-----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, Gt79aLm61ip6VlbWV2yeqR91pzoh0syRfA0aYX3XXkArCssHSx/65TEQHrFvgl4O uU3zGIk8mFacYxpPwp86aQ== 0000935069-99-000246.txt : 19991208 0000935069-99-000246.hdr.sgml : 19991208 ACCESSION NUMBER: 0000935069-99-000246 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990831 FILED AS OF DATE: 19991110 DATE AS OF CHANGE: 19991207 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: 99747728 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 THE PRINCIPAL FAMILY ANNUAL REPORT THE PRINCIPAL FAMILY MONEY MARKET PORTFOLIO ANNUAL REPORT AUGUST 31, 1999 THE PRINCIPAL FAMILY THE RBB FUND, INC. ANNUAL INVESTMENT ADVISER'S REPORT One year ago, economic and financial crises around the world threatened the continuation of the eight-year expansion of the U.S. economy. With the assistance, however, of lower interest rates, low inflation and a consumer driven spending spree, the U.S. economy moved ahead at a brisk pace through August of 1999. First quarter gross domestic product (GDP) grew by 4.5%, and while the second quarter slipped to 1.6%, estimates for the third quarter range as high as 5%. During the same period, price and wage pressures remained tame. The GDP deflator reported a 1.4% increase through the first half of the year, and consumer and wholesale prices for August showed moderate 2.3% increases on a year-over-year basis. Energy costs, in particular, accounted for most of the increases in CPI and PPI, as the price of oil reached $25 a barrel. With the threat of global turmoil behind them, the Federal Reserve began to rescind its three monetary policy easings effected last fall. Twice in the last three months, the Fed raised short-term interest rates by a quarter point. The current federal funds rate of 5.25% should, according to the Fed, "markedly diminish the risk of rising inflation." The Fed's tightenings had an immediate impact on the taxable money markets. Overnight rates increased commensurate with the Fed's moves, while longer-dated securities with maturities out to one year experienced larger gains. The result was a steeper yield curve with yields on one-year obligations exceeding 6%. The Y2K factor also came into play this year. Investments into January, 2000 often carried incentives of 40-50 basis points versus December, 1999 maturities, as investors sought extra liquidity for year-end uncertainties. The U.S. Treasury and agency yield curves also steepened and the spreads widened between the two sectors. The Money Market Portfolio maintained moderately extended maturities for most of the year as the market tended to overvalue the magnitude of future Fed tightenings. This allowed the portfolios to maintain a longer positioning, even in an environment of rising rates. On August 31, the Money Market Portfolio had assets of $2,739,120,331. The Fund, like any business, could be affected if the computer systems on which it relies do not properly process information beginning on January 1, 2000. While Year 2000 issues could have a negative effect on the Fund, the Fund's investment adviser is currently working to avoid such problems. The Fund's investment adviser is also working with other systems providers and vendors servicing the Portfolios to determine their systems' ability to handle Year 2000 problems. There is no guarantee, however, that systems will work properly on or after January 1, 2000. Year 2000 problems may also hurt issuers whose securities the Fund holds or securities markets generally. BlackRock Institutional Management Corporation (Please dial toll-free 800-430-9618 for questions regarding your account or contact your broker.) THE PRINCIPAL FAMILY THE RBB FUND, INC. REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Board of Directors of The RBBFund,Inc.: In our opinion, the accompanying statement of net assets, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Money Market Portfolio, a separately managed Portfolio of The RBB Fund, Inc. (the "Fund"), at August 31, 1999, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods 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 audit. We conducted our audit 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 audit, which included confirmation of securities at August 31, 1999 by correspondence with the custodian and brokers, provides a reasonable basis for the opinion expressed above. PricewaterhouseCoopersLLP 2400 Eleven Penn Center Philadelphia,Pennsylvania October 15, 1999 2 THE PRINCIPAL FAMILY THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS AUGUST 31, 1999 PAR (000) VALUE -------- -------------- CERTIFICATES OF DEPOSIT--14.6% DOMESTIC CERTIFICATES OF DEPOSIT--7.1% First National Bank of Chicago 5.230% 10/20/99 ....................... $ 60,000 $ 60,001,246 6.060% 08/14/00 ....................... 15,000 14,992,908 4.980% 01/06/00 ....................... 50,000 49,996,642 Key Bank N.A. 5.705% 07/12/00 ....................... 10,000 9,998,760 Wilmington Trust Co. 5.060% 10/20/99 ....................... 25,000 25,000,000 5.530% 01/12/00 ....................... 20,000 20,000,000 5.070% 01/14/00 ....................... 14,400 14,400,000 -------------- 194,389,556 -------------- YANKEE DOLLAR CERTIFICATES OF DEPOSIT--7.5% Canadian Imperial Bank of Commerce 5.025% 01/27/00 ....................... 30,000 29,999,413 5.120% 02/23/00 ....................... 22,300 22,294,773 5.180% 03/15/00 ....................... 29,700 29,699,785 5.180% 03/16/00 ....................... 25,000 24,996,102 National Westminster Bank 4.980% 01/10/00 ....................... 15,000 14,998,961 5.280% 04/03/00 ....................... 25,000 24,996,849 Svenska Handelsbanken, Inc. 5.178% 03/16/00 ....................... 25,000 24,993,829 Toronto Dominion NY 5.000% 01/05/00 ....................... 15,000 14,999,500 5.100% 02/22/00 ....................... 20,000 19,996,325 -------------- 206,975,537 -------------- TOTAL CERTIFICATES OF DEPOSIT (Cost $401,364,726) ............... 401,365,093 -------------- COMMERCIAL PAPER--56.6% AGRICULTURAL SERVICES--2.1% Cargill Global Funding PLC 4-2 5.420% 01/19/00 ....................... 25,000 24,473,056 5.420% 01/28/00 ....................... 35,000 34,214,853 -------------- 58,687,909 -------------- PAR (000) VALUE -------- -------------- AIRCRAFT ENGINES & PARTS--3.8% Allied Signal, Inc. 4-2 4.920% 09/10/99 ....................... $ 25,000 $ 24,969,250 5.200% 10/08/99 ....................... 35,000 34,812,944 5.250% 02/15/00 ....................... 25,000 24,391,146 5.250% 02/28/00 ....................... 20,000 19,475,000 -------------- 103,648,340 -------------- ASSET BACKED SECURITIES--19.8% Barton Capital Corp. 4-2 5.140% 09/10/99 ....................... 66,110 66,025,049 Delaware Funding Corp. 4-2 5.120% 09/10/99 ....................... 61,700 61,621,024 Enterprise Funding Corp. 4-2 5.270% 09/20/99 ....................... 10,750 10,720,100 5.230% 10/13/99 ....................... 5,616 5,581,733 Moriarty L.L.C. 4-2 5.300% 09/07/99 ....................... 20,000 19,982,333 5.330% 10/25/99 ....................... 60,000 59,520,300 Moriarty Ltd. 4-2 5.140% 09/15/99 ....................... 40,000 39,920,044 5.180% 10/12/99 ....................... 20,000 19,882,011 Sigma Finance, Inc. 4-2 5.210% 10/28/99 ....................... 25,000 24,793,771 5.410% 11/04/99 ....................... 28,256 27,984,240 5.400% 11/08/99 ....................... 25,000 24,745,000 5.410% 11/15/99 ....................... 61,700 61,004,590 Trident Capital Finance, Inc. 4-2 5.170% 09/14/99 ....................... 75,000 74,859,979 Triple A-1 Funding 4-2 5.180% 09/20/99 ....................... 46,796 46,668,065 -------------- 543,308,239 -------------- BANKS--9.0% AB Spin Tab Swedmortgage 3-A-3 4.880% 09/07/99 ....................... 49,500 49,459,740 5.350% 11/10/99 ....................... 55,000 54,427,847 Abbey National North America 3-A-3 4.920% 01/31/00 ....................... 24,000 23,501,440 4.910% 02/01/00 ....................... 25,000 24,478,313 J.P. Morgan & Co. 3-A-3 4.830% 09/27/99 ....................... 25,000 24,912,792 See Accompanying Notes to Financial Statements. 3 THE PRINCIPAL FAMILY THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS (CONTINUED) AUGUST 31, 1999 PAR (000) VALUE -------- -------------- BANKS--(CONTINUED) San Paolo U.S. Financial Inc. 3-A-3 4.950% 11/17/99 ....................... $ 20,000 $ 19,788,250 Santander Finance, Inc. 3-A-3 5.180% 10/18/99 ....................... 50,000 49,661,861 -------------- 246,230,243 -------------- COMMUNICATION EQUIPMENT NEC--0.9% Alcatel Alsthom Inc. 3-A-3 5.430% 03/13/00 ....................... 25,000 24,268,458 -------------- ELECTRONIC & OTHER ELECTRICAL EQUIPMENT--0.7% General Electric Co. 3-A-3 5.110% 09/08/99 ....................... 18,000 17,982,115 -------------- MOTOR VEHICLES PARTS & ACCESSORIES--1.8% Eaton Corp. 4-2 5.180% 10/04/99 ....................... 50,000 49,762,583 -------------- NEWSPAPER: PUBLISHING & PRINTING--2.2% Knight-Ridder, Inc. 3-A-3 4.810% 09/10/99 ....................... 10,000 9,987,975 5.280% 09/24/99 ....................... 49,500 49,333,020 -------------- 59,320,995 -------------- PERSONAL CREDIT INSTITUTIONS--1.8% Associates First Capital Corp. 3-A-3 5.180% 10/19/99 ....................... 50,000 49,654,667 ------------ RETAIL - DEPARTMENT STORES--2.2% St. Michael Finance Ltd. 3-A-3 5.270% 10/12/99 ....................... 61,355 60,986,751 ------------ SERVICES-EQUIPMENT RENTING & LEASING--0.9% HD Real Estate Funding Corp. 4-2 5.720% 02/07/00 ....................... 25,000 24,368,417 ------------ SHORT-TERM BUSINESS CREDIT INSTITUTIONS--11.4% Associates First Capital Corp. 3-A-3 5.150% 10/18/99 ....................... 43,600 43,306,850 Finova Capital Corp. 3-A-3 5.100% 09/10/99 ....................... 55,000 54,929,875 5.350% 10/08/99 ....................... 40,000 39,780,056 PAR (000) VALUE -------- -------------- SHORT-TERM BUSINESS CREDIT INSTITUTIONS--(CONTINUED) General Electric Capital International 3-A-3 5.240% 09/17/99 ....................... $ 75,000 $ 74,825,333 Heller Financial, Inc. 3-A-3 5.200% 09/02/99 ....................... 25,000 24,996,389 5.250% 09/13/99 ....................... 25,000 24,956,250 5.220% 09/16/99 ....................... 50,000 49,891,250 -------------- 312,686,003 -------------- TOTAL COMMERCIAL PAPER (Cost $1,550,904,720) ............. 1,550,904,720 -------------- MUNICIPAL BONDS--2.6% FLORIDA--0.1% Coral Springs, VRDN IDR (Suntrust)(DAGGER) 5.400% 09/01/99 ....................... 2,300 2,300,000 -------------- GEORGIA--0.3% De Kalb County Development Authority VRDN Series 1995 B (Emory University Project)(DAGGER) 5.350% 09/07/99 ....................... 9,485 9,485,000 ------------ ILLINOIS--0.2% Illinois Health Facilities Authority Convertible/ VRDN Revenue Bond (The Streeterville Corp. Project) Series 1993-B (First National Bank of Chicago)(DAGGER) 5.350% 09/01/99 ....................... 4,400 4,400,000 ------------ INDIANA--0.1% Bremen, Inc. TARN VRDN Series 1996 B (Society National Bank, Cleveland)(DAGGER) 5.400% 09/02/99 ....................... 2,390 2,390,000 ------------ KENTUCKY--0.2% Boone County Taxable IDR Refunding Bonds VRDN (Square D Company Project) Series 1994-B (Credit Lyonnais)(DAGGER) 5.350% 09/01/99 ....................... 4,200 4,200,000 ------------ See Accompanying Notes to Financial Statements. 4 THE PRINCIPAL FAMILY THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS (CONTINUED) AUGUST 31, 1999 PAR (000) VALUE -------- -------------- MISSISSIPPI--0.9% Mississippi Business Finance Corp. IDR Revenue Bond VRDN (Dana Lighting Project) Series 1995 Sun Bank, N.A., Orlando(DAGGER) 5.400% 09/07/99 ........................... $ 5,400 $ 5,400,000 Mississippi Business Finance Corp. Taxable IDR Revenue Bond VRDN (Sun Bank, N.A., Orlando) Series 1995(DAGGER) 5.400% 09/07/99 ........................... 5,600 5,600,000 Mississippi Business Finance Corp. Taxable IDR Revenue Bond VRDN (Bryan Foods, Inc. Project) Series1994(DAGGER) 5.350% 09/01/99 ........................... 14,000 14,000,000 -------------- 25,000,000 -------------- NORTH CAROLINA--0.3% City of Asheville Tax Corp. VRDN(DAGGER) 5.350% 09/01/99 ........................... 8,900 8,900,000 -------------- TEXAS--0.5% South Central Texas Industrial Development Corp. Taxable IDR Revenue Bond VRDN (Rohr Industries Project) Series 1990 (Citibank N.A.)(DAGGER) 5.350% 09/01/99 ........................... 14,800 14,800,000 -------------- TOTAL MUNICIPAL BONDS (Cost $71,475,000) .................... 71,475,000 -------------- VARIABLE RATE OBLIGATIONS--21.6% ASSET BACKED SECURITIES--5.6% Asset Securitization Corp.(DAGGER) 5.473% 09/27/99 ........................... 35,000 34,996,596 SMM Trust 1998-B(DAGGER) 5.204% 09/15/99 ........................... 80,000 80,000,000 SMM Trust 1999-E(DAGGER) 5.323% 10/05/99 ........................... 37,500 37,500,000 -------------- 152,496,596 -------------- PAR (000) VALUE -------- -------------- BANKS--9.5% Bayerische Hypo-Und Vereinsbank(DAGGER) 5.186% 09/14/99 ........................... $ 74,500 $ 74,472,398 5.186% 09/15/99 ........................... 50,000 49,972,065 Key Bank N.A.(DAGGER) 5.035% 09/14/99 ........................... 35,000 34,983,788 5.576% 11/26/99 ........................... 50,000 50,000,000 Royal Bank of Canada(DAGGER) 5.156% 09/14/99 ........................... 50,000 49,998,753 -------------- 259,427,004 -------------- PERSONAL CREDIT INSTITUTIONS--5.6% American Honda Finance Corp.(DAGGER) 5.293% 11/04/99 ........................... 10,000 9,995,308 5.340% 11/08/99 ........................... 30,000 29,983,321 5.535% 11/17/99 ........................... 30,000 30,001,938 5.430% 11/24/99 ........................... 44,600 44,593,706 5.486% 11/26/99 ........................... 15,000 14,998,545 General Motors Acceptance Corp.(DAGGER) 5.270% 10/20/99 ........................... 24,500 24,487,125 -------------- 154,059,943 -------------- SECURITY BROKERS & DEALERS--0.9% Morgan Stanley Dean Witter & Co.(DAGGER) 5.260% 10/14/99 ........................... 25,000 25,000,000 -------------- TOTAL VARIABLE RATE OBLIGATIONS (Cost $590,983,543) ................... 590,983,543 -------------- MEDIUM TERM NOTES--0.3% SECURITY BROKERS & DEALERS--0.3% Goldman Sachs Group LP 5.280% 02/24/00 ........................... 7,500 7,499,928 -------------- TOTAL MEDIUM TERM NOTES (Cost $7,499,928) ..................... 7,499,928 -------------- TIME DEPOSITS--3.7% Bank Brussels Lambert 5.656% 09/01/99 ........................... 100,000 100,000,000 -------------- TOTAL TIME DEPOSITS (Cost $100,000,000) ................... 100,000,000 -------------- See Accompanying Notes to Financial Statements. 5 THE PRINCIPAL FAMILY THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS (CONCLUDED) AUGUST 31, 1999 PAR (000) VALUE -------- -------------- REPURCHASE AGREEMENTS--0.3% J.P. Morgan Securities Inc. (Agreement dated 08/31/99 to be repurchased at $9,401,449 collateralized by $10,760,754 par Government National Mortgage Association at rates of 6.00% and 6.50% due 08/15/29 and 09/20/28. Market Value of collateral is $9,682,001.) 5.550% 09/01/99 ........................... $ 9,400 $ 9,400,000 -------------- TOTAL REPURCHASE AGREEMENTS (Cost $9,400,000) ..................... 9,400,000 -------------- TOTAL INVESTMENTS AT VALUE--99.7% (Cost $2,731,628,284*) .................... 2,731,628,284 -------------- OTHER ASSETS IN EXCESS OF LIABILITIES--0.3% ...................... 7,492,047 -------------- NET ASSETS (Applicable to 360,146,407 Bedford shares, 130,925 Cash Preservation shares, 1,088,418,203 Janney Montgomery Scott shares, 841,894,150 Sansom Street shares, 230,052,052 Select Shares, 218,533,823 Principal Shares, and 800 other shares)--100% ....................... $2,739,120,331 ============== NET ASSET VALUE, Offering and redemption price per share ($2,739,120,331 (DIVIDE) 2,739,176,360) $1.00 ===== * Also cost for Federal income tax purposes. (DAGGER) Variable Rate Obligations -- The rate shown is the rate as of August 31, 1999 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. INVESTMENT ABBREVIATIONS VRDN ..................................................Variable Rate Demand Note IDR ..............................................Industrial Development Revenue TARN ...............................................Taxable Adjustable Rate Note See Accompanying Notes to Financial Statements. 3 THE PRINCIPAL FAMILY THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 1999 (A)
Investment Income Interest ........................... $136,764,907 ------------ Expenses Distribution fees ............... 10,596,485 Investment advisory fees ........ 9,552,406 Transfer agent fees ............. 2,501,558 Service organization fees ....... 572,331 Printing fees ................... 545,693 Custodian fees .................. 417,907 Legal fees ...................... 240,567 Registration fees ............... 225,000 Audit fees ...................... 142,476 Directors' fees ................. 71,775 Insurance expense ............... 33,113 SEC fees ........................ 2,611 Miscellaneous ................... 326 ------------ 24,902,248 Less fees waived and reimbursed . (3,795,799) ------------ Total expenses ............. 21,106,449 ------------ Net investment income .............. 115,658,458 ------------ Realized gain (loss) on investments 72,320 ------------ Net increase in net assets resulting from operations $115,730,778 ============ (a) On June 1, 1999, the Principal Class of shares of the Money Market Fund began operations
See Accompanying Notes to Financial Statements. 7 THE PRINCIPAL FAMILY THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS(A)
FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 1999 AUGUST 31, 1998 --------------- --------------- Increase (decrease) in net assets: Operations: Net investment income ......... $ 115,658,458 $ 127,866,778 Net gain (loss) on investments ................. 72,320 (95,478) -------------- -------------- Net increase in net assets resulting from operations ............. 115,730,778 127,771,300 -------------- -------------- Distributions to shareholders: Dividends to shareholders from net investment income: Bedford shares .............. (28,089,918) (56,898,248) Cash Preservation shares .... (7,069) (10,274) Janney Montgomery Scott shares .................... (43,156,041) (38,111,646) Principal shares ............ (2,455,484) -- Sansom Street shares ........ (36,008,586) (32,846,610) Select shares ............... (5,941,360) -- -------------- -------------- (115,658,458) (127,866,778) Distribution in excess of net investment income: Bedford shares .............. (2,671) (7,165) Cash Preservation shares .... (1) (1) Janney Montgomery Scott shares .................... (2,921) (3,979) Sansom Street shares ........ (2,010) (2,838) Select shares ............... (102) -- -------------- -------------- (7,705) (13,983) Total dividends to shareholders ............ (115,666,163) (127,880,761) -------------- -------------- Net capital share transactions .. 423,497,416 (384,357,868) -------------- -------------- Total increase/(decrease) in net assets .................... 423,562,031 (384,467,329) Net Assets: Beginning of year ............. 2,315,558,300 2,700,025,629 -------------- -------------- End of year ................... $2,739,120,331 $2,315,558,300 ============== ============== (a) On June 1, 1999, the Principal Class of shares of the Money Market Fund began operations
See Accompanying Notes to Financial Statements. 8 THE PRINCIPAL FAMILY THE RBB FUND, INC. FINANCIAL HIGHLIGHTS (B) (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD) MONEY MARKET PORTFOLIO ---------------------- FOR THE PERIOD JUNE 1, 1999 TO AUGUST 31, 1999 (C) ------------------- Net asset value, beginning of period ................... $ 1.00 Income from investment operations: Net investment income ............................... 0.0110 -------- Total from investment operations .................. 0.0110 -------- Less distributions Dividends (from net investment income) .............. (0.0110) -------- Total distributions ............................... (0.0110) -------- Net asset value, end of period ......................... $ 1.00 ======== Total Return ........................................... 1.10%(e) Ratios/Supplemental Data Net assets, end of period ........................... $218,530 Ratios of expenses to average net assets ............ .77%(a)(d) Ratios of net investment income to average net assets ................................ 4.36%(d) (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 .85% for the period ended August 31, 1999. (b) Financial highlights relate solely to the Principal Family of shares within the portfolio. (c) On June 1, 1999 the Money Market Portfolio's Principal Class began operations. (d) Annualized. (e) Non-Annualized. See Accompanying Notes to Financial Statements. 9 THE PRINCIPAL FAMILY THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1999 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 20.03 billion shares are currently classified into ninety-seven classes. Each class represents an interest in one of sixteen investment portfolios of the Fund. The classes have been grouped into sixteen separate "families", nine of which have begun investment operations: the Principal Family, the Select Family, the Sansom Street Family, the Bedford Family, the Cash Preservation Family, the Janney Montgomery Scott Family, the n/i numeric investors Family, the Boston Partners Family and the Schneider Family. The Principal 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 principals. D) FEDERAL INCOME TAXES -- No provision is made for Federal taxes as it is the Fund's intention to have each portfolio to 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. 10 THE PRINCIPAL FAMILY THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 1999 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Pursuant to Investment Advisory Agreement, BlackRock Institutional Management Corporation ("BIMC"), an indirect majority-owned subsidiary of PNC Bank, serves as investment adviser to the portfolio described herein, and also serves as administrator to the Money Market Portfolio. For the Money Market Portfolio, BIMC and PFPC have entered into a delegation agreement, whereas PFPC has agreed to perform Administration and Accounting services for an annual fee of .10% of the average net assets of the portfolios. FOR ITS ADVISORY SERVICES, BIMC IS ENTITLED TO RECEIVE THE FOLLOWING FEE, COMPUTED DAILY AND PAYABLE MONTHLY 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 a respective portfolio, the net advisory fee charged to each class is the same on a relative basis. For the year ended August 31, 1999, advisory fees and waivers were as follows: GROSS NET ADVISORY ADVISORY FEE WAIVER FEE -------------- ------------- ------------- Money Market Portfolio $9,552,406 $(2,971,645) $6,580,761 The investment advisor has agreed to reimburse each portfolio for the amount, if any, by which the total operating and management expenses exceed the expense cap. For the year ended August 31, 1999 the reimbursed expenses were $819,409 for the Money Market Portfolio. 11 THE PRINCIPAL FAMILY THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 1999 NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) In addition, PFPC Trust Co. serves as custodian for each of the Fund's portfolios. PFPC Inc ("PFPC") serves as each class's disbursing agent. Both PFPC Trust Company and PFPC are wholly-owned subsidiaries of PFPC Worldwide Inc., an indirect majority owned subsidiary of PNC Bank Corp. 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, 1999, transfer agency fees and waivers for each class of shares were as follows:
GROSS NET Transfer Agency Transfer Agency FEE WAIVER FEE ------------------ ---------- ----------------- Money Market Portfolio Bedford Class $ 366,050 $ -- $ 366,050 Cash Preservation Class 5,156 (4,745) 411 Janney Montgomery Scott Class 1,679,402 -- 1,679,402 Principal Class 1,950 -- 1,950 Sansom Street Class 444,751 -- 444,751 Select 4,249 -- 4,249 ---------- ------- ---------- Total Money Market Portfolio $2,501,558 $(4,745) $2,496,813 ========== ======= ==========
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 Distribution Contracts with Provident 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, Principal, and Janney Montgomery Scott Classes and up to .20% on an annualized basis for the Sansom Street Class. For the year ended August 31, 1999, distribution fees for each class were as follows: DISTRIBUTION FEE -------------- Money Market Portfolio Bedford Class $ 3,832,958 Cash Preservation Class 657 Janney Montgomery Scott Class 6,150,849 Principal Class 225,438 Sansom Street Class 386,583 ----------- TOTAL MONEY MARKET PORTFOLIO $10,596,485 =========== 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, 1999 service organization fees were $572,331 for the Money Market Portfolio. 12 THE PRINCIPAL FAMILY THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 1999 NOTE 3. CAPITAL SHARES Transactions in capital shares (at $1 per capital share) for the year were as follows:
MONEY MARKET PORTFOLIO --------------------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 1999 AUGUST 31, 1998 -------------- ------------- VALUE VALUE -------------- ------------- SHARES SOLD: Bedford Class $ 1,676,808,408 $ 4,081,920,081 Cash Preservation Class 114,454 113,319 Janney Montgomery Scott Class 4,931,373,936 3,910,533,620 Principal Class 318,334,115 -- Sansom Street Class 2,907,994,377 2,296,071,622 Select Class 1,439,090,920 -- --------------- --------------- Total Shares Sold 11,273,716,210 10,288,638,642 Shares issued in reinvestment of dividends: Bedford Class 28,217,868 56,201,453 Cash Preservation Class 7,224 10,291 Janney Montgomery Scott Class 43,272,113 37,882,680 Principal Class 2,206,341 -- Sansom Street Class 26,800,967 24,189,907 Select Class 347,980 -- --------------- -------------- Total Shares Reinvested 100,852,493 118,284,331 SHARES REPURCHASED: Bedford Class (2,107,674,545) (4,768,237,063) Cash Preservation Class (217,053) (139,525) Janney Montgomery Scott Class (4,790,786,046) (3,780,710,398) Principal Class (102,006,633) -- Sansom Street Class (2,741,000,161) (2,242,193,855) Select Class (1,209,386,849) -- --------------- -------------- Total Shares Repurchased (10,951,071,287) (10,791,280,841) --------------- -------------- Net increase (decrease) $ 423,497,416 $ (384,357,868) =============== ============== Principal Shares authorized 700,000,000 700,000,000 =============== ==============
13 THE PRINCIPAL FAMILY THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 1999 NOTE 4. NET ASSETS At August 31, 1999, net assets consisted of the following: Capital paid-in $2,739,176,360 Accumulated net realized gain (loss) on investments (56,029) -------------- $2,739,120,331 ============== 14 THE PRINCIPAL FAMILY THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 1999 NOTE 5. OTHER FINANCIAL HIGHLIGHTS The Fund currently offers five other classes of shares representing interest in the Money Market Portfolio: Bedford, Janney Montgomery Scott, Cash Preservation, Sansom Street, and Select. Each class is marketed to different types of investors. Financial Highlights of the Cash Preservation class is not presented in this report due to its immateriality. Such information is available in the annual report of its respective family. The financial highlights of certain of the other classes are as follows: THE BEDFORD FAMILY (B)
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, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 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 0.0425 0.0473 0.0462 0.0469 0.0486 -------- -------- ---------- ---------- -------- Total from investment operations 0.0425 0.0473 0.0462 0.0469 0.0486 -------- -------- ---------- ---------- -------- Less distributions Dividends (from net investment income) (0.0425) (0.0473) (0.0462) (0.0469) (0.0486) -------- -------- ---------- ---------- -------- Total distributions (0.0425) (0.0473) (0.0462) (0.0469) (0.0486) -------- -------- ---------- ---------- -------- Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== -------- ---------- ---------- -------- Total Return 4.34% 4.84% 4.72% 4.79% 4.97% Ratios/Supplemental Data Net assets, end of year (000) $360,123 $762,739 $1,392,911 $1,109,334 $935,821 Ratios of expenses to average net assets .97%(a) .97%(a) .97%(a) .97%(a) .96%(a) Ratios of net investment income to average net assets 4.25% 4.73% 4.62% 4.69% 4.86%
(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 1.08%, 1.10%, 1.12%, 1.14%, and 1.17%, for the years ended August 31, 1999, 1998, 1997, 1996, and 1995, respectively. (b) Financial Highlights relate solely to the Bedford Class of shares within each portfolio. 15 THE PRINCIPAL FAMILY THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 1999 NOTE 5. OTHER FINANCIAL HIGHLIGHTS (CONTINUED) THE JANNEY MONTGOMERY SCOTT MONEY FUNDS (C)
MONEY MARKET PORTFOLIO ----------------------------------------------------------------- FOR THE PERIOD FOR THE FOR THE FOR THE FOR THE JUNE 12, 1995 YEAR YEAR YEAR YEAR (COMMENCEMENT ENDED ENDED ENDED ENDED OF OPERATIONS)TO AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, 1999 1998 1997 1996 1995 ---------- -------- ---------- ---------- ---------------- Net asset value, beginning of year or period ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ---------- -------- -------- -------- ---------- Income from investment operations: Net investment income ......... 0.0422 0.0469 0.0459 0.0465 0.0112 ---------- -------- -------- -------- ---------- Total from investment operations .............. 0.0422 0.0469 0.0459 0.0465 0.0112 ---------- -------- -------- -------- ---------- Less distributions Dividends (from net investment income) .......... (0.0422) (0.0469) (0.0459) (0.0465) (0.0112) ---------- -------- -------- -------- ---------- Total distributions ....... (0.0422) (0.0469) (0.0459) (0.0465) (0.0112) ---------- -------- -------- -------- ---------- Net asset value, end of year or period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ========== ======== ======== ======== ========== Total Return .................... 4.30% 4.81% 4.69% 4.76% 5.30%(b) Ratios /Supplemental Data Net assets, end of year or period (000) ................ $1,088,405 $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) 1.00%(a)(b) Ratios of net investment income to average net assets .................. 4.22% 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 1.19%, 1.21%, 1.22%, 1.23% and 1.23% for the years or period ended August 31, 1999, 1998, 1997, 1996 and 1995, respectively. (b) Annualized. (c) Financial Highlights relate solely to the Janney Montgomery Scott Class of shares within each portfolio. 16 THE PRINCIPAL FAMILY THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 1999 NOTE 5. OTHER FINANCIAL HIGHLIGHTS (CONTINUED) THE SANSOM STREET FAMILY (B)
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, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 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 0.0473 0.0520 0.0510 0.0518 0.0543 -------- -------- -------- -------- -------- Total from investment operations 0.0473 0.0520 0.0510 0.0518 0.0543 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) (0.0473) (0.0520) (0.0510) (0.0518) (0.0543) -------- -------- -------- -------- -------- Total distributions (0.0473) (0.0520) (0.0510) (0.0518) (0.0543) -------- -------- -------- -------- -------- Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return 4.83% 5.34% 5.22% 5.30% 5.57% Ratios/Supplemental Data Net assets, end of year $841,887 $684,066 $570,018 $524,359 $441,614 Ratios of expenses to average net assets .49%(a) .49%(a) .49%(a) .48%(a) .39%(a) Ratios of net investment income to average net assets 4.73% 5.20% 5.10% 5.18% 5.43%
(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%, .62%, .64%, .65%, and .59% for the years ended August 31, 1999, 1998, 1997, 1996 and 1995 respectively. (b) Financial highlights relate solely to the Sansom Street Class of shares within the portfolio. 17 THE PRINCIPAL FAMILY THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 1999 NOTE 5. OTHER FINANCIAL HIGHLIGHTS (CONTINUED) THE SELECT FAMILY (B) MONEY MARKET PORTFOLIO ---------------------- FOR THE PERIOD DECEMBER 15, 1998 TO AUGUST 31, 1999 (C) --------------------- Net asset value, beginning of period ................ $ 1.00 -------- Income from investment operations: Net investment income ............................ 0.0345 -------- Total from investment operations ............... 0.0345 -------- Less distributions Dividends (from net investment income) ........... (0.0345) -------- Total distributions ............................ (0.0345) -------- Net asset value, end of period ...................... $ 1.00 ======== Total Return ........................................ 3.50%(e) Ratios/Supplemental Data Net assets, end of period ........................ $230,044 Ratios of expenses to average net assets ......... .27%(a)(d) Ratios of net investment income to average net assets ............................. 4.82%(d) (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 .41% for the period ended August 31, 1999. (b) Financial highlights relate solely to the Select Class of shares within the portfolio. (c) On December 15, 1998 the Money Market Portfolio's Select Class began operations. (d) Annualized. (e) Non-Annualized. 18 -----END PRIVACY-ENHANCED MESSAGE-----