================================================================================
BEAR
STEARNS
MONEY MARKET PORTFOLIO
Annual Report
August 31, 1997
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
ANNUAL INVESTMENT ADVISER'S REPORT
For much of the past year, economic activity grew progressively stronger
and only the good behavior of inflation kept money market yields from an
appreciable rise. In last year's final two quarters and through 1997's first
quarter, the nation's gross domestic product rose from a rate of 2.1% to 4.9%,
led by healthy gains in employment and wages. This strong momentum put pressure
on the Federal Reserve to raise short-term interest rates, particularly early
this year. The Fed's only move, however, was in March when it increased the
federal funds rated from 5.25% to 5.50%. The Fed likened its move to buying
insurance against the possible need for larger moves at a later date. The
reaction to the tighter monetary policy was quite severe, with both the stock
and bond markets experiencing sharp declines in April.
In the months following the Fed's move, economic activity began to show
signs of slowing and the money market yield curve, which reached its steepest
slope in March, began to flatten. One-year yields, for example, which peaked at
6.30% fell below 6.00% over the next few months, while the one- to three-month
sector held steady in a 5.50-5.65% range. One interesting anomaly was the U.S.
Treasury market where yields on three-, six-, and twelve-month bills traded well
below other money market rates. With the huge amount of cash in the market, the
three-month Treasury bill yielded as low as 4.90% in the second quarter, while
overnight rates remained at 5.50%. By the end of August, the three-month
Treasury bill had recovered somewhat, but was still 30 basis points below the
federal funds rate. This dichotomy in market yields generally kept the duration
of the government portfolio shorter than the prime portfolio, as it carried more
overnight investments for both yield and liquidity. In contrast, the prime
portfolio was more attracted to the 3-month and 1-year sectors to pick up
incremental yield during those occasions when the curve steepened.
Early in the year, a lack of supply and a renewed belief in a Federal
Reserve tightening kept municipal yields at historically expensive levels.
Variable rate demand securities maintained strong interest from investors in
anticipation of higher short-term interest rates and in preparation for April's
income tax payments. Total tax-exempt money fund assets reached new all-time
highs in each of the first four months of the year. Tax-free variable rate
yields rose in volatile trading during the second quarter and returns offered
taxable equivalent yields that were 50 basis points above taxable securities.
Substantial cash inflows in mid-summer from coupon payments and crossover buyers
caused daily reset demand notes to drop approximately 170 basis points, while
weekly reset demand notes fell 70 basis points. By the end of August, total
tax-free money market fund assets, as measured by "IBC's MONEY FUND REPORT,"
climbed to an all-time high of over $154 billion. Interest rate volatility and a
flat yield curve allowed RBB Municipal and RBB New York Municipal Money Funds to
maintain shorter average weighted maturities than their "IBC MONEY FUND REPORT"
peer groups. For the year ended August, assets in RBB Municipal rose from $421
million to $488 million, while RBB New York increased from $88 million to $110
million.
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 statements of net assets of the Money Market
Portfolio of the RBB Fund, Inc., as of August 31, 1997 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 owned as of
August 31, 1997, by correspondence with the custodian. 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, 1997 and the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and their 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 17, 1997
2
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1997
PAR
(000) VALUE
-------- ------------
AGENCY OBLIGATIONS--10.0%
Student Loan Marketing
Association(DAGGER)
5.450% 09/02/97 ......................... $ 10,000 $ 10,000,000
5.460% 09/02/97 ......................... 10,000 10,000,000
Student Loan Marketing Assocation
Discount Notes
5.500% 09/02/97 ......................... 250,000 249,961,806
------------
TOTAL AGENCY OBLIGATIONS
(Cost $269,961,806) ................. 269,961,806
------------
CERTIFICATES OF DEPOSIT--32.8%
BANK NOTES--4.6%
First National Bank of Boston
5.625% 10/08/97 ......................... 50,000 50,000,000
5.600% 11/19/97 ......................... 75,000 75,000,000
------------
125,000,000
------------
DOMESTIC CERTIFICATES OF DEPOSIT--5.6%
Bankers Trust Co.
5.980% 06/19/98 ......................... 50,000 49,992,390
5.820% 07/31/98 ......................... 25,000 24,993,453
5.880% 08/11/98 ......................... 25,000 24,993,238
Mellon Bank N.A.
6.030% 09/23/97 ......................... 25,000 25,001,846
Wilmington Trust Co.
5.920% 11/06/97 ......................... 25,000 25,000,000
------------
149,980,927
------------
YANKEE DOLLAR CERTIFICATES OF DEPOSIT--22.6%
Banque Nationale de Paris
5.860% 08/10/98 ......................... 25,000 24,986,523
Caisse Nationale de Credit Agricole
5.640% 10/07/97 ......................... 50,000 50,001,479
Credit Suisse
6.240% 04/08/98 ......................... 40,000 40,040,657
Deutsche Bank
6.000% 03/25/98 ......................... 50,000 50,050,753
6.200% 04/08/98 ......................... 25,000 25,015,286
Industrial Bank of Japan
5.730% 10/10/97 ......................... 50,000 50,000,000
5.680% 10/24/97 ......................... 25,000 25,000,637
Rabobank Nederland
5.710% 02/17/98 ......................... 50,000 50,002,280
PAR
(000) VALUE
-------- ------------
YANKEE DOLLAR CERTIFICATES OF DEPOSIT--(CONTINUED)
Royal Bank of Canada
5.670% 09/02/97(DAGGER) ............. $ 25,000 $ 24,994,403
6.200% 04/06/98 ..................... 19,000 19,014,263
5.940% 06/25/98 ..................... 25,000 24,988,323
Sanwa Bank
5.780% 09/17/97 ..................... 50,000 50,000,637
Societe Generale
5.600% 09/19/97 ..................... 50,000 50,000,000
5.630% 12/31/97 ..................... 25,000 24,999,544
5.770% 01/09/98 ..................... 25,000 24,996,590
Sumitomo Bank
5.640% 10/20/97 ..................... 50,000 50,000,000
Swedbank
5.630% 11/20/97 ..................... 25,000 25,000,548
------------
609,091,923
------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $884,072,850) ............. 884,072,850
------------
COMMERCIAL PAPER--40.5%
ASSET BACKED SECURITIES--4.1%
Beta Finance Inc.
5.620% 09/26/97 ..................... 15,000 14,941,458
Countrywide Funding Corp.
5.590% 09/15/97 ..................... 60,000 59,869,567
5.570% 09/30/97 ..................... 35,000 34,842,957
------------
109,653,982
------------
BANKS--7.3%
AB Spintab Swedmortgage
5.520% 11/06/97 ..................... 50,000 49,494,000
AMRO N.A. Finance Inc.
5.560% 05/01/98 ..................... 50,000 48,131,222
Unifunding Inc.
5.540% 10/07/97 ..................... 50,000 49,723,000
5.520% 10/30/97 ..................... 50,000 49,547,667
------------
196,895,889
------------
FINANCE SERVICES--4.2%
SMM Trust 1997-L(DAGGER)
5.633% 09/29/97 ..................... 13,200 13,200,000
SMM Trust 1997-W(DAGGER)
5.645% 09/16/97 ..................... 100,000 100,000,000
------------
113,200,000
------------
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, 1997
PAR
(000) VALUE
-------- ------------
MOTOR VEHICLES & CAR BODIES--3.7%
BMW US Capital Corp.
5.550% 10/08/97 ........................... $ 50,000 $ 49,714,792
Daimler-Benz North America Corp.
5.600% 09/25/97 ........................... 50,000 49,813,333
--------------
99,528,125
--------------
PERSONAL CREDIT INSTITUTIONS--1.8%
General Motors Acceptance Corp.
5.750% 11/17/97 ........................... 50,000 49,385,069
--------------
PETROLEUM REFINING--0.9%
Repsol International Finance B.V.
5.510% 01/26/98 ........................... 25,000 24,437,521
--------------
SECURITY BROKERS & DEALERS--11.2%
Bear Stearns Companies, Inc.(DAGGER)
5.609% 09/08/97 ........................... 25,000 25,000,000
5.659% 09/22/97 ........................... 50,000 50,000,000
5.605% 09/26/97 ........................... 30,000 30,000,000
Lehman Brothers Holdings, Inc.(DAGGER)
5.913% 09/06/97 ........................... 50,000 50,000,000
Merrill Lynch & Co.
5.570% 12/12/97 ........................... 40,000 39,368,733
5.530% 02/24/98 ........................... 40,000 38,918,578
Nomura Holding America Inc.
5.740% 09/08/97 ........................... 25,000 24,972,097
5.640% 11/12/97 ........................... 20,000 19,774,400
5.630% 11/26/97 ........................... 25,000 24,663,764
--------------
302,697,572
--------------
SERVICES - AUTO RENT & LEASE--3.6% PHH Corp.
5.640% 09/02/97 ........................... 73,000 72,988,563
5.540% 10/09/97 ........................... 25,000 24,853,806
--------------
97,842,369
--------------
SHORT-TERM BUSINESS CREDIT INSTITUTIONS--3.7%
Heller Financial Inc.
5.625% 09/05/97 ........................... 100,000 99,937,500
--------------
TOTAL COMMERCIAL PAPER
(Cost $1,093,578,027) ................. 1,093,578,027
--------------
PAR
(000) VALUE
-------- ------------
CORPORATE OBLIGATIONS--2.0%
FINANCE LESSORS--0.7%
IBM Credit Corp.
5.700% 10/27/97 ....................... $ 20,000 $19,999,145
-----------
PERSONAL CREDIT INSTITUTIONS--0.6%
General Motors Acceptance Corp.
5.625% 10/30/97 ....................... 15,000 14,998,566
-----------
SECURITY BROKERS & DEALERS--0.7%
Bear Stearns Companies, Inc.
5.860% 01/20/98 ....................... 20,000 20,000,000
-----------
TOTAL CORPORATE OBLIGATIONS
(Cost $54,997,711) ................ 54,997,711
-----------
MUNICIPAL BONDS--3.1%
FLORIDA--0.1%
Coral Springs, IDR(DOUBLE DAGGER)
5.600% 09/03/97 ....................... 2,700 2,700,000
-----------
GEORGIA--0.4%
De Kalb County Development Authority
Series 1995 B (Emory University
Project)(DOUBLE DAGGER)
5.600% 08/31/97 ....................... 9,840 9,840,000
-----------
ILLINOIS--0.2%
Illinois Health Facilities Authority
Convertible/ VRDN Revenue Bond
(The Streeterville Corp. Project)
Series 1993-B(DOUBLE DAGGER)
5.700% 09/03/97 ....................... 4,400 4,400,000
-----------
INDIANA--0.2%
Bremen, Inc. TARN Series 1996-B
5.610% 09/04/97 ....................... 5,200 5,200,000
-----------
KENTUCKY--0.2%
Boone County Taxable IDR Refunding
Bonds (Square D Company Project)
Series 1994-B VRDN(DAGGER)
5.700% 09/03/97 ....................... 4,200 4,200,000
-----------
See Accompanying Notes to Financial Statements.
4
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONCLUDED)
AUGUST 31, 1997
PAR
(000) VALUE
-------- -----------
MISSISSIPPI--1.1%
Hinds County, IDR Revenue Bond
VRDN Series 1987(DAGGER)
5.600% 09/03/97 ....................... $ 1,200 $ 1,200,000
Hinds County, IDR Revenue Bond
VRDN Series 1992(DAGGER)
5.600% 09/03/97 ....................... 1,860 1,860,000
Mississippi Business Finance Corp.
IDR Revenue Bond (Dana Lighting
Project) Series 1995(DAGGER)
5.600% 09/07/97 ....................... 6,400 6,400,000
Mississippi Business Finance Corp.
Taxable IDR Revenue Bond
(Bryan Foods, Inc. Project)
Series 1994(DAGGER)
5.700% 09/03/97 ....................... 14,000 14,000,000
Mississippi Business Finance Corp.
Taxable IDR Revenue Bond
Series 1995(DAGGER)
5.600% 09/07/97 ....................... 7,000 7,000,000
-----------
30,460,000
-----------
NORTH CAROLINA--0.4%
City of Asheville Tax Corp.(DAGGER)
5.650% 09/03/97 ....................... 11,700 11,700,000
-----------
TEXAS--0.5%
South Central Texas Industrial
Development Corp. Taxable IDR
Revenue Bond (Rohr Industries
Project Series 1990 VRDN(DAGGER)
5.700% 09/03/97 ....................... 14,800 14,800,000
-----------
TOTAL MUNICIPAL BONDS
(Cost $83,300,000) ................ 83,300,000
-----------
PAR
(000) VALUE
-------- --------------
TIME DEPOSITS--11.3%
First Union National Bank of North
Carolina
5.438% 09/02/97 ................... $ 45,100 $ 45,100,000
5.500% 09/02/97 ................... 50,000 50,000,000
General American Life
5.870% 09/30/97 ................... 50,000 50,000,000
Union Bank of Switzerland
5.625% 09/04/97 ................... 100,000 100,000,000
Wells Fargo Bank, N.A.
5.500% 09/02/97 ................... 60,000 60,000,000
--------------
TOTAL TIME DEPOSITS
(Cost $305,100,000) ........... 305,100,000
--------------
TOTAL INVESTMENTS AT VALUE--99.7%
(Cost $2,691,010,394*) ............ 2,691,010,394
OTHER ASSETS IN EXCESS OF
LIABILITIES--0.3% ................. 9,015,235
--------------
NET ASSETS (Applicable to
1,392,910,207 Bedford shares,
242,215 Cash Preservation shares,
736,852,298 Janney Montgomery
Scott shares, 570,031,293
Sansom Street shares
and 800 other shares)--100.0% ..... $2,700,025,629
==============
NET ASSET VALUE, Offering and
Redemption Price Per Share
($2,700,025,629 (DIVIDE)
2,700,036,813) .................... $1.00
=====
* Also cost for Federal income tax purposes.
(DAGGER) Variable Rate Obligations -- The interest rate shown is the rate as of
August 31, 1997 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 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.
5
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1997
Investment Income
Interest ................................................... $137,348,046
------------
Expenses
Investment advisory fees ................................... 8,969,561
Distribution fees .......................................... 10,841,715
Service organization fees .................................. 535,524
Directors' fees ............................................ 49,983
Custodian fees ............................................. 396,951
Transfer agent fees ........................................ 3,318,408
Legal fees ................................................. 104,755
Audit fees ................................................. 59,877
Registration fees .......................................... 532,500
Insurance fees ............................................. 48,679
Printing fees .............................................. 489,378
------------
25,347,331
Less fees waived ........................................... (3,616,431)
Less expense reimbursement by advisor ...................... (469,986)
------------
Total expenses ........................................ 21,260,914
------------
Net investment income ...................................... 116,087,132
Realized gain on investments ............................... 22,330
------------
Net increase in net assets resulting from operations ....... $116,109,462
============
See Accompanying Notes to Financial Statements.
6
<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, 1997 AUGUST 31, 1996
--------------- ---------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income .......................................................... $ 116,087,132 $ 100,027,983
Net gain (loss) on investments ................................................. 22,330 (12,987)
-------------- --------------
Net increase in net assets resulting from operations ........................... 116,109,462 100,014,996
-------------- --------------
Distributions to shareholders:
Dividends to shareholders from net investment income:
Bedford shares ............................................................... (56,929,832) (49,874,649)
Bradford shares .............................................................. -- --
Cash Preservation shares ..................................................... (10,852) (10,092)
Janney Montgomery Scott shares ............................................... (29,943,530) (24,434,566)
RBB shares ................................................................... (1,286) (2,630)
Sansom Street shares ......................................................... (29,201,632) (25,706,046)
-------------- --------------
Total dividends to shareholders ............................................ (116,087,132) (100,027,983)
-------------- --------------
Net capital share transactions ................................................... 504,179,861 374,464,737
-------------- --------------
Total increase in net assets ..................................................... 504,202,191 374,451,750
Net Assets:
Beginning of year .............................................................. 2,195,823,438 1,821,371,688
-------------- --------------
End of year .................................................................... $2,700,025,629 $2,195,823,438
============== ==============
</TABLE>
See Accompanying Notes to Financial Statements.
7
<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, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<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 ................ 0.0462 0.0469 0.0486 0.0278 0.0243
---------- ---------- -------- -------- --------
Total from investment
operations ..................... 0.0462 0.0469 0.0486 0.0278 0.0243
---------- ---------- -------- -------- --------
Less distributions
Dividends (from net investment
income) ............................ (0.0462) (0.0469) (0.0486) (0.0278) (0.0243)
---------- ---------- -------- -------- --------
Total distributions .............. (0.0462) (0.0469) (0.0486) (0.0278) (0.0243)
---------- ---------- -------- -------- --------
Net asset value, end of year ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ======== ======== ========
Total Return ........................... 4.72% 4.79% 4.97% 2.81% 2.46%
Ratios /Supplemental Data
Net assets, end of year (000) ........ $1,392,911 $1,109,334 $935,821 $710,737 $782,153
Ratios of expenses to average
net assets ......................... .97%(a) .97%(a) .96%(a) .95%(a) .95%(a)
Ratios of net investment income to
average net assets ................. 4.62% 4.69% 4.86% 2.78% 2.43%
<FN>
(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 1.12%,
1.14%, 1.17%, 1.16% and 1.19% for the years ended August 31, 1997, 1996,
1995, 1994 and 1993, respectively.
(b) Financial Highlights relate solely to the Bedford Class of shares within
each portfolio.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
8
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1997
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 13.67 billion shares are currently classified into seventy-nine classes.
Each class represents an interest in one of twenty investment portfolios of the
Fund. The classes have been grouped into sixteen 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 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 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.
9
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1997
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 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, 1997, advisory fees and waivers for the
investment portfolio were as follows:
GROSS NET
ADVISORY ADVISORY
FEE WAIVER FEE
---------- ------------ ----------
$8,969,561 $(3,603,130) $5,366,431
The investment advisor has agreed to reimburse the portfolio for the
amount, if any, by which the total operating and management expenses exceed the
cap. For the year ended August 31, 1997, the reimbursed expenses were $469,986.
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, 1997,
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 $1,790,000 $ -- $1,790,000
Cash Prevention Class 10,311 (9,650) 661
Janney Montgomery Scott Class 1,201,086 -- 1,201,086
RBB Class 3,750 (3,651) 10
Sansom Street Class 313,261 -- 313,261
---------- -------- ----------
TOTAL $3,318,408 $(13,301) $3,305,107
========== ======== ==========
</TABLE>
10
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1997
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
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.
For the year ended August 31, 1997, distribution fees for each class were
as follows:
DISTRIBUTION
FEE
--------------
Bedford Class $ 6,570,719
Cash Prevention Class 934
Janney Montgomery Scott Class 3,911,049
RBB Class 114
Sansom Street Class 358,899
-----------
Total: $10,841,715
===========
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, 1997, service
organization fees were $535,524 for the Money Market Portfolio.
Expenses include legal fees paid to counsel to the company, a partner of
which is secretary of the company.
Expenses include Administrative and 12B-1 fees paid to Counsellors, Inc.
whose secretary is also a director of the company.
11
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1997
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, 1997 AUGUST 31, 1996
--------------- ---------------
VALUE VALUE
--------------- ---------------
<S> <C> <C>
Shares sold:
Bedford Class $ 4,513,203,668 $ 3,797,592,288
Cash Preservation Class 175,000 122,344
Janney Montgomery Scott Class 3,087,651,502 2,359,936,867
RBB Class 4,744 584,206
Sansom Street Class 1,965,226,666 2,191,596,362
Shares issued in reinvestment of dividends:
Bedford Class 55,886,643 49,290,088
Cash Preservation Class 10,748 10,084
Janney Montgomery Scott Class 29,670,134 24,077,173
RBB Class 1,361 2,625
Sansom Street Class 20,645,930 18,389,361
Shares repurchased:
Bedford Class (4,285,531,838) (3,673,362,904)
Cash Preservation Class (145,893) (165,733)
Janney Montgomery Scott Class (2,942,342,585) (2,265,789,890)
RBB Class (67,517) (580,821)
Sansom Street Class (1,940,208,702) (2,127,237,313)
--------------- ---------------
Net increase $ 504,179,861 $ 374,464,737
=============== ===============
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, 1997
NOTE 4. NET ASSETS
At August 31, 1997, net assets consisted of the following:
MONEY MARKET
PORTFOLIO
--------------
Capital Paid-In
Bedford Class $1,392,910,207
Cash Preservation Class 242,215
Janney Montgomery Scott Class 736,852,298
Sansom Street Class 570,031,293
Other Classes 800
Accumulated Net Realized Loss on Investments
Bedford Class (5,881)
Cash Preservation Class (1)
Janney Montgomery Scott Class (1,727)
Sansom Street Class (3,575)
--------------
$2,700,025,629
==============
NOTE 5. CAPITAL LOSS CARRYOVERS
At August 31, 1997, capital loss carryovers were available to offset future
realized gains as follows: $11,184 in the Money Market Portfolio of which
$11,184 expires in 2004.
13
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1997
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 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 other
classes are as follows:
THE JANNEY MONTGOMERY SCOTT MONEY FUNDS
MONEY MARKET PORTFOLIO
----------------------------------------------------
FOR THE PERIOD
FOR THE FOR THE JUNE 12, 1995
YEAR YEAR (COMMENCEMENT
ENDED ENDED OF OPERATIONS) TO
AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- -----------------
Net asset value,
beginning of year ...... $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
Income from investment
operations:
Net investment income .. 0.0459 0.0465 0.0112
-------- -------- --------
Total from investment
operations .......... 0.0459 0.0465 0.0112
-------- -------- --------
Less distributions
Dividends (from net
investment income) .... (0.0459) (0.0465) (0.0112)
-------- -------- --------
Total distributions ... (0.0459) (0.0465) (0.0112)
-------- -------- --------
Net asset value,
end of year ............ $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total Return ............. 4.69% 4.76% 5.30%(b)
Ratios /Supplemental Data
Net assets, end of
year (000) ........... $736,855 $561,865 $443,645
Ratios of expenses to
average net assets ... 1.00%(a) 1.00%(a) 1.00%(a)(b)
Ratios of net investment
income to average
net assets ........... 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 1.22%, 1.23% and 1.23% for the years ended August 31, 1997, 1996 and
1995, respectively.
(b) Annualized.
14
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
AUGUST 31, 1997
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 ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1993
--------------- --------------- --------------- --------------- ---------------
<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 ....................... 0.0510 0.0518 0.0543 0.0334 0.0304
---------- ---------- ---------- ---------- ----------
Total from investment operations ......... 0.0510 0.0518 0.0543 0.0334 0.0304
---------- ---------- ---------- ---------- ----------
Less distributions
Dividends (from net investment income) ...... (0.0510) (0.0518) (0.0543) (0.0334) (0.0304)
---------- ---------- ---------- ---------- ----------
Total distributions ...................... (0.0510) (0.0518) (0.0543) (0.0334) (0.0304)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return .................................. 5.22% 5.30% 5.57% 3.39% 3.08%
Ratios /Supplemental Data
Net assets, end of year (000) ............... $570,018 $524,359 $441,614 $373,745 $190,794
Ratios of expenses to average net assets .... .49%(a) .48%(a) .39%(a) .39%(a) .34%(a)
Ratios of net investment income to
average net assets ......................... 5.10% 5.18% 5.43% 3.34% 3.04%
<FN>
(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 .64%,
.65%, .59%, .60% and .60% for the years ended August 31, 1997, 1996, 1995,
1994 and 1993, respectively.
</FN>
</TABLE>
