================================================================================
ROBERTSON
STEPHENS
Money Market Portfolio
Annual Report
August 31, 1998
================================================================================
<PAGE>
THE SANSOM STREET FAMILY
THE RBB FUND, INC.
Annual Investment Adviser's Report
Concerns about Asia's economic woes were exacerbated in the first two
quarters of 1998, as signs of recession also spread to Russia, Latin America and
South America. The consequences of this worldwide slowdown were evidenced by
plummeting market capitalizations, particularly in August, for example, when the
DJIA fell 17% in four weeks. Adding to the market's problems were the
investigation of President Clinton and Russia's currency devaluation and delay
in naming a new Prime Minister. The net effect of this global turmoil was a
dramatic flight to the quality and safety of U.S. Treasury obligations. Yields
on longer-term Treasuries fell almost 40 basis points to 5.20%, while
three-month Treasury bills dropped below 4.90%. These sudden moves precipitated
widespread expectations of a reduction in the federal funds rate. In not
changing rates to date, the Fed has been particularly comforted by the positive
news on inflation. For the year-to-date, wholesale prices were down almost 1%,
while consumer prices were up only 1.5%. The Fed next meets at the end of
September and there is growing sentiment for a rate cut.
During the last two quarters, the federal funds rate remained at 5.50%, a
level not changed since March, 1997. The short-term yield curve remained very
flat, with interest rate spreads narrowing through the month of August. Treasury
bills continued as a haven for short-term cash and yields dropped sharply near
the end of the period. In fact, the short Treasury curve inverted, with the
three-month bills yielding more than the year bill. Throughout the period,
overnight rates traded close to the federal funds level of 5.50%. Investment
strategy sought to gradually extend the Money Market Portfolio's average
maturity, as the likelihood of higher rates evaporated. Three to six-month
investments were made at yields of 5.60-5.70% during periods of market weakness,
while liquidity was maintained in repurchase agreements at yields near 5.50%. At
the end of August, the Money Market Portfolio had assets of $2,315,558,300.
Year 2000 System Preparedness
BlackRock Institutional Management Corp. (BIMC) serves as investment adviser
to The RBB Fund, Inc. BIMC wishes to confirm for fund investors that PNC Bank
Corp. and its affiliates are actively addressing Year 2000 system changes across
all of our businesses.
Over the past eighteen months, we have reviewed all internal systems to
determine whether there is Year 2000 exposure and, if so, how to remedy. Our
corporate objective is to have all systems Year 2000 ready by December 31, 1998.
Many systems have already been cleared. Those that require changes are currently
undergoing active work and progressing satisfactorily.
BlackRock Institutional Management Corporation
(Please dial toll-free 800-430-9618 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.:
In our opinion, the accompanying statements of net assets of the Money Market
Portfolio of The RBB Fund, Inc. (the "Fund"), and the related statements of
operations and changes in net assets, and the financial highlights present
fairly, in all material respects, the financial position of the Money Market
Portfolio of The RBB Fund, Inc. at August 31, 1998, the results of its
operations for the year then ended, changes in its net assets for each of the
two years in the period then ended, and the financial highlights for each of the
periods presented, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities owned at
August 31, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia,Pennsylvania
October 2, 1998
2
<PAGE>
THE SANSOM STREET FAMILY
THE RBB FUND, INC.
Money Market Portfolio
Statement of Net Assets
August 31, 1998
Par
(000) Value
------------ ------------
AGENCY OBLIGATIONS--0.9%
Student Loan Marketing Association+
5.240% 09/01/98 ................................ $ 10,000 $ 10,000,000
5.250% 09/01/98 ................................ 10,000 10,000,000
------------
TOTAL AGENCY OBLIGATIONS
(Cost $20,000,000) .......................... 20,000,000
------------
CERTIFICATES OF DEPOSIT--13.8%
Banks--2.6%
Credit Communal de Belgique
5.750% 04/01/99 ................................ 30,000 29,991,636
First National Bank of Boston
5.570% 10/06/98 ................................ 30,000 30,000,000
------------
59,991,636
------------
Domestic Certificates of Deposit--1.1%
Wilmington Trust Co.
5.580% 10/08/98 ................................ 25,000 25,000,000
------------
Yankee Dollar Certificates of Deposit--10.1%
Bank Austria
5.670% 07/23/99 ................................ 9,000 9,001,648
Canadian Imperial Bank of Commerce
5.660% 02/26/99 ................................ 40,000 39,990,652
Credit Communal de Belgique
5.620% 12/28/98 ................................ 25,000 24,998,388
Deutsche Bank
5.670% 02/26/99 ................................ 16,000 15,991,821
5.750% 05/26/99 ................................ 25,000 25,010,645
Skandinaviska Enskilden Banken
Funding, Inc.
5.560% 09/08/98 ................................ 10,000 10,000,000
Societe Generale
5.780% 10/08/98 ................................ 25,000 24,995,738
Svenska Handelsbanken Inc.
5.720% 03/31/99 ................................ 25,000 24,991,695
Swiss Bank
5.750% 05/07/99 ................................ 15,000 14,994,390
Westpac Banking Corp.
5.730% 04/16/99 ................................ 45,000 44,991,957
------------
234,966,934
------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $319,958,570) ......................... 319,958,570
------------
Par
(000) Value
------------ ------------
COMMERCIAL PAPER--51.0%
Asset Backed Securities--12.4%
CC USA Inc.
5.495% 10/20/98 ................................ $ 15,000 $ 14,887,810
5.520% 11/09/98 ................................ 40,000 39,576,800
5.470% 01/29/99 ................................ 24,000 23,453,000
5.470% 02/05/99 ................................ 8,000 7,809,158
Corporate Asset Funding, Inc.
5.530% 09/22/98 ................................ 30,000 29,903,225
5.540% 09/23/98 ................................ 50,000 49,830,722
Corporate Receivables Corp.
5.550% 09/11/98 ................................ 20,000 19,969,167
Dakota Certificates Program
5.530% 09/04/98 ................................ 30,000 29,986,175
5.520% 09/25/98 ................................ 50,000 49,816,000
Windmill Funding
5.540% 09/28/98 ................................ 21,858 21,767,180
------------
286,999,237
------------
Banks--13.0%
AB Spintab Swedmortgage
5.530% 11/10/98 ................................ 25,000 24,731,181
5.520% 11/16/98 ................................ 15,000 14,825,200
5.520% 12/17/98 ................................ 40,000 39,343,733
5.510% 03/04/99 ................................ 25,000 24,295,944
Commerzbank
5.505% 10/16/98 ................................ 25,000 24,827,969
IMI Funding Corp.
5.510% 11/27/98 ................................ 24,270 23,946,825
5.510% 12/04/98 ................................ 32,827 32,354,711
5.480% 02/03/99 ................................ 17,136 16,731,686
IMI Funding Corp. (USA)
5.520% 11/09/98 ................................ 11,881 11,755,299
5.530% 11/16/98 ................................ 30,000 29,649,767
Nationsbank Corp.
5.510% 10/15/98 ................................ 30,000 29,797,967
Unifunding Inc.
5.420% 09/29/98 ................................ 30,000 29,873,533
------------
302,133,815
------------
See Accompanying Notes to Financial Statements.
3
<PAGE>
THE SANSOM STREET FAMILY
THE RBB FUND, INC.
Money Market Portfolio
Statement of Net Assets (Continued)
August 31, 1998
Par
(000) Value
------------ ------------
Business Credit Institutions--2.7%
Enterprise Funding Corp.
5.510% 09/23/98 ............................ $ 40,000 $ 39,865,311
5.530% 09/23/98 ............................ 9,873 9,839,635
5.510% 12/02/98 ............................ 13,082 12,897,791
------------
62,602,737
------------
Chemicals & Allied Products--1.6%
Monsanto Co.
5.500% 12/07/98 ............................ 38,477 37,906,792
------------
Finance Services--1.9%
Triple A-1 Funding
5.530% 09/24/98 ............................ 13,328 13,280,911
5.550% 10/14/98 ............................ 30,000 29,801,125
------------
43,082,036
------------
Food & Kindred Products--1.3%
Diageo Capital PLC
5.450% 12/29/98 ............................ 30,000 29,459,542
------------
Household Audio & Video Equipment--0.9%
Panasonic Finance Inc.
5.450% 09/04/98 ............................ 20,000 19,990,917
------------
Misc. Industrial & Commercial Machinery
& Equipment--6.5%
Komatsu Finance America
5.600% 09/09/98 ............................ 20,000 19,975,111
5.620% 09/11/98 ............................ 70,000 69,890,722
5.600% 11/13/98 ............................ 25,000 24,716,111
Mitsubishi Corporate Finance PLC
5.670% 09/14/98 ............................ 35,000 34,928,338
------------
149,510,282
------------
Motor Vehicles & Car Bodies--1.2%
BMW US Capital Corp.
5.500% 11/09/98 ............................ 28,000 27,704,833
------------
Personal Credit Institutions--2.0%
Countrywide Funding Corp.
5.540% 09/28/98 ............................ 47,500 47,302,637
------------
Par
(000) Value
-------------- ------------
Petroleum Refining--0.7%
Chevron Transport Corp.
5.500% 11/20/98 ............................ $ 16,000 $ 15,804,444
--------------
Security Brokers & Dealers--6.8%
Merrill Lynch & Co. Canandian DCP
5.450% 09/02/98 ............................ 50,000 49,992,431
Lehman Brothers Holdings, Inc.
5.550% 11/25/98+ ........................... 25,000 24,672,396
5.540% 01/22/99 ............................ 35,000 34,229,786
Nomura Holding America Inc.
5.650% 10/02/98 ............................ 6,000 5,970,808
5.650% 11/16/98 ............................ 19,000 18,773,372
5.650% 11/23/98 ............................ 25,000 24,674,340
--------------
158,313,133
--------------
TOTAL COMMERCIAL PAPER
(Cost $1,180,810,405) ................... 1,180,810,405
--------------
MUNICIPAL BONDS--3.4%
Florida--0.1%
Coral Springs,VRDN++
5.650% 09/02/98 ............................ 2,500 2,500,000
--------------
Georgia--0.4%
De Kalb County Development
Authority Series 1995 B+
5.650% 09/07/98 ............................ 9,485 9,485,000
--------------
Illinois--0.2%
Illinois Health Facilities Authority
Convertible/ VRDN Revenue Bond
(The Streeterville Corp. Project)
Series 1993-B++
5.700% 09/02/98 ............................ 4,400 4,400,000
--------------
Indiana--0.2%
Bremen, Inc. TARN VRDN
Series 1996 B
5.674% 09/03/98 ............................ 3,600 3,600,000
--------------
See Accompanying Notes to Financial Statements.
4
<PAGE>
THE SANSOM STREET FAMILY
THE RBB FUND, INC.
Money Market Portfolio
Statement of Net Assets (Continued)
August 31, 1998
Par
(000) Value
------------ ------------
Kentucky--0.2%
Boone County Taxable IDR Refunding
Bonds VRDN (Square D Company
Project) Series 1994-B+
5.700% 09/02/98 .......................... $ 4,200 $ 4,200,000
-----------
Mississippi--1.2%
Hinds County, IDR Revenue Bond
VRDN Series 1992+
5.650% 09/02/98 .......................... 1,860 1,860,000
Mississippi Business Finance Corp.
IDR Revenue Bond VRDN(Dana
Lighting Project) Series 1995+
5.650% 09/07/98 .......................... 5,800 5,800,000
Mississippi Business Finance Corp.
Taxable IDR Revenue Bond
Series 1995+
5.650% 09/07/98 .......................... 6,300 6,300,000
Mississippi Business Finance Corp.
Taxable IDR Revenue Bond VRDN
(Bryan Foods, Inc. Project)
Series 1994+
5.700% 09/02/98 .......................... 14,000 14,000,000
-----------
27,960,000
-----------
North Carolina--0.5%
City of Asheville Tax Corp.+
5.650% 09/02/98 .......................... 10,800 10,800,000
-----------
Texas--0.6%
South Central Texas Industrial
Development Corp. Taxable IDR
Revenue Bond VRDN (Rohr
Industries Project) Series 1990+
5.700% 09/02/98 .......................... 14,800 14,800,000
-----------
TOTAL MUNICIPAL BONDS
(Cost $77,745,000) .................... 77,745,000
-----------
Par
(000) Value
------------ ------------
CORPORATE OBLIGATIONS--19.4%
Banks--1.1%
Istituto Bancario San Paolo di Torino+
5.558% 09/08/98 ............................ $ 25,000 $ 24,986,786
------------
Finance Services--7.3%
General American Life+
5.870% 09/01/98 ............................ 50,000 50,000,000
SMM Trust 1997-A+
5.688% 09/23/98 ............................ 20,000 20,000,000
SMM Trust 1997-X+
5.648% 09/14/98 ............................ 100,000 100,000,000
------------
170,000,000
------------
Personal Credit Institutions--6.0%
American Honda Finance Corp. Honda
Motor Company, Ltd.+
5.668% 09/14/98 ............................ 40,000 40,000,000
5.668% 09/16/98 ............................ 25,000 25,000,000
5.658% 10/28/98 ............................ 35,000 35,000,000
General Motors Acceptance Corp.+
5.598% 11/26/98 ............................ 40,000 39,984,420
------------
139,984,420
------------
Security Brokers & Dealers--5.0%
Bear Stearns Companies, Inc.+
5.622% 09/08/98 ............................ 25,000 25,000,808
5.615% 09/24/98 ............................ 40,000 40,000,000
Lehman Brothers Holdings, Inc.+
5.708% 09/08/98 ............................ 50,000 50,000,000
------------
115,000,808
------------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $449,972,014) ..................... 449,972,014
------------
See Accompanying Notes to Financial Statements.
5
<PAGE>
THE SANSOM STREET FAMILY
THE RBB FUND, INC.
Money Market Portfolio
Statement of Net Assets (Continued)
August 31, 1998
Par
(000) Value
--------------- --------------
MEDIUM TERM NOTES--4.3%
Banks--4.3%
Skandinaviska Enskilda Banken
Funding, Inc.+
5.573% 09/14/98 ........................ $ 50,000 $ 49,987,920
Skandinaviska Enskilda Banken
Funding, Inc.
5.610% 02/25/99 ........................ 50,000 49,990,700
--------------
TOTAL MEDIUM TERM NOTES
(Cost $99,978,620) .................. 99,978,620
--------------
REPURCHASE AGREEMENTS--6.9%
Lehman Government Securities Inc.
(Agreement dated 08/31/98 to be
repurchased at $60,009,917
collaterized by $77,315,556 Federal
Home Loan Mortgage Corporation due
9/25/08 to 5/25/24 Market value of
collateral is $61,801,006.) 5.95%
09/01/98 ............................... 60,000 60,000,000
Lehman Government Securities Inc.
(Agreement dated 08/31/98 to be
repurchased at $99,015,984,
collateralized by $230,634,000 U.S.
Government National Strips due
11/15/98 to 08/15/25. Market value
of the collateral is $100,982,776.)
5.8125% 09/01/98 ....................... 99,000 99,000,000
--------------
TOTAL REPURCHASE AGREEMENTS
(Cost $159,000,000) ................. 159,000,000
--------------
TOTAL INVESTMENTS AT VALUE--99.7%
(Cost $2,307,464,609*) ................. 2,307,464,609
OTHER ASSETS IN EXCESS
OF LIABILITIES--0.3% ................... 8,093,691
--------------
Value
--------------
NET ASSETS (Applicable to 762,794,677
Bedford shares, 226,300 Cash
Preservation shares, 904,558,200
Janney Montgomery Scott shares,
648,098,967 Sansom Street shares
and 800 other shares)--100% ........................... $2,315,558,300
==============
NET ASSET VALUE, Offering and
redemption price per share
($2,315,558,300 / 2,315,678,944) ...................... $1.00
=====
* Also cost for Federal income tax purposes.
+ Variable Rate Obligations -- The rate shown is the rate as of August 31,
1998 and the maturity date shown is the date the principal amount can be
recovered through demand or put.
++ Put Bonds -- Maturity date is the put date.
INVESTMENT ABBREVIATIONS
VRDN ..................................................Variable Rate Demand Note
LOC ............................................................Letter of Credit
IDR ..............................................Industrial Development Revenue
TARN ............................................Taxable Adjustable Revenue Note
See Accompanying Notes to Financial Statements.
6
<PAGE>
THE SANSOM STREET FAMILY
THE RBB FUND, INC.
Money Market Portfolio
Statement of Operations
For the Year Ended August 31, 1998
Investment Income
Interest ................................................. $ 150,707,431
-------------
Expenses
Investment advisory fees ................................. 9,618,695
Distribution fees ........................................ 11,703,324
Service organization fees ................................ 531,358
Directors' fees .......................................... 51,825
Custodian fees ........................................... 422,990
Transfer agent fees ...................................... 3,362,291
Legal fees ............................................... 114,345
Audit fees ............................................... 180,246
Registration fees ........................................ 309,694
Insurance expense ........................................ 49,867
Printing fees ............................................ 529,786
Miscellaneous ............................................ 1,955
-------------
26,876,376
Less fees waived ......................................... (3,343,093)
Less expense reimbursement by advisor .................... (692,630)
-------------
Total expenses ........................................ 22,840,653
-------------
Net investment income .................................... 127,866,778
Realized loss on investments ............................. (95,478)
-------------
Net increase in net assets resulting from operations ..... $ 127,771,300
=============
See Accompanying Notes to Financial Statements.
7
<PAGE>
THE SANSOM STREET 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, 1998 August 31, 1997
--------------- ---------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income .............................. $ 127,866,778 $ 116,087,132
Net gain (loss) on investments ..................... (95,478) 22,330
--------------- ---------------
Net increase in net assets resulting from operations 127,771,300 116,109,462
--------------- ---------------
Distributions to shareholders:
Distributions in excess at net investment income:
Bedford shares .................................... (56,898,248) (56,929,832)
Cash Preservation shares .......................... (10,274) (10,852)
Janney Montgomery Scott shares .................... (38,111,646) (29,943,530)
RBB shares ........................................ -- (1,286)
Sansom Street shares .............................. (32,846,610) (29,201,632)
--------------- ---------------
Distributions in excess of net investment income:
Bedford shares .................................... (7,165) --
Cash Preservation shares .......................... (1) --
Janney Montgomery Scott shares .................... (3,979) --
RBB shares ........................................ -- --
Sansom Street shares .............................. (2,838) --
--------------- ---------------
Total dividends to shareholders ................... (127,880,761) (116,087,132)
--------------- ---------------
Net capital share transactions ....................... (384,357,868) 504,179,861
--------------- ---------------
Total increase (decrease) in net assets .............. (384,467,329) 504,202,191
Net Assets:
Beginning of year .................................. 2,700,025,629 2,195,823,438
--------------- ---------------
End of year ........................................ $ 2,315,558,300 $ 2,700,025,629
=============== ===============
</TABLE>
See Accompanying Notes to Financial Statements.
8
<PAGE>
THE SANSOM STREET FAMILY
THE RBB FUND, INC.
Financial Highlights (b)
(For a Share Outstanding Throughout each Period)
<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, 1998 August 31, 1997 August 31, 1996 August 31, 1995 August 31, 1994
--------------- --------------- --------------- --------------- ---------------
<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 .................. 0.0520 0.0510 0.0518 0.0543 0.0334
-------- -------- -------- -------- --------
Total from investment operations ...... 0.0520 0.0510 0.0518 0.0543 0.0334
-------- -------- -------- -------- --------
Less distributions
Dividends (from net investment income) . (0.0520) (0.0510) (0.0518) (0.0543) (0.0334)
-------- -------- -------- -------- --------
Total distributions ...................... (0.0520) (0.0510) (0.0518) (0.0543) (0.0334)
-------- -------- -------- -------- --------
Net asset value, end of year ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return ............................. 5.34% 5.22% 5.30% 5.57% 3.39%
Ratios/Supplemental Data
Net assets, end of year ................ $684,066 $570,018 $524,359 $441,614 $373,745
Ratios of expenses to average net assets .49%(a) .49%(a) .48%(a) .39%(a)
.39%(a)
Ratios of net investment income to
average net assets .................... 5.20% 5.10% 5.18% 5.43% 3.34%
</TABLE>
(a) Without the waiver of advisory and transfer agent fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Money Market Portfolio would have been .62%,
.64%, .65%, .59% and .60% for the years ended August 31, 1998, 1997, 1996,
1995 and 1994, respectively.
(b) Financial highlights relate soley to the Sansom Street Class of shares
within the portfolio.
See Accompanying Notes to Financial Statements.
9
<PAGE>
THE SANSOM STREET FAMILY
THE RBB FUND, INC.
Notes to Financial Statements
August 31, 1998
Note 1. Summary of Significant Accounting Policies
The RBB Fund, Inc. (the "Fund") is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company. The Fund
was incorporated in Maryland on February 29, 1988.
The Fund has authorized capital of thirty billion shares of common stock of
which 16.27 billion shares are currently classified into ninety-seven classes.
Each class represents an interest in one of twenty-six investment portfolios of
the Fund. The classes have been grouped into fifteen separate "families", nine
of which have begun investment operations: the RBB Family, the BEA Family, the
Sansom Street Family, the Bedford Family, the Cash Preservation Family, the
Janney Montgomery Money Family, the n/i Family, the Boston Partners Family and
the Schneider Family. The Sansom Street Family represents interests in the Money
Market Portfolio, which is covered in this report.
A) SECURITY VALUATION -- Portfolio securities are valued under the
amortized cost method, which approximates current market value. Under this
method, securities are valued at cost when purchased and thereafter a
constant proportionate amortization of any discount or premium is recorded
until maturity of the security. Regular review and monitoring of the
valuation is performed in an attempt to avoid dilution or other unfair
results to shareholders. The Portfolio seeks to maintain net asset value per
share at $1.00.
B) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions
are accounted for on the trade date. The cost of investments sold is
determined by use of the specific identification method for both financial
reporting and income tax purposes. Interest income is recorded on the accrual
basis. Certain expenses, principally distribution, transfer agency and
printing, are class specific expenses and vary by class. Expenses not
directly attributable to a specific portfolio or class are allocated among
all of the portfolios or classes of the Fund based on relative net assets of
each portfolio.
C) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net
investment income are declared daily and paid monthly. Any net realized
capital gains are distributed at least annually. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principals.
D) FEDERAL INCOME TAXES -- No provision is made for Federal taxes as it
is the Fund's intention to have each portfolio to continue to qualify for and
elect the tax treatment applicable to regulated investment companies under
the Internal Revenue Code and make the requisite distributions to its
shareholders which will be sufficient to relieve it from Federal income and
excise taxes.
E) REPURCHASE AGREEMENTS -- Money market instruments may be purchased
subject to the seller's agreement to repurchase them at an agreed upon date
and price. The seller will be required on a daily basis to maintain the value
of the securities subject to the agreement at not less than the repurchase
price plus accrued interest. If the value of the underlying securities falls
below 102% of the value of the repurchase price plus accrued interest, the
Fund will require the seller to deposit additional collateral by the next
Fund business day. In the event that the seller under the agreement defaults
on its repurchase obligation or fails to deposit sufficient collateral, the
Fund has the contractual right, subject to the requirements of applicable
bankruptcy and insolvency laws, to sell the underlying securities and may
claim any resulting loss from the seller. The agreements are conditioned upon
the collateral being deposited under the Federal Reserve book-entry system or
with the Fund's custodian or a third party sub-custodian.
F) USE OF ESTIMATES -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumption that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
10
<PAGE>
THE SANSOM STREET FAMILY
THE RBB FUND, INC.
Notes to Financial Statements (Continued)
August 31, 1998
Note 2. Transactions with Affiliates and Related Parties
In March 1998, PNC Institutional Management Corporation, which changed its
name to BlackRock Institutional Management Corporation ("BMIC"), assumed the
responsibilities of PNC Bank, as subadviser, to provide research, credit
analysis and recommendations with respect to the Fund's investments and supply
certain computer facilities, personnel and other services. The personnel and
facilities related to these services are being transferred to BMIC and BMIC's
obligation to pay to PNC Bank a portion of the advisory fee has been terminated.
For its advisory services, BIMC is entitled to receive the following fees,
computed daily and payable monthly based on the portfolio's average daily net
assets:
.45% of first $250 million of net assets;
.40% of next $250 million of net assets;
.35% of net assets in excess of $500 million.
BIMC may, at its discretion, voluntarily waive all or any portion of its
advisory 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, 1998, advisory fees and waivers for the
investment portfolio were as follows:
Gross Net
Advisory Advisory
Fee Waiver Fee
---------- ------------ ----------
$9,618,695 $(3,334,990) $6,283,705
The investment advisor has agreed to reimburse each portfolio for the amount,
if any, by which the total operating and management expenses exceed the cap. For
the year ended August 31, 1998 the reimbursed expenses were $692,630 for the
Money Market Portfolio.
In addition, PNC Bank serves as custodian for the Fund's portfolios. PFPC
Inc. ("PFPC"), an indirect wholly owned subsidiary of PNC Bank Corp., serves as
each class's transfer and dividend disbursing agent.
PFPC may, at its discretion, voluntarily waive all or any portion of its
transfer agency fee for any class of shares. For the year ended August 31, 1998,
transfer agency fees and waivers for each class of shares within the investment
portfolio were as follows:
<TABLE>
<CAPTION>
Gross Net
Transfer Agency Transfer Agency
Fee Waiver Fee
--------------- --------- ---------------
<S> <C> <C> <C>
Bedford Class $1,474,000 $ -- $1,474,000
Cash Preservation Class 8,684 (8,103) 581
Janney Montgomery Scott Class 1,498,346 -- 1,498,346
Sansom Street Class 381,261 -- 381,261
----------- --------- -----------
Total $3,362,291 $(8,103) $3,354,188
=========== ========= ===========
</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 Provident Distributors, Inc. ("PDI"), which provide for each class to make
monthly payments, based on average net assets, to PDI of up to .65% on an
annualized basis for the Bedford, Cash Preservation and Janney Montgomery Scott
Classes and up to .20% on an annualized basis for the Sansom Street Class. Prior
to May 29, 1998, Counsellors Securities Inc. served as distributor.
11
<PAGE>
THE SANSOM STREET FAMILY
THE RBB FUND, INC.
Notes to Financial Statements (Continued)
August 31, 1998
Note 2. Transactions with Affiliates and Related Parties (continued)
For the year ended August 31, 1998, distribution fees for each class were as
follows:
Distribution
Fee
------------
Bedford Class $ 6,509,493
Cash Preservation Class 864
Janney Montgomery Scott Class 4,862,505
Sansom Street Class 330,462
-----------
Total $11,703,324
===========
The Fund has entered into service agreements with banks affiliated with PNC
Bank who render support services to customers who are the beneficial owners of
the Sansom Street Class in consideration of the payment of .10% of the daily net
asset value of such shares. For the year ended August 31, 1998 service
organization fees were $531,358 for the Money Market Portfolio.
Note 3. Capital Shares
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, 1998 August 31, 1997
--------------- ---------------
Value Value
--------------- ---------------
<S> <C> <C>
Shares sold:
Bedford Class .............................. $ 4,081,920,081 $ 4,513,203,668
Cash Preservation Class .................... 113,319 175,000
Janney Montgomery Scott Class .............. 3,910,533,620 3,087,651,502
RBB Class .................................. -- 4,744
Sansom Street Class ........................ 2,296,071,622 1,965,226,666
Shares issued in reinvestment of dividends:
Bedford Class .............................. 56,201,453 55,886,643
Cash Preservation Class .................... 10,291 10,748
Janney Montgomery Scott Class .............. 37,882,680 29,670,134
RBB Class .................................. -- 1,361
Sansom Street Class ........................ 24,189,907 20,645,930
Shares repurchased:
Bedford Class .............................. (4,768,237,064) (4,285,531,838)
Cash Preservation Class .................... (139,525) (145,893)
Janney Montgomery Scott Class .............. (3,780,710,398) (2,942,342,585)
RBB Class .................................. -- (67,517)
Sansom Street Class ........................ (2,242,193,855) (1,940,208,702)
--------------- ---------------
Net increase (decrease) ....................... $ (384,357,869) $ 504,179,861
=============== ===============
Sansom Street Shares authorized ............... 1,000,000,000 1,000,000,000
=============== ===============
</TABLE>
12
<PAGE>
THE SANSOM STREET FAMILY
THE RBB FUND, INC.
Notes to Financial Statements (Continued)
August 31, 1998
Note 4. Net Assets
At August 31, 1998, net assets consisted of the following:
Capital paid-in
Bedford Class $ 762,794,677
Cash Preservation Class 226,300
Janney Montgomery Scott Class 904,561,201
Sansom Street Class 648,098,967
Other Classes 800
Accumulated net realized loss on investments
Bedford Class (41,938)
Cash Preservation Class (12)
Janney Montgomery Scott Class (44,485)
Sansom Street Class (34,210)
---------------
$ 2,315,558,300
===============
Note 5. Capital Loss Carryovers
At August 31, 1998, capital loss carryovers were available to offset future
realized gains as follows: $120,645 in the Money Market Portfolio of which
$120,645 expires in 2006.
13
<PAGE>
THE SANSOM STREET FAMILY
THE RBB FUND, INC.
Notes to Financial Statements (Continued)
August 31, 1998
Note 6. Other Financial Highlights
The Fund currently offers three other classes of shares representing interest
in the Money Market Portfolio: Bedford, Cash Preservation and Janney Montgomery
Scott. Each class is marketed to different types of investors. Financial
Highlights of the Cash Preservation class is not presented in this report due to
its immateriality. Such information is available in the annual report of its
respective family. The financial highlights of certain of the other classes are
as follows:
The Bedford Family
<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, 1998 August 31, 1997 August 31, 1996 August 31, 1995 August 31, 1994
--------------- --------------- --------------- --------------- ---------------
<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.................. 0.0473 0.0462 0.0469 0.0486 0.0278
-------- ---------- ---------- -------- --------
Total from investment
operations......................... 0.0473 0.0462 0.0469 0.0486 0.0278
-------- ---------- ---------- -------- --------
Less distributions
Dividends (from net investment
income).............................. (0.0473) (0.0462) (0.0469) (0.0486) (0.0278)
-------- ---------- ---------- -------- --------
Total distributions.................. (0.0473) (0.0462) (0.0469) (0.0486) (0.0278)
-------- ---------- ---------- -------- --------
Net asset value, end of year............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ---------- ---------- -------- --------
Total Return............................. 4.84% 4.72% 4.79% 4.97% 2.81%
Ratios/Supplemental Data
Net assets, end of year (000) $762,739 $1,392,911 $1,109,334 $935,821 $710,737
Ratios of expenses to average net
assets............................... .97%(a) .97%(a) .97%(a) .96%(a) .95%(a)
Ratios of net investment income to
average net assets................... 4.73% 4.62% 4.69% 4.86% 2.78%
</TABLE>
(a) Without the waiver of advisory and administration fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Money Market Portfolio would have been 1.10%,
1.12%, 1.14%, 1.17% and 1.16% for the years ended August 31, 1998, 1997,
1996, 1995 and 1994, respectively.
14
<PAGE>
THE SANSOM STREET FAMILY
THE RBB FUND, INC.
Notes to Financial Statements (Continued)
August 31, 1998
Note 6. Other Financial Highlights (continued)
The Janney Montgomery Scott Money Funds
<TABLE>
<CAPTION>
Money Market Portfolio
---------------------------------------------------------------------
For the For the For the For the
Year Year Year Year
Ended Ended Ended Ended
August 31, 1998 August 31, 1997 August 31, 1996 August 31, 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ---------- ---------- --------
Income from investment operations:
Net investment income.................. 0.0469 0.0459 0.0465 0.0112
-------- ---------- ---------- --------
Total from investment operations..... 0.0469 0.0459 0.0465 0.0112
-------- ---------- ---------- --------
Less distributions
Dividends (from net investment
income).............................. (0.0469) (0.0459) (0.0465) (0.0112)
-------- ---------- ---------- --------
Total distributions.................. (0.0469) (0.0459) (0.0465) (0.0112)
-------- ---------- ---------- --------
Net asset value, end of year............. $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ---------- ---------- --------
Total Return............................. 4.81% 4.69% 4.76% 5.30%(b)
Ratios/Supplemental Data
Net assets, end of year (000).......... $904,526 $ 736,855 $ 561,865 $443,645
Ratios of expenses to average
net assets........................... 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a)
Ratios of net investment income to
average net assets................... 4.69% 4.59% 4.65% 5.04%(b)
</TABLE>
(a) Without the waiver of advisory, administration and transfer agent fees and
without the reimbursement of certain operating expenses, the ratios of
expenses to average net assets for the Money Market Portfolio would have
been 1.21%, 1.22%, 1.23% and 1.23% for the years or periods ended August
31, 1998, 1997, 1996 and 1995, respectively.
(b) Annualized.
15
