================================================================================
THE BEDFORD MUNICIPAL
MONEY MARKET
PORTFOLIO
MUNICIPAL
MONEY MARKET PORTFOLIO
--------------------------------------------------------------------------------
ANNUAL REPORT
AUGUST 31, 2000
================================================================================
<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.
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 statement 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
Municipal Money Market Portfolio, a separately managed portfolio of The RBB
Fund, Inc. (the "Fund") at August 31, 2000, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the periods
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.
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
PAR
(000) VALUE
------- -------------
ILLINOIS--(CONTINUED)
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
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.
3
<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.
4
<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.
5
<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.
6
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2000
MUNICIPAL
MONEY MARKET
PORTFOLIO
------------
Investment Income
Interest..................................................... $9,003,237
----------
Expenses
Distribution fees............................................ 1,400,210
Investment advisory fees..................................... 814,139
Administration fees.......................................... 232,947
Transfer agent fees.......................................... 94,706
Printing fees................................................ 104,478
Custodian fees............................................... 55,542
Legal fees................................................... 18,485
Registration fees............................................ 83,000
Audit fees................................................... 18,932
Directors' fees.............................................. 11,597
Insurance expense............................................ 2,885
Miscellaneous................................................ 3,953
----------
2,840,874
Less fees waived............................................. (741,791)
Less other expenses reimbursed............................... (54,444)
----------
Total expenses.......................................... 2,044,639
----------
Net investment income........................................... 6,958,598
----------
Net realized loss on investments................................ --
----------
Net increase in net assets resulting from operations............ $6,958,598
==========
See Accompanying Notes to Financial Statements.
7
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
MUNICIPAL MONEY
MARKET PORTFOLIO
-------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, 2000 AUGUST 31, 1999
--------------- ---------------
Increase (decrease) in net assets:
Operations:
Net investment income ....................... $ 6,958,598 $ 6,771,609
Net gain (loss) on investments .............. -- --
------------- ------------
Net increase in net assets
resulting from operations ................. 6,958,598 6,771,609
------------- ------------
Distributions to shareholders:
Dividends to shareholders from
Net Investment Income:
Bedford shares ............................ (3,912,970) (3,903,796)
Cash Preservation shares .................. (6,360) (4,151)
Janney Montgomery Scott shares ............ (3,039,268) (2,863,662)
------------- ------------
(6,958,598) (6,771,609)
Total Dividends to
shareholders .......................... (6,958,598) (6,771,609)
------------- ------------
Net capital share transactions (Note 3) ....... (142,742,303) 19,860,650
------------- ------------
Total increase/(decrease) in net assets ....... (142,742,303) 19,860,650
Net Assets:
Beginning of year ........................... 265,031,464 245,170,814
------------- ------------
End of year ................................. $ 122,289,161 $265,031,464
============= ============
See Accompanying Notes to Financial Statements.
8
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS (b)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<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 Municipal Money Market Portfolio
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.
9
<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 one
portfolio, which is covered in this report.
A) SECURITY VALUATION -- Portfolio securities are valued under the
amortized cost method, which approximates current market value. Under this
method, securities are valued at cost when purchased and thereafter a
constant proportionate amortization of any discount or premium is recorded
until maturity of the security. Regular review and monitoring of the
valuation is performed to ensure that cost continues to approximate 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.
10
<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 portfolio
described herein.
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
---------------------------- --------------------------------------------
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 this portfolio. For each class of shares within the portfolio,
the net advisory fee charged to each class is the same on a relative basis. For
the year ended August 31, 2000, advisory fees and waivers for the investment
portfolio were as follows:
<TABLE>
<CAPTION>
GROSS NET
ADVISORY ADVISORY
FEE WAIVER FEE
-------------- ------------ ----------
<S> <C> <C> <C>
Municipal Money Market Portfolio $814,139 $(734,744) $79,395
</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, other expenses reimbursed were $54,444,
for the Municipal Money Market Portfolio.
In addition, 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.
11
<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 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
---------------
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
=======
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:
<TABLE>
<CAPTION>
GROSS NET
ADMINISTRATION ADMINISTRATION
FEE WAIVER FEE
--------------- ----------- ----------------
<S> <C> <C> <C>
Municipal Money Market Portfolio $232,947 $(7,047) $225,900
</TABLE>
The Fund, on behalf of each class of shares within the investment
portfolio, has adopted Distribution Plans pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended. The Fund has entered into
Distribution Contracts with 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 and Cash Preservation classes.
For the year ended August 31, 2000, distribution fees for each class were
as follows:
DISTRIBUTION
FEE
------------
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
==========
*The Janney Montgomery Scott Class of shares was liquidated on July 31, 2000.
12
<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>
MUNICIPAL 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 $ 240,430,505 $ 471,166,299
Cash Preservation Class 62,468 178,689
Janney Montgomery Scott Class*
Scott Class 389,880,620 445,130,179
Principal Class -- --
Sansom Street Class -- --
Select Class -- --
------------- -------------
Total Shares Sold 630,373,593 916,475,167
Shares issued on reinvestment of dividends:
Bedford Class 3,875,706 3,895,215
Cash Preservation Class 6,129 3,980
Janney Montgomery Scott Class* 3,013,665 2,871,349
Principal Class -- --
Sansom Street Class -- --
Select Class -- --
------------- -------------
Total Shares Reinvested 6,895,500 6,770,544
Shares repurchased:
Bedford Class (272,492,533) (472,416,562)
Cash Preservation Class (83,714) (60,295)
Janney Montgomery Scott Class* (507,435,149) (430,908,204)
Principal Class -- --
Sansom Street Class -- --
Select Class -- --
------------- -------------
Total Shares Repurchased (780,011,396) (903,385,061)
------------- -------------
Net increase (decrease) $(142,742,303) $ 19,860,650
============= =============
Bedford Shares authorized 500,000,000 500,000,000
============= =============
<FN>
*The Janney Montgomery Scott Class of shares was liquidated on July 31, 2000.
</FN>
</TABLE>
13
<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:
MUNICIPAL
MONEY MARKET
PORTFOLIO
------------
Paid-in capital $122,307,654
Accumulated net realized gain/(loss) on investments (18,493)
------------
Total net assets $122,289,161
============
NOTE 5. CAPITAL LOSS CARRYOVER
At August 31, 2000 capital loss carryovers were available to offset future
realized gains as follows: $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.
The Municipal Money Market Portfolio had $444 of capital loss carryover
that expired in 2000.
14
<PAGE>
TAX INFORMATION FOR SHAREHOLDERS
(UNAUDITED)
In the twelve months ended August 31, 1999 (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 55% 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.
15
