==================================
MORGAN KEEGAN
MOR
ACCOUNT
ANNUAL
REPORT FOR
BEDFORD SHARES
AUGUST 31,2000
MONEY MARKET PORTFOLIO
MUNICIPAL
MONEY MARKET PORTFOLIO
GOVERNMENT OBLIGATIONS
MONEY MARKET PORTFOLIO
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
ANNUAL INVESTMENT ADVISER'S REPORT
A year ago, the financial markets were preoccupied with Y2K preparedness,
even as the Federal Reserve was in the midst of a sharp tightening of monetary
policy. In the end, Y2K proved to be a non-event, but the Fed's concern about
the strength of the U.S. economy was justified, as the nation's gross domestic
product grew, in successive quarters, at rates of 4-5%. The second quarter this
year, in fact, registered a 5.3% gain, well above the Fed's non-inflationary
threshold. Only the concurrent gain in productivity kept the Fed from raising
interest rates still higher. At present, the main focus is on energy prices and
the threat that $40 per barrel of oil poses to higher producer and consumer
prices. Overall, inflation has remained well behaved in the past year,
increasing by less than 3%, but it continues to be a key determinant of monetary
policy. The Fed's actions over the last year appear to have produced an economic
slowdown in the third quarter which may be sufficient to keep the federal funds
level at 6.50% through the end of the year.
Starting in June 1999, the Federal Reserve raised short-term interest rates
a total of 175 basis points to 6.50%, in an effort to slow the economy to a more
sustainable and non-inflationary pace. For much of the last twelve months, the
yield curve was positively sloped, reflecting the market's continued
expectations of rising interest rates. Y2K, of course, produced a brief anomaly
last January, but spreads of 50-75 basis points were generally available between
overnight and one-year investments. The Fed's most recent move was a fifty basis
point increase in May 2000. The magnitude of that move, coupled with subsequent
signs of an economic slowdown in July and August, caused the yield curve to
flatten considerably. Currently, there is less than a twenty-five basis point
spread between overnights and one year. Average weighted maturities in the RBB
Money Market and Government Money Market Portfolios were extended, when
possible, in the May to August period, to a 45-55 day range to capture the
higher yields that were available on longer dated investments.
Last fall, as the RBB Municipal Money Market Portfolio began preparations
for possible cash outflows due to Y2K concerns, yields on municipal money market
securities rose approximately 75 basis points to an average of 3.80% by
year-end. As Y2K concerns quickly abated and January coupon payments flooded the
market, dealers of municipal securities took the opportunity to adjust yields
downward reflecting an increase in demand and a decrease in supply of
securities. Supply/demand pressures continued in the municipal money markets
through the April tax season. In anticipation of large redemptions occurring on
April 15, the Municipal Money Market Portfolio increased holdings in weekly
variable rate demand notes for liquidity. Tax-related redemptions were unusually
large this year and yields on municipal money market securities rose
approximately 135 basis points in the month of April. By the end of April,
yields on weekly variable rate demand notes had spiked as high as 5.00%. A
passive Federal Reserve and new issuance of municipal notes during this past
summer returned a degree of stability to the municipal markets. June, July and
August witnessed new supply as several large issuers, including $700 million in
Los Angeles notes and $3 billion in Texas notes, came to the markets with their
annual note deals. The Portfolio participated in several of the large deals and
many of the smaller $5-25 million one-year note offerings. For the year ended
August 31, 2000, the RBB Municipal Money Market Portfolio generally targeted a
40-50 day range for its average weighted maturity and will likely maintain that
position through selective purchases of new one-year rate issuance.
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 RBBFund,Inc.:
In our opinion, the accompanying statements of net assets, and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Money Market, Municipal Money Market and Government Obligations Money Market
Portfolios, separately managed portfolios of The RBB Fund, Inc. (the "Fund"), at
August 31, 2000, the results of each of their operations for the year then
ended, the changes in each of 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 accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 2000 by
correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Two Commerce Square
Philadelphia, Pennsylvania
October 20, 2000
2
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 2000
PAR
(000) VALUE
------- -------------
CERTIFICATES OF DEPOSIT--7.1%
DOMESTIC CERTIFICATES OF DEPOSIT--2.5%
First Tennessee Bank
6.650% 11/03/00 ................................... $35,000 $ 35,000,910
-------------
YANKEE DOLLAR CERTIFICATES OF DEPOSIT--4.6%
Bank of Montreal Yankee
6.540% 09/08/00 ................................... 25,000 25,000,000
Industrial Bank of Japan
6.620% 10/10/00 ................................... 19,600 19,600,000
Sanwa Bank Yankee
6.620% 10/05/00 ................................... 20,000 20,000,187
-------------
64,600,187
-------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $99,601,097) ............................ 99,601,097
-------------
COMMERCIAL PAPER--51.8%
ASSET BACKED SECURITIES--22.8%
Beta Finance Inc.
6.650% 09/11/00 ................................... 9,000 8,983,375
Corporate Receivable Corp.
6.500% 12/20/00 ................................... 25,000 24,503,472
Edison Asset Securitzation LLC.
6.510% 11/06/00 ................................... 10,000 9,880,650
Emerald Certificates Program
6.540% 10/24/00 ................................... 21,705 21,496,017
Enterprise Funding Corp.
6.660% 12/18/00 ................................... 10,000 9,800,200
Fairway Finance Ltd.
6.630% 09/14/00 ................................... 53,412 53,284,123
K2 (USA) LLC.
6.530% 02/26/01 ................................... 9,025 8,733,608
Main Place Funding Corp.
6.888% 10/25/00 ................................... 32,000 32,003,247
Moriarty LLC.
6.690% 12/15/00 ................................... 55,000 53,926,813
Sheffield Receivables Corp.
6.620% 09/18/00 ................................... 48,300 48,149,009
Sigma Finance, Inc.
6.670% 12/15/00 ................................... 50,000 49,027,292
-------------
319,787,806
-------------
PAR
(000) VALUE
------- -------------
BANKS--8.5%
Banque Et Caisse Luxembourg
6.500% 02/26/01 ................................... $24,600 $ 23,809,383
Cregem North America Inc.
6.510% 02/13/01 ................................... 40,000 38,806,500
Forrestal Funding Master Trust
6.565% 02/09/01 ................................... 13,000 12,618,318
HSBC USA Inc.
6.671% 03/09/01 ................................... 35,000 33,774,204
Santander Finance Inc.
6.540% 02/07/01 ................................... 10,000 9,711,150
-------------
118,719,555
-------------
CHEMICALS & ALLIED PRODUCTS--1.7%
BASF (AG)
6.510% 02/27/01 ................................... 25,000 24,190,771
-------------
GOVERNMENT--1.7%
Quebec, Province of
6.620% 11/14/00 ................................... 24,000 23,673,413
-------------
MOTOR VEHICLES & CAR BODIES--1.4%
Daimler Chrysler North America
Holding Corp.
6.500% 02/26/01 ................................... 20,000 19,357,222
-------------
NATURAL GAS TRANS. & DISTR.--1.4%
Consolidated Natural Gas Co.
6.600% 11/30/00 ................................... 20,000 19,670,000
-------------
RETAIL - DEPARTMENT STORES--0.7%
St. Michael Finance Ltd.
6.520% 11/07/00 ................................... 10,180 10,056,471
-------------
SECURITY BROKERS & DEALERS--7.3%
Lehman Brothers Holdings Inc.
6.750% 12/11/00 ................................... 40,000 39,242,500
6.720% 12/15/00 ................................... 9,000 8,823,600
Salomon Smith Barney Holdings Inc.
6.610% 09/14/00 ................................... 55,000 54,868,718
-------------
102,934,818
-------------
See Accompanying Notes to Financial Statements.
3
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 2000
PAR
(000) VALUE
------- -------------
SHORT-TERM BUSINESS CREDIT INSTITUTIONS--6.0%
Heller Financial, Inc.
6.730% 09/05/00 ................................... $40,000 $ 39,970,089
6.730% 09/06/00 ................................... 45,000 44,957,937
-------------
84,928,026
-------------
TELEPHONE COMMUNICATIONS--0.3%
AT&T Corp.
6.490% 02/08/01 ................................... 5,000 4,855,778
-------------
TOTAL COMMERCIAL PAPER
(Cost $728,173,860) ........................... 728,173,860
-------------
MUNICIPAL BONDS--4.8%
FLORIDA--0.1%
Coral Springs, IDR (Alliance Corp.)
Series 1995 (Suntrust Bank,
Central FL LOC)+
6.650% 09/06/00 ................................... 2,000 2,000,000
-------------
GEORGIA--0.7%
De Kalb County, Development Authority
Series 1995 B (Emory University
Project)+
6.600% 09/07/00 ................................... 9,280 9,280,000
-------------
ILLINOIS--0.3%
Illinois Health Facilities Authority
(The Streeterville Corp. Project)
Series 1993-B (Bank One N.A. LOC)+
6.700% 09/06/00 ................................... 4,400 4,400,000
-------------
INDIANA--0.1%
Bremen, IDR Bond Series 1996 B
(Society National Bank, Cleveland
LOC)+
6.650% 09/07/00 ................................... 1,665 1,665,000
-------------
KENTUCKY--0.3%
Boone County, Taxable IDR Refunding
Bonds (Square D Company Project)
Series 1994-B (Societe Generale
LOC)+
6.700% 09/06/00 ................................... 4,200 4,200,000
-------------
PAR
(000) VALUE
------- -------------
MISSISSIPPI--1.7%
Mississippi Business Finance Corp.
IDR Bond (Bryan Foods, Inc.
Project) Series 1994 (Sara Lee
Corp. LOC)+
6.750% 09/06/00 ................................... $14,000 $ 14,000,000
Mississippi Business Finance Corp.
IDR Bond (Dana Lighting Inc.)
Series 1995 (Suntrust Bank,
Central FL LOC)+
6.650% 09/07/00 ................................... 4,900 4,900,000
Mississippi Business Finance Corp. IDR
Bond (Choctaw Foods Inc. Project)
Series 1995 (Rabobank Nederland
LOC)+
6.650% 09/07/00 ................................... 4,800 4,800,000
-------------
23,700,000
-------------
NORTH CAROLINA--0.5%
City of Asheville (Wachovia Bank LOC)+
6.600% 09/06/00 ................................... 7,000 7,000,000
-------------
TEXAS--1.1%
South Central Texas Industrial
Development Corp. Taxable IDR
Revenue Bond (Rohr Industries
Project) Series 1990 (NBD Bank
N.A. LOC)+
6.700% 09/06/00 ................................... 14,800 14,800,000
-------------
TOTAL MUNICIPAL BONDS
(Cost $67,045,000) ............................ 67,045,000
-------------
See Accompanying Notes to Financial Statements.
4
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONCLUDED)
AUGUST 31, 2000
PAR
(000) VALUE
------- -------------
VARIABLE RATE OBLIGATIONS--22.8%
AIRCRAFT PARTS & AUXILIARY EQUIPMENT, NEC--2.1%
Textron Financial Corp.++
6.742% 11/02/00 ................................... $30,000 $ 30,000,000
-------------
BANKS--18.9%
AB Spintab Corp.++
6.740% 10/23/00 ................................... 25,000 24,997,350
American Express Centurion Bank++
6.670% 09/01/00 ................................... 21,000 21,000,000
Bank of America N.T.S.A.++
6.670% 09/01/00 ................................... 50,000 50,000,000
Bayerische Landesbank Girozentrale++
6.540% 09/28/00 ................................... 25,000 24,993,982
SMM Trust 1999-A++
6.780% 09/13/00 ................................... 10,000 10,000,000
SMM Trust 2000-B++
6.639% 09/13/00 ................................... 69,650 69,650,000
Westdeutsche Landesbank
Girozentrale++
6.540% 09/25/00 ................................... 15,000 14,996,420
Westpac Banking Corp.++
6.655% 09/05/00 ................................... 50,000 49,997,514
-------------
265,635,266
-------------
PERSONAL CREDIT INSTITUTIONS--1.8%
American Honda Finance Corp.++
6.720% 10/18/00 ................................... 24,800 24,799,078
-------------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $320,434,344) ........................... 320,434,344
-------------
MEDIUM TERM NOTES--4.3%
SECURITY BROKERS & DEALERS--4.3%
Goldman Sachs Group, Inc.++
6.810% 09/12/00 ................................... 50,000 50,000,000
6.730% 12/20/00 ................................... 10,000 10,000,000
-------------
60,000,000
-------------
TOTAL MEDIUM TERM NOTES
(Cost $60,000,000) ............................ 60,000,000
-------------
PAR
(000) VALUE
------- -------------
TIME DEPOSITS--9.0%
Fifth Third Bank
6.656% 09/01/00 ................................... $67,000 $ 67,000,000
Firstar Bank N.A. (Mercantile Bank)
6.625% 09/01/00 ................................... 60,100 60,100,000
-------------
TOTAL TIME DEPOSITS
(Cost $127,100,000) ........................... 127,100,000
-------------
TOTAL INVESTMENTS--99.8%
(Cost $1,402,354,301*) ............................ $1,402,354,301
--------------
OTHER ASSETS IN EXCESS
OF LIABILITIES--0.2% .............................. 2,371,576
-------------
NET ASSETS (Applicable to
454,943,875 Bedford shares,
412,407 Cash Preservation shares,
326,745,422 Sansom Street shares,
405,205,669 Select shares,
217,519,890 Principal shares,
and 800 other shares)--100% ........................ $1,404,725,877
==============
NET ASSET VALUE, Offering and
redemption price per share
($1,404,725,877 / 1,404,828,063) .................. $1.00
=====
* Also cost for Federal income tax purposes.
+ Variable Rate Demand Note -- The interest rate shown is the rate as of
August 31, 2000 and the maturity date shown is the longer of the next
interest rate readjustment date or the date the principal amount shown can
be recovered through demand.
++ Variable Rate Obligations -- The interest rate shown is the rate as of
August 31, 2000 and the maturity date shown is the next interest rate
readjustment date or the maturity date.
INVESTMENT ABBREVIATIONS
IDR .........Industrial Development Revenue
LOC .......................Letter of Credit
VRDN .............Variable Rate Demand Note
See Accompanying Notes to Financial Statements.
5
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 2000
PAR
(000) VALUE
------- -------------
MUNICIPAL BONDS--99.2%
DISTRICT OF COLUMBIA--1.7%
District of Columbia GO (General Fund
Recovery) Series B (Societe Generale
LOC) DN+
4.350% 09/01/00 ................................... $ 2,100 $ 2,100,000
-------------
FLORIDA--4.9%
Greater Orlando Airport Authority
AMT (Morgan Guaranty LOC) TECP
4.350% 09/14/00 ................................... 4,000 4,000,000
Putnam County Development Authority
PCR RB MB (National Rural Utilities
Co-op Seminole Electric Project)
Series H 1984++
4.050% 09/15/00 ................................... 2,000 2,000,000
-------------
6,000,000
-------------
GEORGIA--0.8%
McDuffie County, Development Authority
AMT (Temple-Inland Forest Product
Corp. Project) TECP
4.650% 10/13/00 ................................... 1,000 1,000,000
-------------
HAWAII--1.7%
Hawaii State Department of Budget &
Finance (Palama Meat Co. Project)
DN (Bank of Hawaii LOC)+
5.150% 09/07/00 ................................... 2,040 2,040,000
-------------
ILLINOIS--12.9%
Addison, Village Of, Dupage County,
Industrial Revenue Refunding Bonds
AMT (General Binding Corp. Project)
1988 DN (ABN AMRO Bank LOC)+
4.630% 09/07/00 ................................... 1,450 1,450,000
Chicago Gas Supply RB (Peoples Gas
Light & Coke Co. Project)
1993B MB++
4.050% 12/01/00 ................................... 5,575 5,575,000
Chicago, City Of, IDA RB AMT(Goose
Island Beer O. Project) DN (ABN
AMRO Bank LOC)+
4.610% 09/07/00 ................................... 1,900 1,900,000
East Dundee, Kane and Cook Counties,
IDA RB AMT (Otto Engine Project)/
(ABN AMRO Bank LOC) DN+
4.300% 09/07/00 ................................... $ 900 $ 900,000
PAR
(000) VALUE
------- -------------
ILLINOIS--(CONTINUED)
Illinois Development Finance Authority
PCR RB (Illinois Power Company
Project) (ABN-AMRO Bank LOC) MB++
4.350% 12/15/00 ................................... 2,000 2,000,000
Illinois Health Facilities Authority
Revolving Fund Pooled Financing
Program (The University of Chicago
Project) MB++
4.150% 09/26/00 ................................... 4,000 4,000,000
-------------
15,825,000
-------------
INDIANA--4.5%
Indiana Development Finance Authority
IDA RB (Enterprise Center II Project)
DN (Bank One Illinois Key Bank LOC)+
4.300% 09/07/00 ................................... 3,000 3,000,000
Indiana State Development Finance
Authority Economic Development
AMT RB DN (Saroyan Hardwoods
Inc. Project) (Banc One Funding
Corp. LOC)+
4.500% 09/07/00 ................................... 1,550 1,550,000
Indiana State Educational Facilities
Authority BAN Series 2000B
4.850% 05/03/01 ................................... 1,000 1,002,263
-------------
5,552,263
-------------
KANSAS--1.4%
Wyandotte County Kansas City Municipal
GO Notes Series 9
4.300% 02/01/01 ................................... 1,663 1,663,000
-------------
KENTUCKY--7.2%
Henderson Industrial Building RB AMT
(Shamrock Technologies) 1997 DN
(First Union National Bank LOC)+
4.500% 09/07/00 ................................... 2,771 2,771,000
See Accompanying Notes to Financial Statements.
6
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 2000
PAR
(000) VALUE
------- -------------
KENTUCKY--(CONTINUED)
Jefferson County PCR RB (Louisville
Gas & Electric Co. Project) Series
1993A TECP
4.500% 11/16/00 ................................... $ 2,000 $ 2,000,000
Kentucky Interlocal School
Transportation Association TRAN
Series 2000
5.000% 06/29/01 ................................... 2,000 2,009,472
Pulaski County Solid Waste Disposal
Facilities PCRB AMT (East Kentucky
Power) Series B MB++
4.300% 02/15/01 ................................... 2,000 2,000,000
-------------
8,780,472
-------------
MARYLAND--2.5%
Maryland State Economic Development
Corp. RB AMT (John Schmitz &
Sons Inc. Project) DN (Allfirst
Bank LOC)+
4.390% 09/07/00 ................................... 3,000 3,000,000
-------------
MASSACHUSETTS--2.5%
New England Educational Loan
Marketing Corp. MB++
6.200% 09/01/00 ................................... 3,000 3,000,000
-------------
MICHIGAN--3.6%
Michigan State Strategic Fund Limited
AMT DN (Banc One LOC)+
4.500% 09/07/00 ................................... 4,400 4,400,000
-------------
MINNESOTA--3.2%
Hennepin County GO
Series 2000B (Landesbank Hessen-
Thuringen Girozentrale LOC) DN+
4.150% 09/07/00 ................................... 2,800 2,800,000
Minneapolis GO Series 1995B DN
(Bayerische Landesbank Hypo-Uno
Vereinsbank LOC)+
4.150% 09/07/00 ................................... 200 200,000
PAR
(000) VALUE
------- -------------
MINNESOTA--(CONTINUED)
Minneapolis GO Series 1999
(Convention Center Project) DN
(Bayerische Hypo-Uno Vereinsbank
LOC)+
4.150% 09/07/00 ................................... $ 485 $ 485,000
Minneapolis GO Series 1999A DN
(Bayerische Hypo-Uno
Vereinsbank LOC)+
4.150% 09/07/00 ................................... 200 200,000
Minneapolis GO Bonds
Series 1999 DN (Bayerische Hypo-
Uno Vereinsbank LOC)+
4.150% 09/07/00 ................................... 200 200,000
-------------
3,885,000
-------------
NEBRASKA--3.1%
Lancaster County Industrial
Development RB AMT(Sun-Husker
Foods, Inc. Project) DN (Bank of
Tokyo LOC)+
4.750% 09/07/00 ................................... 3,800 3,800,000
-------------
NEW JERSEY--2.1%
Aberdeen Township BAN
4.900% 08/16/01 ................................... 1,000 1,004,113
New Jersey State Educational Facilities
Authority RB DN Series 2000 B
(Allied Irish Banks LOC)+
4.050% 09/07/00 ................................... 1,600 1,600,000
-------------
2,604,113
-------------
NEW YORK--3.7%
New York State Energy Research &
Development Authority PCR RB
(Niagara Mohawk Power) Series A
DN (Toronto Dominion LOC)+
4.350% 09/01/00 ................................... 200 200,000
Oswego, County Of, IDA RB AMT
(Crysteel Manufacturing, Inc.
Project) DN (Key Corp. Bank
N.A. LOC)+
4.450% 09/07/00 ................................... 1,200 1,200,000
See Accompanying Notes to Financial Statements.
7
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 2000
PAR
(000) VALUE
------- -------------
NEW YORK--(CONTINUED)
Saint Lawrence County IDA
Environmental Improvement RB
AMT (Reynolds Metals Co.)
DN (Royal Bank of Canada LOC)+
4.000% 09/07/00 ................................... $ 1,200 $ 1,200,000
Ulster County IDA RB 1998A AMT
(Viking Industries, Inc. Project) DN
(Key Corp. Bank N.A. LOC)+
4.450% 09/07/00 ................................... 1,900 1,900,000
-------------
4,500,000
-------------
NORTH CAROLINA--5.9%
Gates County Industrial Facilities &
Pollution Control Financing Authorty
RB AMT (Coxe-Lewis Project) DN
(First Union National Bank LOC)+
4.500% 09/07/00 ................................... 1,870 1,870,000
Lee County Industrial Facilities and
Pollution Control Financing
Authority RB AMT (Var-Arden Corp
Project) Series 1999 DN (Comerica
Bank Detroit LOC)+
4.450% 09/07/00 ................................... 200 200,000
North Carolina Medical Care Commission
Hospital RB DN (Wachovia Bank)+
4.300% 09/07/00 ................................... 1,000 1,000,000
Wilkes County Industrial Facilities and
Pollution Control Financing Authority
RB AMT (Schas Circular Industries,
Inc. Project) Series 1997A DN (Marine
Midland LOC)+
4.300% 09/07/00 ................................... 4,200 4,200,000
-------------
7,270,000
-------------
OHIO--6.0%
Cuyahoga County RB (The Cleveland
Clinic) Series D DN (Bank America
N.A. LOC)+
4.300% 09/07/00 ................................... 300 300,000
Cuyahoga County Hospital RB (Cleveland
Clinic Foundation Project) Series 1998
A DN (Chase Manhattan LOC)+
4.250% 09/07/00 ................................... 2,200 2,200,000
PAR
(000) VALUE
------- -------------
OHIO--(CONTINUED)
Indian Hill Village Economic Development
RB DN Series 1999 (Fifth Third Bank
LOC)+
4.300% 09/07/00 ................................... $ 3,300 $ 3,300,000
Shaker Heights City School District TAN
Series 2000
4.500% 10/23/00 ................................... 1,500 1,500,827
-------------
7,300,827
-------------
OKLAHOMA--2.2%
Oklahoma County Finance Authority IDA
RB AMT (Southwest Electric Co.
Project) Series 1998 DN (Bank One
Oklahoma LOC)+
4.500% 09/07/00 ................................... 2,720 2,720,000
-------------
PENNSYLVANIA--1.8%
Pennsylvania Higher Education Facilities
Authority RB (University of
Pennsylvania Health Services Project)
Series 1984B DN+
4.350% 09/07/00 ................................... 1,200 1,200,000
Philadelphia IDA RB DN Series 1990A &
1990B (Morgan Guaranty LOC)+
4.300% 09/01/00 ................................... 1,000 1,000,000
-------------
2,200,000
-------------
PUERTO RICO--0.7%
Puerto Rico Government Development
Bank Series 1985 DN (MBIA
Insurance; Credit Suisse SBPA)+
3.750% 09/07/00 ................................... 900 900,000
-------------
TENNESSEE--7.4%
City of Jackson IDA RB (Quadion
Corporation Project) AMT DN
(Suntrust Bank, N.A. LOC)+
4.400% 09/07/00 ................................... 3,000 3,000,000
Morristown IDA AMT (Petoskey Plastic
Project) DN (Comerica Bank LOC)+
4.550% 09/07/00 ................................... 6,000 6,000,000
-------------
9,000,000
-------------
See Accompanying Notes to Financial Statements.
8
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONCLUDED)
AUGUST 31, 2000
PAR
(000) VALUE
------- -------------
TEXAS--12.5%
Austin Airport System Revenue Financial
Sevices Department AMT First Union
2A-7 Merlots Series 2000 J (MBIA
Insurance) DN
4.420% 09/07/00 ................................... $ 3,000 $ 3,000,000
Brazos River Harbor Navigational District
PCR RB (The Dow Chemical Co.
Project) 1988 MB++
4.250% 11/20/00 ................................... 8,000 8,000,000
Denton IDA AMT (Hartzell Manufacturing Inc.
Project) DN (National City Bank of
Cleveland LOC)+
4.550% 09/07/00 ................................... 1,300 1,300,000
Haltom City IDA RB AMT DN 1995
(ABN AMRO LOC)+
4.300% 09/07/00 ................................... 3,000 3,000,000
-------------
15,300,000
-------------
VIRGINIA--5.1%
Metro Washington DC Airport Authority
AMT TECP (Bank of America LOC)
4.500% 01/10/01 ................................... 4,000 4,000,000
Smyth County IDA RB (Summit Properties
Project) AMT DN (Fifth Third Bank
LOC)+
4.500% 09/07/00 ................................... 2,300 2,300,000
-------------
6,300,000
-------------
WISCONSIN--1.8%
Mequon, City of, IDA RB AMT (Johnson
Level GRW Investment Project) DN
(Bank One Wisconsin LOC)+
4.500% 09/07/00 ................................... 2,180 2,180,000
-------------
TOTAL MUNICIPAL BONDS
(Cost $121,320,675) ........................... 121,320,675
-------------
TOTAL INVESTMENTS--99.2%
(Cost $121,320,675*) .............................. 121,320,675
-------------
VALUE
-------------
OTHER ASSETS IN EXCESS
OF LIABILITIES--0.8% .............................. $ 968,486
-------------
NET ASSETS (Applicable to
122,163,704 Bedford shares,
199,255 Cash Preservation shares,
and 800 other shares)--100.0% ..................... $ 122,289,161
=============
NET ASSET VALUE, Offering and
redemption price per share
($122,289,161 / 122,363,759) ...................... $1.00
=====
* Also cost for Federal income tax purposes.
+ Variable Rate Demand Notes -- The interest rate shown is the rate as of
August 31, 2000 and the maturity date shown is the longer of the next
interest readjustment date or the date the principal amount shown can be
recovered through demand.
++ Put Bonds -- Maturity date is the put date.
INVESTMENT ABBREVIATIONS
AMT ................Alternative Minimum Tax
BAN .................Bond Anticipation Note
DN .............................Demand Note
GO .....................General Obligations
IDA .......Industrial Development Authority
LOC .......................Letter of Credit
MB ..........................Municipal Bond
PCR ..............Pollution Control Revenue
RB ............................Revenue Bond
TAN ..................Tax Anticipation Note
TECP ...........Tax Exempt Commercial Paper
TRAN .....Tax and Revenue Anticipation Note
See Accompanying Notes to Financial Statements.
9
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
GOVERNMENT OBLIGATIONS MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 2000
PAR
(000) VALUE
------- -------------
AGENCY OBLIGATIONS--36.8%
FEDERAL HOME LOAN BANK--3.2%
4.875% 01/26/01 ................................... $ 3,000 $ 2,977,917
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION--17.8%
6.440% 10/24/00 ................................... 5,000 4,952,594
6.410% 11/16/00 ................................... 5,000 4,932,339
5.988% 01/16/01 ................................... 7,000 6,840,496
-------------
16,725,429
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--15.8%
6.390% 11/09/00 ................................... 5,000 4,938,763
5.900% 12/01/00 ................................... 5,000 4,997,742
6.380% 01/25/01 ................................... 5,000 4,870,628
-------------
14,807,133
-------------
TOTAL AGENCY OBLIGATIONS
(Cost $34,510,479) ............................ 34,510,479
-------------
VARIABLE RATE OBLIGATIONS--32.0%
FEDERAL HOME LOAN BANK--16.0%
6.469% 09/12/00+ .................................. 15,000 14,999,843
-------------
STUDENT LOAN MARKETING ASSOCIATION--16.0%
6.523% 09/05/00+ .................................. 5,000 4,996,701
7.023% 09/05/00+ .................................. 10,000 10,000,000
-------------
14,996,701
-------------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $29,996,544) ............................ 29,996,544
-------------
PAR
(000) VALUE
------- -------------
REPURCHASE AGREEMENTS--31.1%
Goldman Sachs
(Agreement dated 08/17/00 to be
repurchased at $20,115,556 collateralized
by $24,505,005 par Federal Home Loan
Mortgage Corporation Mortgage Bonds
5.00% to 8.00% due 09/01/06 to
02/01/30. Market Value of collateral is
$20,600,000.)
6.500% 09/18/00 ................................... $20,000 $ 20,000,000
Warburg Dillon Read
(Agreement dated 08/31/00 to be
repurchased at $9,201,674
collateralized by $9,040,000 par
US Treasury Note 3.875% due 01/15/09.
Market Value of collateral is
$9,391,955.)
6.550% 09/01/00 ................................... 9,200 9,200,000
-------------
TOTAL REPURCHASE AGREEMENTS
(Cost $29,200,000) ............................ 29,200,000
-------------
TOTAL INVESTMENTS--99.9%
(Cost $93,707,023)* ............................... 93,707,023
-------------
OTHER ASSETS IN EXCESS
OF LIABILITIES--0.1% .............................. 92,980
-------------
NET ASSETS (Applicable to
93,857,221 Bedford shares and
800 other shares)--100% ........................... $93,800,003
===========
NET ASSET VALUE, Offering and
redemption price per share
($93,800,003 / 93,858,021) ........................ $1.00
=====
* Also cost for Federal income tax purposes.
+ Variable Rate Obligations -- The interest rate is the rate as of August 31,
2000 and the maturity date shown is the longer of the next interest
readjustment date or the maturity date.
See Accompanying Notes to Financial Statements.
10
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2000
<TABLE>
<CAPTION>
GOVERNMENT
MUNICIPAL OBLIGATIONS
MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------
<S> <C> <C> <C>
Investment Income
Interest $162,934,325 $9,003,237 $26,527,809
------------ ---------- -----------
Expenses
Distribution fees .................... 10,299,835 1,400,210 2,727,347
Investment advisory fees ............. 9,804,320 814,139 1,934,364
Administration fees .................. -- 232,947 --
Transfer agent fees .................. 2,817,578 94,706 563,114
Service organization fees ............ 290,820 -- --
Printing fees ........................ 711,689 104,478 87,889
Custodian fees ....................... 393,225 55,542 86,566
Legal fees ........................... 185,772 18,485 27,699
Registration fees .................... 45,000 83,000 30,000
Audit fees ........................... 184,421 18,932 32,156
Directors' fees ...................... 144,354 11,597 22,187
Insurance expense .................... 22,144 2,885 5,393
Miscellaneous ........................ -- 3,953 6,348
------------ ---------- -----------
24,899,158 2,840,874 5,523,063
Less fees waived ..................... (1,995,632) (741,791) (645,879)
Less other expenses reimbursed ....... (2,269,338) (54,444) (358,381)
------------ ---------- -----------
Total expenses .................. 20,634,188 2,044,639 4,518,803
------------ ---------- -----------
Net investment income ................... 142,300,137 6,958,598 22,009,006
------------ ---------- -----------
Net realized loss on investments ........ (46,157) -- (776)
------------ ---------- -----------
Net increase in net assets
resulting from operations ............. $142,253,980 $6,958,598 $22,008,230
============ ========== ============
</TABLE>
See Accompanying Notes to Financial Statements.
11
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MUNICIPAL MONEY GOVERNMENT OBLIGATIONS
MONEY MARKET PORTFOLIO MARKET PORTFOLIO MONEY MARKET PORTFOLIO
------------------------------- ------------------------------- -------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 2000 AUGUST 31, 1999 AUGUST 31, 2000 AUGUST 31, 1999 AUGUST 31, 2000 AUGUST 31, 1999
--------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ...... $ 142,300,137 $ 115,658,458 $ 6,958,598 $ 6,771,609 $ 22,009,006 $ 21,447,328
Net gain (loss) on investments (46,157) 72,320 -- -- (776) (37,985)
--------------- -------------- ------------ ------------ ------------- ------------
Net increase in net assets
resulting from operations 142,253,980 115,730,778 6,958,598 6,771,609 22,008,230 21,409,343
--------------- -------------- ------------ ------------ ------------- ------------
Distributions to shareholders:
Dividends to shareholders from
Net Investment Income:
Bedford shares ........... (21,820,881) (28,089,918) (3,912,970) (3,903,796) (5,029,950) (5,251,973)
Cash Preservation shares . (14,538) (7,069) (6,360) (4,151) -- --
Janney Montgomery Scott
shares ................. (55,534,937) (43,156,041) (3,039,268) (2,863,662) (16,979,056) (16,195,355)
Principal shares ......... (11,383,856) (2,455,484) -- -- -- --
Sansom Street shares ..... (31,566,483) (36,008,586) -- -- -- --
Select shares ............ (21,979,442) (5,941,360) -- -- -- --
--------------- -------------- ------------ ------------ ------------- ------------
(142,300,137) (115,658,458) (6,958,598) (6,771,609) (22,009,006) (21,447,328)
Dividends to shareholders from Net
Realized Short-Term Gains in
excess of Net Investment Income:
Bedford shares ............ -- (2,671) -- -- -- --
Cash Preservation shares .. -- (1) -- -- -- --
Janney Montgomery Scott
shares .................. -- (2,921) -- -- -- --
Principal shares .......... -- -- -- -- -- --
Sansom Street shares ...... -- (2,010) -- -- -- --
Select shares ............. -- (102) -- -- -- --
--------------- -------------- ------------ ------------ ------------- ------------
-- (7,705) -- -- -- --
Total Dividends to
shareholders .......... (142,300,137) (115,666,163) (6,958,598) (6,771,609) (22,009,006) (21,447,328)
--------------- -------------- ------------ ------------ ------------- ------------
Net capital share transactions
(Note 3) ..................... (1,334,348,297) 423,497,416 142,742,303) 19,860,650 (388,595,430) (25,077,711)
--------------- -------------- ------------ ------------ ------------- ------------
Total increase/(decrease) in
net assets .................. (1,334,394,454) 423,562,031 142,742,303) 19,860,650 (388,596,206) (25,115,696)
Net Assets:
Beginning of year ........... 2,739,120,331 2,315,558,300 265,031,464 245,170,814 482,396,209 507,511,905
--------------- -------------- ------------ ------------ ------------- ------------
End of year ................. $ 1,404,725,877 $2,739,120,331 $122,289,161 $265,031,464 $ 93,800,003 $482,396,209
=============== ============== ============ ============ ============= ============
</TABLE>
See Accompanying Notes to Financial Statements.
12
<PAGE>
THE BEDFORD 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,
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
<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 .. 0.0512 0.0425 0.0473 0.0462 0.0469
---------- ---------- ---------- ---------- ----------
Total from investment
operations .......... 0.0512 0.0425 0.0473 0.0462 0.0469
---------- ---------- ---------- ---------- ----------
Less distributions
Dividends (from net
investment income) .... (0.0512) (0.0425) (0.0473) (0.0462) (0.0469)
---------- ---------- ---------- ---------- ----------
Total distributions ... (0.0512) (0.0425) (0.0473) (0.0462) (0.0469)
---------- ---------- ---------- ---------- ----------
Net asset value,
end of year ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return ........... 5.24% 4.34% 4.84% 4.72% 4.79%
Ratios /Supplemental Data
Net assets,
end of year (000) ..... $423,977 $360,123 $762,739 $1,392,911 $1,109,334
Ratios of expenses to
average net assets .... .97%(a) .97%(a) .97%(a) .97%(a) .97%(a)
Ratios of net investment
income to average
net assets ............ 5.15% 4.25% 4.73% 4.62% 4.69%
</TABLE>
<TABLE>
<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,
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
<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 .. 0.0301 0.0243 0.0286 0.0285 0.0288
---------- ---------- ---------- ---------- ----------
Total from investment
operations .......... 0.0301 0.0243 0.0286 0.0285 0.0288
---------- ---------- ---------- ---------- ----------
Less distributions
Dividends (from net
investment income) .... (0.0301) (0.0243) (0.0286) (0.0285) (0.0288)
---------- ---------- ---------- ---------- ----------
Total distributions ... (0.0301) (0.0243) (0.0286) (0.0285) (0.0288)
---------- ---------- ---------- ---------- ----------
Net asset value,
end of year ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== =========== =========
Total Return ........... 3.05% 2.46% 2.97% 2.88% 2.92%
Ratios /Supplemental Data
Net assets,
end of year (000) ..... $131,201 $150,278 $147,633 $213,034 $201,940
Ratios of expenses to
average net assets .... .89%(a) .89%(a) .89%(a) .85%(a) .84%(a)
Ratios of net investment
income to average
net assets ............ 2.98% 2.43% 2.86% 2.85% 2.88%
<FN>
(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 1.05%, 1.08%, 1.10%, 1.12% and 1.14% for the years ended August 31,
2000, 1999, 1998, 1997, and 1996, respectively. For the Municipal Money
Market Portfolio, the ratios of expenses to average net assets would have
been 1.21%, 1.15%, 1.15%, 1.14%, and 1.12% for the years ended August 31,
2000, 1999, 1998, 1997, and 1996, respectively.
(b) Financial Highlights relate solely to the Bedford Class of shares within
each portfolio.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
13
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS (b)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
GOVERNMENT OBLIGATIONS 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, 2000 AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996
--------------- --------------- --------------- --------------- ---------------
<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 ............................. 0.0492 0.0409 0.0464 0.0449 0.0458
-------- -------- -------- -------- --------
Total from investment operations .............. 0.0492 0.0409 0.0464 0.0449 0.0458
-------- -------- -------- -------- --------
Less distributions
Dividends (from net investment income) ............ (0.0492) (0.0409) (0.0464) (0.0449) (0.0458)
-------- -------- -------- -------- --------
Total distributions ........................... (0.0492) (0.0409) (0.0464) (0.0449) (0.0458)
-------- -------- -------- -------- --------
Net asset value, end of year ........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return ........................................ 5.03% 4.17% 4.74% 4.59% 4.68%
Ratios /Supplemental Data
Net assets, end of year (000) ..................... $102,322 $113,050 $128,447 $209,715 $192,599
Ratios of expenses to average net assets .......... .977%(a) .975%(a) .975%(a) .975%(a) .975%(a)
Ratios of net investment income to average
net assets ...................................... 4.92% 4.09% 4.63% 4.49% 4.58%
<FN>
(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 Government Obligations Money Market
Portfolio would have been 1.12%, 1.13%, 1.10%, 1.09% and 1.10% for the years
ended August 31, 2000, 1999, 1998, 1997, and 1996, respectively.
(b) Financial Highlights relate solely to the Bedford Class of shares within the
portfolio.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
14
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2000
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 19.88 billion shares are currently classified into ninety-seven classes.
Each class represents an interest in one of fourteen investment portfolios of
the Fund. The classes have been grouped into fourteen separate "families", nine
of which have begun investment operations: the Bedford Family, the Select
Family, the Sansom Street Family, the Cash Preservation Family, the Principal
Family, the n/i numeric investors Family, the Boston Partners Family, the Bogle
Family and the Schneider Family. The Bedford Family represents interests in
three 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 to ensure that cost continues to approximate market
value and to avoid dilution or other unfair results to shareholders. The
Portfolio seeks to maintain net asset value per share at $1.00.
B) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security
transactions are accounted for on the trade date. The cost of investments
sold is determined by use of the specific identification method for both
financial reporting and income tax purposes. Interest income is recorded on
the accrual basis. Certain expenses, principally distribution, transfer
agency and printing, are class specific expenses and vary by class.
Expenses not directly attributable to a specific portfolio or class are
allocated based on relative net assets of each portfolio and class,
respectively.
C) DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment
income are declared daily and paid monthly. Any net realized capital gains
are distributed at least annually. Income distributions and capital gain
distributions are determined in accordance with income tax regulations,
which may differ from accounting principles generally accepted in the
United States of America.
D) FEDERAL INCOME TAXES -- No provision is made for Federal taxes.
It is the Fund's intention to have each portfolio to continue to qualify
for and elect the tax treatment applicable to regulated investment
companies under the Internal Revenue Code and make the requisite
distributions to its shareholders which will be sufficient to relieve it
from Federal income and excise taxes.
E) REPURCHASE AGREEMENTS -- Money market instruments may be
purchased subject to the seller's agreement to repurchase them at an agreed
upon date and price. The seller will be required on a daily basis to
maintain the value of the securities subject to the agreement at not less
than the repurchase price plus accrued interest. If the value of the
underlying securities fall below 102% of the value of the purchase price
plus accrued interest, the Fund will require the seller to deposit
additional collateral by the next Fund business day. In the event that the
seller under the agreement defaults on its repurchase obligation or fails
to deposit sufficient collateral, the Fund has the contractual right,
subject to the requirements of applicable bankruptcy and insolvency laws,
to sell the underlying securities and 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.
15
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2000
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
F) USE OF ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions.
These estimates and assumptions affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to Investment Advisory Agreements, BlackRock Institutional
Management Corp. ("BIMC"), an indirect majority-owned subsidiary of The PNC
Financial Services Group, Inc., serves as investment adviser to the portfolios
described herein, and also serves as administrator for the Money Market and the
Government Obligations Money Market Portfolios. For the Money Market and
Government Obligations Money Market Portfolios, BIMC and PFPC, Inc. ("PFPC")
have entered into a delegation agreement, under which PFPC has agreed to perform
Administration and Accounting services for an annual fee of .10% of the average
net assets of the portfolios, paid out of the fee paid to BIMC.
For its advisory services, BIMC is entitled to receive the following fees,
computed daily and payable monthly, and based on the portfolio's average daily
net assets:
PORTFOLIO ANNUAL RATE
---------------------------- ---------------------------------------------
Money Market and Government .45% of first $250 million of net assets;
Obligations Money Market .40% of next $250 million of net assets;
Portfolios .35% of net assets in excess of $500 million.
Municipal Money Market .35% of first $250 million of net assets;
Portfolio .30% of next $250 million of net assets;
.25% of net assets in excess of $500 million.
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, 2000, advisory fees and waivers for the
investment portfolios were as follows:
<TABLE>
<CAPTION>
GROSS NET
ADVISORY ADVISORY
FEE WAIVER FEE
-------------- -------------- --------------
<S> <C> <C> <C>
Money Market Portfolio $9,804,320 $(1,995,632) $7,808,688
Municipal Money Market Portfolio 814,139 (734,744) 79,395
Government Obligations Money Market Portfolio 1,934,364 (645,879) 1,288,485
</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, 2000 the reimbursed expenses were $2,269,338,
and $358,381 for the Money Market Portfolio, and Government Obligations Money
Market Portfolio, respectively. For the Municipal Money Market, other expenses
reimbursed were $54,444.
16
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2000
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
PFPC Trust Co. serves as custodian for each of the Fund's portfolios. PFPC
serves as each class's transfer and dividend disbursing agent. Both PFPC Trust
Co. and PFPC are wholly-owned subsidiaries of PFPC Worldwide Inc., an indirect
majority owned subsidiary of The PNC Financial Services Group, Inc.
PFPC may, at its discretion, voluntarily waive all or any portion of its
transfer agency fee for any class of shares. For the year ended August 31, 2000,
no fees were waived. Transfer agency fees were as follows:
TRANSFER AGENCY
FEE
---------------
Money Market Portfolio
Bedford Class $ 34,311
Cash Preservation Class 443
Janney Montgomery Scott Class* 2,227,497
Principal Class 7,200
Sansom Street Class 537,432
Select Class 10,695
----------
Total Money Market Portfolio $2,817,578
==========
Municipal Money Market Portfolio
Bedford Class $ 36,210
Cash Preservation Class 810
Janney Montgomery Scott Class* 57,686
----------
Total Municipal Money Market Portfolio $ 94,706
==========
Government Obligations Money Market Portfolio
Bedford Class $ 37,561
Janney Montgomery Scott Class* 525,553
----------
Total Government Money Market Portfolio $ 563,114
==========
*The Janney Montgomery Scott Class of shares was liquidated on July 31, 2000.
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 the Portfolio's average daily net assets. PFPC may, at
its discretion, voluntarily waive all or any portion of its administration fee
for the Portfolio. For the year ended August 31, 2000, the administration fee
and waiver for the portfolio were as follows:
GROSS NET
ADMINISTRATION ADMINISTRATION
FEE WAIVER FEE
-------------- -------- --------------
Municipal Money Market Portfolio $232,947 $(7,047) $225,900
17
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2000
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
The Fund, on behalf of each class of shares within the three investment
portfolios, has adopted Distribution Plans pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended. The Fund has entered into
Distribution Contracts with 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
Principal Classes and up to .20% on an annualized basis for the Sansom Street
Class.
For the year ended August 31, 2000, distribution fees for each class were
as follows:
DISTRIBUTION
FEE
------------
Money Market Portfolio
Bedford Class $ 2,553,192
Cash Preservation Class 1,086
Janney Montgomery Scott Class* 6,598,931
Principal Class 855,610
Sansom Street Class 291,016
-----------
Total Money Market Portfolio $10,299,835
===========
Municipal Money Market Portfolio
Bedford Class $ 789,730
Cash Preservation Class 873
Janney Montgomery Scott Class* 609,607
-----------
Total Municipal Money Market Portfolio $ 1,400,210
===========
Government Obligations Money Market Portfolio
Bedford Class $ 615,888
Janney Montgomery Scott Class* 2,111,459
-----------
Total Government Money Market Portfolio $ 2,727,347
===========
*The Janney Montgomery Scott Class of shares was liquidated on July 31, 2000.
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, 2000 service
organization fees were $290,820 for the Money Market Portfolio.
18
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2000
NOTE 3. CAPITAL SHARES
Transactions in capital shares (at $1 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, 2000 AUGUST 31, 1999 AUGUST 31, 2000 AUGUST 31, 1999
---------------- ---------------- --------------- ---------------
VALUE VALUE VALUE VALUE
---------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold:
Bedford Class $ 866,092,657 $ 1,676,808,408 $ 240,430,505 $ 471,166,299
Cash Preservation Class 462,203 114,454 62,468 178,689
Janney Montgomery Scott Class* 5,748,987,958 4,931,373,936 389,880,620 445,130,179
Principal Class 534,885,343 318,334,115 -- --
Sansom Street Class 3,118,553,510 2,907,994,377 -- --
Select Class 2,969,370,240 1,439,090,920 -- --
---------------- ---------------- ------------- -------------
Total Shares Sold 13,238,351,911 11,273,716,210 630,373,593 916,475,167
Shares issued on reinvestment of dividends:
Bedford Class 21,403,595 28,217,868 3,875,706 3,895,215
Cash Preservation Class 13,920 7,224 6,129 3,980
Janney Montgomery Scott Class* 54,694,717 43,272,113 3,013,665 2,871,349
Principal Class 11,245,950 2,206,341 -- --
Sansom Street Class 13,899,819 26,800,967 -- --
Select Class -- 347,980 -- --
---------------- ---------------- ------------- -------------
Total Shares Reinvested 101,258,001 100,852,493 6,895,500 6,770,544
Shares repurchased:
Bedford Class (792,698,785) (2,107,674,545) (272,492,533) (472,416,562)
Cash Preservation Class (194,641) (217,053) (83,714) (60,295)
Janney Montgomery Scott Class* (6,892,100,877) (4,790,786,046) (507,435,149) (430,908,204)
Principal Class (547,145,226) (102,006,633) -- --
Sansom Street Class (3,647,602,057) (2,741,000,161) -- --
Select Class (2,794,216,623) (1,209,386,849) -- --
---------------- ---------------- ------------- -------------
Total Shares Repurchased (14,673,958,209) (10,951,071,287) (780,011,396) (903,385,061)
---------------- ---------------- ------------- -------------
Net increase (decrease) $ (1,334,348,297) $ 423,497,416 $(142,742,303) $ 19,860,650
================ ================ ============= =============
Bedford Shares authorized 1,500,000,000 1,500,000,000 500,000,000 500,000,000
================ ================ ============= =============
</TABLE>
*The Janney Montgomery Scott Class of shares was liquidated on July 31, 2000.
19
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2000
NOTE 3. CAPITAL SHARES (CONTINUED)
<TABLE>
<CAPTION>
GOVERNMENT OBLIGATIONS MONEY MARKET PORTFOLIO
---------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, 2000 AUGUST 31, 1999
------------------ ------------------
VALUE VALUE
------------------ ------------------
<S> <C> <C>
Shares sold:
Bedford Class $ 270,056,423 $ 351,502,731
Janney Montgomery Scott Class* 1,451,470,056 1,424,893,515
--------------- ---------------
Total Shares Sold 1,721,526,479 1,776,396,246
Shares issued on reinvestment of dividends:
Bedford Class 4,991,533 5,293,048
Janney Montgomery Scott Class* 16,792,074 16,337,605
--------------- ---------------
Total Shares Reinvested 21,783,607 21,630,653
Shares repurchased:
Bedford Class (294,238,125) (372,183,308)
Janney Montgomery Scott Class* (1,837,667,391) (1,450,921,302)
--------------- ---------------
Total Shares Repurchased (2,131,905,516) (1,823,104,610)
--------------- ---------------
Net increase (decrease) $ (388,595,430) $ (25,077,711)
=============== ===============
Bedford Shares authorized 500,000,000 500,000,000
=============== ===============
</TABLE>
*The Janney Montgomery Scott Class of shares was liquidated on July 31, 2000.
20
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2000
NOTE 4. NET ASSETS
At August 31, 2000, net assets consisted of the following:
<TABLE>
<CAPTION>
GOVERNMENT
MUNICIPAL OBLIGATIONS
MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------ -----------
<S> <C> <C> <C>
Paid-in capital $1,404,828,063 $122,307,654 $93,858,121
Accumulated net realized gain/(loss) on investments (102,186) (18,493) (58,118)
-------------- ------------ -----------
Total net assets $1,404,725,877 $122,289,161 $93,800,003
============== ============ ===========
</TABLE>
NOTE 5. CAPITAL LOSS CARRYOVER
At August 31, 2000 capital loss carryovers were available to offset future
realized gains as follows: $102,186 in the Money Market Portfolio of which
$56,029 expires in 2006 and $46,157 expires in 2008; $18,493 in the Municipal
Money Market Portfolio of which, $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;
$58,118 in the Government Obligations Money Market Portfolio of which $12,275
expires in 2004, $1,291 expires in 2005, $5,792 expires in 2006, $37,984 expires
in 2007 and $776 expires in 2008.
The Municipal Money Market Portfolio had $444 of capital loss carryover
that expired in 2000.
21
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2000
NOTE 6. OTHER FINANCIAL HIGHLIGHTS
The Fund currently offers four other classes of shares representing
interest in the Money Market Portfolio: Cash Preservation, Sansom Street,
Select, and Principal. The Fund currently offers one other class of shares
representing interest in the Municipal Money Market Portfolio: Cash
Preservation. Each class is marketed to different types of investors. Financial
Highlights of the Cash Preservation class is not represented in this report due
to its immateriality. Such information is available in the annual report of its
respective family. The financial highlights of certain of the other classes are
as follows:
THE SANSOM STREET FAMILY (b)
<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, 2000 AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996
--------------- --------------- --------------- --------------- ---------------
<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 ....................... 0.0560 0.0473 0.0520 0.0510 0.0518
-------- -------- -------- -------- --------
Total from investment operations .......... 0.0560 0.0473 0.0520 0.0510 0.0518
-------- -------- -------- -------- --------
Less distributions
Dividends (from net investment income) ...... (0.0560) (0.0473) (0.0520) (0.0510) (0.0518)
-------- -------- -------- -------- --------
Total distributions ....................... (0.0560) (0.0473) (0.0520) (0.0510) (0.0518)
-------- -------- -------- -------- --------
Net asset value, end of year ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return ................................... 5.75% 4.83% 5.34% 5.22% 5.30%
Ratios/Supplemental Data
Net assets, end of year (000) ............... $326,745 $841,887 $684,066 $570,018 $524,359
Ratios of expenses to average net assets .... .49%(a) .49%(a) .49%(a) .49%(a) .48%(a)
Ratios of net investment income to
average net assets ........................ 5.42% 4.73% 5.20% 5.10% 5.18%
<FN>
(a) Without the waiver of advisory fees and reimbursement of certain operating
expenses, the ratios of expenses to average net assets for the Money Market
Portfolio would have been .61%, .62%, .62%, .64% and .65% for the years
ended August 31, 2000, 1999, 1998, 1997 and 1996, respectively.
(b) Financial highlights relate solely to the Sansom Street Class of shares
within the portfolio.
</FN>
</TABLE>
22
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2000
NOTE 6. OTHER FINANCIAL HIGHLIGHTS (CONTINUED)
THE SELECT FAMILY (b)
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
-----------------------------------------
FOR THE
YEAR FOR THE PERIOD
ENDED DECEMBER 15, 1998
AUGUST 31, 2000 TO AUGUST 31, 1999(c)
--------------- ---------------------
<S> <C> <C>
Net asset value, beginning of year or period .......... $ 1.00 $ 1.00
-------- --------
Income from investment operations:
Net investment income .............................. 0.0582 0.0345
-------- --------
Total from investment operations ................. 0.0582 0.0345
-------- --------
Less distributions
Dividends (from net investment income) ............. (0.0582) (0.0345)
-------- --------
Total distributions .............................. (0.0582) (0.0345)
-------- --------
Net asset value, end of year or period ................ $ 1.00 $ 1.00
======== ========
Total Return .......................................... 5.98% 3.50%(e)
Ratios /Supplemental Data
Net assets, end of period (000) .................... $405,206 $230,044
Ratios of expenses to average net assets ........... .27%(a) .27%(a)(d)
Ratios of net investment income to
average net assets ............................... 5.87% 4.82%(d)
<FN>
(a) Without the waiver of advisory fees and reimbursement of certain operating
expenses, the ratios of expenses to average net assets for the Money Market
Portfolio would have been .41% and .41% for the periods ended August 31,
2000 and 1999, respectively.
(b) Financial Highlights relate solely to the Select Class of shares within the
portfolio.
(c) On December 15, 1998 the Money Market Portfolio's Select Class began
operations.
(d) Annualized.
(e) Non-Annualized.
</FN>
</TABLE>
23
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
AUGUST 31, 2000
NOTE 6. OTHER FINANCIAL HIGHLIGHTS (CONTINUED)
THE PRINCIPAL FAMILY (b)
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
----------------------------------------
FOR THE
YEAR FOR THE PERIOD
ENDED JUNE 1, 1999 TO
AUGUST 31, 2000 AUGUST 31, 1999(c)
--------------- ------------------
<S> <C> <C>
Net asset value, beginning of year or period ............... $ 1.00 $ 1.00
-------- --------
Income from investment operations:
Net investment income ................................... 0.0532 0.0110
-------- --------
Total from investment operations ...................... 0.0532 0.0110
-------- --------
Less distributions
Dividends (from net investment income) .................. (0.0532) (0.0110)
-------- --------
Total distributions ................................... (0.0532) (0.0110)
-------- --------
Net asset value, end of year or period ..................... $ 1.00 $ 1.00
======== ========
Total Return ............................................... 5.46% 1.10%(e)
Ratios /Supplemental Data
Net assets, end of period (000) ......................... $217,520 $218,530
Ratios of expenses to average net assets ................ .77%(a) .77%(a)(d)
Ratios of net investment income to
average net assets .................................... 5.32% 4.36%(d)
<FN>
(a) Without the waiver of advisory and transfer agent fees and reimbursement of
certain operating expenses, the ratios of expenses to average net assets
for the Money Market Portfolio would have been .85% and .85% for the
periods ended August 31, 2000 and 1999, respectively.
(b) Financial highlights relate solely to the Principal Family of shares within
the portfolio.
(c) On June 1, 1999 the Money Market Portfolio's Principal Class began
operations.
(d) Annualized.
(e) Non-Annualized.
</FN>
</TABLE>
24
<PAGE>
TAX INFORMATION FOR SHAREHOLDERS
(UNAUDITED)
In the twelve months ended August 31, 2000 (the end of the Fund's fiscal year),
100% of the dividends paid by the Municipal Money Market Portfolio were
exempt-interest dividends for purposes of federal income taxes and free from
such taxes. However, approximately 54% 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 2001, 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 Portfolio in calendar year 2000. 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>
Morgan Keegan & Company, Inc./Morgan Keegan Tower/
Fifty Front Street/Memphis, Tennessee 38103
