FBR
------------------
Money Market
Portfolio
FBR
FUNDS
LOGO (GRAPHIC OMITTED)
Semi-Annual Report
February 28, 1998
<PAGE>
THE BEDFORD FAMILY
THE RBB FUND, INC.
SEMI-ANNUAL INVESTMENT ADVISER'S REPORT
Market participants were pleasantly surprised last year as the stock market
again racked up double digit gains, the bond market saw long-term interest rates
fall to near record lows and money market fund assets grew by 20% to over $1
trillion. Early in 1997, these robust results were not widely expected. The
nation's economy was expanding at almost a 5% pace and higher prices for goods
and services were clearly anticipated. The Federal Reserve seemed biased towards
tightening monetary policy, in what they suggested would be a preemptive move
against future inflationary pressures. On March 25, the Fed raised short-term
rates by 25 basis points to 5.50% and with the benefit of perfect hindsight,
their action clearly achieved the desired results. The economy slowed to a 3.1%
pace in the third quarter and 3.9% in the fourth quarter, while inflation fell
to its lowest level in a decade. Wholesale prices, in fact, actually declined
1.2% in 1997, while consumer prices rose only 1.7%. As the year came to an end,
the financial crisis among the Asian economies became a significant influencer
of global economics and the direction of interest rates. U.S. fixed income
securities did well, as a flight to quality and safety unfolded. In January, the
30-year treasury bond fell to a record low of 5.70%. Sentiment towards monetary
policy also shifted, given Mr. Greenspan's comments about deflation, and some
Fed watchers even began to talk about the possibility of an easing of monetary
policy.
Short-term taxable interest rates traded in a narrow range in 1997, as the
Federal Reserve made only one change to monetary policy. Early in the year, the
yield curve inside of one year was positively sloped, reflecting the widely held
view that the Fed would tighten monetary policy. While overnight rates held near
5.50%, one-year maturities reached a peak near 6.25%. This scenario encouraged
the funds to extend portfolio maturities to the 50-60 day range. The second half
of the year, however, was a different story. Low inflation and the concerns over
the Asian crisis precipitated a significant flattening of the money market yield
curve. The 50-75 basis point spread available earlier in the year declined to
10-15 basis points in the fourth and early first quarters. The Treasury market
experienced an even more dramatic shift, as the yield curve inverted. Portfolio
maturities were shortened in this environment, with particular focus given to
issuer credit quality and the deteriorating Asian economies.
At the end of February, assets in the Money Market Portfolio stood at
$3,013,021,180, increasing from $2,700,025,629 last August.
PNC Institutional Management Corporation
(Please dial toll-free 800-447-1139 for questions regarding
your account or contact your broker.)
<PAGE>
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THE BEDFORD FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
FEBRUARY 28, 1998 (UNAUDITED)
PAR
(000) VALUE
-------- ------------
AGENCY OBLIGATIONS--0.7%
Student Loan Marketing Association(DAGGER)
5.718% 03/03/98 ........................ $ 10,000 $ 10,000,000
5.728% 03/03/98 ........................ 10,000 10,000,000
------------
TOTAL AGENCY OBLIGATIONS
(Cost $20,000,000) ................. 20,000,000
------------
CERTIFICATES OF DEPOSIT--17.4%
BANK NOTES--3.3%
First National Bank of Boston
5.700% 04/06/98 ........................ 25,000 25,000,000
5.800% 04/27/98 ........................ 75,000 75,000,000
------------
100,000,000
------------
BANKS--2.2%
Banque Paribas
5.530% 05/04/98 ........................ 25,000 24,998,560
Credit Suisse
6.240% 04/08/98 ........................ 40,000 40,007,055
------------
65,005,615
------------
DOMESTIC CERTIFICATES OF DEPOSIT--5.0%
Bankers Trust Co.
5.980% 06/19/98 ........................ 50,000 49,997,155
5.820% 07/31/98 ........................ 25,000 24,997,025
5.880% 08/11/98 ........................ 25,000 24,996,796
Chase Manhattan Bank-Delaware
5.710% 03/09/98 ........................ 50,000 50,000,000
------------
149,990,976
------------
YANKEE DOLLAR CERTIFICATES OF DEPOSIT--6.9%
Banque Nationale de Paris
5.860% 08/10/98 ........................ 25,000 24,993,635
Banque Paribas
5.560% 05/26/98 ........................ 25,000 25,000,000
Canadian Imperial Bank of Commerce
5.660% 02/26/99 ........................ 40,000 39,980,989
Deutsche Bank
6.000% 03/25/98 ........................ 50,000 50,005,942
Royal Bank of Canada
6.200% 04/06/98 ........................ 19,000 19,002,366
5.940% 06/25/98 ........................ 25,000 24,995,439
PAR
(000) VALUE
-------- ------------
YANKEE DOLLAR CERTIFICATES OF DEPOSIT--(CONTINUED)
Societe Generale
5.780% 10/08/98 ............................ $ 125,000 $ 24,974,541
------------
208,952,912
------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $523,949,503) .................... 523,949,503
------------
COMMERCIAL PAPER--51.1%
ASSET BACKED SECURITIES--7.8%
CXC, Inc.
5.470% 04/01/98 ............................ 50,000 49,764,486
5.470% 04/20/98 ............................ 50,000 49,620,139
Receivables Capital Corp.
5.500% 04/06/98 ............................ 45,082 44,834,049
Windmill Funding
5.520% 03/02/98 ............................ 50,000 49,992,333
5.550% 04/24/98 ............................ 40,517 40,179,696
------------
234,390,703
------------
BANKS--8.7%
AB Spintab Swedmortgage
5.740% 04/07/98 ............................ 50,000 49,705,028
5.740% 04/15/98 ............................ 30,000 29,784,750
5.470% 05/12/98 ............................ 25,000 24,726,500
5.450% 06/09/98 ............................ 30,000 29,545,833
AMRO N.A. Finance Inc.
5.560% 05/01/98 ............................ 50,000 49,528,944
Unifunding Inc.
5.570% 03/03/98 ............................ 30,000 29,990,717
5.630% 04/22/98 ............................ 50,000 49,593,389
------------
262,875,161
------------
BUSINESS CREDIT INSTITUTIONS--1.8%
Enterprise Funding Corp.
5.570% 04/06/98 ............................ 38,728 38,512,285
5.480% 04/14/98 ............................ 17,179 17,063,939
------------
55,576,224
------------
CONGLOMERATES--1.6%
BTR Dunlop Finance Inc. PLC
5.450% 05/14/98 ............................ 50,000 49,439,861
------------
See Accompanying Notes to Financial Statements.
2
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THE BEDFORD FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
FEBRUARY 28, 1998 (UNAUDITED)
PAR
(000) VALUE
-------- ------------
FINANCE LESSORS--3.3%
General Electric Capital Corp.
5.450% 06/11/98 ............................. $100,000 $ 98,455,833
------------
FINANCE SERVICES--4.2%
Barton Capital Corp.
5.540% 04/06/98 ............................. 32,517 32,336,856
5.490% 04/14/98 ............................. 45,000 44,698,050
Old Line Funding Corp.
5.520% 03/09/98 ............................. 50,000 49,938,667
------------
126,973,573
------------
FOOD & KINDRED PRODUCTS--2.7%
Diageo Capital PLC
5.450% 05/11/98 ............................. 25,000 24,731,285
5.470% 04/29/98 ............................. 25,000 24,775,882
Grand Metropolitan Capital Corp.
5.620% 04/15/98 ............................. 33,000 32,768,175
------------
82,275,342
------------
HOUSEHOLD AUDIO & VIDEO EQUIPMENT--0.8%
Toshiba America, Inc.
5.470% 05/15/98 ............................. 25,000 24,715,104
------------
MISCELLANEOUS BUSINESS CREDIT INSTITUTIONS--1.7%
Unifunding Inc.
5.480% 03/09/98 ............................. 50,000 49,939,111
------------
MOTOR VEHICLES & CAR BODIES--2.5%
Daimler-Benz North America Corp.
5.480% 03/06/98 ............................. 75,000 74,942,917
------------
SECURITY BROKERS & DEALERS--7.6%
Lehman Brothers Holdings Inc.
5.520% 03/18/98 ............................. 50,000 49,869,667
Merrill Lynch & Co. Canandian DCP
5.610% 03/04/98 ............................. 50,000 49,976,625
Morgan Stanley Group, Inc.
5.430% 04/09/98 ............................. 50,000 49,705,875
Lehman Brothers Holdings Inc.
5.520% 05/28/98 ............................. 40,000 39,460,267
Morgan Stanley Group, Inc.
5.400% 07/23/98 ............................. 40,000 39,136,000
------------
228,148,434
------------
PAR
(000) VALUE
-------- --------------
SHORT-TERM BUSINESS CREDIT INSTITUTIONS--4.3%
Asset Securitization Coop Corp.
5.550% 04/06/98 .......................... $ 50,000 $ 49,722,500
Delaware Funding Corp.
5.570% 03/16/98 .......................... 30,523 30,452,161
Sears Roebuck Acceptance Corp.
5.460% 05/19/98 .......................... 50,000 49,400,917
--------------
129,575,578
--------------
WHOLESALE - MISCELLANEOUS DURABLE GOODS--2.5%
Mitsubishi International Corp.
5.510% 05/28/98 .......................... 25,000 24,663,278
5.560% 04/28/98 .......................... 25,000 24,776,055
5.560% 04/30/98 .......................... 25,000 24,768,333
--------------
74,207,666
--------------
WHOLESALE GROCERIES & RELATED GOODS--1.6%
Mitsubishi International Corp.
5.510% 05/29/98 .......................... 50,000 49,318,903
--------------
TOTAL COMMERCIAL PAPER
(Cost $1,540,834,410) ................ 1,540,834,410
--------------
MUNICIPAL BONDS--2.7%
FLORIDA--0.1%
Coral Springs,VRDN IDR (Suntrust)(DAGGER)
5.600% 03/04/98 .......................... 2,700 2,700,000
--------------
GEORGIA--0.3%
De Kalb County Development
Authority VRDN Series 1995 B
(Emory University Project)(DAGGER)
5.600% 02/28/98 .......................... 9,485 9,485,000
--------------
ILLINOIS--0.2%
Illinois Health Facilities Authority
Convertible/ VRDN Revenue Bond
(The Streeterville Corp. Project)
Series 1993-B(DAGGER)
5.700% 03/04/98 .......................... 4,400 4,400,000
--------------
INDIANA--0.2%
Bremen, Inc. TARN VRDN Series
1996 B (Society National Bank,
Cleveland)(DAGGER)
5.610% 03/05/98 .......................... 4,400 4,400,000
--------------
See Accompanying Notes to Financial Statements.
3
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THE BEDFORD FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
FEBRUARY 28, 1998 (UNAUDITED)
PAR
(000) VALUE
-------- ------------
KENTUCKY--0.1%
Boone County Taxable IDR Refunding
Bonds VRDN (Square D Company
Project) Series 1994-B(DAGGER)
5.700% 03/04/98 ....................... $ 4,200 $ 4,200,000
-----------
MISSISSIPPI--0.9%
Hinds County, IDR Revenue Bond
VRDN Series 1992(DAGGER)
5.600% 03/04/98 ....................... 1,860 1,860,000
Mississippi Business Finance Corp.
IDR Revenue Bond VRDN (Dana
Lighting Project) Series 1995(DAGGER)
5.600% 03/07/98 ....................... 6,100 6,100,000
Mississippi Business Finance Corp.
Taxable IDR Revenue Bond VRDN
(Bryan Foods, Inc. Project)
Series 1994(DAGGER)
5.700% 03/04/98 ....................... 14,000 14,000,000
Mississippi Business Finance Corp.
Taxable IDR Revenue Bond VRDN
Series 1995(DAGGER)
5.600% 03/07/98 ....................... 7,000 7,000,000
-----------
28,960,000
-----------
NORTH CAROLINA--0.4%
City of Asheville Tax Corp. VRDN(DAGGER)
5.650% 03/04/98 ....................... 11,700 11,700,000
-----------
TEXAS--0.5%
South Central Texas Industrial
Development Corp. Taxable IDR
Revenue Bond VRDN (Rohr
Industries Project Series 1990)(DAGGER)
5.700% 03/04/98 ....................... 14,800 14,800,000
-----------
TOTAL MUNICIPAL BONDS
(Cost $80,645,000) ................ 80,645,000
-----------
PAR
(000) VALUE
-------- ------------
MEDIUM TERM NOTES--15.2%
BANKS--3.3%
Skandinaviska Enskilda Banken
Funding Inc.(DAGGER)
5.550% 03/12/98 ................... $ 50,000 $ 49,974,367
Skandinaviska Enskilda(DAGGER)
5.610% 02/25/99 ................... 50,000 49,981,031
------------
99,955,398
------------
FINANCE SERVICES--6.1%
General American Life(DAGGER)
5.820% 03/02/98 ................... 50,000 50,000,000
SMM Trust 1997-A(DAGGER)
5.906% 03/23/98 ................... 20,000 20,000,000
SMM Trust 1997-L(DAGGER)
5.625% 03/29/98 ................... 13,200 13,200,000
SMM Trust 1997-X(DAGGER)
5.625% 03/12/98 ................... 100,000 100,000,000
------------
183,200,000
------------
SECURITY BROKERS & DEALERS--4.8%
Bear Stearns Companies, Inc.(DAGGER)
5.601% 03/06/98 ................... 25,000 25,000,000
5.595% 03/24/98 ................... 40,000 40,000,000
5.605% 03/26/98 ................... 30,000 30,000,000
Lehman Brothers Holdings, Inc.(DAGGER)
5.958% 03/05/98 ................... 50,000 50,000,000
------------
145,000,000
------------
SERVICES - AUTO RENT & LEASE--1.0%
PHH Corp(DAGGER)
5.565% 03/13/98 ................... 30,000 29,991,082
------------
TOTAL MEDIUM TERM NOTES
(Cost $458,146,480) ........... 458,146,480
------------
See Accompanying Notes to Financial Statements.
4
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THE BEDFORD FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (CONCLUDED)
FEBRUARY 28, 1998 (UNAUDITED)
PAR
(000) VALUE
-------- ------------
REPURCHASE AGREEMENTS--12.4%
Goldman Sachs & Co.
(Agreement dated 02/27/98 to be
repurchased at $100,047,083,
collateralized by $85,579,720
Federal Home Loan Mortgage
Corporation due 09/15/04 to
11/15/23 and $63,500,000 Federal
National Mortgage Association
due 04/25/23. Market value of
collateral is $103,000,000.)
5.650% 03/02/98 ......................... $100,000 $ 100,000,000
Lehman Government Securities Inc.
(Agreement dated 02/27/98 to be
repurchased at $100,045,000,
collateralized by $71,305,000
Federal Home Loan Mortgage
Corporation due 10/15/22 to
01/15/26 and $62,778,948 Federal
National Mortgage Association
due 10/25/08 to 10/25/22. Market
value of collateral is
$103,003,354.)
5.400% 03/02/98 ......................... 100,000 100,000,000
Swiss Bank Corp.
(Agreement dated 02/27/98 to be
repurchased at $75,034,625 and
$100,047,333, respectively,
collateralized by $77,625,000
Government National Mortgage
Association due 10/20/27 and
$102,914,000 Federal National
Mortgage Association due 01/01/28.
Market value of collateral is
$184,783,604.)
5.540% 03/02/98 .......................... 75,000 75,000,000
5.680% 03/02/98 .......................... 100,000 100,000,000
------------
TOTAL REPURCHASE
AGREEMENTS
(Cost $375,000,000) .................. 375,000,000
------------
TOTAL INVESTMENTS--99.5%
(Cost $2,998,575,393) .................... 2,998,575,393
VALUE
--------------
OTHER ASSETS IN EXCESS
OF LIABILITIES--0.5% ..................... $ 14,445,787
--------------
NET ASSETS (Applicable to
1,504,186,443 Bedford shares,
198,797 Cash Preservation shares,
822,075,114 Janney Montgomery
Scott shares, 686,561,111
Sansom Street shares
and 800 other shares)--100.0% ............ $3,013,021,180
==============
NET ASSET VALUE, Offering and
Redemption Price Per Share
($3,013,021,180 (DIVIDE) 3,013,022,265) .. $1.00
=====
* Also cost for Federal income tax purposes.
(DAGGER) Variable Rate Obligations -- The interest rate shown is the rate as of
February 28, 1998 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.
(DOUBLE DAGGER) Put Bonds -- Maturity date is the put date.
INVESTMENT ABBREVIATIONS
VRDN ..................................................Variable Rate Demand Note
LOC ............................................................Letter of Credit
IDR ..............................................Industrial Development Revenue
See Accompanying Notes to Financial Statements.
5
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THE BEDFORD FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998 (UNAUDITED)
Investment Income
Interest .................................................. $79,170,730
-----------
Expenses
Investment advisory fees .................................. 5,016,420
Distribution fees ......................................... 6,201,939
Service organization fees ................................. 281,246
Directors' fees ........................................... 24,442
Custodian fees ............................................ 220,426
Transfer agent fees ....................................... 1,885,453
Legal fees ................................................ 52,774
Audit fees ................................................ 32,785
Registration fees ......................................... 209,692
Insurance expense ......................................... 25,693
Printing fees ............................................. 264,667
Miscellaneous ............................................. 897
-----------
14,216,434
Less fees waived .......................................... (1,872,337)
Less expense reimbursement by advisor ..................... (273,085)
-----------
Total expenses ....................................... 12,071,012
-----------
Net investment income ..................................... 67,099,718
Realized gain on investments .............................. 10,099
-----------
Net increase in net assets resulting from operations ...... $67,109,817
============
See Accompanying Notes to Financial Statements.
6
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THE BEDFORD FAMILY
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
----------------- ---------------
(UNAUDITED)
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ................................. $ 67,099,718 $ 116,087,132
Net gain on investments ............................... 10,099 22,330
-------------- --------------
Net increase in net assets resulting from operations .. 67,109,817 116,109,462
-------------- --------------
Distributions to shareholders:
Dividends to shareholders from net investment income:
Bedford shares ...................................... (33,334,065) (56,929,832)
Cash Preservation shares ............................ (5,235) (10,852)
Janney Montgomery Scott shares ...................... (18,087,563) (29,943,530)
RBB shares .......................................... -- (1,286)
Sansom Street shares ................................ (15,672,855) (29,201,632)
-------------- --------------
Total dividends to shareholders ......................... (67,099,718) (116,087,132)
-------------- --------------
Net capital share transactions .......................... 312,985,452 504,179,861
-------------- --------------
Total increase in net assets ............................ 312,995,551 504,202,191
Net Assets:
Beginning of period ................................... 2,700,025,629 2,195,823,438
-------------- --------------
End of period ......................................... $3,013,021,180 $2,700,025,629
============== ==============
</TABLE>
See Accompanying Notes to Financial Statements.
7
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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
SIX MONTHS YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994
----------------- --------------- --------------- --------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- -------- --------
Income from investment operations:
Net investment income ..................... 0.0236 0.0462 0.0469 0.0486 0.0278
---------- ---------- ---------- -------- --------
Total from investment operations ........ 0.0236 0.0462 0.0469 0.0486 0.0278
---------- ---------- ---------- -------- --------
Less distributions
Dividends (from net investment income) .... (0.0236) (0.0462) (0.0469) (0.0486) (0.0278)
---------- ---------- ---------- -------- --------
Total distributions ..................... (0.0236) (0.0462) (0.0469) (0.0486) (0.0278)
---------- ---------- ---------- -------- --------
Net asset value, end of period ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ======== ========
Total Return ................................. 4.87(c) 4.72% 4.79% 4.97% 2.81%
Ratios /Supplemental Data
Net assets, end of period (000) ........... $1,504,190 $1,392,911 $1,109,334 $935,821 $710,737
Ratios of expenses to average net assets .. .97%(a)(c) .97%(a) .97%(a) .96%(a) .95%(a)
Ratios of net investment income to
average net assets ...................... 4.76%(c) 4.62% 4.69% 4.86% 2.78%
<FN>
(a) Without the waiver of advisory and administration fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Money Market Portfolio would have been 1.11%
annualized for the six months ended February 28, 1998, 1.12%, 1.14%, 1.17%
and 1.16% for the years ended August 31, 1997, 1996, 1995 and 1994,
respectively.
(b) Financial Highlights relate solely to the Bedford Class of shares within
each portfolio.
(c) Annualized.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
8
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THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1998 (UNAUDITED)
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 14.03 billion shares are currently classified into eighty-three classes.
Each class represents an interest in one of twenty-three investment portfolios
of the Fund. The classes have been grouped into fifteen separate "families",
eight of which have begun investment operations: the RBB Family, the BEA Family,
the Sansom Street Family, the Bedford Family, the Cash Preservation Family, the
Janney Montgomery Money Family, the n/i Family and the Boston Partners Family.
The Bedford Family represents interests in the four portfolios, one of which is
covered in this report.
A) SECURITY VALUATION -- Portfolio securities are valued under the amortized
cost method, which approximates current market value. Under this method,
securities are valued at cost when purchased and thereafter a constant
proportionate amortization of any discount or premium is recorded until maturity
of the security. Regular review and monitoring of the valuation is performed in
an attempt to avoid dilution or other unfair results to shareholders. The
Portfolio seeks to maintain net asset value per share at $1.00.
B) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
income tax purposes. Interest income is recorded on the accrual basis. Certain
expenses, principally distribution, transfer agency and printing, are class
specific expenses and vary by class. Expenses not directly attributable to a
specific portfolio or class are allocated 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
generally accepted accounting principles.
D) FEDERAL INCOME TAXES -- No provision is made for Federal taxes as it is the
Fund's intention to have each portfolio continue to qualify for and elect the
tax treatment applicable to regulated investment companies under the Internal
Revenue Code and make the requisite distributions to its shareholders which will
be sufficient to relieve it from Federal income and excise taxes.
E) REPURCHASE AGREEMENTS -- Money market instruments may be purchased subject to
the seller's agreement to repurchase them at an agreed upon date and price. The
seller will be required on a daily basis to maintain the value of the securities
subject to the agreement at not less than the repurchase price. The agreements
are conditioned upon the collateral being deposited under the Federal Reserve
book-entry system or with the Fund's custodian or a third party sub-custodian.
F) USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
9
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THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 28, 1998 (UNAUDITED)
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to the Investment Advisory Agreements, PNC Institutional Management
Corporation ("PIMC")*, a wholly owned subsidiary of PNC Asset Management Group,
Inc., which is in turn a wholly-owned subsidiary of PNC Bank, National
Association ("PNC Bank"), serves as investment advisor for the portfolio
described herein. PNC Bank serves as the sub-advisor for the Money Market
Portfolio.
For its advisory services, PIMC is entitled to receive the following fees,
computed daily and payable monthly based on the portfolio's average daily net
assets:
.45% of first $250 million of net assets;
.40% of next $250 million of net assets;
.35% of net assets in excess of $500 million.
PIMC may, at its discretion, voluntarily waive all or any portion of its
advisory fees for this portfolio. For each class of shares within a respective
portfolio, the net advisory fee charged to each class is the same on a relative
basis. For the six months ended February 28, 1998, advisory fees and waivers for
the investment portfolio were as follows:
Gross Net
ADVISORY ADVISORY
FEE WAIVER FEE
---------- ----------- ----------
$5,016,420 $(1,867,833) $3,148,587
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 six months ended February 28, 1998 the reimbursed expenses were $273,084 for
the Money Market Portfolio.
PNC Bank, as sub-advisor, receives a fee directly from PIMC, not the portfolio.
In addition, PNC Bank serves as custodian for the Fund's portfolios. PFPC Inc.
("PFPC"), an indirect wholly owned subsidiary of PNC Bank Corp., serves as each
class's transfer and dividend disbursing agent.
PFPC may, at its discretion, voluntarily waive all or any portion of its
transfer agency fee for any class of shares. For the six months ended February
28, 1998, transfer agency fees and waivers for each class of shares within the
investment portfolio were as follows:
GROSS NET
TRANSFER AGENCY TRANSFER AGENCY
FEE WAIVER FEE
--------------- ------- --------------
Bedford Class $ 994,000 $ -- $ 994,000
Cash Preservation Class 4,812 (4,504) 308
Janney Montgomery Scott Class 698,290 -- 698,290
Sansom Street Class 188,351 -- 188,351
---------- ------- ----------
Total $1,885,453 $(4,504) $1,880,949
========== ======= ==========
The Fund, on behalf of each class of shares within this investment portfolio,
has adopted Distribution Plans pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended, and has entered into Distribution Contracts
with Counsellors Securities, Inc. ("Counsellors"), which provide for each class
to make monthly payments, based on average net assets, to Counsellors of up to
.65% on an annualized basis for the Bedford, Cash Preservation and Janney
Montgomery Scott Classes and up to .20% on an annualized basis for the Sansom
Street Class.
*As of March 31, 1998, PNC Institutional Management Corporation has officially
changed their name to BlackRock Institutional Management Corporation.
10
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THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 28, 1998 (UNAUDITED)
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
For the six months ended February 28, 1998, distribution fees for each
class were as follows:
DISTRIBUTION
FEE
------------
Bedford Class $3,750,884
Cash Preservation Class 438
Janney Montgomery Scott Class 2,291,871
Sansom Street Class 158,746
----------
Total $6,201,939
==========
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 six months ended February 28, 1998, service
organization fees were $281,246 for the Money Market Portfolio.
11
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[GRAPHIC OMITTED]
THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 28, 1998 (UNAUDITED)
NOTE 3. CAPITAL SHARES
Transactions in capital shares (at $1.00 per capital share) for each period were
as follows:
MONEY MARKET PORTFOLIO
-----------------------------------
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
----------------- ---------------
(UNAUDITED)
VALUE VALUE
----------------- ---------------
Shares Sold:
Bedford Class $2,522,717,905 $ 4,513,203,668
Cash Preservation Class 26,316 175,000
Janney Montgomery Scott Class 1,839,610,433 3,087,651,502
RBB Class -- 4,744
Sansom Street Class 1,087,883,963 1,965,226,666
Shares issued in reinvestment of dividends:
Bedford Class 33,898,767 55,886,643
Cash Preservation Class 5,415 10,748
Janney Montgomery Scott Class 18,501,314 29,670,134
RBB Class -- 1,361
Sansom Street Class 11,686,521 20,645,930
Shares repurchased:
Bedford Class (2,445,340,436) (4,285,531,838)
Cash Preservation Class (75,149) (145,893)
Janney Montgomery Scott Class (1,772,888,931) (2,942,342,585)
RBB Class -- (67,517)
Sansom Street Class (983,040,666) (1,940,208,702)
-------------- ---------------
Net increase $ 312,985,452 $ 504,179,861
============== ===============
Bedford Shares authorized 1,500,000,000 1,500,000,000
============== ===============
12
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THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 28, 1998 (UNAUDITED)
NOTE 4. NET ASSETS
At February 28, 1998, net assets consisted of the following:
MONEY MARKET
PORTFOLIO
--------------
Capital Paid-In
Bedford Class $1,504,186,443
Cash Preservation Class 198,797
Janney Montgomery Scott Class 822,075,114
Sansom Street Class 686,561,111
Other Classes 800
Accumulated Net Realized Loss on Investments
Bedford Class (839)
Cash Preservation Class --
Janney Montgomery Scott Class 1,028
Sansom Street Class (1,274)
--------------
$3,013,021,180
==============
13
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THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 28, 1998 (UNAUDITED)
NOTE 5. OTHER FINANCIAL HIGHLIGHTS
The Fund currently offers four other classes of shares representing interest in
the Money Market Portfolio: Cash Preservation, Janney Montgomery Scott, RBB, and
Sansom Street. Each class is marketed to different types of investors. Financial
Highlights of the RBB and Cash Preservation classes are not presented in this
report due to their immateriality. Such information is available in the annual
reports of each respective family. The financial highlights of certain other
classes are as follows:
THE JANNEY MONTGOMERY SCOTT FAMILY
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
---------------------------------------------------------------------------
FOR THE PERIOD
FOR THE FOR THE FOR THE JUNE 12, 1995
SIX MONTHS YEAR YEAR (COMMENCEMENT OF
ENDED ENDED ENDED OPERATIONS) TO
FEBRUARY 28, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
------------------ --------------- --------------- ----------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net asset value, beginning of period .................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------
Income from investment operations:
Net investment income ................................. 0.0235 0.0459 0.0465 0.0112
-------- -------- -------- --------
Total from investment operations .................... 0.0235 0.0459 0.0465 0.0112
-------- -------- -------- --------
Less distributions
Dividends (from net investment income) ................ (0.0235) (0.0459) (0.0465) (0.0112)
-------- -------- -------- --------
Total distributions ................................. (0.0235) (0.0459) (0.0465) (0.0112)
-------- -------- -------- --------
Net asset value, end of period .......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
Total Return ............................................ 4.84%(b) 4.69% 4.76% 5.30%(b)
Ratios /Supplemental Data
Net assets, end of period (000) ....................... $822,080 $736,855 $561,865 $443,645
Ratios of expenses to average net assets .............. 1.00%(a)(b) 1.00%(a) 1.00%(a) 1.00%(a)(b)
Ratios of net investment income to average
net assets .......................................... 4.76%(b) 4.59% 4.65% 5.04%(b)
<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 1.21% for the six months ended February 28, 1998, 1.22%, 1.23% and
1.23% for the years ended August 31, 1997, 1996 and 1995, respectively.
(b) Annualized.
</FN>
</TABLE>
14
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THE BEDFORD FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
FEBRUARY 28, 1998 (UNAUDITED)
NOTE 5. OTHER FINANCIAL HIGHLIGHTS (CONTINUED)
THE SANSOM STREET FAMILY
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
-----------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE
SIX MONTHS YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994
----------------- --------------- --------------- --------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.0260 0.0510 0.0518 0.0543 0.0334
-------- -------- -------- -------- --------
Total from investment operations 0.0260 0.0510 0.0518 0.0543 0.0334
-------- -------- -------- -------- --------
Less distributions
Dividends (from net investment income) (0.0260) (0.0510) (0.0518) (0.0543) (0.0334)
-------- -------- -------- -------- --------
Total distributions (0.0260) (0.0510) (0.0518) (0.0543) (0.0334)
-------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return 5.37%(b) 5.22% 5.30% 5.57% 3.39%
Ratios /Supplemental Data
Net assets, end of period $686,522 $570,018 $524,359 $441,614 $373,745
Ratios of expenses to average net assets .49%(a)(b) .49%(a) .48%(a) .39%(a) .39%(a)
Ratios of net investment income to
average net assets 5.23%(b) 5.10% 5.18% 5.43% 3.34%
<FN>
(a) Without the waiver of advisory and transfer agent fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Money Market Portfolio would have been .63% for
the six months ended February 28, 1998, .64%, .65%, .59% and .60% for the
years ended August 31, 1997, 1996, 1995 and 1994, respectively.
(b) Annualized.
</FN>
</TABLE>
15
<PAGE>
INVESTMENT ADVISER
PNC Institutional Management Corporation
Wilmington, Delaware
CUSTODIAN
PNC Bank, National Association
Philadelphia, Pennsylvania
TRANSFER AGENT
PFPC Inc.
Wilmington, Delaware
COUNSEL
Drinker Biddle & Reath L.L.P.
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
Philadelphia, Pennsylvania
