0000935069-01-500628.txt : 20011112
0000935069-01-500628.hdr.sgml : 20011112
ACCESSION NUMBER: 0000935069-01-500628
CONFORMED SUBMISSION TYPE: N-30D
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20010831
FILED AS OF DATE: 20011105
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: RBB FUND INC
CENTRAL INDEX KEY: 0000831114
STANDARD INDUSTRIAL CLASSIFICATION: []
FISCAL YEAR END: 0831
FILING VALUES:
FORM TYPE: N-30D
SEC ACT: 1940 Act
SEC FILE NUMBER: 811-05518
FILM NUMBER: 1775276
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
g01-1324.txt
RBB--ANNUAL REPORT FOR THE PRINCIPAL CLASS
ANNUAL
REPORT FOR
THE PRINCIPAL CLASS
MONEY MARKET PORTFOLIO
AUGUST 31, 2001
THE PRINCIPAL FAMILY
THE RBB FUND, INC.
PRIVACY NOTICE
The PRINCIPAL FAMILY of The RBB Fund, Inc. (the "Fund") is committed to
protecting the confidentiality and security of your private investment records
and personal information. Our policies and procedures are designed to safeguard
your information and to permit only appropriate and authorized access to and use
of this information.
In order to carry out the functions necessary to service your investment
account, our service providers collect certain nonpublic personal information
from you from the following sources:
o Information we receive from you over the telephone, on applications,
e-mails or other forms (e.g., your name, social security number and
address); and
o Information about your transactions with the Fund
We restrict access to your personal and account information to those service
providers and their employees who need to know that information to service your
account. The Fund may also share all of the information (as described above)
that we collect with companies that perform marketing services on our behalf or
with other financial institutions with whom we have joint marketing agreements
who may suggest additional Fund services or other investment products which may
be of interest to you. We maintain physical, electronic, and procedural
safeguards that comply with federal standards to guard your nonpublic personal
information.
You can be assured that the Fund considers your data to be private and
confidential, and we will not disclose any nonpublic personal information about
you to any unaffiliated third parties, except as permitted by law. If you decide
to close your account(s) or become an inactive customer, we will adhere to the
privacy policies and practices as described in this notice.
If you have any questions or comments about our privacy practices, please call
us at (800) 290-2358.
April 2001
THE PRINCIPAL FAMILY
THE RBB FUND, INC.
ANNUAL INVESTMENT ADVISER'S REPORT
The U.S. economy slowed dramatically during the twelve months ended August
2001, as the excess capacity of prior years was pared down. Inventories and
business spending on capital equipment fell sharply. The nation's gross domestic
product in the second quarter of 2001 was revised down to 0.3% versus a robust
5.6% in the same quarter a year earlier. The strength in the economy remained
the consumer, whose continued willingness to spend we believe kept the overall
economy from joining the manufacturing sector in the midst of a recession.
However, the jump in the unemployment rate to 4.9% in August was seen as a very
real threat to the continuation of consumer confidence and spending. Inflation
remained tame during the year, providing a positive background for the markets
and a boost to investor sentiment, as both consumer and producer prices trended
lower. The GDP price deflator, a measure of the rate of inflation, rose an
annualized 2.1% in the second quarter versus 3.3% in the first quarter.
The encouraging news on the inflation front was a key to Federal Reserve
monetary policy. On seven separate occasions through August, the Fed reduced the
federal funds rate from 6.5% to 3.5%, in an aggressive series of rate cuts aimed
at rekindling the economy. As money market yields declined, the RBB Money Market
Portfolio extended its average weighted maturities to the 60-day range. In
addition, yield spreads between various taxable money market securities narrowed
during the last six months and with only a few basis points between commercial
paper and government securities, the Money Market Portfolio frequently invested
in agency discount notes to increase credit quality while maintaining yields. On
August 31, 2001, assets in the RBB Money Market Portfolio were $1.18 billion.
The September 11th terrorist attacks on the U.S. were an unprecendented
shock to our nation and the financial markets. We are very fortunate to be able
to report that all our employees are safe, that our systems have remained fully
operational and that the custody and safekeeping of the Fund's assets have not
been affected.
BlackRock Institutional Management Corporation
(Please dial toll-free 800-430-9618 for questions regarding
your account or contact your broker.)
2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of The RBB Fund, Inc.:
In our opinion, the accompanying statement of net assets and the related
statement 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, 2001, 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 indicated, in
conformity with accounting principles generally accepted in the United States of
America. 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 auditing standards generally accepted in the United States of America,
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, 2001 by correspondence with the
custodian, provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
October 15, 2001
3
THE PRINCIPAL FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 2001
PAR
(000) VALUE
--------- --------------
CERTIFICATES OF DEPOSIT--14.7%
DOMESTIC CERTIFICATES OF DEPOSIT--6.4%
Household Bank FSB
3.550% 10/12/01 ............................. $25,000 $ 24,999,434
Washington Mutual Bank
3.720% 10/18/01 ............................. 50,000 49,998,706
--------------
74,998,140
--------------
YANKEE DOLLAR CERTIFICATES OF DEPOSIT--8.3%
Canadian Imperial Bank of Commerce
4.610% 09/28/01 ............................. 11,000 11,000,000
4.270% 04/23/02 ............................. 10,000 9,999,968
4.295% 04/23/02 ............................. 10,000 9,999,377
Royal Bank of Canada
4.028% 07/15/02 ............................. 13,000 12,999,726
3.805% 07/26/02 ............................. 6,000 5,998,426
Svenska Handelsbanken
5.000% 02/07/02 ............................. 30,000 30,060,467
4.040% 07/12/02 ............................. 12,000 12,001,003
Toronto-Dominion Bank (The)
4.045% 07/30/02 ............................. 5,000 4,995,347
--------------
97,054,314
--------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $172,052,454) ..................... 172,052,454
--------------
COMMERCIAL PAPER--48.0%
ABRASIVE ASBESTOS & MISC. NONMETALLIC MINERAL PRODUCTS--2.1%
Compagnie de Saint-Gobain SA
3.670% 10/12/01 ............................. 25,000 24,895,507
--------------
ASSET BACKED SECURITIES--21.4%
Amstel Funding Corp.
3.730% 10/03/01 ............................. 15,000 14,950,267
Barton Capital Corp.
3.580% 10/04/01 ............................. 7,725 7,699,649
Dakota Notes Program
3.580% 10/05/01 ............................. 40,000 39,864,755
Edison Asset Securitization LLC.
3.470% 10/22/01 ............................. 45,000 44,778,787
Fairway Funding Ltd.
3.560% 09/14/01 ............................. 33,522 33,478,905
3.750% 09/14/01 ............................. 25,000 24,966,146
Four Winds Funding Corp.
3.720% 09/04/01 ............................. 55,000 54,982,950
PAR
(000) VALUE
--------- --------------
ASSET BACKED SECURITIES--(CONTINUED)
Moriarty Ltd.
4.480% 09/27/01 ............................. $11,000 $ 10,964,409
Pennine Funding LLC.
3.570% 10/04/01 ............................. 20,078 20,012,295
--------------
251,698,163
--------------
BANKS--8.0%
AB Spintab (A-1, P-1)
3.660% 10/12/01 ............................. 25,000 24,895,792
Depfa-Bank Europe PLC.
3.600% 12/17/01 ............................. 25,000 24,732,500
4.550% 09/26/01 ............................. 15,000 14,952,604
UBS Finance (Delaware) Inc.
4.420% 10/09/01 ............................. 15,000 14,930,017
4.330% 10/11/01 ............................. 15,000 14,927,833
--------------
94,438,746
--------------
FOOD & KINDRED PRODUCTS--2.9%
Diageo Capital PLC.
3.550% 01/17/02 ............................. 34,000 33,537,317
--------------
HOSPITAL & MEDICAL SERVICE PLANS--2.3%
United Healthcare Corp.
3.780% 09/04/01 ............................. 26,500 26,491,652
--------------
PERSONAL CREDIT INSTITUTIONS--0.8%
Ford Motor Credit Company
3.560% 10/12/01 ............................. 10,000 9,959,455
--------------
PHARMACEUTICAL PREPARATIONS--4.2%
American Home Products Corp.
3.670% 10/12/01 ............................. 25,000 24,895,507
3.630% 10/26/01 ............................. 25,000 24,861,354
--------------
49,756,861
--------------
SHORT-TERM BUSINESS CREDIT INSTITUTIONS--2.1%
CIT Group, Inc.
3.580% 10/24/01 ............................. 25,000 24,868,236
--------------
TELEPHONE COMMUNICATIONS--4.2%
AT&T Corp.
3.700% 09/24/01 ............................. 50,000 49,881,805
--------------
TOTAL COMMERCIAL PAPER
(Cost $565,527,742) ..................... 565,527,742
--------------
See Accompanying Notes to Financial Statements.
4
THE PRINCIPAL FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 2001
PAR
(000) VALUE
--------- --------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--6.5%
FNMA
4.310% 11/08/01 ............................. $11,688 $ 11,592,847
4.270% 12/19/01 ............................. 16,500 16,286,678
4.510% 02/08/02 ............................. 23,000 22,538,978
4.150% 02/08/02 ............................. 10,000 9,815,556
4.210% 03/08/02 ............................. 5,000 4,890,072
6.750% 08/15/02 ............................. 10,000 10,269,789
--------------
TOTAL AGENCY OBLIGATIONS
(Cost $75,393,920) ...................... 75,393,920
--------------
MUNICIPAL BONDS--4.2%
FLORIDA--0.1%
Coral Springs VRDN IDR (Alliance
Corp.) (Suntrust Bank, Central FL
LOC) Series 1995+
3.650% 09/05/01 ............................. 1,700 1,700,000
--------------
GEORGIA--0.7%
De Kalb County Development Authority
VRDN Series 1995 B (Emory
University Project)+
3.600% 09/07/01 ............................. 8,880 8,880,000
--------------
ILLINOIS--0.4%
Illinois Health Facilities Authority
VRDN (The Streeterville Corp.
Project) Series 1993-B (Bank One
N.A. LOC)+
3.650% 09/05/01 ............................. 4,400 4,400,000
--------------
INDIANA--0.1%
Bremen IDR Bond VRDN
Series 1996 B (Society National
Bank, Cleveland LOC)+
3.650% 09/06/01 ............................. 1,040 1,040,000
--------------
KENTUCKY--0.4%
Boone County Taxable IDR Refunding
Bonds VRDN (Square D Company
Project) Series 1994-B (Societe
Generale LOC)+
3.650% 09/05/01 ............................. 4,200 4,200,000
--------------
PAR
(000) VALUE
--------- --------------
MISSISSIPPI--0.8%
Mississippi Business Finance Corp.,
IDR Bond VRDN (Choctaw Foods
Inc. Project) Series 1995
(Rabobank Nederland LOC)+
3.650% 09/07/01 ............................. $ 4,400 $ 4,400,000
Mississippi Business Finance Corp.,
IDR Bond VRDN (Dana Lighting
Inc.) (Suntrust Bank, Central FL
LOC) Series 1995+
3.650% 09/07/01 ............................. 5,100 5,100,000
--------------
9,500,000
--------------
NORTH CAROLINA--0.4%
City of Asheville VRDN (Wachovia
Bank LOC)+
3.550% 09/05/01 ............................. 5,000 5,000,000
--------------
TEXAS--1.3%
South Central Texas Industrial
Development Corp. Taxable IDR
Revenue Bond VRDN (Rohr
Industries Project) Series 1990
(NBD Bank N.A. LOC)+
3.650% 09/05/01 ............................. 14,800 14,800,000
--------------
TOTAL MUNICIPAL BONDS
(Cost $49,520,000) ...................... 49,520,000
--------------
VARIABLE RATE OBLIGATIONS--19.1%
BANKS--7.5%
Citigroup Inc.++
3.643% 09/12/01 ............................. 41,000 41,000,000
First Union National Bank++
3.690% 09/10/01 ............................. 15,000 15,000,000
3.600% 09/25/01 ............................. 20,000 20,000,000
Natexis Banque Populares++
3.530% 09/28/01 ............................. 12,000 11,997,297
--------------
87,997,297
--------------
See Accompanying Notes to Financial Statements.
5
THE PRINCIPAL FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONCLUDED)
AUGUST 31, 2001
PAR
(000) VALUE
--------- --------------
LIFE INSURANCE--4.4%
Prudential Funding Corporation++
3.660% 11/16/01 ............................. $11,500 $ 11,506,295
Transamerica Life Insurance &
Annuity Co.++
4.140% 09/04/01 ............................. 40,000 40,000,000
--------------
51,506,295
--------------
SECURITY BROKERS & DEALERS--7.2%
Lehman Brothers Holdings, Inc.++
3.570% 09/04/01 ............................. 30,000 30,000,000
Merrill Lynch & Co. Inc.++
3.569% 11/14/01 ............................. 40,000 40,000,746
Salomon Smith Barney Holdings
Inc.++
3.888% 10/08/01 ............................. 15,000 15,001,519
--------------
85,002,265
--------------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $224,505,857) ..................... 224,505,857
--------------
MEDIUM TERM NOTES--5.5%
General Electric Capital Corp.
3.815% 07/30/02 ............................. 10,000 10,000,000
Goldman Sachs Group Inc.
3.910% 09/10/01 ............................. 15,000 15,000,000
3.740% 04/30/02 ............................. 24,000 24,000,000
Merrill Lynch & Co. Inc.
4.300% 04/24/02 ............................. 7,000 7,000,000
Textron Inc.
6.750% 09/15/02 ............................. 8,400 8,655,577
--------------
TOTAL MEDIUM TERM NOTES
(Cost $64,655,577) 64,655,577
--------------
PAR
(000) VALUE
--------- --------------
REPURCHASE AGREEMENTS--1.8%
Morgan Stanley & Co. Inc.
(Agreement dated 08/31/01 to be
repurchased at $21,508,791
collateralized by $112,201
Federal Home Loan Mortgage
Corporation Collateralized Mortgage
Obligation at a rate of 8.00% due
03/01/30, and $22,037,971 Federal
National Mortgage Corporation
Strips due 12/15/27. Market Value
of collateral is $22,150,172.)
3.680% 09/04/01 ............................. $21,500 $ 21,500,000
--------------
TOTAL REPURCHASE AGREEMENTS
(Cost $21,500,000) ...................... 21,500,000
--------------
TOTAL INVESTMENTS AT VALUE -- 99.8%
(Cost $1,173,155,550*) ...................... 1,173,155,550
--------------
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 0.2% ...................... 2,749,793
--------------
NET ASSETS (Applicable to
676,961,621 Bedford shares,
194,539 Cash Preservation shares,
201,632,735 Sansom Street shares,
297,112,771 Principal Shares,
and 800 other shares) -- 100.0% $1,175,905,343
==============
NET ASSET VALUE, Offering and
Redemption Price Per Share
($1,175,905,343 / 1,175,902,466) $1.00
=====
* Also cost for Federal income tax purposes.
+ Variable Rate Demand Note -- The interest rate shown is the rate as of
August 31, 2001 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.
++ Variable Rate Obligations -- The interest rate shown is the rate as of
August 31, 2001 and the maturity date shown is the next interest rate
readjustment date or the maturity date.
INVESTMENT ABBREVIATIONS
VRDN ................................................. Variable Rate Demand Note
LOC ........................................................... Letter of Credit
IDR ............................................. Industrial Development Revenue
See Accompanying Notes to Financial Statements.
6
THE PRINCIPAL FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2001
Investment Income
Interest ............................................ $68,795,929
-----------
Expenses
Distribution fees ................................... 4,804,602
Investment advisory fees ............................ 4,622,883
Transfer agent fees ................................. 369,390
Printing fees ....................................... 298,558
Registration fees ................................... 257,511
Custodian fees ...................................... 199,876
Legal fees .......................................... 193,455
Audit fees .......................................... 167,023
Directors' fees ..................................... 94,907
Insurance expense ................................... 90,630
Service organization fees ........................... 13,772
Miscellaneous ....................................... 2,300
-----------
Total expenses ................................. 11,114,907
Less fees waived .................................... (1,878,434)
Less expense reimbursement by advisor ............... (23,214)
-----------
Net expenses ................................... 9,213,259
-----------
Net investment income .................................. 59,582,670
-----------
Realized gain/(loss) on investments .................... 105,064
-----------
Net increase in net assets resulting from operations ... $59,687,734
===========
See Accompanying Notes to Financial Statements.
7
THE PRINCIPAL FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, 2001 AUGUST 31, 2000
--------------- ----------------
Increase (decrease) in net assets:
Operations:
Net investment income .................................... $ 59,582,670 $ 142,300,137
Net gain (loss) on investments ........................... 105,064 (46,157)
-------------- ---------------
Net increase in net assets resulting from operations ..... 59,687,734 142,253,980
-------------- ---------------
Distributions to shareholders:
Dividends to shareholders from
Net Investment Income:
Bedford shares ......................................... (24,842,700) (21,820,881)
Cash Preservation shares ............................... (13,247) (14,538)
Janney Montgomery Scott shares ......................... -- (55,534,937)
Principal shares ....................................... (12,476,504) (11,383,856)
Sansom Street shares ................................... (12,942,542) (31,566,483)
Select shares .......................................... (9,307,677) (21,979,442)
-------------- ---------------
Total Dividends to shareholders ...................... (59,582,670) (142,300,137)
-------------- ---------------
Net capital share transactions ............................. (228,925,598) (1,334,348,297)
-------------- ---------------
Total increase/(decrease) in net assets .................... (228,820,534) (1,334,394,454)
Net Assets:
Beginning of year ........................................ 1,404,725,877 2,739,120,331
-------------- ---------------
End of year .............................................. $1,175,905,343 $ 1,404,725,877
============== ===============
See Accompanying Notes to Financial Statements.
8
THE PRINCIPAL FAMILY
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS (a)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
MONEY MARKET PORTFOLIO
-----------------------------------------------------------
FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED JUNE 1, 1999 TO
AUGUST 31, 2001 AUGUST 31, 2000 AUGUST 31, 1999(b)
--------------- --------------- ------------------
Net asset value, beginning of year or period ............... $ 1.00 $ 1.00 $ 1.00
--------- --------- ---------
Income from investment operations:
Net investment income ................................... 0.0483 0.0532 0.0110
--------- --------- ---------
Total from investment operations ...................... 0.0483 0.0532 0.0110
--------- --------- ---------
Less distributions
Dividends (from net investment income) .................. (0.0483) (0.0532) (0.0110)
--------- --------- ---------
Total distributions ................................... (0.0483) (0.0532) (0.0110)
--------- --------- ---------
Net asset value, end of year or period ..................... $ 1.00 $ 1.00 $ 1.00
========= ========= =========
Total Return ............................................... 4.94% 5.46% 1.10%(e)
Ratios /Supplemental Data
Net assets, end of year or period (000) ................. $297,115 $217,520 $218,530
Ratios of expenses to average net assets ................ .77%(c) .77%(c) .77%(c)(d)
Ratios of net investment income to
average net assets .................................... 4.71% 5.32% 4.36%(d)
(a) Financial highlights relate solely to the Principal Family of shares within the portfolio.
(b) On June 1, 1999 the Money Market Portfolio's Principal Class began operations.
(c) Without the waiver of advisory and transfer agent fees and reimbursement of certain operating expenses, the ratios
of expenses to average net assets for the Money Market Portfolio would have been .88%, .85% and .85% for the
periods ended August 31, 2001, 2000 and 1999, respectively.
(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, 2001
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 20.97 billion shares are currently classified into ninety-four classes.
Each class represents an interest in one of fourteen investment portfolios of
the Fund. The classes have been grouped into fourteen separate "families", eight
of which have begun investment operations: the Principal Family, the Bedford
Family, the Sansom Street Family, the Cash Preservation Family, the n/i Family,
the Boston Partners Family, the Schneider Family and the Bogle Family. The
Principal Family represents interests in one 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, to ensure that cost continues to approximate value
and 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, INVESTMENT INCOME, AND EXPENSES --
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. Expenses incurred on behalf of a specific class, fund or fund
family are charged directly to the class, fund or fund family (in
proportion to net assets). Expenses incurred for all of the RBB families
(such as trustee or professional fees) are charged to all funds in
proportion to their net assets of the RBB funds.
C) DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment
income are declared daily, recorded on the ex-date 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 accounting principals
generally accepted in the United States of America.
D) FEDERAL TAXES -- No provision is made for Federal taxes. 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 fall 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
10
THE PRINCIPAL FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2001
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
may claim any resulting loss from the seller. The agreements are
conditioned upon the collateral being deposited under the Federal Reserve
book-entry system or with the Fund's custodian or a third party
sub-custodian.
F) USE OF ESTIMATES-- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions.
These estimates and assumptions 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 Agreements, BlackRock Institutional
Management Corp. ("BIMC"), an indirect majority-owned subsidiary of The PNC
Financial Services Group, Inc., serves as investment adviser and as
administrator for the Money Market Portfolio. For the Money Market Portfolio,
BIMC and PFPC, Inc. ("PFPC") have entered into a delegation agreement, wherein
PFPC has agreed to perform Administration and Accounting services for an annual
fee of .10% of the average net assets of the portfolio, paid out of the fee paid
to BIMC.
For its advisory services, BIMC is entitled to receive the following fees,
computed daily and payable monthly, and 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 the portfolio,
the net advisory fee charged to each class is the same on a relative basis. For
the year ended August 31, 2001, advisory fees and waivers for the investment
portfolio were as follows:
GROSS NET
ADVISORY ADVISORY
FEE WAIVER FEE
---------- ------------ ----------
Money Market Portfolio $4,622,883 $(1,375,781) $3,247,102
The investment advisor/administrator may voluntarily waive and/or 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, 2001,
the expense caps were as follows:
PORTFOLIO CLASS OF SHARES EXPENSE CAP
---------- ----------------- -----------
Money Market Portfolio Bedford 1.00%
Cash Preservation .98
Sansom Street .49
Principal .77
11
THE PRINCIPAL FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2001
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
For the year ended August 31, 2001 waived expenses were $264,231 for the
Money Market Portfolio. Reimbursed expenses for the year ended August 31, 2001
were $23,214 for the Money Market Portfolio.
In addition, PFPC Trust Co. serves as custodian for the Fund's portfolio.
PFPC serves as each class's transfer and dividend disbursing agent. Both PFPC
Trust Co. and PFPC are wholly-owned subsidiaries of PFPC Worldwide Inc., an
indirect majority-owned subsidiary of The PNC Financial Services Group, Inc.
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, 2001,
transfer agency fees and waivers for each class of shares within the investment
portfolio were as follows:
GROSS NET
TRANSFER AGENCY TRANSFER AGENCY
FEE WAIVER FEE
---------------- --------- ---------------
Money Market Portfolio
Bedford Class $204,798 $(204,798) $ --
Cash Preservation Class 7,932 (7,932) --
Principal Class 7,800 -- 7,800
Sansom Street Class 145,465 (24,317) 121,148
Select Class* 3,395 (1,375) 2,020
-------- --------- --------
Total Money Market Portfolio $369,390 $(238,422) $130,968
======== ========= ========
* The Select Class of shares was liquidated on January 31, 2001.
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 PFPC Distributors Inc. ("PFPC Distributors"). PFPC
Distributors is a wholly-owned subsidiary of PFPC Worldwide Inc., an indirect
majority-owned subsidiary of The PNC Financial Services Group, Inc.
The contracts provide for each class to make monthly payments, based on
average net assets, to PFPC Distributors of up to .65% on an annualized basis
for the Bedford, Cash Preservation, and Principal Classes and up to .20% on an
annualized basis for the Sansom Street Class. Prior to January 2, 2001,
Provident Distributors, Inc. ("PDI") served as the Fund's distributor pursuant
to the same compensation arrangement as PFPC Distributors.
12
THE PRINCIPAL FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2001
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
For the period September 1, 2000 through January 1, 2001, distribution fees
paid to PDI for each class were as follows:
DISTRIBUTION
FEE
------------
Money Market Portfolio
Bedford Class $1,006,789
Cash Preservation Class 417
Principal Class 303,527
Sansom Street Class 46,718
----------
Total Money Market Portfolio $1,357,451
==========
For the period January 2, 2001 through August 31, 2001, distribution fees
paid to PFPC Distributors for each class were as follows:
DISTRIBUTION
FEE
------------
Money Market Portfolio
Bedford Class $2,612,966
Cash Preservation Class 680
Principal Class 756,602
Sansom Street Class 76,903
----------
Total Money Market Portfolio $3,447,151
==========
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, 2001 service
organization fees were $13,772 for the Money Market Portfolio.
13
THE PRINCIPAL FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2001
NOTE 3. CAPITAL SHARES
Transactions in capital shares (at $1 per capital share) for each year were
as follows:
MONEY MARKET PORTFOLIO
------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, 2001 AUGUST 31, 2000
--------------- ----------------
VALUE VALUE
--------------- ----------------
Shares sold:
Bedford Class $ 977,375,528 $ 866,092,657
Cash Preservation Class 239,568 462,203
Janney Montgomery Scott Class* -- 5,748,987,958
Principal Class 574,335,866 534,885,343
Sansom Street Class 1,562,347,829 3,118,553,510
Select Class** 947,199,090 2,969,370,240
--------------- ----------------
Total Shares Sold 4,061,497,881 13,238,351,911
Shares issued on reinvestment of dividends:
Bedford Class 25,009,271 21,403,595
Cash Preservation Class 13,843 13,920
Janney Montgomery Scott Class* -- 54,694,717
Principal Class 12,586,542 11,245,950
Sansom Street Class 725,168 13,899,819
--------------- ----------------
Total Shares Reinvested 38,334,824 101,258,001
Shares repurchased:
Bedford Class (780,367,053) (792,698,785)
Cash Preservation Class (471,279) (194,641)
Janney Montgomery Scott Class* -- (6,892,100,877)
Principal Class (507,329,527) (547,145,226)
Sansom Street Class (1,688,185,685) (3,647,602,057)
Select Class** (1,352,404,759) (2,794,216,623)
--------------- ----------------
Total Shares Repurchased (4,328,758,303) (14,673,958,209)
--------------- ----------------
Net increase (decrease) $ (228,925,598) $ (1,334,348,297)
=============== ================
Principal Shares authorized 700,000,000 700,000,000
=============== ================
* The Janney Montgomery Scott Class of shares was liquidated on July 31, 2000.
** The Select Class of shares was liquidated on January 31, 2001.
14
THE PRINCIPAL FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2001
NOTE 4. NET ASSETS
At August 31, 2001, net assets consisted of the following:
MONEY MARKET
PORTFOLIO
--------------
Paid-in capital $1,175,902,466
Accumulated net realized gain/(loss) on investments 2,877
-------------
Total net assets $1,175,905,343
==============
15
THE PRINCIPAL FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2001
NOTE 5. OTHER FINANCIAL HIGHLIGHTS
The Fund currently offers three other classes of shares representing
interest in the Money Market Portfolio: Bedford, Cash Preservation, and Sansom
Street. Each class is marketed to different types of investors. Financial
Highlights of the Cash Preservation class is not represented 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 (a)
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,
2001 2000 1999 1998 1997
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of year ....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- ----------
Income from investment operations:
Net investment income .................................. 0.0460 0.0512 0.0425 0.0473 0.0462
-------- -------- -------- -------- ----------
Total net income from investment operations ........... 0.0460 0.0512 0.0425 0.0473 0.0462
-------- -------- -------- -------- ----------
Less distributions
Dividends (from net investment income) ................. (0.0460) (0.0512) (0.0425) (0.0473) (0.0462)
-------- -------- -------- -------- ----------
Total distributions ................................... (0.0460) (0.0512) (0.0425) (0.0473) (0.0462)
-------- -------- -------- -------- ----------
Net asset value, end of year ............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ==========
Total Return ........................................... 4.70% 5.24% 4.34% 4.84% 4.72%
Ratios /Supplemental Data
Net assets, end of year (000) .......................... $676,964 $423,977 $360,123 $762,739 $1,392,911
Ratios of expenses to average net assets ............... 1.00%(b) .97%(b) .97%(b) .97%(b) .97%(b)
Ratios of net investment income to average
net assets ............................................ 4.46% 5.15% 4.25% 4.73% 4.62%
(a) Financial Highlights relate solely to the Bedford Class of shares within each portfolio.
(b) 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%,
1.05%, 1.08%, 1.10% and 1.12% for the years ended August 31, 2001, 2000, 1999, 1998 and 1997, respectively.
16
THE PRINCIPAL FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
AUGUST 31, 2001
NOTE 5. OTHER FINANCIAL HIGHLIGHTS (CONTINUED)
THE SANSOM STREET FAMILY (a)
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, 2001 AUGUST 31, 2000 AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997
--------------- --------------- --------------- --------------- ---------------
Net asset value, beginning of year ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ......................... 0.0511 0.0560 0.0473 0.0520 0.0510
-------- -------- -------- -------- --------
Total net income from investment operations . 0.0511 0.0560 0.0473 0.0520 0.0510
-------- -------- -------- -------- --------
Less distributions
Dividends (from net investment income) ........ (0.0511) (0.0560) (0.0473) (0.0520) (0.0510)
-------- -------- -------- -------- --------
Total distributions ......................... (0.0511) (0.0560) (0.0473) (0.0520) (0.0510)
-------- -------- -------- -------- --------
Net asset value, end of year ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return ..................................... 5.23% 5.75% 4.83% 5.34% 5.22%
Ratios/Supplemental Data
Net assets, end of year (000) ................. $201,632 $326,745 $841,887 $684,066 $570,018
Ratios of expenses to average net assets ...... .49%(b) .49%(b) .49%(b) .49%(b) .49%(b)
Ratios of net investment income to
average net assets .......................... 5.23% 5.42% 4.73% 5.20% 5.10%
(a) Financial highlights relate solely to the Sansom Street Class of shares within the portfolio.
(b) Without the waiver of advisory fees and reimbursement of certain operating expenses, the ratios of expenses to average net
assets for the Money Market Portfolio would have been .61%, .61%, .62%, .62% and .64% for the years ended August 31, 2001,
2000, 1999, 1998 and 1997, respectively.
17
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