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BEAR STEARNS
[LOGO OMITTED]
MONEY MARKET PORTFOLIO
Annual Report
August 31, 1996
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<PAGE>
THE BEDFORD 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 800-447-1139 for questions regarding
your account or contact your broker.)
<PAGE>
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
<PAGE>
THE BEDFORD 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
<PAGE>
THE BEDFORD 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
<PAGE>
THE BEDFORD 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
<PAGE>
THE BEDFORD 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
<PAGE>
THE BEDFORD 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
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, 1996 AUGUST 31, 1995
---------------- ---------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ................................................... $ 100,027,983 $ 64,913,329
Net gain (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
============== ==============
</TABLE>
8
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS (b)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
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, 1996 AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1993 AUGUST 31, 1992
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
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%
<FN>
(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 1.14%, 1.17%, 1.16%, 1.19%
and 1.20% for the years ended August 31, 1996, 1995, 1994, 1993 and 1992,
respectively.
(b) Financial Highlights relate solely to the Bedford Class of shares within
each portfolio.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
9
<PAGE>
THE BEDFORD 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 Money Family, the n/i Family, and the Bradford Family. The
Bedford Family represents interests in the four 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 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 assumptions 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
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1996
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to the 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:
<TABLE>
<CAPTION>
GROSS NET
TRANSFER AGENCY TRANSFER AGENCY
FEE WAIVER FEE
--------------- -------- ---------------
<S> <C> <C> <C>
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
========== ======== ==========
</TABLE>
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
<PAGE>
THE BEDFORD 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:
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, 1996 AUGUST 31, 1995
--------------- ---------------
VALUE VALUE
--------------- ---------------
<S> <C> <C>
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
=============== ===============
Bedford Shares authorized 1,500,000,000 1,500,000,000
=============== ===============
</TABLE>
12
<PAGE>
THE BEDFORD 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:
MONEY MARKET
PORTFOLIO
---------------
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 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
<PAGE>
THE BEDFORD 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: Cash Preservation, Janney Montgomery
Scott, RBB, and Sansom Street. 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 other classes are as follows:
THE JANNEY MONTGOMERY SCOTT MONEY FUNDS
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
----------------------------------
FOR THE PERIOD
FOR THE JUNE 12, 1995
YEAR (COMMENCEMENT OF
ENDED OPERATIONS) TO
AUGUST 31, 1996 AUGUST 31, 1995
--------------- ----------------
<S> <C> <C>
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)
<FN>
(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.
</FN>
</TABLE>
14
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
AUGUST 31, 1996
NOTE 6. OTHER FINANCIAL HIGHLIGHTS (CONTINUED)
THE SANSOM STREET FAMILY
<TABLE>
<CAPTION>
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, 1996 AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1993 AUGUST 31, 1992
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
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%
<FN>
(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.
</FN>
</TABLE>
15
