RBB
FAMILY OF MUTUAL FUNDS
A TRADITION OF BUILDING WEALTH
[GRAPHIC OMITTED]
Government Securities Portfolio
Semi-Annual ReportFebruary 28, 1999
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THE RBB FAMILY
THE RBB FUND, INC.
SEMI-ANNUAL INVESTMENT ADVISER'S REPORT
GOVERNMENT SECURITIES PORTFOLIO
September 1, 1998 through February 28, 1999 was a tumultuous period for the
United States and world financial markets. The Russian default and fears of the
Asian contagion spreading to South America precipitated a credit panic. The
combination of the credit panic and tremendous deleveraging resulted in extreme
widening and volatility of credit spreads and reduced liquidity during the
fourth quarter of 1998. The Federal Reserve responded by easing monetary policy,
lowering the federal funds rate three times for a total of 75 basis points. By
the beginning of 1999, calm and liquidity returned to the markets. Credit
spreads narrowed, although they remain above historical averages.
In spite of the turmoil in the financial markets, the United States'
economy continued its above trend growth. Gross domestic product increased at a
6.1% annual rate in the fourth quarter of 1998 and is expected to rise
approximately 4% in the first quarter of 1999. Lower commodity prices, excess
capacity and productivity gains all contributed to inflation remaining subdued.
The consumer price index increased at a 1.5% annual rate during the past six
months.
During the period, the Government Securities Portfolio's strategy
emphasized liquidity. Maturing securities were reinvested in short-term U.S.
government agency discount notes. The portfolio's average maturity was
maintained at approximately 7.6 years.
BlackRock Institutional Management Corporation
(Please dial toll-free 800-430-9618 for questions
regarding your account or contact your broker.)
THE RBB FAMILY
THE RBB FUND,INC.
GOVERNMENT SECURITIES PORTFOLIO
STATEMENT OF NET ASSETS
FEBRUARY 28, 1999
(UNAUDITED)
PAR
(000) VALUE
------- -------
AGENCY OBLIGATIONS--41.1%
9.000% 08/24/00 .................................. $ 170 $ 181,253
8.250% 12/18/00 .................................. 1,000 1,048,414
4.760% 03/11/99 .................................. 749 748,010
6.500% 11/29/05 .................................. 250 260,191
----------
TOTAL AGENCY OBLIGATIONS
(Cost $2,174,030) ............................ 2,237,868
----------
U.S. TREASURY OBLIGATIONS--58.4%
U.S TREASURY BONDS--29.5%
7.250% 05/15/16 .................................. 250 288,803
8.500% 02/15/20 .................................. 1,000 1,319,152
----------
1,607,955
----------
U.S. TREASURY NOTES--28.9%
7.500% 10/31/99 .................................. 250 254,132
7.125% 02/29/00 .................................. 250 255,008
6.375% 09/30/01 .................................. 250 257,060
7.500% 11/15/01 .................................. 250 264,253
7.500% 05/15/02 .................................. 250 266,377
7.000% 07/15/06 .................................. 250 273,732
----------
1,570,562
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $2,745,932) ............................ 3,178,517
----------
TOTAL INVESTMENTS--99.5%
(Cost$4,919,962*) ............................ $5,416,385
----------
OTHER ASSETS IN EXCESS
OF LIABILITIES--0.5% ......................... 25,124
----------
NET ASSETS (Applicable to 646,748
RBB Shares)--100.0% .......................... $5,441,509
==========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE
($5,441,509 (DIVIDE) 646,748) ................ $8.41
=====
OFFERING PRICE PER SHARE
($8.41 a .9525) .............................. $8.83
=====
* Also cost for Federal income tax purposes. The gross appreciation
(depreciation) on a tax basis is as follows:
Gross Appreciation $501,906
Gross Depreciation (5,483)
--------
Net Appreciation $496,423
========
See Accompanying Notes to Financial Statements
2
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THE RBB FAMILY
THE RBB FUND, INC.
GOVERNMENT SECURITIES PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999 (UNAUDITED)
Investment Income
Interest ....................................................... $ 184,511
---------
Expenses
Investment advisory fees ....................................... 11,339
Distribution fees .............................................. 11,339
Custodian fees ................................................. 6,225
Registration fees .............................................. 6,033
Printing expenses .............................................. 3,366
Administration fees ............................................ 2,835
Other expenses ................................................. 1,305
---------
42,442
Less fees waived ............................................... (14,174)
Less expense reimbursements by advisor ......................... (8,425)
---------
Total expenses .............................................. 19,843
---------
Net investment income ............................................. 164,668
---------
Realized and unrealized gain (loss) on investments
Net realized gain (loss) on investments ........................ (14,481)
Increase in net unrealized depreciation on investments.......... (104,620)
---------
Net loss on investments ........................................ (119,101)
---------
Net increase in net assets resulting from operations .............. $ 45,567
=========
See Accompanying Notes to Financial Statements.
3
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<TABLE>
<CAPTION>
THE RBB FAMILYTHE RBB FUND, INC.
GOVERNMENT SECURITIES PORTFOLIOSTATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1999 AUGUST 31, 1998
----------------- ---------------
(UNAUDITED)
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income .............................. $ 164,668 $ 379,047
Net gain (loss) on investments ..................... (119,101) 260,625
----------- ----------
Net increase in net assets resulting from operations 45,567 639,672
----------- ----------
Distributions to shareholders:
Dividends to shareholders from net investment income:
RBB shares ......................................... (164,632) (380,337)
Distributions to shareholders from capital:
RBB shares ......................................... (177,100) (250,222)
----------- ---------
Total distributions to shareholders ............ (341,732) (630,559)
----------- ---------
Net capital share transactions ....................... (163,588) (845,217)
----------- ---------
Total decrease in net assets ......................... (459,753) (836,104)
----------- ---------
Net Assets:
Beginning of period ................................ 5,901,262 6,737,366
----------- ----------
End of period ...................................... $ 5,441,509 $5,901,262
=========== ==========
</TABLE>
See Accompanying Notes to Financial Statements.
4
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THE RBB FAMILY
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES PORTFOLIO
--------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE
SIX MONTHS YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
FEBRUARY 28, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
----------------- --------------- --------------- --------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....... $ 8.87 $ 8.87 $ 9.04 $ 9.54 $ 9.69
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ................... 0.2538 0.5562 0.8744 0.5220 0.5819
Net gain/(loss) on securities
(both realized and unrealized) ............. (0.1865) ` 0.3565 (0.1346) (0.2540) 0.0361
-------- -------- -------- -------- --------
Total from investment operations .... 0.0673 0.9127 1.0090 0.2680 0.6180
-------- -------- -------- -------- --------
Less distributions
Dividends (from net investment income) .. (0.2538) (0.5562) (0.8744) (0.5220) 0.5819
Distributions (from excess net
investment income) ................... -- -- -- -- --
Return of capital ....................... (0.2735) (0.3565) (0.3046) (0.2460) (0.1861)
-------- -------- -------- -------- --------
Total distributions ................. (0.5273) (0.9127) (1.1790) (0.7680) (0.7680)
-------- -------- -------- -------- --------
Net asset value, end of period ............. $ 8.41 $ 8.87 $ 8.87 $ 9.04 $ 9.54
======== ======== ======== ======== ========
Total return ............................... 0.54%(b)(c) 6.48%(b) 9.39%(b) 2.75%(b) 6.72%(b)
Ratios/Supplemental Data
Net assets, end of period (000) ......... $ 5,442 $ 5,901 $ 6,737 $ 8,785 $ 10,514
Ratios of expenses to average net assets 0.70%(a)(c) 0.70%(a) 0.70%(a) 0.70%(a) 0.72%(a)
Ratios of net investment income to
average net assets ................... 5.81%(c) 6.16% 6.18% 6.05% 6.59%
Portfolio turnover rate ................. 3% 5% 26% 77% 86%
<FN>
(a) Without the waiver of advisory, administration and custody fees and without
the reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Government Securities Portfolio would have been
1.50% for the six months ended February 28, 1999 and 1.71%, 2.15%, 2.05% and
1.22% for the years ended August 31, 1998, 1997, 1996 and 1995,
respectively.
(b) Sales load not reflected in total return.
(c) Annualized.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
5
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THE RBB FAMILYTHE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTSFEBRUARY 28, 1999
(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 19.83 billion shares are currently classified into ninety-seven classes.
Each class represents an interest in one of sixteen investment portfolios of the
Fund. The classes have been grouped into sixteen separate "families", nine of
which have begun investment operations: the RBB Family, the Select Family, the
Sansom Street Family, the Bedford Family, the Cash Preservation Family, the
Janney Montgomery Scott Money Family, the n/i numeric investors Family, the
Schneider Family and the Boston Partners Family.
A) SECURITY VALUATION -- Government Securities Portfolio: Portfolio
securities for which market quotations are readily available are valued at
market value, which is currently determined using the last reported sales price.
If no sales are reported, as in the case of some securities traded
over-the-counter, portfolio securities are valued at the mean between the last
reported bid and asked prices. Corporate bonds, tax-exempt bonds and notes, and
government securities are valued on the basis of quotations provided by an
independent pricing service which uses information with respect to transactions
on bonds, quotations from bond dealers, market transactions in comparable
securities and various relationships between securities in determining value.
Short-term obligations with maturities of 60 days or less are valued at
amortized cost which approximates market value.
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 agent 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) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Government Securities
Portfolio: Dividends from net investment income from each portfolio are declared
and paid at least monthly. Any net realized capital gains will be distributed at
least annually. Income distributions and capital gain distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles.
D) FEDERAL INCOME TAXES -- No provision is made for Federal taxes as it is
the Fund's intention to have each portfolio continue to qualify for and elect
the tax treatment applicable to regulated investment companies under the
Internal Revenue Code and make the requisite distributions to its shareholders
which will be sufficient to relieve it from Federal income and excise taxes.
E) REPURCHASE AGREEMENTS -- Money market instruments may be purchased
subject to the seller's agreement to repurchase them at an agreed upon date and
price. The seller will be required on a daily basis to maintain the value of the
securities subject to the agreement at not less than the repurchase price plus
accrued interest. If the value of the underlying securities falls below 102% of
the value of the purchase price plus accrued interest, the Fund will require the
seller to deposit additional collateral by the next Fund business day. In the
event that the seller under the agreement defaults on its repurchase obligation
or fails to deposit sufficient collateral, the Fund has the contractual right,
subject to the requirements of applicable bankruptcy and insolvency laws, to
sell the underlying securities and may claim any resulting loss from the seller.
The agreements are conditioned upon the collateral being deposited under the
Federal Reserve book-entry system or with the Fund's custodian or a third party
sub-custodian.
F) USE OF ESTIMATES -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
6
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7
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THE RBB FAMILYTHE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 28, 1999
(UNAUDITED)
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
The Fund, on behalf of each class of shares within the investment
portfolios, has adopted Distribution Plans pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended, and has entered into Distribution
Contracts with Provident Distributors ("PDI"), which provide for each class to
make monthly payments, based on average net assets, to PDI of up to .40% on an
annualized basis for the RBB Government Securities Portfolio.
For the six months ended February 28, 1999, distribution fees of shares
within the investment portfolio were as follows:
DISTRIBUTION
FEE
------------
Government Securities Portfolio $11,399
=======
NOTE 3. PURCHASE AND SALES OF SECURITIES
For the six months ended February 28, 1999, purchases and sales of
investment securities and United States Government Obligations (other than
short-term investments) were as follows:
INVESTMENT SECURITIES U.S. GOVERNMENT OBLIGATIONS
--------------------- ---------------------------
PURCHASES SALES PURCHASES SALES
--------- ------- --------- -------
Government Securities
Portfolio ............. $ -- $ -- $ -- $77,354
NOTE 4. CAPITAL SHARES
Transactions in capital shares for each period were as follows:
GOVERNMENT SECURITIES PORTFOLIO
----------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1999 AUGUST 31, 1998
----------------- -------------------
SHARES VALUE SHARES VALUE
------- --------- ------ --------
Shares sold: ....... 17,817 $ 157,604 1,394 $ 12,311
Shares issued in
reinvestment of
dividends: ....... 24,625 214,575 44,414 393,184
Shares repurchased: (60,774) (535,767) (140,687) (1,250,712)
----------- --------- ----------- ----------
Net decrease ....... (18,332) $(163,588) (94,879) $ (845,217)
=========== ========= =========== ==========
RBB Shares
authorized ....... 100,000,000 100,000,000
=========== ===========
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THE RBB FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 28, 1999
(UNAUDITED)
NOTE 5. NET ASSETS
At February 28, 1999, net assets consist of the following:
GOVERNMENT SECURITIES PORTFOLIO
-------------------------------
Capital Paid-In ..................... $ 9,438,285
Accumulated Net Realized
Gain (Loss) on Investments .......... (4,493,199)
Unrealized Appreciation
(Depreciation) on Investments ....... 496,423
-----------
$ 5,441,509
===========
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