-----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, Be6yMzes+Z+GqWVkQwtVS9sjMLBN9jYlCDv1Ver563xzjNmtprIxIbO8fo8S4D1z cyDER4MA/22aIE3GxzPxSg== 0000935069-96-000132.txt : 19961106 0000935069-96-000132.hdr.sgml : 19961106 ACCESSION NUMBER: 0000935069-96-000132 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961104 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RBB FUND INC CENTRAL INDEX KEY: 0000831114 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05518 FILM NUMBER: 96653793 BUSINESS ADDRESS: STREET 1: 400 BELLEVUE PKWY STE 100 CITY: WILMINGTON STATE: DE ZIP: 19809 BUSINESS PHONE: 3027911791 MAIL ADDRESS: STREET 1: 103 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-30D 1 ROBERTSON STEPHENS ANNUAL REPORT ================================================================================ - -------------------------------------------------------------------------------- ROBERTSON STEPHENS [GRAPHIC OMITTED] MONEY MARKET PORTFOLIO Annual Report August 31, 1996 - -------------------------------------------------------------------------------- ================================================================================ THE SANSOM STREET FAMILY THE RBB FUND, INC. ANNUAL INVESTMENT ADVISER'S REPORT Although this summer's weather remained on the cool side, the debate over Federal Reserve monetary policy became quite heated as the year progressed. By early July, a majority of Fed watchers were convinced that a rise in short-term interest rates was imminent, and pointed to July's strong employment report as evidence. The only question seemed to be the size and timing of the Fed's move. Would the Fed wait until its August meeting, or would they immediately raise the funds rate 25 or 50 basis points? Certainly, they pointed out, the jump in nonfarm payroll (+700,000 jobs) and the spike in hourly earnings (+9 cents) was cause for immediate action by the Fed to curb the economy and prevent a rekindling of inflation. However, as has often happened this year, economic reports that seemed to suggest either a business expansion or a slowdown were followed quite closely by reports that suggested otherwise. It seemed that after the winter's government shut downs and snowstorms, the predictability of economic numbers became a lost art in 1996. This same type of reversal of expectations occurred again in July following the strong jobs report. Within only a few weeks, signs of slower economic activity had tempered the certainty of a rate hike, and by the time Alan Greenspan spoke at his Humphrey-Hawkins testimony, he speculated that, "looking forward, there are a number of reasons to expect demands to moderate and economic activity to settle back toward a more sustainable pace in the months ahead." The Federal Reserve's forecast for growth is 2.5%-2.75% this year, falling to 1.75%-2.25% next year; while inflation should average about 3.0%-3.25% this year, and 2.75%-3.0% next year. Greenspan's remarks were very well received by the markets, and stocks and bonds rose sharply into early August. In addition, the expectation of higher short-term interest rates eased considerably, and by the time the Fed met on August 20, there was almost no one in the "tighter" camp. Short-term taxable interest rates have held steady at 5.25% (federal funds rate) for the last two quarters. The Federal Reserve's last move was on January 31, when they eased monetary policy to encourage economic growth, following news of a very weak fourth quarter 1995. At that time, market sentiment was biased towards additional easings of monetary policy and the short-term yield curve offered no incentive to extend. By mid-April, however, strong jobs reports worried the markets that the Fed would not only stop easing but might consider tightening. In response, the yield curve turned positive and rewarded longer average maturities with yield pick ups of 20-30 basis points. The Money Market and Government portfolios took advantage of this opportunity by moving their maturities to the 50-60 day range. For much of the last two quarters, investments of 3-12 months have outyielded overnight rates by 25-50 basis points. As always, all the Fund's portfolios emphasized high quality securities and highly liquid structures, in addition to providing competitive daily returns. Our credit research department employs fifteen professionals to approve and monitor the creditworthiness of every issue/issuer in which the portfolios invest. Finally, as of the date of this report, there are a number of proposed amendments to Rule 2a-7, the regulations which govern money market funds.The anticipated effective date of October 3 has been postponed by the SEC. We are following the situation closely and will be reporting to you in the future about the substance and timing of those changes. PNC Institutional Management Corporation (Please dial toll-free 800-430-9618 for questions regarding your account or contact your broker.) REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Board of Directors of The RBB Fund, Inc.: We have audited the accompanying statement of net assets of the Money Market Portfolio of The RBB Fund, Inc., as of August 31, 1996, and the related statements of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of investments held by the custodian and brokers as of August 31, 1996. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide 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 Money Market Portfolio of The RBB Fund, Inc. as of August 31, 1996 and 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 its financial highlights for each of the periods presented, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. 2400 Eleven Penn Center Philadelphia, Pennsylvania October 15, 1996 2 THE SANSOM STREET FAMILY THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS AUGUST 31, 1996 PAR (000) VALUE ------- ------------- CERTIFICATES OF DEPOSIT--12.8% BANK NOTES--4.6% First National Bank of Boston 5.500% 01/13/97 ........................ $50,000 $ 50,000,000 Mellon Bank 5.540% 02/07/97 ........................ 50,000 50,000,000 ------------ 100,000,000 ------------ YANKEE DOLLAR CERTIFICATES OF DEPOSIT--8.2% Bank of Tokyo-Mitsubishi 5.600% 11/04/96 ........................ 25,000 25,000,000 Banque Nationale de Paris 5.430% 09/30/96 ........................ 50,000 50,000,392 Swedbank 5.530% 09/12/96 ........................ 30,000 30,000,090 5.440% 11/06/96 ........................ 75,000 75,001,356 ------------ 180,001,838 ------------ TOTAL CERTIFICATES OF DEPOSIT (Cost $280,001,838) ................ 280,001,838 ------------ COMMERCIAL PAPER--56.1% ASSET BACKED SECURITIES--5.8% Corporate Receivables Corp. 5.350% 11/21/96 ........................ 25,000 24,699,063 5.400% 01/15/97 ........................ 25,800 25,273,680 Cxc, Inc. 5.320% 11/20/96 ........................ 30,000 29,645,333 Sigma Finance, Inc. 5.420% 02/20/97 ........................ 50,000 48,705,222 ------------ 128,323,298 ------------ BANKS--2.3% Chase Manhattan Corp. 5.330% 01/10/97 ........................ 25,000 24,515,118 National City Corp. 5.270% 09/11/96 ........................ 25,000 24,963,403 ------------ 49,478,521 ------------ PAR (000) VALUE ------- ------------- CIGARETTES--3.0% American Brands, Inc. 5.300% 12/12/96 ..................... $21,000 $ 20,684,650 5.290% 12/13/96 ..................... 25,000 24,621,618 5.480% 01/06/97 ..................... 20,000 19,613,356 ------------ 64,919,624 ------------ FINANCE SERVICES--1.7% Countrywide Funding Corp. 5.450% 10/18/96 ..................... 38,000 37,729,619 ------------ GLASS, GLASSWARE, PRESSED OR BLOWN--2.3% Newell Co. 5.320% 09/12/96 ..................... 50,000 49,918,722 ------------ PERSONAL CREDIT INSTITUTIONS--10.7% BMW US Capital Corp. 5.340% 09/09/96 ..................... 33,196 33,156,607 5.300% 09/16/96 ..................... 50,000 49,889,583 Ford Motor Credit Corp. 5.430% 10/22/96 ..................... 50,000 49,615,375 5.400% 12/12/96 ..................... 50,000 49,235,000 General Motors Acceptance Corp. 5.580% 12/26/96 ..................... 30,000 29,460,600 5.460% 02/12/97 ..................... 25,000 24,378,167 ------------ 235,735,332 ------------ PETROLEUM REFINING--1.1% Repsol Int'l Finance B.V. 5.370% 12/27/96 ..................... 25,000 24,563,688 ------------ PHARMACEUTICAL PREPARATIONS--2.7% American Home Products Corp. 5.250% 09/03/96 ..................... 60,000 59,982,500 ------------ SEARCH, DETECTION, NAVIGATION, GUIDANCE AERONAUTIC SYSTEMS--4.5% Raytheon Co. 5.280% 09/17/96 ..................... 100,000 99,765,333 ------------ See Accompanying Notes to Financial Statements. 3 THE SANSOM STREET FAMILY THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS (CONTINUED) AUGUST 31, 1996 PAR (000) VALUE -------- -------------- SECURITY BROKERS & DEALERS--12.9% Lehman Brothers Holdings Inc. 5.500% 09/12/96 .......................... $ 55,000 $ 54,907,569 Merrill Lynch & Co. Canandian DCP 5.500% 11/18/96 .......................... 50,000 49,404,167 Morgan Stanley Group, Inc. 5.400% 09/23/96 .......................... 25,000 24,917,500 5.300% 10/21/96 .......................... 50,000 49,631,945 5.310% 12/13/96 .......................... 30,000 29,544,225 Nomura Holding America, Inc. 5.510% 10/24/96 .......................... 25,000 24,797,201 5.380% 11/14/96 .......................... 50,000 49,447,056 -------------- 282,649,663 -------------- SHORT-TERM BUSINESS CREDIT INSTITUTIONS--9.1% American Express Credit Corp. 5.280% 09/05/96 .......................... 100,000 99,941,333 Sears Roebuck Acceptance Corp. 5.310% 09/04/96 .......................... 50,000 49,977,875 5.480% 10/31/96 .......................... 50,000 49,543,333 -------------- 199,462,541 -------------- TOTAL COMMERCIAL PAPER (Cost $1,232,528,841) ................ 1,232,528,841 -------------- MUNICIPAL BONDS--5.4% CALIFORNIA--0.9% San Bernardino County California Certificate of Participation County Center Refinancing Project, Series 1995 (LOC Canadian Imperial Bank of Commerce)(DOUBLE DAGGER) 5.650% 09/07/96 .......................... 7,800 7,800,000 Adventist Health Systems West Series 1988 (LOC-First Interstate Bank of California)(DAGGER) 3.750% 09/04/96 .......................... 12,925 12,925,000 -------------- 20,725,000 -------------- FLORIDA--0.1% Coral Springs, Florida Industrial Development Revenue (LOC Sun Bank, N.A.)(DOUBLE DAGGER) 5.650% 09/05/96 .......................... 2,900 2,900,000 -------------- PAR (000) VALUE ------- ----------- GEORGIA--0.4% De Kalb County Georgia Development Authority (Emory U.)(DOUBLE DAGGER) 5.450% 09/04/96 ...................... $10,100 $10,100,000 ----------- ILLINOIS--0.8% Barton Healthcare Taxable Revenue Bonds Series 1995 DN (LOC- American Nation Bank)(DAGGER) 5.550% 09/04/96 ...................... 12,455 12,455,000 Baylis Group Partnership Weekly Demand Taxable Bond Series 1992 (LOC-Societe Generale)(DOUBLE DAGGER) 5.650% 09/04/96 ...................... 600 600,000 Illinois Health Facilities Authority Convertible/ VRDN RB (The Streeterville CORP Project) Series 1993-B (LOC-First National Bank of Chicago)(DOUBLE DAGGER) 5.550% 09/04/96 ...................... 4,400 4,400,000 ----------- 17,455,000 ----------- KENTUCKY--0.2% Boone County Taxable IDR Refunding Bonds (Square D Company Project) Series 1994-B (LOC-Societe Generale) VRDN(DAGGER) 5.550% 09/04/96 ...................... 4,200 4,200,000 ----------- MINNESOTA--0.2% Fairview Hospital And Healthcare Services Taxable ADJ Convertible Extendable Securities Series 1994 (MBIA Insurance) VRDN(DAGGER) 5.550% 09/05/96 ...................... 5,100 5,100,000 ----------- MISSISSIPPI--0.9% Hinds County, Mississippi (LOC-RaboBank Nederland) IDRB VRDN(DAGGER) 5.450% 09/04/96 ...................... 1,400 1,400,000 5.450% 09/04/96 ...................... 2,155 2,155,000 See Accompanying Notes to Financial Statements. 4 THE SANSOM STREET FAMILY THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS (CONTINUED) AUGUST 31, 1996 PAR (000) VALUE ------- ----------- MISSISSIPPI--(CONTINUED) Mississippi Business Finance Corp. Taxable IDRB (Bryan Foods, Inc. Project) Series 1994 (Sara Lee Corporation Guaranty) (LOC-Sun Bank, N.A.) VRDN(DAGGER) 5.550% 09/04/96 ..................... $14,000 $ 14,000,000 Mississippi Business Finance Corp. Taxable IDRB VRDN(DAGGER) 5.450% 09/07/96 ..................... 3,200 3,200,000 ------------ 20,755,000 ------------ NEW YORK--0.6% Health Insurance Plan of Greater NY adj/Convertible Extendable Securities Series 1990 (LOC-Morgan Guaranty Trust Company) VRDN(DAGGER) 5.500% 09/04/96 ..................... 12,300 12,300,000 ------------ NORTH CAROLINA--0.6% Community Health Systems, Inc. Taxable (LOC-First Union National Bank of North Carolina) Series 1991-A(DAGGER) 5.700% 09/04/96 ..................... 400 400,000 City of Ashville North Carolina (LOC-Wachovia Bank of N.C.) Tax Corp.(DAGGER) 5.400% 09/04/96 ..................... 12,700 12,700,000 ------------ 13,100,000 ------------ TEXAS--0.7% South Central Texas Industrial Development Corp. Taxable IDR Bonds (Rohr Industries Project Series 1990 (LOC-Citibank N.A.) VRDN(DAGGER) 5.550% 09/04/96 ..................... 14,800 14,800,000 ------------ TOTAL MUNICIPAL BONDS (Cost $121,435,000) ............. 121,435,000 ------------ PAR (000) VALUE ------- ------------ REVENUE ANTICIPATION NOTES--0.3% MANDATORY PUT BONDS--0.3% Bremen, Inc. Tax Adjustable Notes (LOC-Society National Bank) 5.500% 09/05/96 ........................ $ 6,000 $ 6,000,000 ------------ TOTAL REVENUE ANTICIPATION NOTES (Cost $6,000,000) .................. 6,000,000 ------------ CORPORATE OBLIGATIONS--10.2% BANKS--2.3% Norwest Corp.(DAGGER) 5.398% 09/28/96 ........................ 50,000 50,000,000 ------------ PERSONAL CREDIT INSTITUTIONS--0.9% General Motors Acceptance Corp. 5.410% 09/01/96(DAGGER) ................ 5,000 4,998,894 General Motors Acceptance Corp. 7.900% 03/12/97 ........................ 14,750 14,950,198 ------------ 19,949,092 ------------ SECURITY BROKERS & DEALERS--7.0% Bear Stearns & Co., Inc. 5.290% 03/11/97 ........................ 20,000 20,000,000 Goldman Sachs Group, LP 5.711% 11/06/96(DAGGER) ................ 53,000 53,000,000 Lehman Brothers Holdings Inc. 5.600% 09/05/96(DAGGER) ................ 50,000 50,000,000 Merrill Lynch & Co. 5.000% 12/15/96 ........................ 5,000 4,991,584 5.120% 02/27/97 ........................ 25,000 24,997,555 ------------ 152,989,139 ------------ TOTAL CORPORATE OBLIGATIONS (Cost $222,938,231) ................ 222,938,231 ------------ AGENCY OBLIGATIONS--2.5% Student Loan Marketing Association(DAGGER) 5.390% 09/03/96 ........................ 25,000 24,994,375 5.410% 09/03/96 ........................ 10,000 10,000,000 5.420% 09/03/96 ........................ 20,000 20,000,000 ------------ TOTAL AGENCY OBLIGATIONS (Cost $54,994,375) ................. 54,994,375 ------------ See Accompanying Notes to Financial Statements. 5 THE SANSOM STREET FAMILY THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS (CONCLUDED) AUGUST 31, 1996 PAR (000) VALUE ------- -------------- TIME DEPOSITS--12.6% Bank of Tokyo-Mitsubishi 5.375% 09/03/96 .......................... $76,800 $ 76,800,000 Dai-ichi Kangyo Bank 5.406% 09/05/96 .......................... 50,000 50,000,000 First National Bank of Boston 5.344% 09/05/96 .......................... 50,000 50,000,000 First Union National Bank of NC 5.250% 09/03/96 .......................... 100,000 100,000,000 -------------- TOTAL TIME DEPOSITS (Cost $276,800,000) .................. 276,800,000 -------------- TOTAL INVESTMENTS AT VALUE--99.9% (Cost $2,194,698,285*) ................... 2,194,698,285 OTHER ASSETS IN EXCESS OF LIABILITIES--0.1% ..................... 1,125,153 -------------- NET ASSETS (Applicable to 1,109,351,734 Bedford shares, 202,360 Cash Preservation shares, 561,873,247 Janney Montgomery Scott shares, 61,412 RBB shares, 524,367,399 Sansom Street shares and 800 other shares)--100.0% ............ $2,195,823,438 ============== NET ASSET VALUE, offering and redemption price per share ($2,195,823,438 (DIVIDE) 2,195,856,952) .. $1.00 ===== * Also cost for Federal income tax purposes (DAGGER) Variable Rate Obigations -- The interest rate shown is the rate as of August 31, 1996 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. (DOUBLE DAGGER) Put Bonds -- Maturity date is the put date. INVESTMENT ABBREVIATIONS VRDN ............................Variable Rate Demand Note LOC ......................................Letter of Credit IDR.........................Industrial Development Revenue See Accompanying Notes to Financial Statements. 6 THE SANSOM STREET FAMILY THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 1996 Investment Income Interest .................................. $118,092,977 ------------ Expenses Investment advisory fees .................. 7,702,090 Distribution fees ......................... 9,304,376 Service organization fees ................. 471,499 Directors' fees ........................... 38,473 Custodian fees ............................ 345,973 Transfer agent fees ....................... 3,044,149 Legal fees ................................ 77,139 Audit fees ................................ 61,049 Registration fees ......................... 434,000 Insurance expense ......................... 43,932 Printing fees ............................. 426,220 Miscellaneous ............................. 1,884 ------------ 21,950,784 Less fees waived .......................... (3,543,632) Less expense reimbursement by advisor .............................. (342,158) ------------ Total expenses ....................... 18,064,994 ------------ Net investment income ..................... 100,027,983 ------------ Realized loss on investments .............. (12,987) ------------ Net increase in net assets resulting from operations ............... $100,014,996 ============= See Accompanying Notes to Financial Statements. 7 THE SANSOM STREET FAMILY THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 1996 AUGUST 31, 1995 --------------- --------------- Increase (decrease) in net assets: Operations: Net investment income .................... $ 100,027,983 $ 64,913,329 Net loss on investments .................. (12,987) (18,463) -------------- ------------- Net increase in net assets resulting from operations .............. 100,014,996 64,894,866 -------------- ------------- Distributions to shareholders: Dividends to shareholders from net investment income: Bedford shares ......................... (49,874,649) (38,765,552) Cash Preservation shares ............... (10,092) (11,336) Janney Montgomery Scott shares ......... (24,434,566) (4,784,092) RBB shares ............................. (2,630) (2,530) Sansom Street shares ................... (25,706,046) (21,349,819) -------------- -------------- Total distributions to shareholders .................... (100,027,983) (64,913,329) -------------- -------------- Net capital share transactions ............. 374,464,737 736,630,198 -------------- -------------- Total increase in net assets ............... 374,451,750 736,611,735 Net Assets: Beginning of year ........................ 1,821,371,688 1,084,759,953 -------------- -------------- End of year .............................. $2,195,823,438 $1,821,371,688 ============== ============== See Accompanying Notes to Financial Statements. 8 THE SANSOM STREET FAMILY THE RBB FUND, INC. FINANCIAL HIGHLIGHTS (b) (FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
MONEY MARKET PORTFOLIO ----------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1993 AUGUST 31, 1992 --------------- --------------- --------------- --------------- --------------- Net asset value, beginning of year ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- ------- -------- Income from investment operations: Net investment income ............ 0.0518 0.0543 0.0334 0.0304 0.0435 Net gains on securities (both realized and unrealized) .. -- -- -- -- 0.0007 -------- -------- -------- -------- -------- Total from investment operations .................. 0.0518 0.0543 0.0334 0.0304 0.0442 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) ............. (0.0518) (0.0543) (0.0334) (0.0304) (0.0435) Distributions (from capital gains) ................. -- -- -- -- (0.0007) -------- -------- -------- -------- -------- Total distributions ............ (0.0518) (0.0543) (0.0334) (0.0304) (0.0442) -------- -------- -------- -------- -------- Net asset value, end of year ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return ....................... 5.30% 5.57% 3.39% 3.08% 4.51% Ratios /Supplemental Data Net assets, end of year .......... $524,359 $441,614 $373,745 $190,794 $228,079 Ratios of expenses to average net assets ..................... .48%(a) .39%(a) .39%(a) .34%(a) .35%(a) Ratios of net investment income to average net assets ........... 5.18% 5.43% 3.34% 3.04% 4.35% (a) Without the waiver of advisory 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 .65%, .59%, .60%, .60% and .61% for the years ended August 31, 1996, 1995, 1994, 1993 and 1992, respectively. (b) Financial highlights relate soley to the Sansom Street Class of shares within the portfolio.
See Accompanying Notes to Financial Statements. 9 THE SANSOM STREET FAMILY THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS AUGUST 31,1996 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The RBB Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund was incorporated in Maryland on February 29, 1988. The Fund has authorized capital of thirty billion shares of common stock of which 12.35 billion shares are currently classified into sixty-six classes. Each class represents an interest in one of seventeen investment portfolios of the Fund. The classes have been grouped into fifteen separate "families", eight of which have begun investment operations: the RBB Family, the BEA Family, the Sansom Street Family, the Bedford Family, the Cash Preservation Family, the Janney Montgomery Scott Money Family, the n/i Family, and the Bradford Family. The Sansom Street Family represents interests in the Money Market Portfolio, which is covered in this report. 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 in an attempt 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 AND INVESTMENT INCOME -- 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 recorded on the accrual basis. 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. C) DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income are declared daily and paid monthly. 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 generally accepted accounting principles. D) FEDERAL INCOME TAXES -- No provision is made for Federal taxes as 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. 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. 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 generally accepted accounting principles requires management to make estimates and assumption that affect the reported amounts of 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. 10 THE SANSOM STREET FAMILY THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31,1996 NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Pursuant to Investment Advisory Agreements, PNC Institutional Management Corporation ("PIMC"), a wholly owned subsidiary of PNC Asset Management Group, Inc., which is in turn a wholly-owned subsidiary of PNC Bank, National Association ("PNC Bank"), serves as investment advisor for the portfolio described herein. PNC Bank serves as the sub-advisor for the Money Market Portfolio. For its advisory services, PIMC is entitled to receive the following fees, computed daily and payable monthly based on the portfolio's average daily net assets: .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. PIMC may, at its discretion, voluntarily waive all or any portion of its advisory fee for this portfolio. For each class of shares within a respective portfolio, the net advisory fee charged to each class is the same on a relative basis. For the year ended August 31, 1996, advisory fees and waivers for the investment portfolio were as follows: GROSS NET ADVISORY ADVISORY FEE WAIVER FEE -------------- -------------- -------------- $7,702,090 $(3,527,715) $4,174,375 PNC Bank, as sub-advisor, receives a fee directly from PIMC, not the portfolio. In addition, PNC Bank serves as custodian for the Fund's portfolios. PFPC Inc. ("PFPC"), an indirect wholly owned subsidiary of PNC Bank Corp., serves as each class's transfer and dividend disbursing agent. 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, 1996, 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 --------------- -------------- --------------- Bedford Class $1,658,468 $ -- $1,658,468 Cash Preservation Class 8,613 (7,971) 642 Janney Montgomery Scott Class 1,045,385 -- 1,045,385 RBB Class 8,149 (7,946) 203 Sansom Street Class 323,534 -- 323,534 ---------- -------- ---------- Total $3,044,149 $(15,917) $3,028,232 ========== ======== =========== The Fund, on behalf of each class of shares within this investment portfolio, has adopted Distribution Plans pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended, and has entered into Distribution Contracts with Counsellors Securities Inc. ("Counsellors"), which provide for each class to make monthly payments, based on average net assets, to Counsellors of up to .65% on an annualized basis for the Bedford, Cash Preservation, Janney Montgomery Scott and RBB Classes and up to .20% on an annualized basis for the Sansom Street Class. 11 THE SANSOM STREET FAMILY THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31,1996 NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) For the year ended August 31, 1996, distribution fees for each class were as follows: DISTRIBUTION FEE ------------ Bedford Class $5,826,142 Cash Preservation Class 858 Janney Montgomery Scott Class 3,161,043 RBB Class 226 Sansom Street Class 316,107 ---------- Total $9,304,376 ========== 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 year ended August 31, 1996 service organization fees were $471,499 for the Money Market Portfolio. NOTE 3. CAPITAL SHARES Transactions in capital shares (at $1.00 per capital share) for each year were as follows: MONEY MARKET PORTFOLIO -------------------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 1996 AUGUST 31, 1995 --------------- --------------- VALUE VALUE --------------- --------------- Shares sold: Bedford Class $ 3,797,592,288 $ 2,966,911,277 Cash Preservation Class 122,344 84,527 Janney Montgomery Scott Class 2,359,936,867 855,058,809 RBB Class 584,206 31,504 Sansom Street Class 2,191,596,362 1,864,628,110 Shares issued in reinvestment of dividends: Bedford Class 49,290,088 37,681,204 Cash Preservation Class 10,084 11,226 Janney Montgomery Scott Class 24,077,173 4,534,944 RBB Class 2,625 2,500 Sansom Street Class 18,389,361 16,689,941 Shares repurchased: Bedford Class (3,673,362,904) (2,779,499,052) Cash Preservation Class (165,733) (91,268) Janney Montgomery Scott Class (2,265,789,890) (415,944,656) RBB Class (580,821) (23,917) Sansom Street Class (2,127,237,313) (1,813,444,951) --------------- --------------- Net increase $ 374,464,737 $ 736,630,198 =============== =============== Sansom Street Shares authorized 1,000,000,000 1,000,000,000 =============== =============== 12 THE SANSOM STREET FAMILY THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31,1996 NOTE 4. NET ASSETS At August 31, 1996, net assets consisted of the following: Capital paid-in: Bedford Class $1,109,351,734 Cash Preservation Class 202,360 Janney Montgomery Scott Class 561,873,247 RBB Class 61,412 Sansom Street Class 524,367,399 Other Classes 800 Accumulated net realized gain (loss) on investments Bedford Class (17,400) Cash Preservation Class (3) Janney Montgomery Scott Class (7,821) RBB Class (1) Sansom Street Class (8,289) -------------- $2,195,823,438 ============== NOTE 5. CAPITAL LOSS CARRYOVERS At August 31, 1996, $33,513 capital loss carryovers were available to offset future realized gains of which $2,062 expires in 2002, $18,464 expires in 2003 and $12,987 expires in 2004. 13 THE SANSOM STREET FAMILY THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31,1996 NOTE 6. OTHER FINANCIAL HIGHLIGHTS The Fund currently offers four other classes of shares representing interest in the Money Market Portfolio: Bedford, Cash Preservation, Janney Montgomery Scott and RBB. Each class is marketed to different types of investors. Financial Highlights of the RBB and Cash Preservation classes are not presented in this report due to their immateriality. Such information is available in the annual reports of each respective family. The financial highlights of certain of the other classes are as follows: THE BEDFORD FAMILY
MONEY MARKET PORTFOLIO ----------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1993 AUGUST 31, 1992 --------------- --------------- --------------- --------------- --------------- Net asset value, beginning of year ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ---------- ---------- ---------- ---------- ---------- Income from investment operations: Net investment income ............ 0.0469 0.0486 0.0278 0.0243 0.0375 Net gains on securities (both realized and unrealized) ........ -- -- -- -- 0.0007 ---------- ---------- ---------- ---------- ---------- Total from investment operations ................... 0.0469 0.0486 0.0278 0.0243 0.0382 ---------- ---------- ---------- ---------- ---------- Less distributions Dividends (from net investment income) .............. (0.0469) (0.0486) (0.0278) (0.0243) (0.0375) Distributions (from capital gains) .................. -- -- -- -- (0.0007) ---------- ---------- ---------- ---------- ---------- Total distributions ........... (0.0469) (0.0486) (0.0278) (0.0243) (0.0382) ---------- ---------- ---------- ---------- ---------- Net asset value, end of year ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ========== ========== ========== ========== ========== Total Return ....................... 4.79% 4.97% 2.81% 2.46% 3.89% Ratios /Supplemental Data Net assets, end of year (000) .... $1,109,334 $ 935,821 $ 710,737 $ 782,153 $ 736,842 Ratios of expenses to average net assets ...................... .97%(a) .96%(a) .95%(a) .95%(a) .95%(a) Ratios of net investment income to average net assets ........... 4.69% 4.86% 2.78% 2.43% 3.75% (a) Without the waiver of advisory and 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 1.14%, 1.17%, 1.16%, 1.19%, and 1.20% for the years ended August 31, 1996, 1995, 1994, 1993 and 1992, respectively.
14 THE SANSOM STREET FAMILY THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONCLUDED) AUGUST 31,1996 NOTE 6. OTHER FINANCIAL HIGHLIGHTS (CONTINUED) THE JANNEY MONTGOMERY SCOTT MONEY FUNDS MONEY MARKET PORTFOLIO ----------------------------------- FOR THE PERIOD FOR THE JUNE 12, 1995 YEAR (COMMENCEMENT OF ENDED OPERATIONS) TO AUGUST 31, 1996 AUGUST 31, 1995 --------------- ---------------- Net asset value, beginning of period .................. $ 1.00 $ 1.00 -------- -------- Income from investment operations: Net investment income ................ 0.0465 0.0112 -------- -------- Total from investment operations ....................... 0.0465 0.0112 -------- -------- Less distributions Dividends (from net investment income) ................... (0.0465) (0.0112) -------- -------- Total distributions ................ (0.0465) (0.0112) -------- -------- Net asset value, end of period ......... $ 1.00 $ 1.00 ======== ======== Total Return ........................... 4.76% 5.30%(b) Ratios /Supplemental Data Net assets, end of period (000) ...... $561,865 $443,645 Ratios of expenses to average net assets ................. 1.00%(a) 1.00%(a)(b) Ratios of net investment income to average net assets ................. 4.65% 5.04%(b) (a) Without the waiver of advisory 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 1.23% for the year ended August 31, 1996 and 1.23% annualized for the period ended August 31, 1995. (b) Annualized. 15 -----END PRIVACY-ENHANCED MESSAGE-----