-----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, UsRm8VSrb2A4XMEK1DxaEsgUy8K28+Dxh6To3ewnx69kC6IDv+N7kNwqwR7DVEb/ 0sW0VpfWePPE7GgJZOSluQ== 0000935069-98-000198.txt : 19981106 0000935069-98-000198.hdr.sgml : 19981106 ACCESSION NUMBER: 0000935069-98-000198 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980831 FILED AS OF DATE: 19981105 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: SEC FILE NUMBER: 811-05518 FILM NUMBER: 98738129 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 BEAR STEARNS ANNUAL REPORT - ------------------------------------------------------------------------------- BEAR STEARNS Money Market Portfolio Annual Report August 31, 1998 THE BEDFORD FAMILY THE RBB FUND, INC. Annual Investment Adviser's Report Concerns about Asia's economic woes were exacerbated in the first two quarters of 1998, as signs of recession also spread to Russia, Latin America and South America. The consequences of this worldwide slowdown were evidenced by plummeting market capitalizations, particularly in August, for example, when the DJIA fell 17% in four weeks. Adding to the market's problems were the investigation of President Clinton and Russia's currency devaluation and delay in naming a new Prime Minister. The net effect of this global turmoil was a dramatic flight to the quality and safety of U.S. Treasury obligations. Yields on longer-term Treasuries fell almost 40 basis points to 5.20%, while three-month Treasury bills dropped below 4.90%. These sudden moves precipitated widespread expectations of a reduction in the federal funds rate. In not changing rates to date, the Fed has been particularly comforted by the positive news on inflation. For the year-to-date, wholesale prices were down almost 1%, while consumer prices were up only 1.5%. The Fed next meets at the end of September and there is growing sentiment for a rate cut. During the last two quarters, the federal funds rate remained at 5.50%, a level not changed since March, 1997. The short-term yield curve remained very flat, with interest rate spreads narrowing through the month of August. Treasury bills continued as a haven for short-term cash and yields dropped sharply near the end of the period. In fact, the short Treasury curve inverted, with the three-month bills yielding more than the year bill. Throughout the period, overnight rates traded close to the federal funds level of 5.50%. Investment strategy sought to gradually extend the Money Market Portfolio's average maturity, as the likelihood of higher rates evaporated. Three to six-month investments were made at yields of 5.60-5.70% during periods of market weakness, while liquidity was maintained in repurchase agreements at yields near 5.50%. At the end of August, the Money Market Portfolio had assets of $2,315,558,300. Year 2000 System Preparedness BlackRock Institutional Management Corp. (BIMC) serves as investment adviser to The RBB Fund, Inc. BIMC wishes to confirm for fund investors that PNC Bank Corp. and its affiliates are actively addressing Year 2000 system changes across all of our businesses. Over the past eighteen months, we have reviewed all internal systems to determine whether there is Year 2000 exposure and, if so, how to remedy. Our corporate objective is to have all systems Year 2000 ready by December 31, 1998. Many systems have already been cleared. Those that require changes are currently undergoing active work and progressing satisfactorily. BlackRock Institutional Management Corporation (Please dial toll-free 800-447-1139 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.: In our opinion, the accompanying statements of net assets of the Money Market Portfolio of The RBB Fund, Inc. (the "Fund), and the related statements of operations and changes in net assets, and the financial highlights present fairly, in all material respects, the financial position of the Money Market Portfolio of The RBB Fund, Inc. at August 31, 1998, the results of its operations for the year then ended, changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with generally accepted accounting principles. 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 generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities owned at August 31, 1998 by correspondence with the custodian and brokers, provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP 2400 Eleven Penn Center Philadelphia, Pennsylvania October 2, 1998 2 THE BEDFORD FAMILY THE RBB FUND, INC. Money Market Portfolio Statement of Net Assets August 31, 1998 Par (000) Value ----- ----- AGENCY OBLIGATIONS--0.9% Student Loan Marketing Association+ 5.240% 09/01/98 ............................... $10,000 $ 10,000,000 5.250% 09/01/98 ............................... 10,000 10,000,000 ------------ TOTAL AGENCY OBLIGATIONS (Cost $20,000,000) ........................ 20,000,000 ------------ CERTIFICATES OF DEPOSIT--13.8% Banks--2.6% Credit Communal de Belgique 5.750% 04/01/99 ............................... 30,000 29,991,636 First National Bank of Boston 5.570% 10/06/98 ............................... 30,000 30,000,000 ------------ 59,991,636 ------------ Domestic Certificates of Deposit--1.1% Wilmington Trust Co. 5.580% 10/08/98 ............................... 25,000 25,000,000 ------------ Yankee Dollar Certificates of Deposit--10.1% Bank Austria 5.670% 07/23/99 ............................... 9,000 9,001,648 Canadian Imperial Bank of Commerce 5.660% 02/26/99 ............................... 40,000 39,990,652 Credit Communal de Belgique 5.620% 12/28/98 ............................... 25,000 24,998,388 Deutsche Bank 5.670% 02/26/99 ............................... 16,000 15,991,821 5.750% 05/26/99 ............................... 25,000 25,010,645 Skandinaviska Enskilden Banken Funding, Inc. 5.560% 09/08/98 ............................... 10,000 10,000,000 Societe Generale 5.780% 10/08/98 ............................... 25,000 24,995,738 Svenska Handelsbanken Inc. 5.720% 03/31/99 ............................... 25,000 24,991,695 Swiss Bank 5.750% 05/07/99 ............................... 15,000 14,994,390 Westpac Banking Corp. 5.730% 04/16/99 ............................... 45,000 44,991,957 ------------ 234,966,934 ------------ TOTAL CERTIFICATES OF DEPOSIT (Cost $319,958,570) ....................... 319,958,570 ------------ Par (000) Value ----- ----- COMMERCIAL PAPER--51.0% Asset Backed Securities--12.4% CC USA Inc. 5.495% 10/20/98 ............................... $15,000 $ 14,887,810 5.520% 11/09/98 ............................... 40,000 39,576,800 5.470% 01/29/99 ............................... 24,000 23,453,000 5.470% 02/05/99 ............................... 8,000 7,809,158 Corporate Asset Funding, Inc. 5.530% 09/22/98 ............................... 30,000 29,903,225 5.540% 09/23/98 ............................... 50,000 49,830,722 Corporate Receivables Corp. 5.550% 09/11/98 ............................... 20,000 19,969,167 Dakota Certificates Program 5.530% 09/04/98 ............................... 30,000 29,986,175 5.520% 09/25/98 ............................... 50,000 49,816,000 Windmill Funding 5.540% 09/28/98 ............................... 21,858 21,767,180 ------------ 286,999,237 ------------ Banks--13.0% AB Spintab Swedmortgage 5.530% 11/10/98 ............................... 25,000 24,731,181 5.520% 11/16/98 ............................... 15,000 14,825,200 5.520% 12/17/98 ............................... 40,000 39,343,733 5.510% 03/04/99 ............................... 25,000 24,295,944 Commerzbank 5.505% 10/16/98 ............................... 25,000 24,827,969 IMI Funding Corp. 5.510% 11/27/98 ............................... 24,270 23,946,825 5.510% 12/04/98 ............................... 32,827 32,354,711 5.480% 02/03/99 ............................... 17,136 16,731,686 IMI Funding Corp. (USA) 5.520% 11/09/98 ............................... 11,881 11,755,299 5.530% 11/16/98 ............................... 30,000 29,649,767 Nationsbank Corp. 5.510% 10/15/98 ............................... 30,000 29,797,967 Unifunding Inc. 5.420% 09/29/98 ............................... 30,000 29,873,533 ------------ 302,133,815 ------------ See Accompanying Notes to Financial Statements. 3 THE BEDFORD FAMILY THE RBB FUND, INC. Money Market Portfolio Statement of Net Assets (continued) August 31, 1998 Par (000) Value ----- ----- Business Credit Institutions--2.7% Enterprise Funding Corp. 5.510% 09/23/98 ......................... $40,000 $ 39,865,311 5.530% 09/23/98 ......................... 9,873 9,839,635 5.510% 12/02/98 ......................... 13,082 12,897,791 -------------- 62,602,737 -------------- Chemicals & Allied Products--1.6% Monsanto Co. 5.500% 12/07/98 ......................... 38,477 37,906,792 -------------- Finance Services--1.9% Triple A-1 Funding 5.530% 09/24/98 ......................... 13,328 13,280,911 5.550% 10/14/98 ......................... 30,000 29,801,125 -------------- 43,082,036 -------------- Food & Kindred Products--1.3% Diageo Capital PLC 5.450% 12/29/98 ......................... 30,000 29,459,542 -------------- Household Audio & Video Equipment--0.9% Panasonic Finance Inc. 5.450% 09/04/98 ......................... 20,000 19,990,917 -------------- Misc. Industrial & Commercial Machinery & Equipment--6.5% Komatsu Finance America 5.600% 09/09/98 ......................... 20,000 19,975,111 5.620% 09/11/98 ......................... 70,000 69,890,722 5.600% 11/13/98 ......................... 25,000 24,716,111 Mitsubishi Corporate Finance PLC 5.670% 09/14/98 ......................... 35,000 34,928,338 -------------- 149,510,282 -------------- Motor Vehicles & Car Bodies--1.2% BMW US Capital Corp. 5.500% 11/09/98 ......................... 28,000 27,704,833 -------------- Personal Credit Institutions--2.0% Countrywide Funding Corp. 5.540% 09/28/98 ......................... 47,500 47,302,637 -------------- Par (000) Value ----- ----- Petroleum Refining--0.7% Chevron Transport Corp. 5.500% 11/20/98 ......................... $16,000 $ 15,804,444 -------------- Security Brokers & Dealers--6.8% Merrill Lynch & Co. Canandian DCP 5.450% 09/02/98 ......................... 50,000 49,992,431 Lehman Brothers Holdings, Inc. 5.550% 11/25/98+ ........................ 25,000 24,672,396 5.540% 01/22/99 ......................... 35,000 34,229,786 Nomura Holding America Inc. 5.650% 10/02/98 ......................... 6,000 5,970,808 5.650% 11/16/98 ......................... 19,000 18,773,372 5.650% 11/23/98 ......................... 25,000 24,674,340 -------------- 158,313,133 ------------ TOTAL COMMERCIAL PAPER (Cost $1,180,810,405) ............... 1,180,810,405 -------------- MUNICIPAL BONDS--3.4% Florida--0.1% Coral Springs, VRDN++ 5.650% 09/02/98 ......................... 2,500 2,500,000 -------------- Georgia--0.4% De Kalb County Development Authority Series 1995 B+ 5.650% 09/07/98 ......................... 9,485 9,485,000 -------------- Illinois--0.2% Illinois Health Facilities Authority Convertible/VRDN Revenue Bond (The Streeterville Corp. Project) Series 1993-B++ 5.700% 09/02/98 ......................... 4,400 4,400,000 -------------- Indiana--0.2% Bremen, Inc. TARN VRDN Series 1996 B 5.674% 09/03/98 ......................... 3,600 3,600,000 -------------- See Accompanying Notes to Financial Statements. 4 THE BEDFORD FAMILY THE RBB FUND, INC. Money Market Portfolio Statement of Net Assets (continued) August 31, 1998 Par (000) Value ----- ----- Kentucky--0.2% Boone County Taxable IDR Refunding Bonds VRDN (Square D Company Project) Series 1994-B+ 5.700% 09/02/98 ........................... $ 4,200 $ 4,200,000 -------------- Mississippi--1.2% Hinds County, IDR Revenue Bond VRDN Series 1992+ 5.650% 09/02/98 ........................... 1,860 1,860,000 Mississippi Business Finance Corp. IDR Revenue Bond VRDN (Dana Lighting Project) Series 1995+ 5.650% 09/07/98 ........................... 5,800 5,800,000 Mississippi Business Finance Corp. Taxable IDR Revenue Bond Series 1995+ 5.650% 09/07/98 ........................... 6,300 6,300,000 Mississippi Business Finance Corp. Taxable IDR Revenue Bond VRDN (Bryan Foods, Inc. Project) Series 1994+ 5.700% 09/02/98 ........................... 14,000 14,000,000 -------------- 27,960,000 -------------- North Carolina--0.5% City of Asheville Tax Corp.+ 5.650% 09/02/98 ........................... 10,800 10,800,000 -------------- Texas--0.6% South Central Texas Industrial Development Corp. Taxable IDR Revenue Bond VRDN (Rohr Industries Project) Series 1990+ 5.700% 09/02/98 ........................... 14,800 14,800,000 -------------- TOTAL MUNICIPAL BONDS (Cost $77,745,000) .................... 77,745,000 -------------- Par (000) Value ----- ----- CORPORATE OBLIGATIONS--19.4% Banks--1.1% Istituto Bancario San Paolo di Torino+ 5.558% 09/08/98 ........................... $25,000 $ 24,986,786 -------------- Finance Services--7.3% General American Life+ 5.870% 09/01/98 ........................... 50,000 50,000,000 SMM Trust 1997-A+ 5.688% 09/23/98 ........................... 20,000 20,000,000 SMM Trust 1997-X+ 5.648% 09/14/98 ........................... 100,000 100,000,000 -------------- 170,000,000 -------------- Personal Credit Institutions--6.0% American Honda Finance Corp. Honda Motor Company, Ltd.+ 5.668% 09/14/98 ........................... 40,000 40,000,000 5.668% 09/16/98 ........................... 25,000 25,000,000 5.658% 10/28/98 ........................... 35,000 35,000,000 General Motors Acceptance Corp.+ 5.598% 11/26/98 ........................... 40,000 39,984,420 -------------- 139,984,420 -------------- Security Brokers & Dealers--5.0% Bear Stearns Companies, Inc.+ 5.622% 09/08/98 ........................... 25,000 25,000,808 5.615% 09/24/98 ........................... 40,000 40,000,000 Lehman Brothers Holdings, Inc.+ 5.708% 09/08/98 ........................... 50,000 50,000,000 -------------- 115,000,808 -------------- TOTAL VARIABLE RATE OBLIGATIONS (Cost $449,972,014) ................... 449,972,014 -------------- See Accompanying Notes to Financial Statements. 5 THE BEDFORD FAMILY THE RBB FUND, INC. Money Market Portfolio Statement of Net Assets (continued) August 31, 1998 Par (000) Value ----- ----- MEDIUM TERM NOTES--4.3% Banks--4.3% Skandinaviska Enskilda Banken Funding, Inc.+ 5.573% 09/14/98 ......................... $50,000 $ 49,987,920 Skandinaviska Enskilda Banken Funding, Inc. 5.610% 02/25/99 ......................... 50,000 49,990,700 -------------- TOTAL MEDIUM TERM NOTES (Cost $99,978,620) .................. 99,978,620 -------------- REPURCHASE AGREEMENTS--6.9% Lehman Government Securities Inc. (Agreement dated 08/31/98 to be repurchased at $60,009,917 collaterized by $77,315,556 Federal Home Loan Mortgage Corporation due 9/25/08 to 5/25/24. Market value of collateral is $61,801,006.) 5.95% 09/01/98 ......... 60,000 60,000,000 Lehman Government Securities Inc. (Agreement dated 08/31/98 to be repurchased at $99,015,984, collateralized by $230,634,000 U.S. Government National Strips due 11/15/98 to 08/15/25. Market value of the collateral is $100,982,776.) 5.8125% 09/01/98 ...... 99,000 99,000,000 -------------- TOTAL REPURCHASE AGREEMENTS (Cost $159,000,000) ................. 159,000,000 -------------- TOTAL INVESTMENTS AT VALUE--99.7% (Cost $2,307,464,609*) .................. 2,307,464,609 OTHER ASSETS IN EXCESS OF LIABILITIES--0.3% .................... 8,093,691 -------------- Value -------------- NET ASSETS (Applicable to 762,794,677 Bedford shares, 226,300 Cash Preservation shares, 904,558,200 Janney Montgomery Scott shares, 648,098,967 Sansom Street shares and 800 other shares)--100% ............. $2,315,558,300 ============== NET ASSET VALUE, Offering and redemption price per share ($2,315,558,300 / 2,315,678,944) $1.00 ============== * Also cost for Federal income tax purposes. + Variable Rate Obligations -- The rate shown is the rate as of August 31, 1998 and the maturity date shown is the date the principal amount can be recovered through demand or put. ++ Put Bonds -- Maturity date is the put date. INVESTMENT ABBREVIATIONS VRDN ....................................... Variable Rate Demand Note LOC ....................................... Letter of Credit IDR ....................................... Industrial Development Revenue TARN ....................................... Taxable Adjustable Revenue Note See Accompanying Notes to Financial Statements. 6 THE BEDFORD FAMILY THE RBB FUND, INC. Money Market Portfolio Statement of Operations For the Year Ended August 31, 1998 Investment Income Interest ........................................... $ 150,707,431 ------------- Expenses Investment advisory fees ........................... 9,618,695 Distribution fees .................................. 11,703,324 Service organization fees .......................... 531,358 Directors' fees .................................... 51,825 Custodian fees ..................................... 422,990 Transfer agent fees ................................ 3,362,291 Legal fees ......................................... 114,345 Audit fees ......................................... 180,246 Registration fees .................................. 309,694 Insurance expense .................................. 49,867 Printing fees ...................................... 529,786 Miscellaneous ...................................... 1,955 ------------- 26,876,376 Less fees waived ................................... (3,343,093) Less expense reimbursement by advisor .............. (692,630) ------------- Total expenses ................................ 22,840,653 ------------- Net investment income .............................. 127,866,778 Realized loss on investments ....................... (95,478) ------------- Net increase in net assets resulting from operations $ 127,771,300 ============= See Accompanying Notes to Financial Statements. 7 THE BEDFORD FAMILY THE RBB FUND, INC. Money Market Portfolio Statement of Changes in Net Assets
For the For the Year Ended Year Ended August 31, 1998 August 31, 1997 --------------- --------------- Increase (decrease) in net assets: Operations: Net investment income .............................. $ 127,866,778 $ 116,087,132 Net gain (loss) on investments ..................... (95,478) 22,330 --------------- --------------- Net increase in net assets resulting from operations 127,771,300 116,109,462 --------------- --------------- Distributions to shareholders: Dividends to shareholders from net investment income: Bedford shares ................................... (56,898,248) (56,929,832) Cash Preservation shares ......................... (10,274) (10,852) Janney Montgomery Scott shares ................... (38,111,646) (29,943,530) RBB shares ....................................... -- (1,286) Sansom Street shares ............................. (32,846,610) (29,201,632) --------------- --------------- Distributions in excess of net investment income: Bedford shares ................................... (7,165) -- Cash Preservation shares ......................... (1) -- Janney Montgomery Scott shares ................... (3,979) -- Sansom Street shares ............................. (2,838) -- --------------- --------------- Total dividends to shareholders .................. (127,880,761) (116,087,132) --------------- --------------- Net capital share transactions ....................... (384,357,868) 504,179,861 --------------- --------------- Total increase (decrease) in net assets .............. (384,467,329) 504,202,191 Net Assets: Beginning of year .................................. 2,700,025,629 2,195,823,438 --------------- --------------- End of year ........................................ $ 2,315,558,300 $ 2,700,025,629 =============== ===============
See Accompanying Notes to Financial Statements. 8 THE BEDFORD FAMILY THE RBB FUND, INC. Financial Highlights(b) (For a Share Outstanding Throughout each Period)
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, 1998 August 31, 1997 August 31, 1996 August 31, 1995 August 31, 1994 --------------- --------------- --------------- --------------- --------------- Net asset value, beginning of year ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- ---------- ---------- -------- -------- Income from investment operations: Net investment income .................. 0.0473 0.0462 0.0469 0.0486 0.0278 -------- ---------- ---------- -------- -------- Total from investment operations ..... 0.0473 0.0462 0.0469 0.0486 0.0278 -------- ---------- ---------- -------- -------- Less distributions Dividends (from net investment income) . (0.0473) (0.0462) (0.0469) (0.0486) (0.0278) -------- ---------- ---------- -------- -------- Total distributions .................. (0.0473) (0.0462) (0.0469) (0.0486) (0.0278) -------- ---------- ---------- -------- -------- Net asset value, end of year .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ========== ========== ======== ======== Total Return .............................. 4.84% 4.72% 4.79% 4.97% 2.81% Ratios/Supplemental Data Net assets, end of year (000) .......... $762,739 $1,392,911 $1,109,334 $935,821 $710,737 Ratios of expenses to average net assets .97%(a) .97%(a) .97%(a) .96%(a) .95%(a) Ratios of net investment income to average net assets ................... 4.73% 4.62% 4.69% 4.86% 2.78%
(a) Without the waiver of advisory and administration 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 1.10, 1.12%, 1.14%, 1.17% and 1.16% for the years ended August 31, 1998, 1997, 1996, 1995 and 1994, respectively. (b) Financial Highlights relate solely to the Bedford Class of shares within each portfolio. See Accompanying Notes to Financial Statements. 9 THE BEDFORD FAMILY THE RBB FUND, INC. Notes to Financial Statements August 31, 1998 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 16.27 billion shares are currently classified into ninety-seven classes. Each class represents an interest in one of twenty-six investment portfolios of the Fund. The classes have been grouped into fifteen separate "families", nine 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 Money Family, the n/i Family, the Boston Partners Family and the Schneider Family. The Bedford Family represents interests in the three portfolios, one of 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 among all of the portfolios or classes of the Fund based on relative net assets of each portfolio. c) Dividends and 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 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 generally accepted accounting principles 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 reporting period. Actual results could differ from those estimates. 10 THE BEDFORD FAMILY THE RBB FUND, INC. Notes to Financial Statements (continued) August 31, 1998 Note 2. Transactions with Affiliates and Related Parties In March 1998, PNC Institutional Management Corporation, which changed its name to BlackRock Institutional Management Corporation ("BMIC"), assumed the responsibilities of PNC Bank, as subadviser, to provide research, credit analysis and recommendations with respect to the Fund's investments and supply certain computer facilities, personnel and other services. The personnel and facilities related to these services are being transferred to BMIC and BMIC's obligation to pay to PNC Bank a portion of the advisory fee has been terminated. For its advisory services, BIMC 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. BIMC may, at its discretion, voluntarily waive all or any portion of its advisory fees 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, 1998, advisory fees and waivers for the investment portfolio were as follows: GROSS NET ADVISORY ADVISORY FEE WAIVER FEE -------- ------ -------- $9,618,695 $(3,334,990) $6,283,705 The investment advisor has agreed to reimburse each portfolio for the amount, if any, by which the total operating and management expenses exceed the cap. For the year ended August 31, 1998 the reimbursed expenses were $692,630 for the Money Market 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, 1998, 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 $1,474,000 $ -- $1,474,000 Cash Preservation Class 8,684 (8,103) 581 Janney Montgomery Scott Class 1,498,346 -- 1,498,346 Sansom Street Class 381,261 -- 381,261 ---------- ----- ---------- Total $3,362,291 $(8,103) $3,354,188 ========== ======= ==========
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 Providend Distributors, Inc. ("PDI"), which provide for each class to make monthly payments, based on average net assets, to PDI of up to .65% on an annualized basis for the Bedford, Cash Preservation and Janney Montgomery Scott Classes and up to .20% on an annualized basis for the Sansom Street Class. Prior to May 29, 1998, Counsellors Securities Inc. served as distributor. 11 THE BEDFORD FAMILY THE RBB FUND, INC. Notes to Financial Statements (continued) August 31, 1998 Note 2. Transactions with Affiliates and Related Parties (continued) For the year ended August 31, 1998, distribution fees for each class were as follows: DISTRIBUTION FEE ------------ Bedford Class ................... $ 6,509,493 Cash Preservation Class ......... 864 Janney Montgomery Scott Class ... 4,862,505 Sansom Street Class ............. 330,462 ----------- Total ..................... $11,703,324 =========== 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, 1998, service organization fees were $531,358 for the Money Market Portfolio. Note 3. Capital Shares MONEY MARKET PORTFOLIO ---------------------------------- For the For the Year Ended Year Ended August 31, 1998 August 31, 1997 --------------- --------------- VALUE VALUE --------------- --------------- Shares sold: Bedford Class ........................ $ 4,081,920,081 $ 4,513,203,668 Cash Preservation Class .............. 113,319 175,000 Janney Montgomery Scott Class ........ 3,910,533,620 3,087,651,502 RBB Class ............................ -- 4,744 Sansom Street Class .................. 2,296,071,622 1,965,226,666 Shares issued in reinvestment of dividends: Bedford Class ........................ 56,201,453 55,886,643 Cash Preservation Class .............. 10,291 10,748 Janney Montgomery Scott Class ........ 37,882,680 29,670,134 RBB Class ............................ -- 1,361 Sansom Street Class .................. 24,189,907 20,645,930 Shares repurchased: Bedford Class ........................ (4,768,237,064) (4,285,531,838) Cash Preservation Class .............. (139,525) (145,893) Janney Montgomery Scott Class ........ (3,780,710,398) (2,942,342,585) RBB Class ............................ -- (67,517) Sansom Street Class .................. (2,242,193,855) (1,940,208,702) --------------- --------------- Net increase (decrease) .............. $ (384,357,869) $ 504,179,861 =============== =============== Bedford Shares authorized ............ 1,500,000,000 1,500,000,000 =============== =============== 12 THE BEDFORD FAMILY THE RBB FUND, INC. Notes to Financial Statements (continued) August 31, 1998 Note 4. Net Assets At August 31, 1998, net assets consisted of the following: MONEY MARKET PORTFOLIO ------------ Capital paid-in Bedford Class ........................... $ 762,787,510 Cash Preservation Class ................. 226,299 Janney Montgomery Scott Class ........... 904,554,222 Sansom Street Class ..................... 648,096,129 Other Classes ........................... 800 Accumulated net realized loss on investments Bedford Class ........................... (34,771) Cash Preservation Class ................. (11) Janney Montgomery Scott Class ........... (40,506) Sansom Street Class ..................... (31,372) --------------- $ 2,315,558,300 =============== Note 5. Capital Loss Carryovers At August 31, 1998, capital loss carryovers were available to offset future realized gains as follows: $106,660 in the Money Market Portfolio of which $11,182 expires in 2004 and $95,478 expires in 2006. 13 THE BEDFORD FAMILY THE RBB FUND, INC. Notes to Financial Statements (continued) August 31, 1998 Note 6. Other Financial Highlights The Fund currently offers three other classes of shares representing interest in the Money Market Portfolio: Cash Preservation, Janney Montgomery Scott, and Sansom Street. Each class is marketed to different types of investors. Financial Highlights of the Cash Preservation class are not presented in this report due to its immateriality. Such information is available in the annual report of the respective family. The financial highlights of certain other classes are as follows: The Janney Montgomery Scott Money Funds
MONEY MARKET PORTFOLIO ---------------------------------------------------------------- For the Period For the For the For the June 12, 1995 Year Year Year (Commencement of Ended Ended Ended Operations) to August 31, 1998 August 31, 1997 August 31, 1996 August 31, 1995 --------------- --------------- --------------- --------------- Net asset value, beginning of year or period ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- Income from investment operations: Net investment income .................................. 0.0469 0.0459 0.0465 0.0112 -------- -------- -------- -------- Total from investment operations ....................... 0.0469 0.0459 0.0465 0.0112 -------- -------- -------- -------- Less distributions Dividends (from net investment income) ................. (0.0469) (0.0459) (0.0465) (0.0112) -------- -------- -------- -------- Total distributions .................................... (0.0469) (0.0459) (0.0465) (0.0112) -------- -------- -------- -------- Net asset value, end of year or period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== Total Return ........................................... 4.81% 4.69% 4.76% 5.30%(b) Ratios/Supplemental Data Net assets, end of year or period (000) ............. $904,526 $736,855 $561,865 $443,645 Ratios of expenses to average net assets ............ 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a)(b) Ratios of net investment income to average net assets 4.69% 4.59% 4.65% 5.04%(b)
(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 Money Market Portfolio would have been 1.21%, 1.22%, 1.23% and 1.23% for the years or period ended August 31, 1998, 1997, 1996 and 1995, respectively. (b) Annualized. 14 THE BEDFORD FAMILY THE RBB FUND, INC. Notes to Financial Statements (concluded) August 31, 1998 Note 6. Other Financial Highlights (continued) The Sansom Street Family
MONEY MARKET PORTFOLIO ----------------------------------------------------------------------------- For the For the For the For the For the Year Year Year Year Year Ended Ended Ended Ended Ended August 31, 1998 August 31, 1997 August 31, 1996 August 31, 1995 August 31, 1995 --------------- --------------- --------------- --------------- --------------- Net asset value, beginning of year ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income ......................... 0.0520 0.0510 0.0518 0.0543 0.0334 -------- -------- -------- -------- -------- Total from investment operations .......... 0.0520 0.0510 0.0518 0.0543 0.0334 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) ........... (0.0520) (0.0510) (0.0518) (0.0543) (0.0334) -------- -------- -------- -------- -------- Total distributions ....................... (0.0520) (0.0510) (0.0518) (0.0543) (0.0334) -------- -------- -------- -------- -------- Net asset value, end of year ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return ..................................... 5.34% 5.22% 5.30% 5.57% 3.39% Ratios/Supplemental Data Net assets, end of year ....................... $684,066 $570,018 $524,359 $441,614 $373,745 Ratios of expenses to average net assets ...... .49%(a) .49%(a) .48%(a) .39%(a) .39%(a) Ratios of net investment income to average net assets................................... 5.20% 5.10% 5.18% 5.43% 3.34%
(a) Without the waiver of advisory 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 .62%, .64%, .65%, .59% and .60% for the years ended August 31, 1998, 1997, 1996, 1995 and 1994, respectively. 15 -----END PRIVACY-ENHANCED MESSAGE-----