<PAGE>
[LOGO OF RIVERSIDE CAPITAL FUNDS]
Riverside
Capital Funds
------------------------
Mid-Year Report to
Shareholders
December 31, 1995
------------------------
[LOGO OF NATIONAL BANK OF COMMERCE]
<PAGE>
RIVERSIDE
LETTER FROM THE CHAIRMAN AND INVESTMENT ADVISER CAPITAL FUNDS
Dear Shareholders:
The six months ended December 31, 1995, saw strong gains for the stock and
bond markets. The Standard & Poor's 500 Stock Index gained 14.38%, and the
Lehman Brothers Aggregate Bond Index returned 6.31%.
Those gains capped a very strong year for the financial markets. So, it's not
surprising that some investors succumbed to the temptation to modify their
long-term strategies--often taking on additional risks--to capitalize on the
markets' surge.
For our part, we continued to manage the Riverside Capital Funds with an eye
toward our shareholders' investment goals and the benefits of a disciplined,
long-term approach. Our equity and fixed-income funds were positioned to share
in some of the markets' strongest sectors. However, we maintained low exposure
to market sectors that seemed to carry a great deal of risk--even when that
meant sacrificing some potential for short-term gains.
We also ignored the temptation to try to make short-term forecasts about
different markets and securities. The Funds' managers continued to devote
their efforts to the search for individual securities that can deliver strong
returns over the long run, without regard to temporary fluctuations in
financial markets.
A SLOW ECONOMY AND FALLING INTEREST RATES
The financial markets' strong performance during the period owed much to
prospects for continued mild inflation, modest economic growth and low
interest rates. That prospect is based on deep and persistent trends within
the economy.
First, in recent years, many companies have streamlined their work forces and
used technology to become more efficient; that in turn has helped boost
corporate profits and keep a lid on labor costs. Layoffs, combined with rising
household debt, have reduced consumer demand. Signs of a poor Christmas season
for retailers confirmed that trend.
Second, international factors also played a role. Major trading partners such
as Mexico, Canada and Japan are struggling with weak economies. As a result,
their purchases of U.S. goods and services declined.
The result: During the fourth quarter of 1995 the consumer price index
increased at only about a 2.5% annual rate and the economy grew about 2% to
3%.
Our strategy in that environment did not waiver. We continued to search for
bargains in overlooked corners of the stock market, such as small-company
shares. In addition, we found opportunities among companies that we believe
can deliver steady earnings growth due to superior products and management as
well as strong markets in this country and abroad.
Our fixed-income funds shifted some assets toward higher-quality securities
that could offer a measure of extra security in a slow economy. As rates
declined, we also shortened the average maturities of some Funds' investments.
That move helped reduce the risk that the Funds would lose money if rates
rebounded to higher levels.
LOOKING AHEAD
We share the belief of many leading money managers that trying to forecast
financial markets should take a back seat to the business of picking
individual securities. That said, our Funds' strategies will be defined, in
part, by the current economic and financial environment. That environment will
likely continue to include modest inflation, relatively low interest rates and
slow economic growth. However, it's hard to imagine that rates will continue
to fall as fast as they did in 1995; instead, they are likely to remain fairly
stable in 1996.
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.
<PAGE>
The prospect of stable, low interest rates is still good news for stock and
bond prices--but it's not as exciting as sharp interest-rate declines.
Moreover, the continued slow growth of our economy will take a toll on
corporate profit growth. The upshot: While investors can reasonably hope for
respectable returns in the stock and bond markets during the coming months,
another year like 1995 probably isn't in the cards.
In fact, given the recent strength of both markets, it's possible that they
will suffer some sort of setback. If that happens, however, we will continue to
seek out opportunities to buy securities for less than we believe they are
worth. That strategy may not deliver the biggest gains in the short term. But
with patience, we believe it should reward us even when the stock and bond
markets aren't breaking record highs on a regular basis as they did in 1995.
The Riverside Capital Equity and Municipal Income Fund liquidated its holdings
and distributed the proceeds to shareholders on August 29, 1995. The change
will enable us to devote our resources and talents to managing our remaining
Funds more effectively in the years to come.
On the following pages you'll find detailed accounts of each Riverside Capital
Fund's efforts to pursue shareholders' goals during the past six months. If you
have any questions or would like a prospectus, please call 1-800-8-RIVER-6.
Read the prospectus carefully before you invest or send money.
Sincerely,
/s/ Wally Grimm
- ------------------------
Wally Grimm
Chairman
Riverside Capital Funds
/s/ Alfred H. Jordan
- --------------------------
Alfred H. Jordan
National Bank of Commerce
Investment Adviser
<PAGE>
THE PORTFOLIOS
THE RIVERSIDE CAPITAL VALUE EQUITY FUND
During the six months ended December 31, 1995, the Riverside Capital Value
Equity Fund posted a total return of 10.54%,* compared to a 14.38% return for
the Standard & Poor's 500 Stock Index. The difference partly reflects the
strong performance of large market capitalization stocks, particularly in
certain consumer growth sectors. By contrast, the Fund's portfolio includes
significant exposure to shares of small and medium-sized firms, which
historically have outperformed the broader market, but have trailed large-
company stocks for most of the past 18 months.
The Fund's recent results also reflect its manager's patient, long-term
approach to investing. We seek to identify stocks that sell at deep discounts
from their long-term value--and we are willing to hold an undervalued stock
even when other investors ignore it for sustained periods. The Fund's average
holding period is unusually high at three to four years.
Our long-term value approach has performed well in the longer term, and we are
comfortable with the Fund's potential to deliver strong results in the future.
We believe our portfolio, which is comprised of companies with strong
management, excellent balance sheets and good earnings prospects, offered
outstanding value at current levels.
THE FINANCIALS PERFORMED WELL
The Fund's strongest performers during the recent period included shares of
financial companies, which benefited from lower interest rates. Insurers such
as SunAmerica and Travelers, as well as savings and loans such as Leader
Financial Corp. and H.F. Ahmanson, boosted the Fund's results. Late in the
year, prices of some financial shares climbed to levels that more fully
reflected their underlying values, and, as a result, we locked in gains by
selling a portion of the Fund's investment in those stocks.
We also found bargains in a range of other industries, choosing shares of
strong, well-managed companies with little or no debt. Some winners turned up
in the energy sector: They included shares of oil-service company B.J.
Services and refiner Valero Energy. Other solid performers included Skyline, a
manufactured housing company with improving earnings prospects, a strong
market share and significant cash holdings.
SPECIALTY RETAILERS WITH A COMPETITIVE EDGE
We continued to maintain our investment in some retail stocks, despite the
dismal performance of that sector. The Fund retained its investment in
specialty retailers with competitive advantages--the likes of Burlington Coat
Factory, which has low costs and a strong franchise. However, we sold our
shares in K-Mart as the broader retail climate deteriorated.
The bargain-priced stocks that are this Fund's bailiwick have become harder to
find in recent months. That might suggest that stocks are due for a correction
of some sort; however, we're not in the business of making such predictions.
Instead, we will continue to focus on picking stocks that we believe offer
good value and will wait patiently for other investors to recognize their
inherent worth.
THE RIVERSIDE CAPITAL GROWTH FUND
The stock market experienced some significant shifts during the six months
ended December 31, 1995. Market sectors such as technology, which had
delivered the market's strongest gains early in the year, lost momentum,
giving way to other industry groups ranging from consumer products to
manufactured housing.
The Fund continued to buy and hold stocks of companies that we believe to be
highly profitable, with strong financial statements and the ability to deliver
consistent earnings growth. Our largest holdings included shares of firms that
we believe can deliver above-average earnings and dividend growth. The
Riverside Capital Growth Fund had a total return of 8.41%** during the six-
month period through December 31, 1995, compared to a return of 14.38% for the
Standard & Poor's 500 Stock Index.
MARKET FAVORITES
Shares of non-cyclical consumer issues were among the market's favorites
during the period. Investors were especially drawn to firms with a strong
presence in overseas markets, reasoning that these companies' profits have the
capability to grow at a rapid pace even as the U.S. economy slows.
Shares of these companies accounted for a large portion of the Fund's
portfolio, and many of them delivered significant gains for shareholders. For
example, we held large stakes in General Electric, Coca-Cola and Procter &
Gamble, all of which did well during the period.
*The Fund's return with the maximum 4.50% sales charge was 5.52% for the same
period.
**The Fund's return with the maximum 4.50% sales charge was 3.55% for the same
period.
<PAGE>
We persisted in our efforts to buy shares when they were trading at attractive
prices relative to factors such as earnings potential. We purchased shares of
some strong, well-managed retailers such as Home Depot and Wal-Mart, companies
whose share prices have been unduly battered by the retail industry's recent
problems.
GROWTH IN A SLOW-GROWTH ECONOMY
It is unlikely that stocks will continue to deliver enormous and uninterrupted
gains in the months ahead. We are confident that our portfolio is well-
positioned to deliver gains in a less radiant stock market climate. On that
basis, it consists largely of attractively priced companies that we believe
offer the potential for consistent profit growth in a slow-growth economy.
In addition, some of the Fund's recent investments, such as Philip Morris and
Atlantic Richfield, offer relatively high dividend yields. These yields can
contribute to the Fund's total return during the coming period--and could help
reduce losses in the event of a market correction.
THE RIVERSIDE CAPITAL FIXED INCOME FUND
The Fund benefited from declining interest rates during the recent period,
posting a 4.70%* total return for the six months ended December 31, 1995. That
compared to a 5.21% total return for the Lehman Brothers Intermediate-Term
Government/Corporate Bond Index, the Fund's benchmark.
Rates declined in part because investors expected the economy's rate of growth
to continue to decrease. The likelihood of slower economic growth also
affected the Fund's strategy during the past several months. In particular, we
decided that it would be prudent to shift the Fund's holdings toward higher-
quality securities whose issuers have the financial resources to ride out a
slow-growth period or even a recession.
AN EXTRA MARGIN OF SAFETY
To that end, we boosted the Fund's investment in U.S. Government agency
securities as well as bonds issued by high-quality financial companies or in
other sectors that can prosper in a variety of economic circumstances. In some
cases, we were willing to sacrifice some small amount of additional yield to
obtain an extra margin of safety.
The Fund continued to hold some unrated securities that we judge to be of high
quality. Such issues sometimes are overlooked by investors and trade at
attractive prices. Thus, they offer a way to boost the Fund's yield without
taking on undue risk.
Some of the most attractive opportunities in the bond market recently included
securities that mature in 10 to 15 years, and they accounted for roughly 30%
of the Fund's portfolio. The remainder was divided among a diverse portfolio
of shorter-term securities whose prices are less sensitive to interest-rate
fluctuations.
THE RIVERSIDE CAPITAL TENNESSEE MUNICIPAL OBLIGATIONS FUND
During the recent period, the Fund continued to pursue its two primary goals:
first, to maintain a relatively stable net asset value; and second, to provide
Tennessee residents with a high level of income that is exempt from federal
and state income taxes.** To meet those goals, we looked for opportunities to
add to the Fund's yield without taking on undue risk.
A FOCUS ON QUALITY
We maintained a relatively stable average maturity of roughly eight years
during the six months ended December 31, 1995, and continued to invest a
sizable portion of Fund assets in A-rated Tennessee issues. We believed that
this was the most appropriate strategy in an environment of falling interest
rates and modest economic growth.
For the six months ended December 31, 1995, the Fund had a total return of
2.74%.*** Its benchmark, the Lehman Brothers Municipal General Obligations
Bond Index returned 7.12%. When comparing performance to the index, it is
important to keep in mind that the index represents the national municipal
bond market and may include securities with lower ratings than those held in
the Fund.
The municipal markets in general benefited from lower interest rates, but
suffered from concerns that lawmakers will impose a flat tax of some kind,
thus doing away with the tax benefits of municipal issues. Our viewpoint is
that municipal bonds will continue to receive favorable treatment. As a
result, we believe that the current environment presents some opportunities to
buy bonds at attractive prices.
* The Fund's return with the maximum 3.00% sales charge was 1.52% for the same
period.
**The income from such investments may be subject to the federal alternative
minimum tax and to certain state and local taxes.
***The Fund's return with the maximum 3.00% sales charge was -.30% for the
same period.
<PAGE>
At the same time, however, the threat of slower economic growth may increase
the risks in lower-quality municipal obligations. Should growth continue to
slow, we will increase the Fund's concentration in higher-quality securities
whose issuers are well-positioned to withstand any strains that might be
caused by a weaker economy. Thus, we will shift more assets toward AA- and
AAA-rated securities and avoid issuers that have less than rock-solid
financial backing.
THE RIVERSIDE CAPITAL LOW DURATION GOVERNMENT SECURITIES FUND
The Fund maintained a consistent portfolio strategy during the recent period,
with the goal of providing a yield higher than money fund payouts, without
exposing shareholders to significant additional risk. The strategy called for
investing in U.S. Government agency securities that offer a high level of
credit quality while paying yields slightly higher than those available on
Treasury securities.
The Fund's average maturity declined slightly during the period, from around
5.3 years to 5.1 years. The lowering of the average maturity of the Fund's
holdings reduced shareholders' vulnerability to price fluctuations caused by
changes in interest rates. A fund with a lower average maturity will suffer
smaller losses when rates rise, and the risk of such a rate increase seemed to
increase during the period.
For the six-month period, the Fund had a total return of 4.36%,* compared to a
return of 4.94% for the Lehman Brothers Intermediate-Term Government Bond
Index.
THE RIVERSIDE CAPITAL MONEY MARKET FUND**
The Fund aims to maintain a stable net asset value while providing some
current income to shareholders. In keeping with its safety-first strategy, the
Fund recently held all of its holdings in U.S. Government agency securities,
which are of higher credit quality than corporate obligations. That stance is
designed to provide an added margin of safety in an environment of slow
economic growth. The Fund also maintained a relatively short average maturity
of about 37 days to further reduce the risk of share price fluctuations.
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.
- -------------------------------------------------------------------------------
*The Fund's return with the maximum 2.00% sales charge was 2.25% for the
period.
**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.
<PAGE>
TABLE OF CONTENTS
Statements of Assets and Liabilities
Page 7
Statements of Operations
Page 9
Statements of Changes in Net Assets
Page 11
Schedules of Portfolio Investments
Page 13
Notes to Financial Statements
Page 24
Financial Highlights
Page 29
-6-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
MONEY MARKET EQUITY GROWTH
FUND FUND FUND
------------ ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments, at value............... $143,163,443 $79,009,959 $26,216,362
Repurchase agreements............... 6,418,402 3,486,022
------------ ----------- -----------
149,581,845 82,495,981 26,216,362
Interest and dividends receivable... 1,225,558 158,090 67,910
Receivable for capital shares is-
sued............................... 143
Receivable from brokers for invest-
ments sold......................... 202,158 281,291
Unamortized organization costs...... 1,542
Prepaid expenses.................... 11,370 7,219 911
------------ ----------- -----------
Total Assets...................... 151,020,931 82,942,581 26,286,868
------------ ----------- -----------
LIABILITIES:
Dividends payable................... 610,750
Accrued expenses and other payables:
Investment advisory fees.......... 4,320 6,122 753
Administration fees............... 10,627 5,382 1,283
Administrative services fees...... 50,986 13,380 4,833
12b-1 fees........................ 15,421 4,946 1,125
Custodian and accounting fees..... 1,594 4,566 3,253
Legal and audit fees.............. 28,871 18,567 10,543
Printing fees..................... 18,613 9,831 4,241
Transfer agent fees............... 4,249 7,525 4,314
Other............................. 8,294 2,945 1,871
------------ ----------- -----------
Total Liabilities................. 753,725 73,264 32,216
------------ ----------- -----------
NET ASSETS:
Capital............................. 150,598,553 68,862,633 22,432,163
Undistributed net investment income
(loss)............................. 10,121 (582)
Net unrealized appreciation on in-
vestments.......................... 13,246,192 3,769,140
Accumulated undistributed net
realized gains (losses) on
investment transactions............ (331,347) 750,371 53,931
------------ ----------- -----------
Net Assets........................ $150,267,206 $82,869,317 $26,254,652
============ =========== ===========
Outstanding units of beneficial in-
terest (shares).................... 150,598,553 6,189,646 2,051,773
============ =========== ===========
Net asset value--redemption price
per share.......................... $ 1.00 $ 13.39 $ 12.80
============ =========== ===========
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) $ 14.02 $ 13.40
============ =========== ===========
Investments, at cost................ $149,581,845 $69,249,789 $22,447,222
============ =========== ===========
</TABLE>
- ------
(a) Offering price and redemption price are the same for the Money Market Fund.
See notes to financial statements.
-7-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
LOW DURATION TENNESSEE
GOVERNMENT MUNICIPAL
FIXED INCOME SECURITIES OBLIGATIONS
FUND FUND FUND
------------ ------------ -----------
<S> <C> <C> <C>
ASSETS:
Investments, at value................... $33,934,598 $7,582,830 $18,342,217
Cash.................................... 857,826 291,588 144,146
Interest receivable..................... 374,915 106,934 396,887
Unamortized organization costs.......... 1,003 16,502
Prepaid expenses........................ 9,982 406 1,831
----------- ---------- -----------
Total Assets.......................... 35,177,321 7,982,761 18,901,583
----------- ---------- -----------
LIABILITIES:
Accrued expenses and other payables:
Investment advisory fees.............. 1,871
Administration fees................... 2,315 389 1,298
Administrative services fees.......... 5,449 3,197 1,468
12b-1 fees............................ 2,122 266 2,760
Custodian and accounting fees......... 1,754 4,343 3,923
Legal and audit fees.................. 11,543 8,161 11,070
Transfer agent fees................... 5,198 3,549 4,441
Printing fees......................... 4,825 3,209 3,848
Other................................. 870 620 1,937
----------- ---------- -----------
Total Liabilities..................... 35,947 23,734 30,745
----------- ---------- -----------
NET ASSETS:
Capital................................. 39,372,795 7,718,511 19,672,550
Undistributed net investment loss....... (2,125) (3,050) (1,763)
Net unrealized appreciation on invest-
ments.................................. 263,644 276,934 368,727
Accumulated undistributed net realized
losses on investment transactions...... (4,492,940) (33,368) (1,168,676)
----------- ---------- -----------
Net Assets............................ $35,141,374 $7,959,027 $18,870,838
=========== ========== ===========
Outstanding units of beneficial interest
(shares)............................... 3,759,294 773,128 1,919,970
=========== ========== ===========
Net asset value--redemption price per
share.................................. $ 9.35 $ 10.29 $ 9.83
=========== ========== ===========
Maximum Sales Charge.................... 3.00% 2.00% 3.00%
=========== ========== ===========
Maximum Offering Price (100%/(100%-Maxi-
mum Sales Charge) of net asset value
adjusted to nearest cent) per share.... $ 9.64 $ 10.50 $ 10.13
=========== ========== ===========
Investments, at cost.................... $33,670,954 $7,305,896 $17,973,490
=========== ========== ===========
</TABLE>
See notes to financial statements.
-8-
<PAGE>
THE SESSIONS GROUP RIVERSIDE CAPITAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
MONEY MARKET EQUITY GROWTH
FUND FUND FUND
------------ ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income......................... $4,427,591 $ 54,257 $ 63,424
Dividend income......................... 1,015,594 253,717
---------- ---------- ----------
Total Income............................ 4,427,591 1,069,851 317,141
---------- ---------- ----------
EXPENSES:
Investment advisory fees................ 262,208 374,912 124,380
Administration fees..................... 149,833 83,219 24,876
Administrative services fees............ 187,291 104,041 31,095
12b-1 fees.............................. 187,291 104,041 31,095
Custodian and accounting fees........... 35,536 22,678 17,533
Legal and audit fees.................... 26,320 15,925 2,437
Organization costs...................... 2,576
Trustees' fees and expenses............. 7,822 3,805 972
Transfer agent fees..................... 16,904 21,358 10,856
Registration and filing fees............ 3,938 5,270 1,411
Printing costs.......................... 13,033 6,603 538
Other................................... 8,876 3,218 672
Expenses voluntarily reduced............ (157,325) (87,415) (116,648)
---------- ---------- ----------
Total Expenses.......................... 741,727 657,655 131,793
---------- ---------- ----------
Net Investment Income................... 3,685,864 412,196 185,348
---------- ---------- ----------
REALIZED/UNREALIZED GAINS ON INVESTMENTS:
Net realized gains on investment
transactions......................... 151,894 2,787,784 286,179
Change in unrealized appreciation on
investments.......................... 5,116,397 1,477,507
---------- ---------- ----------
Net realized/unrealized gains on
investments............................... 151,894 7,904,181 1,763,686
---------- ---------- ----------
Change in net assets resulting from
operations................................ $3,837,758 $8,316,377 $1,949,034
========== ========== ==========
</TABLE>
See notes to financial statements.
-9-
<PAGE>
THE SESSIONS GROUP RIVERSIDE CAPITAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
LOW DURATION TENNESSEE
GOVERNMENT MUNICIPAL
FIXED INCOME SECURITIES OBLIGATIONS
FUND FUND FUND
------------ ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income........................ $1,406,887 $256,423 $ 647,628
Dividend income........................ 81,055
---------- -------- ---------
Total Income........................... 1,487,942 256,423 647,628
---------- -------- ---------
EXPENSES:
Investment advisory fees............... 121,829 19,417 68,283
Administration fees.................... 37,486 7,767 21,021
Administrative services fees........... 46,828 9,708 26,263
12b-1 fees............................. 46,828 9,708 26,263
Custodian and accounting fees.......... 28,208 20,206 25,695
Legal and audit fees................... 8,367 3,871 4,923
Organization costs..................... 1,656 4,475
Trustees' fees and expenses............ 2,083 302 979
Transfer agent fees.................... 12,401 9,509 10,679
Registration and filing fees........... 2,576 1,968 184
Printing costs......................... 2,878 368 1,038
Other.................................. 1,577 300 788
Expenses voluntarily reduced........... (39,301) (29,515) (90,328)
---------- -------- ---------
Total Expenses......................... 271,760 55,265 100,263
---------- -------- ---------
Net Investment Income.................. 1,216,182 201,158 547,365
---------- -------- ---------
REALIZED/UNREALIZED GAINS (LOSSES) ON
INVESTMENTS:
Net realized gains (losses) on
investment transactions.................. 215,388 (877) 1,830
Change in unrealized appreciation on
investments......................... 275,065 135,733 19,793
---------- -------- ---------
Net realized/unrealized gains on
investments.............................. 490,453 134,856 21,623
---------- -------- ---------
Change in net assets resulting from
operations............................... $1,706,635 $336,014 $ 568,988
========== ======== =========
</TABLE>
See notes to financial statements.
-10-
<PAGE>
THE SESSIONS GROUP RIVERSIDE CAPITAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MONEY MARKET FUND VALUE EQUITY FUND GROWTH FUND
---------------------------- -------------------------- -------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1995 1995 1995 1995 1995 1995
------------- ------------- ------------ ------------ ------------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income.. $ 3,685,864 $ 6,920,710 $ 412,196 $ 899,777 $ 185,348 $ 194,157
Net realized gains
(losses) on
investment
transactions......... 151,894 (948,499) 2,787,784 953,377 286,179 273,411
Net change in
unrealized
appreciation on
investments.......... 5,116,397 3,898,036 1,477,507 2,415,733
------------- ------------- ----------- ------------ ----------- -----------
Change in net assets
resulting from
operations........... 3,837,758 5,972,211 8,316,377 5,751,190 1,949,034 2,883,301
------------- ------------- ----------- ------------ ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income............... (3,685,864) (6,920,710) (412,196) (841,639) (185,348) (165,741)
In excess of net
investment income.... (87,522) (31,789)
From net realized gains
on investments....... (2,787,784) (953,377) (286,179)
In excess of net
realized gains on
investments.......... (194,259) (4,237,871) (219,480)
------------- ------------- ----------- ------------ ----------- -----------
Change in net assets
from shareholder
distributions........ (3,685,864) (6,920,710) (3,481,761) (6,032,887) (722,796) (165,741)
------------- ------------- ----------- ------------ ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued............... 201,062,436 481,425,381 2,170,256 9,107,308 3,976,057 13,601,991
Dividends reinvested... 280,684 559,926 1,650,921 2,629,804 295,204 85,237
Cost of shares
redeemed............. (209,131,417) (451,762,504) (6,050,272) (10,424,030) (728,197) (1,264,531)
------------- ------------- ----------- ------------ ----------- -----------
Change in net assets
from capital
transactions......... (7,788,297) 30,222,803 (2,229,095) 1,313,082 3,543,064 12,422,697
Capital contribution... 628,737
------------- ------------- ----------- ------------ ----------- -----------
Change in net assets... (7,636,403) 29,903,041 2,605,521 1,031,385 4,769,302 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.......... $ 150,267,206 $ 157,903,609 $82,869,317 $ 80,263,796 $26,254,652 $21,485,350
============= ============= =========== ============ =========== ===========
SHARE TRANSACTIONS:
Issued................. 201,062,436 481,425,381 162,605 734,724 316,342 1,231,162
Reinvested............. 280,684 559,926 122,651 232,650 23,101 7,846
Redeemed............... (209,131,417) (451,762,504) (452,402) (862,147) (57,142) (115,950)
------------- ------------- ----------- ------------ ----------- -----------
Change in shares....... (7,788,297) 30,222,803 (167,146) 105,227 282,301 1,123,058
============= ============= =========== ============ =========== ===========
</TABLE>
See notes to financial statements.
-11-
<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
------------------------- ------------------------ -------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1995 1995 1995 1995 1995 1995
------------ ----------- ------------ ----------- ------------ -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income.. $ 1,216,182 $ 2,614,835 $ 201,158 $ 464,598 $ 547,365 $ 1,030,817
Net realized gains
(losses) on
investment
transactions......... 215,388 (3,007,163) (877) (21,516) 1,830 (980,042)
Net change in
unrealized
appreciation on
investments.......... 275,065 2,284,408 135,733 187,815 19,793 925,567
----------- ----------- ---------- ----------- ----------- -----------
Change in net assets
resulting from
operations........... 1,706,635 1,892,080 336,014 630,897 568,988 976,342
----------- ----------- ---------- ----------- ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income............... (1,216,182) (2,614,835) (201,158) (454,961) (547,365) (1,021,053)
In excess of net
investment income.... (165,508) (39,804) (24,566) (40,211)
From net realized gains
on investments....... (906)
----------- ----------- ---------- ----------- ----------- -----------
Change in net assets
from shareholder
distributions........ (1,381,690) (2,654,639) (225,724) (454,961) (588,482) (1,021,053)
----------- ----------- ---------- ----------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued............... 1,381,409 9,410,452 538,093 2,084,648 1,487,657 8,742,390
Dividends reinvested... 558,356 957,588 190,903 404,688 149,336 262,359
Cost of shares
redeemed............. (6,619,796) (12,417,944) (533,467) (2,704,498) (3,573,448) (8,098,317)
----------- ----------- ---------- ----------- ----------- -----------
Change in net assets
from capital
transactions......... (4,680,031) (2,049,904) 195,529 (215,162) (1,936,455) 906,432
----------- ----------- ---------- ----------- ----------- -----------
Change in net assets... (4,355,086) (2,812,463) 305,819 (39,226) (1,955,949) 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.......... $35,141,374 $39,496,460 $7,959,027 $ 7,653,208 $18,870,838 $20,826,787
=========== =========== ========== =========== =========== ===========
SHARE TRANSACTIONS:
Issued................. 149,137 1,017,567 52,871 212,299 152,096 903,304
Reinvested............. 59,976 103,889 18,749 41,066 15,260 27,164
Redeemed............... (711,296) (1,347,411) (52,675) (273,850) (364,624) (848,954)
----------- ----------- ---------- ----------- ----------- -----------
Change in shares....... (502,183) (225,955) 18,945 (20,485) (197,268) 81,514
=========== =========== ========== =========== =========== ===========
</TABLE>
See notes to financial statements.
-12-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
---------- -------------------------------------------------------- ----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES (95.2%):
A.I.D. to Israel:
1,510,000 5.19%*, 11/15/99**...................................... $1,492,985
A.I.D. to Jamaica:
750,000 5.96%*, 10/5/12**....................................... 756,037
Federal Farm Credit Bank:
5,000,000 5.63%, 3/1/96........................................... 5,000,000
5,000,000 5.60%*, 10/25/96........................................ 5,004,543
Federal Home Loan Bank:
3,600,000 Discount Note, 1/8/96................................... 3,595,401
5,000,000 5.68%*, 6/3/96.......................................... 5,000,000
3,000,000 6.00%, 10/16/96......................................... 3,000,000
5,000,000 5.31%, 12/27/96......................................... 5,000,000
2,500,000 6.30%*, 1/27/97**....................................... 2,500,903
1,000,000 5.74%*, 2/14/97**....................................... 998,550
Federal Home Loan Mortgage Corp.:
3,000,000 4.85%*, 5/17/96......................................... 2,999,619
Federal National Mortgage Assoc.:
10,000,000 5.30%, 12/26/96......................................... 9,992,531
3,000,000 5.22%*, 7/28/97**....................................... 2,985,697
Overseas Private Investment Corp.:
7,482,000 6.06%*, 6/1/00**........................................ 7,509,682
Small Business Administration:
1,028,435 6.45%*, 9/25/99**....................................... 1,028,435
Student Loan Marketing Assoc.:
2,000,000 5.25%*, 1/11/96......................................... 2,000,000
2,500,000 5.25%*, 3/14/96......................................... 2,500,000
2,000,000 5.30%*, 5/9/96.......................................... 2,000,000
2,000,000 5.29%*, 6/13/96......................................... 2,000,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
---------- ----------------------------------------------------- ------------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Student Loan Marketing Assoc., continued:
4,115,000 5.26%*, 12/20/96..................................... $4,114,058
10,000,000 5.22%*, 10/14/97**................................... 9,987,113
4,830,000 5.22%*, 11/24/97**................................... 4,817,325
8,000,000 5.24%*, 8/20/98**.................................... 7,987,577
4,000,000 5.24%*, 11/10/98**................................... 3,992,938
6,000,000 5.26%*, 1/13/99**.................................... 5,979,197
6,850,000 5.26%*, 2/8/99**..................................... 6,832,262
14,000,000 5.27%*, 8/2/99**..................................... 13,982,359
10,050,000 5.31%*, 3/7/01**..................................... 9,991,362
5,000,000 5.27%*, 4/11/16**.................................... 5,000,000
Tennessee Valley Authority:
5,000,000 8.25%, 11/15/96...................................... 5,114,869
------------
Total U.S. Government Agencies 143,163,443
------------
Investments, at amortized cost 143,163,443
------------
REPURCHASE AGREEMENTS (4.3%):
6,418,402 Shearson Lehman Securities, 5.70%, 1/2/96
(Collateralized by 10,675,000 U.S. Treasury Strips,
8/15/04, market value--$6,598,538)................... 6,418,402
------------
Total Repurchase Agreements 6,418,402
------------
Total (Cost--$149,581,845)(a) $149,581,845
============
</TABLE>
- ------
Percentages indicated are based on net assets of $150,267,206.
(a)Cost for federal income tax and financial reporting purposes are the same.
* Put and demand features exist allowing the Fund to require the repurchase
of the instrument within variable time periods ranging from daily, weekly,
monthly, quarterly or semi-annually.
** Floating Variable Rate Certificates are securities with interest rates that
change periodically and are payable on different dates ranging from daily,
weekly, monthly, 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 December 31, 1995.
See notes to financial statements.
-13-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL VALUE EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (93.2%):
Banking (6.5%):
36,965 First Hawaiian, Inc.................................... $ 1,108,950
181,800 Premier Bancorp (b).................................... 4,249,575
-----------
5,358,525
-----------
Computers & Peripherals (5.9%):
203,650 Amdahl Corp. (b)....................................... 1,731,025
63,100 Data General Corp. (b)................................. 867,625
25,200 I.B.M. Corp............................................ 2,312,100
-----------
4,910,750
-----------
Electronic & Electrical (2.3%):
109,700 Augat, Inc............................................. 1,878,613
-----------
Entertainment (3.0%):
81,300 Hasbro, Inc............................................ 2,520,300
-----------
Financial Services (7.8%)
71,400 Leader Financial Corp.................................. 2,668,575
60,600 Travelers, Inc......................................... 3,810,225
-----------
6,478,800
-----------
Food Processing & Packaging (2.2%):
164,100 J & J Snack Foods, Inc. (b)............................ 1,805,100
-----------
Hotels & Motels (3.4%):
247,500 Equity Inns, Inc....................................... 2,846,250
-----------
Insurance-Life (3.4%):
58,500 SunAmerica, Inc........................................ 2,778,750
-----------
Insurance-Prop, Casualty, Health & Other (4.2%):
23,000 Phoenix Re Corp........................................ 609,500
52,600 UNUM Corp.............................................. 2,893,000
-----------
3,502,500
-----------
Mobile Homes & Manufactured Housing (3.1%):
124,300 Skyline Corp........................................... 2,579,225
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Oil & Gas (7.2%):
166,400 Global Industries Technology, Inc. (b)................. $ 3,140,800
116,380 Valero Energy Corp..................................... 2,851,310
-----------
5,992,110
-----------
Oilfield Service (3.8%):
108,795 B. J. Services (b)..................................... 3,155,055
-----------
Primary Metal & Mineral Production (2.8%):
55,650 Cleveland Cliffs....................................... 2,281,650
-----------
Real Estate Investment Trusts (11.1%):
98,938 Mid-America Apartment Community........................ 2,448,715
109,600 Storage USA............................................ 3,575,700
127,625 Transnational Re Corp.--Class A........................ 3,126,813
-----------
9,151,228
-----------
Retail (10.4%):
302,650 Burlington Coat Factory (b)............................ 3,102,163
195,700 Crompton & Knowles..................................... 2,593,025
327,100 Hancock Fabrics........................................ 2,943,900
8,639,088
-----------
Savings & Loan Companies (3.6%):
113,100 H.F. Ahmanson & Co..................................... 2,997,150
-----------
Steel (2.0%):
112,500 Birmingham Steel Corp.................................. 1,673,437
-----------
Tobacco (7.3%):
35,050 Philip Morris Companies, Inc........................... 3,172,025
87,000 UST, Inc............................................... 2,903,625
-----------
6,075,650
-----------
Trucking-Local & Long Distance (3.2%):
129,100 Werner Enterprises, Inc................................ 2,614,274
-----------
Total Common Stocks 77,238,455
-----------
</TABLE>
Continued
-14-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL VALUE EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- -------------
<C> <S> <C>
INVESTMENT COMPANIES (2.1%):
836,606 Dreyfus Treasury Prime Fund.......................... $ 836,606
934,898 Riverside Capital Money Market Fund.................. 934,898
-------------
Total Investment Companies 1,771,504
-------------
Investments, at value 79,009,959
=============
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
REPURCHASE AGREEMENTS (4.2%):
3,486,022 HSBC Securities 5.45%, 1/2/96 (Collateralized by
3,445,000 U.S. Treasury Notes, 5.88%, 7/31/97, market
value--$3,564,125) $ 3,486,022
-----------
Total Repurchase Agreements 3,486,022
-----------
Total (Cost--$69,249,789)(a) $82,495,981
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $82,869,317.
(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...................................... $16,311,800
Unrealized depreciation...................................... (3,065,608)
-----------
Net unrealized appreciation.................................. $13,246,192
===========
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements.
-15-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------- --------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (94.9%):
Automotive Parts (3.5%):
33,950 Titan Wheel International, Inc........................... $ 551,687
20,200 Walbro Corp.............................................. 363,600
-----------
915,287
-----------
Banking (6.8%):
9,500 NationsBank Corp......................................... 661,437
14,200 Southern National Corp................................... 372,750
29,200 Southtrust Corp.......................................... 748,250
-----------
1,782,437
-----------
Beverages (2.4%):
8,400 Coca-Cola Co............................................. 623,700
-----------
Building Materials (2.4%):
20,500 Masco Corp............................................... 643,187
-----------
Computers & Peripherals (2.0%):
35,000 EMC Corp.(b)............................................. 538,125
-----------
Conglomerates (2.4%):
41,500 Hanson PLC............................................... 632,875
-----------
Construction (5.4%):
26,000 Champion Enterprises, Inc. (b)........................... 802,750
29,156 Clayton Homes, Inc....................................... 623,215
-----------
1,425,965
-----------
Cosmetics & Related (2.1%):
7,500 Avon Products, Inc....................................... 565,312
-----------
Electrical Equipment (5.1%):
18,500 General Electric Co...................................... 1,332,000
-----------
Electronic & Electrical--General (2.3%):
10,500 Motorola, Inc............................................ 598,500
-----------
Food Processing & Packaging (6.8%):
28,500 First Colony Corp........................................ 723,188
10,000 Nabisco Holdings Corp.................................... 326,250
22,000 Sara Lee Corp............................................ 701,250
-----------
1,750,688
-----------
Insurance (4.0%):
7,500 American International Group, Inc........................ 693,750
9,000 Providian Corp........................................... 366,750
-----------
1,060,500
-----------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------- --------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Manufacturing-Capital Goods (2.4%):
28,700 Wabash National Corp..................................... $ 638,575
-----------
Oil--Integrated Companies (5.1%):
6,000 Atlantic Richfield Co.................................... 664,500
8,500 Texaco, Inc.............................................. 667,250
-----------
1,331,750
-----------
Pharmaceuticals (6.1%):
17,500 Abbott Laboratories...................................... 730,625
16,100 Schering-Plough.......................................... 881,475
-----------
1,612,100
-----------
Pollution Control Services & Equipment (2.6%):
23,500 Browning-Ferris Industries, Inc.......................... 693,250
-----------
Real Estate Investment Trusts (4.9%):
24,000 Merry Land & Investments Co.............................. 567,000
22,300 Storage USA.............................................. 727,538
-----------
1,294,538
-----------
Restaurants (2.4%):
32,000 Cracker Barrel Old Country Store, Inc.................... 552,000
20,000 The Krystal Co.(b)....................................... 90,000
-----------
642,000
-----------
Retail (5.8%):
18,200 Home Depot, Inc.......................................... 871,325
29,000 Wal Mart Stores, Inc..................................... 648,875
-----------
1,520,200
-----------
Semiconductors (2.6%):
11,800 Intel Corp............................................... 669,650
-----------
Services (Non-Financial) (5.8%):
10,200 Procter & Gamble Co...................................... 846,600
30,000 Rollins Inc.............................................. 663,750
-----------
1,510,350
-----------
Tobacco & Tobacco Products (4.2%):
12,100 Philip Morris Co., Inc................................... 1,095,050
-----------
Toys & Bicycles--Manufacturing (2.5%):
21,500 Mattel, Inc.............................................. 661,125
-----------
</TABLE>
Continued
-16-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ --------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities--Telecommunications (5.3%):
11,000 A T & T Corp............................................. $ 712,250
25,500 MCI Telecommunications Corp.............................. 666,188
-----------
1,378,438
-----------
Total Common Stocks 24,915,602
-----------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ --------------------------------------------------------- -----------
<C> <S> <C>
INVESTMENT COMPANIES (5.0%):
644,893 Dreyfus Treasury Prime Fund.............................. $ 644,893
655,867 Riverside Capital Money Market Fund...................... 655,867
-----------
Total Investment Companies 1,300,760
-----------
Total (Cost--$22,447,222)(a) $26,216,362
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $26,254,652.
(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....................................... $4,576,726
Unrealized depreciation....................................... (807,586)
----------
Net unrealized appreciation................................... $3,769,140
==========
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements.
-17-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FIXED INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
CORPORATE BONDS (27.0%):
Banking (4.8%):
1,500,000 Commerce Bancorp, Inc., 8.38%, 7/15/03................ $ 1,673,200
-----------
Financial Services (5.8%):
1,000,000 Allamerica Financial, 7.63%, 10/15/25................. 1,055,000
1,000,000 Fidelity National Financial, 8.00%, 1/15/06........... 1,000,000
-----------
2,055,000
-----------
Industrial Goods & Services (12.9%):
2,000,000 Montalbano Builders, 10.00%, 5/1/99................... 2,000,000
904,639 Rosewood Care Center Funding, 7.25%, 11/1/13.......... 947,610
1,600,000 Voyager Lines, 9.50%, 11/1/99 (a)..................... 1,600,000
-----------
4,547,610
-----------
Retail Stores (3.5%):
1,500,000 K-Mart Corp., 8.80%, 7/1/10........................... 1,230,000
-----------
Total Corporate Bonds 9,505,810
-----------
PREFERRED STOCKS (1.8%):
Financial Services (1.8%):
25,000 Morgan Stanley Financial PLC, 7.82%, 11/30/13......... 628,125
-----------
Total Preferred Stocks 628,125
-----------
TAXABLE MUNICIPAL BONDS (22.1%):
Connecticut (3.6%):
228,324 Connecticut State Development Authority, 6.95%*,
8/1/03............................................... 212,340
1,000,000 Connecticut State Housing Finance Authority, 7.50%,
5/15/13.............................................. 1,049,270
-----------
1,261,610
-----------
Illinois (0.4%):
147,076 Belleville, Illinois, St. Clair County, 7.35%,
11/15/09............................................. 156,112
-----------
Indiana (1.3%):
425,000 Jeffersonville, Indiana Economic Sub-Public Warehouse,
Inc. Project, 10.45%, 4/1/05......................... 441,826
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
TAXABLE MUNICIPAL BONDS, CONTINUED:
Tennessee (4.1%):
130,000 Decatur County, Tennessee Health, Educational &
Housing Facilities Board Revenue, 8.00%, 9/1/97...... $ 126,625
745,000 Hamilton County, Tennessee Industrial Development
Board, Project A, 8.50%, 8/1/10...................... 733,140
120,000 Jackson County, Tennessee Health & Educational
Facilities, 8.00%, 9/1/97............................ 116,885
445,000 Memphis-Shelby County, Tennessee Industrial
Development Board, 9.10%, 2/1/04..................... 463,912
-----------
1,440,562
-----------
Texas (5.7%):
2,000,000 Dallas County Texas Housing Finance Corp. 7.25%,
6/1/14............................................... 2,017,840
-----------
West Virginia (7.0%):
110,000 Harrison County, West Virginia Revenue Refunding,
9.25%, 11/1/08....................................... 109,643
285,000 Summers County, West Virginia Revenue Refunding,
8.00%, 10/1/03....................................... 275,698
170,000 Tyler County, West Virginia Revenue Refunding, Series
B, 9.00%, 6/1/04..................................... 173,079
655,000 West Virginia State Hospital Financial Authority,
9.25%, 8/1/10........................................ 657,758
1,230,000 West Virginia State Hospital Financial Authority,
9.50%, 8/1/15........................................ 1,235,178
-----------
2,451,356
-----------
Total Taxable Municipal Bonds 7,769,306
-----------
</TABLE>
Continued
-18-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FIXED INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES (39.4%):
Federal Home Loan Bank:
1,620,000 6.24%, 1/8/05.......................................... $ 1,665,392
7,500,000 6.10%, 12/13/10........................................ 7,572,900
Federal Home Loan Mortgage Corp.:
4,500,000 6.91%, 11/30/05........................................ 4,554,225
Government Trust Certificates, State of Israel:
50,320 9.13%, 11/15/96........................................ 51,578
-----------
Total U.S. Government Agencies 13,844,095
-----------
U.S. TREASURY BONDS (0.3%):
24,000 8.75%, 11/15/08........................................ 28,587
49,000 9.13%, 5/15/09......................................... 60,005
-----------
Total U.S. Treasury Bonds 88,592
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
WARRANTS (0.3%):
100,000 Guin, Alabama Taxable Warrants, Series 94A, 10.30%,
12/1/09.............................................. $ 104,137
-----------
INVESTMENT COMPANIES (5.7%):
550,777 Dreyfus Treasury Prime Fund........................... 550,777
1,443,756 Riverside Capital Money Market Fund................... 1,443,756
-----------
Total Investment Companies 1,994,533
-----------
Total (Cost--$33,670,954)(b) $33,934,598
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $35,141,374.
(a) Represents a restricted security, purchased under Rule 144A, which is
exempt from registration under the Securities Act of 1933, as amended.
(b) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $ 599,964
Unrealized depreciation........................................ (336,320)
---------
Net unrealized appreciation.................................... $ 263,644
=========
</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 December 31, 1995.
See notes to financial statements.
-19-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL LOW DURATION GOVERNMENT SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- -------------------------------------------------------- ----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES (89.4%):
Federal Farm Credit Bank:
700,000 8.80%, 1/31/02.......................................... $ 819,931
Federal Home Loan Bank:
700,000 3.06%, 7/15/98*......................................... 666,238
Federal Home Loan Mortgage Corp.:
750,000 7.54%, 5/3/04........................................... 778,395
500,000 7.89%, 5/12/04.......................................... 513,490
Federal National Mortgage Assoc.:
1,000,000 Discount Note, 1/18/96.................................. 997,158
545,000 7.20%, 1/10/02.......................................... 552,129
Guaranteed Export Certificates--Series 1994-A:
2,290,473 7.12%, 4/15/06.......................................... 2,422,863
Shipco 668 Series A:
363,000 8.50%, 5/11/02.......................................... 366,953
----------
Total U.S. Government Agencies 7,117,157
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- -------------------------------------------------------- ----------
<C> <S> <C>
INVESTMENT COMPANIES (5.9%):
191 Dreyfus Treasury Prime Fund............................. $ 191
465,482 Riverside Capital Money Market Fund..................... 465,482
----------
Total Investment Companies 465,673
----------
Total (Cost--$7,305,896)(a) $7,582,830
==========
</TABLE>
- ------
Percentages indicated are based on net assets of $7,959,027.
(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......................................... $284,473
Unrealized depreciation......................................... (7,539)
--------
Net unrealized appreciation..................................... $276,934
========
</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. The rate reflected on the Schedule of
Portfolio Investments is the rate in effect on December 31, 1995.
See notes to financial statements.
-20-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL TENNESSEE MUNICIPAL OBLIGATIONS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
MUNICIPAL BONDS (97.2%):
Alabama (2.3%):
175,000 Alabama State Board Education Revenue, 6.60%, 1/1/05.. $ 180,140
250,000 Troy, Alabama, Affordable Housing Revenue, 6.30%,
7/1/01............................................... 249,655
-----------
429,795
-----------
Kansas (4.0%):
750,000 Manhattan, Kansas Industrial Revenue Bonds, 7.00%,
12/1/14.............................................. 755,265
-----------
Louisiana (4.4%):
750,000 New Orleans, Louisiana Audubon Park Revenue Bonds,
8.00%, 4/1/12........................................ 826,582
-----------
Minnesota (0.6%):
100,000 St. Paul, Minnesota Housing & Redevelopment Authority,
7.75%, 11/1/02....................................... 104,386
-----------
Oklahoma (1.6%):
300,000 Oklahoma Development Finance Authority Revenue, 8.38%,
8/1/11............................................... 308,478
-----------
Pennsylvania (2.7%):
250,000 Schuylkill County, Pennsylvania Industrial Development
Authority Revenue, Beverly Enterprises Project,
6.63%, 5/1/03........................................ 255,482
250,000 Wyoming County, Pennsylvania Industrial Development
Authority Revenue, Beverly Enterprises Project,
6.25%, 7/1/06........................................ 255,198
-----------
510,680
-----------
South Carolina (1.1%):
200,000 Charleston County, South Carolina Health Facilities
Revenue, 8.00%, 11/1/24.............................. 211,806
-----------
Tennessee (79.4%):
105,000 Blount County, Tennessee Health & Educational
Facilities Board Revenue, Maryville Towers Project,
6.20%, 7/20/28....................................... 106,888
250,000 Blount County, Tennessee Hospital Revenue, 6.13%,
7/1/12............................................... 263,057
100,000 Bruceton, Tennessee Water & Sewer Development, 6.70%,
3/1/13............................................... 107,385
105,000 Bruceton, Tennessee Water & Sewer Development, 6.70%,
3/1/14............................................... 112,754
115,000 Bruceton, Tennessee Water & Sewer Development, 6.75%,
3/1/15............................................... 124,417
125,000 Bruceton, Tennessee Water & Sewer Development, 6.75%,
3/1/16............................................... 134,895
100,000 Chattanooga, Tennessee Industrial Development Board
Revenue, 7.05%, 8/15/05.............................. 110,591
395,000 Clarkesville, Tennessee Water, Sewer & Gas Refunding &
Improvement, 6.25%, 2/1/18........................... 420,071
470,000 Dyer County, Tennessee Health, Educational & Housing
Facilities Board Revenue, 7.25%, 10/1/04............. 501,913
350,000 Fayetteville, Tennessee Water & Sewer, 7.50%, 1/1/06.. 357,073
115,000 Gatlinburg, Tennessee Water & Sewer Revenue, Series A,
6.80%, 4/1/06........................................ 121,493
500,000 Hamilton County, Tennessee Industrial Development
Board Revenue, 7.20%, 9/1/05......................... 522,025
890,000 Hamilton County, Tennessee Industrial Development
Board Revenue, Multifamily Housing Revenue, Series B,
6.60%, 2/1/24........................................ 889,929
300,000 Jackson, Tennessee Health, Educational & Housing,
7.00%, 5/1/17........................................ 319,896
</TABLE>
Continued
-21-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL TENNESSEE MUNICIPAL OBLIGATIONS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- --------------------------------------------------------- ----------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Tennessee, continued:
100,000 Johnson City Tennessee Health & Education Refunding
Bonds, 6.75%, 7/1/06.................................... $ 113,797
335,000 Knox County, Tennessee Industrial Development Board
Revenue, 9.63%, 4/1/07.................................. 337,030
350,000 Knox County, Tennessee Public Improvement, 6.38%, 4/1/07. 380,373
350,000 Knoxville, Tennessee Community Development Corp., 6.60%,
10/15/07................................................ 369,037
250,000 Knoxville, Tennessee Community Development Corp., 6.65%,
10/15/10................................................ 261,297
250,000 Lawrance County, Tennessee, 6.63%, 3/1/14................ 273,402
300,000 Lewisburg, Tennessee Certificates Partnership Lease,
7.00%, 12/1/10.......................................... 177,000
250,000 Lewisburg, Tennessee Certificates Partnership Lease,
7.10%, 12/1/14.......................................... 147,500
385,000 Loudon County, Tennessee Industrial Development Board,
6.20%, 2/1/23........................................... 401,255
100,000 Madison County, Tennessee Hospital Revenue, 7.38%,
4/1/13.................................................. 102,942
115,000 Manchester, Tennessee Water & Sewer Revenue, Series 1992,
6.00%, 7/1/06........................................... 120,807
100,000 Memphis Shelby County, Tennessee Airport Authority,
8.13%, 2/15/12.......................................... 109,185
310,000 Memphis-Shelby County, Tennessee Airport Authority,
Series A, 6.00%, 2/15/13................................ 323,637
250,000 Memphis Tennessee Health, Educational, & Housing
Facilities Board, 6.45%, 4/1/26......................... 259,798
250,000 Memphis, Tennessee Health, Educational & Housing
Facilities Board, 7.38%, 1/20/27........................ 272,340
250,000 Metropolitan Government Nashville & Davidson County,
Tennessee Housing & Educational Facilities Board Revenue
7.50%, 7/1/99........................................... 264,035
100,000 Metropolitan Government Nashville & Davidson County,
Tennessee Housing & Educational Facilities Board
Revenue, 6.00%, 10/1/16................................. 104,452
250,000 Metropolitan Government Nashville & Davidson County,
Tennessee Water & Sewer Revenue, 7.00%, 1/1/14.......... 255,567
150,000 Morristown, Tennessee Housing Development Corp., 6.25%,
5/1/18.................................................. 155,285
130,000 Poplar Grove, Tennessee Utility District, 6.05%, 4/1/05.. 140,466
150,000 Poplar Grove Utility District, Tipton County Gas System
Revenue, Series 1993, 6.90%, 1/15/07.................... 161,867
160,000 Rutherford County, Tennessee, 0.00%, 5/1/13.............. 61,653
200,000 Shelby County, Tennessee, 5.88, 3/1/12................... 210,274
370,000 Shelby County, Tennessee Compound Interest School Bonds,
Series A, 0.00%, 5/1/12................................. 146,439
100,000 Shelby County, Tennessee Health, Educational & Housing
Facilities Board Revenue, 7.30%, 8/15/98................ 108,277
125,000 Shelby County, Tennessee Health, Educational & Housing
Facilities Board Revenue, 6.50%, 4/1/02................. 125,866
250,000 Shelby County, Tennessee Health, Educational & Housing
Facilities Board Revenue, 6.50%, 3/1/09................. 255,728
1,150,000 Shelby County, Tennessee Health, Educational & Housing
Facilities Board Revenue, 6.75%, 10/1/17................ 1,203,958
725,000 Shelby County, Tennessee Health, Educational & Housing
Facilities Board Revenue, 7.13%, 7/1/25................. 788,670
310,000 South Fulton, Tennessee, Industrial Development Revenue,
6.00%, 10/1/10.......................................... 319,142
500,000 South Fulton, Tennessee, Industrial Development Revenue,
6.35%, 10/1/15.......................................... 513,700
200,000 Spring City, Tennessee Health, Educational & Housing
Facility, 8.75%, 9/1/24................................. 210,460
740,000 Tennessee Housing Development Agency, 7.05%, 7/1/20...... 774,602
</TABLE>
Continued
-22-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL TENNESSEE MUNICIPAL OBLIGATIONS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Tennessee, continued:
145,000 Tennessee Housing Development Agency, Series A, 6.90%,
7/1/25............................................... $ 152,979
500,000 Tennessee Housing Development Agency, Series C, 6.10%,
7/1/15............................................... 506,180
100,000 Tennessee State School Board Authority, Higher
Education Facilities, Series A, 6.25%, 5/1/17........ 106,935
100,000 Weakley County, Tennessee, 6.00%, 8/1/12.............. 106,558
550,000 Winchester, Tennessee Health & Educational Facilities
Board, 7.00%, 6/1/09................................. 565,686
-----------
14,980,566
-----------
Texas (0.4%):
90,000 Southeast Texas Housing Financial Corp., 8.50%,
5/1/04............................................... 84,600
-----------
West Virginia (0.7%):
125,000 Summers County, West Virginia, 7.25%, 10/1/09......... 130,058
-----------
Total Municipal Bonds........................................... 18,342,216
-----------
INVESTMENT COMPANIES (0.0%):
1 Dreyfus Municipal Cash Management Plus................ 1
-----------
Total Investment Companies...................................... 1
-----------
Total (Cost-$17,973,490)(a)..................................... $18,342,217
===========
</TABLE>
- --------
Percentages indicated are based on net assets of $18,870,838.
(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........................................ $ 674,219
Unrealized depreciation........................................ (305,492)
---------
Net unrealized appreciation.................................... $ 368,727
=========
</TABLE>
See notes to financial statements.
-23-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(UNAUDITED)
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") 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 Obligations 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 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 in conformity with generally accepted accounting
principles 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 revenues 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.
Investments in common and preferred stocks, corporate bonds, commercial
paper, municipal securities and U.S. Government securities 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 quotation
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.
Continued
-24-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1995
(UNAUDITED)
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
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 inabliity 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 Funds' 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' limitation on
investments in illiquid securities as set forth in the Funds' investment
restrictions.
Continued
-25-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1995
(UNAUDITED)
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
carryforwards, 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, 1995 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: a
decrease in capital and a corresponding decrease in accumulated
undistributed net realized losses on investment transactions in the amount
of approximately $628,000.
FEDERAL INCOME TAXES:
It is the policy of each of the Funds to qualify or continue to qualify as a
regulated 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 incurred 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.
3. RECLASSIFICATIONS:
Certain reclassifications have been made to the 1994 financial statements
and financial highlights in order to conform to the 1995 presentation.
4. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
six months ended December 31, 1995 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Value Equity Fund.................................... $ 7,870,470 $15,897,228
Growth Fund.......................................... $ 7,888,330 $ 3,898,233
Fixed Income Fund.................................... $80,002,815 $82,541,969
Low Duration Government Securities Fund.............. -- $ 1,317,321
Tennessee Municipal Obligations
Fund........................... $ 6,293,907 $ 8,294,184
</TABLE>
Continued
-26-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1995
(UNAUDITED)
5. 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 six months
ended December 31, 1995.
During the year ended June 30, 1995, NBC voluntarily contributed $97,370 of
its investment advisory fees back to the Money Market Fund. In addition, 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 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.
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's fees are
computed daily as a percentage of the average net assets of each Fund. BISYS
Fund Services Ohio, Inc. serves the funds as Transfer Agent and Mutual Fund
Accountant.
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.
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 six months ended December 31, 1995,
BISYS received $14,354 from commissions earned on sales of shares of the
variable net asset value funds, of which $6,993 was reallowed to affiliates
of the Fund.
Fees may be voluntarily reduced to assist the Funds in maintaining
competitive expense ratios.
Continued
-27-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1995
(UNAUDITED)
Information regarding these transactions is as follows for the six months
ended December 31, 1995:
<TABLE>
<CAPTION>
VALUE
MONEY MARKET EQUITY GROWTH
FUND FUND FUND
------------ ----------------- -----------------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary
fee reductions (percentage .35% 1.00% of 1.00% of
of average net assets)..... first $50 million first $50 million
.75% of remaining .75% of remaining
Voluntary fee reductions... $84,251
ADMINISTRATION FEES:
Annual fee before voluntary
fee reductions (percentage
of average net assets)..... .20% .20% .20%
Voluntary fee reductions... $6,239
12B-1 FEES:
Annual fee before voluntary
fee reductions (percentage
of average net assets)..... .25% .25% .25%
Voluntary fee reductions... $121,832 $74,915 $24,883
ADMINISTRATIVE SERVICES
FEES:
Annual fee before voluntary
fee reductions (percentage
of average net assets)..... .25% .25% .25%
Voluntary fee reductions... $35,493 $12,500 $1,275
<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... $19,417 $68,283
ADMINISTRATION FEES:
Annual fee before voluntary
fee reductions (percentage
of average net assets)..... .20% .20% .20%
Voluntary fee reductions... $1,943
12B-1 FEES:
Annual fee before voluntary
fee reductions (percentage
of average net assets)..... .25% .25% .25%
Voluntary fee reductions... $33,923 $8,155 $9,446
ADMINISTRATIVE SERVICES
FEES:
Annual fee before voluntary
fee reductions (percentage
of average net assets)..... .25% .25% .25%
Voluntary fee reductions... $5,378 $12,599
</TABLE>
-28-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MONEY MARKET FUND
--------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ---------------------------------------------------
1995 1995 1994 1993 1992 1991
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE, BEGIN-
NING OF PERIOD......... $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- -------- -------- --------
Investment Activities
Net investment income. 0.025 0.044 0.026 0.032 0.051 0.071
Net realized and
unrealized gains
(losses) on invest-
ments................ (0.004) 0.003
----------- -------- -------- -------- -------- --------
Total from Invest-
ment Activities.... 0.025 0.040 0.026 0.032 0.054 0.071
----------- -------- -------- -------- -------- --------
Distributions
Net investment income. (0.025) (0.044) (0.026) (0.032) (0.051) (0.071)
Net realized gains.... (0.003)
----------- -------- -------- -------- -------- --------
Total Distributions. (0.025) (0.044) (0.026) (0.032) (0.054) (0.071)
----------- -------- -------- -------- -------- --------
Capital Transactions.... 0.004
----------- --------
NET ASSET VALUE, END OF
PERIOD................. $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== ======== ======== ======== ======== ========
Total Return............ 2.50%(b) 4.44%(a) 2.65% 3.20% 5.61% 7.29%
RATIOS/SUPPLEMENTAL DA-
TA:
Net Assets, at end of
period (000)........... $150,267 $157,904 $128,001 $141,840 $162,361 $165,242
Ratio of expenses to av-
erage net assets....... 0.99%(c) 0.97% 0.95% 0.85% 0.66% 0.63%
Ratio of net investment
income to average
net assets............. 4.92%(c) 4.41% 2.62% 3.17% 5.12% 6.95%
Ratio of expenses to av-
erage net assets*...... 1.20%(c) 1.18% 1.09% 0.94% 0.91% 0.68%
Ratio of net investment
income to average
net assets*............ 4.71%(c) 4.20% 2.48% 3.08% 4.87% 6.90%
</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 year
ended June 30, 1995.
(b)Not annualized.
(c)Annualized.
See notes to financial statements.
-29-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
VALUE EQUITY FUND
------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JUNE 30, OCTOBER 31, 1991
DECEMBER 31, ------------------------- TO JUNE 30,
1995 1995 1994 1993 1992 (A)
---------------- ------- ------- ------- ----------------
(UNAUDITED)
<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. 0.07 0.14 0.07 0.21 0.17
Net realized and
unrealized gains on
investments.......... 1.26 0.76 1.28 0.96 1.03
------- ------- ------- ------- -------
Total from
Investment
Activities......... 1.33 0.90 1.35 1.17 1.20
------- ------- ------- ------- -------
Distributions
Net investment income. (0.07) (0.13) (0.06) (0.22) (0.16)
In excess of net
investment income.... (0.01)
Net realized gains.... (0.46) (0.15) (0.19) (0.42)
In excess of net
realized gains....... (0.03) (0.66)
------- ------- ------- ------- -------
Total Distributions. (0.57) (0.94) (0.25) (0.64) (0.16)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $13.39 $12.63 $ 12.67 $ 11.57 $ 11.04
======= ======= ======= ======= =======
Total Return (excludes
sales charges)......... 10.54%(b) 8.03% 11.75% 10.94% 12.04%(b)
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, at end of
period (000)........... $82,869 $80,264 $79,232 $52,629 $25,461
Ratio of expenses to
average net assets..... 1.58%(c) 1.58% 1.36% 0.73% 0.67%(c)
Ratio of net investment
income to average
net assets............. 0.99%(c) 1.13% 0.52% 1.84% 2.43%(c)
Ratio of expenses to
average net assets*.... 1.79%(c) 1.79% 1.74% 1.69% 1.95%(c)
Ratio of net investment
income to average
net assets*............ 0.78%(c) 0.92% 0.14% 0.88% 1.15%(c)
Portfolio turnover...... 9.81% 35.64% 62.17% 16.13% 23.07%
</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.
-30-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH FUND
------------------------------------------
SIX MONTHS ENDED YEAR ENDED APRIL 18, 1994
DECEMBER 31, JUNE 30, TO JUNE 30,
1995 1995 1994 (A)
---------------- ---------- --------------
(UNAUDITED)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................ $12.14 $9.82 $10.00
------- ------- ------
Investment Activities
Net investment income............ 0.09 0.16
Net realized and unrealized gains
(losses) on investments......... 0.91 2.30 (0.18)
------- ------- ------
Total from Investment
Activities.................... 1.00 2.46 (0.18)
------- ------- ------
Distributions
Net investment income............ (0.09) (0.14)
In excess of net investment
income............................ (0.02)
Net realized gains............... (0.14)
In excess of net realized gains (0.11)
------- ------- ------
Total Distributions............ (0.36) (0.14)
------- ------- ------
NET ASSET VALUE, END OF PERIOD..... $12.80 $12.14 $ 9.82
======= ======= ======
Total Return (excludes sales
charges).......................... 8.41%(b) 25.27% (1.80)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, at end of period (000). $26,255 $21,485 $6,345
Ratio of expenses to average net
assets............................ 1.06%(c) 1.24% 2.59%(c)
Ratio of net investment income to
average net assets................ 1.49%(c) 1.64% 0.25%(c)
Ratio of expenses to average net
assets*........................... 2.00%(c) 2.51% 3.90%(c)
Ratio of net investment income
(loss) to average net assets*..... 0.55%(c) 0.37% (1.07)%(c)
Portfolio turnover................. 17.30% 29.36% 0.00%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or fee reimbursements 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.
-31-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FIXED INCOME FUND
-------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JUNE 30, OCTOBER 31, 1991
DECEMBER 31, -------------------------- TO JUNE 30,
1995 1995 1994 1993 1992 (A)
---------------- ------- ------- ------- ----------------
(UNAUDITED)
<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. 0.33 0.58 0.57 0.68 0.42
Net realized and
unrealized gains
(losses) on
investments.......... 0.10 (0.15) (0.76) 0.27 0.22
------- ------- ------- ------- -------
Total from
Investment
Activities......... 0.43 0.43 (0.19) 0.95 0.64
------- ------- ------- ------- -------
Distributions
Net investment income. (0.35) (0.58) (0.57) (0.69) (0.38)
In excess of net
investment income.... (0.01)
Net realized gains.... (0.25) (0.08)
------- ------- ------- ------- -------
Total Distributions. (0.35) (0.59) (0.82) (0.77) (0.38)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $9.35 $ 9.27 $ 9.43 $ 10.44 $ 10.26
======= ======= ======= ======= =======
Total Return (excludes
sales charges)......... 4.70%(b) 4.82% (2.20)% 9.64% 6.56%(b)
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, at end of
period (000)........... $35,141 $39,496 $42,309 $35,951 $27,256
Ratio of expenses to
average net assets..... 1.45%(c) 1.43% 1.37% 0.74% 0.69%(c)
Ratio of net investment
income to average net
assets................. 6.49%(c) 6.33% 5.61% 6.65% 6.51%(c)
Ratio of expenses to
average net assets*.... 1.66%(c) 1.64% 1.70% 1.42% 1.63%(c)
Ratio of net investment
income to average net
assets*................ 6.28%(c) 6.12% 5.28% 5.97% 5.58%(c)
Portfolio turnover...... 232.66% 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.
-32-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LOW DURATION GOVERNMENT SECURITIES FUND
------------------------------------------
SIX MONTHS ENDED YEAR ENDED APRIL 18, 1994
DECEMBER 31, JUNE 30, TO JUNE 30,
1995 1995 1994 (A)
---------------- ---------- --------------
(UNAUDITED)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................ $10.15 $ 9.93 $10.00
------ ------ ------
Investment Activities
Net investment income............ 0.27 0.56 0.07
Net realized and unrealized gains
(losses) on investments......... 0.17 0.21 (0.08)
------ ------ ------
Total from Investment
Activities.................... 0.44 0.77 (0.01)
------ ------ ------
Distributions
Net investment income............ (0.27) (0.55) (0.06)
In excess of net investment
income.......................... (0.03)
------ ------ ------
Total Distributions............ (0.30) (0.55) (0.06)
------ ------ ------
NET ASSET VALUE, END OF PERIOD..... $10.29 $10.15 $ 9.93
====== ====== ======
Total Return (excludes sales
charges).......................... 4.36%(b) 8.03% (0.13)%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, at end of period (000). $7,959 $7,653 $7,692
Ratio of expenses to average net
assets............................ 1.42%(c) 1.33% 2.85%(c)
Ratio of net investment income to
average net assets................ 5.18%(c) 5.67% 3.63%(c)
Ratio of expenses to average net
assets*........................... 2.18%(c) 2.10% 3.67%(c)
Ratio of net investment income to
average net assets*............... 4.42%(c) 4.89% 2.81%(c)
Portfolio turnover................. 0.00% 34.47% 21.20%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or fee reimbursements 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.
-33-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TENNESSEE MUNICIPAL
OBLIGATIONS FUND
----------------------------------------------------
YEAR ENDED
SIX MONTHS ENDED JUNE 30, NOVEMBER 4, 1992
DECEMBER 31, ---------------- TO JUNE 30,
1995 1995 1994 1993 (A)
---------------- ------- ------- ----------------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $9.84 $ 9.81 $ 10.44 $ 10.00
------- ------- ------- -------
Investment Activities
Net investment income. 0.26 0.50 0.48 0.30
Net realized and
unrealized gains
(losses) on
investments.......... 0.01 0.03 (0.57) 0.43
------- ------- ------- -------
Total from
Investment
Activities......... 0.27 0.53 (0.09) 0.73
------- ------- ------- -------
Distributions
Net investment income. (0.26) (0.50) (0.48) (0.29)
Net realized gains.... (0.02)
In excess of net
realized gains....... (0.06)
------- ------- ------- -------
Total Distributions. (0.28) (0.50) (0.54) (0.29)
------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $9.83 $ 9.84 $ 9.81 $ 10.44
======= ======= ======= =======
Total Return (excludes
sales charges)......... 2.74%(b) 5.61% (1.00)% 7.39%(b)
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, at end of
period (000)........... $18,871 $20,827 $19,965 $17,425
Ratio of expenses to
average net assets..... 0.95%(c) 1.12% 1.19% 0.82%(c)
Ratio of net investment
income to average net
assets................. 5.21%(c) 5.24% 4.67% 4.76%(c)
Ratio of expenses to
average net assets*.... 1.81%(c) 1.98% 1.99% 1.62%(c)
Ratio of net investment
income (loss) to
average net assets*.... 4.35%(c) 4.38% 3.87% 3.96%(c)
Portfolio turnover...... 31.05% 62.59% 86.57% 52.52%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or fee reimbursements 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.
-34-
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
Investment Adviser
National Bank of Commerce
One Commerce Square
Memphis, Tennessee 38150
Administrator and Distributor
BISYS Fund Services
3435 Stalzer 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
