<PAGE>
[LOGO OF RIVERSIDE CAPITAL FUNDS]
Riverside
Capital Funds
-------------------------------
Annual Report to
Shareholders
June 30,1996
-------------------------------
[LOGO OF NATIONAL BANK OF COMMERCE]
National Bank
of Commerce
Memphis, Tennesee
Investment Adviser
BISYS FUND SERVICES
Administrator and Distributor
3435 Stelzer Road
Columbus, Ohio 43219-3035
<PAGE>
RIVERSIDE
LETTER FROM THE CHAIRMAN CAPITAL
AND INVESTMENT ADVISER FUNDS
Dear Shareholders:
The 12 months ended June 30, 1996, provided strong gains for investors in
stocks. However, rising interest rates during the second half of the period
had a negative impact on bond prices.
These results offer further evidence of the importance of diversification.
Often, a setback in one sector of the financial markets will be offset by
gains elsewhere. By investing in a mix of different assets, investors can more
easily ride out short-term fluctuations in pursuit of their long-term goals.
Our approach to money management is based on such long-term concerns. Rather
than try to predict the fluctuations in the financial markets, we devote our
resources and energy to finding individual securities that offer value to
shareholders.
STOCKS SURGE
The stock market delivered very strong returns during the period, with
valuations expanding across many industry groups and a large quantity of
initial public offerings. The growth in the equity market was fueled by huge
inflows of new cash to mutual funds.
After years of relatively pain-free gains in the stock market, some normally
risk-averse investors began to commit money to stock funds--perhaps forgetting
the potential risks in the equity market. The flows into equity funds also
included money invested in retirement plans by baby boomers who are entering
their forties and fifties--a time of life when retirement planning becomes a
serious issue.
RISING INTEREST RATES HURT BONDS
Stock prices continued to surge even as interest rates climbed during the
second half of the period. But investors in bond funds weren't so fortunate.
In fact, the 12 months were far more volatile for bonds than for stocks. The
second half of 1995 produced gains for most bond funds, but the first quarter
of 1996 was one of the worst ever for bond market investors, and the market
has continued to perform poorly in recent months.
The bond market's volatility reflected investors' shifting expectations about
the economy and interest rates. Rising consumer spending, higher commodity
prices and low unemployment suggested a surprisingly strong economy that could
spark a higher rate of inflation. Spooked investors avoided bonds, driving
their prices lower and their yields higher.
LOOKING AHEAD: A BUMPY RIDE FOR STOCKS
Although some observers worry that stocks are overvalued in the wake of recent
gains, equity valuations don't appear extreme to us. The average price-to-
earnings ratio of stocks in the S&P 500 recently stood at around 16.7 based on
estimated 1996 earnings and 15.7 based on estimated 1997 earnings.
However, some sectors of the market--blue chips, in particular--are selling at
high prices relative to their growth rates. In addition, the likelihood of a
stronger economy and higher interest rates could spell temporary trouble for
stocks at their current levels.
We will respond to that potential risk by selling companies we consider too
richly valued and reinvesting in companies we believe to be significantly
undervalued. In addition, we may raise the cash levels in our stock
portfolios, which would allow us to take advantage of any bargains that might
appear in a stock market correction.
Prices of long-term bonds could continue to decline somewhat in the coming
months as the economy continues to grow. But we believe that inflation will
rise only slightly, remaining below 4%. Moreover, some sectors of the bond
market may benefit from a stronger economy, which will help reduce credit
concerns.
THE RIVERSIDE CAPITAL FUNDS ARE NOT FDIC
INSURED AND ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR ENDORSED OR GUARANTEED BY, NATIONAL BANK OF
COMMERCE OR ANY OF ITS AFFILIATES. INVESTMENT
PRODUCTS INVOLVE INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
-1-
<PAGE>
A FOCUS ON THE LONG TERM
Still, this is a good time to be defensive in the bond market, buying issues
that can offer some cushion against risk. We will continue to be extremely
selective in our portfolios, choosing issues that offer good values and a
measure of safety. That said, we are not going to manage our portfolios based
on short-term market forecasts. Short-term risks certainly exist, but so do
long-term opportunities--and those opportunities will remain the focus of our
efforts to help you reach your goals.
On the pages that follow, you will find accounts of the performance of the
Riverside Capital Funds during the recent 12-month period. If you would like a
prospectus or have questions regarding your investment in the Funds, please
call 1-800-8-RIVER-6. Please read the prospectus carefully before you invest.
Sincerely,
/s/ Walter B. Grimm /s/ Alfred H. Jordan
Walter B. Grimm Alfred H. Jordan
Chairman National Bank of Commerce
Riverside Capital Funds Investment Adviser
-2-
<PAGE>
THE PORTFOLIOS
THE RIVERSIDE CAPITAL VALUE EQUITY FUND
A number of shifts in market sentiment occurred during the 12 months ended
June 30, 1996, as investors debated the outlook for the economy and interest
rates. For example, during the first calendar quarter of 1996 the market began
to anticipate a stronger economy, and our portfolio of value-oriented stocks--
which includes a number of issues whose fortunes are closely tied to the
economy--did well. However, in the second quarter, in response to higher
interest rates, the market shifted gears and began to discount a slowing
economy. As a result, growth stocks, or less economically sensitive stocks,
began to outperform. On balance, growth-oriented stocks outperformed value
stocks over the 12-month period.
This shift in market sentiment is reflected in the Fund's performance. For the
12 months ended June 30, 1996, the Riverside Capital Value Equity Fund posted
total return of 20.50%+, compared to a return of 26.05% for its benchmark, the
Standard & Poor's 500 Stock Index.
TAKING ADVANTAGE OF MARKET FLUCTUATIONS
However, rather than trying to out-guess the market's shifting focus, the
Fund's managers maintained their value approach of identifying companies whose
stocks are selling at a steep discount to long-term intrinsic value. Instead
of trying to time short-term market fluctuations, we took advantage of them to
reposition the Fund's holdings. For example, we sold shares of companies such
as Leaderal Financial and Data General as their prices climbed to levels that
reflected their underlying intrinsic value.
At the same time, we added some undervalued stocks, such as Echlin Inc., a
leading maker of auto and truck parts. The company's stock had lost ground on
concerns that auto sales would slow down. But the firm's profits are tied more
closely to the replacement parts market, which we think will be strong in the
coming years, given the fact that U.S. cars, on average, are eight-and-a-half
years old.
Other positions added included shares of McCormick & Company, Inc., the
world's leading spice company and Darden Restaurants Inc., the world's largest
full-service restaurant organization. Both companies should see improved
operating margins over the course of the next several years due to recent
restructurings.
POSITIONED FOR A POSSIBLE CORRECTION
Looking ahead, it seems clear that we are in the late stages of the economic
cycle. Moreover, the financial markets have not seen a sharp correction since
1990. Given the potential for a temporary setback in the markets, we take
comfort in the fact that our stocks sell at a 15% to 25% discount to the
market on the basis of price-to-earnings ratios and other valuation measures.
Also, our typical company's estimated long-term earnings growth rate is 12% on
average, versus 8% for the typical stock in the S&P 500.
We believe that our below-market valuation will give us some downside
protection in the event of a correction in the market, but more importantly,
our below market valuation combined with above average growth expectations has
the potential to give us above-average performance over time.
The Fund's top five holdings as of June 30, 1996, were Philip Morris (4.53%),
Hancock Fabrics (4.47%), Werner Enterprises (4.17%), Unum Corp. (4.07%) and
Transitional RE Corp. (3.91%).++
+The Fund's total return with the maximum 4.50% sales charge was 15.04% for
the same period.
++The composition of the Fund's portfolio is subject to change.
Value Equity Fund
Value of $10,000 Investment
<TABLE>
<CAPTION>
Date Value Equity Fund S&P 500 Index
<S> <C> <C>
10/30/91 9,551 10,000
06/30/92 10,701 10,610
06/30/93 11,872 12,057
06/30/94 13,267 12,227
06/30/95 14,332 15,412
06/30/96 17,271 19,427
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------
Average Annual Total Return*
- -------------------------------
Since
Inception
Date 1 Year (10/31/91)
- -------------------------------
<S> <C> <C>
6/30/96 15.40% 12.41%
- -------------------------------
</TABLE>
Past performance is not predicitive of future performance. Investment return and
principal value of the Riverside Capital Funds will fluctuate, so that the
shares, when redeemed, may be worth more or less than their original cost.
*Reflects 4.50% Sales Charge.
The Standard & Poor's 500 Stock Index is an unmanaged index considered to be
representative of the stock market as a whole. It does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management and fund accounting fees. The performance of the Riverside Capital
Value Equity Fund reflects the deduction of fees for these value-added
services.
-3-
<PAGE>
THE RIVERSIDE CAPITAL GROWTH FUND
The Fund continued to buy stocks of companies with strong finances, consistent
profit growth and high returns on equity. Such firms have the potential to
increase earnings and dividends faster than the typical firm in the Standard &
Poor's 500 Stock Index.
Rising interest rates caused shares of some interest rate-sensitive companies
where the Fund is exposed to decline during the recent period. However, the
Fund also held stocks of consumer growth companies such as Coca-Cola, Philip
Morris and Procter & Gamble. These stocks performed extremely well during the
period.
Our exposure to interest-rate sensitive issues caused the Fund to underperform
its benchmark. For the 12 months ended June 30, 1996, the Fund had a total
return of 19.44%+, compared to a return of 26.05% for the Standard & Poor's 500
Stock Index.
The Fund's managers made significant changes in the portfolio to adapt to
changing market conditions--and more important, to take advantage of
opportunities in different market sectors. For example, we sold shares of some
large companies such as Avon and Procter & Gamble as their stocks rose to more
fully valued levels. We also reduced our exposure to stocks of manufactured
housing companies such as Champion Enterprise.
A FOCUS ON GROWTH IN CHANGING MARKET SECTORS
At the same time, the Fund acquired shares that appeared to offer attractive
growth opportunities. Those stocks included some small-company shares, as well
as technology stocks that we purchased after that sector sustained losses late
in the period. We also made selective investments in insurance stocks whose
prices declined due to higher interest rates. Our recent picks in that industry
included First Colony and American International Group (AIG).
It's possible that rising interest rates or a sudden decline in money flows to
mutual funds could interrupt the stock market's recent advance. If that occurs,
our holdings of higher-quality growth stocks trading at a discount to the
market may offer some cushion from the losses that will assail funds that
invest in high-flying stocks. Moreover, a correction might offer an opportunity
to buy bargain-priced shares of first-rate companies.
The Fund's top five holdings as of June 30, 1996, were General Electric
(4.72%), First Colony Corp. (4.52%), Philip Morris (4.05%), Schering-Plough
(3.54%) and Home Depot (3.46%).++
+The Fund's total return with the maximum 4.50% sales charge was 14.08% for
the same period.
++The composition of the Fund's portfolio is subject to change.
Growth Fund
Value of $10,000 Investment
<TABLE>
<CAPTION>
Date Growth Fund* S&P 500 Index
<S> <C> <C>
04/15/94 9,551 10,000
06/30/94 9,379 10,015
06/30/95 11,749 12,624
06/30/96 14,033 15,913
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------
Average Annual Total Return*
- -------------------------------
Since
Inception
Date 1 Year (4/15/94)
- -------------------------------
<S> <C> <C>
6/30/96 14.08% 16.54%
- -------------------------------
</TABLE>
Past performance is not predicitive of future performance. Investment return and
principal value of the Riverside Capital Funds will fluctuate, so that the
shares, when redeemed, may be worth more or less than their original cost.
*Reflects 4.50% Sales Charge.
The Standard & Poor's 500 Stock Index is an unmanaged index considered to be
representative of the stock market as a whole. It does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management and fund accounting fees. The performance of the Riverside Capital
Growth Fund reflects the deduction of fees for these value-added services.
THE RIVERSIDE CAPITAL FIXED INCOME FUND
Although bond prices delivered reasonable returns during late 1995, signs of
stronger-than-expected growth in the first quarter of 1996 caused bond yields
to rise and bond prices to fall sharply. Our strategy during that period called
for a shorter average maturity, since longer maturity bonds suffer the greatest
losses when interest rates rise. We found the best values in bonds with seven-
to-15-year maturities.
Our strategy paid off in that the Fund remained in positive territory for the
12 months ended June 30, 1996, with a total return of 1.05%.+ That compared to
a return of 5.01% for the Lehman Brothers Government/Corporate Intermediate
Bond Index, the Fund's benchmark.
AN EMPHASIS ON AGENCY BONDS
In addition, we increased the Fund's investment in U.S. Government agency
securities from 9% to 60% of the portfolio. Agency securities offered yields
comparable to those on riskier corporate bonds, but with much less credit risk.
That move paid off when corporate bonds lost ground relative to agency issues
later in the period. Some of the Fund's agency holdings were
-4-
<PAGE>
discount callable bonds, which offer a yield advantage over other agency bonds
and modest potential for price appreciation.
OPPORTUNITIES IN FINANCIAL SERVICES AND TAXABLE MUNIS
Among corporate issues, the Fund bought bonds that still traded at attractive
prices and paid yields that compensated for their credit risk. For example, we
found such securities among bonds issued by brokerage firms and other companies
that provide financial services, as well as health-care companies.
Finally, the Fund continued to hold some taxable municipal bonds. Such issues
often are overlooked by investors because they are less liquid than many other
bonds. But we are willing to buy and hold them for long periods in the belief
that their yield advantage more than compensates for the relatively low
liquidity.
Bond prices may decline further during the coming months, especially if the
economy continues to exhibit signs of strong continued growth. We will continue
to seek out long-term values in the bond market and take advantage of
opportunities to buy high-quality issues when their prices fall below intrinsic
value.
+The Fund's total return with the maximum 3.00% sales charge was -2.02% for the
same period.
Fixed Income Fund
Value of $10,000 Investment
<TABLE>
<CAPTION>
Date Fixed Income Fund* Lehman Brothers Govt/Corp
Intermediate Index
<S> <C> <C>
10/30/91 9,699 10,000
06/30/92 10,336 10,674
06/30/93 11,333 11,795
06/30/94 11,084 11,787
06/30/95 11,618 12,987
06/30/96 11,740 13,638
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------
Average Annual Total Return*
- -------------------------------
Since
Inception
Date 1 Year (10/31/91)
- -------------------------------
<S> <C> <C>
6/30/96 -2.02% 3.49%
- -------------------------------
</TABLE>
Past performance is not predicitive of future performance. Investment return and
principal value of the Riverside Capital Funds will fluctuate, so that the
shares, when redeemed, may be worth more or less than their original cost.
*Reflects 3.00% Sales Charge.
The Lehman Brothers Government/Corporate Intermediate Bond Index is an
unmanaged index considered to be representative of bonds with maturities
between 1 and 10 years. It does not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund
accounting fees. The performance of the Riverside Capital Fixed Income Fund
reflects the deduction of fees for these value-added services.
THE RIVERSIDE CAPITAL LOW DURATION GOVERNMENT SECURITIES FUND
The Fund aims to generate higher income than a money market fund without
incurring significant extra risk by investing primarily in securities backed by
the U.S. Government and its agencies, which carry very little credit risk.
Moreover, it maintains a short-term portfolio with average maturities that
generally range between two and 10 years. That reduces the Fund's potential
yield in most circumstances, but also renders its asset value less sensitive to
rising interest rates that can trim the returns of longer-term funds. During
the recent period, the Fund held all of its assets in agency securities, since
corporate bonds offered very little in the way of higher yields. The Fund's
average maturity stood at just under six years at the end of the period. That
makes it a relatively low-risk place for short-term holdings, especially if
interest rates rise during the coming months. At the same time, however, it's
likely that the Fund will lag longer-term portfolios during the next bond
market rally.
The result of our effort to preserve value while generating income: The Fund
generated a respectable total return of 3.21%+
during the 12 months ended June 30, 1996, a difficult period for the fixed-
income markets. This compared to a return of 4.92% for its benchmark, the
Lehman Brothers Intermediate Government Bond Index during the same period.
+The Fund's total return with the maximum 2.00% sales charge was 1.11% for the
same period.
-5-
<PAGE>
Low Duration Government Securities Fund
Value of $10,000 Investment
<TABLE>
<CAPTION>
Lehman Brothers Government
Date Low Duration Government Securities Fund* Intermediate Index
<S> <C> <C>
04/15/94 9,804 10,000
06/30/94 9,791 9,977
06/30/95 10,579 11,242
06/30/96 10,917 11,795
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------
Average Annual Total Return*
- -------------------------------
Since
Inception
Date 1 Year (4/15/94)
- -------------------------------
<S> <C> <C>
6/30/96 1.11% 9.04%
- -------------------------------
</TABLE>
Past performance is not predicitive of future performance. Investment return and
principal value of the Riverside Capital Funds will fluctuate, so that the
shares, when redeemed, may be worth more or less than their original cost.
*Reflects 2.00% Sales Charge.
The Lehman Brothers Intermediate Government Bond Index is an unmanaged index
considered to be representative of government bonds with maturities between 1
and 10 years. It does not reflect the deduction of expenses associated with a
mutual fund, such as investment management and fund accounting fees. The
performance of the Riverside Capital Low Duration Government Securities Fund
reflects the deduction of fees for these value-added services.
THE RIVERSIDE CAPITAL TENNESSEE MUNICIPAL OBLIGATIONS FUND
The Fund aims to provide Tennessee residents with a high level of income
exempt from federal and Tennessee state income taxes, while maintaining a
relatively stable net asset value./1/
The volatility of the municipal bond market during the year ended June 30,
1996, caused many individual investors--who make up 80% of the buyers in the
tax-free sector--to focus on issues that mature in under five or 10 years.
This caused some good values to crop up among bonds with maturities in the 15-
year range, which helped us boost the Fund's yield.
Even so, we slightly reduced the average maturity of the Fund's portfolio
during the recent period. That move was designed to lower the risk that
shareholders would suffer losses from rising interest rates, and it
contributed to the Fund's returns. As signs of a stronger-than-expected
economy surfaced, longer-term bonds experienced significant losses.
A HEALTHY RETURN IN A DEPRESSED MARKET
As a result of the Fund's lower average maturity, at 10.77 years, and our
search for value, the Fund posted a relatively strong total return of 4.67%+
in a difficult market. That compares to a return of 6.42% for the Fund's
benchmark, the Lehman Brothers Municipal General Obligation Bond Index.
As a rule, Tennessee bonds are extremely high quality, which has the effect of
increasing their prices and lowering their yields. As a result, we searched
for higher payouts in out-of-state bonds, which accounted for 21% of the
Fund's holdings as of June 30, 1996. In addition, we held some single-A bonds
that provide higher yields than AA- and AAA-issues.
The Fund experienced its first-ever default during the period, involving
securities issued by Lewisburg, Tennessee. But we judged that the situation
would be satisfactorily resolved, and that proved correct: In June we
recovered 100% of the Fund's investment in these bonds.
+The Fund's total return with the maximum 3.00% sales charge was 1.57% for the
same period.
/1/The income received from such investments may be subject to the federal
alternative minimum tax and to certain state and local taxes.
Tennessee Municipal Obligations Fund
Value of $10,000 Investment
<TABLE>
<CAPTION>
Lehman Brothers Obligations
Date Tennessee Municipal Obligations Fund* Bond Index
<S> <C> <C>
11/04/92 9,699 10,000
06/30/93 10,416 10,979
06/30/94 10,312 11,046
06/30/95 10,890 11,955
06/30/96 11,398 12,723
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------
Average Annual Total Return*
- -------------------------------
Since
Inception
Date 1 Year (11/04/92)
- -------------------------------
<S> <C> <C>
6/30/96 1.57% 3.64%
- -------------------------------
</TABLE>
Past performance is not predicitive of future performance. Investment return and
principal value of the Riverside Capital Funds will fluctuate, so that the
shares, when redeemed, may be worth more or less than their original cost.
*Reflects 3.00% Sales Charge.
The Lehman Brothers Municipal General Obligation Bond Index is an unmanaged
index considered to be representative of the municipal bond market as a whole.
It does not reflect the deduction of expenses associated with a mutual fund,
such as investment management and fund accounting fees. The performance of the
Riverside Capital Tennessee Municipal Obligations Fund reflects the deduction
of fees for these value-added services.
-6-
<PAGE>
THE RIVERSIDE CAPITAL MONEY MARKET FUND/2/
The Fund aims to deliver stability of principal as well as current income.
During recent months, we invested its assets in U.S. Government agency
securities, with a small stake in repurchase agreements collateralized by U.S.
Government Securities. That strategy increased the Fund's credit quality, which
should be an important consideration for investors in a money fund.
The Fund maintained an average maturity of 31 days, shorter than the industry
average of 51 days. That short maturity reduces the Fund's exposure to
fluctuations in the short-term market, which in recent years has become more
volatile.
/2/An investment in the Fund is neither insured nor guaranteed by the U.S.
Government. There can be no assurance that the Fund will be able to maintain a
stable net asset value of $1 per share.
For more information, including charges and expenses, call 1-800-8-RIVER-6 to
receive a prospectus, which should be read carefully before you invest or send
money. The Riverside Capital Funds are distributed by BISYS Fund Services. The
composition of the Funds' holdings is subject to change.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, NATIONAL BANK OF COMMERCE OR ANY OF ITS AFFILIATES, AND SHARES ARE
NOT FEDERALLY INSURED BY THE FDIC OR ANY OTHER AGENCY. AN INVESTMENT IN SHARES
OF THE FUNDS INVOLVES THE POSSIBLE LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
-7-
<PAGE>
TABLE OF CONTENTS
Independent Auditors' Report
Page 9
Statements of Assets and Liabilities
Page 10
Statements of Operations
Page 12
Statements of Changes in Net Assets
Page 14
Schedules of Portfolio Investments
Page 16
Notes to Financial Statements
Page 27
Financial Highlights
Page 34
-8-
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees
The Sessions Group--
The Riverside Capital Funds:
We have audited the accompanying statements of assets and liabilities of The
Sessions Group--The Riverside Capital Funds (comprised of the Riverside
Capital Money Market Fund, Riverside Capital Value Equity Fund, Riverside
Capital Growth Fund, Riverside Capital Fixed Income Fund, Riverside Capital
Low Duration Government Securities Fund and Riverside Capital Tennessee
Municipal Obligations Fund), including the schedules of portfolio investments
as of June 30, 1996, and the related statements of operations, statements of
changes in net assets and the financial highlights for each of the periods
indicated herein. These financial statements and the financial highlights are
the responsibility of The Sessions Group--The Riverside Capital Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included verification of securities
owned as of June 30, 1996 by confirmation with the custodian and other
appropriate audit procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned funds comprising The Sessions Group--The Riverside
Capital Funds at June 30, 1996, the results of their operations, the changes
in their net assets and the financial highlights for each of the periods
indicated herein, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
August 26, 1996
-9-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1996
<TABLE>
<CAPTION>
MONEY VALUE
MARKET EQUITY GROWTH
FUND FUND FUND
------------ ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments, at value (cost
$125,869,852; $66,911,792; and
$28,072,751, respectively).......... $125,869,852 $80,426,289 $33,878,339
Repurchase agreements (cost
$7,714,419)......................... 7,714,419 -- --
------------ ----------- -----------
Total investments.................... 133,584,271 80,426,289 33,878,339
Interest and dividends receivable.... 1,122,472 214,984 75,842
Receivable from brokers for invest-
ments sold.......................... -- 470,068 --
Prepaid expenses..................... 26,402 7,278 3,142
------------ ----------- -----------
Total Assets....................... 134,733,145 81,118,619 33,957,323
------------ ----------- -----------
LIABILITIES:
Dividends payable.................... 502,254 -- --
Payable to brokers for investments
purchased........................... -- -- 166,450
Accrued expenses and other payables:
Investment advisory fees........... 3,854 6,024 971
Administration fees................ 7,351 4,473 1,390
Administrative services fees....... 13,805 12,959 4,351
12b-1 fees......................... 25,042 2,720 1,121
Custodian and accounting fees...... 1,103 3,736 2,003
Legal and audit fees............... 29,881 24,544 11,142
Printing fees...................... 3,293 4,899 785
Transfer agent fees................ 939 3,951 735
Other.............................. -- 179 1,006
------------ ----------- -----------
Total Liabilities.................. 587,522 63,485 189,954
------------ ----------- -----------
NET ASSETS:
Capital.............................. 134,348,768 60,131,224 27,015,438
Undistributed net investment income.. -- 106,815 11,382
Net unrealized appreciation on in-
vestments........................... -- 13,514,497 5,805,588
Accumulated undistributed net
realized gains (losses) on
investment transactions............. (203,145) 7,302,598 934,961
------------ ----------- -----------
Net Assets......................... $134,145,623 $81,055,134 $33,767,369
============ =========== ===========
Outstanding units of beneficial in-
terest (shares)..................... 134,348,769 5,573,485 2,409,383
============ =========== ===========
Net asset value--redemption price per
share............................... $ 1.00 $ 14.54 $ 14.01
============ =========== ===========
Maximum Sales Charge................. 4.50% 4.50%
=========== ===========
Maximum Offering Price (100%/(100%--
Maximum Sales Charge) of net asset
value adjusted to nearest cent) per
share............................... $ 1.00(a) $ 15.23 $ 14.67
============ =========== ===========
</TABLE>
- ------
(a) Offering price and redemption price are the same for the Money Market Fund.
See notes to financial statements.
-10-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1996
<TABLE>
<CAPTION>
LOW DURATION TENNESSEE
GOVERNMENT MUNICIPAL
FIXED INCOME SECURITIES OBLIGATIONS
FUND FUND FUND
------------ ------------ -----------
<S> <C> <C> <C>
ASSETS:
Investments, at value (cost $29,370,100;
$7,363,027; and $18,441,220, respec-
tively)................................ $29,388,109 $7,354,770 $18,683,329
Interest and dividends receivable....... 654,353 134,738 396,380
Receivable from brokers for investments
sold................................... 3,140,789 -- --
Unamortized organization costs.......... -- -- 11,952
Prepaid expenses........................ 3,143 617 4,418
----------- ---------- -----------
Total Assets.......................... 33,186,394 7,490,125 19,096,079
----------- ---------- -----------
LIABILITIES:
Cash overdraft.......................... 399,580 1,185 35,935
Payable to brokers for investments pur-
chased................................. 3,779,764 -- --
Accrued expenses and other payables:
Investment advisory fees.............. 1,541 -- 78
Administration fees................... 1,577 303 1,034
Administrative services fees.......... 2,700 1,686 1,880
12b-1 fees............................ 945 1,475 1,548
Custodian and accounting fees......... 5,133 9,332 1,452
Trustees' fees........................ 479 42 205
Legal and audit fees.................. 13,735 10,880 13,186
Transfer agent fees................... 2,892 1,136 1,762
Printing fees......................... 2,713 2,460 1,911
Other................................. 128,126 635 --
----------- ---------- -----------
Total Liabilities..................... 4,339,185 29,134 58,991
----------- ---------- -----------
NET ASSETS:
Capital................................. 35,111,736 7,487,755 19,961,714
Undistributed net investment income..... 72,377 15,797 41,200
Net unrealized appreciation (deprecia-
tion) on investments................... 18,009 (8,257) 242,109
Accumulated undistributed net realized
losses on investment transactions...... (6,354,913) (34,304) (1,207,935)
----------- ---------- -----------
Net Assets............................ $28,847,209 $7,460,991 $19,037,088
=========== ========== ===========
Outstanding units of beneficial interest
(shares)............................... 3,289,966 750,109 1,949,549
=========== ========== ===========
Net asset value--redemption price per
share.................................. $ 8.77 $ 9.95 $ 9.76
=========== ========== ===========
Maximum Sales Charge.................... 3.00% 2.00% 3.00%
=========== ========== ===========
Maximum Offering Price (100%/(100%--Max-
imum Sales Charge) of net asset value
adjusted to nearest cent) per share.... $ 9.04 $ 10.15 $ 10.06
=========== ========== ===========
</TABLE>
See notes to financial statements.
-11-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
MONEY VALUE
MARKET EQUITY GROWTH
FUND FUND FUND
---------- ----------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income......................... $8,446,191 $ 47,939 $ 49,358
Dividend income......................... -- 2,101,037 637,528
---------- ----------- ----------
Total Income............................ 8,446,191 2,148,976 686,886
---------- ----------- ----------
EXPENSES:
Investment advisory fees................ 524,476 747,594 284,790
Administration fees..................... 299,701 166,025 56,958
Administrative services fees............ 374,626 207,537 71,198
12b-1 fees.............................. 374,626 207,537 71,198
Custodian and accounting fees........... 67,844 45,604 34,999
Legal and audit fees.................... 45,430 29,575 5,713
Organization costs...................... -- -- 5,124
Trustees' fees and expenses............. 13,828 7,445 2,428
Transfer agent fees..................... 31,646 41,742 21,594
Interest expense........................ 20,788 -- --
Registration and filing fees............ 7,214 10,730 3,049
Printing costs.......................... 24,317 14,247 1,895
Other................................... 14,944 8,132 1,579
---------- ----------- ----------
Expenses before fee waivers............. 1,799,440 1,486,168 560,525
Less: Fee waivers....................... (314,686) (174,337) (262,782)
---------- ----------- ----------
Net Expenses............................ 1,484,754 1,311,831 297,743
---------- ----------- ----------
Net Investment Income................... 6,961,437 837,145 389,143
---------- ----------- ----------
REALIZED/UNREALIZED GAINS ON INVESTMENTS:
Net realized gains on investment
transactions......................... 141,785 9,340,011 1,167,209
Change in unrealized appreciation on
investments.......................... -- 5,384,702 3,513,955
---------- ----------- ----------
Net realized/unrealized gains on
investments............................... 141,785 14,724,713 4,681,164
---------- ----------- ----------
Change in net assets resulting from
operations................................ $7,103,222 $15,561,858 $5,070,307
========== =========== ==========
</TABLE>
See notes to financial statements.
-12-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
LOW DURATION TENNESSEE
FIXED GOVERNMENT MUNICIPAL
INCOME SECURITIES OBLIGATIONS
FUND FUND FUND
----------- ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income....................... $ 2,583,016 $ 511,233 $ 1,277,149
Dividend income....................... 105,493 22 --
----------- --------- -----------
Total Income.......................... 2,688,509 511,255 1,277,149
----------- --------- -----------
EXPENSES:
Investment advisory fees.............. 223,976 38,565 129,939
Administration fees................... 68,916 15,426 39,991
Administrative services fees.......... 86,072 19,283 49,977
12b-1 fees............................ 86,072 19,283 49,977
Custodian and accounting fees......... 59,324 41,676 50,864
Legal and audit fees.................. 15,283 7,329 8,927
Organization costs.................... -- 3,294 9,025
Trustees' fees and expenses........... 4,267 848 2,071
Transfer agent fees................... 24,049 18,791 20,871
Registration and filing fees.......... 5,125 3,787 366
Printing costs........................ 5,972 751 2,312
Other................................. 4,124 848 2,062
----------- --------- -----------
Expenses before fee waivers........... 583,180 169,881 366,382
Less: Fee waivers..................... (72,216) (58,617) (169,544)
----------- --------- -----------
Net Expenses.......................... 510,964 111,264 196,838
----------- --------- -----------
Net Investment Income................. 2,177,545 399,991 1,080,311
----------- --------- -----------
REALIZED/UNREALIZED LOSSES ON
INVESTMENTS:
Net realized losses on investment
transactions............................ (1,646,585) (1,813) (37,429)
Change in unrealized appreciation
(depreciation) on investments...... 29,430 (149,458) (106,825)
----------- --------- -----------
Net realized/unrealized losses on
investments............................. (1,617,155) (151,271) (144,254)
----------- --------- -----------
Change in net assets resulting from
operations.............................. $ 560,390 $ 248,720 $ 936,057
=========== ========= ===========
</TABLE>
See notes to financial statements.
-13-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MONEY MARKET FUND VALUE EQUITY FUND GROWTH FUND
---------------------------- -------------------------- ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995 1996 1995
------------- ------------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income.. $ 6,961,437 $ 6,920,710 $ 837,145 $ 899,777 $ 389,143 $ 194,157
Net realized gains
(losses)
on investment
transactions......... 141,785 (948,499) 9,340,011 953,377 1,167,209 273,411
Net change in
unrealized
appreciation on
investments.......... -- -- 5,384,702 3,898,036 3,513,955 2,415,733
------------- ------------- ------------ ------------ ----------- -----------
Change in net assets
resulting from
operations........... 7,103,222 5,972,211 15,561,858 5,751,190 5,070,307 2,883,301
------------- ------------- ------------ ------------ ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income............... (6,961,437) (6,920,710) (827,973) (841,639) (389,143) (165,741)
In excess of net
investment income.... -- -- -- -- (19,825) --
From net realized gains
on investments....... -- -- (2,982,043) (953,377) (505,659) --
In excess of net
realized
gains on investments. -- -- -- (4,237,871) -- --
------------- ------------- ------------ ------------ ----------- -----------
Change in net assets
from shareholder
distributions........ (6,961,437) (6,920,710) (3,810,016) (6,032,887) (914,627) (165,741)
------------- ------------- ------------ ------------ ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued............... 426,124,612 481,425,381 5,108,660 9,107,308 10,696,082 13,601,991
Dividends reinvested... 512,232 559,926 1,808,516 2,629,804 383,839 85,237
Cost of shares
redeemed............. (450,674,926) (451,762,504) (17,877,680) (10,424,030) (2,953,582) (1,264,531)
------------- ------------- ------------ ------------ ----------- -----------
Change in net assets
from capital
transactions......... (24,038,082) 30,222,803 (10,960,504) 1,313,082 8,126,339 12,422,697
------------- ------------- ------------ ------------ ----------- -----------
Capital contribution... 138,311 628,737 -- -- -- --
------------- ------------- ------------ ------------ ----------- -----------
Change in net assets... (23,757,986) 29,903,041 791,338 1,031,385 12,282,019 15,140,257
NET ASSETS:
Beginning of period.... 157,903,609 128,000,568 80,263,796 79,232,411 21,485,350 6,345,093
------------- ------------- ------------ ------------ ----------- -----------
End of period.......... $ 134,145,623 $ 157,903,609 $ 81,055,134 $ 80,263,796 $33,767,369 $21,485,350
============= ============= ============ ============ =========== ===========
SHARE TRANSACTIONS:
Issued................. 426,124,613 481,425,381 373,123 734,724 832,694 1,231,162
Reinvested............. 512,232 559,926 133,595 232,650 29,644 7,846
Redeemed............... (450,674,926) (451,762,504) (1,290,025) (862,147) (222,427) (115,950)
------------- ------------- ------------ ------------ ----------- -----------
Change in shares....... (24,038,081) 30,222,803 (783,307) 105,227 639,911 1,123,058
============= ============= ============ ============ =========== ===========
</TABLE>
See notes to financial statements.
-14-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
LOW DURATION GOVERNMENT TENNESSEE MUNICIPAL
FIXED INCOME FUND SECURITIES FUND OBLIGATIONS FUND
-------------------------- ------------------------ ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995 1996 1995
------------ ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income.. $ 2,177,545 $ 2,614,835 $ 399,991 $ 464,598 $ 1,080,311 $ 1,030,817
Net realized losses on
investment
transactions......... (1,646,585) (3,007,163) (1,813) (21,516) (37,429) (980,042)
Net change in
unrealized
appreciation
(depreciation)
on investments....... 29,430 2,284,408 (149,458) 187,815 (106,825) 925,567
------------ ------------ ----------- ----------- ----------- -----------
Change in net assets
resulting from
operations........... 560,390 1,892,080 248,720 630,897 936,057 976,342
------------ ------------ ----------- ----------- ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income............... (2,163,561) (2,614,835) (399,991) (454,961) (1,077,559) (1,021,053)
In excess of net
investment income.... -- (39,804) (3,182) -- -- --
In excess of net
realized gains on
investments.......... (104,990) -- (2,537) -- (906) --
------------ ------------ ----------- ----------- ----------- -----------
(2,268,551) (2,654,639) (405,710) (454,961) (1,078,465) (1,021,053)
------------ ------------ ----------- ----------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued............... 2,751,575 9,410,452 688,187 2,084,648 3,937,416 8,742,390
Dividends reinvested... 971,603 957,588 339,394 404,688 294,830 262,359
Cost of shares
redeemed............. (12,664,268) (12,417,944) (1,062,808) (2,704,498) (5,879,537) (8,098,317)
------------ ------------ ----------- ----------- ----------- -----------
Change in net assets
from capital
transactions......... (8,941,090) (2,049,904) (35,227) (215,162) (1,647,291) 906,432
------------ ------------ ----------- ----------- ----------- -----------
Change in net assets... (10,649,251) (2,812,463) (192,217) (39,226) (1,789,699) 861,721
NET ASSETS:
Beginning of period.... 39,496,460 42,308,923 7,653,208 7,692,434 20,826,787 19,965,066
------------ ------------ ----------- ----------- ----------- -----------
End of period.......... $ 28,847,209 $ 39,496,460 $ 7,460,991 $ 7,653,208 $19,037,088 $20,826,787
============ ============ =========== =========== =========== ===========
SHARE TRANSACTIONS:
Issued................. 300,179 1,017,567 67,717 212,299 402,934 903,304
Reinvested............. 106,183 103,889 33,512 41,066 30,243 27,164
Redeemed............... (1,377,873) (1,347,411) (105,303) (273,850) (600,866) (848,954)
------------ ------------ ----------- ----------- ----------- -----------
Change in shares....... (971,511) (225,955) (4,074) (20,485) (167,689) 81,514
============ ============ =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
-15-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
----------- ------------------------------------------------------- ----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES (93.8%):
A.I.D. to Israel:
$ 1,510,000 5.45%, 11/15/99*....................................... $1,495,175
A.I.D. to Jamaica:
750,000 5.94%, 10/5/12*........................................ 755,694
Federal Farm Credit Bank:
5,000,000 5.26%, 7/1/96.......................................... 5,000,000
Federal Home Loan Bank:
5,000,000 5.31%, 12/27/96........................................ 5,000,000
1,000,000 5.31%, 2/14/97*........................................ 999,194
2,000,000 5.28%, 4/4/97*......................................... 1,999,037
Federal National Mortgage Assoc.:
10,000,000 5.30%, 12/26/96........................................ 9,996,307
10,000,000 5.24%, 3/25/97*........................................ 9,996,291
3,000,000 5.49%, 7/28/97*........................................ 2,990,232
5,000,000 5.43%, 9/2/97*......................................... 4,995,023
Student Loan Marketing Assoc.:
7,000,000 5.54%, 7/11/96*........................................ 7,000,000
2,000,000 5.39%, 9/12/96*........................................ 2,000,000
650,000 5.61%, 11/27/96*....................................... 650,226
3,750,000 5.56%, 3/3/97*......................................... 3,750,000
1,000,000 5.70%, 4/21/97*........................................ 1,002,820
10,000,000 5.41%, 10/14/97*....................................... 9,990,711
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
----------- ---------------------------------------------------- ------------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Student Loan Marketing Assoc., continued:
$ 4,830,000 5.41%, 11/24/97*.................................... $ 4,820,654
8,000,000 5.43%, 8/20/98*..................................... 7,989,927
2,000,000 5.43%, 9/28/98*..................................... 1,997,352
9,000,000 5.43%, 11/10/98*.................................... 8,987,219
6,000,000 5.45%, 1/13/99*..................................... 5,982,614
6,850,000 5.45%, 2/8/99*...................................... 6,835,109
1,000,000 5.45%, 7/12/99*..................................... 994,323
14,000,000 5.46%, 8/2/99*...................................... 13,984,811
Overseas Private Investment Corp.:
6,641,000 5.75%, 6/1/00*...................................... 6,657,133
------------
Total U.S. Government Agencies 125,869,852
------------
Total Investments, at amortized cost 125,869,852
------------
REPURCHASE AGREEMENTS (5.8%):
7,714,419 Zions Securities, 5.30%, 7/1/96 (Collateralized by
$7,420,000 U.S. Treasury Notes, 7.25%, 8/15/04,
market value--$7,887,649)........................... 7,714,419
------------
Total Repurchase Agreements 7,714,419
------------
Total (Cost--$133,584,271)(a) $133,584,271
============
</TABLE>
- ------
Percentages indicated are based on net assets of $134,145,623.
(a)Cost and value for federal income tax and financial reporting purposes are
the same.
* Floating Variable Rate Certificates are securities with interest rates that
change periodically and are payable on different dates ranging from daily,
weekly, monthly, quarterly or semi-annually. The interest rate is based on an
index of market interest rates. The rate reflected on the Schedule of
Portfolio Investments is the rate in effect on June 30, 1996.
See notes to financial statements.
-16-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL VALUE EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1996
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (98.7%):
Automobiles (3.5%):
74,900 Echlin, Inc............................................ $ 2,836,838
-----------
Banking (1.3%):
36,965 First Hawaiian, Inc. .................................. 1,053,503
-----------
Computers & Peripherals (5.8%):
203,650 Amdahl Corp. (b)....................................... 2,189,238
25,200 I.B.M. Corp............................................ 2,494,800
-----------
4,684,038
-----------
Department Stores (3.1%):
155,000 Global Industries
Technology, Inc. (b).................................. 2,480,000
-----------
Electrical Equipment (2.6%):
109,700 Augat, Inc. ........................................... 2,098,013
-----------
Entertainment (3.6%):
81,300 Hasbro, Inc. .......................................... 2,906,475
-----------
Financial Services (3.4%):
61,046 Travelers, Inc......................................... 2,785,201
-----------
Food Processing & Packaging (5.5%):
164,100 J & J Snack Foods, Inc. (b)............................ 1,887,150
117,050 McCormick & Company, Inc............................... 2,589,731
-----------
4,476,881
-----------
Hotels & Motels (3.2%):
227,500 Equity Inns, Inc....................................... 2,616,250
-----------
Insurance (8.5%):
23,000 Phoenix Re Corp........................................ 557,750
53,800 SunAmerica, Inc........................................ 3,039,700
52,600 UNUM Corp.............................................. 3,274,350
-----------
6,871,800
-----------
Medical Services (3.0%):
102,700 Value Health, Inc. (b)................................. 2,426,288
-----------
Metal & Mineral Production (2.7%):
55,650 Cleveland Cliffs....................................... 2,177,306
-----------
Mobile Homes & Manufactured Housing (3.2%):
104,300 Skyline Corp........................................... 2,607,500
-----------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Oil & Gas (3.3%):
108,380 Valero Energy Corp..................................... $ 2,709,500
-----------
Oilfield Equipment & Services (3.3%):
75,195 B. J. Services (b)..................................... 2,641,224
-----------
Pollution Control Services & Equipment (3.9%):
178,700 Safety Kleen........................................... 3,127,250
-----------
Real Estate Investment Trusts (9.7%):
88,938 Mid-America Apartment Community........................ 2,256,802
75,260 Storage USA............................................ 2,427,135
127,625 Transnational Re Corp.................................. 3,142,765
-----------
7,826,702
-----------
Restaurants (3.0%):
226,600 Darden Restaurants, Inc................................ 2,435,950
-----------
Retail (7.8%):
262,650 Burlington Coat Factory (b)............................ 2,757,825
327,100 Hancock Fabrics........................................ 3,598,100
-----------
6,355,925
-----------
Savings & Loan Companies (3.8%):
113,100 Ahmanson (HF) & Co..................................... 3,053,700
-----------
Steel (2.7%):
132,400 Birmingham Steel Corp.................................. 2,168,050
-----------
Tobacco (7.7%):
35,050 Philip Morris Cos., Inc................................ 3,645,200
77,000 UST, Inc............................................... 2,637,250
-----------
6,282,450
-----------
Trucking (4.1%):
129,100 Werner Enterprises, Inc................................ 3,356,599
-----------
Total Common Stocks 79,977,443
-----------
INVESTMENT COMPANIES (0.6%):
443,929 Dreyfus Treasury Prime Fund............................ 443,929
4,917 Riverside Capital Money Market Fund.................... 4,917
-----------
Total Investment Companies 448,846
-----------
Total (Cost--$66,911,792)(a) $80,426,289
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $81,055,134.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation...................................... $15,988,069
Unrealized depreciation...................................... (2,473,572)
-----------
Net unrealized appreciation.................................. $13,514,497
===========
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements.
-17-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1996
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------- --------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (92.4%):
Automotive Parts (3.8%):
38,950 Titan Wheel International, Inc........................... $ 623,200
33,200 Walbro Corp. ............................................ 672,300
-----------
1,295,500
-----------
Banking (6.5%):
9,500 NationsBank Corp......................................... 784,938
14,200 Southern National Corp................................... 450,850
34,200 SouthTrust Corp.......................................... 961,875
-----------
2,197,663
-----------
Beverages (3.0%):
20,800 Coca-Cola Co............................................. 1,016,600
-----------
Computers ( 1.3%):
30,000 Checkmate Electronics, Inc. (b).......................... 435,000
-----------
Computers & Peripherals (2.0%):
35,000 EMC Corp.(b)............................................. 651,875
-----------
Construction (2.5%):
42,756 Clayton Homes, Inc....................................... 855,120
-----------
Electrical Equipment (4.7%):
18,500 General Electric Co. .................................... 1,600,250
-----------
Electronic & Electrical (5.4%):
21,000 AMP, Inc. ............................................... 842,625
15,500 Motorola, Inc. .......................................... 974,563
-----------
1,817,188
-----------
Food Processing & Packaging (4.7%):
25,000 Nabisco Holdings Corp. .................................. 884,375
22,000 Sara Lee Corp............................................ 712,250
-----------
1,596,625
-----------
Insurance (8.4%):
9,500 American International
Group, Inc.............................................. 936,937
49,400 First Colony Corp........................................ 1,531,400
9,000 Providian Corp........................................... 385,875
-----------
2,854,212
-----------
Manufacturing-Capital Goods (3.3%):
40,000 Metrotrans Corp. (b)..................................... 560,000
32,000 Wabash National Corp. ................................... 568,000
-----------
1,128,000
-----------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------- --------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Medical Services (1.6%):
30,000 Healthsource, Inc. (b)................................... $ 525,000
-----------
Oil--Integrated Companies (4.7%):
7,400 Atlantic Richfield Co.................................... 876,900
8,500 Texaco, Inc.............................................. 712,938
-----------
1,589,838
-----------
Pharmaceuticals (6.5%):
22,500 Abbott Laboratories...................................... 978,750
19,100 Schering-Plough.......................................... 1,198,525
-----------
2,177,275
-----------
Pollution Control Services & Equipment (2.0%):
23,500 Browning-Ferris Industries, Inc.......................... 681,500
-----------
Real Estate Investment Trusts (5.3%):
44,000 Merry Land & Investment Co............................... 924,000
27,300 Storage USA.............................................. 880,425
-----------
1,804,425
-----------
Restaurants (2.7%):
37,000 Cracker Barrel Old Country Store, Inc.................... 897,250
-----------
Retail (6.8%):
45,000 Books-A-Million (b)...................................... 376,875
21,700 Home Depot, Inc.......................................... 1,171,800
29,000 Wal-Mart Stores, Inc. ................................... 735,875
-----------
2,284,550
-----------
Semiconductors (3.0%):
13,800 Intel Corp............................................... 1,013,437
-----------
Services (Non-Financial) (2.5%):
35,000 Rollins, Inc............................................. 822,500
-----------
Soaps & Cleaning Agents (2.1%):
8,000 Procter & Gamble Co. .................................... 725,000
-----------
Tobacco (4.1%):
13,200 Philip Morris Cos., Inc.................................. 1,372,800
-----------
Toys & Bicycles--Manufacturing (3.0%):
35,675 Mattel, Inc.............................................. 1,021,196
-----------
Utilities--Telecommunications (2.5%):
33,000 MCI Telecommunications
Corp.................................................... 845,625
-----------
Total Common Stocks 31,208,429
-----------
</TABLE>
Continued
-18-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JUNE 30, 1996
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ -------------------------------------------------------- ----------
<C> <S> <C>
INVESTMENT COMPANIES (7.9%):
1,334,955 Dreyfus Treasury Prime Fund............................. $1,334,955
1,334,955 Riverside Capital Money Market Fund..................... 1,334,955
----------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ -------------------------------------------------------- ----------
<C> <S> <C>
INVESTMENT COMPANIES, CONTINUED:
Total Investment Companies $ 2,669,910
-----------
Total (Cost--$28,072,751)(a) $33,878,339
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $33,767,369.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....................................... $6,581,859
Unrealized depreciation....................................... (776,271)
----------
Net unrealized appreciation................................... $5,805,588
==========
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements.
-19-
<PAGE>
THE SESSION GROUP
RIVERSIDE CAPITAL FIXED INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1996
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS (24.8%):
Banking (5.5%):
$1,500,000 Commerce Bancorp, Inc., 8.38%, 7/15/03............... $ 1,587,914
-----------
Industrial Goods & Services (13.9%):
1,500,000 Montalbano Builders, 10.00%, 5/1/99, Callable 5/1/98
@100................................................ 1,500,000
889,787 Rosewood Care Center Funding, 7.25%, 11/1/13......... 902,022
1,600,000 Voyager Lines Private Placement, 9.50%, 11/1/99,
Callable 11/1/96 @100 (b)........................... 1,600,000
-----------
4,002,022
-----------
Manufacturing (1.5%):
450,000 Timken, 7.25%, 8/20/02............................... 449,438
-----------
Transportation & Shipping (3.9%):
1,125,000 Ray and Ross Transport, Inc., 10.00%, 2/1/06,
Callable 1/1/97 @100................................ 1,125,000
-----------
Total Corporate Bonds 7,164,374
-----------
PREFERRED STOCKS (2.2%):
Financial Services (2.2%):
25,000 Lincoln National PLC, 8.75%, Callable 7/2/01 @25..... 625,000
-----------
Total Preferred Stocks 625,000
-----------
TAXABLE MUNICIPAL BONDS (12.3%):
Illinois (0.5%):
132,036 Belleville, St. Clair County, CMO, 7.35%, 11/15/09... 131,141
-----------
Indiana (1.5%):
420,000 Jeffersonville, Public Warehouse Income Project,
10.45%, 4/1/05, LOC: State Bank of Austria.......... 436,275
-----------
Tennessee (4.8%):
130,000 Decatur County, Tennessee Health, Educational &
Housing Facilities Board Revenue, First Mortgage,
8.00%, 9/1/97....................................... 127,752
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- -----------
<C> <S> <C>
TAXABLE MUNICIPAL BONDS, CONTINUED:
Tennessee, continued:
$ 745,000 Hamilton County, Tennessee Industrial Development
Board, Multifamily Housing Revenue, Waterford
Apartments, Project A, 8.50%, 8/1/10................ $ 729,385
120,000 Jackson County, Tennessee Health & Educational
Facilities, First Mortgage, Forest Cove B, 8.00%,
9/1/97.............................................. 117,925
410,000 Memphis-Shelby County, Tennessee Industrial
Development Board, Economic Development Revenue,
Cleo Project B, 9.10%, 2/1/04....................... 419,840
-----------
1,394,902
-----------
West Virginia (5.5%):
110,000 Harrison County, West Virginia Revenue Refunding,
First Mortgage, Meadow B, 9.25%, 11/1/08............ 109,968
285,000 Summers County, West Virginia First Mortgage Gross
Revenue Refunding, Limited Partnership, 8.00%,
10/1/03............................................. 277,185
1,230,000 West Virginia State Hospital Financial Authority,
Hospital Revenue, Nellas Income Project, 9.50%,
8/1/15.............................................. 1,205,941
-----------
1,593,094
-----------
Total Taxable Municipal Bonds 3,555,412
-----------
</TABLE>
Continued
-20-
<PAGE>
THE SESSION GROUP
RIVERSIDE CAPITAL FIXED INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JUNE 30, 1996
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES (60.0%):
Federal Home Loan Bank:
$ 620,000 6.75%, 4/10/06, Callable 7/10/96 @100................. $ 602,671
Federal Home Loan Mortgage Corp.:
5,000,000 7.52%, 4/21/06, Callable 4/21/99 @100................. 4,961,356
3,000,000 7.55%, 4/26/06, Callable 4/26/99 @100................. 2,987,190
2,500,000 7.40%, 3/28/11, Callable 3/28/01 @100................. 2,433,025
Federal National Mortgage Assoc.:
3,000,000 6.93%, 10/26/05, Callable 10/26/98 @100............... 2,901,900
3,330,000 6.69%, 2/2/11, Callable 2/2/01 @100................... 3,090,140
Government Trust Certificates, State of Israel:
8,314 9.13%, 11/15/96....................................... 8,376
Puerto Rico, HUD 94A Caguas:
340,000 6.85%, 8/1/07......................................... 332,248
-----------
Total U.S. Government Agencies 17,316,906
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
U.S. TREASURY BONDS (0.2%):
$ 49,000 9.13%, 5/15/09........................................ $ 55,849
-----------
Total U.S. Treasury Bonds 55,849
-----------
INVESTMENT COMPANIES (2.3%):
670,568 Riverside Capital Money Market Fund................... 670,568
-----------
Total Investment Companies 670,568
-----------
Total (Cost--$29,370,100)(a) $29,388,109
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $28,847,209.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $ 224,796
Unrealized depreciation........................................ (206,787)
---------
Net unrealized appreciation.................................... $ 18,009
=========
</TABLE>
(b) Represents a restricted security, purchased under Rule 144A, which is
exempt from registration under the Securities Act of 1933, as amended.
CMO-- Collateralized Mortgage Obligation
LOC-- Letter of Credit
PLC-- Public Liability Company
See notes to financial statements.
-21-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL LOW DURATION GOVERNMENT SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1996
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- --------------------------------------------------------- ----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES (96.8%):
Federal Farm Credit Bank:
$ 700,000 8.80%, 1/31/02........................................... $ 766,451
250,000 7.10%, 11/12/02.......................................... 253,792
Federal Home Loan Bank:
700,000 4.54%, 7/15/98*.......................................... 661,252
250,000 5.50%, 1/23/01........................................... 238,830
Federal Home Loan Mortgage Corp.:
250,000 7.75%, 11/07/01.......................................... 261,950
750,000 7.54%, 5/3/04............................................ 750,255
500,000 7.89%, 5/12/04........................................... 500,410
Federal National Mortgage Assoc.:
250,000 5.55%, 1/17/01........................................... 239,352
545,000 7.20%, 1/10/02........................................... 545,033
Guaranteed Export Certificates--Series 1994-A:
2,215,555 7.12%, 4/15/06........................................... 2,243,271
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ------------------------------------------------------- ----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Private Export Funding:
$ 466,900 5.65%, 3/15/03......................................... $ 448,808
Shipco 668 Series A-Title XI:
316,000 8.50%, 5/11/02......................................... 316,365
----------
Total U.S. Government Agencies 7,225,769
----------
INVESTMENT COMPANIES (1.7%):
1 Dreyfus Treasury Prime Fund............................ 1
129,000 Riverside Capital Money Market Fund.................... 129,000
----------
Total Investment Companies 129,001
----------
Total (Cost--$7,363,027)(a) $7,354,770
==========
</TABLE>
- ------
Percentages indicated are based on net assets of $7,460,991.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $ 77,980
Unrealized depreciation........................................ (86,237)
--------
Net unrealized depreciation.................................... $ (8,257)
========
</TABLE>
* Floating Variable Rate Certificates are securities with interest rates that
change periodically and are payable on different dates ranging from daily,
weekly, monthly, quarterly or semi-annually. The interest rate is based on an
index of market interest rates or other index. The rate reflected on the
Schedule of Portfolio Investments is the rate in effect on June 30, 1996.
See notes to financial statements.
-22-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL TENNESSEE MUNICIPAL OBLIGATIONS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ----------------------------------------------------- -----------
<C> <S> <C>
MUNICIPAL BONDS (85.8%):
Alabama (1.3%):
$ 250,000 Troy, Affordable Housing Revenue, 6.30%, 7/1/01...... $ 246,322
-----------
Georgia (2.2%):
400,000 Atlanta, Georgia Housing Development Corp., Mortgage
Revenue, 7.00%, 12/1/20, Callable 12/1/05 @102...... 418,552
-----------
Kansas (3.9%):
750,000 Manhattan, Kansas Industrial Revenue, 7.00%, 12/1/14,
Callable 12/1/05 @100............................... 734,467
-----------
Louisiana (4.3%):
750,000 New Orleans, Louisiana Audubon Park Revenue, 8.00%,
4/1/12.............................................. 812,273
-----------
Pennsylvania (2.6%):
250,000 Schuylkill County, Pennsylvania Industrial
Development Authority Revenue, Beverly Enterprises
Project, 6.63%, 5/1/03.............................. 252,238
250,000 Wyoming County, Pennsylvania Industrial Development
Authority Revenue, Beverly Enterprises Project,
6.25%, 7/1/06....................................... 250,260
-----------
502,498
-----------
Puerto Rico (3.3%):
195,000 Puerto Rico Commonwealth Highway & Transportation,
5.50%, 7/1/19, Callable 7/1/03 @101.5............... 183,265
450,000 Puerto Rico Electric Power Authority, 6.00%, 7/1/15,
Callable 7/1/05 @102................................ 454,144
-----------
637,409
-----------
South Carolina (1.1%):
200,000 Charleston County, South Carolina Health Facilities
Revenue, Franke Home Project, 8.00%, 11/1/24........ 207,694
-----------
Tennessee (65.2%):
105,000 Blount County, Tennessee Health & Educational
Facilities Board Revenue, Multifamily Mortgage,
Maryville Towers Project, 6.20%, 7/20/28, GNMA...... 105,066
100,000 Bruceton, Tennessee Water & Sewer Development, GO,
6.70%, 3/1/13....................................... 104,650
105,000 Bruceton, Tennessee Water & Sewer Development, GO,
6.70%, 3/1/14....................................... 109,882
115,000 Bruceton, Tennessee Water & Sewer Development, GO,
6.75%, 3/1/15....................................... 120,698
125,000 Bruceton, Tennessee Water & Sewer Development, GO,
6.75%, 3/1/16....................................... 131,194
100,000 Chattanooga, Tennessee Industrial Development Board
Revenue, 7.05%, 8/15/05............................. 108,019
395,000 Clarkesville, Tennessee Water, Sewer & Gas Refunding
& Improvement, 6.25%, 2/1/18, MBIA.................. 406,131
100,000 Dayton, Tennessee Housing Assistance, Pikeville
Townhomes, 5.75%, 11/1/13........................... 97,951
470,000 Dyer County, Tennessee Health, Educational & Housing
Facilities Board Revenue, 1st Mortgage Parkview
Convalescent, 7.25%, 10/1/04........................ 490,356
500,000 Hamilton County, Tennessee Industrial Development
Board Revenue, Multifamily Housing, Park at 58
Project, 6.70%, 3/1/21, Callable 3/1/06 @101........ 506,015
250,000 Hamilton County, Tennessee Industrial Development
Board Revenue, Multifamily Housing, Pattern Towers,
6.38%, 8/1/26, Callable 8/1/05 @102................. 247,177
</TABLE>
Continued
-23-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL TENNESSEE MUNICIPAL OBLIGATIONS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JUNE 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ----------------------------------------------------- -----------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Tennessee, continued:
$ 890,000 Hamilton County, Tennessee Industrial Development
Board Revenue, Multifamily Housing, Waterford Place
Apartments, Series B, 6.60%, 2/1/24, FGIC........... $ 864,653
300,000 Jackson, Tennessee Health, Educational & Housing,
Posthouse Apartments, 7.00%, 5/1/17................. 313,545
100,000 Johnson City, Tennessee Health & Education Refunding
Bonds, Health Hospital, Nursing Home, 6.75%, 7/1/06,
Prerefunded 7/1/01 @102............................. 110,379
100,000 Knox County, Tennessee Industrial Development Board,
Multifamily Revenue, 5.85%, 3/1/15, Callable 9/1/05
@102................................................ 99,094
350,000 Knox County, Tennessee Public Improvement, GO, 6.38%,
4/1/07.............................................. 378,885
350,000 Knoxville, Tennessee Community Development Corp.,
Clinton Towers Housing Revenue, Multifamily, 6.60%,
10/15/07............................................ 362,834
250,000 Knoxville, Tennessee Community Development Corp.,
Clinton Towers Housing Revenue, Multifamily, 6.65%,
10/15/10............................................ 256,855
250,000 Lawrance County, GO, 6.63%, 3/1/14................... 266,025
115,000 Manchester, Tennessee Water & Sewer Revenue, Series
1992, GO, 6.00%, 7/1/06, AMBAC...................... 118,352
450,000 Maury County Industrial Development Board, PCR,
6.50%, 9/1/24, Callable 9/1/04 @102................. 463,140
250,000 Memphis, Tennessee Health, Educational, & Housing
Facilities Board, Mortgage Revenue, Edgewater
Terrace Project, 7.38%, 1/20/27, FHA, LOC: First
Alabama Birmingham.................................. 264,007
250,000 Memphis, Tennessee Health, Educational, & Housing
Facilities Board, Multifamily Refunding, River Trace
II, 6.45%, 4/1/26................................... 253,902
250,000 Metropolitan Government, Nashville & Davidson County,
Tennessee Health & Educational Facilities Board
Revenue, 1st Mortgage, Blakeford Project, 7.50%,
7/1/99.............................................. 259,903
100,000 Metropolitan Government, Nashville & Davidson County,
Tennessee Housing & Educational Facilities Board
Revenue, Vanderbilt University, Series A, 6.00%,
10/1/16............................................. 100,798
170,000 Metropolitan Government, Nashville & Davidson County,
Tennessee Water & Sewer Revenue, 7.00%, 1/1/14...... 173,798
150,000 Morristown, Tennessee Housing Development Corp.,
Multifamily Revenue, 6.25%, 5/1/18.................. 151,988
150,000 Poplar Grove, Tennessee Utility District, Tipton
County Gas System Revenue, Series 1993, 6.90%,
1/15/07............................................. 154,623
130,000 Poplar Grove, Tennessee Utility District, Waterworks
Revenue Refunding & Improvement, 6.05%, 4/1/05...... 136,715
160,000 Rutherford County, 0.00%, 5/1/13..................... 58,315
370,000 Shelby County, Tennessee Compound Interest School
Bonds, Series A, GO, 0.00%, 5/1/12.................. 140,940
1,150,000 Shelby County, Tennessee Health, Educational &
Housing Facilities Board Revenue, Multifamily
Housing, Windsor Apartments, 6.75%, 10/1/17......... 1,186,513
250,000 Shelby County, Tennessee Health, Educational &
Housing Facilities Board Revenue Refunding, Beverly
Enterprises Project, 6.50%, 3/1/09.................. 251,428
</TABLE>
Continued
-24-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL TENNESSEE MUNICIPAL OBLIGATIONS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JUNE 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ----------------------------------------------------- -----------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Tennessee, continued:
$ 125,000 Shelby County, Tennessee Health, Educational &
Housing Facilities Board Revenue Refunding,
Industrial Development, 1st Healthcare Project,
6.50%, 4/1/02....................................... $ 122,930
725,000 Shelby County, Tennessee Health, Educational &
Housing Facilities Board Revenue Refunding, Heritage
Place Project, 7.12%, 7/1/25, MBIA, FHA............. 768,892
500,000 Shelby County, 6.00%, 4/15/24........................ 481,015
500,000 Shelby County, Tennessee Health, Educational &
Housing Facilities Board Revenue, Trezevant Manor
Project, 6.00%, 8/1/16.............................. 472,300
500,000 South Fulton, Tennessee Industrial Development
Revenue, 6.35%, 10/1/15, Callable 10/1/05 @102...... 501,135
310,000 South Fulton, Tennessee Industrial Revenue Authority,
6.00%, 10/1/10, Callable 10/1/05 @102............... 307,914
200,000 Spring City, Tennessee Health, Educational & Housing
Facility, Spring City Care Center, 8.75%, 9/1/24.... 208,002
100,000 Tennessee State School Board Authority, Higher
Education Facilities, Series A, 6.25%, 5/1/17....... 103,523
100,000 Weakley County, GO, 6.00%, 8/1/12.................... 103,085
550,000 Winchester, Tennessee Health & Educational Facilities
Board, Revenue Refunding, Beverly Enterprises Income
Project, 7.00%, 6/1/09.............................. 557,838
-----------
12,420,465
-----------
West Virginia (0.7%):
125,000 Summers County, West Virginia, First Mortgage Gross
Revenue Refunding, 7.25%, 10/1/09................... 128,095
-----------
Wyoming (1.2%):
65,000 Sweetwater County, PCR, Idaho Power Company, Series
C, 7.63%, 12/1/13, Callable 11/3/96 @103............ 67,428
150,000 Sweetwater County, PCR, Idaho Power Company, Series
D, 7.63%, 12/1/13, Callable 11/3/96 @103............ 155,602
-----------
223,030
-----------
Total Municipal Bonds........................................... 16,330,805
-----------
ALTERNATIVE MINIMUM TAX PAPER (12.4%):
Oklahoma (1.6%):
300,000 Oklahoma Development Finance Authority Revenue, First
Mortgage, Bake Rite Income Project, 8.38%, 8/1/11... 303,015
-----------
Tennessee (10.8%):
530,000 Loudon County, Tennessee Industrial Development
Board, Solid Waste Disposal Revenue, Kimberly-Clark
Corp. Project, 6.20%, 2/1/23........................ 533,609
100,000 Memphis Shelby County, Tennessee Airport Revenue,
8.13%, 2/15/12, MBIA................................ 106,957
740,000 Tennessee Housing Development Agency, 7.05%, 7/1/20.. 758,360
145,000 Tennessee Housing Development Agency Mortgage, Series
A, 6.90%, 7/1/25.................................... 150,188
</TABLE>
Continued
-25-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL TENNESSEE MUNICIPAL OBLIGATIONS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JUNE 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ----------------------------------------------------- -----------
<C> <S> <C>
ALTERNATIVE MINIMUM TAX PAPER, CONTINUED:
Tennessee, continued:
$ 500,000 Tennessee Housing Development Agency Mortgage, Series
C, 6.10%, 7/1/15.................................... $ 500,395
-----------
2,049,509
-----------
Total Alternative Minimum Tax Paper............................. 2,352,524
-----------
Total (Cost--$18,441,220)(a).................................... $18,683,329
===========
</TABLE>
- --------
Percentages indicated are based on net assets of $19,037,088.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $ 359,432
Unrealized depreciation........................................ (117,323)
---------
Net unrealized appreciation.................................... $ 242,109
=========
</TABLE>
AMBAC Insured by American Municipal Bond Assurance Corp.
FGIC Insured by Financial Guaranty Insurance Corp.
FHA Insured by Federal Housing Administration
GNMA Insured by Government National Mortgage Assoc.
GO General Obligation
LOC Letter of Credit
MBIA Insured by Municipal Bond Insurance Assoc.
PCR Pollution Control Revenue
See notes to financial statements.
-26-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
1. ORGANIZATION:
The Sessions Group (the "Group") was organized on April 25, 1988 as an Ohio
business trust, and is registered under the Investment Company Act of 1940
as amended, (the "1940 Act"), as an open-end management investment company.
Between the date of organization and the dates of commencement of operations
of the Riverside Capital Money Market Fund, the Riverside Capital Value
Equity Fund, the Riverside Capital Growth Fund, the Riverside Capital Fixed
Income Fund, the Riverside Capital Low Duration Government Securities Fund
and the Riverside Capital Tennessee Municipal Obligation Fund (individually,
a "Fund" and collectively, the "Funds"), each a series of the Group, the
Funds earned no investment income and had no operations other than incurring
organizational expenses and the sale of initial units of beneficial interest
("shares") of the Funds. On August 29, 1995, the Riverside Capital Equity
and Municipal Income Fund liquidated and ceased operations.
The investment objective of the Money Market Fund is to seek current income
with liquidity and stability of principal. The investment objective of the
Value Equity Fund is to seek growth of capital by investing primarily in a
diversified portfolio of common stocks and securities convertible into
common stocks. The investment objective of the Growth Fund is to seek growth
of capital by investing primarily in a diversified portfolio of common
stocks and securities convertible into common stocks. The investment
objective of the Fixed Income Fund is to seek current income as well as
preservation of capital by investing in a portfolio of high grade fixed
income securities. The investment objective of the Low Duration Government
Securities Fund is to seek current income consistent with preservation of
capital. The investment objectives of the Tennessee Municipal Obligations
Fund are to seek (1) income which is exempt from federal income tax and
Tennessee state income tax, and (2) preservation of capital.
The Group is authorized to issue an unlimited number of shares without par
value. Sales of shares of the Funds may be made to customers of National
Bank of Commerce ("NBC") and its affiliates, to all accounts of
correspondent banks of NBC and to the general public. NBC serves as
investment adviser to the Funds.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by
the Group in the preparation of its financial statements. The policies are
in conformity with generally accepted accounting principles. The preparation
of financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses for the period. Actual results could differ from those estimates.
SECURITIES VALUATION:
Investments of the Money Market Fund are valued at either amortized cost,
which approximates market value, or at original cost, which combined with
accrued interest, approximates market value. Under the amortized cost
method, discount or premium is amortized on a constant basis to the maturity
of the security. In addition, the Fund may not a) purchase any instrument
with a remaining maturity greater than thirteen months unless such
investment is subject to a demand feature, or b) maintain a dollar-weighted
average portfolio maturity which exceeds 90 days.
Continued
-27-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JUNE 30, 1996
Investments in common and preferred stocks and commercial paper of the Value
Equity Fund, the Growth Fund, the Fixed Income Fund, the Low Duration
Government Securities Fund and the Tennessee Municipal Obligations Fund
(collectively, "the variable net asset value funds"), are valued at their
market values determined on the basis of the latest available bid quotations
in the principal market (closing sales prices if the principal market is an
exchange) in which such securities are normally traded. Investments in
corporate bonds, municipal securities and U.S. Government securities of the
variable net asset value funds are valued at their market values determined
on the basis of the mean of the latest bid and asked quotations in the
principal market (closing sales prices if the principal market is an
exchange) in which such securities are normally traded. Investments in
investment companies are valued at their net asset values as reported by
such companies. Other securities for which quotations are not readily
available are valued at their fair value under procedures established by the
Group's Board of Trustees. The differences between the cost and market
values of investments held by the variable net asset value funds are
reflected as either unrealized appreciation or depreciation.
SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the accrual
basis and includes, where applicable, the amortization of premium or
discount. Dividend income is recorded on the ex-dividend date. Gains or
losses realized on sales of securities are determined by comparing the
identified cost of the security lot sold with the net sales proceeds.
REPURCHASE AGREEMENTS:
The Funds may acquire repurchase agreements from financial institutions such
as banks and broker dealers which NBC deems creditworthy under guidelines
approved by the Board of Trustees, subject to the seller's agreement to
repurchase such securities at a mutually agreed-upon date and price. The
repurchase price generally equals the price paid by each Fund plus interest
negotiated on the basis of current short-term rates, which may be more or
less than the rate on the underlying portfolio securities. The seller, under
a repurchase agreement, is required to maintain the value of collateral held
pursuant to the agreement at not less than the repurchase price (including
accrued interest). Securities subject to repurchase agreements are held by
the Funds' custodian or another qualified custodian or in the Federal
Reserve/Treasury book-entry system. Repurchase agreements are considered to
be loans by the Funds under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS:
The Funds may borrow for temporary purposes by entering into reverse
repurchase agreements. Pursuant to such agreements, a Fund would sell
portfolio securities to financial institutions such as banks and broker-
dealers, and agree to repurchase them at a mutually agreed-upon date and
price. At the time a Fund enters into a reverse repurchase agreement, it
places in a segregated custodial account assets having a value equal to the
repurchase price (including accrued interest), and will continually monitor
the account to ensure such equivalent value is maintained at all times.
Reverse repurchase agreements are considered to be borrowings by the Funds
under the 1940 Act.
DERIVATIVES:
A derivative is defined as a financial instrument whose value is derived
from the performance of underlying assets, interest rate and currency
exchange rates, or indices, and include (but are not limited to) structured
Continued
-28-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JUNE 30, 1996
debt obligations, interest rate and currency swaps, futures contracts,
options, and forward currency contracts. The variable net asset value funds
may invest in structured debt obligations for the purpose of mitigating
interest rate risk in the portfolio. Such structured debt obligations have
floating interest rates that reset to various indices, which may include
swap rates or floors, and which reset at periodic intervals, as disclosed in
the accompanying Schedules of Portfolio Investments. Risks of entering into
such transactions include the potential inability of the dealer to meet
their obligations and unanticipated movements in the value of the security
or the underlying assets or indices. It is possible that the Funds will
incur a loss as a result of their investments in derivative instruments. It
is the Fund's policy to the extent that there exists no readily available
market for such securities, that the investment will be treated as an
illiquid security for purposes of calculating the Funds' limitations in
illiquid securities as set forth in the Funds' investment restrictions.
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income are declared daily and paid monthly and
distributable net realized capital gains, if any, are declared and
distributed at least annually for the Money Market Fund. Dividends from net
investment income are declared and paid monthly and distributable net
realized capital gains, if any, are declared and distributed annually for
the variable net asset value funds.
Dividends from net investment income and net realized capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily
due to differing treatments for net operating losses, expiring capital loss
carry forwards, and deferral of certain losses. The following
reclassification has been made to the components of net assets of the Money
Market Fund as of June 30, 1996 to more clearly reflect the differences
between financial statement amounts available for distribution and the
amounts available for distribution to comply with income tax regulations: an
decrease in capital and corresponding decrease in accumulated undistributed
net realized losses on investment transactions in the amount of
approximately $138,000.
FEDERAL INCOME TAXES:
It is the policy of each of the Funds to qualify or continue to qualify as a
regulation investment company by complying with the provisions available to
certain investment companies, as defined in applicable sections of the
Internal Revenue Code, and to make distributions of net investment income
and net realized capital gains sufficient to relieve it from all, or
substantially all, federal income taxes.
ORGANIZATION COSTS:
All expenses in connection with each Fund's organization and registration
under the 1940 Act and the Securities Act of 1933 were paid by the Funds.
Such expenses are amortized over a period of two years commencing with the
date of the initial public offering (five years for the Tennessee Municipal
Obligations Fund). In the event that any of the initial shares of a Fund are
redeemed during such period by any holder thereof, the redemption proceeds
will be reduced by a pro rata portion of any remaining organization costs in
the same proportion as the number of initial shares being redeemed bears to
the number of initial shares outstanding at the time of redemption.
Continued
-29-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JUNE 30, 1996
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
year ended June 30, 1996 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Value Equity Fund.................................. $ 22,246,521 $ 34,354,010
Growth Fund........................................ $ 15,450,988 $ 8,085,554
Fixed Income Fund.................................. $117,254,138 $120,909,929
Low Duration Government Securities Fund............ $ 1,547,136 $ 1,472,589
Tennessee Municipal Obligations Fund............... $ 11,843,364 $ 13,329,531
</TABLE>
4. RELATED PARTY TRANSACTIONS:
Investment advisory services are provided to the Funds by NBC. Under the
terms of the investment advisory agreement, NBC is entitled to receive fees
based on a percentage of the average net assets of each Fund. NBC has agreed
that if the aggregate expenses of the Funds, as defined, for any fiscal year
exceed limitations of any state having jurisdiction over the Funds, NBC will
refund to the Funds, or otherwise bear, such excess. Such limitation did not
affect the calculation of the investment advisory fees during the year ended
June 30, 1996.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS"),
an Ohio limited partnership, and BISYS Fund Services Ohio, Inc. ("BISYS
Ohio") are subsidiaries of The BISYS Group, Inc.
BISYS, with whom certain officers and trustees of the Group are affiliated,
serves the Funds as administrator. Such officers and trustees are paid no
fees directly by the Funds for serving as officers and trustees of the
Group. Under the terms of the administration agreement, BISYS fees are
computed daily as a percentage of the average net assets of each Fund. BISYS
Ohio serves the Funds as transfer agent and fund accountant.
During the year ended, June 30, 1996, NBC voluntarily contributed $124,984
of its investment advisory fees and BISYS voluntarily contributed $13,327 of
its administrative fees to the Money Market Fund. During the year ended,
June 30, 1995, NBC voluntarily contributed $97,370 of its investment
advisory fees to the Money Market Fund. In addition, during the year ended
June 30, 1995, NBC purchased securities from the Fund for their carrying
value of $14,199,150 plus accrued interest. The market value of these
securities at the date of the sale to NBC was $13,667,783. The voluntary
contribution of investment advisory fees and administrative fees, and the
difference between the market value and carrying value of the securities on
the transaction date are reflected in the accompanying financial statements
as a capital contribution to the Fund.
The Group has adopted a Distribution and Shareholder Service Plan in
accordance with Rule 12b-1 under the 1940 Act, pursuant to which each Fund
is authorized to pay or reimburse BISYS, as distributor, a periodic amount,
calculated at an annual rate not to exceed 0.25% of the average daily net
asset value of each Fund. These fees are used by BISYS to pay banks,
including NBC, broker dealers and other institutions, or to reimburse BISYS
or its affiliates, for administration, distribution and shareholder services
in connection with the distribution of Fund shares.
Continued
-30-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JUNE 30, 1996
The Group has adopted an Administrative Services Plan, pursuant to which
each Fund is authorized to pay compensation to banks and other financial
institutions, which may include NBC, its correspondent and affiliated banks
and BISYS, for providing ministerial, recordkeeping and/or administrative
support services to their customers who are the beneficial or record owners
of a Fund. The compensation which may be paid under the Administrative
Services Plan is a fee computed daily at an annual rate of up to 0.25% of
the average daily net asset value of a Fund.
BISYS is also entitled to receive commissions on sales of shares of the
variable net asset value funds. For the year ended June 30, 1996, BISYS
received $9,120 from commissions earned on sales of shares of the variable
net asset value funds, of which $4,090 was reallowed to affiliated
broker/dealers.
Fees may be voluntarily reduced to assist the Funds in maintaining
competitive expense ratios.
Information regarding these transactions is as follows for the year ended
June 30, 1996:
<TABLE>
<CAPTION>
MONEY VALUE
MARKET EQUITY GROWTH
FUND FUND FUND
-------- ----------------- -----------------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee .35% 1.00% of 1.00% of
reductions (percentage of average first $50 million first $50 million
net assets)....................... .75% of remaining .75% of remaining
Voluntary fee reductions........... -- -- $188,588
ADMINISTRATION FEES:
Annual fee before voluntary fee
reductions (percentage of average
net assets)....................... .20% .20% .20%
Voluntary fee reductions........... -- -- $14,290
12B-1 FEES:
Annual fee before voluntary fee
reductions (percentage of average
net assets)....................... .25% .25% .25%
Voluntary fee reductions........... $171,557 $151,866 $55,404
ADMINISTRATIVE SERVICES FEES:
Annual fee before voluntary fee
reductions (percentage of average
net assets)....................... .25% .25% .25%
Voluntary fee reductions........... $143,129 $22,471 $4,500
FUND ACCOUNTANT AND TRANSFER
AGENT FEES......................... $76,601 $72,840 $52,692
</TABLE>
Continued
-31-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JUNE 30, 1996
<TABLE>
<CAPTION>
LOW DURATION TENNESSEE
FIXED GOVERNMENT MUNICIPAL
INCOME SECURITIES OBLIGATIONS
FUND FUND FUND
------- ------------ -----------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before
voluntary fee reductions
(percentage of average
net assets)............... .65% .50% .65%
Voluntary fee reductions... -- $38,565 $127,577
ADMINISTRATION FEES:
Annual fee before
voluntary fee reductions
(percentage of average
net assets)............... .20% .20% .20%
Voluntary fee reductions:.. -- $ 3,856 --
12B-1 FEES:
Annual fee before
voluntary fee reductions
(percentage of average
net assets)............... .25% .25% .25%
Voluntary fee reductions:.. $63,798 $12,381 $20,359
ADMINISTRATIVE SERVICES
FEES:
Annual fee before
voluntary fee reductions
(percentage of average
net assets)............... .25% .25% .25%
Voluntary fee reductions... $8,418 $3,815 $21,608
FUND ACCOUNTANT AND
TRANSFER AGENT FEES........ $58,691 $49,282 $70,155
</TABLE>
5. FEDERAL INCOME TAXES:
For federal income tax purposes, the following Funds have capital loss
carryforwards as of June 30, 1996, which are available to offset future
capital gains, if any:
<TABLE>
<CAPTION>
AMOUNT EXPIRES
--------- -------
<S> <C> <C>
Money Market Fund........................................... $145,161 2003
69,007 2004
Fixed Income Fund........................................... 2,812,097 2003
2,114,706 2004
Low Duration Government Securities Fund..................... 8,905 2003
23,561 2004
Tennessee Municipal Obligations Fund........................ 235,900 2003
968,507 2004
</TABLE>
Continued
-32-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JUNE 30, 1996
6. ELIGIBLE DISTRIBUTIONS (UNAUDITED):
The Group designates the following eligible distributions for the dividends
received deduction for corporations:
<TABLE>
<CAPTION>
VALUE
EQUITY GROWTH
FUND FUND
---------- --------
<S> <C> <C>
Dividend Income.......................................... $2,101,037 $637,528
Dividend Income Per Share................................ $ 0.137 $ 0.167
</TABLE>
7. EXEMPT-INTEREST INCOME DESIGNATIONS (UNAUDITED):
The Group designates the following exempt-interest income for the Tennessee
Municipal Obligations Fund's taxable year ended June 30, 1996:
<TABLE>
<S> <C>
Exempt-Interest Distributions...................................... $1,077,559
Exempt-Interest Distributions Per Share............................ $ 0.53
</TABLE>
The percentage break-down of the exempt-interest income by state for the
Tennessee Municipal Obligations Fund's taxable year ended June 30, 1996 was
as follows:
<TABLE>
<S> <C>
Alabama............................................................... 1.69%
Arkansas.............................................................. 0.33%
Georgia............................................................... 0.11%
Kansas................................................................ 2.63%
Kentucky.............................................................. 0.17%
Louisiana............................................................. 2.18%
Minnesota............................................................. 0.38%
Oklahoma.............................................................. 1.98%
Pennsylvania.......................................................... 2.54%
Puerto Rico........................................................... 1.66%
South Carolina........................................................ 1.26%
Tennessee............................................................. 79.24%
Texas................................................................. 0.59%
West Virginia......................................................... 5.11%
Wyoming............................................................... 0.13%
------
100.00%
======
</TABLE>
For the year ended June 30, 1996, 9.5% of the income earned by the Tennessee
Municipal Obligations Fund may be subject to the alternative minimum tax.
-33-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MONEY MARKET FUND
------------------------------------------------------
YEAR ENDED JUNE 30,
------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Investment Activities
Net investment income. 0.046 0.044 0.026 0.032 0.051
Net realized and
unrealized gains
(losses) on invest-
ments................ -- (0.004) -- -- 0.003
-------- -------- -------- -------- --------
Total from Invest-
ment Activities.... 0.046 0.040 0.026 0.032 0.054
-------- -------- -------- -------- --------
Distributions
Net investment income. (0.046) (0.044) (0.026) (0.032) (0.051)
Net realized gains.... -- -- -- -- (0.003)
-------- -------- -------- -------- --------
Total distributions. (0.046) (0.044) (0.026) (0.032) (0.054)
-------- -------- -------- -------- --------
Capital Transactions.... -- 0.004 -- -- --
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return............ 4.75%(a) 4.44%(a) 2.65% 3.20% 5.61%
RATIOS/SUPPLEMENTAL DA-
TA:
Net Assets, at end of
period (000)........... $134,146 $157,904 $128,001 $141,840 $162,361
Ratio of expenses to av-
erage net assets....... 0.99% 0.97% 0.95% 0.85% 0.66%
Ratio of net investment
income to average
net assets............. 4.65% 4.41% 2.62% 3.17% 5.12%
Ratio of expenses to av-
erage net assets*...... 1.20% 1.18% 1.09% 0.94% 0.91%
Ratio of net investment
income to average
net assets*............ 4.44% 4.20% 2.48% 3.08% 4.87%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) The capital contribution had no impact on the total return for the years
ended June 30, 1995 and June 30, 1996.
See notes to financial statements.
-34-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
VALUE EQUITY FUND
----------------------------------------------------
YEAR ENDED JUNE 30, OCTOBER 31, 1991
---------------------------------- TO JUNE 30,
1996 1995 1994 1993 1992 (A)
------- ------- ------- ------- ----------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD................ $ 12.63 $ 12.67 $ 11.57 $ 11.04 $ 10.00
------- ------- ------- ------- -------
Investment Activities
Net investment income... 0.14 0.14 0.07 0.21 0.17
Net realized and
unrealized gains on
investments............ 2.40 0.76 1.28 0.96 1.03
------- ------- ------- ------- -------
Total from Investment
Activities........... 2.54 0.90 1.35 1.17 1.20
------- ------- ------- ------- -------
Distributions
Net investment income... (0.14) (0.13) (0.06) (0.22) (0.16)
Net realized gains...... (0.49) (0.15) (0.19) (0.42) --
In excess of net
realized gains......... -- (0.66) -- -- --
------- ------- ------- ------- -------
Total Distributions... (0.63) (0.94) (0.25) (0.64) (0.16)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................... $ 14.54 $ 12.63 $ 12.67 $ 11.57 $ 11.04
======= ======= ======= ======= =======
Total Return (excludes
sales charges)........... 20.50% 8.03% 11.76% 10.94% 12.04%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, at end of pe-
riod (000)............... $81,055 $80,264 $79,232 $52,629 $25,461
Ratio of expenses to
average net assets....... 1.58% 1.58% 1.36% 0.73% 0.67%(c)
Ratio of net investment
income to average
net assets............... 1.01% 1.13% 0.52% 1.84% 2.43%(c)
Ratio of expenses to
average net assets*...... 1.79% 1.79% 1.74% 1.69% 1.95%(c)
Ratio of net investment
income to average
net assets*.............. 0.80% 0.92% 0.14% 0.88% 1.15%(c)
Portfolio turnover........ 27.89% 35.64% 62.17% 16.13% 23.07%
Average commission rate
paid (d)................. $0.0605 -- -- -- --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b)Not annualized.
(c)Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
See notes to financial statements.
-35-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH FUND
------------------------------------
YEAR ENDED JUNE 30, APRIL 15, 1994
-------------------- TO JUNE 30,
1996 1995 1994(A)
--------- --------- --------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..... $ 12.14 $ 9.82 $10.00
--------- --------- ------
Investment Activities
Net investment income.................. 0.18 0.16 --
Net realized and unrealized gains
(losses) on investments............... 2.13 2.30 (0.18)
--------- --------- ------
Total from Investment Activities..... 2.31 2.46 (0.18)
--------- --------- ------
Distributions
Net investment income.................. (0.18) (0.14) --
In excess of net investment income..... (0.01) -- --
Net realized gains..................... (0.25) -- --
--------- --------- ------
Total Distributions.................. (0.44) (0.14) --
--------- --------- ------
NET ASSET VALUE, END OF PERIOD........... $ 14.01 $ 12.14 $ 9.82
========= ========= ======
Total Return (excludes sales charges).... 19.35% 25.27% (1.80)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, at end of period (000)....... $33,767 $21,485 $6,345
Ratio of expenses to average net assets.. 1.05% 1.24% 2.59%(c)
Ratio of net investment income to average
net assets.............................. 1.37% 1.64% 0.25%(c)
Ratio of expenses to average net assets*. 1.97% 2.51% 3.90%(c)
Ratio of net investment income (loss) to
average net assets*..................... 0.45% 0.37% (1.07)%(c)
Portfolio turnover....................... 31.22% 29.36% 0.00%
Average commissions rate paid (d)........ $ 0.0686 -- --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b)Not annualized.
(c)Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
See notes to financial statements.
-36-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FIXED INCOME FUND
-----------------------------------------------------
YEAR ENDED JUNE 30, OCTOBER 31, 1991
----------------------------------- TO JUNE 30,
1996 1995 1994 1993 1992 (A)
------- ------- ------- ------- ----------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $ 9.27 $ 9.43 $ 10.44 $ 10.26 $ 10.00
------- ------- ------- ------- -------
Investment Activities
Net investment income.. 0.59 0.58 0.57 0.68 0.42
Net realized and
unrealized gains
(losses) on
investments........... (0.48) (0.15) (0.76) 0.27 0.22
------- ------- ------- ------- -------
Total from Investment
Activities.......... 0.11 0.43 (0.19) 0.95 0.64
------- ------- ------- ------- -------
Distributions
Net investment income.. (0.58) (0.58) (0.57) (0.69) (0.38)
In excess of net
investment income..... -- (0.01) -- -- --
Net realized gains..... -- -- -- (0.08) --
In excess of net
realized gains........ (0.03) -- (0.25) -- --
------- ------- ------- ------- -------
Total Distributions.. (0.61) (0.59) (0.82) (0.77) (0.38)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD.................. $ 8.77 $ 9.27 $ 9.43 $ 10.44 $ 10.26
======= ======= ======= ======= =======
Total Return (excludes
sales charges).......... 1.05% 4.82% (2.20)% 9.64% 6.56%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, at end of
period (000)............ $28,847 $39,496 $42,309 $35,951 $27,256
Ratio of expenses to
average net assets...... 1.48% 1.43% 1.37% 0.74% 0.69%(c)
Ratio of net investment
income to average
net assets.............. 6.32% 6.33% 5.61% 6.65% 6.51%(c)
Ratio of expenses to
average net assets*..... 1.69% 1.64% 1.70% 1.42% 1.63%(c)
Ratio of net investment
income to average
net assets*............. 6.11% 6.12% 5.28% 5.97% 5.58%(c)
Portfolio turnover....... 363.84% 223.29% 328.44% 234.71% 40.85%
</TABLE>
- ------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
-37-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LOW DURATION GOVERNMENT
SECURITIES FUND
------------------------------
YEAR ENDED
JUNE 30, APRIL 15, 1994
-------------- TO JUNE 30,
1996 1995 1994 (A)
------ ------ --------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........... $10.15 $ 9.93 $10.00
------ ------ ------
Investment Activities
Net investment income........................ 0.53 0.56 0.07
Net realized and unrealized gains (losses) on
investments................................. (0.20) 0.21 (0.08)
------ ------ ------
Total from Investment Activities........... 0.33 0.77 (0.01)
------ ------ ------
Distributions
Net investment income........................ (0.53) (0.55) (0.06)
------ ------ ------
NET ASSET VALUE, END OF PERIOD................. $ 9.95 $10.15 $ 9.93
====== ====== ======
Total Return (excludes sales charges).......... 3.31% 8.03% (0.13)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, at end of period (000)............. $7,461 $7,653 $7,692
Ratio of expenses to average net assets........ 1.44% 1.33% 2.85%(c)
Ratio of net investment income to average net
assets........................................ 5.19% 5.67% 3.63%(c)
Ratio of expenses to average net assets*....... 2.20% 2.10% 3.67%(c)
Ratio of net investment income to average net
assets*....................................... 4.43% 4.89% 2.81%(c)
Portfolio turnover............................. 20.87% 34.47% 21.20%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
-38-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TENNESSEE MUNICIPAL OBLIGATIONS FUND
--------------------------------------------
YEAR ENDED JUNE 30, NOVEMBER 4, 1992
------------------------- TO JUNE 30,
1996 1995 1994 1993 (A)
------- ------- ------- ----------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................... $ 9.84 $ 9.81 $ 10.44 $ 10.00
------- ------- ------- -------
Investment Activities
Net investment income........... 0.53 0.50 0.48 0.30
Net realized and unrealized
gains (losses) on investments.. (0.08) 0.03 (0.57) 0.43
------- ------- ------- -------
Total from Investment
Activities................... 0.45 0.53 (0.09) 0.73
------- ------- ------- -------
Distributions
Net investment income........... (0.53) (0.50) (0.48) (0.29)
In excess of net realized gains. -- -- (0.06) --
------- ------- ------- -------
Total Distributions........... (0.53) (0.50) (0.54) (0.29)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.... $ 9.76 $ 9.84 $ 9.81 $ 10.44
======= ======= ======= =======
Total Return (excludes sales
charges)......................... 4.67% 5.61% (1.00)% 7.39%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, at end of period
(000)............................ $19,037 $20,827 $19,965 $17,425
Ratio of expenses to average net
assets........................... 0.98% 1.12% 1.19% 0.82%(c)
Ratio of net investment income to
average net assets............... 5.40% 5.24% 4.67% 4.76%(c)
Ratio of expenses to average net
assets*.......................... 1.83% 1.98% 1.99% 1.62%(c)
Ratio of net investment income to
average net assets*.............. 4.55% 4.38% 3.87% 3.96%(c)
Portfolio turnover................ 60.76% 62.59% 86.57% 52.52%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
-39-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
RESULTS OF SPECIAL SHAREHOLDER MEETING (UNAUDITED)
On June 28, 1996, a special meeting of the shareholders of The Sessions Group
was held to consider the election of five Trustees and the ratification of the
selection of KPMG Peat Marwick LLP as independent accountant for each portfolio
of The Sessions Group.
Election of Trustees--The shareholders of The Sessions Group were requested
to vote for the election of the following individuals to serve as Trustees of
The Sessions Group. The shareholders of The Sessions Group approved each
nominee. The results of such solicitation are as follows:
<TABLE>
<CAPTION>
VOTES
NOMINEE VOTES FOR WITHHELD
------- --------- --------
<S> <C> <C>
Nancy E. Converse 259,663,786 246
Walter B. Grimm 259,664,032 --
Maurice G. Stark 259,664,032 --
Dr. James H. Woodward 259,664,032 --
Chalmers P. Wylie 259,664,032 --
</TABLE>
Ratification of Independent Auditors--The shareholders of The Sessions Group
ratified the appointment of KPMG Peat Marwick LLP as independent auditor for
The Sessions Group for the fiscal year ending June 30, 1996 as follows:
<TABLE>
<CAPTION>
IN FAVOR OPPOSED ABSTAIN
-------- ------- -------
<S> <C> <C>
259,662,329 -- 1,704
</TABLE>
-40-
<PAGE>
- ------------------------------
Investment Adviser
National Bank of Commerce
One Commerce Square
Memphis, Tennessee 38150
Administrator and Distributor
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219-3035
Legal Counsel
Baker & Hostetler
65 East State Street
Columbus, Ohio 43215
Auditors
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, Ohio 43215
