8/31/03 9.69 0.05** 1.83** --(2) -- -- -- 11.57 8/31/02 12.55 0.00** (0.94)** (0.06) (1.86) -- 9.69 8/31/01 11.66 0.04** 0.91** (0.06) 0 -- 12.55 INVESTOR CLASS 8/31/05 $13.02 $ --(2) $ 3.13 $ -- $(2.35) $ -- $ -- $13.80 8/31/04 11.43 (0.02)** 1.65** (0.04) -- -- -- 13.02 8/31/03 9.58 0.02** 1.83** -- -- -- -- 11.43 8/31/02 12.43 (0.02)** (0.94)** (0.03) (1.86) -- -- 9.58 8/31/01 11.55 0.01** 0.91** (0.04) -- -- -- 12.43 - ------------------------------------------------------------------------------------------------------------------------------- BP ALL-CAP VALUE FUND - --------------------- INSTITUTIONAL CLASS 8/31/05 $13.29 $ 0.07 $ 2.83 $(0.05) $(0.60) $ -- $ -- $15.54 8/31/04 10.82 0.06 2.48 (0.07) -- -- -- 13.29 8/31/03 9.45 0.06 1.34 (0.03) -- -- -- 10.82 7/1/02* to 8/31/02 10.00 -- (0.55) -- -- -- -- 9.45 INVESTOR CLASS 8/31/05 $13.26 $ 0.03 $ 2.83 $(0.03) $(0.60) $ -- $ -- $15.49 8/31/04 10.80 0.02 2.48 (0.04) -- -- -- 13.26 8/31/03 9.44 0.04 1.34 (0.02) -- -- -- 10.80 7/1/02* to 8/31/02 10.00 -- (0.56) -- -- -- -- 9.44 - ------------------------------------------------------------------------------------------------------------------------------- WPG TUDOR FUND - -------------- INSTITUTIONAL CLASS 8/31/05(3) $17.55 $(0.04) $(0.09) $ -- $ -- $ -- $ -- $17.42 12/31/04 16.34 -- 3.11 -- (1.90) -- -- 17.55 12/31/03 11.24 -- 5.10 -- -- -- -- 16.34 12/31/02 15.21 -- (3.97) -- -- -- -- 11.24 12/31/01 18.41 -- (2.73) -- (0.47) -- -- 15.21 12/31/00 22.91 -- (1.50) -- (3.00) -- -- 18.41 - ------------------------------------------------------------------------------------------------------------------------------- RATIO OF RATIO OF EXPENSES TO EXPENSES TO AVERAGE NET AVERAGE NET NET ASSETS WITH ASSETS WITH ASSETS, WAIVERS AND WAIVERS AND TOTAL END OF REIMBURSEMENTS REIMBURSEMENTS INVESTMENT PERIOD (INCLUDING (EXCLUDING RETURN(1) (000) DIVIDEND EXPENSE) DIVIDEND EXPENSE) - ----------------------------------------------------------------------------------------- BP MID CAP VALUE FUND - --------------------- INSTITUTIONAL CLASS 8/31/05 25.97% $ 54,187 1.00% --% 8/31/04 14.39 42,240 1.00 -- 8/31/03 19.41 57,052 1.00 -- 8/31/02 (8.97) 50,073 1.00 -- 8/31/01 8.23 116,605 1.00 -- INVESTOR CLASS 8/31/05 25.47% $ 4,462 1.25% --% 8/31/04 14.08 2,819 1.25 -- 8/31/03 19.31 3,159 1.25 -- 8/31/02 (9.26) 6,232 1.25 -- 8/31/01 7.96 1,787 1.22 -- - ----------------------------------------------------------------------------------------- BP ALL-CAP VALUE FUND - --------------------- INSTITUTIONAL CLASS 8/31/05 22.33% $ 7,315 1.25% --% 8/31/04 23.50 5,177 1.25 -- 8/31/03 14.84 2,890 1.25 -- 7/1/02* to 8/31/02 (5.50) 1,810 1.25(2) -- INVESTOR CLASS 8/31/05 22.06% $ 2,840 1.50% --% 8/31/04 23.13 649 1.50 -- 8/31/03 14.63 106 1.50 -- 7/1/02* to 8/31/02 (5.60) 84 1.50(2) -- - ----------------------------------------------------------------------------------------- WPG TUDOR FUND - -------------- INSTITUTIONAL CLASS 8/31/05(3) (0.74)% $ 52,368 1.57% --% 12/31/04 19.35 57,787 1.55 -- 12/31/03 45.37 58,282 1.68 -- 12/31/02 (26.10) 47,705 1.54 -- 12/31/01 (14.78) 71,324 1.38 -- 12/31/00 (5.20) 94,418 1.28 -- - ----------------------------------------------------------------------------------------- RATIO OF RATIO OF RATIOS OF NET EXPENSES TO EXPENSES TO INVESTMENT AVERAGE NET AVERAGE NET INCOME TO ASSETS WITHOUT ASSETS WITHOUT AVERAGE WAIVERS AND WAIVERS AND NET ASSETS REIMBURSEMENTS REIMBURSEMENTS WITH WAIVERS PORTFOLIO (EXCLUDING (INCLUDING AND TURNOVER DIVIDEND EXPENSE) DIVIDEND EXPENSE) REIMBURSEMENTS RATE - ----------------------------------------------------------------------------------------------- BP MID CAP VALUE FUND - --------------------- INSTITUTIONAL CLASS 8/31/05 --% 1.31% 0.03% 74.08% 8/31/04 -- 1.26 0.07 67.40 8/31/03 -- 1.40 0.55 77.87 8/31/02 -- 1.33 0.01 99.23 8/31/01 -- 1.30 0.29 234.52 INVESTOR CLASS 8/31/05 --% 1.56% (0.22)% 74.08% 8/31/04 -- 1.51 (0.18) 67.40 8/31/03 -- 1.65 0.21 77.87 8/31/02 -- 1.57 (0.18) 99.23 8/31/01 -- 1.40 0.07 234.52 - ----------------------------------------------------------------------------------------------- BP ALL-CAP VALUE FUND - --------------------- INSTITUTIONAL CLASS 8/31/05 --% 3.90% 0.53% 28.72% 8/31/04 -- 5.82 0.51 27.40 8/31/03 -- 9.49 0.62 38.36 7/1/02* to 8/31/02 -- 14.54(2) 0.16(2) 6.61(2) INVESTOR CLASS 8/31/05 --% 4.04% 0.20% 28.72% 8/31/04 -- 5.84 0.14 27.40 8/31/03 -- 9.88 0.41 38.36 7/1/02* to 8/31/02 -- 15.34(2) (0.01)(2) 6.61(2) - ------------------------------------------------------------------------------------------------ WPG TUDOR FUND - -------------- INSTITUTIONAL CLASS 8/31/05(3) --% 1.57%(4) (0.35)% 135.85% 12/31/04 -- 1.55 (0.55) 159.20 12/31/03 -- 1.68 0.83 228.30 12/31/02 -- 1.54 (0.81) 105.60 12/31/01 -- 1.38 0.11 128.10 12/31/00 -- 1.28 (0.22) 84.00 - ----------------------------------------------------------------------------------------------- - ---------- * Commencement of operations. ** Calculated based on average shares outstanding for the period. 1 Total 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. 2 Amount is less than $.01 per share. 3 For the short-year period January 1, 2005 through August 31, 2005. 4 Excludes the effects of fees paid indirectly. Had such offsets been included, the ratio would not significantly differ.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 74 AND 75 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (continued) PER SHARE OPERATING PERFORMANCE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Contained below is per share operating performance data for each class of shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. This information has been derived from information provided in the financial statements. - --------------------------------------------------------------------------------
NET NET REALIZED DIVIDENDS DISTRIBUTIONS DISTRIBUTIONS ASSET AND TO TO TO NET VALUE, NET UNREALIZED SHAREHOLDERS SHAREHOLDERS SHAREHOLDERS ASSET BEGINNING INVESTMENT GAIN/(LOSS) FROM NET FROM NET FROM VALUE, OF INCOME/ ON INVESTMENT REALIZED TAX RETURN REDEMPTION END OF PERIOD (LOSS) INVESTMENTS INCOME GAINS OF CAPITAL FEES PERIOD - ---------------------------------------------------------------------------------------------------------------------------------- WPG LARGE CAP GROWTH FUND - ------------------------- INSTITUTIONAL CLASS 8/31/05(2) $23.10 $(0.07) $ 0.33 $ -- $ -- $ -- $ -- $23.36 12/31/04 25.27 -- 0.93 -- (3.10) -- -- 23.10 12/31/03 19.16 -- 6.11 -- -- -- -- 25.27 12/31/02 26.46 -- (7.30) -- -- -- -- 19.16 12/31/01 33.60 (0.01) (6.86) -- (0.27) -- -- 26.46 12/31/00 39.88 0.01 (0.94) -- (5.35) -- -- 33.60 - -------------------------------------------------------------------------------------------------------------------------------- WPG CORE BOND FUND ------------------ INSTITUTIONAL CLASS 8/31/05(2) $10.81 $ 0.25 $ 0.03 $(0.25) $ -- $ -- $ -- $10.84 12/31/04 10.66 0.31 0.15 (0.31) -- -- -- 10.81 12/31/03 10.44 0.30 0.22 (0.30) -- -- -- 10.66 12/31/02 9.80 0.40 0.64 (0.40) -- -- -- 10.44 12/31/01 9.40 0.49 0.40 (0.49) -- -- -- 9.80 12/31/00 9.07 0.60 0.33 (0.60) -- -- -- 9.40 - ---------------------------------------------------------------------------------------------------------------------------------- RATIO OF RATIO OF EXPENSES TO EXPENSES TO AVERAGE NET AVERAGE NET NET ASSETS WITH ASSETS WITH ASSETS, WAIVERS AND WAIVERS AND TOTAL END OF REIMBURSEMENTS REIMBURSEMENTS INVESTMENT PERIOD (INCLUDING (EXCLUDING RETURN(1) (000) DIVIDEND EXPENSE) DIVIDEND EXPENSE) - ----------------------------------------------------------------------------------------- WPG LARGE CAP GROWTH FUND - ------------------------- INSTITUTIONAL CLASS 8/31/05(2) 1.13% $ 20,626 1.40% --% 12/31/04 3.82 26,222 1.40 -- 12/31/03 31.89 52,355 1.44 -- 12/31/02 (27.59) 43,412 1.25 -- 12/31/01 (20.45) 74,931 1.14 -- 12/31/00 (1.68) 109,347 1.01 -- - ----------------------------------------------------------------------------------------- WPG CORE BOND FUND ------------------ INSTITUTIONAL CLASS 8/31/05(2) 2.65% $161,761 0.43% --% 12/31/04 4.38 144,349 0.43 -- 12/31/03 5.04 145,818 0.45 -- 12/31/02 10.87 105,261 0.50 -- 12/31/01 9.64 123,797 0.50 -- 12/31/00 10.66 114,547 0.50 -- - ----------------------------------------------------------------------------------------- RATIO OF RATIO OF RATIOS OF NET EXPENSES TO EXPENSES TO INVESTMENT AVERAGE NET AVERAGE NET INCOME TO ASSETS WITHOUT ASSETS WITHOUT AVERAGE WAIVERS AND WAIVERS AND NET ASSETS REIMBURSEMENTS REIMBURSEMENTS WITH WAIVERS PORTFOLIO (EXCLUDING (INCLUDING AND TURNOVER DIVIDEND EXPENSE) DIVIDEND EXPENSE) REIMBURSEMENTS RATE - -------------------------------------------------------------------------------------------------- WPG LARGE CAP GROWTH FUND - ------------------------- INSTITUTIONAL CLASS 8/31/05 2 --% 2.08%(3) (0.42)% 100.01%(5) 12/31/04 -- 1.50 (0.06) 138.70 12/31/03 -- 1.44 (0.52) 126.80 12/31/02 -- 1.25 (0.42) 107.90 12/31/01 -- 1.14 (0.11) 56.40 12/31/00 -- 1.01 (0.03) 78.20 - -------------------------------------------------------------------------------------------------- WPG CORE BOND FUND ------------------ INSTITUTIONAL CLASS 8/31/05 2 --% 0.75%(3) 3.52% 602.95%(4,5) 12/31/04 -- 0.71 2.90 805.80 12/31/03 -- 0.75 2.81 561.80 12/31/02 -- 0.83 4.02 539.20 12/31/01 -- 0.81 5.04 431.50 12/31/00 -- 0.79 6.58 509.00 - -------------------------------------------------------------------------------------------------- - ---------- 1 Total 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. 2 For the short-year period January 1, 2005 through August 31, 2005. 3 Excludes the effects of fees paid indirectly. Had such offsets been included, the ratio would not significantly differ. 4 The portfolio turnover rates excluding mortgage dollar roll transactions were 295.21% and 573.60% for the period ended August 31, 2005 and the year ended December 31, 2004, respectively. 5 Annualized
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 76 AND 77 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The RBB Fund, Inc. ("RBB" or "Company") 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 "1940 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 1940 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 seventeen active investment portfolios, including Robeco Boston Partners Small Cap Value Fund II ("BP Small Cap Value Fund II"), Robeco Boston Partners Long/Short Equity Fund ("BP Long/Short Equity Fund"), Robeco Boston Partners Large Cap Value Fund ("BP Large Cap Value Fund"), Robeco Boston Partners Mid Cap Value Fund ("BP Mid Cap Value Fund"), Robeco Boston Partners All-Cap Value Fund ("BP All-Cap Value Fund"), Robeco WPG Tudor Fund ("WPG Tudor Fund"), Robeco WPG Large Cap Growth Fund ("WPG Large Cap Growth Fund") and Robeco WPG Core Bond Fund ("WPG Core Bond Fund") (each a "Fund", collectively the "Funds"). As of August 31, 2005, the Boston Partners Funds each offer two classes of shares, Institutional Class and Investor Class while the WPG Funds are single class funds. RBB has authorized capital of thirty billion shares of common stock of which 26.473 billion are currently classified into one hundred and three classes of common stock. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into seven separate "families," six of which have begun investment operations. On December 16, 2005, the Board of Trustees of the WPG Tudor Fund, WPG Large Cap Growth Fund and WPG Core Bond Fund, a series of Weiss, Peck and Greer Funds Trust (each a "Fund" and collectively, the "Funds"), approved an Agreement and Plan of Reorganization between each Fund and The RBB Fund, Inc., a Maryland corporation (the "Company"), that provides for the tax-free reorganization of the Funds into newly created portfolios of the Company (the "New Funds"). Each Agreement and Plan of Reorganization was submitted to a vote of shareholders of the Funds at a meeting held on April 27, 2005. The Agreement and Plan of Reorganization was approved by the shareholders, and, effective after the close of business on April 29, 2005, all of the assets and liabilities of the WPG Funds have been transferred, in a tax-free exchange, to the New Funds and the shareholders of the Funds have become shareholders of the New Funds. PORTFOLIO VALUATION -- The Funds' net asset value ("NAV") is calculated once daily at the close of regular trading hours on the NYSE (generally 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by the Funds are valued using the closing price or the last sale price on a national securities exchange or on the National Association of Securities Dealers Automatic Quotation System ("NASDAQ") market system where they are primarily traded. If there were no sales on that day or the securities are traded on other over-the-counter markets, the mean of the last bid and ask price prior to the market close is used. Short-term debt securities having a remaining maturity of 60 days or less are amortized to maturity based on their cost. Debt securities having a remaining maturity of greater than 60 days are valued by a pricing service which utilizes both dealer-supplied valuations and other techniques which take into account appropriate factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data. With the approval of the Company's Board of Directors, the Funds may use a pricing service, bank or broker/dealer experienced in providing valuations to value the Funds' securities. If market quotations are unavailable or deemed unreliable, securities will be valued by the Company's Valuation Committee following procedures adopted by the Board of Directors. 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. INVESTMENT TRANSACTIONS, INVESTMENT INCOME AND EXPENSES -- The Funds record security transactions based on 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 when earned. Dividend income is recorded on the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. The Funds' investment income, expenses (other than class specific distribution fees) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the begin- 78 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) - -------------------------------------------------------------------------------- ning of the day. 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 director or professional fees) are charged to all funds in proportion to their net assets of the RBB funds, or in such other manner as the Board of Directors deems fair or equitable. 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 Funds. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income and distributions from net realized capital gains, if any, are declared and paid at least annually to shareholders and recorded on ex-date for all Funds with the exception of the WPG Core Bond Fund which declares daily and pays monthly dividends from net investment income. 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, 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 within the components of net assets. U.S. TAX STATUS -- No provision is made for U.S. income taxes as it is the Funds' 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. OTHER -- In the normal course of business, the Funds may enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is dependent on claims that may be made against the Funds in the future, and, therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote. SHORT SALES -- In the BP Long/Short Equity Fund and the BP All-Cap Value Fund, when the Investment Adviser believes that a security is overvalued, it may sell the security short by borrowing the same security from a broker or other institution and selling the security. A Fund will incur a loss as a result of a short sale if the price of the borrowed security increases between the date of the short sale and the date on which the Fund buys and replaces such borrowed security. A Fund will realize a gain if there is a decline in price of the security between those dates where decline exceeds costs of the borrowing of the security and other transaction costs. There can be no assurance that a Fund will be able to close out a short position at any particular time or at an acceptable price. Although a Fund's gain is limited to the amount at which it sold a security short, its potential loss is unlimited in size. Until a Fund replaces a borrowed security, it will maintain at all times cash, U.S. Government securities, or other liquid securities in an amount which, when added to any amount deposited with a broker as collateral, will at least equal the current market value of the security sold short. Depending on arrangements made with brokers, a Fund may not receive any payments (including interest) on collateral deposited with them. OPTIONS -- The BP All-Cap Value Fund, WPG Tudor Fund, WPG Large Cap Growth Fund and WPG Core Bond Fund may buy put and call options and write covered call and secured put options. Such options may relate to particular securities or domestic stock indices, and may or may not be listed on a domestic securities exchange or issued by the Options Clearing Corporation. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in purchasing an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of being unable to enter into a closing transaction at an acceptable price if a liquid secondary market does not exist. The Fund also may write over-the-counter options where completing the obligation depends upon the credit standing of the other party. Option contracts also involve the risk that they may result in loss due to unanticipated developments in market conditions or other causes. Options purchased are recorded as an asset and written options are recorded as liabilities to the extent of premiums paid or received. Gains or losses are realized when the option transaction expires or closes. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of the premium received or paid. ANNUAL REPORT 2005 | 79 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) - -------------------------------------------------------------------------------- The BP All-Cap Value Fund had transactions in options written during year ended August 31, 2005 as follows: NUMBER OF PREMIUMS CONTRACTS RECEIVED --------- -------- Options outstanding at August 31, 2004 173 $ 31,266 Options written 155 44,087 Options terminated in closing purchase transactions (17) (4,524) Options expired -- -- Options exercised (222) (39,713) ----- -------- Options outstanding at August 31, 2005 89 $ 31,116 ===== ======== FUTURES -- The WPG Tudor Fund and the WPG Core Bond Fund may enter into futures contracts. A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. Upon entering into such a contract, a Fund is required to pledge to the broker an amount of cash and/or securities equal to the minimum "initial margin" requirements of the exchange on which such contract is traded. Pursuant to the contract, the Fund agrees to receive from, or pay to the broker, an amount of cash equal to the daily fluctuation in value of the contract. Such a receipt of payment is known as a "variation margin" and is recorded by each Fund as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The Fund is also required to fully collateralize futures contracts purchased. The Fund only enters into futures contracts which are traded on exchanges. At August 31, 2005, the Funds did not hold any futures. FOREIGN SECURITIES -- There are certain risks resulting from investing in foreign securities in addition to the usual risks inherent in domestic investments. Such risks include future political, economic and currency exchange developments including investment restrictions and changes in foreign laws. FORWARD CURRENCY CONTRACTS -- The Funds may enter into forward currency contracts. Such contracts may be utilized in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolios denominated in foreign currencies. Fluctuations in the value of the forward contracts are recorded as unrealized gains or losses by the Funds. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of the foreign currency relative to the U.S. dollar. Upon entering into such a contract, the Fund is required to segregate assets with its custodian at least equal to the value of the Fund's assets committed to fulfilling the forward currency contract. At August 31, 2005, the Funds did not hold any forward currency contracts. FOREIGN CURRENCY TRANSLATION -- The books and records of the portfolios are maintained in U.S. dollars as follows: (1) the foreign currency market value of investment securities and other assets and liabilities stated in foreign currencies are translated at the exchange rate prevailing at the end of the period; and (2) purchases, sales, income and expenses are translated at the rate of exchange prevailing on the respective dates of such transactions. The resulting exchange gains and losses are included in the Statement of Operations. LINE OF CREDIT -- Each Robeco Boston Partners Fund may borrow an amount up to its prospectus-defined limitations, from a committed line of credit of $5,000,000 available to the Funds in the Robeco Boston Partners Fund Family. Borrowings from the line of credit will bear interest at the Federal Funds Rate. The Funds had no outstanding borrowings at August 31, 2005 or at any time during the year ended August 31, 2005. 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Boston Partners, a wholly owned subsidiary of Robeco Investment Management, USA, serves as the BP Funds' Investment Adviser. For its advisory services, Boston Partners is entitled to receive 1.25% of the BP Small Cap Value Fund II's average daily net assets, 2.25% of the BP Long/Short Equity Fund's average daily net assets, 0.75% of the BP Large Cap Value Fund's average daily net assets, 0.80% of the BP Mid Cap Value Fund's average daily net assets and 1.00% of the BP All-Cap Value Fund's average daily net assets, each accrued daily and payable monthly. 80 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) - -------------------------------------------------------------------------------- Boston Partners has contractually agreed to limit a Fund's total operating expenses to the extent that such expenses exceed the ratios in the table below. This limit is calculated daily based on the average daily net assets. This limitation is effected in waivers of advisory fees and reimbursements of expenses exceeding the advisory fee as necessary. The BP Funds will not pay the adviser at a later time for any amounts waived or any amounts assumed. FUND INSTITUTIONAL INVESTOR - ---- ------------- -------- BP Small Cap Value Fund II 1.55% 1.80% BP Long/Short Equity Fund 2.50%* 2.75%* BP Large Cap Value Fund 1.00% 1.25% BP Mid Cap Value Fund 1,00% 1.25% BP All-Cap Value Fund 1.25% 1.50% *Excluding short sale dividend expense. Weiss, Peck & Greer ("WPG"), a wholly owned subsidiary of Robeco Investment Management, USA, serves as the WPG Funds' Investment Adviser. The annual advisory fees of each WPG Fund are as follows, and are paid monthly: WPG Tudor .90% of net assets up to $300 million .80% of net assets $300 million to $500 million .75% of net assets in excess of $500 million WPG Large Cap Growth .75% of net assets WPG Core Bond .45% of net assets WPG has agreed to cap operating expenses and may not discontinue or modify the cap without the approval of the Funds' directors. The WPG Tudor Fund's expenses are capped at 1.70%, WPG Large Cap Growth Fund's expenses are capped at 1.40%, and WPG Core Bond Fund's expenses are capped at 0.43%. Pursuant to an agreement, beginning in 2004, WPG may seek reimbursement from the WPG Tudor Fund and WPG Large Cap Growth Fund for expenses waived by WPG during the prior two years to the extent that such recovery would not cause the affected fund to exceed the expense limitations in effect at the time of recovery. At August 31, 2005, the amounts potentially recoverable by WPG from the WPG Large Cap Growth Fund pursuant to this agreement are $42,989 expiring December 31, 2006 and $54,529 expiring April 29, 2007. For the year ended August 31, 2005, investment advisory fees, waivers and reimbursements of expenses were as follows:
GROSS NET EXPENSE FUND ADVISORY FEES WAIVERS ADVISORY FEES REIMBURSEMENT - ---- ------------- ---------- ------------- ------------- BP Small Cap Value Fund II $5,553,173 $ (33,847) $5,519,326 $ -- BP Long/Short Equity Fund 2,170,944 (166,629) 2,004,315 -- BP Large Cap Value Fund 325,038 (152,258) 172,780 -- BP Mid Cap Value Fund 421,550 (163,631) 257,919 -- BP All-Cap Value Fund 83,834 (83,834) -- 136,440 WPG Tudor Fund 321,986 -- 321,986 -- WPG Large Cap Growth Fund 110,768 (99,468) 11,300 -- WPG Core Bond Fund 460,221 (318,082) 142,139 --
As of August 31, 2005, Boston Partners held 24% of the outstanding shares of the BP All-Cap Value Fund. PFPC Inc. ("PFPC"), a wholly-owned subsidiary of PFPC Worldwide Inc., an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc., serves as administrator for the Funds. For providing accounting and administration services, PFPC is entitled to receive a monthly fee equal to an annual rate of 0.1125% of the Funds' first $200 million of average net assets; and 0.095% of average net assets in excess of $200 million with a minimum monthly fee of $5,333. For providing regulatory administrative services to RBB, PFPC is entitled to receive compensation as agreed to by the Company and PFPC. This fee is charged to all funds in proportion to their net assets of the RBB funds. For the year or period ended August 31, 2005 the Funds' portions of this fee were $69,480, $13,688, $6,395, $7,885, $1,344, $9,895, $8,399 and $14,771 for the BP Small Cap Value Fund II, BP Long/Short Equity Fund, BP Large Cap Value Fund, BP Mid Cap Value Fund, BP All-Cap Value Fund, WPG Tudor Fund, WPG Large Cap Growth Fund and WPG Core Bond Fund, respectively. In addition, PFPC serves as the Funds' transfer and disbursing agent. PFPC receives a fee at the annual rate of $10 per account in the Fund, with a minimum monthly fee of $3,000 per class payable monthly on a pro rata basis, exclusive of out-of-pocket expenses, and also receives a reimbursement of its out-of-pocket expenses. ANNUAL REPORT 2005 | 81 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) - -------------------------------------------------------------------------------- PFPC Distributors, Inc., provides certain administrative services to the Funds. As compensation for such administrative services, PFPC Distributors, Inc. is entitled to receive an annual fee of $62,500 from the BP Funds which is allocated to the BP Funds in proportion to their net assets. PFPC Distributors, Inc. is entited to receive an annual fee of $5,000 per Fund from the WPG Funds. PFPC Trust Co., a wholly owned subsidiary of PFPC Worldwide Inc., an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc., provides certain custodian services to the BP Funds. As compensation for such custodian services, PFPC Trust Co. is entitled to receive a monthly fee equal to an annual rate of 0.010% of the Funds' average daily gross assets or a minimum monthly fee of $1,000. At August 31, 2005, PFPC and its affiliates were due fees for their services of $82,514, $30,074, $16,800, $16,812, $15,205, $17,822, $12,978 and $11,070 from the BP Small Cap Value Fund II, BP Long/Short Equity Fund, BP Large Cap Value Fund, BP Mid Cap Value Fund, BP All-Cap Value Fund, WPG Tudor Fund, WPG Large Cap Growth Fund and WPG Core Bond Fund, respectively. 3. INVESTMENT IN SECURITIES For the year ended August 31, 2005, aggregate purchases and sales of investment securities (excluding short-term investments and U.S. government obligations) were as follows: INVESTMENT SECURITIES ------------------------------- FUND PURCHASES SALES - ---- ------------ ------------ BP Small Cap Value Fund II $160,807,120 $300,998,088 BP Long/Short Equity Fund 129,016,947 98,295,278 BP Large Cap Value Fund 31,965,373 40,985,201 BP Mid Cap Value Fund 37,455,057 37,236,341 BP All-Cap Value Fund 5,285,777 2,289,845 WPG Core Bond Fund 796,236,022 782,573,744 WPG Large Cap Growth Fund 14,832,348 20,786,673 WPG Tudor Fund 47,171,732 51,288,698 Purchases and sales of long-term U.S. government obligations were: FUND PURCHASES SALES - ---- ------------ ------------ WPG Core Bond Fund $680,893,222 $659,079,647 4. SECURITIES LENDING (WPG TUDOR FUND AND WPG CORE BOND FUND) At August 31, 2005, the WPG Tudor Fund loaned securities valued at $2,590,318 (including accrued interest). For collateral the WPG Tudor Fund received a letter of credit from Danske Bank in an amount equal to $2,750,000. At August 31, 2005, the WPG Core Bond Fund loaned securities with maturity dates ranging from 11/15/21 to 11/15/27 and interest rates ranging from 0% to 6.25% valued at $29,799,621 (including accrued interest). For collateral, the WPG Core Bond Fund received U.S. Treasury securities which were valued at $30,817,332. For the period ended August 31, 2005, the WPG Tudor Fund earned $6,871 and the WPG Core Bond Fund earned $17,239 in securities lending fees, net of custodian expenses. Securities may be loaned to financial institutions, such as broker-dealers, and are required to be secured continuously by collateral in cash, cash equivalents or U.S. government securities maintained on a current basis at an amount at least equal to the market value of the securities loaned. 5. MORTGAGE DOLLAR ROLLS (WPG CORE BOND FUND) The WPG Core Bond Fund may enter into mortgage dollar rolls in which WPG Core Bond Fund sells mortgage securities for delivery in the current month and simultaneously contracts to repurchase similar, but not identical, securities at an agreed upon price on a fixed date. The WPG Core Bond Fund accounts for such dollar rolls as purchases and sales and records an unrealized gain or loss each day equal to the difference between the original value of the purchase and the current market value. The WPG Core Bond Fund must maintain liquid securities having a value not less than the repurchase price (including accrued interest) for such dollar rolls. Losses may arise due to changes in value of the securities or if the counterparty does not perform under the terms of the agreement. If the counterparty files for bankruptcy or becomes insolvent, the WPG Core Bond Fund's right to repurchase or sell securities may be limited. 82 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) - -------------------------------------------------------------------------------- 6. CUSTODIAN FEES (WPG TUDOR FUND, WPG LARGE CAP GROWTH FUND AND WPG CORE BOND FUND) Each WPG Fund has entered into an expense offset agreement with its custodian, Boston Safe Deposit and Trust Company, wherein it receives a credit toward the reduction of custodian fees whenever there are uninvested cash balances. For the period ended August 31, 2005, the Funds' custodian fees and related offset were as follows: FUND CUSTODIAN FEE OFFSET CREDIT - ---- ------------ ------------- WPG Tudor Fund $13,913 $ 240 WPG Large Cap Growth Fund 15,485 353 WPG Core Bond Fund 30,106 5,684 The Funds could have invested their cash balances elsewhere if they had not agreed to a reduction in fees under the expense offset agreement with their custodian. 7. CAPITAL SHARE TRANSACTIONS As of August 31, 2005, each class of each Fund has 100,000,000 shares of $0.001 par value common stock authorized. Transactions in capital shares for the respective periods were as follows:
BP SMALL CAP VALUE FUND II ---------------------------------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 --------------------------- ---------------------------- SHARES VALUE SHARES VALUE ---------- ------------- ----------- ------------ INSTITUTIONAL CLASS Sales ........................................... 777,812 $ 18,327,856 2,387,080 $ 53,304,432 Repurchases ..................................... (1,687,171) (40,024,300) (1,473,382) (33,782,982) Redemption Fees* ................................ -- 43,603 -- 84,971 Reinvestments ................................... 656,191 15,282,691 48,875 1,094,808 ---------- ------------- ----------- ------------ Net Increase / (Decrease) .......................... (253,168) $ (6,370,150) 962,573 $ 20,701,229 ========== ============= =========== ============ INVESTOR CLASS Sales ........................................... 1,070,961 $ 24,915,496 3,838,683 $ 87,385,969 Repurchases ..................................... (6,064,815) (139,675,678) (3,407,848) (77,326,018) Redemption Fees* ................................ -- 98,569 -- 212,236 Reinvestments ................................... 1,731,042 39,744,721 131,225 2,909,247 ---------- ------------- ----------- ------------ Net Increase / (Decrease) .......................... (3,262,812) $ (74,916,892) 562,060 $ 13,181,434 ========== ============= =========== ============ BP LONG/SHORT EQUITY FUND --------------------------------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 ------------------------- --------------------------- SHARES VALUE SHARES VALUE ---------- ------------ ---------- ------------ INSTITUTIONAL CLASS Sales ........................................... 2,751,092 $ 44,635,106 2,351,039 $ 33,801,598 Repurchases ..................................... (1,139,281) (18,057,317) (2,393,312) (34,290,765) Redemption Fees* ................................ -- 27,144 -- 77,888 ---------- ------------ ---------- ------------ Net Increase / (Decrease) .......................... 1,611,811 $ 26,604,933 (42,273) $ (411,279) ========== ============ ========== ============ INVESTOR CLASS Sales ........................................... 556,860 $ 9,076,329 437,505 $ 6,280,742 Repurchases ..................................... (143,392) (2,274,376) (536,016) (7,637,790) Redemption Fees* ................................ -- 6,652 -- 19,060 ---------- ------------ ---------- ------------ Net Increase / (Decrease) .......................... 413,468 $ 6,808,605 (98,511) $ (1,337,988) ========== ============ ========== ============
ANNUAL REPORT 2005 | 83 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) - --------------------------------------------------------------------------------
BP LARGE CAP VALUE FUND --------------------------------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 ------------------------- --------------------------- SHARES VALUE SHARES VALUE ---------- ------------ ---------- ------------ INSTITUTIONAL CLASS Sales ........................................... 330,361 $ 4,604,925 339,870 $ 4,050,338 Repurchases ..................................... (1,861,228) (25,796,464) (1,087,011) (13,535,453) Reinvestments ................................... 21,384 297,875 34,867 415,263 ---------- ------------ ---------- ------------ Net Increase / (Decrease) .......................... (1,509,483) $(20,893,664) (712,274) $ (9,069,852) ========== ============ ========== ============ INVESTOR CLASS Sales ........................................... 402,140 $ 5,703,289 354,277 $ 4,391,409 Repurchases ..................................... (194,274) (2,796,981) (191,544) (2,406,983) Reinvestments ................................... 4,032 57,102 3,317 40,164 ---------- ------------ ---------- ------------ Net Increase / (Decrease) .......................... 211,898 $ 2,963,410 166,050 $ 2,024,590 ========== ============ ========== ============ BP MID CAP VALUE FUND ------------------------------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 ----------------------- ---------------------------- SHARES VALUE SHARES VALUE -------- ----------- ----------- ------------- Institutional Class Sales ........................................... 295,033 $ 3,923,035 465,320 $ 6,083,536 Repurchases ..................................... (215,949) (2,832,424) (2,202,125) (27,985,385) Reinvestments ................................... 575,796 7,462,319 16,114 203,846 -------- ----------- ----------- ------------- Net Increase / (Decrease) .......................... 654,880 $ 8,552,930 (1,720,691) $(21,698,003) ======== =========== =========== ============= INVESTOR CLASS Sales ........................................... 140,507 $ 1,897,369 109,413 $ 1,410,651 Repurchases ..................................... (73,889) (968,387) (170,037) (2,199,393) Reinvestments ................................... 40,086 512,302 846 10,588 -------- ----------- ----------- ------------- Net Increase / (Decrease) .......................... 106,704 $ 1,441,284 (59,778) $ (778,154) ======== =========== =========== ============= BP ALL-CAP VALUE FUND ------------------------------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 ----------------------- ------------------------ SHARES VALUE SHARES VALUE ------- ----------- ------- ---------- INSTITUTIONAL CLASS Sales ........................................... 135,352 $ 1,923,347 121,535 $1,527,587 Repurchases ..................................... (70,683) (1,056,193) (249) (3,089) Reinvestments ................................... 16,501 234,976 1,362 16,593 ------- ----------- ------- ---------- Net Increase / (Decrease) .......................... 81,169 $ 1,102,130 122,648 $1,541,091 ======= =========== ======= ========== INVESTOR CLASS Sales ........................................... 157,282 $ 2,279,313 47,851 $ 625,002 Repurchases ..................................... (26,670) (388,899) (8,691) (113,767) Reinvestments ................................... 3,715 52,873 31 385 ------- ----------- ------- ---------- Net Increase / (Decrease) .......................... 134,327 $ 1,943,287 39,191 $ 511,620 ======= =========== ======= ==========
84 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) - --------------------------------------------------------------------------------
WPG TUDOR FUND --------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE PERIOD JANUARY 1, 2005 TO YEAR ENDED YEAR ENDED AUGUST 31, 2005 DECEMBER 31, 2004 DECEMBER 31, 2003 -------------------------- ------------------------- -------------------------- SHARES VALUE SHARES VALUE SHARES VALUE -------- ----------- -------- ------------ ---------- ------------ INSTITUTIONAL CLASS Sales .................... 37,823 $ 644,418 132,091 $ 2,287,219 1,804,197 $ 22,280,713 Repurchases .............. (323,869) (5,495,452) (711,927) (12,368,622) (2,482,642) (31,586,950) Reinvestments ............ -- -- 304,962 5,208,756 -- -- -------- ----------- -------- ------------ ---------- ------------ Net Increase / (Decrease) ... (286,046) $(4,851,034) (274,874) $ (4,872,647) (678,445) $ (9,306,237) ======== =========== ======== ============ ========== ============ WPG LARGE CAP GROWTH FUND --------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE PERIOD JANUARY 1, 2005 TO YEAR ENDED YEAR ENDED AUGUST 31, 2005 DECEMBER 31, 2004 DECEMBER 31, 2003 -------------------------- --------------------------- ------------------------ SHARES VALUE SHARES VALUE SHARES VALUE -------- ----------- ---------- ------------ -------- ----------- INSTITUTIONAL CLASS Sales .................... 7,869 $ 177,920 134,452 $ 3,337,476 150,021 $ 3,333,334 Repurchases .............. (260,180) (5,808,907) (1,192,359) (29,117,158) (344,174) (7,485,469) Reinvestments ............ -- -- 121,536 2,775,886 -- -- -------- ----------- ---------- ------------ -------- ----------- Net Increase / (Decrease) ... (252,311) $(5,630,987) (936,371) $(23,003,796) (194,153) $(4,152,135) ======== =========== ========== ============ ======== =========== WPG CORE BOND FUND --------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE PERIOD JANUARY 1, 2005 TO YEAR ENDED YEAR ENDED AUGUST 31, 2005 DECEMBER 31, 2004 DECEMBER 31, 2003 ------------------------- --------------------------- -------------------------- SHARES VALUE SHARES VALUE SHARES VALUE ---------- ----------- ---------- ------------ ---------- ------------ INSTITUTIONAL CLASS Sales .................. 2,600,838 $ 27,885,333 4,653,509 $ 49,322,297 6,788,607 $ 72,013,231 Repurchases ............ (1,351,096) (14,543,674) (5,354,201) (57,635,145) (3,431,790) (36,159,856) Redemption Fees* ....... -- 1,420 -- -- -- -- Reinvestments .......... 311,924 3,368,054 376,259 4,030,853 240,549 2,829,202 ---------- ------------ ---------- ------------ ---------- ------------ Net Increase / (Decrease) . 1,561,666 $ 16,711,133 (324,433) $ (4,281,995) 3,597,366 $ 38,682,577 ========== ============ ========== ============ ========== ============ - ---------- * There is a 1.00% redemption fee on shares redeemed which have been held 365 days or less on the BP Small Cap Value Fund II. There is a 2.00% redemption fee on shares redeemed which have been held 365 days or less on the BP Long/Short Equity Fund. The redemption fees are retained by the Funds for the benefit of the remaining shareholders and recorded as paid-in capital. The WPG Core Bond Fund has a 2.00% redemption fee on shares redeemed within 60 days of purchase.
As of August 31, 2005, the following shareholders held 10% or more of the outstanding shares of the Funds. These shareholders may be omnibus accounts which are comprised of many individual shareholders. BP Small Cap Value Fund II (2 shareholders) 49% BP Long/Short Equity Fund (3 shareholders) 68% BP Large Cap Value Fund (1 shareholder) 60% BP Mid Cap Value Fund (2 shareholders) 86% BP All-Cap Value Fund (2 shareholders) 59% WPG Tudor Fund -- WPG Large Cap Growth Fund (1 shareholder) 10% WPG Core Bond Fund (3 shareholders) 59% ANNUAL REPORT 2005 | 85 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) - -------------------------------------------------------------------------------- 8. FEDERAL INCOME TAX INFORMATION At August 31, 2005, Federal tax cost and aggregate gross unrealized appreciation and depreciation of securities held by each Fund were as follows:
NET UNREALIZED FEDERAL TAX UNREALIZED UNREALIZED APPRECIATION/ FUND COST APPRECIATION DEPRECIATION DEPRECIATION - ------ ------------ ------------ ------------- -------------- BP Small Cap Value Fund II $335,384,084 $97,265,454 $(15,693,776) $81,571,678 BP Long/Short Equity Fund 55,590,449 20,887,293 (10,952,500) 9,934,793 BP Large Cap Value Fund 35,398,482 5,836,184 (558,671) 5,277,513 BP Mid Cap Value Fund 48,425,290 11,470,065 (962,144) 10,507,921 BP All-Cap Value Fund 8,450,085 1,971,046 (217,982) 1,753,064 WPG Tudor Fund 50,482,481 5,609,577 (2,352,943) 3,256,634 WPG Large Cap Growth Fund 17,859,432 3,074,722 (369,853) 2,704,869 WPG Core Bond Fund 260,814,692 1,282,081 (477,592) 804,489
The following permanent differences as of August 31, 2005, primarily attributable to net investment loss and non-deductible expenses, were reclassified to the following accounts:
INCREASE/(DECREASE) INCREASE/(DECREASE) ACCUMULATED INCREASE/(DECREASE) UNDISTRIBUTED NET REALIZED ADDITIONAL NET INVESTMENT GAIN/(LOSS) PAID-IN FUND INCOME/(LOSS) ON INVESTMENTS CAPITAL - ---- ------------------- ------------------- ------------------ BP Small Cap Value Fund II $2,542,727 $(2,542,727) $ -- BP Long/Short Equity Fund 1,804,868 (1,804,868) -- BP Large Cap Value Fund (2) (1,185,294) 1,185,296 BP Mid Cap Value Fund 13,814 (13,814) -- BP All-Cap Value Fund (8,953) 8,953 -- WPG Tudor Fund 129,343 (129,343) -- WPG Large Cap Growth Fund 62,806 (373) (62,433) WPG Core Bond Fund -- -- --
As of August 31, 2005, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM FUND INCOME GAINS - ------ ------------- ------------- BP Small Cap Value Fund II $4,842,920 $40,435,353 BP Long/Short Equity Fund 2,863,078 2,766,051 BP Large Cap Value Fund 325,835 4,674,553 BP Mid Cap Value Fund 805,830 4,692,604 BP All-Cap Value Fund 144,859 514,940 WPG Tudor Fund 3,007,949 2,693,232 WPG Large Cap Growth Fund -- 2,031,188 WPG Core Bond Fund (8,966) -- At August 31, 2005, the WPG Core Bond Fund had capital loss carryforwards of $2,731,098 available to offset future capital gains which expire in 2007. During the year ended August 31, 2005, the BP Large Cap Value Fund utilized $3,129,974 of prior capital loss carryforwards, the BP Long/Short Equity Fund utilized $7,780,009 of prior capital loss carryforwards, and the WPG Core Bond Fund utilized $360,085 of prior capital loss carryforwards. 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, 2005, there were no post-October capital losses or post-October currency losses incurred by the Funds. 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. 86 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (concluded) - -------------------------------------------------------------------------------- The tax character of dividends and distributions paid during the last two fiscal years or periods were as follows:
FISCAL YEAR/ TAX PERIOD ORDINARY LONG-TERM RETURN OF FUND ENDED INCOME GAINS CAPITAL TOTAL - ---- ------------ ----------- ----------- -------- ----------- BP Small Cap Value Fund II 8/31/05 $13,031,469 $44,235,919 $ -- $57,267,388 8/31/04 1,705,172 2,461,756 -- 4,166,928 BP Long/Short Equity Fund 8/31/05 $ -- $ -- $ -- $ -- 8/31/04 -- -- -- -- BP Large Cap Value Fund 8/31/05 $ 355,713 $ -- $ -- $ 355,713 8/31/04 456,090 -- -- 456,090 BP Mid Cap Value Fund 8/31/05 $ 3,143,371 $ 5,032,887 $ -- $ 8,176,258 8/31/04 293,409 -- -- 293,409 BP All-Cap Value Fund 8/31/05 $ 45,057 $ 284,013 $ -- $ 329,070 8/31/04 20,688 -- -- 20,688 WPG Tudor Fund 8/31/05 $ -- $ -- $ -- $ -- 12/31/04 5,773,811 -- -- 5,773,811 WPG Large Cap Growth Fund 8/31/05 $ -- $ -- $ -- $ -- 12/31/04 -- 3,205,905 -- 3,205,905 WPG Core Bond Fund 8/31/05 $ 3,597,722 $ -- $ -- $ 3,597,722 12/31/04 4,533,585 -- -- 4,533,585
9. IN-KIND REDEMPTION During the year ended August 31, 2005, the BP Large Cap Value Fund distributed securities in lieu of cash for an Institutional Shareholder redemption. The shareholder received a pro-rata portion of the BP Large Cap Value Fund's holdings. The value of the redemption was $7,471,816 (of which $1,185,294 was a realized gain for financial reporting purposes). Institutional shares of 581,012 were redeemed from the BP Large Cap Value Fund as a part of this transaction. This transaction was completed following guidelines approved by the Board of Directors. ANNUAL REPORT 2005 | 87 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - -------------------------------------------------------------------------------- To the Board of Directors and Shareholders of The RBB Fund, Inc.: In our opinion, the accompanying statements of assets and liabilities, including the portfolios 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 Robeco Boston Partners Small Cap Value Fund II, Robeco Boston Partners Long/Short Equity Fund, Robeco Boston Partners Large Cap Value Fund, Robeco Boston Partners Mid Cap Value Fund, Robeco Boston Partners All-Cap Value Fund, Robeco WPG Tudor Fund (formerly WPG Tudor Fund), Robeco WPG Large Cap Growth Fund (formerly WPG Large Cap Growth Fund), and Robeco WPG Core Bond Fund (formerly WPG Core Bond Fund), each separately managed portfolios of The RBB Fund, Inc. (the "Fund") at August 31, 2005, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, except for the Robeco WPG Tudor Fund, Robeco WPG Large Cap Growth Fund and Robeco WPG Core Bond Fund for which the results of each of their operations, the changes in each of their net assets and the financial highlights are for the period January 1, 2005 to August 31, 2005, 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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, 2005 by correspondence with the custodians and brokers, provide a reasonable basis for our opinion. The statements of operations for the year ended December 31, 2004, the statements of changes in net assets for each of the two years ended December 31, 2004 and the financial highlights for each of the five years ended December 31, 2004 for the Robeco WPG Tudor Fund, Robeco WPG Large Cap Growth Fund and Robeco WPG Core Bond Fund were audited by other independent accountants whose report dated February 14, 2005 expressed an unqualified opinion on those financial statements. PricewaterhouseCoopers LLP Philadelphia, Pennsylvania October 28, 2005 88 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SHAREHOLDER TAX INFORMATION (Unaudited) - -------------------------------------------------------------------------------- BP SMALL CAP VALUE FUND II BP LONG/SHORT EQUITY FUND BP LARGE CAP VALUE FUND BP MID CAP VALUE FUND BP ALL-CAP VALUE FUND WPG TUDOR FUND WPG LARGE CAP GROWTH FUND WPG CORE BOND FUND 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, 2005) 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, 2005, the following dividends and distributions per share were paid by each of the Funds:
ORDINARY INCOME SHORT-TERM CAPITAL GAINS LONG-TERM CAPITAL GAINS ------------------------ ------------------------ ------------------------ INSTITUTIONAL INVESTOR INSTITUTIONAL INVESTOR INSTITUTIONAL INVESTOR FUND CLASS CLASS CLASS CLASS CLASS CLASS - ------ ------------- -------- ------------- -------- ------------- -------- BP Small Cap Value Fund II ........ $ -- $ -- $0.69 $0.69 $2.34 $2.34 BP Large Cap Value Fund ........... 0.11 0.08 -- -- -- -- BP Mid Cap Value Fund ............. 0.01 -- 0.89 0.89 1.46 1.46 BP All-Cap Value Fund ............. 0.05 0.03 0.04 0.04 0.56 0.56 WPG Tudor Fund .................... -- N/A 1.90 N/A -- N/A WPG Large Cap Growth Fund ......... -- N/A -- N/A 3.10 N/A WPG Core Bond Fund ................ 0.25 N/A -- N/A -- N/A
The percentage of total ordinary income dividends qualifying for the corporate dividends received deduction for each Fund is as follows: BP Small Cap Value Fund II .................. 32% BP Long/Short Equity Fund ................... N/A BP Large Cap Value Fund ..................... 100% BP Mid Cap Value Fund ....................... 25% BP All-Cap Value Fund ....................... 87% WPG Tudor Fund .............................. N/A WPG Large Cap Growth Fund ................... N/A WPG Core Bond Fund .......................... N/A The percentage of total ordinary income dividends qualifying for the 15% dividend income tax rate for each Fund is as follows: BP Small Cap Value Fund II .................. 23% BP Long/Short Equity Fund ................... N/A BP Large Cap Value Fund ..................... 100% BP Mid Cap Value Fund ....................... 23% BP All-Cap Value Fund ....................... 81% WPG Tudor Fund .............................. N/A WPG Large Cap Growth Fund ................... N/A WPG Core Bond Fund .......................... N/A These amounts were reported to shareholders as income in 2004. Because each Fund's fiscal year is not the calendar year, another notification will be sent with respect to calendar year 2005. 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 2006. 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 Fund, 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 Fund. ANNUAL REPORT 2005 | 89 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OTHER INFORMATION (Unaudited) - -------------------------------------------------------------------------------- PROXY VOTING Policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities as well as information regarding how the Funds voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (888) 261-4073 and on the Securities and Exchange Commission's website at http://www.sec.gov. QUARTERLY PORTFOLIO SCHEDULE The Company files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third fiscal quarters of each fiscal year (quarters ended November 30 and May 31) on Form N-Q. The Company's Form N-Q will be available on the Securities and Exchange Commission's website at http://www.sec.gov and may be reviewed and copied at the Securities and Exchange Commission's Public Reference Room in Washington, D.C. Information on the operation of the Securities and Exchange Commission's Public Reference Room may be obtained by calling 1-800-SEC-0330. RENEWAL OF INVESTMENT ADVISORY AGREEMENTS ROBECO BOSTON PARTNERS FUNDS BOSTON PARTNERS ASSET MANAGEMENT As required by the 1940 Act, the Board of Directors (the "Board") of the Company, including all of the Directors who are not "interested persons" of the Company, as that term is defined in the 1940 Act (the "Independent Directors"), considered the renewal of the investment advisory agreements between Boston Partners Asset Management, L.L.C. (the "Adviser" or "Boston Partners") and the Company (each an "Advisory Agreement" and collectively, the "Advisory Agreements") on behalf of the Robeco Boston Partners Large Cap Value Fund, Mid Cap Value Fund, Small Cap Value Fund II, All-Cap Value Fund and Long/Short Equity Fund (each a "Fund" and collectively the "Funds") at a meeting of the Board held on May 25, 2005. At this meeting, the Board approved the Advisory Agreements for an additional one-year term. The Board's decision to approve the Agreements reflects the exercise of its business judgment to continue the existing arrangement. In approving the Agreements, the Board considered information provided by the Adviser with the assistance and advice of counsel to the Independent Directors and the Company. In considering the renewal of and approval of the Advisory Agreements, the Directors took into account all the materials provided prior to and during the meeting, the presentations made during the meeting, and the discussions during the meeting. The Directors discussed the materials from the Adviser mailed in advance of the meeting that addressed most, if not all, of the factors listed below. The Adviser also made a presentation during the meeting and responded to questions from the Directors. Among other things, the Directors considered (i) the nature, extent, and quality of the Adviser's services provided to the Funds; (ii) descriptions of the experience and qualifications of the personnel providing those services; (iii) the Adviser's investment philosophies and processes; (iv) the Adviser's assets under management and client descriptions; (v) the Adviser's soft dollar commission and trade allocations policies, including information on the types of research and services obtained in connection with soft dollar commissions; (vi) the current and proposed advisory fee arrangements with the Company and other similarly managed clients; (vii) compliance procedures; (viii) the Adviser's financial information, insurance coverage and profitability analysis related to providing advisory services to the Funds; (ix) the extent to which economies of scale are relevant to each Fund; (x) a report comparing each Fund's proposed or current advisory fees and expenses to those of its peer group; and (xi) a report comparing the performance of each Fund to the performance of its applicable benchmark index and peer group. No one factor was determinative in the Board's consideration of the Advisory Agreements. The Directors then met in executive session with counsel to discuss and consider information presented in connection with the continuation of the Advisory Agreements as well as the Directors' responsibilities and duties in approving the Agreements. 90 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OTHER INFORMATION (Unaudited) (continued) - -------------------------------------------------------------------------------- During the course of its deliberations, the Board reached the following conclusions, among others, regarding Boston Partners and the Advisory Agreements with respect to the Funds. The Directors considered the Funds' gross and net advisory fees and gross and net expense ratios in comparison to that of each Fund's peer group median as well as each Fund's performance in comparison to the performance of that Fund's peer group median and benchmark. The Directors also reviewed the gross advisory fees in comparison to the fees Boston Partners charges for managing assets pursuant to a strategy similar to that of a Fund for its other clients. The Directors began with an evaluation of the Large Cap Value Fund, considering that both the gross and net advisory fee ratios and expenses for the Investor Class were lower than the peer group average and for the Institutional Class were higher than the peer group average. For the year-to-date and one-year periods ended March 31, 2005, the Fund performed better than the peer group average and performed worse than the benchmark. The Directors reviewed the advisory fees charged by Boston Partners to manage other clients' assets in a similar strategy as that of the Fund and found the fees to be lower in comparison to the advisory fees charged to the Fund. The Directors then noted that Boston Partners agreed to waive its advisory fee and reimburse expenses of the Fund through December 31, 2006 to limit the Fund's total annual operating expenses of the Institutional Class and Investor Class to 1.00% and 1.25%, respectively. The Directors considered and assessed the reasons for the higher advisory fees for the Institutional Class of the Fund; the higher expense ratios for the Institutional Class of the Fund; and the lagging performance for the Fund relative to its benchmark. Next, the Directors evaluated the Mid Cap Value Fund, considering that for the Investor Class, the gross and net advisory fees were the same as the Fund's peer group median while gross and net expense ratios were lower than the Fund's peer group average. The Directors then noted that for the Institutional Class, the gross and net advisory fees were slightly higher than the peer group average while the gross and net expenses were higher and lower, respectively, than the Fund's peer group average. The Directors also discussed that, for the year-to-date period ended March 31, 2005, the Fund performed worse than the peer group average but better than the benchmark while the Fund performed better than both the peer group average and benchmark for the one year period ended March 31, 2005. The Directors reviewed the advisory fees charged by Boston Partners to manage other clients' assets in a similar strategy as that of the Fund and found the fees to be the same or lower in comparison to the advisory fees charged to the Fund. The Directors then noted that Boston Partners agreed to waive its advisory fee and reimburse expenses of the Fund through December 31, 2006 to limit the Fund's total annual operating expenses of the Institutional Class and Investor Class to 1.00% and 1.25%, respectively. The Directors considered and assessed the reasons for the slightly higher advisory fee for the Institutional Class of the Fund; the higher gross expense ratio for the Institutional Class of the Fund; and the lagging year-to-date performance for the Fund relative to its peer group. The Directors then evaluated the Small Cap Value Fund II, considering that for the Investor and Institutional Classes, the gross and net advisory fees were higher than the peer group median while gross and net expenses were lower for the Investor Class but higher for the Institutional Class when compared to the Fund's peer group average. The Directors also discussed that, for the year-to-date period ended March 31, 2005, the Fund performed worse than the peer group average but better than the benchmark, while the Fund performed worse than both the peer group average and benchmark for the one year period ended March 31, 2005. The Directors reviewed the advisory fees charged by Boston Partners to manage other clients' assets in a similar strategy as that of the Fund and found the fees to be lower in comparison to the fees charged to the Fund. The Directors then noted that Boston Partners agreed to waive its advisory fee and reimburse expenses of the Fund through December 31, 2006 to limit the Fund's total annual operating expenses of the Institutional Class and Investor Class to 1.55% and 1.80%, respectively. The Directors considered and assessed the reasons for the higher advisory fees for both the Investor and Institutional Classes of the Fund; the higher gross and net expense ratios for the Institutional Class of the Fund; and the lagging one year performance for the Fund relative to its peer group and benchmark. The Directors continued by evaluating the All-Cap Value Fund, considering that for the Investor Class, the gross and net advisory fees were lower than the peer group average, while for the Institutional Class, gross and net advisory fees were higher and lower, respectively, than the peer group average. It was noted that gross expenses were higher than the peer group average for both Classes and that net expenses for the Investment and Institutional Classes were lower and higher, respectively, than the peer group average. The Directors also discussed that, for the year-to-date and one year periods ended March 31, 2005, the Fund out-performed both the peer group average and benchmark. The Directors reviewed the advisory fees charged by Boston Partners to manage other clients' assets in a similar strategy as that of the Fund and found the fees to be lower in comparison to the fees charged to the Fund. The Directors then noted that Boston Partners agreed to waive ANNUAL REPORT 2005 | 91 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OTHER INFORMATION (Unaudited) (continued) - -------------------------------------------------------------------------------- its advisory fee and reimburse expenses of the Fund through December 31, 2006 to limit the Fund's total annual operating expenses of the Institutional Class and Investor Class to 1.25% and 1.50%, respectively. The Directors considered and assessed the reasons for the higher gross advisory fee for the Institutional Class of the Fund; the higher gross expense ratios for both Classes and the higher net expense ratio for the Institutional Class of the Fund. The Directors evaluated the Long/Short Equity Fund, considering that for the Investor and Institutional Classes, the gross and net advisory fees and gross and net expense ratios were higher than the peer group average. The Directors discussed that, for the year-to-date and one-year periods ended March 31, 2005, the Fund performed better than the Fund's peer group average and benchmark during the same period. The Directors reviewed the advisory fees charged by Boston Partners to manage other clients' assets in a similar strategy as that of the Fund and found the fees to be lower in comparison to the fees charged to the Fund. The Directors then noted that Boston Partners agreed to waive its advisory fee and reimburse expenses of the Fund through December 31, 2006 to limit the Fund's total annual operating expenses of the Institutional Class and Investor Class to 2.50% and 2.75%, respectively. The Directors considered and assessed the reasons for the higher gross and net advisory fees and expense ratios for the Institutional and Investor Classes of the Fund. The Directors then determined that the nature, extent and quality of services provided by Boston Partners in advising the Funds was satisfactory; the profits earned by Boston Partners seemed reasonable; and the benefits derived by Boston Partners from managing the Funds, including its use of soft dollars and the way it selects brokers, seemed reasonable. The Directors discussed and considered any economies-of-scale realized by each Fund as a result of asset growth. Based on all of the information presented to the Board and its consideration of relevant factors, the Board concluded that the fee paid to the Adviser by each Fund was reasonable, and in the exercise of its business judgment that Boston Partners' Advisory Agreements, on behalf of each Fund, be continued for another one-year period ending August 16, 2006. ROBECO WPG FUNDS WEISS, PECK & GREER INVESTMENTS The Board of the Company, including all of the Independent Directors, considered the approval of the investment advisory agreements between Robeco Investment Management, USA, through its division Weiss, Peck & Greer (the "Adviser" or "WPG"), and the Company (each an "Advisory Agreement" and collectively, the "Advisory Agreements") on behalf of the Robeco WPG Tudor Fund, Large Cap Growth Fund, and Core Bond Fund (each a "Fund" and collectively the "Funds") at a meeting of the Board held on February 24, 2005. At this meeting, the Board approved the Advisory Agreements for an initial term ending on August 31, 2006. The Board's decision to approve the Agreements reflects the exercise of its business judgment. In approving the Agreements, the Board considered information provided by the Adviser with the assistance and advice of counsel to the Independent Directors and Company. In considering the approval of the Advisory Agreements, the Directors took into account all the materials provided prior to and during the meeting, the presentations made during the meeting, and the discussions during the meeting. The Directors discussed the materials from the Adviser mailed in advance of the meeting that addressed most, if not all, of the factors listed below. The Adviser also made a presentation during the meeting and responded to questions from the Directors. Among other things, the Directors considered (i) the nature, extent, and quality of the Adviser's services provided to the Funds; (ii) descriptions of the experience and qualifications of the personnel providing those services; (iii) the Adviser's investment philosophies and processes; (iv) the Adviser's assets under management and client descriptions; (v) the Adviser's soft dollar commission and trade allocations policies, including information on the types of research and services obtained in connection with soft dollar commissions; (vi) the current and proposed advisory fee arrangements with the Company and other similarly managed clients; (vii) compliance procedures; (viii) the Adviser's financial information, insurance coverage and profitability analysis related to providing advisory services to the Funds; (ix) the extent to which economies of scale are relevant to each Fund; (x) a report comparing each Fund's proposed or current advisory fees and expenses to those of its peer group; and (xi) a report comparing the performance of each Fund to the performance of its applicable benchmark index and peer group. No one factor was determinative in the Board's consideration of the Advisory Agreements. The Directors then met in executive session with counsel to discuss and consider information presented in connection with the approval of the Advisory Agreements as well as the Directors' responsibilities and duties in approving the Agreements. 92 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OTHER INFORMATION (Unaudited) (continued) - -------------------------------------------------------------------------------- During the course of its deliberations, the Board reached the following conclusions, among others, regarding WPG and the Advisory Agreements with respect to the Funds. The Directors considered the Funds' gross and net advisory fees and net expense ratios in comparison to that of each Fund's peer group average as well as each Fund's performance in comparison to the performance of that Fund's peer group average and benchmark. The Directors also reviewed the gross advisory fees in comparison to the fees WPG charges for managing assets pursuant to a strategy similar to that of a Fund for its other clients. The Directors began with an evaluation of the Robeco WPG Large Cap Growth Fund considering that for the year-to-date and one-year periods ended October 31, 2004, the Fund underperformed its benchmark. The Fund performed below its peer group average for the year-to-date and one-year periods ended September 30, 2004. The Directors considered that the gross and net advisory fees were higher and lower, respectively, than the peer group averages. The Directors further noted that the total net expense ratio was higher than the peer group averages. The Directors reviewed the advisory fees charged by WPG to manage other clients' assets in a similar strategy as that of the Fund and found the fees to be lower in comparison to the advisory fees charged to the Fund. The Directors then noted that WPG agreed to waive its advisory fee and reimburse expenses of the Fund through April 30, 2006 to limit the Fund's total annual operating expenses of the Institutional Class to 1.40%. The Directors considered and assessed the reasons for the higher gross advisory fee for the Institutional Class of the Fund; the higher net expense ratio for the Institutional Class of the Fund; and the lagging performance for the Fund relative to its benchmark and peer group. Next, the Directors evaluated the Robeco WPG Tudor Fund considering that for the year-to-date and one-year periods ended October 31, 2004, the Fund underperformed its benchmark. The Fund's performance ranked in the third quartile of its peer group for the year-to-date and one-year periods ended September 30, 2004. The Directors considered that the gross and net advisory fees were slightly lower and higher, respectively, than the peer group and population averages. The Directors further noted that the total net expense ratio was higher than the peer group and population averages. The Directors reviewed the advisory fees charged by WPG to manage other clients' assets in a similar strategy as that of the Fund and found the fees to be lower in comparison to the advisory fees charged to the Fund. The Directors then noted that WPG agreed to waive its advisory fee and reimburse expenses of the Fund through April 30, 2006 to limit the Fund's total annual operating expenses of the Institutional Class to 1.00%. The Directors considered and assessed the reasons for the higher net advisory fee for the Institutional Class of the Fund; the higher net expense ratio for the Institutional Class of the Fund; and the lagging for the Fund relative to its benchmark and peer group. The Directors then evaluated the Robeco WPG Core Bond considering that for the year-to-date period ended October 31, 2004, the Fund slightly underperformed the benchmark while for the one-year period ended October 31, 2004, the Fund slightly outperformed the benchmark. The Fund ranked in the first quartile with respect to investment performance for the year-to-date and one-year periods ended September 30, 2004, among its peer group. The Directors considered that the gross and net advisory fees were slightly higher and lower, respectively, than the peer group averages. The Directors noted that the total net expense ratio was lower than the peer group averages. The Directors reviewed the advisory fees charged by WPG to manage other clients' assets in a similar strategy as that of the Fund and found the fees to be lower in comparison to the advisory fees charged to the Fund. The Directors then noted that WPG agreed to waive its advisory fee and reimburse expenses of the Fund through April 30, 2006 to limit the Fund's total annual operating expenses of the Institutional Class to 1.70%. The Directors considered and assessed the reasons for the slightly higher gross advisory fee for the Institutional Class of the Fund and the lagging year-to-date performance for the Fund relative to its benchmark. The Directors then determined that the nature, extent and quality of services provided by WPG in advising the Funds was satisfactory; the profits earned by WPG seemed reasonable; and the benefits derived by WPG from managing the Funds, including its use of soft dollars and the way it selects brokers, seemed reasonable. The Directors discussed and considered any economies-of-scale realized by each Fund as a result of asset growth. Based on all of the information presented to the Board and its consideration of relevant factors, the Board concluded that the fee paid to the Adviser by each Fund was reasonable, and in the exercise of its business judgment that WPG's Advisory Agreements, on behalf of each Fund, be approved for an initial period ending August 16, 2006. ANNUAL REPORT 2005 | 93 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SHAREHOLDER MEETING INFORMATION (Unaudited) - -------------------------------------------------------------------------------- Special Meetings of the Shareholders of the WPG Core Bond Fund, a series of the Weiss Peck & Greer Funds Trust, the WPG Tudor Fund and the WPG Large Cap Growth Fund (each, a predecessor fund to the Robeco WPG Funds) were held on April 27, 2005 at which the shareholders voted on the proposals described below. The following proposals were approved by the shareholders and the results of the vote are shown below:
SHARES SHARES VOTED VOTED AGAINST OR SHARES BROKER FUND PROPOSAL FOR WITHHELD ABSTAINED NON-VOTE - ---- --------------------- --------- ------------- --------- -------- WPG Core Bond Fund, Approval of an 8,905,680 197,919 29,939 0 a series of the Weiss, Peck Agreement and Plan of & Greer Funds Trust Reorganization WPG Tudor Fund Approval of an 1,625,283 144,197 114,417 0 Agreement and Plan of Reorganization WPG Large Cap Approval of an 526,498 18,837 24,647 0 Growth Fund Agreement and Plan of Reorganization
94 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FUND MANAGEMENT (Unaudited) - -------------------------------------------------------------------------------- The business and affairs of the Company are managed under the direction of the Company's Board of Directors. The Company is organized under and managed pursuant to Maryland law. The Directors and executive officers of the Company, their dates of birth, business addresses and principal occupations during the past five years are 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) 261-4073.
NUMBER OF PORTFOLIOS IN POSITION(S) TERM OF OFFICE FUND COMPLEX OTHER NAME, ADDRESS, HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST OVERSEEN BY DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED(1) 5 YEARS DIRECTOR* HELD BY DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS - ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director 1988 to present Since 1969, Director and Vice Chairman 17 Director, Comcast Corporation Comcast Corporation (cable television Comcast 1500 Market Street, and communications); Director, NDS Corporation 35th Floor Group PLC (provider of systems and Philadelphia, PA 19102 applications for digital pay TV). DOB: 7/16/33 - ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director 1988 to present Since 2000, Vice President, Fox Chase 17 None Fox Chase Cancer Center Cancer Center (biomedical research and 333 Cottman Avenue medical care); prior to 2000, Executive Philadelphia, PA 19111 Vice President, Fox Chase Cancer DOB: 12/06/35 Center. - ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director 1991 to present Since December 2000, Director, Gabelli 17 None 106 Pierrepont Street Partners, L.P. (an investment Brooklyn, NY 11201 partnership); Chief Operating Officer DOB: 5/21/48 and member of the Board of Directors of Outercurve Technologies (wireless 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 Manage-ment Securities, Inc. (formerly Counsellors Securities, Inc.) and Director/Trustee of various investment companies advised by Warburg Pincus Asset Management, Inc. until September 15, 1999; Prior to 1997, Managing Director of Warburg Pincus Asset Management, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director 1991 to present Since 1974, Chairman, Director and 17 Director, Moyco Technologies, Inc. President, Moyco Technologies, Inc. Moyco 200 Commerce Drive (manufacturer of precision coated and Technologies, Inc. Montgomeryville, PA 18936 industrial abrasives). Since 1999, DOB: 3/24/34 Director, Pennsylvania Business Bank. - ------------------------------------------------------------------------------------------------------------------------------------ * Each Director oversees seventeen portfolios of the Company that are currently offered for sale. The Company is authorized to offer two additional portfolios that had not commenced operations as of the date of this report. 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified.
ANNUAL REPORT 2005 | 95 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FUND MANAGEMENT (Unaudited) (continued) - --------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN POSITION(S) TERM OF OFFICE FUND COMPLEX OTHER NAME, ADDRESS, HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST OVERSEEN BY DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED(1) 5 YEARS DIRECTOR* HELD BY DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS(2) - ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director 1991 to present Since July 2002, Senior Vice President 17 None Oppenheimer & Company, Inc. and prior thereto, Executive Vice 200 Park Avenue President of Oppenheimer & Co., Inc., New York, NY 10166 formerly Fahnestock & Co., Inc. (a DOB: 4/16/38 registered broker-dealer). - ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director 2002 to present Director of PFPC Inc. from January 17 Director, 400 Bellevue Parkway 1987 to April 2002, Chairman and Chief Cornerstone Wilmington, DE 19809 Executive Officer of PFPC Inc. until Bank DOB: 9/25/38 April 2002, Executive Vice President of PNC Bank, National Association from October 1981 to April 2002, Director of PFPC International Ltd. (financial services) from August 1993 to April 2002, Director of PFPC International (Cayman) Ltd. (financial services) from September 1996 to April 2002; Governor of the Investment Company Institute (investment company industry trade organization) from July 1996 to January 2002; Director of PNC Asset Management, Inc. (investment advisory) from September 1994 to March 1998; Director of PNC National Bank from October 1995 to November 1997; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984; and Director of Cornerstone Bank since March 2004. - ------------------------------------------------------------------------------------------------------------------------------------ * Each Director oversees seventeen portfolios of the Company that are currently offered for sale. The Company is authorized to offer two additional portfolios that had not commenced operations as of the date of this report. 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified. 2 Messrs. Carnall and Sablowsky are considered "interested persons" of the Company as that term is defined in the 1940 Act. Mr. Carnall is 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. Sablowsky is considered an "interested Director" of the Company by virtue of his position as an officer of a registered broker-dealer.
96 | ANNUAL REPORT 2005 ROBECO INVESTMENT FUNDS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FUND MANAGEMENT (Unaudited) (concluded) - --------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN POSITION(S) TERM OF OFFICE FUND COMPLEX OTHER NAME, ADDRESS, HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST OVERSEEN BY DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED(1) 5 YEARS DIRECTOR* HELD BY DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS - ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President 1991 to present Certified Public Accountant; Vice N/A N/A 400 Bellevue Parkway and and Chairman of the Board, Fox Chase Cancer 4th Floor Treasurer 1988 to present Center; Trustee Emeritus, Pennsylvania Wilmington, DE 19809 School for the Deaf; Trustee Emeritus, DOB: 6/29/24 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, President since 2002, Treasurer since 1981 and Chief Compliance Officer since September 2004 of Chestnut Street Exchange Fund; and Director of the Bradford Funds, Inc. from 1996 to 2000. - ------------------------------------------------------------------------------------------------------------------------------------ Tina M. Payne Secretary 2005 to present Since 2003, Vice President and N/A N/A 301 Bellevue Parkway Associate Counsel, PFPC Inc. (financial 2nd Floor services company); Associate, Stradley, Wilmington, DE 19809 Ronon, Stevens & Young, LLC (law firm) DOB: 5/19/74 from 2001 to 2003. - ------------------------------------------------------------------------------------------------------------------------------------ Salvatore Faia, Esquire, Chief 2004 to present President, Vigilant Compliance N/A N/A CPA Compliance Services, Since 2004; Senior Legal Vigilant Compliance Officer Counsel, PFPC Inc. from 2002 to 2004; 186 Dundee Drive, Suite 700 Chief Legal Counsel, Corviant Williamstown, NJ 08094 Corporation (Investment Adviser, DOB: 12/25/62 Broker/Dealer and Service Provider to Investment Advisers and Separate Accountant Providers) from 2001 to 2002; Partner, Pepper Hamilton LLP (law firm) from 1997 to 2001. - ------------------------------------------------------------------------------------------------------------------------------------ 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified.
ANNUAL REPORT 2005 | 97 [GRAPHIC OMITTED] ROBECO INVESTMENT ADVISERS --------------------------- Boston Partners Asset Management, LLC 28 State Street Boston, MA 02109 WPG Investments 909 Third Avenue New York, NY 10022 ADMINISTRATOR ----------------------- PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 TRANSFER AGENT ----------------------- PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 DISTRIBUTOR ----------------------- PFPC Distributors, Inc. 760 Moore Rd. King of Prussia, PA 19406 CUSTODIANS ----------------------- PFPC Trust Company 8800 Tinicum Blvd. Suite 200 Philadelphia, PA 19153 Boston Safe Deposit and Trust Company One Exchange Place Boston, MA 02109 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------------------------------ 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 UNION BUG HERE ============================================ THE SCHNEIDER FUNDS ============================================ OF THE RBB FUND, INC. SCHNEIDER SMALL CAP VALUE FUND SCHNEIDER VALUE FUND ====================== ANNUAL REPORT AUGUST 31, 2005 ====================== [LOGO - ----------------------- SCHNEIDER CAPITAL MANAGEMENT [GRAPHIC OMITTED] THE SCHNEIDER FUNDS ANNUAL INVESTMENT ADVISER'S REPORT (UNAUDITED) AUGUST 31, 2005 Dear Fellow Shareholder: We are pleased to provide you with the annual report for the Schneider Funds for the fiscal year ended August 31, 2005. INVESTMENT ENVIRONMENT U.S. stocks posted healthy gains during the twelve months ended August 31, 2005. The Russell 3000 Index, which represents the broad U.S. equity market, rose 15.3% during the period. Small and medium-capitalization stocks continued their multi-year performance streak and outpaced large caps by a wide margin. The U.S. economy was strong and resilient during the past year. For the past nine quarters, it has expanded by more than 3% per quarter, the fastest sustained growth since 1984-1986. Third-quarter 2005 earnings for the companies in the S&P 500 are expected to grow 16% over the same quarter a year ago, which would make for a record fourteen consecutive quarters of double-digit gains. SCHNEIDER SMALL CAP VALUE FUND -- INVESTMENT REVIEW AND PORTFOLIO STRATEGY The Small Cap Value Fund generated exceptionally strong results during the year ended August 31, 2005, returning 31.57% versus 22.61% for the Russell 2000 Value Index. Since inception on September 2, 1998, the Fund has performed notably well in delivering a 29.72% annualized return versus 14.43% for the benchmark index. Timely stock selection in the hotel, commercial aerospace and non-residential real estate segments made a favorable contribution to returns. We established our initial positions when these industries were under severe stress and investor expectations had reached a low-water mark. The hotel and commercial aerospace industries have already experienced a cyclical upswing in demand and strong rebound in profits. Investments in stocks such as Boykin Lodging, MeriStar Hospitality and BE Aerospace benefited from the improving health of their respective industries. We believe that these areas continue to offer a good combination of attractive valuations and further business improvement. The office real estate market has more recently begun to emerge from a severe three-year slump. Our strategy for the Fund has been to invest in a diversified group of companies that are engaged in real estate services, property ownership and construction. We anticipate that our holdings will fully participate in the cyclical upturn as vacancy rates decline, pricing recovers, and new properties are developed in select markets. Since we are probably entering the later stages of the U.S. economic and corporate profits cycle, investors might favor companies that can produce robust earnings growth in an environment where earnings are harder to come by. It is heartening to note that Wall Street analysts expect the median company in the Fund to post 30% earnings growth in fiscal 2006, nearly double the projected 16% increase for the companies in the benchmark Russell 2000 Value Index. We are working hard every day to uncover out-of-favor companies with attractive return potential. - ---------- THE FUNDS INVEST IN STOCKS OF SMALL-CAPITALIZATION COMPANIES WHICH ARE MORE VOLATILE THAN, AND NOT AS READILY MARKETABLE AS, THOSE OF LARGER MORE ESTABLISHED COMPANIES. SMALL COMPANIES MAY ALSO HAVE LIMITED PRODUCT LINES, MARKETS OR FINANCIAL RESOURCES AND MAY BE DEPENDENT ON LESS EXPERIENCED MANAGEMENT. ADDITIONALLY, THE TRADING VOLUME OF SMALL-COMPANY SECURITIES MAY MAKE THEM MORE DIFFICULT TO SELL THAN THOSE OF LARGER COMPANIES. PORTFOLIO COMPOSITION IS SUBJECT TO CHANGE. 1 THE SCHNEIDER FUNDS SEMI-ANNUAL INVESTMENT ADVISER'S REPORT (CONTINUED) (UNAUDITED) AUGUST 31, 2005 SCHNEIDER VALUE FUND -- INVESTMENT REVIEW AND PORTFOLIO STRATEGY The Value Fund delivered strong performance during the year ended August 31, 2005, returning 19.37% versus 16.86% for the Russell 1000 Value Index. Since inception on September 30, 2002, the Fund has produced a 32.48% annualized return compared to 20.05% for the benchmark index. The favorable results were attributable to successful stock selection in diverse industries and company-specific opportunities. Businesses engaged in lodging, office real estate, oil refining and commercial aerospace were among the strong contributors to performance. Timely investments in hotels and real estate-related issues made a favorable contribution to returns. Starwood Hotels, a significant holding since the inception of the Fund, has benefited from the recovering demand that boosted hotel occupancy and room rates. Investments in CB Richard Ellis Group (since sold) and Trizec Properties benefited from evidence that the office real estate market is on the mend following a severe three-year slump. Boeing and Goodrich were beneficiaries of the vibrant rebound in aircraft orders and deliveries following the worst slump in the history of commercial aviation. The business fundamentals in commercial aerospace continue to point in a positive direction. The Fund also benefited from underweighting the Financial Services sector. Bank stocks have been weak amid the Federal Reserve's steady increase in short-term interest rates since summer 2004. The flattening yield curve has negative implications for various types of financial companies, and we are prepared to take advantage of any potential fallout given our underweighting in the sector. Investment performance during the year was hampered by our limited exposure to the high-performing Energy sector. As a deep value investor, we generally find commodity stocks attractive when the companies have hit a trough in profitability and the price of their products have hit a temporary bottom. In our view, energy stocks are not cheap, and the price of oil over the next 3-5 years is likely to trend lower as both supply and demand respond to market conditions. /s/ Arnold C. Schneider III Arnold C. Schneider III, CFA Portfolio Manager Schneider Capital Management - ---------- VALUE INVESTING INVOLVES THE RISK THAT A FUND'S INVESTMENT IN COMPANIES WHOSE SECURITIES ARE BELIEVED TO BE UNDERVALUED, RELATIVE TO THEIR UNDERLYING PROFITABILITY, WILL NOT APPRECIATE IN VALUE AS ANTICIPATED. 2 THE SCHNEIDER FUNDS SCHNEIDER SMALL CAP VALUE FUND ANNUAL INVESTMENT ADVISER'S REPORT (CONTINUED) (UNAUDITED) AUGUST 31, 2005 Comparison of Change in Value of $10,000 Investment in Schneider Small Cap Value Fund vs. Russell 2000 Value Index [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Russell 2000 Schneider Value Index Small Cap Value Aggregate (Inception 9/2/98) Inst & Investor-9/2/98 9/30/03 $33,202 $17,333 10/31/03 38,366 18,746 11/30/03 42,292 19,466 12/31/03 45,017 20,170 1/31/04 46,405 20,867 2/29/04 47,518 21,271 3/31/04 47,743 21,565 4/30/04 46,114 20,450 5/31/04 46,388 20,697 6/30/04 48,985 21,748 7/31/04 47,340 20,748 8/31/04 46,921 20,952 9/30/04 48,469 21,781 10/31/04 48,582 22,119 11/30/04 54,082 24,081 12/31/04 57,277 24,657 1/31/05 54,010 23,702 2/28/05 56,089 24,174 3/31/05 54,851 23,676 4/30/05 50,420 22,454 5/31/05 54,010 23,824 6/30/05 56,980 24,877 7/31/05 62,104 26,293 8/31/05 61,732 25,688 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. - -------------------------------------------------------------------------------- Total Returns For the Period Ended August 31, 2005 AVERAGE ANNUAL ---------------------------- SINCE ONE YEAR FIVE YEARS INCEPTION(1) -------- ---------- ------------ SCHNEIDER SMALL CAP VALUE 31.57% 24.36% 29.72% RUSSELL 2000 VALUE INDEX 22.61% 15.09% 14.43% - -------------------------------------------------------------------------------- THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE FUND HAS EXPERIENCED RELATIVELY HIGH PERFORMANCE WHICH MAY NOT BE REPEATED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE CALL 1-888-520-3277. The Fund's annualized total return since inception is based on an increase in net asset value from $10.00 per share on September 2, 1998 (inception) to $24.94 per share on August 31, 2005, adjusted for dividends and distributions totaling $20.38 per share paid from net investment income and realized gains. - ---------- (1) Annualized return for the period September 2, 1998 (inception) through August 31, 2005. 3 THE SCHNEIDER FUNDS SCHNEIDER VALUE FUND ANNUAL INVESTMENT ADVISER'S REPORT (CONCLUDED) (UNAUDITED) AUGUST 31, 2005 Comparison of Change in Value of $10,000 Investment in Schneider Value Fund vs. Russell 1000 Value Index [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Schneider Small Russell 2000 Cap Value Fund Value Index 9/30/02 $10,000 $10,000 10/31/02 10,660 10,620 11/30/02 11,950 11,289 12/31/02 11,237 10,799 1/31/03 10,636 10,537 2/28/03 10,566 10,256 3/31/03 10,796 10,274 4/30/03 11,638 11,178 5/31/03 13,042 11,899 6/30/03 13,252 12,048 7/31/03 13,984 12,228 8/31/03 14,846 12,418 9/30/03 14,495 12,297 10/31/03 15,628 13,049 11/30/03 16,430 13,226 12/31/03 17,738 14,042 1/31/04 18,396 14,289 2/29/04 18,929 14,595 3/31/04 18,950 14,467 4/30/04 18,438 14,114 5/31/04 19,044 14,258 6/30/04 19,775 14,594 7/31/04 19,023 14,389 8/31/04 19,034 14,594 9/30/04 19,431 14,820 10/31/04 19,713 15,066 11/30/04 21,290 15,828 12/31/04 22,123 16,358 1/31/05 21,305 16,067 2/28/05 21,769 16,599 3/31/05 21,647 16,372 4/30/05 20,354 16,079 5/31/05 21,481 16,466 6/30/05 22,067 16,645 7/31/05 22,897 17,127 8/31/05 22,720 17,053 The chart assumes a hypothetical $10,000 initial investment in the Fund made on September 30, 2002 (inception) and reflects Fund expenses. Investors should note that the Fund is a professionally managed mutual fund while the Russell 1000 Value Index is unmanaged, does not incur sales charges and/or expenses and is not available for investment. - -------------------------------------------------------------------------------- Total Returns For the Period Ended August 31, 2005 AVERAGE ANNUAL ------------------------ SINCE ONE YEAR INCEPTION(1) -------- ---------- SCHNEIDER VALUE 19.37% 32.48% RUSSELL 1000 VALUE INDEX 16.86% 20.05% - -------------------------------------------------------------------------------- THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. 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 AND DO NOT REFLECT TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE FUND HAS EXPERIENCED RELATIVELY HIGH PERFORMANCE WHICH MAY NOT BE REPEATED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE CALL 1-888-520-3277. The Fund's aggregate total return since inception is based on an increase in net asset value from $10.00 per share on September 30, 2002 (inception) to $20.55 per share on August 31, 2005, adjusted for dividends and distributions totaling $1.85 per share paid from net investment income and realized gains. - ---------- (1) Annualized return for the period September 30, 2002 (inception) through August 31, 2005. 4 SCHNEIDER CAPITAL MANAGEMENT FUND EXPENSE EXAMPLES (UNAUDITED) As a shareholder of the Fund(s), you incur two types of costs: (1) transaction costs, including redemption fees; and (2) ongoing costs, including management fees; and other expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund(s) and to compare these costs with the ongoing costs of investing in other mutual funds. These examples are based on an investment of $1,000 invested at the beginning of the period and held for the period from March 1, 2005 through August 31, 2005. ACTUAL EXPENSES The first line of the accompanying tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the accompanying tables provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the accompanying tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. 5 SCHNEIDER CAPITAL MANAGEMENT FUND EXPENSE EXAMPLES (CONCLUDED) (UNAUDITED)
SCHNEIDER SMALL CAP VALUE FUND ---------------------------------------------------------------------------- BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID MARCH 1, 2005 AUGUST 31, 2005 DURING PERIOD* ----------------------- -------------------- -------------- Actual $1,000.00 $1,100.60 $5.82 Hypothetical (5% return before expenses) 1,000.00 1,019.58 5.62
SCHNEIDER VALUE FUND ---------------------------------------------------------------------------- BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID MARCH 1, 2005 AUGUST 31, 2005 DURING PERIOD* ----------------------- -------------------- -------------- Actual $1,000.00 $1,043.70 $4.38 Hypothetical (5% return before expenses) 1,000.00 1,020.86 4.34
* Expenses are equal to an annualized expense ratio of 1.10% for the Schneider Small Cap Value Fund and 0.85% for the Schneider Value Fund, which includes waived fees or reimbursed expenses, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (184), then divided by 365 to reflect the one-half year period. The Fund's ending account values on the first line in each table are based on the actual total return for each Fund of 10.06% for the Schneider Small Cap Value Fund and 4.37% for the Schneider Value Fund. 6 THE SCHNEIDER FUNDS SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO HOLDINGS SUMMARY TABLE AUGUST 31, 2005 % OF NET ASSETS VALUE -------- ----------- Domestic Common Stocks: Real Estate Investment Trust .... 10.8% $ 5,937,750 Aerospace & Defense ............. 6.6 3,625,866 Manufacturing ................... 5.1 2,802,618 Real Estate ..................... 5.1 2,786,012 Retail - Specialty Stores ....... 4.5 2,457,453 Semiconductor Equipment ......... 4.0 2,228,237 Semiconductors & Related ........ 3.9 2,132,421 Manufactured Housing ............ 3.9 2,125,034 Electrical Equipment ............ 3.7 2,041,258 Energy & Utilities .............. 2.9 1,621,250 Computer Components ............. 2.6 1,426,209 Paper & Forestry Products ....... 2.4 1,316,283 Automobile Parts & Equipment .... 2.2 1,206,090 Office Furnishings .............. 1.9 1,052,504 Diversified ..................... 1.8 999,880 Insurance ....................... 1.6 902,761 Restaurants ..................... 1.6 887,499 Aircraft Parts & Auxiliary Equipment, Nec ................ 1.6 873,227 Machinery ....................... 1.5 846,819 Savings & Loan Associations ..... 1.5 801,193 Airlines ........................ 1.4 776,558 Construction .................... 1.4 760,350 Electrical Work ................. 1.3 727,958 Chemicals - Specialty ........... 1.1 620,458 Broadcasting & Cable Television . 1.1 618,230 Services - Engineering Services . 1.1 590,487 Utilities ....................... 1.0 578,826 Transportation .................. 1.0 550,304 Hotels & Restaurants ............ 1.0 537,692 Leisure & Entertainment ......... 0.9 523,654 Electronics ..................... 0.9 511,263 Schools ......................... 0.9 498,641 Agriculture ..................... 0.9 496,003 Chemicals & Plastic ............. 0.9 473,614 Metals & Mining ................. 0.8 464,177 Paper ........................... 0.8 446,261 Agricultural Chemicals .......... 0.8 445,740 Computer Software ............... 0.8 430,067 Oil & Gas Field Services ........ 0.7 378,864 Fertilizers ..................... 0.7 376,863 Footwear ........................ 0.7 375,938 % OF NET ASSETS VALUE -------- ----------- Electric Products ............... 0.7% $ 372,945 General Industrial Machinery & Equipment ..................... 0.6 350,665 Commercial Services ............. 0.6 345,190 Chemicals ....................... 0.5 275,858 Banks ........................... 0.4 245,765 Retail - Department Stores ...... 0.4 202,027 Home Furnishings ................ 0.3 170,522 Drugs & Medical Products ........ 0.3 165,564 Pipes Lines (No Nat. Gas) ....... 0.3 153,354 Services - Computer Processing & Data Preparation .............. 0.2 120,848 Telecommunications & Equipment ..................... 0.2 105,188 Oil Equipment & Services ........ 0.1 81,566 Finance-Diversified ............. 0.1 62,737 Farm Machinery & Equipment ...... 0.1 60,563 Building Supplies ............... 0.1 38,681 Food Distribution Wholesalers ... 0.0 24,776 Temporary Investments .............. 2.8 1,580,793 Exchange Traded Funds .............. 1.2 655,813 Corporate Bonds .................... 1.0 537,500 Canadian Common Stocks ............. 0.7 387,601 Liabilities In Excess Of Other Assets .......................... 0.0 (27,205) ----- ----------- NET ASSETS ......................... 100.0% $55,163,063 ===== =========== The accompanying notes are an integral part of the financial statements. 7 THE SCHNEIDER FUNDS SCHNEIDER VALUE FUND PORTFOLIO HOLDINGS SUMMARY TABLE AUGUST 31, 2005 % OF NET ASSETS VALUE -------- ----------- Domestic Common Stocks: Financial Services .............. 6.7% $ 4,097,779 Aerospace & Defense ............. 6.6 4,042,368 Electronic Components & Accessories ................... 5.9 3,613,640 Insurance ....................... 5.5 3,378,691 Broadcasting & Cable Television . 5.3 3,230,995 Energy & Utilities .............. 4.0 2,434,375 Industrial Goods & Materials .... 3.6 2,216,660 Transportation .................. 3.3 2,025,581 Retail - Department Stores ...... 3.0 1,857,891 Hotels & Restaurants ............ 2.9 1,751,915 Food ............................ 2.8 1,735,771 Agricultural Chemicals .......... 2.8 1,712,707 Manufacturing ................... 2.5 1,545,639 Leisure & Entertainment ......... 2.5 1,512,271 Paper & Forestry Products ....... 2.4 1,453,840 Automobiles ..................... 2.3 1,406,570 Medical & Medical Services ...... 2.0 1,249,117 Real Estate Investment Trust .... 1.8 1,101,705 Oil Refining .................... 1.7 1,016,861 Computers, Software & Servicing ..................... 1.6 1,012,684 Telecommunications & Equipment ..................... 1.6 995,625 Wholesale - Drug Distribution ... 1.6 987,511 Electronics ..................... 1.6 968,820 Automobile Parts & Equipment .... 1.5 903,032 Chemicals - Diversified ......... 1.4 865,236 Semiconductors & Related ........ 1.4 832,860 Home Furnishings & Housewares .................... 1.3 776,705 Power, Distribution & Specialty Transformers .................. 1.3 776,468 Banks ........................... 1.2 725,350 Wholesale - Distribution ........ 1.1 683,640 Dairy Products .................. 0.9 546,712 Airlines ........................ 0.9 543,456 Drugs & Medical Products ........ 0.7 443,519 Electronic Components ........... 0.7 408,603 Retail - Shoe Stores ............ 0.6 341,796 Real Estate ..................... 0.4 257,970 % OF NET ASSETS VALUE -------- ----------- Gambling - Non Hotel ............ 0.4% $ 245,074 Packaging & Containers .......... 0.4 241,169 Engineering & Construction ...... 0.4 229,817 Metals & Mining ................. 0.3 189,385 Retail - Consumer Electronics Stores ........................ 0.3 188,408 Commercial Services ............. 0.1 78,566 Temporary Investments .............. 7.4 4,501,271 Exchange Traded Funds .............. 2.3 1,413,343 Canadian Common Stocks ............. 1.2 700,898 Corporate Bonds .................... 0.0 19,027 Liabilities In Excess Of Other Assets .......................... (0.2) (115,157) ----- ----------- NET ASSETS ......................... 100.0% $61,146,164 ===== =========== The accompanying notes are an integral part of the financial statements. 8 THE SCHNEIDER FUNDS SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 2005 SHARES VALUE --------- ----------- DOMESTIC COMMON STOCKS -- 94.3% AEROSPACE & DEFENSE -- 6.6% AAR Corp.* ............................ 59,650 $ 1,049,840 BE Aerospace, Inc.* ................... 122,275 1,939,281 CAE, Inc. ............................. 91,750 636,745 ----------- 3,625,866 ----------- AGRICULTURAL CHEMICALS -- 0.8% Mosaic Co., (The)* .................... 27,600 445,740 ----------- AGRICULTURE -- 0.9% Corn Products International, Inc. ..... 22,025 496,003 ----------- AIRCRAFT PARTS & AUXILIARY EQUIPMENT, NEC -- 1.6% HEICO Corp., Class A .................. 2,837 52,484 Triumph Group, Inc.* .................. 20,900 820,743 ----------- 873,227 ----------- AIRLINES -- 1.4% AirTran Holdings, Inc.* ............... 75,175 776,558 ----------- AUTOMOBILE PARTS & EQUIPMENT -- 2.2% Exide Technologies* ................... 22,300 98,789 Visteon Corp. ......................... 112,075 1,107,301 ----------- 1,206,090 ----------- BANKS -- 0.4% W. Holding Co., Inc. .................. 24,875 245,765 ----------- BROADCASTING & CABLE TELEVISION -- 1.1% TV Azteca, S.A. de C.V. -- ADR ........ 66,950 618,230 ----------- BUILDING SUPPLIES -- 0.1% Comfort Systems USA, Inc.* ............ 4,700 38,681 ----------- CHEMICALS -- 0.5% Airgas, Inc. .......................... 2,400 67,512 PolyOne Corp.* ........................ 5,675 38,533 Westlake Chemical Corp. ............... 6,175 169,813 ----------- 275,858 ----------- CHEMICALS & PLASTIC -- 0.9% A. Schulman, Inc. ..................... 15,650 284,986 Spartech Corp. ........................ 9,850 188,628 ----------- 473,614 ----------- SHARES VALUE --------- ----------- CHEMICALS - SPECIALTY -- 1.1% Cytec Industries, Inc. ................ 11,400 $ 542,640 Ferro Corp. ........................... 4,100 77,818 ----------- 620,458 ----------- COMMERCIAL SERVICES -- 0.6% Convergys Corp.* ...................... 24,275 345,190 ----------- COMPUTER COMPONENTS -- 2.6% Lexar Media, Inc.* .................... 131,250 821,625 Silicon Storage Technology, Inc.* ..... 124,400 604,584 ----------- 1,426,209 ----------- COMPUTER SOFTWARE -- 0.8% Insight Enterprises, Inc.* ............ 8,700 163,821 MSC.Software Corp.* ................... 6,550 91,176 NetIQ Corp.* .......................... 14,925 175,070 ----------- 430,067 ----------- CONSTRUCTION -- 1.4% Drew Industries, Inc.* ................ 8,500 381,225 Infrasource Services, Inc.* ........... 25,275 379,125 ----------- 760,350 ----------- DIVERSIFIED -- 1.8% Acuity Brands, Inc. ................... 17,100 504,963 Viad Corp. ............................ 17,025 494,917 ----------- 999,880 ----------- DRUGS & MEDICAL PRODUCTS -- 0.3% Par Pharmaceutical Cos., Inc.* ........ 6,850 165,564 ----------- ELECTRIC PRODUCTS -- 0.7% Encore Wire Corp.* .................... 26,450 372,945 ----------- ELECTRICAL EQUIPMENT -- 3.7% EMCOR Group, Inc.* .................... 20,725 1,142,776 General Cable Corp.* .................. 54,075 848,437 GrafTech International, Ltd.* ......... 8,425 50,045 ----------- 2,041,258 ----------- ELECTRICAL WORK -- 1.3% Integrated Electrical Services, Inc.* . 248,450 727,958 ----------- The accompanying notes are an integral part of the financial statements. 9 THE SCHNEIDER FUNDS SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 2005 SHARES VALUE --------- ----------- ELECTRONICS -- 0.9% Curtiss-Wright Corp. .................. 7,575 $ 489,042 Orbotech, Ltd.* ....................... 900 22,221 ----------- 511,263 ----------- ENERGY & UTILITIES -- 2.9% Reliant Energy, Inc.* ................. 129,700 1,621,250 ----------- FARM MACHINERY & EQUIPMENT -- 0.1% AGCO Corp.* ........................... 2,950 60,563 ----------- FERTILIZERS -- 0.7% LESCO, Inc.* .......................... 25,550 376,863 ----------- FINANCE - DIVERSIFIED -- 0.1% Doral Financial Corp. ................. 4,375 62,737 ----------- FOOD DISTRIBUTION WHOLESALERS -- 0.0% Performance Food Group Co.* ........... 800 24,776 ----------- FOOTWEAR -- 0.7% Barry (R.G) Corp.* .................... 60,150 375,938 ----------- GENERAL INDUSTRIAL MACHINERY & EQUIPMENT -- 0.6% Manitowoc Co., Inc., (The) ............ 7,525 350,665 ----------- HOME FURNISHINGS -- 0.3% La-Z-Boy, Inc. ........................ 11,850 170,522 ----------- HOTELS & RESTAURANTS -- 1.0% Interstate Hotels & Resorts, Inc.* .... 75,275 377,128 Orient-Express Hotels Ltd., Class A ... 5,225 160,564 ----------- 537,692 ----------- INSURANCE -- 1.6% Assured Guaranty, Ltd. ................ 7,400 165,760 ProAssurance Corp.* ................... 16,731 737,001 ----------- 902,761 ----------- LEISURE & ENTERTAINMENT -- 0.9% Intrawest Corp. ....................... 20,025 523,654 ----------- MACHINERY -- 1.5% Flowserve Corp.* ...................... 6,950 258,123 Terex Corp.* .......................... 11,325 552,433 UNOVA, Inc.* .......................... 1,250 36,263 ----------- 846,819 ----------- SHARES VALUE --------- ----------- MANUFACTURED HOUSING -- 3.9% Champion Enterprises, Inc.* ........... 91,575 $ 1,220,695 Fleetwood Enterprises, Inc.* .......... 89,450 904,339 ----------- 2,125,034 MANUFACTURING -- 5.1% Griffon Corp.* ........................ 12,150 311,526 Navistar International Corp.* ......... 23,525 751,859 Trinity Industries, Inc. .............. 11,514 430,969 York International Corp. .............. 22,800 1,308,264 ----------- 2,802,618 METALS & MINING -- 0.8% Brush Engineered Materials, Inc.* ..... 27,100 435,226 Cameco Corp. .......................... 575 28,951 ----------- 464,177 ----------- OFFICE FURNISHINGS -- 1.9% Interface, Inc., Class A* ............. 103,695 1,052,504 ----------- OIL & GAS FIELD SERVICES -- 0.7% Willbros Group, Inc.* ................. 21,925 378,864 ----------- OIL EQUIPMENT & SERVICES -- 0.1% Dresser-Rand Group, Inc.* ............. 3,400 81,566 ----------- PAPER -- 0.8% Glatfelter ............................ 32,550 446,261 ----------- PAPER & FORESTRY PRODUCTS -- 2.4% Longview Fibre Co. .................... 30,700 620,140 Neenah Paper, Inc. .................... 22,975 696,143 ----------- 1,316,283 ----------- PIPE LINES (NO NATURAL GAS) -- 0.3% Hudson Highland Group, Inc.* .......... 6,100 153,354 ----------- REAL ESTATE -- 5.1% American Real Estate Partners, L.P.* .. 12,200 473,360 California Coastal Communities, Inc.* . 250 9,200 Jones Lang LaSalle, Inc.* ............. 24,150 1,191,319 MI Developments, Inc., Class A ........ 33,650 1,112,133 ----------- 2,786,012 ----------- The accompanying notes are an integral part of the financial statements. 10 THE SCHNEIDER FUNDS SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 2005 SHARES VALUE --------- ----------- REAL ESTATE INVESTMENT TRUST -- 10.8% American Financial Realty Trust ....... 36,975 $ 524,675 Anworth Mortgage Asset Corp. .......... 123,475 1,095,223 Bedford Property Investors, Inc. ...... 4,575 105,454 Boykin Lodging Co.* ................... 102,375 1,347,255 CRT Properties, Inc. .................. 40,050 1,120,199 Highwoods Properties, Inc. ............ 14,425 445,444 MeriStar Hospitality Corp.* ........... 141,250 1,299,500 ----------- 5,937,750 RESTAURANTS -- 1.6% Triarc Cos., Inc., Class A ............ 7,025 114,999 Triarc Cos., Inc., Class B ............ 51,500 772,500 ----------- 887,499 ----------- RETAIL - DEPARTMENT STORES -- 0.4% Dillard's, Inc., Class A .............. 8,975 202,027 ----------- RETAIL - SPECIALTY STORES -- 4.5% Casual Male Retail Group, Inc.* ....... 60,014 426,700 Eddie Bauer Holdings, Inc.* ........... 10,525 282,859 GameStop Corp., Class A* .............. 1,750 59,062 Linens 'n Things, Inc.* ............... 3,050 71,980 MarineMax, Inc.* ...................... 20,125 571,751 Pep Boys-Manny, Moe & Jack, (The) ..... 30,825 402,575 West Marine, Inc.* .................... 18,025 335,626 Zale Corp.* ........................... 11,000 306,900 ----------- 2,457,453 ----------- SAVINGS & LOAN ASSOCIATIONS -- 1.5% First Niagara Financial Group, Inc. ... 27,500 389,675 Flagstar Bancorp, Inc. ................ 4,050 69,862 Partners Trust Financial Group, Inc. .. 4,975 58,954 Provident Financial Services, Inc. .... 15,900 282,702 ----------- 801,193 ----------- SCHOOLS -- 0.9% Corinthian Colleges, Inc.* ............ 39,325 498,641 ----------- SHARES VALUE --------- ----------- SEMICONDUCTOR EQUIPMENT -- 4.0% Advanced Energy Industries, Inc.* ..... 12,100 $ 144,232 Alliance Semiconductor Corp.* ......... 191,175 512,349 Axcelis Technologies, Inc.* ........... 8,775 51,773 BE Semiconductor Industries N.V.* ..... 309,618 1,431,983 Kulicke and Soffa Industries, Inc.* ... 4,300 35,948 Ultratech, Inc.* ...................... 3,400 51,952 ----------- 2,228,237 ----------- SEMICONDUCTORS & RELATED -- 3.9% ASM International N.V.* ............... 94,700 1,472,585 STATS ChipPAC, Ltd. -- ADR* ........... 83,550 532,214 ZiLOG, Inc.* .......................... 49,275 127,622 ----------- 2,132,421 ----------- SERVICES - COMPUTER PROCESSING & DATA PREPARATION -- 0.2% Source Interlink Cos., Inc.* .......... 9,825 120,848 ----------- SERVICES - ENGINEERING SERVICES -- 1.1% Washington Group International, Inc. .. 11,175 590,487 ----------- TELECOMMUNICATIONS & EQUIPMENT -- 0.2% CommScope, Inc.* ...................... 3,650 68,255 Sycamore Networks, Inc.* .............. 9,875 36,933 ----------- 105,188 ----------- TRANSPORTATION -- 1.0% Alexander & Baldwin, Inc. ............. 10,500 550,304 ----------- UTILITIES -- 1.0% Avista Corp. .......................... 29,775 578,826 ----------- TOTAL DOMESTIC COMMON STOCKS (Cost $38,030,014) ............... 52,028,561 ----------- The accompanying notes are an integral part of the financial statements. 11 THE SCHNEIDER FUNDS SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) AUGUST 31, 2005 SHARES VALUE --------- ----------- CANADIAN COMMON STOCKS -- 0.7% REAL ESTATE INVESTMENT TRUST -- 0.7% Boardwalk Real Estate Investment Trust .............................. 2,050 $ 34,060 Trizec Canada, Inc. ................... 17,575 353,541 ----------- 387,601 ----------- TOTAL CANADIAN COMMON STOCKS (Cost $288,605) .................. 387,601 ----------- PAR (000) --------- CORPORATE BONDS -- 1.0% Mercer International, Inc. 144A 8.50%, 10/15/10 .................... $500 537,500 ----------- TOTAL CORPORATE BONDS (Cost $500,000) .................. 537,500 ----------- SHARES --------- EXCHANGE TRADED FUNDS -- 1.2% FINANCE -- 1.2% iShares Russell 2000 Value Index Fund ............................... 9,850 655,813 ----------- TOTAL EXCHANGE TRADED FUNDS (Cost $621,436) .................. 655,813 ----------- SHARES VALUE --------- ----------- TEMPORARY INVESTMENTS -- 2.8% PNC Bank Money Market Deposit 2.85% 9/01/05 .............. 1,580,793 $ 1,580,793 ----------- TOTAL TEMPORARY INVESTMENTS (Cost $1,580,793) ................ 1,580,793 ----------- TOTAL INVESTMENTS -- 100.0% (Cost $41,020,848) ................. 55,190,268 ----------- LIABLITIES IN EXCESS OF OTHER ASSETS -- 0.0% ..................... (27,205) ----------- NET ASSETS -- 100.0% .................. $55,163,063 =========== - ---------- *Non-income producing. 144A -- Security was purchased pursuant to Rule 144A under Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. As of August 31, 2005, these securities amounted to 0.97% of net assets. ADR -- American Depository Receipt. The accompanying notes are an integral part of the financial statements. 12 THE SCHNEIDER FUNDS SCHNEIDER VALUE FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 2005 SHARES VALUE --------- ----------- DOMESTIC COMMON STOCKS -- 89.3% AEROSPACE & DEFENSE -- 6.6% Boeing Co., (The) ..................... 51,975 $ 3,483,364 Goodrich Corp. ........................ 12,200 559,004 ----------- 4,042,368 ----------- AGRICULTURAL CHEMICALS -- 2.8% Mosaic Co., (The)* .................... 106,050 1,712,707 ----------- AIRLINES -- 0.9% Southwest Airlines Co. ................ 40,800 543,456 ----------- AUTOMOBILE PARTS & EQUIPMENT -- 1.5% Visteon Corp.* ........................ 91,400 903,032 ----------- AUTOMOBILES -- 2.3% HONDA MOTOR Co., Ltd. -- ADR .......... 52,250 1,406,570 ----------- BANKS -- 1.2% Hudson City Bancorp, Inc. ............. 25,150 314,375 North Fork Bancorporation, Inc. ....... 14,950 410,975 ----------- 725,350 ----------- BROADCASTING & CABLE TELEVISION -- 5.3% Liberty Global, Inc. Series C* ........ 33,017 1,675,613 Liberty Media Corp. Class A* .......... 187,170 1,555,382 ----------- 3,230,995 ----------- CHEMICALS - DIVERSIFIED -- 1.4% Bayer AG -- ADR ....................... 19,825 703,986 Lyondell Chemical Co. ................. 6,250 161,250 ----------- 865,236 ----------- COMMERCIAL SERVICES -- 0.1% Convergys Corp.* ...................... 5,525 78,566 ----------- COMPUTERS, SOFTWARE & SERVICING -- 1.6% BearingPoint, Inc.* ................... 123,800 1,012,684 ----------- DAIRY PRODUCTS -- 0.9% Dean Foods Co.* ....................... 14,800 546,712 ----------- DRUGS & MEDICAL PRODUCTS -- 0.7% Bristol-Myers Squibb Co. .............. 18,125 443,519 ----------- ELECTRONIC COMPONENTS -- 0.7% Celestica, Inc.* ...................... 34,250 408,603 ----------- SHARES VALUE --------- ----------- ELECTRONIC COMPONENTS & ACCESSORIES -- 5.9% AU Optronics Corp. -- ADR ............. 60,293 $ 891,726 Avnet, Inc.* .......................... 53,800 1,347,690 Sanmina-SCI Corp.* .................... 271,050 1,374,224 ----------- 3,613,640 ----------- ELECTRONICS -- 1.6% Agilent Technologies, Inc.* ........... 30,125 968,820 ----------- ENERGY & UTILITIES -- 4.0% Reliant Energy, Inc.* ................. 194,750 2,434,375 ----------- ENGINEERING & CONSTRUCTION -- 0.4% ABB, Ltd. -- ADR* ..................... 31,525 229,817 ----------- FINANCIAL SERVICES -- 6.7% Fannie Mae ............................ 30,225 1,542,684 JP Morgan Chase & Co. ................. 58,125 1,969,856 Washington Mutual, Inc. ............... 14,075 585,239 ----------- 4,097,779 ----------- FOOD -- 2.8% Smithfield Foods, Inc.* ............... 825 22,976 Tate & Lyle P.L.C -- ADR .............. 51,700 1,712,795 ----------- 1,735,771 ----------- GAMBLING - NON HOTEL -- 0.4% GTECH Holdings Corp. .................. 8,575 245,074 ----------- HOME FURNISHINGS & HOUSEWARES -- 1.3% Newell Rubbermaid, Inc. ............... 33,150 776,705 ----------- HOTELS & RESTAURANTS -- 2.9% Starwood Hotels & Resorts Worldwide, Inc. .................... 30,050 1,751,915 ----------- INDUSTRIAL GOODS & MATERIALS -- 3.6% Tyco International, Ltd. .............. 79,650 2,216,660 ----------- INSURANCE -- 5.5% Aon Corp. ............................. 56,000 1,675,520 Genworth Financial, Inc. Class A ...... 39,000 1,254,630 Loews Corp. ........................... 4,100 359,529 PMI Group, Inc. (The) ................. 2,200 89,012 ----------- 3,378,691 ----------- The accompanying notes are an integral part of the financial statements. 13 THE SCHNEIDER FUNDS SCHNEIDER VALUE FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 2005 SHARES VALUE --------- ----------- LEISURE & ENTERTAINMENT -- 2.5% Carnival Corp. ........................ 30,650 $ 1,512,271 ----------- MANUFACTURING -- 2.5% Deere & Co. ........................... 1,350 88,263 Navistar International Corp.* ......... 45,600 1,457,376 ----------- 1,545,639 ----------- MEDICAL & MEDICAL SERVICES -- 2.0% Tenet Healthcare Corp.* ............... 15,800 192,444 Triad Hospitals, Inc.* ................ 21,950 1,056,673 ----------- 1,249,117 ----------- METALS & MINING -- 0.3% Freeport-McMoRan Copper & Gold, Inc., Class B ................ 4,491 189,385 ----------- OIL REFINING -- 1.7% Premcor, Inc. ......................... 10,900 1,016,861 ----------- PACKAGING & CONTAINERS -- 0.4% Pactiv Corp.* ......................... 12,425 241,169 ----------- PAPER & FORESTRY PRODUCTS -- 2.4% Abitibi-Consolidated, Inc. ............ 88,300 383,222 International Paper Co. ............... 34,704 1,070,618 ----------- 1,453,840 ----------- POWER, DISTRIBUTION & SPECIALTY TRANSFORMERS -- 1.3% NRG Energy, Inc.* ..................... 19,402 776,468 ----------- REAL ESTATE -- 0.4% St. Joe Co., (The) .................... 3,430 257,970 ----------- REAL ESTATE INVESTMENT TRUST -- 1.8% Host Marriott Corp. ................... 10,600 185,394 Trizec Properties, Inc. ............... 40,925 916,311 ----------- 1,101,705 ----------- RETAIL - CONSUMER ELECTRONICS STORES -- 0.3% Circuit City Stores, Inc. ............. 11,155 188,408 ----------- SHARES VALUE --------- ----------- RETAIL - DEPARTMENT STORES -- 3.0% J.C. Penney Co., Inc. ................. 27,500 $ 1,337,325 Kohl's Corp.* ......................... 9,925 520,566 ----------- 1,857,891 ----------- RETAIL - SHOE STORES -- 0.6% Foot Locker, Inc. ..................... 15,650 341,796 ----------- SEMICONDUCTORS & RELATED -- 1.4% ATI Technologies, Inc.* ............... 3,000 36,540 Teradyne, Inc.* ....................... 47,400 796,320 ----------- 832,860 TELECOMMUNICATIONS & EQUIPMENT -- 1.6% Telephone and Data Systems, Inc. ...... 10,000 408,500 Telephone and Data Systems, Inc. - Special Common Shares .............. 15,250 587,125 ----------- 995,625 ----------- TRANSPORTATION -- 3.3% CSX Corp. ............................. 38,200 1,678,126 Swift Transportation Co., Inc.* ....... 17,425 347,455 ----------- 2,025,581 WHOLESALE - DISTRIBUTION -- 1.1% Hughes Supply, Inc. ................... 21,600 683,640 ----------- WHOLESALE - DRUG DISTRIBUTION -- 1.6% AmerisourceBergen Corp. ............... 13,225 987,511 ----------- TOTAL DOMESTIC COMMON STOCKS (Cost $45,541,239) ............... 54,626,782 ----------- CANADIAN COMMON STOCKS -- 1.2% MANUFACTURING -- 1.2% Bombardier, Inc., Class B* ............ 266,050 700,898 ----------- TOTAL CANADIAN COMMON STOCKS (Cost $700,811) .................. 700,898 ----------- The accompanying notes are an integral part of the financial statements. 14 THE SCHNEIDER FUNDS SCHNEIDER VALUE FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) AUGUST 31, 2005 PAR (000) VALUE --------- ----------- CORPORATE BONDS -- 0.0% Delta Air Lines, Inc. (C, D)** 8.00%, 06/03/23 .................... $118 $ 19,027 ----------- TOTAL CORPORATE BONDS (Cost $76,477) ................... 19,027 ----------- SHARES --------- EXCHANGE TRADED FUNDS -- 2.3% FINANCE -- 2.3% iShares Russell 1000 Value Index Fund ............................... 20,675 1,413,343 ----------- TOTAL EXCHANGE TRADED FUNDS (Cost $1,392,909) ................ 1,413,343 ----------- TEMPORARY INVESTMENTS -- 7.4% PNC Bank Money Market Deposit 2.85% 9/01/05 ...................... 4,501,271 4,501,271 ----------- TOTAL TEMPORARY INVESTMENTS (Cost $4,501,271) ................ 4,501,271 ----------- TOTAL INVESTMENTS -- 100.2% (Cost $52,212,707) ................. 61,261,321 ----------- LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.2)% ............. (115,157) ----------- NET ASSETS -- 100.0% .................. $61,146,164 =========== *Non-income producing. **The Moody's Investor Service, Inc. and Standard & Poor's Rating Group ratings indicated are the most recent ratings available at August 31, 2005 and are unaudited. ADR -- American Depository Receipt. The accompanying notes are an integral part of the financial statements. 15 THE SCHNEIDER FUNDS STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 2005
SCHNEIDER SCHNEIDER SMALL CAP VALUE FUND VALUE FUND -------------------- ---------- ASSETS Investments, at value (cost -- $41,020,848 and $52,212,707, respectively) ... $55,190,268 $61,261,321 Receivable for investments sold ............................................. 195,778 91,767 Dividends and interest receivable ........................................... 44,638 71,243 Prepaid expenses and other assets ........................................... 14,770 15,701 ----------- ----------- Total Assets .............................................................. 55,445,454 61,440,032 ----------- ----------- LIABILITIES Payable for investments purchased ........................................... 200,701 139,673 Payable to the Investment Adviser ........................................... 25,698 17,444 Payable for fund shares redeemed ............................................ -- 86,715 Accrued expenses payable and other liabilities .............................. 55,993 50,036 ----------- ----------- Total Liabilities ......................................................... 282,392 293,868 ----------- ----------- NET ASSETS Capital stock, $0.001 par value ............................................. 2,212 2,975 Additional paid-in capital .................................................. 34,250,235 49,388,203 Undistributed net investment income ......................................... -- 160,056 Accumulated net realized gain from investments and foreign exchange transactions, if any ................................. 6,741,196 2,546,316 Net unrealized appreciation on investments and foreign exchange transactions, if any ..................................... 14,169,420 9,048,614 ----------- ----------- Net assets applicable to shares outstanding ................................. $55,163,063 $61,146,164 =========== =========== Shares outstanding ............................................................. 2,211,907 2,975,119 =========== =========== Net assets value, offering and redemption price per share ...................... $24.94 $20.55 =========== ===========
The accompanying notes are an integral part of the financial statements. 16 THE SCHNEIDER FUNDS STATEMENT OF OPERATIONS
SCHNEIDER SCHNEIDER SMALL CAP VALUE FUND VALUE FUND -------------------- --------------- FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2005 -------------------- --------------- INVESTMENT INCOME Dividends* .................................................................. $ 317,367 $ 685,058 Interest .................................................................... 44,881 19,842 ----------- ----------- Total investment income ................................................... 362,248 704,900 ----------- ----------- EXPENSES Advisory fees ............................................................... 521,691 390,424 Administration and Accounting fees and expenses ............................. 114,868 113,393 Administrative services fees ................................................ 78,254 83,643 Custodian fees and expenses ................................................. 53,310 42,700 Transfer Agent fees ......................................................... 33,085 49,097 Audit and Legal fees ........................................................ 25,025 23,173 Printing fees ............................................................... 23,779 24,430 Directors' and Officer's fees ............................................... 20,004 19,949 Federal and State Registration fees ......................................... 17,603 19,449 Insurance fees and other expenses ........................................... 3,307 2,699 ----------- ----------- Total expenses before waivers ............................................. 890,926 768,957 Less: waivers ............................................................... (317,065) (294,980) ----------- ----------- Total expenses after waivers and reimbursements ........................... 573,861 473,977 ----------- ----------- Net investment income/(loss) ................................................... (211,613) 230,923 ----------- ----------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain from: Investments ............................................................... 10,226,407 3,823,826 Foreign currency transactions ............................................. -- 588 Net change unrealized appreciation on: Investments ............................................................... 4,534,695 4,730,598 ----------- ----------- Net realized and unrealized gain on investments and foreign currency transactions ..................................................... 14,761,102 8,555,012 ----------- ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................... $14,549,489 $ 8,785,935 =========== ===========
- ---------- * Net of foreign withholding taxes of $6,435 and $9,144, for the Small Cap Value Fund and Value Fund, respectively. The accompanying notes are an integral part of the financial statements. 17 THE SCHNEIDER FUNDS STATEMENT OF CHANGES IN NET ASSETS
SCHNEIDER SMALL CAP VALUE FUND --------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 --------------- --------------- INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS Net investment loss ......................................................... $ (211,613) $ (248,596) Net realized gain from investments and foreign currency transactions, if any ...................................................... 10,226,407 22,868,101 Net change in unrealized appreciation/(depreciation) on investments and foreign currency transactions, if any ................................. 4,534,695 (6,067,234) ----------- ----------- Net increase in net assets resulting from operations ........................ 14,549,489 16,552,271 ----------- ----------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ....................................................... -- (213,220) Net realized capital gains .................................................. (20,055,242) (3,215,235) ----------- ----------- Total dividends and distributions to shareholders ......................... (20,055,242) (3,428,455) ----------- ----------- INCREASE/(DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (SEE NOTE 4) ................................................... 11,824,283 (13,199,746) ----------- ----------- Total increase/(decrease) in net assets ................................... 6,318,530 (75,930) NET ASSETS Beginning of period ......................................................... 48,844,533 48,920,463 ----------- ----------- End of period* .............................................................. $55,163,063 $48,844,533 =========== ===========
- ---------- * Includes undistributed net investment income of $0 and $21 for the fiscal years ended August 31, 2005 and 2004, respectively. The accompanying notes are an integral part of the financial statements. 18 THE SCHNEIDER FUNDS STATEMENT OF CHANGES IN NET ASSETS
SCHNEIDER VALUE FUND --------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 --------------- --------------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS Net investment income ....................................................... $ 230,923 $ 86,532 Net realized gain from investments and foreign currency transactions, if any ...................................................... 3,824,414 1,739,426 Net change in unrealized appreciation on investments and foreign currency transactions, if any ................................. 4,730,598 2,256,274 ----------- ----------- Net increase in net assets resulting from operations ........................ 8,785,935 4,082,232 ----------- ----------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ....................................................... (140,505) (54,680) Net realized capital gains .................................................. (2,857,824) (610,325) ----------- ----------- Total dividends and distributions to shareholders ......................... (2,998,329) (665,005) ----------- ----------- INCREASE IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (SEE NOTE 4) ................................................... 16,952,916 23,200,846 ----------- ----------- Total increase in net assets .............................................. 22,740,522 26,618,073 NET ASSETS Beginning of period ......................................................... 38,405,642 11,787,569 ----------- ----------- End of period* .............................................................. $61,146,164 $38,405,642 =========== ===========
- ---------- * Includes undistributed net investment income of $160,056 and $69,050 for the fiscal years ended August 31, 2005 and 2004, respectively. The accompanying notes are an integral part of the financial statements. 19 THE SCHNEIDER FUNDS 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 YEAR ENDED AUGUST 31, ------------------------------------------------------- 2005 2004 2003 2002 2001 ------- ------- ------- ------- ------- PER SHARE OPERATING PERFORMANCE* Net asset value, beginning of year ......................... $ 29.09 $ 22.52 $ 14.82 $ 17.53 $ 17.57 Net investment income/(loss) ............................... (0.10) (0.13) 0.10 0.03 0.09 Net realized and unrealized gain/(loss) on investments and foreign currency transactions, if any(1) ............ 8.01 8.50 7.71 (1.83) 2.75 ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations ......................................... 7.91 8.37 7.81 (1.80) 2.84 ------- ------- ------- ------- ------- Dividends and distributions to shareholders from: Net investment income ...................................... -- (0.11) (0.03) (0.07) (0.08) Net realized capital gains ................................. (12.06) (1.69) (0.08) (0.84) (2.80) ------- ------- ------- ------- ------- Total dividends and distributions to shareholders .......... (12.06) (1.80) (0.11) (0.91) (2.88) ------- ------- ------- ------- ------- Net asset value, end of year ............................... $ 24.94 $ 29.09 $ 22.52 $ 14.82 $ 17.53 ======= ======= ======= ======= ======= Total investment return(2) ................................. 31.57% 37.99% 53.10% (10.76)% 19.94% ======= ======= ======= ======= ======= RATIO/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) .................. $55,163 $48,845 $48,920 $45,268 $38,912 Ratio of expenses to average net assets(3) ................. 1.10% 1.10% 1.10% 1.10% 1.10% Ratio of expenses to average net assets without waivers and expense reimbursements ...................... 1.71% 1.74% 1.85% 1.65% 2.02% Ratio of net investment income to average net assets(3) .... (0.41)% (0.49)% 0.53% 0.34% 0.71% Portfolio turnover rate .................................... 68.87% 110.69% 85.33% 102.46% 79.30%
- ------------------ * 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) 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. (2) 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. (3) Includes waivers and reimbursements. The accompanying notes are an integral part of the financial statements. 20 THE SCHNEIDER FUNDS SCHNEIDER 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 YEAR ENDED AUGUST 31, FOR THE PERIOD ------------------------------- SEPTEMBER 30, 2002* 2005 2004 THROUGH AUGUST 31, 2003 ---------- ---------- ----------------------- PER SHARE OPERATING PERFORMANCE** Net asset value, beginning of period ............................. $ 18.22 $ 14.81 $ 10.00 Net investment income ............................................ 0.07 0.04 0.07 Net realized and unrealized gain on investments and foreign currency transactions, if any(1) .................. 3.40 4.05 4.77 ------- ------- ------- Net increase in net assets resulting from operations ............. 3.47 4.09 4.84 ------- ------- ------- Dividends and distributions to shareholders from: Net investment income ............................................ (0.05) (0.06) (0.03) Net realized capital gains ....................................... (1.09) (0.62) 0.00 ------- ------- ------- Total dividends and distributions to shareholders ................ (1.14) (0.68) (0.03) ------- ------- ------- Net asset value, end of period ................................... $ 20.55 $ 18.22 $ 14.81 ======= ======= ======= Total investment return(2) ....................................... 19.37% 28.21% 48.46% ======= ======= ======= RATIO/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) ........................ $61,146 $38,406 $11,788 Ratio of expenses to average net assets(3) ....................... 0.85% 0.85% 0.85%(4) Ratio of expenses to average net assets without waivers and expense reimbursements ............................ 1.38% 1.96% 4.01%(4) Ratio of net investment income to average net assets(3) .......... 0.41% 0.35% 0.72%(4) Portfolio turnover rate .......................................... 76.66% 116.60% 98.06%
- ---------- * 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) 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. (2) 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. (3) Includes waivers and reimbursements. (4) Annualized. The accompanying notes are an integral part of the financial statements. 21 THE SCHNEIDER FUNDS NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2005 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The RBB Fund, Inc. ("RBB" or "Company") 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 "1940 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 1940 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 seventeen active investment portfolios, including the Schneider Small Cap Value Fund (the "Small Cap Value Fund") and the Schneider Value Fund (the "Value Fund") (each a "Fund", collectively the "Funds"), which commenced investment operations on September 2, 1998 and September 30, 2002, respectively. As of the date hereof, each Fund offers the Institutional Class. RBB has authorized capital of thirty billion shares of common stock of which 26.473 billion are currently classified into one hundred and three classes of Common Stock. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into seven separate "families," six of which have begun investment operations. PORTFOLIO VALUATION -- The Funds' net asset value ("NAV") is calculated once daily at the close of regular trading hours on the New York Stock Exchange ("NYSE") (generally 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by the Funds are valued using the closing price or the last sale price on a national securities exchange or on the National Association of Securities Dealers Automatic Quotation System ("NASDAQ") market system where they are primarily traded. If there were no sales on that day or the securities are traded on other over-the-counter markets, the mean of the last bid and ask prices prior to the market close are used. Short-term debt securities having a remaining maturity of 60 days or less are amortized to maturity based on their cost. Debt securities having a remaining maturity of greater than 60 days are valued at the mean between the bid and ask prices. If the Funds hold foreign equity securities, the calculation of the Funds' NAV will not occur at the same time as the determination of the value of the foreign equity securities in the Funds' portfolio, since these securities are traded on foreign exchanges. With the approval of the Company's Board of Directors, the Funds may use a pricing service, bank or broker/dealer experienced in providing valuations to value the Funds' securities. If market quotations are unavailable or deemed unreliable, securities will be valued by the Funds' Valuation Committee following procedures adopted by the Board of Directors. 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 Funds 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 a Fund enters into repurchase agreements are banks and broker/dealers that Schneider Capital Management, LP ("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 a Fund to possible loss because 22 THE SCHNEIDER FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2005 of adverse market action or delays in connection with the disposition of the underlying securities. For the year/period ended August 31, 2005, the Funds did not enter into any repurchase agreements. 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. 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 director or professional fees) are charged to all funds in proportion to their average net assets of the RBB funds, or in such other manner as the Board of Directors deems fair or equitable. 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 Funds. 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 Funds 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 within the components of net assets. U.S. TAX STATUS -- No provision is made for U.S. income taxes as it is each 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. OTHER -- In the normal course of business, the Funds may enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is dependent on claims that may be made against the Funds in the future, and, therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote. 23 THE SCHNEIDER FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2005 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES SCM serves as each Fund's investment adviser. For its advisory services, SCM is entitled to receive 1.00% of the Small Cap Value Fund's average daily net assets and 0.70% of the Value Fund's average daily net assets, computed daily and payable monthly. The adviser contractually agreed to limit the Small Cap Value Fund's and the Value Fund's operating expenses for the current fiscal year to the extent that such expenses exceeded 1.10% and 0.85%, of the Fund's average daily net assets, respectively. As necessary, this limitation is effected in waivers of advisory fees and reimbursements of other fund expenses. For the year ended August 31, 2005, investment advisory fees and waivers of expenses were as follows:
GROSS ADVISORY FEES WAIVERS NET ADVISORY FEES ------------------- ------- ----------------- Schneider Small Cap Value Fund $521,691 $(242,245) $279,446 Schneider Value Fund 390,424 (222,399) 168,025
The Funds will not pay SCM at a later time for any amounts it may waive or any amounts that SCM has assumed. PFPC Inc. ("PFPC"), serves as administrator for the Funds. PFPC Trust Co. serves as custodian of the Funds. Both PFPC and PFPC Trust Co. are wholly-owned subsidiaries of PFPC Worldwide, Inc., an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. For providing administration and accounting services, PFPC is entitled to receive a monthly fee equal to an annual rate of 0.125% of each Fund's average daily net assets, subject to a minimum monthly fee of $8,333 per Fund plus out of pocket expenses. PFPC, at its discretion, voluntarily agreed to waive a portion of its administration and accounting fees for the Funds. For the year ended August 31, 2005, PFPC's administration and accounting fees and related waivers were as follows:
GROSS ADMINISTRATION NET ADMINISTRATION AND ACCOUNTING AND ACCOUNTING SERVICE FEES AND EXPENSES WAIVERS SERVICE FEES AND EXPENSES ------------------------- ------- ------------------------- Schneider Small Cap Value Fund $114,868 $(7,000) $107,868 Schneider Value Fund 113,393 (4,167) 109,226
For providing regulatory administrative services to RBB, PFPC is entitled to receive compensation as agreed to by the Company and PFPC. This agreement commenced on June 1, 2003. This fee is allocated among all funds in proportion to their net assets of the RBB Funds. The Schneider Small Cap Value Fund and Value Fund portions of these fees for the year ended August 31, 2005 were $8,341 and $8,713, respectively. 24 THE SCHNEIDER FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2005 In addition, PFPC serves as the Fund's transfer and dividend disbursing agent. For providing transfer agent services, PFPC is entitled to receive a monthly fee, subject to a minimum monthly fee of $2,000 per Fund, plus out of pocket expenses. PFPC, at its discretion, voluntarily agreed to waive a portion of its transfer agency fees for the Value Fund. For the year ended August 31, 2005, transfer agency fees and related waivers for the Funds were as follows:
GROSS TRANSFER NET TRANSFER AGENT FEES WAIVERS AGENT FEES -------------- ------- ------------ Schneider Small Cap Value Fund $33,085 $ -- $33,085 Schneider Value Fund 49,097 (1,000) 48,097
For providing custodian services, PFPC Trust Co. is entitled to receive a monthly fee equal to an annual rate of .015% of each Fund's average daily gross assets, subject to a minimum monthly fee of $1,000 per Fund. PFPC Trust Co., at its discretion, voluntarily agreed to waive a portion of their custodial fees for the Value Fund. For the year ended August 31, 2005, custodial fees and related waivers for the Funds were as follows:
GROSS CUSTODIAN NET CUSTODIAN FEES AND EXPENSES WAIVERS FEES AND EXPENSES ----------------- ------- ----------------- Schneider Small Cap Value Fund $53,310 $ -- $53,310 Schneider Value Fund 42,700 (500) 42,200
PFPC Distributors, Inc., ("PFPC Distributors"), a wholly-owned subsidiary of PFPC Worldwide, Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc., provided certain administrative services to the Funds. As compensation for such administrative services, PFPC Distributors receives a monthly fee equal to an annual rate of 0.15% of each Fund's average daily net assets. PFPC Distributors, at its discretion, voluntarily agreed to waive a portion of its administrative services fees for the Funds. For the year ended August 31, 2005, administrative services fees and related waivers for the Funds were as follows:
GROSS ADMINISTRATIVE NET ADMINISTRATIVE SERVICES FEES WAIVERS SERVICES FEES -------------- ------- ------------------- Schneider Small Cap Value Fund $78,254 $(67,820) $10,434 Schneider Value Fund 83,643 (66,914) 16,729
As of August 31, 2005, the Small Cap Value Fund and Value Fund owed PFPC and affiliates $24,102 and $22,391, respectively, for their services. 3. INVESTMENT IN SECURITIES For the year ended August 31, 2005, aggregate purchases and sales of investment securities (excluding short-term investments) were as follows:
PURCHASES SALES --------- ----- Schneider Small Cap Value Fund $34,369,009 $42,408,542 Schneider Value Fund 51,689,415 40,206,726
25 THE SCHNEIDER FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2005 4. CAPITAL SHARE TRANSACTIONS As of August 31, 2005, each Fund has 100,000,000 shares of $0.001 par value common stock authorized. Transactions in capital shares for the respective periods were as follows:
SCHNEIDER SMALL CAP VALUE FUND -------------------------------------------------------------------------- FOR THE FISCAL YEAR ENDED FOR THE FISCAL YEAR ENDED ------------------------------ ------------------------------ AUGUST 31, 2005 AUGUST 31, 2004 ------------------------------ ------------------------------ SHARES AMOUNT SHARES AMOUNT --------- ------------ --------- ------------ Sales .................................... 21,466 $ 505,284 28,284 $ 806,401 Reinvestments ............................ 869,921 19,616,726 120,295 3,183,023 Redemption Fees* ......................... -- 204 -- 2,059 Repurchases .............................. (358,408) (8,297,931) (641,974) (17,191,229) --------- ------------ --------- ------------ Net increase/(decrease) .................. 532,979 $ 11,824,283 (493,395) $(13,199,746) ========= ============ ========= ============
SCHNEIDER VALUE FUND -------------------------------------------------------------------------- FOR THE FISCAL YEAR ENDED FOR THE FISCAL YEAR ENDED ------------------------------ ------------------------------ AUGUST 31, 2005 AUGUST 31, 2004 ------------------------------ ------------------------------ SHARES AMOUNT SHARES AMOUNT --------- ------------ --------- ------------ Sales .................................... 1,349,985 $ 26,451,721 1,447,520 $ 25,410,225 Reinvestments ............................ 138,571 2,724,308 35,275 567,932 Redemption Fees* ......................... -- 4,758 -- 7,400 Repurchases .............................. (621,719) (12,227,871) (170,583) (2,784,711) --------- ------------ --------- ------------ Net increase ............................. 866,837 $ 16,952,916 1,312,212 $ 23,200,846 ========= ============ ========= ============
* There is a 1.75% redemption fee on shares redeemed which have been held less than one year in the Schneider Small Cap Value Fund. There is a 1.00% redemption fee on shares redeemed which have been held less than 90 days in the Schneider Value Fund. The redemption fees are retained by the Funds for the benefit of the remaining shareholders and recorded as paid-in capital. As of August 31, 2005, the following shareholders held 10% or more of the outstanding shares of the Funds. These shareholders may be omnibus accounts which are comprised of many individual shareholders. Schneider Small Cap Value Fund (2 shareholders) 42% Schneider Value Fund (1 shareholder) 15% 26 THE SCHNEIDER FUNDS NOTES TO FINANCIAL STATEMENTS (CONCLUDED) AUGUST 31, 2005 5. FEDERAL INCOME TAX INFORMATION At August 31, 2005, Federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Funds were as follows:
NET UNREALIZED FEDERAL TAX UNREALIZED UNREALIZED APPRECIATION/ COST APPRECIATION DEPRECIATION DEPRECIATION ----------- ------------ ------------ -------------- Schneider Small Cap Value Fund $42,881,774 $14,578,105 $(2,269,611) $12,308,494 Schneider Value Fund 52,567,624 10,809,142 (2,115,445) 8,693,697
The following permanent differences as of August 31, 2005, primarily attributable to net investment losses and foreign currency transactions, were reclassified to the following accounts:
UNDISTRIBUTED ACCUMULATED NET INVESTMENT NET REALIZED INCOME (LOSS) GAIN/(LOSS) --------------- --------------- Schneider Small Cap Value Fund $211,592 $(211,592) Schneider Value Fund 588 (588)
As of August 31, 2005, the components of distributable earnings on a tax basis were as follows:
UNDISTRIBUTED UNDISTRIBUTED ORDINARY INCOME LONG-TERM GAINS --------------- --------------- Schneider Small Cap Value Fund $1,183,058 $7,419,064 Schneider Value Fund 1,643,293 1,417,996
At August 31, 2005, the Funds 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, 2005, there were no post-October losses incurred in the Funds. 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 2005 $6,844,092 $13,211,150 $20,055,242 2004 2,094,392 1,334,064 3,428,456 Schneider Value Fund 2005 $1,698,566 $1,299,763 $2,998,329 2004 665,005 -- 665,005
27 THE SCHNEIDER FUNDS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF THE RBB FUND, INC.: In our opinion, the accompanying statements of assets and liabilities, including the portfolios 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 and Schneider Value Fund, separately managed portfolios of The RBB Fund, Inc. (the "Fund"), at August 31, 2005, the results of each of their operations for the year then ended, the changes in each of their 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Philadelphia, Pennsylvania October 28, 2005 28 THE SCHNEIDER FUNDS FUND MANAGEMENT (UNAUDITED) The business and affairs of the Company are managed under the direction of the Company's Board of Directors. The Company is organized under and managed pursuant to Maryland law. The Directors and executive officers of the Company, their dates of birth, business addresses and principal occupations during the past five years are 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 NAME, ADDRESS, POSITION(S) HELD TERM OF OFFICE PRINCIPAL OCCUPATION(S) DURING PAST PORTFOLIOS IN OTHER AND DATE OF BIRTH WITH FUND AND LENGTH OF 5 YEARS FUND COMPLEX DIRECTORSHIPS TIME SERVED 1 OVERSEEN BY HELD BY DIRECTOR DIRECTOR* - ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS - ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director 1988 to present Since 1969, Director and Vice Chairman, 17 Director, Comcast Corporation Comcast Corporation (cable television and Comcast 1500 Market Street, communications); Director, NDS Group PLC Corporation. 35th Floor (provider of systems and applications for Philadelphia, PA 19102 digital pay TV). DOB: 7/16/33 - ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director 1988 to present Since 2000, Vice President, Fox Chase Cancer 17 None Fox Chase Cancer Center Center (biomedical research and medical care); 333 Cottman Avenue prior to 2000, Executive Vice President, Fox Philadelphia, PA 19111 Chase Cancer Center. DOB: 12/06/35 - ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director 1991 to present Since December 2000, Director, Gabelli Group 17 None 106 Pierrepont Street Capital Partners, L.P. (an investment Brooklyn, NY 11201 partnership); Chief Operating Officer and DOB: 5/21/48 member of the Board of Directors of Outercurve Technologies (wireless 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; Prior to 1997, Managing Director of Warburg Pincus Asset Management, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director 1991 to present Since 1974, Chairman, Director and President, 17 Director, Moyco Technologies, Inc. Moyco Technologies, Inc. (manufacturer of Moyco 200 Commerce Drive precision coated and industrial abrasives). Technologies, Montgomeryville, PA 18936 Since 1999, Director, Pennsylvania Business Inc. DOB: 3/24/34 Bank. - ------------------------------------------------------------------------------------------------------------------------------------
*Each Director oversees seventeen portfolios of the Company that are currently offered for sale. The Company is authorized to offer two additional portfolios that had not commenced operations as of the date of this report. 29 THE SCHNEIDER FUNDS FUND MANAGEMENT (CONTINUED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF NAME, ADDRESS, POSITION(S) HELD TERM OF OFFICE PRINCIPAL OCCUPATION(S) DURING PAST PORTFOLIOS IN OTHER AND DATE OF BIRTH WITH FUND AND LENGTH OF 5 YEARS FUND COMPLEX DIRECTORSHIPS TIME SERVED 1 OVERSEEN BY HELD BY DIRECTOR DIRECTOR* - ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS 2 - ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director 1991 to present Since July 2002, Senior Vice President and 17 None Oppenheimer & Company, Inc. prior thereto, Executive Vice President of 200 Park Avenue Oppenheimer & Co., Inc., formerly Fahnestock & New York, NY 10166 Co., Inc. (a registered broker-dealer). DOB: 4/16/38 - ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director 2002 to present Director of PFPC Inc. from January 1987 to 17 Director, 400 Bellevue Parkway April 2002, Chairman and Chief Executive Cornerstone Wilmington, DE 19809 Officer of PFPC Inc. until April 2002, Bank DOB: 9/25/38 Executive Vice President of PNC Bank, National Association from October 1981 to April 2002, Director of PFPC International Ltd. (financial services) from August 1993 to April 2002, Director of PFPC International (Cayman) Ltd. (financial services) from September 1996 to April 2002; Governor of the Investment Company Institute (investment company industry trade organization) from July 1996 to January 2002; Director of PNC Asset Management, Inc. (investment advisory) from September 1994 to March 1998; Director of PNC National Bank from October 1995 to November 1997; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984; and Director of Cornerstone Bank since March 2004. - ------------------------------------------------------------------------------------------------------------------------------------
*Each Director oversees seventeen portfolios of the Company that are currently offered for sale. The Company is authorized to offer two additional portfolios that had not commenced operations as of the date of this report. 1Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified. 2Messrs. Carnall and Sablowsky are considered "interested persons" of the Company as that term is defined in the 1940 Act. Mr. Carnall is 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. Sablowsky is considered an "interested Director" of the Company by virtue of his position as an officer of a registered broker-dealer. 30 THE SCHNEIDER FUNDS FUND MANAGEMENT (CONCLUDED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF NAME, ADDRESS, POSITION(S) HELD TERM OF OFFICE PRINCIPAL OCCUPATION(S) DURING PAST PORTFOLIOS IN OTHER AND DATE OF BIRTH WITH FUND AND LENGTH OF 5 YEARS FUND COMPLEX DIRECTORSHIPS TIME SERVED OVERSEEN BY HELD BY DIRECTOR DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS 2 - ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS - ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President 1991 to present Certified Public Accountant; Vice Chairman of N/A N/A 400 Bellevue Parkway and and the Board, Fox Chase Cancer Center; Trustee 4th Floor Treasurer 1988 to present Emeritus, Pennsylvania School for the Deaf; Wilmington, DE 19809 Trustee Emeritus, Immaculata University; DOB: 6/29/24 President or Vice President and Treasurer of various investment companies advised by subsidiaries of PNC Bank Corp. from 1981 to 1997; Managing General Partner, President since 2002, Treasurer since 1981 and Chief Compliance Officer since September 2004 of Chestnut Street Exchange Fund; and Director of the Bradford Funds, Inc. from 1996 to 2000. - ------------------------------------------------------------------------------------------------------------------------------------ Tina M. Payne Secretary 2005 to present Since 2003, Vice President and Associate N/A N/A 301 Bellevue Parkway Counsel, PFPC Inc. (financial services 2nd Floor company); Associate, Stradley, Ronon, Stevens Wilmington, DE 19809 & Young, LLC (law firm) from 2001 to 2003. DOB: 5/19/74 - ------------------------------------------------------------------------------------------------------------------------------------ Salvatore Faia, Esquire, CPA Chief 2004 to present President, Vigilant Compliance Services, N/A N/A Vigilant Compliance Compliance since 2004; Senior Legal Counsel, PFPC, 186 Dundee Drive, Suite 700 Officer Inc. from 2002 to 2004; Chief Legal Counsel, Williamstown, NJ 08094 Corviant Corporation (Investment Adviser, DOB: 12/25/62 Broker/Dealer and Service Provider to Investment Advisers and Separate Accountant Providers) from 2001 to 2002; Partner, Pepper Hamilton LLP (law firm) from 1997 to 2001). - ------------------------------------------------------------------------------------------------------------------------------------
31 THE SCHNEIDER FUNDS 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) 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, 2005, 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 $ -- $4.12 $7.94 Schneider Value Fund 0.05 0.59 0.50
The percentage of total ordinary income dividends qualifying for the 15% dividend income tax rate is 3% for the Schneider Small Cap Value Fund and 17% for the Schneider Value Fund. The percentage of total ordinary income dividends qualifying for the corporate dividends received deduction is 4% for the Schneider Small Cap Value Fund and 19% for the Schneider Value Fund. These amounts were reported to shareholders as income in 2004. Because each Fund's fiscal year is not the calendar year, another notification will be sent with respect to calendar year 2005. 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 2006. 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. 32 THE SCHNEIDER FUNDS OTHER INFORMATION (UNAUDITED) 1. PROXY VOTING Policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities as well as information regarding how the Funds voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (888) 520-3277 and on the Securities and Exchange Commission's website at http://www.sec.gov. 2. QUARTERLY PORTFOLIO SCHEDULES The Company will file a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third fiscal quarters of each fiscal year (quarters ended November 30 and May 31) on Form N-Q. The Company's Form N-Q will be available on the Securities and Exchange Commission's website at http://www.sec.gov and may be reviewed and copied at the Securities and Exchange Commission's Public Reference Room in Washington, D.C. Information on the operation of the Securities and Exchange Commission's Public Reference Room may be obtained by calling 1-800-SEC-0330. 3. APPROVALS OF INVESTMENT MANAGEMENT AGREEMENTS As required by the 1940 Act, the Board of Directors (the "Board") of the Company, including all of the Directors who are not "interested persons" of the Company, as that term is defined in the 1940 Act (the "Independent Directors"), considered the renewal of the investment advisory agreements between SCM and the Company (each an "Advisory Agreement" and collectively, the "Advisory Agreements") on behalf of the SCM Funds at a meeting of the Board held on May 25, 2005. At this meeting, the Board approved the Advisory Agreements for an additional one-year term. The Board's decision to approve the Agreements reflects the exercise of its business judgment to continue the existing arrangement. In approving the Agreements, the Board considered information provided by the Adviser with the assistance and advice of counsel to the Independent Directors and the Company. In considering the renewal of and approval of the Advisory Agreements, the Directors took into account all the materials provided prior to and during the meeting, the presentations made during the meeting, and the discussions during the meeting. The Directors discussed the materials from SCM mailed in advance of the meeting that addressed most, if not all, of the factors listed below. SCM also made a presentation during the meeting and responded to questions from the Directors. Among other things, the Directors considered (i) the nature, extent, and quality of SCM services provided to the Funds; (ii) descriptions of the experience and qualifications of the personnel providing those services; (iii) SCM's investment philosophies and processes; (iv) SCM assets under management and client descriptions; (v) SCM's soft dollar commission and trade allocations policies, including information on the types of research and services obtained in connection with soft dollar commissions; (vi) the current and proposed advisory fee arrangements with the Company and other similarly managed clients; (vii) compliance procedures; (viii) SCM's financial information, insurance coverage and profitability analysis related to providing advisory services to the Funds; (ix) the extent to which economies of scale are relevant to each Fund; (x) a report comparing each Fund's proposed or current advisory fees and expenses to those of its peer group; and (xi) a report comparing the performance of each Fund to the performance of its applicable benchmark index and peer group. No one factor was determinative in the Board's consideration of the Advisory Agreements. 33 THE SCHNEIDER FUNDS OTHER INFORMATION (CONCLUDED) (UNAUDITED) The Directors then met in executive session with counsel to discuss and consider information presented in connection with the continuation of the Advisory Agreements as well as the Directors' responsibilities and duties in approving the Agreements. During the course of its deliberations, the Board reached the following conclusions, among others, regarding SCM and the Advisory Agreements with respect to the Funds. The Directors considered the Funds' gross and net advisory fees and gross and net expense ratios in comparison to that of each Fund's peer group average as well as each Fund's performance in comparison to the performance of the Fund's peer group average and benchmark. The Directors also reviewed the gross advisory fees in comparison to the fees SCM charges for managing assets for other clients. The Directors began with an evaluation of the Small Cap Value Fund, considering that both the gross advisory fee and expense ratio were higher than the peer group average while the net advisory fee and expense ratio were lower than the peer group average. For the year-to-date period ended March 31, 2005, the Fund performed worse than the peer group average and benchmark while for the one-year period ended March 31, 2005, the Fund performed better than the peer group average and benchmark. The Directors reviewed the advisory fees charged by SCM to manage other clients' assets in a similar strategy as that of the Fund and found the fees to be the same in comparison to the fees charged to the Fund. The Directors then noted that SCM agreed to waive its advisory fee and reimburse expenses of the Fund through December 31, 2005 to limit the Fund's total annual operating expenses to 1.10%. The Directors then considered and assessed the reasons for the higher gross advisory fee and expense ratio of the Fund as well as the lagging year-to-date performance for the Fund. Next, the Directors evaluated the Value Fund, considering that both the gross advisory fee and expense ratio were higher than the peer group average while the net advisory fee and expense ratio were lower than the peer group average. For the year-to-date period ended March 31, 2005, the Fund performed worse than the peer group average and benchmark while for the one-year period ended March 31, 2005, the Fund performed better than the peer group average and benchmark. The Directors reviewed the advisory fees charged by SCM to manage other clients' assets in a similar strategy as that of the Fund and found the fees to be lower in comparison to the fees charged to the Fund. The Directors then noted that SCM agreed to waive its advisory fee and reimburse expenses of the Fund through December 31, 2005 to limit the Fund's total annual operating expenses to 0.85%. The Directors then considered and assessed the reasons for the higher gross advisory fee and expense ratio of the Fund as well as the lagging year-to-date performance for the Fund. The Directors then determined that the nature, extent and quality of services provided by SCM in advising the Funds was satisfactory; the profits earned by SCM seemed reasonable; and the benefits derived by SCM from managing the Funds, including its use of soft dollars and the way it selects brokers, seemed reasonable. The Directors discussed and considered any economies-of-scale realized by each Fund as a result of asset growth. Based on all of the information presented to the Board and its consideration of relevant factors, the Board concluded that the fee paid to the Adviser by each Fund was reasonable, and in the exercise of its business judgment, determined that SCM's Advisory Agreements, on behalf of each Fund, be continued for another one-year period ending August 16, 2006. 34 THE SCHNEIDER FUNDS PRIVACY NOTICE THE SCHNEIDER FUNDS 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. INVESTMENT ADVISER Schneider Capital Management 460 E. Swedesford Road Suite 1080 Wayne, PA 19087 ADMINISTRATOR PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 TRANSFER AGENT PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 DISTRIBUTOR PFPC Distributors, Inc. 760 Moore Road King of Prussia, PA 19406 CUSTODIAN PFPC Trust Company 8800 Tinicum Blvd. Suite 200 Philadelphia, PA 19153 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 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 Funds. It is not authorized for distribution unless preceded or accompanied by a current prospectus for the Funds. =============================== BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND OF THE RBB FUND, INC. ANNUAL REPORT AUGUST 31, 2005 =============================== - -------------------------------------------------------------------------------- BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND PRIVACY NOTICE (UNAUDITED) - -------------------------------------------------------------------------------- The BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH 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 (877) 264-5346. BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND ANNUAL REPORT (UNAUDITED) Fellow Shareholder: We are pleased to report results for our latest fiscal period, our sixth fiscal year of operations. The Fund posted attractive performance, in both absolute terms and relative to its benchmark, during this latest reporting period (September 1, 2004 - August 31, 2005), as our focus on identifying stocks with sustainable earnings growth and relatively attractive valuation paid off, despite continued macroeconomic uncertainty. For the fiscal year ended August 31, 2005, the Fund's Investor shares advanced +27.22%, the Institutional shares gained +27.34%, and the unmanaged Russell 2000(R) Index of small cap stocks returned +23.10%. Longer term (since inception October 1, 1999 through August 31, 2005), the Fund has significantly outperformed the Russell 2000(R), with an annualized return of +18.52% for the Investor shares and +18.60% for the Institutional shares versus the annualized gain of +9.17% for the benchmark Russell 2000(R). These returns, as reflected by the dollar value of a $10,000 investment made at the start of the Fund, compared to the same investment in the benchmark, are shown in the charts on the next two pages. The balance of this letter covers the market environment, performance attribution, Fund characteristics, our fiscal year "report card," and an update on the mutual fund business at Bogle Investment Management, L.P. MARKET ENVIRONMENT. After moving sideways for several months in 2004, U.S. equity markets rallied strongly from September of 2004 through the end of December, the first four months of our latest fiscal year. Indeed, most of the Russell 2000(R) Index's strong fiscal year performance occurred during these four months, as gains totaled +19.45%. Market results were mixed for the eight months that followed, from January through August of 2005. After 2004's year-end rally, investors seemed to reassess the macroeconomic picture. Surging oil prices, continued Fed interest rate increases, and inflation fears weighed on investor sentiment and U.S. equity markets were generally in negative territory from January through April. Markets bounced from May through July, erasing calendar-year-to-date losses, then modestly retrenched in August. For the fiscal year, small cap stocks, as measured by the Russell 2000(R) Index, advanced +23.10%, significantly outperforming large cap stocks, as measured by the Russell 1000(R) Index, which earned +14.63%. Small caps have outperformed large caps in each of the last six fiscal years according to Russell benchmarks. Since the Fund's inception on October 1, 1999 through August 31, 2005, the small cap market has benefited primarily from strength in small value stocks (The Russell 2000(R) Value Index has gained +15.45% per year while the Russell 2000 Growth(R) Index has inched up +2.10% per year over this period); however, for the latest fiscal period the Russell 2000 Growth(R) Index edged out the Russell 2000 Value(R) Index by 90 basis points (up +23.51% versus +22.61%). Given the environment of rising oil prices and interest rates, it is not surprising that small cap energy stocks produced particularly robust results, while small cap financial stocks generally lagged the overall small cap market for the fiscal period. Finally, we continued to see very low levels of volatility in the market and in the Fund's performance relative to its benchmark over the last year. PERFORMANCE ATTRIBUTION. For the fiscal year, the Fund's Investor Class of shares outperformed the benchmark Russell 2000(R) by +4.12%, net of all fees, and the Institutional Class of shares outperformed by +4.24%, net of all fees. The Fund's performance relative to its benchmark picked up in early December of last year and can (Commentary continues on page 5) 2 COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND INSTITUTIONAL CLASS(1)(2) VS. RUSSELL 2000 INDEX (UNAUDITED) - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS AS OF AUGUST 31, 2005 --------------------------------------------------
GROWTH ONE FIVE SINCE OF $10,000 YEAR YEAR INCEPTION 3 ---------- ---- ---- ----------- BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND -- INSTITUTIONAL CLASS $27,443 27.34% 9.51% 18.60% RUSSELL 2000 INDEX $16,811 23.10% 5.75% 9.17%
- -------------------------------------------------------------------------------- [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAHIC AS FOLLOWS: Bogle Institutional Russell Shares 2000 Index -------------- ---------- Oct. 1, 1999 $10,000 $10,000 Oct. 31, 1999 10,325 10,041 Nov. 30, 1999 11,350 10,640 Dec. 31, 1999 13,017 11,845 Jan. 31, 2000 12,583 11,654 Feb. 29, 2000 14,825 13,578 Mar. 31, 2000 15,100 12,684 Apr. 30, 2000 14,692 11,920 May 31, 2000 14,258 11,225 Jun. 30, 2000 15,933 12,204 Jul. 31, 2000 15,758 11,811 Aug. 31, 2000 17,425 12,712 Sept. 30, 2000 17,117 12,338 Oct. 31, 2000 17,092 11,788 Nov. 30, 2000 15,221 10,577 Dec. 31, 2000 16,506 11,486 Jan. 31, 2001 16,851 12,084 Feb. 28, 2001 15,851 11,292 Mar. 31, 2001 15,075 10,740 Apr. 30, 2001 16,644 11,579 May, 31, 2001 17,196 11,864 Jun. 30, 2001 17,541 12,274 Jul. 31, 2001 17,386 11,610 Aug. 31, 2001 16,834 11,235 Sept. 30, 2001 15,195 9,722 Oct. 31, 2001 15,954 10,291 Nov. 30, 2001 16,601 11,088 Dec. 31, 2001 17,369 11,772 Jan. 31, 2002 17,670 11,649 Feb. 28, 2002 17,282 11,330 Mar. 31, 2002 18,516 12,241 Apr. 30, 2002 18,904 12,353 May 31, 2002 18,145 11,804 Jun. 30, 2002 17,524 11,219 Jul. 31, 2002 15,178 9,525 Aug. 31, 2002 15,377 9,501 Sep. 30, 2002 14,212 8,819 Oct. 31, 2002 14,359 9,102 Nov. 30, 2002 14,902 9,914 Dec. 31, 2002 14,316 9,361 Jan. 31, 2003 14,212 9,102 Feb. 28, 2003 13,824 8,827 Mar. 31, 2003 13,859 8,941 Apr. 30, 2003 15,135 9,789 May 31, 2003 16,696 10,839 Jun. 30, 2003 17,239 11,035 Jul. 31, 2003 18,671 11,726 Aug. 31, 2003 19,585 12,263 Sep. 30, 2003 19,395 12,036 Oct. 31, 2003 21,396 13,047 Nov. 30, 2003 22,465 13,510 Dec. 31, 2003 22,733 13,785 Jan. 31, 2004 24,225 14,383 Feb. 29, 2004 24,225 14,512 Mar. 31, 2004 23,992 14,647 Apr. 30, 2004 22,534 13,900 May 31, 2004 22,707 14,121 Jun. 30, 2004 23,707 14,716 Jul. 31, 2004 22,276 13,725 Aug. 31, 2004 21,551 13,655 Sep. 30, 2004 22,914 14,296 Oct. 31, 2004 22,742 14,578 Nov. 30, 2004 24,497 15,841 Dec. 31, 2004 25,202 16,310 Jan. 31, 2005 24,344 15,630 Feb. 29, 2005 25,307 15,894 Mar. 31, 2005 24,535 15,440 Apr. 30, 2005 23,381 14,555 May 31, 2005 24,830 15,508 Jun. 30, 2005 25,631 16,107 Jul. 31, 2005 27,443 17,128 Aug. 31, 2005 27,443 16,811 THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE VISIT OUR WEB SITE AT WWW.BOGLEFUNDS.COM. - ---------- (1) THE CHART AND TABLE ASSUME A HYPOTHETICAL $10,000 INITIAL INVESTMENT IN THE FUND MADE ON OCTOBER 1, 1999 (INCEPTION) AND REFLECT FUND EXPENSES. INVESTORS SHOULD NOTE THAT THE FUND IS AN ACTIVELY MANAGED MUTUAL FUND WHILE THE INDEX IS EITHER UNMANAGED AND DOES NOT INCUR EXPENSES AND/OR IS NOT AVAILABLE FOR INVESTMENT. (2) BOGLE INVESTMENT MANAGEMENT WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 WAIVERS AND REIMBURSEMENTS OF FEES AND EXPENSES IN EXCESS OF EXPENSE LIMITATIONS. RETURNS SHOWN INCLUDE THE REINVESTMENT OF ALL DIVIDENDS AND OTHER DISTRIBUTIONS. THE GRAPH AND TABLE DO NOT REFLECT THE DEDUCTION OF TAXES A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. (3) FOR THE PERIOD OCTOBER 1, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH AUGUST 31, 2005. 3 COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND INVESTOR CLASS(1)(2) VS. RUSSELL 2000 INDEX (UNAUDITED) - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS AS OF AUGUST 31, 2005 --------------------------------------------------
GROWTH ONE FIVE SINCE OF $10,000 YEAR YEAR INCEPTION 3 ---------- ---- ---- ----------- BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND -- INVESTOR CLASS $27,380 27.22% 9.44% 18.52% RUSSELL 2000 INDEX $16,811 23.10% 5.75% 9.17%
- -------------------------------------------------------------------------------- [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: Bogle Investor Shares Russell 2000 Index Sept. 30, 1999 $10,000 $10,000 Oct. 31, 1999 10,325 10,041 Nov. 30, 1999 11,350 10,640 Dec. 31, 1999 13,008 11,845 Jan. 31, 2000 12,583 11,654 Feb. 29, 2000 14,825 13,578 Mar. 31, 2000 15,100 12,684 Apr. 30, 2000 14,692 11,920 May, 31, 2000 14,250 11,225 Jun. 30, 2000 15,925 12,204 Jul. 31, 2000 15,750 11,811 Aug. 31, 2000 17,408 12,712 Sept. 30, 2000 17,100 12,338 Oct. 31, 2000 17,075 11,788 Nov. 30, 2000 15,213 10,577 Dec. 31, 2000 16,498 11,486 Jan. 31, 2001 16,843 12,084 Feb. 28, 2001 15,834 11,292 Mar. 31, 2001 15,058 10,740 Apr. 30, 2001 16,627 11,579 May 31, 2001 17,179 11,864 Jun. 30, 2001 17,524 12,274 Jul. 31, 2001 17,369 11,610 Aug. 31, 2001 16,808 11,235 Sept. 30, 2001 15,170 9,722 Oct. 31, 2001 15,937 10,291 Nov. 30, 2001 16,576 11,088 Dec. 31, 2001 17,334 11,772 Jan. 31, 2002 17,645 11,649 Feb. 28, 2002 17,248 11,330 Mar. 31, 2002 18,499 12,241 Apr. 30, 2002 18,878 12,353 May 31, 2002 18,119 11,804 Jun. 30, 2002 17,498 11,219 Jul. 31, 2002 15,161 9,525 Aug. 31, 2002 15,351 9,501 Sep. 30, 2002 14,187 8,819 Oct. 31, 2002 14,333 9,102 Nov. 30, 2002 14,877 9,914 Dec. 31, 2002 14,290 9,361 Jan. 31, 2003 14,187 9,102 Feb. 28, 2003 13,799 8,827 Mar. 31, 2003 13,833 8,941 Apr. 30, 2003 15,109 9,789 May 31, 2003 16,662 10,839 Jun. 30, 2003 17,197 11,035 Jul. 31, 2003 18,628 11,726 Aug. 31, 2003 19,534 12,263 Sep. 30, 2003 19,344 12,036 Oct. 31, 2003 21,345 13,047 Nov. 30, 2003 22,405 13,510 Dec. 31, 2003 22,673 13,785 Jan. 31, 2004 24,156 14,383 Feb. 29, 2004 24,156 14,512 Mar. 31, 2004 23,923 14,647 Apr. 30, 2004 22,466 13,900 May 31, 2004 22,638 14,121 Jun. 30, 2004 23,630 14,716 Jul. 31, 2004 22,207 13,725 Aug. 31, 2004 21,483 13,655 Sep. 30, 2004 22,837 14,296 Oct. 31, 2004 22,665 14,578 Nov. 30, 2004 24,401 15,841 Dec. 31, 2004 25,117 16,310 Jan. 31, 2005 24,239 15,630 Feb. 29, 2005 25,212 15,894 Mar. 31, 2005 24,439 15,440 Apr. 30, 2005 23,285 14,555 May 31, 2005 24,726 15,508 Jun. 30, 2005 25,527 16,107 Jul. 31, 2005 27,330 17,128 Aug. 31, 2005 27,330 16,811 THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END, PLEASE VISIT OUR WEB SITE AT WWW.BOGLEFUNDS.COM. - ---------- (1) THE CHART AND TABLE ASSUME A HYPOTHETICAL $10,000 INITIAL INVESTMENT IN THE FUND MADE ON OCTOBER 1, 1999 (INCEPTION) AND REFLECT FUND EXPENSES. INVESTORS SHOULD NOTE THAT THE FUND IS AN ACTIVELY MANAGED MUTUAL FUND WHILE THE INDEX IS EITHER UNMANAGED AND DOES NOT INCUR EXPENSES AND/OR IS NOT AVAILABLE FOR INVESTMENT. (2) BOGLE INVESTMENT MANAGEMENT WAIVED A PORTION OF ITS ADVISORY FEE AND AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES, IF 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 WAIVERS AND REIMBURSEMENTS OF FEES AND EXPENSES IN EXCESS OF EXPENSE LIMITATIONS. RETURNS SHOWN INCLUDE THE REINVESTMENT OF ALL DIVIDENDS AND OTHER DISTRIBUTIONS. THE GRAPH AND TABLE DO NOT REFLECT THE DEDUCTION OF TAXES A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. (3) FOR THE PERIOD OCTOBER 1, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH AUGUST 31, 2005. 4 be attributed to positive stock selection from each of our three main investment models. Recall that these fundamentally-based, quantitatively implemented tools evaluate, individually, financial quality, earnings improvement, and relative valuation. It is interesting to note that while returns from each of the three models were positive, each of the model's return streams was more muted than we have seen historically. We believe that this was symptomatic of the low volatility market environment. In the latest fiscal year, stock selection was strongest in energy, basic industry, and financial stocks and each of these sectors contributed almost two percentage points to the Fund's fiscal year relative-to-benchmark performance. Performance in the technology sector, traditionally a strong area for our investment process (but a difficult area in 2004), turned positive in February of this year, adding nearly three percentage points to relative performance from February through the end of the fiscal year (although the contribution was just modestly positive for the fiscal year overall). This improvement in the Fund's technology stock selection provided one indication of a more favorable environment for our stock selection process than we experienced through most of 2004. Another positive sign was the strength of our stock selection during each of the last three quarterly earnings announcement periods, suggesting that company-specific information, as opposed to widespread market and sector movements, was driving prices of individual equities during these announcement periods. As of the end of the fiscal year, the Fund remained well diversified, holding 174 stocks, with the largest holding representing just 1.3% of portfolio assets. This diversification allows us to control the impact any single stock can have on total Fund performance. Still, stock-specific examples of investment performance can be illustrative and a few follow. One of our top performing stocks for the fiscal year period was IPSCO, which operates steel and pipe mills in the United States and Canada and was identified in September 2004 as attractive according to our earnings expectations model. Another top performer, Crown Holdings, Inc., a supplier of packaging products to consumer marketing companies, was first purchased back in April of 2003 because it scored well according to both financial quality and relative valuation. As of the end of our fiscal year, we continue to hold both of these stocks. One of the reasons we include financial quality in our investment process is that, generally speaking, stocks that score highly according to financial quality tend to sustain an above-average relative ranking longer than stocks that score well according to earnings expectations signals such as analyst estimate revisions and earnings surprises. Therefore, including financial quality in our analysis reduces turnover and transaction costs relative to a model that considers just earnings expectations and relative valuation. In the technology sector, this fiscal year's winners included Arris Group, a global telecommunications technology leader that provides broadband local access networks. Arris was first identified in December 2004 by the financial quality model and more recently has seen improvements in its earnings expectations score, illustrating how strong financial quality signals are often a precursor to future earnings strength. FUND CHARACTERISTICS. We seek to add value through stock selection rather than through predictions of broad market or sector movements. Therefore, we strive to remain fully invested with sector exposures that look similar to the benchmark Russell 2000(R). Fund characteristics are also generally kept in line with the benchmark, as shown in the table to the right. As of the end of August, the Fund maintained a small bias toward companies with somewhat higher long-term earnings growth rates. Offsetting this exposure, the Fund's - -------------------------------------------------------------------------------- FUNDAMENTAL CHARACTERISTICS AUGUST 31, 2005 RUSSELL MEDIAN BOGLX 2000(R) - -------- ------- -------- Median Market Cap ($mil.) $990 $1018 Long-Term Estimated Earnings Growth Rate 16.0% 15.0% Price/Historical Earnings 21.7x 21.8x Price/Forward Earnings 18.3x 18.0x Price/Sales 1.1x 1.9x - -------------------------------------------------------------------------------- 5 median price-to-sales ratio remained below benchmark, reflecting its primacy in our relative valuation model. The Fund's median market capitalization continued to be modestly below benchmark. The Fund also maintained below-benchmark exposure at the small end of the capitalization range, with 10% of the Fund invested in stocks with capitalization below $290 million, while the Russell 2000(R) bottom decile was below $360 million. REPORT CARD. It is our custom to grade ourselves on investment performance and client service over the past year. On our performance we give ourselves a B+. We outperformed our benchmark for the fiscal year by approximately +4% and risk-adjusted performance was about in line with long-term objectives. On client service we remain at a grade of B. There is always room for improvement in this area, particularly in your day-to-day contact with shareholder services. Although shareholder inquiries and transactions are outsourced to PFPC Inc., we encourage you to let us know if we can assist in this area or if you have any feedback on your experience. We are committed to answering your questions promptly and addressing problems quickly. PROGRESS AT BOGLE INVESTMENT MANAGEMENT. We added two professionals to our team in May of 2005, bringing total staff to twelve, with five dedicated to portfolio management and research, and seven focused on client service, portfolio accounting and compliance. At the end of August 2005, assets in the Fund were around $312 million. The Fund remains closed to new investors. A few shareholders have recently asked why we are no longer included in the mutual fund tables of some of the major newspapers. Some of these publications have recently revised upward the minimum asset levels at which funds are included in their listings, causing the two classes of the fund to fall out of the daily printing. These changes, in part, reflect media recognition of the greater frequency with which investors are getting their pricing from the Internet rather than in their daily paper. Information about the Fund, including historical NAVs, sector allocation, fundamental characteristics, and top ten holdings, can be viewed on our website, WWW.BOGLEFUNDS.COM. The NAVs are updated daily while the other Fund information is updated quarterly. Fund information is also available on Morningstar.com and other internet-based financial data providers. As always, thank you for your ongoing support. Please let us know if there is any way we can improve your investment experience with us. Respectfully, Bogle Investment Management, L.P. Management Office: 781-283-5000 Shareholder Services Toll Free: 1-877-BOGLEIM (264-5346) - ---------- PAST PERFORMANCE IS NOT A GUARANTEE OF 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. PORTFOLIO COMPOSITION IS SUBJECT TO CHANGE. THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. THE RUSSELL 2000 IS AN INDEX OF STOCKS 1001 THROUGH 3000 IN THE RUSSELL 3000 INDEX AS RANKED BY TOTAL MARKET CAPITALIZATION. A DIRECT INVESTMENT IN THE INDEX IS NOT POSSIBLE. INVESTING IN SMALL COMPANIES CAN INVOLVE MORE VOLATILITY, LESS LIQUIDITY, AND LESS PUBLICLY AVAILABLE INFORMATION THAN INVESTING IN LARGE COMPANIES. 6 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND FUND EXPENSE EXAMPLES (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees, shareholder servicing fees, and other expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. These examples are based on an investment of $1,000 invested at the beginning of the six-month period from March 1, 2005 through August 31, 2005, and held for the entire period. ACTUAL EXPENSES The first line of the accompanying tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the accompanying tables provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the accompanying tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
INSTITUTIONAL CLASS -------------------------------------------------------------------------------- BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* ----------------------- -------------------- -------------------- Actual $1,000.00 $1,084.40 $6.57 Hypothetical (5% return before expenses) 1,000.00 1,018.82 6.38
7 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND FUND EXPENSE EXAMPLES (CONCLUDED) (UNAUDITED)
INVESTOR CLASS -------------------------------------------------------------------------------- BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING MARCH 1, 2005 AUGUST 31, 2005 PERIOD* ----------------------- -------------------- -------------------- Actual $1,000.00 $1,084.00 $7.09 Hypothetical (5% return before expenses) 1,000.00 1,018.31 6.89 - ---------- *Expenses are equal to the Fund's annualized expense ratio of 1.25% for the Institutional Class and 1.35% for the Investor Class, which includes waived fees or reimbursed expenses, multiplied by the average account value over the period, multiplied by the number of days (184) in the most recent fiscal half-year, then divided by 365 to reflect the one-half year period. The Fund's ending account values on the first line in each table are based on the actual total return for each class of 8.44% for the Institutional Class and 8.40% for the Investor Class.
8 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND PORTFOLIO HOLDINGS SUMMARY TABLE % OF NET SECURITY TYPE & SECTOR CLASSIFICATION ASSETS VALUE - -------------------------------------------------------------------------------- COMMON STOCKS: Technology 24.4% $ 75,960,955 Consumer Growth 16.9 52,760,543 Consumer Cyclical 16.8 52,197,122 Industrial 15.8 49,091,015 Financial 15.6 48,558,875 Energy 6.1 18,835,015 Basic Industry 2.9 9,173,685 Utility 0.6 1,980,990 SHORT-TERM INVESTMENTS 0.9 2,795,234 OTHER ASSETS IN EXCESS OF LIABILITIES 0.0 59,402 ------ ------------ NET ASSETS 100.0% $311,412,836 ------ ============ The accompanying notes are an integral part of the financial statements. 9 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 2005 NUMBER OF SHARES VALUE --------- ----------- COMMON STOCKS--99.1% BASIC INDUSTRY--2.9% Braskem S.A. - ADR ........................ 92,400 $ 1,820,280 Crown Holdings, Inc.* ..................... 178,300 3,011,487 H.B. Fuller Co. ........................... 75,600 2,480,436 IPSCO, Inc. ............................... 17,800 1,142,582 Lone Star Technologies, Inc.* ............. 13,000 718,900 ----------- 9,173,685 ----------- CONSUMER CYCLICAL--16.8% 7-Eleven, Inc.* ........................... 88,500 2,508,090 Aaron Rents, Inc. ......................... 77,100 1,707,765 Argosy Gaming Co.* ........................ 9,500 443,270 Barnes & Noble, Inc.* ..................... 55,800 2,107,566 Bluegreen Corp.* .......................... 37,300 657,972 Buckle, Inc. (The) ........................ 25,000 981,500 Building Materials Holding Corp. ................................... 22,200 2,075,256 CKE Restaurants, Inc. ..................... 151,300 1,770,210 CSK Auto Corp.* ........................... 116,200 1,946,350 Denny's Corp.* ............................ 347,500 1,824,375 Domino's Pizza, Inc. ...................... 92,000 2,116,000 Furniture Brands International, Inc. ..................... 81,200 1,551,732 Genesco, Inc.* ............................ 31,300 1,242,923 Gold Kist, Inc.* .......................... 41,600 768,768 Hartmarx Corp.* ........................... 137,300 1,219,224 Intrawest Corp. ........................... 47,400 1,239,510 J. Jill Group, Inc.* ...................... 85,800 1,520,376 Jack in the Box, Inc.* .................... 52,500 1,851,675 LKQ Corp.* ................................ 38,800 1,213,664 Longs Drug Stores Corp. ................... 57,800 2,450,720 Media General, Inc., Class A .............. 18,200 1,197,378 Monarch Casino & Resort, Inc.* ................................... 90,300 1,714,797 Pantry, Inc. (The)* ....................... 33,200 1,191,548 Phillips-Van Heusen Corp. ................. 82,500 2,762,925 Rent-Way, Inc.* ........................... 159,900 1,183,260 Retail Ventures, Inc.* .................... 129,100 1,474,322 Ryder System, Inc. ........................ 26,400 926,376 Shoe Carnival, Inc.* ...................... 39,400 644,584 Skechers U.S.A., Inc., Class A* ................................ 104,200 1,740,140 NUMBER OF SHARES VALUE --------- ----------- CONSUMER CYCLICAL--(CONTINUED) Sonic Automotive, Inc., Class A ................................. 91,000 $ 2,133,950 Stanley Furniture Co., Inc. ............... 19,600 525,476 Stein Mart, Inc. .......................... 115,700 2,830,022 Steven Madden Ltd.* ....................... 69,800 1,636,810 THQ, Inc.* ................................ 13,600 457,096 UniFirst Corp. ............................ 14,800 581,492 ----------- 52,197,122 ----------- CONSUMER GROWTH--16.9% Alpharma, Inc., Class A ................... 147,300 3,921,126 AMN Healthcare Services, Inc.* .................................. 123,300 1,906,218 AngioDynamics, Inc.* ...................... 107,900 2,330,640 Anika Therapeutics, Inc.* ................. 15,400 195,580 Bright Horizons Family Solutions, Inc.* ........................ 26,600 1,045,912 Chattem, Inc.* ............................ 20,200 782,548 Chemed Corp. .............................. 23,400 946,764 Chemtura Corp. ............................ 168,300 2,888,028 CNS, Inc. ................................. 87,900 2,312,649 Cutera, Inc.* ............................. 105,000 2,550,450 Dade Behring Holdings, Inc. ............... 83,800 3,066,242 Education Management Corp.* .................................. 65,200 2,208,324 Genesis HealthCare Corp.* ................. 41,491 1,663,789 Haemonetics Corp.* ........................ 60,200 2,675,288 Hi-Tech Pharmacal Co., Inc.* .............. 74,800 1,841,576 Kendle International, Inc.* ............... 80,100 1,938,420 Lifecore Biomedical, Inc.* ................ 42,100 463,100 Magellan Health Services, Inc.* ................................... 59,100 2,095,095 MedCath Corp.* ............................ 44,000 1,091,640 Natus Medical, Inc.* ...................... 149,500 1,581,710 Nu Skin Enterprises, Inc., Class A ................................. 17,900 381,986 Nutri/System, Inc.* ....................... 130,800 2,865,828 Orthofix International, N.V.* ............. 34,600 1,575,684 Per-Se Technologies, Inc.* ................ 29,300 564,904 PerkinElmer, Inc. ......................... 118,900 2,461,230 Playtex Products, Inc.* ................... 162,700 1,760,414 Respironics, Inc.* ........................ 61,700 2,416,172 The accompanying notes are an integral part of the financial statements. 10 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 2005 NUMBER OF SHARES VALUE --------- ----------- CONSUMER GROWTH--(CONTINUED) Savient Pharmaceuticals, Inc.* ................................... 369,000 $ 1,490,760 Steiner Leisure Ltd.* ..................... 37,170 1,145,951 West Pharmaceutical Services, Inc. .................................... 20,900 592,515 ----------- 52,760,543 ----------- ENERGY--6.1% Advanced Energy Industries, Inc.* ................................... 145,600 1,735,552 Core Laboratories N.V.* ................... 93,400 2,972,922 Distributed Energy Systems Corp.* .................................. 348,200 2,353,832 Frontier Oil Corp. ........................ 77,100 2,825,715 Giant Industries, Inc.* ................... 59,600 2,935,300 Tesoro Corp. .............................. 57,600 3,329,280 Vintage Petroleum, Inc. ................... 69,800 2,682,414 ----------- 18,835,015 ----------- FINANCIAL--15.6% Allmerica Financial Corp.* ................ 50,800 2,068,068 American Physicians Capital, Inc.* .................................. 50,700 2,241,447 Arch Capital Group Ltd.* .................. 52,400 2,276,780 Banco Itau Holding Financeira S.A. - ADR ................... 29,100 3,049,098 BankAtlantic Bancorp, Inc., Class A ................................. 54,400 927,520 Calamos Asset Management, Inc., Class A ........................... 69,100 1,861,554 Capital Crossing Bank* .................... 15,900 592,434 Cash America International, Inc. ..................................... 59,300 1,243,521 EZCORP, Inc., Class A* .................... 134,200 2,191,486 First American Corp. ...................... 67,100 2,792,031 First Republic Bank ....................... 17,500 630,000 GFI Group, Inc.* .......................... 60,600 2,004,648 Investment Technology Group, Inc.* ............................ 110,600 3,035,970 LandAmerica Financial Group, Inc. ............................. 42,300 2,500,776 Max Re Capital Ltd. ....................... 102,000 2,344,980 NUMBER OF SHARES VALUE --------- ----------- FINANCIAL--(CONTINUED) National Financial Partners Corp. ................................... 25,400 $ 1,115,060 Ohio Casualty Corp. ....................... 80,900 2,043,534 Safety Insurance Group, Inc. .............. 67,200 2,357,376 Selective Insurance Group, Inc. 25,800 1,221,372 StanCorp Financial Group, Inc. .................................... 31,200 2,522,520 Stewart Information Services Corp. ................................... 45,800 2,201,606 UICI ...................................... 74,100 2,286,726 United Fire & Casualty Co. ................ 27,900 1,149,759 Unitrin, Inc. ............................. 32,700 1,509,759 Universal American Financial Corp.* .................................. 17,500 401,625 Zenith National Insurance Corp. ................................... 31,500 1,989,225 ----------- 48,558,875 ----------- INDUSTRIAL--15.8% Administaff, Inc. ......................... 91,800 3,302,046 Aftermarket Technology Corp.* .................................. 50,941 876,185 AMERCO* ................................... 46,200 2,765,070 Blount International, Inc.* ............... 8,400 151,200 Brink's Co., (The) ........................ 68,000 2,732,240 Celadon Group, Inc.* ...................... 42,200 863,834 CNF, Inc. ................................. 44,200 2,230,774 Columbus McKinnon Corp.* .................. 163,600 3,157,480 Consolidated Graphics, Inc.* .............. 32,700 1,262,547 CP Ships Ltd. ............................. 129,000 2,919,270 Flowserve Corp.* .......................... 8,800 326,832 Genlyte Group, Inc., (The)* ............... 15,200 747,992 Greif, Inc., Class A ...................... 21,700 1,277,045 Hub Group, Inc., Class A* ................. 95,600 3,083,100 Ingram Micro, Inc., Class A* .............. 106,200 1,859,562 Laidlaw International, Inc.* .............. 91,100 2,254,725 McDermott International, Inc.* ................................... 116,400 4,021,620 Pacer International, Inc.* ................ 93,600 2,456,064 Rollins, Inc. ............................. 104,400 2,052,504 Snap-On, Inc. ............................. 34,800 1,235,400 The accompanying notes are an integral part of the financial statements. 11 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 2005 NUMBER OF SHARES VALUE --------- ----------- INDUSTRIAL--(CONTINUED) Stewart & Stevenson Services, Inc. ..................................... 103,900 $ 2,532,043 Thomas & Betts Corp.* ..................... 40,900 1,453,586 Universal Forest Products, Inc. 43,200 2,351,376 WESCO International, Inc.* ................ 91,600 3,178,520 ----------- 49,091,015 ----------- TECHNOLOGY--24.4% Advanced Digital Information Corp.* .................................. 1,900 16,967 Advent Software, Inc.* .................... 57,400 1,581,944 Arris Group, Inc.* ........................ 289,800 3,040,002 BE Aerospace, Inc.* ....................... 53,800 853,268 BEA Systems, Inc.* ........................ 25,700 226,674 Blackboard, Inc.* ......................... 40,400 976,064 Bottomline Technologies, Inc.* ................................... 125,100 1,924,038 Brightpoint, Inc.* ........................ 38,600 1,106,276 Captiva Software Corp.* ................... 108,800 2,065,024 Coherent, Inc.* ........................... 11,600 368,764 Comtech Telecommunications Corp.* .................................. 57,000 2,000,700 CryptoLogic, Inc. ......................... 27,700 501,093 Ctrip.com International Ltd. - ADR* ............................. 44,500 2,518,255 ECI Telecom Ltd.* ......................... 157,300 1,204,918 Emulex Corp.* ............................. 125,800 2,710,990 Energy Conversion Devices, Inc.* ................................... 24,300 843,453 Extreme Networks, Inc.* ................... 179,600 775,872 FileNET Corp.* ............................ 60,100 1,596,857 Hologic, Inc.* ............................ 58,100 2,802,163 Hypercom Corp.* ........................... 302,000 1,917,700 i2 Technologies, Inc.* .................... 78,000 1,826,760 Informatica Corp.* ........................ 224,900 2,568,358 IXYS Corp.* ............................... 127,200 1,319,064 ManTech International Corp., Class A* ................................ 33,200 1,029,532 McDATA Corp., Class A* .................... 318,100 1,711,378 MTS Systems Corp. ......................... 58,200 2,399,004 NICE Systems Ltd. - ADR* .................. 49,900 2,157,676 NUMBER OF SHARES VALUE --------- ----------- TECHNOLOGY--(CONTINUED) ON Semiconductor Corp.* ................... 197,300 $ 1,134,475 Optimal Group, Inc., Class A* ................................ 76,000 1,591,440 PAR Technology Corp.* ..................... 77,200 1,926,912 Parametric Technology Corp.* .................................. 401,200 2,431,272 Progress Software Corp.* .................. 66,500 2,038,890 Quidel Corp.* ............................. 204,600 1,665,444 Radiant Systems, Inc.* .................... 181,600 2,144,696 Skyworks Solutions, Inc.* ................. 264,600 1,995,084 SonicWALL, Inc.* .......................... 183,900 1,097,883 SPSS, Inc.* ............................... 90,600 1,975,080 Standard Microsystems Corp.* .................................. 77,900 2,029,295 Sykes Enterprises, Inc.* .................. 73,600 783,840 TiVo, Inc.* ............................... 186,000 957,900 Transaction Systems Architects, Inc.* ....................... 80,200 2,147,756 TriQuint Semiconductor, Inc.* ................................... 226,100 872,746 TriZetto Group, Inc., (The)* .............. 188,700 2,960,703 Vignette Corp.* ........................... 155,200 2,357,488 Xyratex Ltd.* ............................. 79,900 1,290,385 Zoran Corp.* .............................. 159,700 2,516,872 ----------- 75,960,955 ----------- UTILITY--0.6% Compania Anonima Nacional Telefonos de Venezuela (CANTV) - ADR ........................... 133,400 1,980,990 ----------- TOTAL COMMON STOCKS (Cost $247,931,229) 308,558,200 ----------- SHORT-TERM INVESTMENTS--0.9% Galaxy Institutional Money Market Fund 3.43% 09/01/05 .......................... 2,795,234 2,795,234 ----------- TOTAL SHORT-TERM INVESTMENTS (Cost $2,795,234) ..................... 2,795,234 ----------- The accompanying notes are an integral part of the financial statements. 12 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) AUGUST 31, 2005 VALUE ----------- TOTAL INVESTMENTS--100.0% (Cost $250,726,463) ........................................ $311,353,434 ------------ OTHER ASSETS IN EXCESS OF LIABILITIES--0.0% ....................................... 59,402 ------------ NET ASSETS--100.0% ............................................ $311,412,836 ============ - ---------- *Non-income producing. ADR -- American Depository Receipt. The accompanying notes are an integral part of the financial statements. 13 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 2005 ASSETS Investments, at value (cost - $250,726,463) ................. $311,353,434 Receivable for investments sold ............................. 4,074,488 Receivable for Fund shares sold ............................. 86,806 Dividends receivable ........................................ 151,131 Prepaid expenses and other assets ........................... 27,963 ------------ Total assets .............................................. 315,693,822 ------------ LIABILITIES Payable for investments purchased ........................... 3,670,548 Payable for Fund shares redeemed ............................ 207,264 Payable to the Adviser ...................................... 255,319 Accrued expenses and other liabilities ...................... 147,855 ------------ Total liabilities ......................................... 4,280,986 ------------ NET ASSETS Capital stock, $0.001 par value ............................. 10,841 Additional paid-in capital .................................. 208,602,237 Accumulated net realized gain from investments .............. 42,172,787 Net unrealized appreciation on investments .................. 60,626,971 ------------ Net assets ................................................ $311,412,836 ============ INSTITUTIONAL CLASS Net assets .................................................. $177,358,575 ------------ Shares outstanding .......................................... 6,161,599 ------------ Net asset value, offering and redemption price per share .... $ 28.78 ============ INVESTOR CLASS Net assets .................................................. $134,054,261 ------------ Shares outstanding .......................................... 4,679,498 ------------ Net asset value, offering and redemption price per share .... $ 28.65 ============ The accompanying notes are an integral part of the financial statements. 14 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND STATEMENT OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2005 ---------------- INVESTMENT INCOME Dividends(1) .............................................. $ 1,598,391 ----------- Total investment income ................................. 1,598,391 ----------- EXPENSES Advisory fees ............................................. 3,096,795 Administrative service fees ............................... 464,519 Administration and accounting fees and expenses ........... 440,927 Transfer agent fees and expenses .......................... 147,669 Shareholder servicing fees ................................ 130,014 Custodian fees and expenses ............................... 92,904 Audit and legal fees ...................................... 89,611 Printing fees ............................................. 65,790 Directors' and Officers' fees and expenses ................ 60,875 Federal and state registration fees ....................... 31,253 Insurance and other expenses .............................. 24,295 ----------- Total expenses before waivers and reimbursements ........ 4,644,652 Less: waivers and reimbursements ........................ (643,644) ----------- Net expenses ............................................ 4,001,008 ----------- Net investment loss ....................................... (2,402,617) ----------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain from investments ........................ 45,421,086 Net change in unrealized appreciation on investments ...... 30,964,248 ----------- Net realized and unrealized gain from investments ......... 76,385,334 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ......... $73,982,717 =========== - ---------- (1) Net of foreign taxes withheld of $21,918. The accompanying notes are an integral part of the financial statements. 15 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND STATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 --------------- --------------- INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment loss ................................... $ (2,402,617) $ (1,973,494) Net realized gain from investments .................... 45,421,086 43,215,406 Net change in unrealized appreciation on investments ...................................... 30,964,248 (19,214,527) ------------ ------------ Net increase in net assets resulting from operations .. 73,982,717 22,027,385 ------------ ------------ LESS DIVIDENDS TO SHAREHOLDERS FROM: Net realized capital gains Institutional shares ....... (17,084,780) -- Net realized capital gains Investor shares ............ (12,346,358) -- ------------ ------------ Total dividends to shareholders ..................... (29,431,138) -- ------------ ------------ INCREASE/(DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 4) ................... (32,811,507) 32,292,113 ------------ ------------ Total increase in net assets .......................... 11,740,072 54,319,498 ------------ ------------ NET ASSETS Beginning of period ................................... 299,672,764 245,353,266 ------------ ------------ End of period ......................................... $311,412,836 $299,672,764 ============ ============
The accompanying notes are an integral part of the financial statements. 16 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Contained below is per share operating performance data for each class of shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. This information has been derived from information provided in the financial statements. - --------------------------------------------------------------------------------
INSTITUTIONAL CLASS ----------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED 8/31/05 8/31/04 8/31/03 8/31/02 8/31/01 --------- ------- ------- ------- ------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ............ $ 24.99 $ 22.71 $ 17.83 $ 19.52 $ 20.91 ------- ------- ------- ------- ------- Net investment loss ............................. (0.22) (0.16)* (0.11)* (0.02) (0.07)* Net realized and unrealized gain/(loss) on investments ............................... 6.49 2.44* 4.99* (1.67) (0.66)* ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations .................... 6.27 2.28 4.88 (1.69) (0.73) ------- ------- ------- ------- ------- Distributions to shareholders from: Net investment income ........................... -- -- -- -- -- Net realized capital gains ...................... (2.48) -- -- -- (0.66) ------- ------- ------- ------- ------- Net asset value, end of period .................. $ 28.78 $ 24.99 $ 22.71 $ 17.83 $ 19.52 ======= ======= ======= ======= ======= Total investment return(1) ...................... 27.34% 10.04% 27.37% (8.66)% (3.39)% ======= ======= ======= ======= ======= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) .............................. $177,359 $175,642 $132,845 $80,639 $36,526 Ratio of expenses to average net assets with waivers and reimbursements .............. 1.25% 1.25% 1.25% 1.25% 1.25% Ratio of expenses to average net assets without waivers and reimbursements ........... 1.46% 1.44% 1.50% 1.50% 1.68% Ratio of net investment loss to average net assets ................................... (0.73)% (0.61)% (0.60)% (0.11)% (0.36)% Portfolio turnover rate ......................... 129.18% 129.18% 122.39% 140.27% 125.99% - ---------- * Calculated based on average shares outstanding for the period. (1) 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.
The accompanying notes are an integral part of the financial statements. 17 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Contained below is per share operating performance data for each class of shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. This information has been derived from information provided in the financial statements. - --------------------------------------------------------------------------------
INVESTOR CLASS ----------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED 8/31/05 8/31/04 8/31/03 8/31/02 8/31/01 --------- ------- ------- ------- ------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ............. $ 24.91 $ 22.65 $ 17.80 $ 19.49 $ 20.89 ------- ------- ------- ------- ------- Net investment loss .............................. (0.23) (0.18)* (0.12)* (0.03) (0.09)* Net realized and unrealized gain/(loss) on investments ................................ 6.45 2.44* 4.97* (1.66) (0.65)* ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations ..................... 6.22 2.26 4.85 (1.69) (0.74) ------- ------- ------- ------- ------- Distributions to shareholders from: Net investment income ............................ -- -- -- -- -- Net realized capital gains ....................... (2.48) -- -- -- (0.66) ------- ------- ------- ------- ------- Net asset value, end of period ................... $ 28.65 $ 24.91 $ 22.65 $ 17.80 $ 19.49 ======= ======= ======= ======= ======= Total investment return(1) ....................... 27.22% 9.98% 27.25% (8.67)% (3.45)% ======= ======= ======= ======= ======= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) ........ $134,054 $124,031 $112,508 $88,920 $54,255 Ratio of expenses to average net assets with waivers and reimbursements ........ 1.35% 1.35% 1.35% 1.27% 1.35% Ratio of expenses to average net assets without waivers and reimbursements ............ 1.56% 1.54% 1.60% 1.60% 1.78% Ratio of net investment loss to average net assets .................................... (0.83)% (0.70)% (0.69)% (0.20)% (0.46)% Portfolio turnover rate .......................... 129.18% 129.18% 122.39% 140.27% 125.99% - ---------- * Calculated based on average shares outstanding for the period. (1) 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.
The accompanying notes are an integral part of the financial statements. 18 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The RBB Fund, Inc. ("RBB" or "Company") 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 seventeen active investment portfolios, including the Bogle Investment Management Small Cap Growth Fund (the "Fund"), which commenced investment operations on October 1, 1999. As of the date hereof, the Fund offers two classes of shares, Institutional Class and Investor Class. RBB has authorized capital of thirty billion shares of common stock of which 26.473 billion are currently classified into one hundred and three classes of common stock. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into seven separate "families," six of which have begun investment operations. PORTFOLIO VALUATION -- The Fund's net asset value ("NAV") is calculated once daily at the close of regular trading hours on the NYSE (generally 4:00 p.m. Eastern time) on each day the NYSE is open. Securities held by the Fund are valued using the closing price or the last sale price on a national securities exchange or on the National Association of Securities Dealers Automatic Quotation System ("NASDAQ") market system where they are primarily traded. If there were no sales on that day or the securities are traded on other over-the-counter markets, the mean of the last bid and ask prices prior to the market close are used. Short-term debt securities having a remaining maturity of 60 days or less are amortized to maturity based on their cost. Debt securities having a remaining maturity of greater than 60 days are valued at the mean between the bid and ask prices. With the approval of the Company's Board of Directors, the Fund may use a pricing service, bank or broker-dealer experienced in providing valuations to value the Fund's securities. If market quotations are unavailable or deemed unreliable, securities will be valued by the Fund's Valuation Committee following procedures adopted by the Board of Directors. 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 that Bogle Investment Management, L.P. (the "Adviser" or "Bogle") 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. The Adviser marks to market daily the 19 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) value of the collateral, and, if necessary, requires the seller to deposit additional collateral by the next day of business, 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. For the year ended August 31, 2005, the Fund did not enter into any repurchase agreements. INVESTMENT TRANSACTIONS, INVESTMENT INCOME AND EXPENSES -- The Fund records security transactions based on 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 when earned. Dividend income is recorded on the ex-dividend date. The Fund's net investment income (other than class specific shareholder servicing fees) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day. 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 director or professional fees) are charged to all funds in proportion to their net assets of the RBB Funds, or in such other manner as the Board of Directors deems fair or equitable. 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. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income and distributions from net realized capital gains, if any, will be declared and paid at least annually to shareholders and recorded on ex-date. Income and capital gain distributions are determined in accordance with U.S. federal income tax regulations which may differ from accounting principles generally accepted in the United States. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards, foreign currency gain/loss, 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 within the components of net assets. U.S. TAX STATUS -- No provision is made for U.S. income taxes as it is the Fund's intention to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. income and excise taxes. OTHER -- In the normal course of business, the Fund may enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future, and, therefore, cannot be estimated; however, based on experience, the risk of material loss for such claims is considered remote. 20 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES For its advisory services, the Adviser is entitled to receive 1.00% of the Fund's average daily net assets, computed daily and payable monthly. The Adviser has contractually agreed to limit the Fund's total operating expenses for the current fiscal year to the extent that such expenses exceed 1.25% of the average daily net assets of the Fund's Institutional Class and 1.35% of the average daily net assets of the Fund's Investor Class. As necessary, this limitation is effected in waivers of advisory fees and reimbursements of expenses exceeding the advisory fee. The contractual fee waiver does not provide for recoupment of fees that were waived or expenses that were reimbursed. For the year ended August 31, 2005, investment advisory fees and waivers were as follows: GROSS NET ADVISORY FEES WAIVERS ADVISORY FEES ------------- ---------- ------------- Bogle Investment Management Small Cap Growth Fund $3,096,795 $(202,351) $2,894,444 The Fund will not pay the Adviser at a later time for any amounts waived or any amounts assumed. In addition to serving as the Fund's investment adviser, Bogle Investment Management, L.P. provides certain shareholder services to the Investor Class of the Fund. As compensation for such services, the Adviser receives a monthly fee equal to an annual rate of 0.10% of the average daily net assets of the Fund's Investor Class. PFPC Inc. ("PFPC"), a wholly-owned subsidiary of PFPC Worldwide Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc., serves as administrator for the Fund. For providing administrative and accounting services, PFPC is entitled to receive a monthly fee equal to an annual rate of 0.115% of the Fund's average daily net assets, subject to a minimum of $6,250 per month. The Fund also pays a monthly multiple class fee of $1,875 per class. In addition, PFPC serves as the Fund's transfer and dividend disbursing agent. For providing regulatory administrative services to RBB, PFPC is entitled to receive compensation as agreed to by the Company and PFPC. This fee is charged to all funds in proportion to their net assets of the RBB Funds. The Bogle Investment Management Small Cap Growth Fund's portion of this fee for the year ended August 31, 2005 was $51,846. 21 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) PFPC voluntarily agreed to waive a portion of its administration and accounting services fees for the Fund. For the year ended August 31, 2005, administration and accounting services fees and waivers were as follows:
GROSS ADMINISTRATION NET ADMINISTRATION AND AND ACCOUNTING ACCOUNTING SERVICES SERVICES FEES AND EXPENSES WAIVERS FEES AND EXPENSES -------------------------- --------- ---------------------- Bogle Investment Management Small Cap Growth Fund $440,927 $(38,710) $402,217
PFPC Distributors, Inc., ("PFPC Distributors") a wholly-owned subsidiary of PFPC Worldwide, Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc., provides 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. PFPC Distributors voluntarily agreed to waive a portion of its administrative services fees for the Fund. For the year ended August 31, 2005, administrative services fees and waivers were as follows:
GROSS ADMINISTRATIVE NET ADMINISTRATIVE SERVICES FEES WAIVERS SERVICES FEES -------------------- --------- ------------------ Bogle Investment Management Small Cap Growth Fund $464,519 $(402,583) $61,936
The Fund will not pay PFPC or PFPC's affiliates at a later time for any amounts waived or any amounts assumed. PFPC Trust Company provides certain custodial services to the Fund. PFPC Trust Company is a wholly-owned subsidiary of PFPC Worldwide, Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. As compensation for such custodial services, PFPC Trust Company is entitled to receive a monthly fee equal to an annual rate of 0.03% of the Fund's average daily net assets subject to a minimum monthly fee of $1,500. PFPC and its affiliates were due fees from the Fund of $66,586 at August 31, 2005. 3. INVESTMENT IN SECURITIES For the year ended August 31, 2005, aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: INVESTMENT SECURITIES ------------------------------- PURCHASES SALES ------------ ------------ Bogle Investment Management Small Cap Growth Fund $394,436,186 $451,039,512 22 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) 4. CAPITAL SHARE TRANSACTIONS As of August 31, 2005, the Fund has 100,000,000 shares of $0.001 par value common stock authorized for the Institutional Class and 100,000,000 shares of $0.001 par value common stock authorized for the Investor Class. Transactions in capital shares were as follows:
INSTITUTIONAL CLASS ----------------------------------------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 ------------------------------ --------------------------- SHARES VALUE SHARES VALUE ---------- ----------- --------- ------------ Sales ................................... 771,801 $ 20,183,245 2,135,001 $ 56,532,403 Reinvestments ........................... 700,636 16,457,954 -- -- Redemptions ............................. (2,338,064) (60,402,341) (958,444) (24,625,912) ---------- ------------ --------- ------------ Net Increase/(Decrease) ................. (865,627) $(23,761,142) 1,176,557 $ 31,906,491 ========== ============ ========= ============ INVESTOR CLASS ----------------------------------------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2005 AUGUST 31, 2004 ------------------------------ --------------------------- SHARES VALUE SHARES VALUE ---------- ----------- --------- ------------ Sales ................................... 289,103 $ 7,421,197 812,505 $ 21,459,043 Reinvestments ........................... 500,745 11,717,438 -- -- Redemptions ............................. (1,089,315) (28,189,000) (800,883) (21,073,421) ---------- ------------ --------- ------------ Net Increase/(Decrease) ................. (299,467) $ (9,050,365) 11,622 $ 385,622 ========== ============ ========= ============
As of August 31, 2005, one shareholder held 30% of the outstanding shares of the Fund. This shareholder is an omnibus account comprised of many individual shareholders. 5. FEDERAL INCOME TAX INFORMATION At August 31, 2005, Federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows:
FEDERAL TAX UNREALIZED UNREALIZED NET UNREALIZED COST APPRECIATION DEPRECIATION APPRECIATION ------------ ------------ ------------ -------------- Bogle Investment Management Small Cap Growth Fund .............. $251,393,283 $66,419,828 $(6,459,677) $59,960,151
23 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONCLUDED) The following permanent differences as of August 31, 2005, primarily attributable to net investment loss were reclassified to the following accounts: INCREASE DECREASE ACCUMULATED ACCUMULATED NET INVESTMENT NET REALIZED LOSS GAIN -------------- ------------ Bogle Investment Management Small Cap Growth Fund $2,402,617 $(2,402,617) As of August 31, 2005, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM INCOME GAINS ------------- ------------- Bogle Investment Management Small Cap Growth Fund $11,157,445 $31,682,163 At August 31, 2005, 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, 2005, the Fund incurred no post-October 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 ---------- ----------- ----------- Bogle Investment Management Small Cap Growth Fund 2005 $2,306,138 $27,125,000 $29,431,138 2004 -- -- --
24 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 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 Bogle Investment Management Small Cap Growth Fund, a separately managed portfolio of The RBB Fund, Inc. (the "Fund") at August 31, 2005, 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 five years in the period then ended, 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Philadelphia, Pennsylvania October 28, 2005 25 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND SHAREHOLDER TAX INFORMATION (UNAUDITED) The Fund is required by Subchapter M of the Internal Revenue Code of 1986, as amended, to advise its shareholders within 60 days of the Fund's fiscal year end (August 31) 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, 2005, the following dividends and distributions per share were paid by the Fund: NET INVESTMENT SHORT-TERM LONG-TERM INCOME GAINS GAINS ---------- ---------- --------- Institutional Class $-- $0.19 $2.29 Investor Class -- 0.19 2.29 Because the Fund's fiscal year is not the calendar year, another notification will be sent with respect to calendar year 2005. 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 2006. There will be no 1099-DIV issued if there is no distribution required. 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 Fund, 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 Fund. The percentage of total ordinary income dividends qualifying for the 15% dividend income tax rate is 74% for the Bogle Investment Management Small Cap Growth Fund. The percentage of total ordinary income dividends qualifying for the corporate dividends received deduction is 86% for the Bogle Investment Management Small Cap Growth Fund. These amounts were reported to shareholders as income in 2004. 26 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND OTHER INFORMATION (UNAUDITED) 1. PROXY VOTING Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities as well as information regarding how the Fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 are available without charge, upon request, by calling (877) 264-5346 and on the Securities and Exchange Commission's website at http://www.sec.gov. 2. QUARTERLY PORTFOLIO SCHEDULES The Company will file its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third fiscal quarters of each fiscal year (quarters ended November 30 and May 31) on Form N-Q. The Company's Form N-Q will be available on the Securities and Exchange Commission's website at http://www.sec.gov and may be reviewed and copied at the Securities and Exchange Commission's Public Reference Room in Washington, D.C. Information on the operation of the Securities and Exchange Commission's Public Reference Room may be obtained by calling 1-800-SEC-0330. 3. BOARD REVIEW OF ADVISORY AGREEMENT As required by the Investment Company Act, the Board of Directors (the "Board") of the Company, including all of the Directors who are not "interested persons" of the Company, as that term is defined in the 1940 Act (the "Independent Directors"), considered the renewal of the investment advisory agreement between Bogle and the Company (the "Advisory Agreement") on behalf of the Fund at a meeting of the Board held on May 25, 2005. At this meeting, the Board approved the Advisory Agreement for an additional one-year term. The Board's decision to approve the Agreement reflects the exercise of its business judgment to continue the existing arrangement. In approving the Agreement, the Board considered information provided by the Adviser with the assistance and advice of counsel to the Independent Directors and the Company. In considering the renewal of and approval of the Advisory Agreement, the Directors took into account all the materials provided prior to and during the meeting, the presentations made during the meeting, and the discussions during the meeting. The Directors discussed the materials from the Adviser mailed in advance of the meeting that addressed most, if not all, of the factors listed below. The Adviser also made a presentation during the meeting and responded to questions from the Directors. Among other things, the Directors considered (i) the nature, extent, and quality of the Adviser's services provided to the Fund; (ii) descriptions of the experience and qualifications of the personnel providing those services; (iii) the Adviser's investment philosophies and processes; (iv) the Adviser's assets under management and client descriptions; (v) the Adviser's soft dollar commission and trade allocations policies, including information on the types of research and services obtained in connection with soft dollar commissions; (vi) the current and proposed advisory fee arrangements with the Company and other similarly managed clients; (vii) compliance procedures; (viii) the Adviser's financial information, insurance coverage and profitability analysis related to providing advisory services to the Fund; (ix) the extent to which economies of scale are relevant to the Fund; (x) a report comparing the Fund's proposed or current advisory fees and expenses to those of its peer group; 27 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND OTHER INFORMATION (UNAUDITED) (CONCLUDED) and (xi) a report comparing the performance of the Fund to the performance of its applicable benchmark index and peer group. No one factor was determinative in the Board's consideration of the Advisory Agreement. The Directors then met in executive session with counsel to discuss and consider information presented in connection with the continuation of the Advisory Agreement as well as the Directors' responsibilities and duties in approving the Agreement. During the course of its deliberations, the Board reached the following conclusions, among others, regarding the Adviser and its Advisory Agreement with respect to the Fund. The Directors considered that the Fund's gross and net advisory fees were higher in comparison to that of its peer group average and is the same in comparison to the fees the Adviser charges for managing assets for other clients utilizing its long only strategies. The Board considered that the Fund is currently closed to new investors and reviewed the overall value added by the Adviser to the Fund's performance when assessing the Fund's higher advisory fee. In addition, the Directors discussed that the Fund's gross and net expense ratio was lower than its peer group average. It was further considered by the Directors that the Adviser has agreed to waive its advisory fee and reimburse expenses to limit annual operating expenses of the Institutional Class and Investor Class of the Fund to 1.25% and 1.35%, respectively. The Directors noted that the Fund's year-to-date performance ended March 31, 2005 lagged the benchmark while the Fund's performance for the one-year period ended May 3, 2005 was higher than the Lipper composite sample group of small cap growth funds but lower than the Lipper composite sample group of small cap core funds. The Directors then determined that the nature, extent and quality of services provided by the Adviser in advising the Fund was satisfactory; the profits earned by the Adviser seemed reasonable; and the benefits derived by the Adviser from managing the Fund, including its use of soft dollars and the process it uses to select brokers, seemed reasonable. The Directors discussed and considered any economies-of-scale realized by the Fund as a result of growth in the assets of the Fund. Based on all of the information presented to the Board and its consideration of relevant factors, the Board concluded that the fee paid to the Adviser by the Fund was reasonable, and in the exercise of its business judgment, determined that the Adviser's Advisory Agreement be continued for another one-year period ending August 16, 2006. 28 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND FUND MANAGEMENT (UNAUDITED) The business and affairs of the Company are managed under the direction of the Company's Board of Directors. The Company is organized under and managed pursuant to Maryland law. The Directors and executive officers of the Company, their dates of birth, business addresses and principal occupations during the past five years are set forth below. The Statement of Additional Information ("SAI") includes additional information about the Company's directors and may be obtained free of charge by calling (877) 264-5346.
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX OTHER AND DATE OF BIRTH WITH FUND TIME SERVED 5 YEARS OVERSEEN BY DIRECTORSHIPS DIRECTOR HELD BY DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS - ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director 1988 to present Since 1969, Director and Vice 17 Director, Comcast Corporation Chairman, Comcast Corporation (cable Comcast 1500 Market Street, television and communications); Corporation 35th Floor Director, NDS Group PLC (provider of Philadelphia, PA 19102 systems and applications for digital DOB: 7/16/33 pay TV). - ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director 1988 to present Since 2000, Vice President, Fox Chase 17 None Fox Chase Cancer Center Cancer Center (biomedical research 333 Cottman Avenue and medical care); prior to 2000, Philadelphia, PA 19111 Executive Vice President, Fox Chase DOB: 12/06/35 Cancer Center. - ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director 1991 to present Since December 2000, Director, 17 None 106 Pierrepont Street Gabelli Group Capital Partners, L.P. Brooklyn, NY 11201 (an investment partnership); Chief DOB: 5/21/48 Operating Officer and member of the Board of Directors of Outercurve Technologies (wireless 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; Prior to 1997, Managing Director of Warburg Pincus Asset Management, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director 1991 to present Since 1974, Chairman, Director and 17 Director, Moyco Technologies, Inc. President, Moyco Technologies, Inc. Moyco 200 Commerce Drive (manufacturer of precision coated and Technologies, Montgomeryville, PA 18936 industrial abrasives). Since 1999, Inc. DOB: 3/24/34 Director, Pennsylvania Business Bank. - ------------------------------------------------------------------------------------------------------------------------------------ * Each Director oversees seventeen portfolios of the Company that are currently offered for sale. The Company is authorized to offer two additional portfolios that had not commenced operations as of the date of this report. 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified.
29 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND FUND MANAGEMENT (CONTINUED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX OTHER AND DATE OF BIRTH WITH FUND TIME SERVED (1) 5 YEARS OVERSEEN BY DIRECTORSHIPS DIRECTOR* HELD BY DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS 2 - ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director 1991 to present Since July 2002, Senior Vice 17 None Oppenheimer & Company, Inc. President and prior thereto, 200 Park Avenue Executive Vice President of New York, NY 10166 Oppenheimer & Co., Inc., formerly DOB: 4/16/38 Fahnestock & Co., Inc. (a registered broker-dealer). - ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director 2002 to present Director of PFPC Inc. from January 17 Director, 400 Bellevue Parkway 1987 to April 2002, Chairman and Cornerstone Wilmington, DE 19809 Chief Executive Officer of PFPC Inc. Bank DOB: 9/25/38 until April 2002, Executive Vice President of PNC Bank, National Association from October 1981 to April 2002, Director of PFPC International Ltd. (financial services) from August 1993 to April 2002, Director of PFPC International (Cayman) Ltd. (financial services) from September 1996 to April 2002; Governor of the Investment Company Institute (investment company industry trade organization) from July 1996 to January 2002; Director of PNC Asset Management, Inc. (investment advisory) from September 1994 to March 1998; Director of PNC National Bank from October 1995 to November 1997; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984, and Director of Cornerstone Bank since March 2004. - ------------------------------------------------------------------------------------------------------------------------------------ *Each Director oversees seventeen portfolios of the Company that are currently offered for sale. The Company is authorized to offer two additional portfolios that had not commenced operations as of the date of this report. 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified. 2 Messrs. Carnall and Sablowsky are considered "interested persons" of the Company as that term is defined in the 1940 Act. Mr. Carnall is 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. Sablowsky is considered an "interested Director" of the Company by virtue of his position as an officer of a registered broker-dealer.
30 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND FUND MANAGEMENT (CONCLUDED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX OTHER AND DATE OF BIRTH WITH FUND TIME SERVED (1) 5 YEARS OVERSEEN BY DIRECTORSHIPS DIRECTOR* HELD BY DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS - ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President 1991 to present Certified Public Accountant; Vice N/A N/A 400 Bellevue Parkway and and Chairman of the Board, Fox Chase 4th Floor Treasurer 1988 to present Cancer Center; Trustee Emeritus, Wilmington, DE 19809 Pennsylvania School for the Deaf; DOB: 6/29/24 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, President since 2002, Treasurer since 1981 and Chief Compliance Officer since September 2004 of Chestnut Street Exchange Fund; and Director of the Bradford Funds, Inc. from 1996 to 2000. - ------------------------------------------------------------------------------------------------------------------------------------ Tina M. Payne Secretary 2005 to present Since 2003, Vice President and N/A N/A 301 Bellevue Parkway Associate Counsel, PFPC Inc. 2nd Floor (financial services company); Wilmington, DE 19809 Associate, Stradley, Ronon, Stevens & DOB: 5/19/74 Young, LLC (law firm) from 2001 to 2003. - ------------------------------------------------------------------------------------------------------------------------------------ Salvatore Faia, Esquire, CPA Chief 2004 to present President, Vigilant Compliance N/A N/A Vigilant Compliance Compliance Services, since 2004; Senior Legal 186 Dundee Drive, Suite 700 Officer Counsel, PFPC Inc. from 2002 to 2004; Williamstown, NJ 08094 Chief Legal Counsel, Corviant DOB: 12/25/62 Corporation (Investment Adviser, Broker/Dealer and Service Provider to Investment Advisers and Separate Accountant Providers) from 2001 to 2002; Partner, Pepper Hamilton LLP (law firm) from 1997 to 2001. - ------------------------------------------------------------------------------------------------------------------------------------
31 INVESTMENT ADVISER Bogle Investment Management, L.P. 57 River Street Suite 206 Wellesley, MA 02481 ADMINISTRATOR PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 TRANSFER AGENT PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 DISTRIBUTOR PFPC Distributors, Inc. 760 Moore Road King of Prussia, PA 19406 CUSTODIAN PFPC Trust Company 8800 Tinicum Blvd. Suite 200 Philadelphia, PA 19153 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PricewaterhouseCoopers LLP Two Commerce Square 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 distribution unless preceded or accompanied by a current prospectus for the Fund. ITEM 2. CODE OF ETHICS. (a) The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. (c) There has been amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description. At a Board Meeting held on September 13, 2005, the Board of Directors approved the Code of Ethics for Principal Executive and Senior Financial Officers amended to include an additional investment advisor to The RBB Fund, Inc.. The code is attached under Item 12 exhibit (a)(1). (d) The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item's instructions. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. As of the end of the period covered by the report, the registrant's board of directors has determined that the registrant has at least one audit committee financial expert serving on its audit committee. Julian A. Brodsky, Francis J. McKay, and Marvin E. Sternberg are the registrant's audit committee financial experts and each of them is "independent." ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Audit Fees - ---------- (a) The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were $260,500 for 2004 and $309,300 for 2005. Audit-Related Fees - ------------------ (b) The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item were $850 for 2004 and $750 for 2005. These fees were for out-of-pocket expenses related to the audit. Tax Fees - -------- (c) The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were $5,100 for 2004 and $0 for 2005. These were for excise tax review All Other Fees - -------------- (d) The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item were $0 for 2004 and $0 for 2005. (e)(1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. Pre-Approval of Audit and Permitted Non-Audit Services ------------------------------------------------------ 1. PRE-APPROVAL REQUIREMENTS OF THE COMPANY. The Committee shall pre-approve all auditing services and permissible non-audit services (e.g., tax services) to be provided to the Company by the Auditor, including the fees associated with those services. 2. PRE-APPROVAL REQUIREMENTS OF AFFILIATES. Additionally, the Committee shall pre-approve any engagement of the Auditor to provide non-audit services to an investment adviser of a Portfolio or to any affiliate of such investment adviser that provides ongoing services to the Company, if the engagement relates directly to the operations and financial reporting of the Company. 3. DELEGATION. The Committee may delegate to the Chairman of the Committee, or if the Chairman is not available, one or more of its members, the authority to grant pre-approvals. The decisions of any member to whom authority is delegated shall be presented to the full Committee at its next scheduled meeting. 4. PROHIBITED SERVICES. The Committee shall confirm with the Auditor that the Auditor is not performing contemporaneously with the Company's audit any prohibited non-audit services for the Company, any investment adviser of a Portfolio, or any affiliates of the Company or such investment advisers. The Auditor is responsible for informing the Committee of whether it believes that a particular service is permissible or prohibited pursuant to applicable regulations and standards. (e)(2) The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows: (b) 100% (c) 100% (d) N/A (f) The percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was less than fifty percent. (g) The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant were $0 for 2004 and $0 for 2005. (h) The registrant's audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or this Item. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant's second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. (a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. (a)(3) Not applicable. (b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (registrant) The RBB Fund, Inc. ----------------------------------------------------------------- By (Signature and Title)* /s/ Edward J. Roach ---------------------------------------------------- Edward J. Roach, President & Treasurer (principal executive officer) Date November 3, 2005 ------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Edward J. Roach ---------------------------------------------------- Edward J. Roach, President & Treasurer (principal executive officer & principal financial officer) Date November 3, 2005 ------------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature. EX-99.CODE ETH 2 g17289_codeeth.txt CODE OF ETHICS EX-99.CODE ETH THE RBB FUND, INC. CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS The Board of Directors (the "Board") of The RBB Fund, Inc. (the "Company") has adopted this Code of Ethics (the "Code") for certain senior officers of the Company to guide and remind such officers of their responsibilities to the Company, and shareholders of the series of the Company (the "Funds"). Such officers are expected to act in accordance with the guidance and standards set forth in this Code. I. COVERED OFFICERS AND PURPOSE OF THE CODE The Code applies to the Company's President, who is the Company's principal executive officer, and the Treasurer, who is the Company's principal financial officer, and any persons performing similar functions on behalf of the Company, regardless of whether such persons are employed by the Company or a third party (the "Covered Officers") for the purpose of promoting: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Company*; o compliance with applicable laws and governmental rules and regulations; o the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and o accountability for adherence to the Code. Each Covered Officer is obligated to use his or her best efforts to promote the factors listed above, should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. ETHICAL HANDLING OF ACTUAL AND APPARENT CONFLICTS OF INTEREST A. CONFLICTS OF INTEREST - GENERAL 1. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his or her service to, the Company and its shareholders, including if a Covered Officer, or a member of his or her - ---------------------- * If a Covered Person becomes aware that information filed with the SEC or made available to the public contains any false or misleading information or omits to disclose necessary information, he or she shall promptly report it to the Audit Committee. family, receives improper personal benefits as a result of his or her position with the Company. 2. A conflict of interest generally arises if a Covered Officer, or a member of his or her family, directly or indirectly participates in any investment, interest, association, activity or relationship that may impair or appear to impair the Covered Officer's objectivity. B. SCOPE This Code does not, and is not intended to, repeat or replace the following programs and procedures, and such conflicts that fall outside of the parameters of this Code: 1. Certain conflicts of interest already are subject to conflicts of interest provisions in the Investment Company Act of 1940, as amended (the "1940 Act"), and the Investment Advisers Act of 1940 (the "Advisers Act"). 2. The Company's and each investment adviser's compliance programs and procedures that are designed to prevent, or identify and correct, violations of these provisions. C. TYPES OF CONFLICTS 1. CONTRACTUAL RELATIONSHIPS Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Company, investment advisers, or service providers of which the Covered Officers may also be officers or employees. As a result, this Code recognizes that the Covered Officers may, in the normal course of their duties (whether formally for the Company, for the investment adviser or for the service providers), be involved in establishing policies and implementing decisions that will have different effects on the Company, each adviser and the administrator. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Company and the investment adviser or administrator and is consistent with the performance by the Covered Officers of their duties as officers of the Company. Thus, if performed in conformity with the provisions of the 1940 Act and the Advisers Act, such activities will be deemed to have been handled ethically. 2. OTHER INVESTMENT COMPANIES In addition, it is recognized by the Company's Board that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. 3. ADDITIONAL CONFLICTS Other conflicts of interest may be covered by the Code, even if such conflicts of interest are not subject to provisions in the 1940 Act and the Advisers Act. D. PERSONAL INTERESTS The major principle of this Code is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Company. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that this list is not exhaustive. Each Covered Officer must: o not use his or her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Company whereby the Covered Officer would benefit personally to the detriment of the Company; o not cause the Company to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the Company; o not use material non-public knowledge of portfolio transactions made or contemplated for the Company to trade personally or cause others to trade personally in contemplation of the market effect of such transactions; and o report at least annually affiliations or other relationships with the Company, each investment adviser or the distributor, including any related conflict of interest. E. REPORTING OF CONFLICTS 1. Required Disclosures If certain conflict of interest situations are engaged in by Covered Officers or by members of their family, these conflicts of interest must be promptly discussed with the Audit Committee. These conflicts of interest include: o service as a director on the board of any public or private company; o the receipt of any non-nominal gifts in excess of $250.00; o the receipt of any entertainment from any company with which the Company has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; o any ownership interest in, or any consulting or employment relationship with, any of the Company's service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; o a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Company for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership; and o any other interest, relationship or matter that a Covered Person or the Board determines, in his or her reasonable judgement, warrants disclosure. 2. Recommended Disclosures There are potential conflict of interest situations, which may be engaged in by Covered Officers or by members of their family, that should be discussed with the Audit Committee. A Covered Person should use reasonable judgement to determine if a conflict, other than conflicts listed under section E(1), is material and warrants disclosure to the Audit Committee. III. COMPLIANCE AND DISCLOSURE A. COMPLIANCE Each Covered Officer should: 1. familiarize himself or herself with the disclosure requirements generally applicable to the Company; 2. not knowingly misrepresent, or cause others to misrepresent, facts about the Company to others, whether within or outside the Company, including to the Company's directors and auditors, governmental regulators and self-regulatory organizations and any other organization; 3. to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the Company, investment advisers and other service providers with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Company files with, or submits to, the SEC and in other public communications made by the Company; and 4. promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. B. DISCLOSURE Unless otherwise required by law, this Code shall be disclosed as required by the SEC. IV. ACCOUNTABILITY Each Covered Officer must: o upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board on the certification attached hereto as Appendix A that he or she has received, read, and understands the Code; o annually thereafter affirm to the Board that he or she has complied with the requirements of the Code and reported any violations of the Code; o not retaliate against any other Covered Officer or any employee of the Company affiliated persons of the Company or the Company's service providers for reports of potential violations that are made in good faith; and o notify the Chairman of the Audit Committee promptly if he or she knows of any violation of this Code. Failure to do so is itself a violation of this Code. V. REPORTING PROCEDURES 1. RESPONSIBILITY** o The Company's Audit Committee is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. o The Company's Audit Committee may consult Company counsel in order to effectively discharge its responsibilities. - ---------------------------------- ** The Audit Committee may delegate its responsibilities and investigation procedures to the Chairman of the Audit Committee. 2. INVESTIGATION PROCEDURES** The Company will follow these procedures in investigating and enforcing the Code: o The Audit Committee will take all appropriate action to investigate any potential violations of the Code; o If, after such investigation, the Audit Committee believes that no violation has occurred, the Audit Committee is not required to take any further action; o Any matter that the Audit Committee believes is a violation of this Code will be reported to the Board; and o If the Board concurs that a violation has occurred, it will take action which it considers appropriate. Such action may include a review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of each service provider or its governing body; or a recommendation to dismiss the Covered Officer. 3. WAIVERS Any approvals or waivers(psi), implicit or otherwise, sought by a Covered Person will be considered by the Audit Committee. Such Committee will be responsible for granting waivers, as appropriate; and any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. A waiver is the approval of a material departure from a provision of this Code. An implicit waiver is the Company's failure to take action within a reasonable period of time regarding a material departure from a provision of this Code that has been made known to the Audit Committee of the Company. V. OTHER POLICIES AND PROCEDURES This Code shall be the sole code of ethics adopted by the Company for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Company, each investment adviser, distributor, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Company's and its investment advisers' and distributor's codes of ethics under Rule 17j-1 under the 1940 Act - ---------------------------------- ** The Audit Committee may delegate its responsibilities and investigation procedures to the Chairman of the Audit Committee. (see Exhibit A for a list of the investment advisers and distributor of the Company) are separate requirements applying to the Covered Officers and others, and are not part of this Code. VI. AMENDMENTS Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Board, including a majority of disinterested directors, as that term is defined by the 1940 Act. VII. CONFIDENTIALITY AND RECORDKEEPING All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Audit Committee. Subject to the confidentiality provisions above, the Company will maintain and preserve for a period of not less than six (6) years from the date of submission or the date action is taken, the first two (2) years in an easily accessible place, a copy of the Covered Officer's annual certifications and any information or materials supplied to the Audit Committee that provided the basis for any amendment or waiver to this Code or relating to any violation of the Code and sanctions imposed for such violation, together with a written record of the approval or action taken by the Board. VIII. INTERNAL USE The Code is intended solely for the internal use by the Company and does not constitute an admission, by or on behalf of any Company, as to any fact, circumstance, or legal conclusion. Adopted: July 23, 2003 REVISED: SEPTEMBER 13, 2005 EXHIBIT A List of Advisers and Distributor BlackRock Institutional Management Corporation (no code) Bogle Investment Management LP Boston Partners Asset Management, L.L.C. Hilliard Lyons Research Trust Numeric Investors, LL.C. Schneider Capital Management, Inc. Weiss, Peck & Greer Investments WesCorp Investment Services, LLC (no code) PFPC Distributors, Inc. APPENDIX A - ---------- THE RBB FUND, INC. CERTIFICATION AND ACKNOWLEDGMENT OF RECEIPT OF CODE OF ETHICS FOR PRINCIPAL OFFICERS AND SENIOR FINANCIAL OFFICERS I acknowledge and certify that I have received a copy of the Code of Ethics for Principal Officers and Senior Financial Officers of The RBB Fund, Inc. (the "Code"). I understand and agree that it is my responsibility to read and familiarize myself with the policies and procedures contained in the Code and to abide by those policies and procedures. I acknowledge my commitment to comply with the Code. APPLICABLE NEXT YEAR: I acknowledge that I complied with the Code for the fiscal year ended _________. I acknowledge that I reported all violations of this Code of Ethics for the fiscal year ended ___________ of which I am aware. (PLEASE SUBMIT ON A SEPARATE PIECE OF PAPER, EXCEPTIONS TO THESE ACKNOWLEDGEMENTS.) _________________________________________ ___________________________________ Officer Name (Please Print) Officer Signature ___________________________________ Date EX-99.CERT 3 g17289_302cert.txt 302 CERTIFICATION CERTIFICATION PURSUANT TO RULE 30A-2(A) UNDER THE 1940 ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT I, Edward J. Roach, certify that: 1. I have reviewed this report on Form N-CSR of The RBB Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 3, 2005 /s/ Edward J. Roach --------------------- ------------------------------------------- Edward J. Roach, President & Treasurer (principal executive officer & principal financial officer) EX-99.906CERT 4 g17289_906cert.txt 906 CERTIFICATION CERTIFICATION PURSUANT TO RULE 30A-2(B) UNDER THE 1940 ACT AND SECTION 906 OF THE SARBANES-OXLEY ACT I, Edward J. Roach, President & Treasurer of The RBB Fund, Inc. (the "Registrant"), certify that: 1. The Form N-CSR of the Registrant (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: November 3, 2005 /s/ Edward J. Roach --------------------- -------------------------------------------- Edward J. Roach, President & Treasurer (principal executive officer & principal financial officer) -----END PRIVACY-ENHANCED MESSAGE-----