N-30D 1 g6639.txt BEDFORD MONEY MARKET SAR -------------------------------------------------------------------------------- THE BEDFORD CLASS MONEY MARKET PORTFOLIO SEMI-ANNUAL REPORT FEBRUARY 28, 2003 -------------------------------------------------------------------------------- THE BEDFORD CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO SEMI-ANNUAL INVESTMENT ADVISER'S REPORT FEBRUARY 28, 2003 (UNAUDITED) The U.S. economy got off to a strong start in 2002, as the nation's gross domestic product (GDP) surged 5% in the first quarter on strong housing and automobile sales. Continued growth over the balance of the year, however, proved more elusive as rising unemployment, corporate scandals, the war on terrorism and the three-year decline of the stock market weighed heavily on businesses and the consumer. In a November speech, Federal Reserve Chairman Greenspan acknowledged the economy's malaise by describing it as in a "soft patch." GDP was weakening from the brief 4% uptick in the third quarter, and perhaps most importantly, consumer spending seemed to be slowing. The year-end retail-selling season was one of the poorest in recent memory and layoffs continued. The nation's unemployment rate rose to 6% in the fourth quarter, and November and December's jobs reports showed 100,000 declines each month. The President's response to restore growth was a $670 billion stimulus package that included proposals to make dividends tax-free and to accelerate last year's tax cuts. Approval of a final package, however, is months away, and we believe that a meaningful recovery in the near-term, therefore, is unlikely, particularly given the geopolitical environment and the crises in Iraq and North Korea. Following eleven aggressive rate cuts in 2001, the Federal Reserve's Open Market Committee lowered rates only once in 2002, dropping the Federal Funds rate by fifty basis points to 1.25% in November. Early in the year, the money market yield curve steepened on prospects of a recovery and higher interest rates, but by the second half, as signs of continued weakness persisted, the yield curve narrowed sharply. For example, at year-end the spread between one-month and one-year obligations was a scant seven basis points. The supply of non-financial commercial paper continued to dwindle during the year, and credit spreads also narrowed. U.S. Treasury obligations remained in demand as investors sought safety and liquidity amid the elevated risks of war and the deterioration of corporate credit quality. As interest rates declined and the yield curve flattened, the Money Market Portfolio sought to maintain a moderately extended average weighted maturity during the six-month period ended February 28, 2003. To minimize credit risk, most of the longer maturing investments were made in government agency obligations and high quality bank obligations. On February 28, the average weighted maturity stood at 46 days, up from 41 days last August. The Fund's assets declined during the period from $297.1 million on August 31, 2002, to $237.9 million at the end of February. For the six months ended February 28, 2003, the Bedford Class had a total return of 0.75%, versus the IMONEYNET First Tier Money Market Funds average of 0.85%. 1 BlackRock Institutional Management Corporation (For questions regarding your account, please dial toll-free 800-430-9618 or contact your broker.) 1 The IMONEYNET First Tier Money Market Funds average is composed of retail money market funds investing in first tier eligible money market instruments. iMoneyNet, Inc., an Informa Financial company, is a nationally recognized independent publication that monitors the performance of money market funds. THE BEDFORD CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS FEBRUARY 28, 2003 (UNAUDITED) PAR (000) VALUE ------- ------------ CERTIFICATES OF DEPOSIT--13.2% DOMESTIC CERTIFICATES OF DEPOSIT--6.5% J.P.Morgan Chase Bank 1.270%, 03/27/03 .............................. $10,000 $ 10,000,000 Washington Mutual Bank 1.330%, 04/22/03 .............................. 5,500 5,500,000 ------------ 15,500,000 ------------ YANKEE DOLLAR CERTIFICATES OF DEPOSIT--6.7% Barclays Bank NY 1.300%, 05/02/03 .............................. 14,000 13,999,994 Westdeutsche Landesbank Girozentrale 2.170%, 08/11/03 .............................. 2,000 2,000,000 ------------ 15,999,994 ------------ TOTAL CERTIFICATES OF DEPOSIT (Cost $31,499,994) ........................ 31,499,994 ------------ COMMERCIAL PAPER--29.9% ASSET BACKED SECURITIES--21.5% Amstel Funding Corp. 1.290%, 05/05/03 .............................. 13,000 12,969,721 Concord Minutemen Capital Co., LLC. 1.290%, 05/20/03 .............................. 12,332 12,296,648 Lexington Parker Capital 1.280%, 05/06/03 .............................. 13,000 12,969,494 Scaldis Capital LLC. 1.310%, 04/07/03 .............................. 13,025 13,007,463 ------------ 51,243,326 ------------ BANKS--7.5% Depfa Bank Europe P.L.C. 1.320%, 04/07/03 .............................. 12,000 11,983,720 HBOs Treasury Services P.L.C. 1.300%, 04/08/03 .............................. 5,800 5,792,041 ------------ 17,775,761 ------------ ELECTRONIC & OTHER ELECTRICAL EQUIPMENT--0.9% General Electric Co. 1.340%, 03/28/03 .............................. 2,000 1,997,990 ------------ TOTAL COMMERCIAL PAPER (Cost $71,017,077) ........................ 71,017,077 ------------ PAR (000) VALUE ------- ------------ MUNICIPAL BONDS--7.6% CALIFORNIA--4.2% California State RAN Series 2002 F 1.337%, 03/06/03 .............................. $10,000 $ 10,000,000 ------------ INDIANA--0.1% Bremen IDR Bond VRDN (Universal Bearing, Inc. Project) Series 1996 B (Society National Bank,Cleveland LOC)+ 1.400%, 03/06/03 .............................. 200 200,000 ------------ KENTUCKY--1.8% Boone County Taxable IDR Refunding Bonds VRDN (Square D Company Project) Series 1994-B (Societe Generale LOC)+ 1.350%, 03/05/03 .............................. 4,200 4,200,000 ------------ MISSISSIPPI--1.5% Mississippi Business Finance Corp. IDR RB (Choctaw Foods, Inc.) Series 1995 (Rabobank)+ 1.350%, 03/05/03 .............................. 3,600 3,600,000 ------------ TOTAL MUNICIPAL BONDS (Cost $18,000,000) ........................ 18,000,000 ------------ VARIABLE RATE OBLIGATIONS--24.1% BANKS--9.2% U.S. Bank N.A.++ 1.300%, 03/03/03 .............................. 12,000 11,998,910 Wachovia Corp.++ 1.660%, 03/31/03 .............................. 10,000 10,002,424 ------------ 22,001,334 ------------ SECURITY BROKERS & DEALERS--14.9% Bear Stearns Companies, Inc. (The)++ 1.360%, 03/03/03 .............................. 10,000 10,000,000 Merrill Lynch & Co., Inc.++ 1.550%, 03/24/03 .............................. 11,317 11,321,073 See Accompanying Notes to Financial Statements. 2 THE BEDFORD CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS (CONCLUDED) FEBRUARY 28, 2003 (UNAUDITED) PAR (000) VALUE ------- ------------ VARIABLE RATE OBLIGATIONS--(CONTINUED) SECURITY BROKERS & DEALERS--(CONTINUED) Salomon Smith Barney Holdings, Inc.++ 1.640%, 04/24/03 .............................. $10,000 $ 10,012,000 1.313%, 04/25/03 .............................. 4,000 4,000,000 ------------ 35,333,073 ------------ TOTAL VARIABLE RATE OBLIGATIONS (Cost $57,334,407) ........................ 57,334,407 ------------ AGENCY OBLIGATIONS--17.3% Federal Home Loan Mortgage Corp. 1.605%, 10/09/03 .............................. 3,000 2,970,308 Federal National Mortgage Assn. 5.125%, 02/13/04 .............................. 5,000 5,178,851 1.310%, 03/03/03 .............................. 33,000 32,997,598 ------------ TOTAL AGENCY OBLIGATIONS (Cost $41,146,757) ........................ 41,146,757 ------------ MEDIUM TERM NOTES--6.2% BankAmerica Corp. 7.000%, 05/15/03 .............................. 1,300 1,313,620 Goldman Sachs Group, Inc. 1.340%, 05/20/03 .............................. 12,500 12,500,000 Heller Financial, Inc. 7.875%, 05/15/03 .............................. 1,000 1,012,260 ------------ TOTAL MEDIUM TERM NOTES (Cost $14,825,880) ........................ 14,825,880 ------------ REPURCHASE AGREEMENTS--1.7% Morgan Stanley & Co., Inc. (Tri-Party Agreement dated 02/28/03 to be repurchased at $3,800,433.83 collateralized by $3,933,570.41 Federal National Mortgage Association due 01/06/17 to 01/08/31 and $1,287,776.57 Federal Home Loan Mortgage Corp. due 01/11/17. The total market value of collateral is $3,914,657.87) 1.370%, 03/03/03 .............................. 3,800 3,800,000 PAR (000) VALUE ------- ------------ REPURCHASE AGREEMENTS--(CONTINUED) UBS Warburg LLC. (Tri-Party Agreement dated 02/28/03 to be repurchased at $200,021.67 collateralized by $206,521.32 by U.S.Treasury Notes due 11/15/12. The market value of the collateral is $204,187.99) 1.300%, 03/03/03 .............................. $ 200 $ 200,000 ------------ TOTAL REPURCHASE AGREEMENTS (Cost $4,000,000) ......................... 4,000,000 ------------ TOTAL INVESTMENTS AT VALUE--100.0% (Cost $237,824,115) ........................... 237,824,115 ------------ ASSETS IN EXCESS OF OTHER LIABILITIES--0.0% ....................... 80,483 ------------ NET ASSETS (Applicable to 81,605,120 Bedford shares, 156,282,331 Sansom Street shares and 800 other shares)--100.0% ..................... $237,904,598 ============ NET ASSET VALUE, Offering and Redemption Price Per Share ($237,904,598 / 237,888,251) .................. $1.00 ===== + Variable Rate Demand Note -- The interest rate shown is the rate as of February 28, 2003 and the maturity date shown is the longer of the next interest rate readjustment date or the date the principal amount shown can be recovered through demand. ++ Variable Rate Obligations -- The interest rate shown is the rate as of February 28, 2003 and the maturity date shown is the next interest rate readjustment date or the maturity date. INVESTMENT ABBREVIATIONS IDR ..............................................Industrial Development Revenue LOC ............................................................Letter of Credit RAN ...................................................Revenue Anticipation Note RB .................................................................Revenue Bond VRDN ..................................................Variable Rate Demand Note See Accompanying Notes to Financial Statements. 3 THE BEDFORD CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 28, 2003 (UNAUDITED) Investment Income Interest ................................................ $2,087,924 ---------- Expenses Investment advisory fees ................................ 573,938 Distribution fees ....................................... 289,479 Custodian fees .......................................... 28,201 Legal fees .............................................. 27,565 Audit fees .............................................. 24,642 Registration fees ....................................... 23,000 Transfer agent fees ..................................... 20,250 Directors' fees ......................................... 15,355 Insurance expense ....................................... 9,347 Service organization fees ............................... 6,084 Printing fees ........................................... 6,000 Administration fees ..................................... -- Miscellaneous ........................................... -- SEC fees ................................................ -- ---------- Total Expenses ..................................... 1,023,861 Less fees waived ........................................ (249,118) Less expense reimbursement by advisor ................... (21,141) ---------- Total expenses ..................................... 753,602 ---------- Net investment income ...................................... 1,334,322 ---------- Realized gain on investments ............................... 16,347 ---------- Net increase in net assets resulting from operations ....... $1,350,669 ========== See Accompanying Notes to Financial Statements 4 THE BEDFORD CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE SIX MONTHS ENDED YEAR ENDED FEBRUARY 28, 2003 AUGUST 31, 2002 ----------------- --------------- (UNAUDITED) Increase (decrease) in net assets: Operations: Net investment income ......................................... $ 1,334,322 $ 14,819,708 Net gain on investments ....................................... 16,347 135,451 ------------ -------------- Net increase in net assets resulting from operations .......... 1,350,669 14,955,159 ------------ -------------- Distributions to shareholders: Dividends to shareholders from Net Investment Income: Bedford shares .............................................. (248,897) (6,602,799) Cash Preservation shares .................................... -- (2,033) Bear Stearns shares ......................................... -- (7,224) Principal shares ............................................ -- (3,345,540) Sansom Street shares ........................................ (1,085,425) (4,862,112) Distributions to shareholders from Net realized short-term gains: Bedford shares .............................................. (42,292) -- Sansom Street shares ........................................ (96,036) -- ------------ -------------- Total distributions to shareholders ....................... (1,472,650) (14,819,708) ------------ -------------- Net capital share transactions (See Note 3) ..................... (59,063,598) (878,950,617) ------------ -------------- Total decrease in net assets .................................... (59,185,579) (878,815,166) Net Assets: Beginning of period ........................................... 297,090,177 1,175,905,343 ------------ -------------- End of period ................................................. $237,904,598 $ 297,090,177 ============ ==============
See Accompanying Notes to Financial Statements 5 THE BEDFORD CLASS THE RBB FUND, INC. FINANCIAL HIGHLIGHTS (A) (FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
MONEY MARKET PORTFOLIO ----------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE SIX MONTHS YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED FEBRUARY 28, 2003 AUGUST 31, 2002 AUGUST 31, 2001 AUGUST 31, 2000 AUGUST 31, 1999 ----------------- --------------- --------------- --------------- --------------- (UNAUDITED) Net asset value, beginning of year ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income .................. 0.0032 0.0157 0.0460 0.0512 0.0425 Net gains on securities ................ 0.0005 -- -- -- -- -------- -------- -------- -------- -------- Total from investment operations ......................... 0.0037 0.0157 0.0460 0.0512 0.0425 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) .............................. (0.0032) (0.0157) (0.0460) (0.0512) (0.0425) Distributions (from capital gains) ..... (0.0005) -- -- -- -- -------- -------- -------- -------- -------- Total distributions .................. (0.0037) (0.0157) (0.0460) (0.0512) (0.0425) -------- -------- -------- -------- -------- Net asset value, end of year .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return .............................. .75% 1.59% 4.70% 5.24% 4.34% Ratios /Supplemental Data Net assets, end of year (000) .......... $ 81,608 $ 52,878 $676,964 $423,977 $360,123 Ratios of expenses to average net assets(b) ........................ .99% 1.00% 1.00% .97% .97% Ratios of net investment income to average net assets ................ .63% 1.75% 4.46% 5.15% 4.25% (a) Financial Highlights relate solely to the Bedford Class of shares within this Portfolio. (b) Without the waiver of advisory, administration and transfer agent fees and without the reimbursement of certain operating expenses, the ratios of expenses to average net assets for the Money Market Portfolio would have been 1.25%, for the six months ended February 28, 2003 and 1.25%, 1.19%, 1.05% and 1.08% for the years ended August 31, 2002, 2001, 2000 and 1999, respectively.
See Accompanying Notes to Financial Statements. 6 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2003 (UNAUDITED) NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The RBB Fund, Inc. ("RBB") was incorporated under the laws of the State of Maryland on February 29, 1988, and is registered under the Investment Company Act of 1940, as amended, (the "Investment Company Act") as an open-end management investment company. RBB is a "series fund,"which is a mutual fund divided into separate portfolios. Each portfolio is treated as a separate entity for certain matters under the Investment Company Act, and for other purposes, and a shareholder of one portfolio is not deemed to be a shareholder of any other portfolio. Currently RBB has fourteen investment portfolios, including the Bedford Money Market Portfolio. RBB has authorized capital of thirty billion shares of common stock of which 21.073 billion shares are currently classified into ninety-five classes of Common Stock. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into seven separate "families," all of which have begun investment operations. A) SECURITY VALUATION -- Portfolio securities are valued under the amortized cost method, which approximates current market value. Under this method, securities are valued at cost when purchased and thereafter a constant proportionate amortization of any discount or 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, principally 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 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. C) 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 distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. D) FEDERAL TAXES -- No provision is made for federal taxes. It is the Fund'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. 7 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 28, 2003 (UNAUDITED) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 purchase price plus accrued interest, the Fund will require the seller to deposit additional collateral by the next Fund business day. In the event that the seller under the agreement defaults on its repurchase obligation or fails to deposit sufficient collateral, the Fund 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 Fund'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. NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Pursuant to Investment Advisory Agreements, BlackRock Institutional Management Corp. ("BIMC"), an indirect majority-owned subsidiary of The PNC Financial Services Group, Inc., serves as investment adviser to the portfolio described herein and also serves as administrator for the Money Market Portfolio. For the Money Market Portfolio, BIMC and PFPC Inc. ("PFPC") have entered into a delegation agreement, 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. BIMC may, at its discretion, voluntarily waive all or any portion of its advisory fee for this 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 six months ended February 28, 2003, advisory fees and waivers for the investment portfolio were as follows: GROSS NET ADVISORY ADVISORY FEE WAIVER FEE -------- --------- -------- Money Market Portfolio $573,938 $(242,725) $331,213 8 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 28, 2003 (UNAUDITED) NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) The investment advisor/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 six months ended February 28, 2003, the expense caps were as follows: PORTFOLIO CLASS OF SHARES EXPENSE CAP ---------------------- --------------- ----------- Money Market Portfolio Bedford .97% Sansom Street .20 Effective January 7, 2003, the Money Market Portfolio expense caps for the Bedford Class and Sansom Street Class changed from 1.00% to .97% and .49% to .20% respectively. Reimbursed expenses for the six months ended February 28, 2003 were $21,141 for the Money Market Portfolio. PFPC Trust Co. serves as custodian for the Fund's 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. PFPC serves as each class's transfer and dividend disbursing agent. 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. 9 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 28, 2003 (UNAUDITED) NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) PFPC may, at its discretion, voluntarily waive all or any portion of its transfer agency fee for any class of shares. For the six months ended February 28, 2003, transfer agency fees and waivers for each class of shares within the investment portfolio were as follows:
GROSS NET TRANSFER AGENCY TRANSFER AGENCY FEE WAIVER FEE --------------- ------- --------------- Money Market Portfolio Bedford Class $15,000 $(6,393) $ 8,607 Sansom Street Class 5,250 -- 5,250 ------- ------- ------- Total Money Market Portfolio $20,250 $(6,393) $13,857 ======= ======= =======
The Fund, on behalf of each class of shares within the investment portfolio, has adopted Distribution Plans pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended. 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., an 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 .20% on an annualized basis for the Sansom Street Class. For the six months ended February 28, 2003, distribution fees paid to PFPC Distributors for each class were as follows: DISTRIBUTION FEE ------------ Money Market Portfolio Bedford Class $257,944 Sansom Street Class 31,535 -------- Total Money Market Portfolio $289,479 ======== The Fund has entered into service agreements with banks affiliated with PNC Bank 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 six months ended February 28, 2003, service organization fees were $6,084 for the Money Market Portfolio. 10 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 28, 2003 (UNAUDITED) NOTE 3. CAPITAL SHARES Transactions in capital shares (at $1 per capital share) for each year were as follows:
MONEY MARKET PORTFOLIO --------------------------------------------- FOR THE FOR THE SIX MONTHS ENDED YEAR ENDED FEBRUARY 28, 2003 AUGUST 31, 2002 ----------------- ---------------- (UNAUDITED) VALUE VALUE ----------------- ---------------- Shares sold: Bedford Class $ 155,745,824 $ 574,531,230 Cash Preservation Class*** -- 81,222 Bear Stearns Class* -- 13,403,021 Principal Class** -- 339,878,249 Sansom Street Class 742,558,770 1,682,808,874 -------------- -------------- Total Shares Sold 898,304,594 2,610,702,596 Shares issued on reinvestment of dividends: Bedford Class 299,278 7,167,536 Cash Preservation Class*** -- 2,178 Bear Stearns Class* -- 7,224 Principal Class** -- 3,597,374 Sansom Street Class 98,955 312,927 -------------- -------------- Total Shares Reinvested 398,233 11,087,239 Shares repurchased: Bedford Class (127,295,502) (1,205,804,868) Cash Preservation Class*** -- (277,939) Bear Stearns Class* -- (13,410,245) Principal Class** -- (640,588,392) Sansom Street Class (830,470,923) (1,640,659,008) -------------- -------------- Total Shares Repurchased (957,766,425) (3,500,740,452) -------------- -------------- Net increase (decrease) $ (59,063,598) $ (878,950,617) ============== ============== Bedford Shares authorized 1,500,000,000 1,500,000,000 ============== ============== * The Bear Stearns Class of shares began operations on November 28, 2001, and was liquidated June 28, 2002. ** The Principal Class of shares was liquidated on March 25, 2002. *** The Cash Preservation Class of shares was liquidated on April 30, 2002.
11 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 28, 2003 (UNAUDITED) NOTE 4. NET ASSETS At February 28, 2003, net assets consisted of the following: MONEY MARKET PORTFOLIO ------------ Paid-in capital $237,888,251 Accumulated net realized gain/(loss) on investments 16,347 ------------ Total net assets $237,904,598 ============ 12 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONCLUDED) FEBRUARY 28, 2003 (UNAUDITED) NOTE 5. OTHER FINANCIAL HIGHLIGHTS The Fund currently offers one other class of shares representing interest in the Money Market Portfolio: Sansom Street. The Sansom Street Class is marketed to different types of investors. Additional information regarding the Sansom Street shares is available in its annual report. The financial highlights of the Sansom Street Class are as follows: THE SANSOM STREET FAMILY (a)
MONEY MARKET PORTFOLIO ---------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE SIX MONTHS YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED FEBRUARY 28, 2003 AUGUST 31, 2002 AUGUST 31, 2001 AUGUST 31, 2000 AUGUST 31, 1999 ------------------ --------------- --------------- --------------- ---------------- (UNAUDITED) Net asset value, beginning of year ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income .................. 0.0061 0.0209 0.0511 0.0560 0.0473 Net gains on securities ................ 0.0005 -- -- -- -- -------- -------- -------- -------- -------- Total net income from investment operations ......................... 0.0066 0.0209 0.0511 0.0560 0.0473 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) (0.0061) (0.0209) (0.0511) (0.0560) (0.0473) Distributions (from capital gains) ..... (0.0005) -- -- -- -- -------- -------- -------- -------- -------- Total distributions .................. (0.0066) (0.0209) (0.0511) (0.0560) (0.0473) -------- -------- -------- -------- -------- Net asset value, end of year .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return ......................... 1.34% 2.11% 5.23% 5.75% 4.83% Ratios /Supplemental Data Net assets, end of year (000) .......... $156,297 $244,212 $201,632 $326,745 $841,887 Ratios of expenses to average net assets(b) ........................ .41% .49% .49% .49% .49% Ratios of net investment income to average net assets ................... 1.22% 2.10% 5.23% 5.42% 4.73% (a) Financial highlights relate solely to the Sansom Street Class of shares within the portfolio. (b) Without the waiver of advisory fees and reimbursement of certain operating expenses, the ratios of expenses to average net assets for the Money Market Portfolio would have been .59% for the six months ended February 28, 2003 and .64%, .61%, .61% and .62% for the years ended August 31, 2002, 2001, 2000 and 1999, respectively.
13 [THIS PAGE INTENTIONALLY LEFT BLANK.] [THIS PAGE INTENTIONALLY LEFT BLANK.] INVESTMENT ADVISER BlackRock Institutional Management Corporation 100 Bellevue Parkway Wilmington, DE 19809 ADMINISTRATOR/TRANSFER AGENT PFPC Inc. 400 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 ACCOUNTANTS PricewaterhouseCoopers LLP Two Commerce Square, Suite 1700 2001 Market Street Philadelphia, PA 19103-7042 COUNSEL Drinker Biddle & Reath LLP One Logan Square 18th and Cherry Streets Philadelphia, PA 19103-6996 The financial information included herein is taken from the records of the Money Market Portfolio without examination by independent accountants who do not express an opinion thereon.