================================================================================
Cash Preservation
PORTFOLIOS
Money Market Portfolio
and
Municipal Money Market
Portfolio
Annual Report
August 31, 1998
================================================================================
<PAGE>
CASH PRESERVATION 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.
In the short-term tax-exempt market, interest rates also traded in a narrow
band during the period. One-year notes remained generally in the 3.60-3.70%
range, while shorter-term variable rate demand notes fluctuated from highs near
4.50% to lows of 2.0%. During the April tax period, the tax-free portfolios
maintained high levels of liquidity to meet possible redemptions. Average
maturities were also kept moderately short in June as the maturity of general
market notes reduced supply. In July and August, the portfolios began to extend
slightly as new issuance returned to the market. At the end of August, the
Municipal Money Market Portfolio had assets of $245,170,814.
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
and Municipal Money Market Portfolios 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 and Municipal Money market Portfolios of The RBB
Fund, Inc. at August 31, 1998, the results of their operations for the year then
ended, changes in their 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>
CASH PRESERVATION 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(DAGGER)
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>
CASH PRESERVATION 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(DAGGER) .................... 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(DOUBLE DAGGER)
5.650% 09/02/98 ............................ 2,500 2,500,000
--------------
Georgia--0.4%
De Kalb County Development
Authority Series 1995 B(DAGGER)
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(DOUBLE DAGGER)
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>
CASH PRESERVATION 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(DAGGER)
5.700% 09/02/98 .............................. $ 4,200 $ 4,200,000
-----------
Mississippi--1.2%
Hinds County, IDR Revenue Bond
VRDN Series 1992(DAGGER)
5.650% 09/02/98 .............................. 1,860 1,860,000
Mississippi Business Finance Corp.
IDR Revenue Bond VRDN (Dana
Lighting Project) Series 1995(DAGGER)
5.650% 09/07/98 .............................. 5,800 5,800,000
Mississippi Business Finance Corp.
Taxable IDR Revenue Bond
Series 1995(DAGGER)
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(DAGGER)
5.700% 09/02/98 .............................. 14,000 14,000,000
-----------
27,960,000
-----------
North Carolina--0.5%
City of Asheville Tax Corp.(DAGGER)
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(DAGGER)
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(DAGGER)
5.558% 09/08/98 .............................. $ 25,000 $ 24,986,786
------------
Finance Services--7.3%
General American Life(DAGGER)
5.870% 09/01/98 .............................. 50,000 50,000,000
SMM Trust 1997-A(DAGGER)
5.688% 09/23/98 .............................. 20,000 20,000,000
SMM Trust 1997-X(DAGGER)
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.(DAGGER)
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.(DAGGER)
5.598% 11/26/98 .............................. 40,000 39,984,420
------------
139,984,420
------------
Security Brokers & Dealers--5.0%
Bear Stearns Companies, Inc.(DAGGER)
5.622% 09/08/98 .............................. 25,000 25,000,808
5.615% 09/24/98 .............................. 40,000 40,000,000
Lehman Brothers Holdings, Inc.(DAGGER)
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>
CASH PRESERVATION FAMILY
THE RBB FUND, INC.
Money Market Portfolio
Statement of Net Assets (Concluded)
August 31, 1998
Par
(000) Value
-------------- --------------
MEDIUM TERM NOTES--4.3%
Banks--4.3%
Skandinaviska Enskilda Banken
Funding, Inc.(DAGGER)
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
(DIVIDE) 2,315,678,944) ................ $1.00
=====
* Also cost for Federal income tax purposes
(DAGGER) 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.
(DOUBLE DAGGER) Put Bonds -- Maturity date is the put date.
INVESTMENT ABBREVIATIONS
VRDN ..................................................Variable Rate Demand Note
LOC ............................................................Letter of Credit
IDR ..............................................Industrial Development Revenue
TARN ............................................Taxable Adjustable Revenue Note
See Accompanying Notes to Financial Statements.
6
<PAGE>
CASH PRESERVATION FAMILY
THE RBB FUND, INC.
Municipal Money Market Portfolio
Statement of Net Assets
August 31, 1998
Par
(000) Value
---------- ----------
MUNICIPAL BONDS--99.6%
Arkansas--1.3%
Arkansas Development Finance
Authority Single Family Mortgage
RB Mortgage-Backed Securities
Program MB(DOUBLE DAGGER)
3.700% 03/01/99 .............................. $ 3,230 $3,230,000
----------
California--2.2%
California Higher Education Student
Loan RB Series D-2 DN(DOUBLE DAGGER)
3.650% 07/01/99 .............................. 3,000 3,000,000
California Statewide Community
Development Authority RB
Floating Rate Trust Receipts
Series A23-Reg D DN(DAGGER)
3.550% 09/07/98 .............................. 2,500 2,500,000
----------
5,500,000
----------
Colorado--3.3%
Denver, City and County Of, Colorado
Airport System Subordinate RB
Series 1997A TECP(DOUBLE DAGGER)
3.550% 11/17/98 .............................. 8,000 8,000,000
----------
Connecticut--1.2%
Connecticut Special Assessment
Unemployment Compensation
Advance Fund (Connecticut
Unemployment Project) Series
1993 C MB(DOUBLE DAGGER)
3.600% 07/01/99 .............................. 3,000 3,000,000
----------
Florida--2.4%
Capital Projects Finance Authority
(Florida Hospital Association -
Capital Projects Loan Program)
Series 1998A DN(DAGGER)
3.250% 09/07/98 .............................. 2,500 2,500,000
Flagler County Florida School District
TAN
3.890% 06/30/99 .............................. 3,300 3,303,611
----------
5,803,611
----------
Par
(000) Value
----------- -----------
Georgia--6.2%
Bulloch County, Development Authority
of Tax-Exempt Adjustable Mode IDA
RB (Gold Kist Inc. Project) DN(DAGGER)
3.450% 09/07/98 .............................. $ 5,700 $ 5,700,000
Middle Georgia Regional Development
Authority IDA RB (Tolleson Lumber
Co., Inc. Project) Series 1997 DN(DAGGER)
3.450% 09/07/98 .............................. 4,500 4,500,000
Savannah Economic Development
Authority RB (Georgia Kaolin Inc.)
DN(DAGGER)
3.400% 09/07/98 .............................. 5,000 5,000,000
-----------
15,200,000
-----------
Idaho--1.5%
Idaho State TAN
4.500% 06/30/99 .............................. 3,750 3,776,944
-----------
Illinois--7.0%
Chicago Tender Notes MB(DOUBLE DAGGER)
3.550% 02/04/99 .............................. 2,000 2,000,000
Chicago, City Of, IDA RB (Goose
Island Beer O. Project) DN(DAGGER)
3.630% 09/07/98 .............................. 2,100 2,100,000
Illinois Health Facilities Authority
Revolving Fund Pooled Financing
Program (The University of Chicago
Project) TECP(DOUBLE DAGGER)
3.750% 11/04/98 .............................. 8,000 8,000,000
Illinois Health Facility Authority
(Evanston Hospital Corp. Project)
Series 1996 MB(DOUBLE DAGGER)
3.700% 07/15/99 .............................. 5,000 5,000,000
-----------
17,100,000
-----------
Indiana--9.0%
Bremen IDA RB Series 1996 A
(Universal Bearings, Inc. Project
Private Placement) DN(DAGGER)
3.600% 09/07/98 .............................. 5,000 5,000,000
Indiana Development Finance
Authority IDA RB (Enterprise
Center I Project) DN(DAGGER)
3.400% 09/07/98 .............................. 2,900 2,900,000
See Accompanying Notes to Financial Statements.
7
<PAGE>
CASH PRESERVATION FAMILY
THE RBB FUND, INC.
Municipal Money Market Portfolio
Statement of Net Assets (Continued)
August 31, 1998
Par
(000) Value
----------- -----------
Indiana--(continued)
Indiana Development Finance
Authority IDA RB (Enterprise
Center II Project) DN(DAGGER)
3.400% 09/07/98 .............................. $ 2,000 $ 2,000,000
Indiana Development Finance
Authority IDA RB (Enterprise
Center IV Project) DN(DAGGER)
3.400% 09/07/98 .............................. 7,500 7,500,000
Portage Economic Development RB
(Breckenridge Apartments Project)
DN(DAGGER)
3.450% 09/07/98 .............................. 4,650 4,650,000
-----------
22,050,000
-----------
Kentucky--7.0%
Hopkinsville IDA RB (Douglas Autotech
Corp. Project) Series 1995 DN(DAGGER)
4.350% 09/07/98 .............................. 7,700 7,700,000
Kentucky Economic Development
Finance Authority Hospital
Facilities RB (Baptist Healthcare
System) DN(DAGGER)
3.350% 09/07/98 .............................. 1,500 1,500,000
Kentucky Interlocal School
Transportation Association TAN
and RAN Certificates of Participation
3.900% 06/30/99 .............................. 8,000 8,016,593
-----------
17,216,593
-----------
Massachusetts--1.9%
Commonwealth of Massachusetts
Federal Highway Grant Anticipation
Notes 1998 Series A Trust Receipt
(Floater-Trs) DN(DAGGER)
3.600% 09/02/98 .............................. 900 900,000
Whiteman-Hanson Regional School
District BAN
4.000% 07/01/99 .............................. 1,000 1,001,195
Whiteman-Hanson Regional School
District RAN
4.100% 06/30/99 .............................. 2,800 2,807,806
-----------
4,709,001
-----------
Par
(000) Value
----------- -----------
Missouri--2.9%
Kansas City IDA RB (Mid-America
Health Services, Inc. Project)
Series 1984 DN(DAGGER)
3.470% 09/07/98 .............................. $ 1,100 $ 1,100,000
Missouri Environmental Improvement
and Energy Resource Authority RB
(Kansas City Power and Light Co.
Project) Series 1992 DN(DAGGER)
3.300% 09/07/98 .............................. 5,900 5,900,000
----------
7,000,000
----------
Nebraska--1.5%
Lancaster (Sun-Husker Foods, Inc.
Project) DN(DAGGER)
4.100% 09/07/98 .............................. 3,800 3,800,000
----------
New Hampshire--0.6%
New Hampshire State Business
Finance Authority PCR RB (New
England Power Co. Project) MB
3.650% 09/24/98 .............................. 1,500 1,500,000
----------
New Jersey--0.2%
New Jersey Economic Development
Authority Economic Development RB
(J. JAMS REALTY CO.) DN(DAGGER)
3.200% 09/07/98 .............................. 500 500,000
----------
New York--3.5%
New York City G.O. Series 1994 H-3
TECP (Financial Security Assurance)
3.400% 10/09/98 .............................. 5,500 5,500,000
New York State Energy Research &
Development Authority PCR
Refunding RB (Niagara Mohawk)
Series 1987A DN
3.200% 09/01/98 .............................. 3,110 3,110,000
----------
8,610,000
----------
See Accompanying Notes to Financial Statements.
8
<PAGE>
CASH PRESERVATION FAMILY
THE RBB FUND, INC.
Municipal Money Market Portfolio
Statement of Net Assets (Continued)
August 31, 1998
Par
(000) Value
----------- -----------
North Carolina--8.3%
Charlotte-Mecklenburg Hospital
Authority Health Care RB DN(DAGGER)
3.200% 09/07/98 .............................. $ 1,500 $ 1,500,000
Haywood Regional Medical Center
RB Series 1997 DN(DAGGER)
3.200% 09/07/98 .............................. 1,800 1,800,000
North Carolina Educational Facilities
Finance Agency (Duke University
Project) DN(DAGGER)
3.200% 09/07/98 .............................. 3,200 3,200,000
North Carolina Medical Care
Commission Health Care Facility RB
(Lutheran Services for the Aging
Project) Series 1998 DN(DAGGER)
3.250% 09/07/98 .............................. 4,000 4,000,000
North Carolina Medical Care
Commission Hospital RB (Baptist
Hospital Project) Series 1996 DN(DAGGER)
3.250% 09/07/98 .............................. 1,400 1,400,000
North Carolina Medical Care
Community Hospital Lincoln Health
System DN(DAGGER)
3.300% 09/07/98 .............................. 1,600 1,600,000
Rockingham County Industrial
Facilities and Finance Authority
PCR RB (Medibeg USA, Inc.)
1997 DN(DAGGER)
3.400% 09/03/98 .............................. 3,000 3,000,000
Wake County Industrial Facilities and
Pollution Control Financing
Authority RB (Carolina Power &
Light Co. Project) Series 1987 DN(DAGGER)
3.300% 09/07/98 .............................. 1,200 1,200,000
Wake County Industrial Facility PCR RB
(Carolina Power & Light Co.) Series
B DN(DAGGER)
3.300% 09/07/98 ................................ 2,600 2,600,000
-----------
20,300,000
-----------
Par
(000) Value
----------- -----------
Ohio--6.5%
Canfield Local School District BAN
3.800% 04/15/99 .............................. $ 4,900 $ 4,902,038
Clinton County Hospital RB (Ohio
Hospital Capital, Inc. Pooled
Financing Programs) DN(DAGGER)
3.350% 09/07/98 .............................. 2,000 2,000,000
Mahoning County (Youngstown Iron
& Metal Inc. Project) DN(DAGGER)
3.500% 09/07/98 .............................. 2,040 2,040,000
Ohio State Higher Education Facilities
Community RB Pooled Financing
DN(DAGGER)
3.350% 09/07/98 ................................ 4,600 4,600,000
Trumbull County Health Care Facilities
RB Series 1998 DN(DAGGER)
3.350% 09/07/98 .............................. 2,500 2,500,000
-----------
16,042,038
-----------
Oklahoma--2.0%
Oklahoma County Finance Authority
IDA RB (Southwest Electric Co.
Project) Series 1998 DN(DAGGER)
3.450% 09/07/98 .............................. 3,000 3,000,000
Oklahoma Development Finance
Authority (Shawnee Funding
Limited) DN(DAGGER)
3.450% 09/07/98 .............................. 2,000 2,000,000
-----------
5,000,000
-----------
Oregon--0.7%
Portland Multifamily Housing RB
Village of Lovejoy Fountain DN(DAGGER)
3.450% 09/07/98 .............................. 1,600 1,600,000
-----------
Pennsylvania--3.0%
Geisinger Authority Health System RB
(Penn State Geisinger Health
System) DN(DAGGER)
3.350% 09/01/98 .............................. 1,100 1,100,000
Philadelphia IDA RB (30th Street
Station Project) Series 1987 DN(DAGGER)
3.900% 09/30/98 .............................. 6,300 6,300,000
-----------
7,400,000
-----------
See Accompanying Notes to Financial Statements.
9
<PAGE>
CASH PRESERVATION FAMILY
THE RBB FUND, INC.
Municipal Money Market Portfolio
Statement of Net Assets (Continued)
August 31, 1998
Par
(000) Value
----------- -----------
South Carolina--7.7%
Berkeley County IDA RB (Nucor Corp.)
Series 1998 DN(DAGGER)
3.550% 09/07/98 .............................. $ 8,800 $ 8,800,000
Chesterfield County IDA RB (Culp,
Inc.) DN(DAGGER)
3.450% 09/07/98 .............................. 6,000 6,000,000
Marlboro County Solid Waste
Disposal Facilities RB (Willamette
Industries, Inc. Project) DN(DAGGER)
3.500% 09/07/98 .............................. 1,100 1,100,000
South Carolina Jobs Economic
Development Authority (Ellcon
National Inc. Project) Series 1998B
DN(DAGGER)
3.400% 09/07/98 .............................. 3,000 3,000,000
-----------
18,900,000
-----------
Tennessee--8.6%
Clarksville Public Building Authority
RB Series 1997 DN(DAGGER)
3.300% 09/07/98 .............................. 1,900 1,900,000
Montgomery County Public Building
Authority Pooled Financing RB
(Montgomery County Loan Project)
Series 1995 DN(DAGGER)
3.300% 09/07/98 .............................. 9,900 9,900,000
Oak Ridge Solid Waste Disposal
Facility Series 1996 M4
(Environmental Project) DN(DAGGER)
3.450% 09/07/98 .............................. 5,100 5,100,000
Tennessee State School Bond
Authority Higher Education
Facilities TECP
3.500% 11/18/98 .............................. 4,200 4,200,000
-----------
21,100,000
-----------
Par
(000) Value
----------- -----------
Texas--5.9%
Brazos River Harbor Navigation
District of Brazoria County PCR RB
(The Dow Chemical Co. Project)
1988 TECP
3.500% 11/17/98 .............................. $ 9,980 $ 9,980,000
Denton IDA (Hartzell Manufacturing
Inc. Project) DN(DAGGER)
3.600% 09/07/98 .............................. 1,300 1,300,000
Lower Colorado River Authority
Junior Lien Refunding RB
Series 1996 DN(DAGGER)
3.150% 09/07/98 .............................. 3,100 3,100,000
------------
14,380,000
------------
Virginia--3.3%
Metropolitan Washington D.C.
Airports Authority Flexible Term
Revenue Notes TECP(DOUBLE DAGGER)
3.550% 11/25/98 .............................. 5,000 5,000,000
Metropolitan Washington D.C.
Airports Authority Virginia
Passenger Facility Flexible Term
Notes TECP
3.500% 09/25/98 .............................. 3,000 3,000,000
------------
8,000,000
------------
Wisconsin--1.8%
Amery IDRB (Plastech Corp.) Series
1997 DN(DAGGER)
3.600% 09/07/98 .............................. 2,000 2,000,000
Mequon, City of, IDA RB (Johnson
Level GRW Investment Project) DN(DAGGER)
3.450% 09/07/98 .............................. 2,500 2,500,000
------------
4,500,000
------------
TOTAL INVESTMENTS AT VALUE--99.6%
(Cost $244,218,187*) ......................... 244,218,187
OTHER ASSETS IN EXCESS
OF LIABILITIES--0.4% ......................... 952,627
------------
See Accompanying Notes to Financial Statements.
10
<PAGE>
CASH PRESERVATION FAMILY
THE RBB FUND, INC.
Municipal Money Market Portfolio
Statement of Net Assets (Concluded)
August 31, 1998
Value
--------------
NET ASSETS (Applicable to 147,705,175
Bedford shares, 91,997 Cash Preservation
shares, 97,447,539 Janney Montgomery
Scott shares and 800 other shares)--100%...... $ 245,170,814
===============
NET ASSET VALUE, Offering and
redemption price per share
($245,170,814 (DIVIDE) 245,245,511) .......... $1.00
=====
* Also cost for Federal income tax purposes
(DAGGER) Variable Rate Demand Notes -- The rate shown is the rate as of August
31, 1998 and the maturity date shown is the date the principal amount shown can
be recovered through demand or put.
(DOUBLE DAGGER) Put Bonds -- Maturity date is the put date.
INVESTMENT ABBREVIATIONS
BAN ......................................................Bond Anticipation Note
DN ..................................................................Demand Note
GO ..........................................................General Obligations
IDA ............................................Industrial Development Authority
MB ...............................................................Municipal Bond
PCR ...................................................Pollution Control Revenue
RAN ...................................................Revenue Anticipation Note
RAW ...............................................Revenue Anticipation Warrants
RB .................................................................Revenue Bond
TAN .......................................................Tax Anticipation Note
TECP ................................................Tax Exempt Commercial Paper
TRAN ..........................................Tax and Revenue Anticipation Note
See Accompanying Notes to Financial Statements.
11
<PAGE>
CASH PRESERVATION FAMILY
THE RBB FUND, INC.
Statements of Operations
For the Year Ended August 31, 1998
<TABLE>
<CAPTION>
Municipal
Money Market Money Market
Portfolio Portfolio
------------- -------------
<S> <C> <C>
Investment Income
Interest .............................................. $ 150,707,431 $ 11,768,927
------------- -------------
Expenses
Investment advisory fees .............................. 9,618,695 1,061,254
Administration fees ................................... -- 312,593
Distribution fees ..................................... 11,703,324 1,836,326
Service organization fees ............................. 531,358 --
Directors' fees ....................................... 51,825 6,089
Custodian fees ........................................ 422,990 70,232
Transfer agent fees ................................... 3,362,291 110,557
Legal fees ............................................ 114,345 12,235
Audit fees ............................................ 180,246 20,132
Registration fees ..................................... 309,694 152,640
Insurance expense ..................................... 49,867 5,898
Printing fees ......................................... 529,786 48,870
Miscellaneous ......................................... 1,955 457
------------- -------------
28,876,376 3,637,283
Less fees waived ...................................... (3,343,093) (831,110)
Less expense reimbursement by advisor ................. (692,630) (55,085)
------------- -------------
Total expenses .................................. 22,840,653 2,751,088
------------- -------------
Net investment income ................................. 127,866,778 9,017,839
------------- -------------
Realized loss on investments .......................... (95,478) (3,055)
------------- -------------
Net increase in net assets resulting from operations... $ 127,771,300 $ 9,014,784
============= =============
</TABLE>
See Accompanying Notes to Financial Statements.
12
<PAGE>
CASH PRESERVATION FAMILY
THE RBB FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Municipal Money
Money Market Portfolio Market Portfolio
---------------------------------- ----------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
August 31, 1998 August 31, 1997 August 31, 1998 August 31, 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ......................... $ 127,866,778 $ 116,087,132 $ 9,017,839 $ 12,741,126
Net gain (loss) on investments ................ (95,478) 22,330 (3,055) (3,917)
--------------- --------------- --------------- ---------------
Net increase in net assets resulting
from operations .............................. 127,771,300 116,109,462 9,014,784 12,737,209
--------------- --------------- --------------- ---------------
Distributions to shareholders:
Dividends to shareholders from
net investment income:
Bedford shares ............................... (56,898,248) (56,929,832) (5,548,854) (5,758,068)
Bradford shares .............................. -- -- (405,975) (4,148,194)
Cash Preservation shares ..................... (10,274) (10,852) (2,738) (2,492)
Janney Montgomery Scott shares ............... (38,111,646) (29,943,530) (3,060,273) (2,832,323)
RBB shares ................................... -- (1,286) -- (49)
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) -- -- --
Sansom Street shares ......................... (2,838) -- -- --
--------------- --------------- --------------- ---------------
Total dividends to shareholders ............ (127,880,761) (116,087,132) (9,017,840) (12,741,126)
--------------- --------------- --------------- ---------------
Net capital share transactions .................. (384,357,868) 504,179,861 (242,871,946) 67,161,386
--------------- --------------- --------------- ---------------
Total increase (decrease) in net assets ......... (384,467,329) 504,202,191 (242,875,001) 67,157,469
Net Assets:
Beginning of year ............................. 2,700,025,629 2,195,823,438 488,045,815 420,888,346
--------------- --------------- --------------- ---------------
End of year ................................... $ 2,315,558,300 $ 2,700,025,629 $ 245,170,814 $ 488,045,815
=============== =============== =============== ===============
</TABLE>
See Accompanying Notes to Financial Statements.
13
<PAGE>
CASH PRESERVATION 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, August 31, August 31, August 31, August 31,
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
Net asset value, beginning
<S> <C> <C> <C> <C> <C>
of year ............................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Income from investment
operations:
Net investment income ................. 0.0474 0.0464 0.0471 0.0487 0.0278
---------- ---------- ---------- ---------- ----------
Total from investment
operations ......................... 0.0474 0.0464 0.0471 0.0487 0.0278
---------- ---------- ---------- ---------- ----------
Less distributions
Dividends (from net investment
income) .............................. (0.0474) (0.0464) (0.0471) (0.0487) (0.0278)
--------- --------- --------- --------- ---------
Total distributions .................. 0.0474) (0.0464) (0.0471) (0.0487) (0.0278)
--------- --------- --------- ---------
Net asset value, end of year ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return ............................ 4.86% 4.74% 4.81% 4.98% 2.81%
Ratios/Supplemental Data
Net assets, end of year (000) ......... $ 226 $ 242 $ 202 $ 236 $ 231
Ratios of expenses to average
net assets ........................... .95%(a) .95%(a) .95%(a) .95%(a) .95%(a)
Ratios of net investment income
to average net assets ................ 4.74% 4.64% 4.71% 4.87% 2.78%
<CAPTION>
Municipal 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,
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
Net asset value, beginning
<S> <C> <C> <C> <C> <C>
of year ............................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- ---------- ---------- ---------- ----------
Income from investment
operations:
Net investment income ................. 0.0274 0.0272 0.0274 0.0281 0.0174
--------- ---------- ---------- ---------- ----------
Total from investment
operations ......................... 0.0274 0.0272 0.0274 0.0281 0.0174
--------- ---------- ---------- ---------- ----------
Less distributions
Dividends (from net investment
income) .............................. (0.0274) (0.0272) (0.0274) (0.0281) (0.0174)
--------- ---------- ---------- ---------- ----------
Total distributions .................. (0.0274) (0.0272) (0.0274) (0.0281) (0.0174)
--------- ---------- ---------- ---------- ----------
Net asset value, end of year ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========== ========== ========== ==========
Total Return ............................ 2.82% 2.76% 2.78% 2.84% 1.75%
Ratios/Supplemental Data
Net assets, end of year (000) ......... $ 92 $ 97 $ 116 $ 161 $ 201
Ratios of expenses to average
net assets ........................... .98%(a) .98%(a) .98%(a) .98%(a) .98%(a)
Ratios of net investment income
to average net assets ................ 2.78% 2.72% 2.74% 2.81% 1.74%
</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 been 9.84%, 10.68%, 12.08%, 9.34% and 2.52% for the years ended August
31, 1998, 1997, 1996, 1995 and 1994, respectively. For the Municipal Money
Market Portfolio, the ratios of expenses to average net assets would have
been 23.15%, 26.58%, 19.20%, 10.80% and 11.52% for the years ended August
31, 1998, 1997, 1996, 1995 and 1994, respectively.
(b) Financial Highlights relate solely to the Cash Preservation Class of shares
within each portfolio.
See Accompanying Notes to Financial Statements.
14
<PAGE>
CASH PRESERVATION 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 Scott Money Family, the n/i Family, the Schneider Family, the
Boston Partners Family, and the Schneider Capital Management Family. The Cash
Preservation Family represents interests in two portfolios, which are 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 Fund seeks to maintain net asset value per share
at $1.00 for these portfolios.
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 will be 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 plus accrued interest. If the value of the underlying securities falls
below 102% of the value of the purchase price plus accrued interest, the Fund
will require the seller to deposit additional collateral by the next Fund
business day. In the event that the seller under the agreement defaults on
its repurchase obligation or fails to deposit sufficient collateral, the Fund
has the contractual right, subject to the requirements of applicable
bankruptcy and insolvency laws, to sell the underlying securities and may
claim any resulting loss from the seller. The agreements are conditioned upon
the collateral being deposited under the Federal Reserve book-entry system or
with the Fund's custodian or a third party sub-custodian.
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.
15
<PAGE>
CASH PRESERVATION 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 each of the two portfolios' average
daily net assets:
<TABLE>
<CAPTION>
Portfolio Annual Rate
-------------------------------- --------------------------------------------
<S> <C>
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.
Municipal Money Market Portfolio .35% of first $250 million of net assets;
.30% of next $250 million of net assets;
.25% of net assets in excess of $500 million.
</TABLE>
BIMC may, at its discretion, voluntarily waive all or any portion of its
advisory fee for these portfolios. 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 each of
the two investment portfolios were as follows:
<TABLE>
<CAPTION>
Gross Net
Advisory Advisory
Fee Waiver Fee
---------- ------------ ----------
<S> <C> <C> <C>
Money Market Portfolio $9,618,695 $(3,334,990) $6,283,705
Municipal Money Market Portfolio 1,061,254 (822,533) 238,721
</TABLE>
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, $55,085
and $392,949 for the Money Market Portfolio, Municipal Money Market Portfolio,
Government Obligations Money Market Portfolio, respectively.
In addition, PNC Bank serves as custodian for each of 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 two
investment portfolios were as follows:
<TABLE>
<CAPTION>
Gross Net
Transfer Agency Transfer Agency
Fee Waiver Fee
--------------- -------- ---------------
<S> <C> <C> <C>
Money Market Portfolio
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 Money Market Portfolio $3,362,291 $(8,103) $3,354,188
========== ======= ==========
</TABLE>
16
<PAGE>
CASH PRESERVATION FAMILY
THE RBB FUND, INC.
Notes to Financial Statements (Continued)
August 31, 1998
Note 2. Transactions with Affiliates and Related Parties (continued)
<TABLE>
<CAPTION>
Gross Net
Transfer Agency Transfer Agency
Fee Waiver Fee
--------------- ------ ----------------
<S> <C> <C> <C>
Municipal Money Market Portfolio
Bedford Class $ 66,188 $ -- $ 66,188
Bradford Class 2,914 -- 2,914
Cash Preservation Class 8,997 (8,578) 419
Janney Montgomery Scott Class 32,458 -- 32,458
-------- ------ --------
Total Municipal Money Market Portfolio $110,557 $(8,578) $101,979
======== ======= ========
</TABLE>
In addition, PFPC serves as administrator for the Municipal Money Market
Portfolio. The administration fee is computed daily and payable monthly at an
annual rate of .10% of each Portfolio's average daily net assets. For the year
ended August 31, 1998, the administration fee for the Municipal Money Market
Portfolio was as follows:
Administration
Fee
--------------
Municipal Money Market Portfolio $312,593
The Fund, on behalf of each class of shares within the two investment
portfolios, 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, Bradford, 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.
For the year ended August 31, 1998, distribution fees for each class were as
follows:
Distribution
Fee
------------
Money Market Portfolio
Bedford Class $ 6,509,493
Cash Preservation Class 864
Janney Montgomery Class 4,862,505
Sansom Street Class 330,462
-----------
Total Money Market Portfolio $11,703,324
===========
Municipal Money Market Portfolio
Bedford Class $ 1,119,567
Bradford Class 83,480
Cash Preservation Class 394
Janney Montgomery Class 632,885
-----------
Total Municipal Money Market Portfolio $ 1,836,326
===========
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.
17
<PAGE>
CASH PRESERVATION FAMILY
THE RBB FUND, INC.
Notes to Financial Statements (Continued)
August 31, 1998
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 Municipal Money Market Portfolio
---------------------------------- ----------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
August 31, 1998 August 31, 1997 August 31, 1998 August 31, 1997
--------------- --------------- --------------- ---------------
Value Value Value Value
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold:
Bedford Class $ 4,081,920,081 $ 4,513,203,668 $ 1,250,832,088 $ 1,075,834,153
Bradford Class -- -- 59,917,620 586,482,906
Cash Preservation Class 113,319 175,000 65,859 82,717
Janney Montgomery Scott Class 3,910,533,620 3,087,651,502 404,988,148 406,706,164
RBB Class -- 4,744 -- 200
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 5,440,322 5,696,659
Bradford Class -- -- 427,390 4,016,410
Cash Preservation Class 10,291 10,748 2,591 2,358
Janney Montgomery Scott Class 37,882,680 29,670,134 3,071,524 2,820,771
RBB Class -- 1,361 -- 53
Sansom Street Class 24,189,907 20,645,930 -- --
Shares repurchased:
Bedford Class (4,768,237,064) (4,285,531,838) (1,321,667,987) (1,070,439,669)
Bradford Class -- -- (226,438,837) (553,804,071)
Cash Preservation Class (139,525) (145,893) (73,397) (103,897)
Janney Montgomery Scott Class (3,780,710,398) (2,942,342,585) (419,437,268) (390,127,972)
RBB Class -- (67,517) -- (5,396)
Sansom Street Class (2,242,193,855) (1,940,208,702) -- --
--------------- --------------- --------------- ---------------
Net increase (decrease) $ (384,357,869) $ 504,179,861 $ (242,871,947) $ 67,161,386
=============== =============== =============== ===============
Cash Preservation Shares authorized 500,000,000 500,000,000 500,000,000 500,000,000
=============== =============== =============== ===============
</TABLE>
18
<PAGE>
CASH PRESERVATION 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:
Municipal
Money Market Money Market
Portfolio Portfolio
--------------- ---------------
Capital paid-in
Bedford Class $ 762,787,510 $ 147,705,175
Cash Preservation Class 226,299 91,997
Janney Montgomery Scott Class 904,554,222 97,447,539
Sansom Street Class 648,096,129 --
Other Classes 800 800
Accumulated net realized gain
(loss) on investments
Bedford Class (34,771) (73,952)
Cash Preservation Class (11) 3
Janney Montgomery Scott Class (40,506) (748)
Sansom Street Class (31,372) --
--------------- ---------------
$ 2,315,558,300 $ 245,170,814
=============== ===============
Note 5. Capital Loss Carryovers
At August 31, 1998, capital loss carryovers were available to offset future
realized capital gains as follows: $106,660 in the Money Market Portfolio of
which $11,182 expires in 2004 and $95,478 expires in 2006; $74,697 in the
Municipal Money Market Portfolio of which $55,760 expires in 1999, $444 expires
in 2000, $1,058 expires in 2001, $9,789 expires in 2002, $674 expires in 2004,
$3,917 expires in 2005, and $3,055 expires in 2006.
19
<PAGE>
CASH PRESERVATION 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, Janney Montgomery Scott and Sansom
Street. The Fund currently offers two other classes of shares representing
interest in the Municipal Money Market Portfolio: Bedford and Janney Montgomery
Scott. Each class is marketed to different types of investors. 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, August 31, August 31, August 31, August 31,
1998 1997 1996 1995 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%
<CAPTION>
Municipal 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,
1998 1997 1996 1995 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 .... 0.0286 0.0285 0.0288 0.0297 0.0195
---------- ---------- ---------- ---------- ----------
Total from investment
operations ............ 0.0286 0.0285 0.0288 0.0297 0.0195
---------- ---------- ---------- ---------- ----------
Less distributions
Dividends (from net
investment income) ...... (0.0286) (0.0285) (0.0288) (0.0297) (0.0195)
---------- ---------- ---------- ---------- ----------
Total distributions .... (0.0286) (0.0285) (0.0288) (0.0297) (0.0195)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return ............... 2.97% 2.88% 2.92% 3.01% 1.97%
Ratios/Supplemental Data
Net assets, end of
year (000) .............. $147,633 $ 213,034 $ 201,940 $ 198,425 $ 182,480
Ratios of expenses to
average net assets ...... .89%(a) .85%(a) .84%(a) .82%(a) .77%(a)
Ratios of net investment
income to average
net assets .............. 2.86% 2.85% 2.88% 2.97% 1.95%
</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. For the Municipal Money Market
Portfolio, the ratios of expenses to average net assets would have been
1.15%, 1.14%, 1.12%, 1.14% and 1.12% for the years ended August 31, 1998,
1997, 1996, 1995 and 1994, respectively.
20
<PAGE>
CASH PRESERVATION FAMILY
THE RBB FUND, INC.
Notes to Financial Statements (Continued)
August 31, 1998
Note 6. Other Financial Highlights (continued)
Bradford Municipal Money Market Shares(c)
<TABLE>
<CAPTION>
For the For the For the For the
Month Year Year Year
Ended Ended Ended Ended
September 30, 1997 August 31, 1997 August 31, 1996 August 31, 1995
------------------ --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year
or period ............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------- ------------- ------------- -------------
Income from investment operations:
Net investment income ................ 0.0023 0.0285 0.0288 0.0297
------------- ------------- ------------- -------------
Total from investment operations . 0.0023 0.0285 0.0288 0.0297
------------- ------------- ------------- -------------
Less distributions
Dividends (from net investment income) (0.0023) (0.0285) (0.0288) (0.0297)
------------- ------------- ------------- -------------
Total distributions .............. (0.0023) (0.0285) (0.0288) (0.0297)
------------- ------------- ------------- -------------
Net asset value, end of year or period . $ 1.00 $ 1.00 $ 1.00 $ 1.00
============= ============= ============= =============
Total Return ........................... 0.24%(d) 2.88% 2.92% 3.01%
Ratios /Supplemental Data
Net assets, end of year or period .... $ 168,172 $ 166,089 $ 129,399 $ 110,936
Ratios of expenses to average
net assets ......................... .89%(a)(b) .85%(a) .84%(a) .82%(a)
Ratios of net investment income to
average net assets .................. 0.23%(d) 2.85% 2.88% 2.97%
<CAPTION>
For the For the
Year Year
Ended Ended
August 31, 1994 August 31, 1993
--------------- ---------------
<S> <C> <C>
Net asset value, beginning of year
or period ................................. $ 1.00 $ 1.00
------------- -------------
Income from investment operations:
Net investment income ..................... 0.0195 0.0195
------------- -------------
Total from investment operations ...... 0.0195 0.0195
------------- -------------
Less distributions
Dividends (from net investment income)..... (0.0195) (0.0195)
------------- -------------
Total distributions ................... (0.0195) (0.0195)
------------- -------------
Net asset value, end of year or period ...... $ 1.00 $ 1.00
============= =============
Total Return ................................ 1.97% 1.96%
Ratios /Supplemental Data
Net assets, end of year or period ......... $ 100,089 $ 76,975
Ratios of expenses to average
net assets .............................. .77%(a) .77%(a)
Ratios of net investment income to
average net assets ....................... 1.95% 1.95%
</TABLE>
(a) Without the waiver of advisory, transfer agency and administration fees and
without the reimbursement of certain operating expenses, the ratio of
expenses to average net assets would have been 1.13% annualized for the
month ended September 30, 1997, 1.14%, 1.12%, 1.14%, 1.11% and 1.16% for
the years ended August 31, 1997, 1996, 1995, 1994 and 1993, respectively.
(b) Annualized.
(c) On October 1, 1997, the Municipal Money Market Portfolio's Bradford Class
of 168,177,203 shares were liquidated.
(d) Non-annualized.
21
<PAGE>
CASH PRESERVATION FAMILY
THE RBB FUND, INC.
Notes to Financial Statements (Continued)
August 31, 1998
Note 6. Other Financial Highlights (continued)
The Janney Montgomery Scott Family
<TABLE>
<CAPTION>
Money Market Portfolio
------------------------------------------------------------------------
For the Period
For the For the For the June 12, 1995
Year Year Year (Commencement of
Ended Ended Ended Operations) to
August 31, 1998 August 31, 1997 August 31, 1996 August 31, 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
year or period ........................... $ 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 or period ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ========== ======== ========
Total Return ............................... 4.81% 4.69% 4.76% 5.30%(b)
Ratios/Supplemental Data $ 904,526 $736,85 $561,865 $443,645
Ratios of expenses to average net assets . 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a)(b)
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.
22
<PAGE>
CASH PRESERVATION FAMILY
THE RBB FUND, INC.
Notes to Financial Statements (Continued)
August 31, 1998
Note 6. Other Financial Highlights (continued)
The Janney Montgomery Scott Family (continued)
<TABLE>
<CAPTION>
Municipal Money Market Portfolio
---------------------------------------------------------------------------
For the Period
For the For the For the June 12, 1995
Year Year Year (Commencement of
Ended Ended Ended Operations) to
August 31, 1998 August 31, 1997 August 31, 1996 August 31, 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year or period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- -------- ------- -------
Income from investment operations:
Net investment income ......................... 0.0290 0.0285 0.0278 0.0063
------- -------- ------- -------
Total from investment operations ............ 0.0290 0.0285 0.0278 0.0063
------- -------- ------- -------
Less distributions
Dividends (from net investment income) ........ (0.0290) (0.0285) (0.0278) (0.0063)
------- -------- ------- -------
Total distributions ......................... (0.0290) (0.0285) (0.0278) (0.0063)
------- -------- ------- -------
Net asset value, end of year or period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ========= ======== ========
Total Return .................................... 2.94% 2.89% 2.81% 2.87%(b)
Ratios/Supplemental Data
Net assets, end of year or period (000) ....... $97,445 $108,826 $89,428 $113,256
Ratios of expenses to average net assets ...... 0.86%(a) 0.85%(a) 0.94%(a) 1.00%(a)(b)
Ratios of net investment income to average
net assets .................................. 2.90% 2.85% 2.78% 2.83%(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 Municipal Money Market Portfolio
would have been 1.16%, 1.13%, 1.23% and 1.30% for the years or periods
ended August 31, 1998, 1997, 1996 and 1995, respectively.
(b) Annualized.
23
<PAGE>
CASH PRESERVATION FAMILY
THE RBB FUND, INC.
Notes to Financial Statements (Concluded)
August 31, 1998
Note 6. Other Financial Highlights (continued)
The Sansom Street Family
<TABLE>
<CAPTION>
Money Market Portfolio
------------------------------------------------------------------------------------
For the For the For the For the For the
Year Year Year Year Year
Ended Ended Ended Ended Ended
August 31, 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
-------- ------- ------- -------- --------
Less distributions
Dividends (from net investment income) ..... (0.0520) (0.0510) (0.0518) (0.0543)
-------- ------- ------- -------- --------
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.
24
<PAGE>
Tax Information for Shareholders
(Unaudited)
In the twelve months ended August 31, 1998 (the end of the Fund's fiscal year),
100% of the dividends paid by the Municipal Money Market and New York Municipal
Money Market Portfolios were exempt-interest dividends for purposes of federal
income taxes and free from such taxes. However, approximately 45% and 18% of
such dividends was attributable to interest on private activity bonds which must
be included in federal alternative minimum taxable income for the purpose of
determining liability for federal alternative minimum tax.
In January 1999, you will be furnished with a schedule showing the yearly
percentage breakdown by state or U.S. possession of the source of interest
earned by the Municipal Money Market and New York Municipal Money Market
Portfolios in 1998. It is suggested that you consult your tax adviser concerning
the applicability of state and local taxes to dividends paid by the Fund during
the year.
25
<PAGE>
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