<PAGE>
[LOGO OF RIVERSIDE CAPITAL FUNDS]
Riverside
Capital Funds
---------------------------------
Mid-Year Report to
Shareholders
December 31, 1997
---------------------------------
[LOGO OF NATIONAL BANK OF COMMERCE]
National Bank
of Commerce
Memphis, Tennessee
Investment Adviser
BISYS FUND SERVICES
Administrator and Distributor
3435 Stelzer Road
Columbus, Ohio 43219-3035
<PAGE>
MESSAGE FROM THE CHAIRMAN AND RIVERSIDE
INVESTMENT ADVISER CAPITAL
FUNDS
Dear Shareholders:
Despite an environment that tended to be somewhat uncertain from day to day,
we are pleased to report that the six months ended December 31, 1997 was a
period of growth for the Riverside Capital Funds. While stocks sold off
sharply in August and late October, they bounced back smartly each time within
a matter of days. Bonds, too, gained ground as interest rates slid lower on
news that the economy was slowing and inflation appeared to be dormant. As a
result, we are pleased to report that all of our funds posted solid gains over
the period.
Moreover, investors' interest in stocks and bonds remained high, and
throughout the period, money continued to stream into mutual funds.
TURNING TO THE MARKETS
Of course, some of the growth in net assets under management came from capital
appreciation--after all was said and done, both stocks and bonds posted
positive returns over the six months. Nonetheless, throughout the period the
financial markets were considerably more volatile than they have been in some
time. In August, when signs began to appear that the economy was slowing and
nervousness grew about the earnings of larger capitalization companies, stocks
stumbled briefly and then recovered just as briskly. In October, as rumors of
serious problems in Asian markets began to circulate, the Dow Jones Industrial
Average experienced the largest one-day decline in its history, 554 points.
Again, within days, the market recovered. Nevertheless, the market's
increasing volatility dampened a good deal of enthusiasm for stocks, and many
investors took a new look at the fixed-income markets. Already benefiting from
a slowing economy and declining interest rates, the bond market moved even
higher with the shift in sentiment. And, with reports of turmoil in the Asian
financial markets dominating the headlines and the airwaves as the year drew
to a close, investors focused their attention on quality and safety. As a
result, high-quality investment-grade bonds did particularly well in the
closing months of the year.
A BANNER YEAR FOR BONDS?
Moreover, given the current environment, the year ahead may be a very good one
for the fixed-income markets. Currently, there is evidence that some Asian
investors are moving money into the more stable U.S. financial markets--in
particular, the U.S. fixed-income markets. But even more to the liking of bond
investors is the fact that the "Asian Flu" is likely to dampen growth in
markets worldwide--and, among them the United States. A slower economy will
further pressure interest rates downward and perhaps increase deflationary,
rather than any inflationary trends. This, coupled with the first federal
budget surpluses seen in several decades, would create a very favorable
environment for bonds.
THE ASIAN WILD CARD
What is good for bonds, however, may not be all that good for stocks. While it
is difficult to predict precisely how the situation in Asian markets will play
out, there are several likely scenarios. First and foremost among them is the
thought that, with their manufacturing capacity hitting all-time highs and
their financial markets in disarray, Asian marketers will be looking for
places to sell their products in the months ahead. The strongest, healthiest
economy in the world at the moment is the United States. More than likely,
this is the first place many will turn, and most are expected to price their
products very aggressively. Such a move would squeeze U.S. corporations'
margins and, in turn, impact corporate profits and further slow the economy.
-1-
<PAGE>
The truth of the matter is, of course, that no one can precisely predict what
the effect of the "Asian Flu" will be. Nonetheless, while the stock market may
be more volatile in the months ahead, we do not believe that a major recession
is just over the horizon. The underlying fundamentals of our economy remain
very strong. Moreover, beyond the immediate future, the long-term prospects for
both the stock and bond markets are still very bright--and historically, those
who invest with a long-term perspective have reaped far greater rewards than
those who invest based on short-term forecasts.
IN CLOSING. . .
In the pages that follow, you will find a detailed discussion on the
performance of each of The Riverside Capital Funds of The Sessions Group during
the six months ended December 31, 1997. We urge you to read this material
closely.
Finally, we thank you for your continued confidence in us. As always, if you
have any questions or require any assistance, please do not hesitate to call us
at 1-800-8-RIVER-6.
Sincerely,
/s/ Walter B. Grimm
Walter B. Grimm
Chairman
The Sessions Group
THE RIVERSIDE CAPITAL FUNDS ARE NOT FDIC INSURED AND ARE NOT DEPOSITS OF, OR
ENDORSED OR GUARANTEED BY, NATIONAL BANK OF COMMERCE OR ANY OF ITS AFFILIATES.
INVESTMENT PRODUCTS INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE RISK OF
PRINCIPAL.
-2-
<PAGE>
THE PORTFOLIOS
THE RIVERSIDE CAPITAL VALUE EQUITY FUND
Investors were nervous during the six months ended December 31, 1997 and, often
times very emotional. On rumors that corporate earnings were slowing, stocks
took a dive in August. In October, tremors in Asian markets triggered a sell-
off. In both cases, the market recovered quickly--and, in each case, as it did,
investors showed a clear preference for quality value stocks. Financial
services company stocks did particularly well. Heavily weighted in this area,
the Fund benefited handsomely from the popularity of holdings like HF Ahmanson
(3.2% of the Fund's assets), the Travelers Group (5.2%) and UNUM Corp. (5.0%).
Holdings in the energy and oil services sectors, like BJ Services (3.4%) and
Pride International, Inc. (2.3%), also made substantial gains. As a result,
despite the volatile environment of the period, the Fund beat its industry
benchmark by a substantial margin. For the six months ended December 31, 1997,
it posted a total return of 15.78%* (without sales load), versus a 10.58% total
return for the S&P 500 over the same period.
COMPARISON SHOPPING
Given the high level of public interest in stocks, their lofty valuations and
the continuing tug of war between long-term and short-term investors, the stock
market may be increasingly volatile in the year ahead. Consequently, we will
continue to approach the market very cautiously. As always, we will look for
opportunities to sell holdings in companies we feel are too richly valued.
At the same time, we will continue to seek out and invest in "good companies at
good prices," (i.e., high-quality companies selling at a discount to their
intrinsic value). Given valuations at this point, such values are hard to find.
Nonetheless, any correction or decline should create a number of very
attractive opportunities, and we will make every effort to capitalize on them
as they arise.
As of December 31, 1997, the top five holdings in the Fund's portfolio were
Travelers, Inc. (5.2%), Unum Corporation (5.0%), Century Telephone (4.5%),
Safety Kleen (4.0%) and Hancock Fabrics (4.0%).**
*The Fund's total return, with the maximum 4.50% sales charge, was 10.58% for
the same period.
**The composition of the Fund's portfolio is subject to change.
Past performance is not predictive of future results. The value of shares in
the Riverside Capital Value Equity Fund will fluctuate, so that the shares,
when redeemed, may be worth more or less than their original cost.
-3-
<PAGE>
THE RIVERSIDE CAPITAL GROWTH FUND+
Despite an increasingly volatile environment, the Fund performed well during
the six months ended December 31, 1997. During the period, investors clearly
preferred the safety and liquidity of larger capitalization stocks. With just
over 75% of our assets invested in this area, the Fund did very well indeed.
For the period, the Fund produced a total return of 11.20% (without sales
load).*
Performance was enhanced by our holdings in the financial sector: AIG (2.7% of
the Fund assets) and NationsBank (2.9%) made substantial gains. Pharmaceutical
stocks like Schering Plough (3.1%) and Abbott Labs (2.9%), as well as
retailing stocks like Home Depot (4.0%) and Wal-Mart Stores (2.8%), also made
substantial contributions. The Fund's standout performer, however, was a
small-cap telecommunications company: World Access (2.8%), which gained some
300% over the course of 1997, a year when small-cap stocks in general wilted
in the shadow of larger capitalization stocks.
SMALL CAP OPPORTUNITIES ABOUND
Looking ahead, many expect to see corporate earnings slow in the coming year.
While in general, this may in fact be the case, we are somewhat more
optimistic with regard to our own holdings. While earnings may not increase at
the rapid pace of the recent past, we do expect to see price gains in the
coming year.
In addition, we believe that the small-cap sector now offers investors some
very attractive opportunities. Over the past year, many small-capitalization
companies experienced astonishing growth in revenues and earnings. Yet,
because liquidity and safety were paramount concerns of investors, these gains
were overlooked and unappreciated. Consequently, in the coming months, we
expect to seek out and capitalize on many of these opportunities.
As of December 31, 1997, the top five holdings in the Fund's portfolio were
General Electric Co. (4.4%), Philip Morris Companies, Inc. (4.5%), Coca-Cola
Co. (3.1%), Home Depot, Inc. (4.0%) and Intel Corporation (3.3%).**
+Small-cap funds typically carry additional risks since smaller companies
generally have a higher risk of failure. Historically, stocks of smaller
companies have experienced a greater degree of market volatility than stocks
on average.
*The Fund's total return, with the maximum 4.50% sales charge, was 6.17% for
the same period.
**The composition of the Fund's portfolio is subject to change.
Past performance is not predictive of future results. The value of shares in
the Riverside Capital Growth Fund will fluctuate, so that the shares, when
redeemed, may be worth more or less than their original cost.
-4-
<PAGE>
THE RIVERSIDE CAPITAL TENNESSEE
MUNICIPAL OBLIGATIONS FUND
Throughout the period, demand for municipal securities remained very strong,
and with municipalities reluctant to authorize new spending, supply remained
tight. Moreover, in the falling rate environment, what new issues were tended
were refinanced. In high-quality markets like Tennessee, the result was a very
firm and relatively quiet market. Focused on high-quality securities with
long-term maturities, the Fund performed well in the environment. For the six
months ended December 31, 1997, the Fund produced a total return of 4.64%
(without sales load).*
Clearly, the uncertainty in Asian markets has fueled investors' interest in
fixed-income securities, and we expect this interest to increase further in
the coming years. As much as the baby-boomers have enjoyed the stock market's
rise, they are realizing that double-digit returns on stocks will not continue
indefinitely. And, as they move closer to retirement, their tolerance for risk
is likely to decrease and their appreciation of tax-free returns is likely to
increase.
As of December 31, 1997, the Fund had approximately 50 issues, 20% of which
are issued from states other than Tennessee. The average maturity of the Fund
was 8.2 years; the credit quality of its holdings ranged from A to AAA.**
*The Fund's total return, with the maximum 3.00% sales charge, was 1.48% for
the same period.
**The composition of the Fund's portfolio is subject to change.
Past performance is not predictive of future results. The value of shares in
The Riverside Capital Tennessee Municipal Obligations Fund will fluctuate, so
that the shares, when redeemed, may be worth more or less than their original
cost.
-5-
<PAGE>
THE RIVERSIDE CAPITAL FIXED INCOME FUND
After years of laboring in the shadow of a skyrocketing stock market, the bond
market came into its own during the six months ended December 31, 1997.
Interest rates peaked in the spring and throughout the summer, and then
drifted downward as inflation hit the lowest levels in decades, the economy
showed signs of slowing despite robust job growth, and rumors of a federal
budget surplus began to surface. Then, in early October, as events in Asia
unfolded, long-term rates responded rapidly and dipped below six percent.
As a result, bonds in general performed well over the period as sentiment grew
more positive daily. More specifically, high-quality investment-grade bonds
did extremely well as investors moved into the marketplace and, given the
uncertain environment, sought quality and safety.
We expect the months ahead to be good ones for the bond market. As events have
unfolded in Asia, it has become clear that the situation will take some time
to play itself out. While it is unclear just how the U.S. economy will be
impacted, it is apparent that we will see some slowing of growth as a result,
which would put further downward pressure on rates. This situation, coupled
with the fact that the federal government may produce a budget surplus for the
first time since the 1960's, should create a very positive environment for
fixed-income investments.
Heavily weighted in government securities, which offer competitive yields with
less credit risk than corporate bonds, the Riverside Capital Fixed Income Fund
benefited as investors fled to quality. As a result, for the six months ended
December 31, 1997, the Fund produced a total return of 3.52% (without sales
load).*
Given the uncertain environment, we expect to continue to approach the
marketplace cautiously in the coming months. No major changes in the Fund's
maturity or credit structure are anticipated. As of December 31, 1997, the
average maturity of the Fund's holdings was 4.2 years. With over 45.8% of its
assets invested in U.S. government securities, the average credit quality of
holdings in the Fund was AAA.**
*The Fund's total return, with the maximum 3.00% sales charge, was 0.40% for
the same period.
**The composition of the Fund's portfolio is subject to change.
Past performance is not predictive of future results. The value of shares in
The Riverside Capital Fixed Income Fund will fluctuate, so that the shares,
when redeemed, may be worth more or less than their original cost.
-6-
<PAGE>
THE RIVERSIDE CAPITAL MONEY MARKET FUND
The economy and employment continued to rise during summer and early fall, but
inflationary pressures did not materialize. Consequently, what remaining fears
there were about inflation evaporated, investors relaxed, and rates began to
trend lower. Then, when the first indications of trouble in Asia were felt in
October, the short-term markets grew somewhat choppier.
Conservatively positioned throughout the period, the Fund's assets were
invested in the highest quality short-term investments available, U.S.
Government agency securities and repurchase agreements collateralized by U.S.
Government securities. The average maturity of the Fund's holdings ranged
between 33 and 40 days throughout the six months ended December 31, 1997.
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government. Yields will fluctuate, and there can be no assurance that the Fund
will be able to maintain a stable net asset value of $1 per share.
This material is authorized for distribution to prospective investors only
when preceded or accompanied by a prospectus.
For more information, including charges and expenses, call 1-800-8-RIVER-6 to
receive a prospectus, which should be read carefully before you invest or send
money. The Riverside Capital Funds are distributed by BISYS Fund Services. The
composition of the Funds' holdings is subject to change.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, NATIONAL BANK OF COMMERCE OR ANY OF ITS AFFILIATES, AND SHARES
ARE NOT FEDERALLY INSURED BY THE FDIC OR ANY OTHER AGENCY. AN INVESTMENT IN
SHARES OF THE FUNDS INVOLVES THE POSSIBLE LOSS OF PRINCIPAL.
- -------------------------------------------------------------------------------
-7-
<PAGE>
TABLE OF CONTENTS
Statements of Assets and Liabilities
Page 9
Statements of Operations
Page 11
Statements of Changes in Net Assets
Page 13
Schedules of Portfolio Investments
Page 15
Notes to Financial Statements
Page 25
Financial Highlights
Page 31
-8-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MONEY VALUE
MARKET EQUITY GROWTH
FUND FUND FUND
------------ ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments, at value (cost
$20,378,844; $53,088,459; and
$12,971,209, respectively)......... $ 20,378,844 $80,916,520 $24,891,963
Repurchase agreements (cost
$95,000,000; $2,445,550; and
$10,554,521, respectively)......... 95,000,000 2,445,550 10,554,521
------------ ----------- -----------
Total Investments................. 115,378,844 83,362,070 35,446,484
Cash................................ 716 -- --
Interest and dividends receivable... 90,314 118,780 56,083
Receivable for capital shares
issued............................. -- -- 239
Receivable for investments sold..... -- 2,594,337 4,621,267
Prepaid expenses.................... 4,408 2,225 1,489
------------ ----------- -----------
Total Assets...................... 115,474,282 86,077,412 40,125,562
------------ ----------- -----------
LIABILITIES:
Cash Overdraft...................... -- -- 56,466
Dividends payable................... 431,548 -- --
Accrued expenses and other payables:
Investment advisory fees.......... 1,103 2,098 384
Administration fees............... 3,152 2,293 1,075
Administrative services fees...... 23,359 5,908 3,423
12b-1 fees........................ 3,808 14,614 6,285
Custodian fees.................... 4,079 3,981 882
Accounting fees................... 14 -- --
Trustees' fees.................... -- 149 --
Legal fees........................ 11,604 6,693 4,045
Audit fees........................ 17,333 11,297 4,877
Printing fees..................... 17,760 9,282 7,391
Transfer agent fees............... 313 5,638 2,060
Registration and filing fees...... 755 947 179
Other liabilities................. 2,135 2,084 913
------------ ----------- -----------
Total Liabilities................. 516,963 64,984 87,980
------------ ----------- -----------
NET ASSETS:
Capital............................. 115,246,025 56,578,625 25,094,565
Undistributed net investment income. -- (3,064) 12,155
Net unrealized appreciation on
investments........................ -- 27,828,061 11,920,754
Accumulated undistributed net
realized gains (losses) on
investment transactions............ (288,706) 1,608,806 3,010,108
------------ ----------- -----------
Net Assets........................ $114,957,319 $86,012,428 $40,037,582
============ =========== ===========
Outstanding units of beneficial
interest (shares).................. 114,961,570 5,306,680 2,241,403
============ =========== ===========
Net asset value--redemption price
per share.......................... $ 1.00 $ 16.21 $ 17.86
============ =========== ===========
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) $ 16.97 $ 18.70
============ =========== ===========
</TABLE>
- --------
(a) Offering price and redemption price are the same for the Money Market Fund.
See notes to financial statements.
-9-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
TENNESSEE
FIXED MUNICIPAL
INCOME OBLIGATIONS
FUND FUND
----------- -----------
<S> <C> <C>
ASSETS:
Investments, at value (cost $16,826,430 and
$17,153,$99, respectively).......................... $17,163,965 $17,894,069
Repurchase agreements (cost $4,827,526 and $0,
respectively)....................................... 4,827,526 --
----------- -----------
Total Investments.................................. 21,991,491 17,894,069
Interest and dividends receivable.................... 294,370 393,664
Prepaid expenses..................................... 904 7,525
----------- -----------
Total Assets....................................... 22,286,765 18,295,258
----------- -----------
LIABILITIES:
Payable for investments purchased.................... -- 375,000
Accrued expenses and other payables:
Investment advisory fees........................... 396 2,578
Administration fees................................ 608 489
Administrative services fees....................... 3,541 1,233
12b-1 fees......................................... 1,968 3,169
Custodian fees..................................... 4,566 --
Accounting fees.................................... 813 1,830
Organizational costs............................... -- 1,467
Legal fees......................................... 9,361 5,251
Audit fees......................................... 257 2,612
Transfer agent fees................................ 3,451 2,744
Printing fees...................................... 3,352 2,608
Other liabilities.................................. 910 850
----------- -----------
Total Liabilities.................................. 29,223 399,831
----------- -----------
NET ASSETS:
Capital.............................................. 28,674,718 18,174,786
Undistributed net investment income.................. (47,562) (31,251)
Net unrealized appreciation on investments........... 337,535 740,770
Accumulated undistributed net realized losses on
investment transactions............................. (6,707,149) (988,878)
----------- -----------
Net Assets......................................... $22,257,542 $17,895,427
=========== ===========
Outstanding units of beneficial interest (shares).... 2,552,889 1,767,518
=========== ===========
Net asset value--redemption price per share.......... $ 8.72 $ 10.12
=========== ===========
Maximum Sales Charge................................. 3.00% 3.00%
=========== ===========
Maximum Offering Price (100%/(100%--Maximum Sales
Charge) of net asset value adjusted to nearest cent)
per share........................................... $ 8.99 $ 10.43
=========== ===========
</TABLE>
See notes to financial statements.
-10-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MONEY VALUE
MARKET EQUITY GROWTH
FUND FUND FUND
---------- ----------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income......................... $3,870,702 $ 70,625 $ 59,375
Dividend income......................... -- 859,166 363,572
---------- ----------- ----------
Total Income............................ 3,870,702 929,791 422,947
---------- ----------- ----------
EXPENSES:
Investment advisory fees................ 246,109 387,382 202,525
Administration fees..................... 140,634 86,498 40,505
Administrative services fees............ 175,793 108,123 50,631
12b-1 fees.............................. 175,793 108,123 50,631
Custodian fees.......................... 14,168 7,544 1,656
Accounting fees......................... 15,664 10,846 11,030
Legal fees.............................. 26,864 552 552
Audit fees.............................. 16,744 8,832 4,600
Trustees' fees and expenses............. 3,128 1,104 920
Transfer agent fees..................... 18,768 19,688 12,157
Interest expense........................ 7,673 -- --
Registration and filing fees............ 368 2,576 1,656
Printing costs.......................... 6,089 3,533 5,001
Other expenses.......................... 2,391 1,288 552
---------- ----------- ----------
Total Expenses.......................... 850,186 746,089 382,416
Less: Fee waivers....................... (147,666) (90,823) (180,937)
---------- ----------- ----------
Net Expenses............................ 702,520 655,266 201,479
---------- ----------- ----------
Net Investment Income................... 3,168,182 274,525 221,468
---------- ----------- ----------
REALIZED/UNREALIZED GAINS (LOSSES) ON
INVESTMENTS:
Net realized gains (losses) on
investment transactions................. (519,446) 4,492,922 4,901,413
Change in unrealized
appreciation/depreciation on
investments............................. -- 7,591,459 (905,698)
---------- ----------- ----------
Net realized/unrealized gains (losses)
on investments.......................... (519,446) 12,084,381 3,995,715
---------- ----------- ----------
Change in net assets resulting from
operations.............................. $2,648,736 $12,358,906 $4,217,183
========== =========== ==========
</TABLE>
See notes to financial statements.
-11-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
TENNESSEE
FIXED MUNICIPAL
INCOME OBLIGATIONS
FUND FUND
-------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Interest income........................................ $662,037 $532,843
Dividend income........................................ 5,967 3,419
-------- --------
Total Income........................................... 668,004 536,262
-------- --------
EXPENSES:
Investment advisory fees............................... 62,217 61,651
Administration fees.................................... 19,144 18,221
Administrative services fees........................... 23,930 22,776
12b-1 fees............................................. 23,930 22,776
Custodian fees......................................... 16,016 1,722
Accounting fees........................................ 11,306 17,344
Legal fees............................................. 7,084 --
Audit fees............................................. 1,686 2,208
Organization costs..................................... -- 4,600
Trustees' fees and expenses............................ 552 368
Transfer agent fees.................................... 12,696 10,672
Interest expense....................................... 764 --
Registration and filing fees........................... 736 552
Printing costs......................................... 1,012 920
Other expenses......................................... 276 368
-------- --------
Total Expenses......................................... 181,349 164,178
Less: Fee waivers...................................... (20,101) (67,913)
-------- --------
Net Expenses........................................... 161,248 96,265
-------- --------
Net Investment Income.................................. 506,756 439,997
-------- --------
REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) on investment transactions. (97,342) 118,381
Change in unrealized appreciation/depreciation on
investments............................................ 240,382 266,954
-------- --------
Net realized/unrealized gains (losses) on investments.. 143,040 385,335
-------- --------
Change in net assets resulting from operations......... $649,796 $825,332
======== ========
</TABLE>
See notes to financial statements.
-12-
<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 FOR THE SIX MONTHS FOR THE YEAR SIX MONTHS FOR THE
ENDED YEAR ENDED ENDED ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997 1997 1997
------------- ------------- ------------ ------------ ------------ -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income.... $ 3,168,182 $ 5,981,680 $ 274,525 $ 465,744 $ 221,468 $ 352,994
Net realized gains
(losses) on investments
transactions............ (519,446) (4,905) 4,492,922 8,840,538 4,901,413 1,370,108
Net change in unrealized
appreciation/depreciation
on investments.......... -- -- 7,591,459 6,722,105 (905,698) 7,020,864
------------- ------------- ----------- ------------ ----------- -----------
Change in net assets
resulting from
operations.............. 2,648,736 5,976,775 12,358,906 16,028,387 4,217,183 8,743,966
------------- ------------- ----------- ------------ ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income.................. (3,168,182) (5,981,680) (345,792) (504,356) (219,263) (354,568)
From net realized gains
on investments.......... -- -- (8,393,151) (10,634,101) (3,261,413) (934,819)
------------- ------------- ----------- ------------ ----------- -----------
Change in net assets from
shareholder
distributions........... (3,168,182) (5,981,680) (8,738,943) (11,138,457) (3,480,676) (1,289,387)
------------- ------------- ----------- ------------ ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued.................. 157,803,785 364,918,577 559,810 4,195,632 1,028,844 2,745,588
Dividends reinvested..... 144,769 336,522 4,443,401 5,098,769 1,694,545 568,918
Cost of shares redeemed.. (182,920,606) (359,396,813) (2,175,128) (15,675,083) (827,728) (7,131,040)
------------- ------------- ----------- ------------ ----------- -----------
Change in net assets from
capital transactions.... (24,972,052) 5,858,286 2,828,083 (6,380,682) 1,895,661 (3,816,534)
------------- ------------- ----------- ------------ ----------- -----------
Capital contribution..... 274,469 175,344 -- -- -- --
------------- ------------- ----------- ------------ ----------- -----------
Change in net assets..... (25,217,029) 6,028,725 6,448,046 (1,490,752) 2,632,168 3,638,045
NET ASSETS:
Beginning of period...... 140,174,348 134,145,623 79,564,382 81,055,134 37,405,414 33,767,369
------------- ------------- ----------- ------------ ----------- -----------
End of period............ $ 114,957,319 $ 140,174,348 $86,012,428 $ 79,564,382 $40,037,582 $37,405,414
============= ============= =========== ============ =========== ===========
SHARE TRANSACTIONS:
Issued................... 157,530,351 364,918,578 32,917 290,948 55,579 182,434
Reinvested............... 144,769 336,522 278,044 370,120 94,110 38,111
Redeemed................. (182,920,606) (359,396,813) (127,301) (1,111,533) (44,438) (493,776)
------------- ------------- ----------- ------------ ----------- -----------
Change in shares......... (25,245,486) 5,858,287 183,660 (450,465) 105,251 (273,231)
============= ============= =========== ============ =========== ===========
</TABLE>
See notes to financial statements.
-13-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TENNESSEE MUNICIPAL
FIXED INCOME FUND OBLIGATIONS FUND
-------------------------- -------------------------
SIX MONTHS FOR THE SIX MONTHS FOR THE
ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1997 1997 1997 1997
------------ ------------ ------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income.... $ 506,756 $ 1,547,129 $ 439,997 $ 999,770
Net realized gains
(losses) on investments
transactions............ (97,342) (434,866) 118,381 101,371
Net change in unrealized
appreciation/depreciation
on investments.......... 240,382 79,144 266,954 231,707
----------- ------------ ----------- -----------
Change in net assets
resulting from
operations.............. 649,796 1,191,407 825,332 1,332,848
----------- ------------ ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income.................. (589,599) (1,546,955) (513,019) (974,115)
----------- ------------ ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued.................. 5,012,055 789,954 431,053 893,164
Dividends reinvested..... 334,444 725,558 157,176 298,374
Cost of shares redeemed.. (1,375,933) (11,930,394) (1,357,475) (2,234,999)
----------- ------------ ----------- -----------
Change in net assets from
capital transactions.... 3,970,566 (10,414,882) (769,246) (1,043,461)
----------- ------------ ----------- -----------
Capital contribution..... 0 3,084,688 -- --
----------- ------------ ----------- -----------
Change in net assets..... 4,030,763 (10,620,430) (456,933) (684,728)
NET ASSETS:
Beginning of period...... 18,226,779 28,847,209 18,352,360 19,037,088
----------- ------------ ----------- -----------
End of period............ $22,257,542 $ 18,226,779 $17,895,427 $18,352,360
=========== ============ =========== ===========
SHARE TRANSACTIONS:
Issued................... 573,508 90,153 43,041 90,725
Reinvested............... 38,406 82,987 15,628 30,318
Redeemed................. (158,044) (1,364,087) (135,069) (226,674)
----------- ------------ ----------- -----------
Change in shares......... 453,870 (1,190,947) (76,400) (105,631)
=========== ============ =========== ===========
</TABLE>
See notes to financial statements.
-14-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
----------- --------------------------------------------------- ------------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES (17.7%):
Federal Home Loan Bank:
$20,397,000 Discount Note, 1/9/98.............................. $ 20,378,844
------------
Total U.S. Government Agencies 20,378,844
------------
REPURCHASE AGREEMENTS (82.7%):
10,000,000 C.S. First Boston Corp., dated 12/3/97, 5.70%,
matures 1/2/98, Proceeds at maturity $10,047,500
(Collateralized by $10,000,000 Federal National
Mortgage Association, 5.61%, 5/14/98, Market Value
= $10,073,242).................................... 10,000,000
10,200,000 C.S. First Boston Corp., dated 12/29/97, 6.25%,
matures 1/2/98, Proceeds at maturity $10,207,083
(Collateralized by $10,000,000 Federal Home Loan
Mortgage Corporation, 8.00%, 4/9/07, Market Value
= $10,240,222).................................... 10,200,000
14,000,000 C.S. First Boston Corp., dated 12/29/97, 6.25%,
matures 1/2/98, Proceeds at maturity $14,009,722
(Collateralized by $13,680,000 Federal National
Mortgage Association, 6.29%, 8/7/02, Market Value
= $14,070,701).................................... 14,000,000
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
----------- ------------------------------------------------- ------------
<C> <S> <C>
REPURCHASE AGREEMENTS, CONTINUED:
$25,125,000 C.S. First Boston Corp., dated 12/29/97, 6.25%,
matures 1/2/98, Proceeds at maturity $25,142,448
(Collateralized by $25,000,000 Federal National
Mortgage Association, 6.40%, 11/4/02, Market
Value = $25,303,333)............................ $ 25,125,000
25,687,500 C.S. First Boston Corp., dated 12/29/97, 6.25%,
matures 1/2/98, Proceeds at maturity $25,705,339
(Collateralized by $25,000,000 Federal Home Loan
Bank, 7.34%, 8/27/07, Market Value =
$25,757,056).................................... 25,687,500
9,987,500 C.S. First Boston Corp., dated 12/29/97, 6.25%,
matures 1/2/98, Proceeds at maturity $9,994,436
(Collateralized by $10,000,000 Federal Home Loan
Bank, 6.21%*, 6/11/07, Market Value =
$10,035,211).................................... 9,987,500
------------
Total Repurchase Agreements 95,000,000
------------
Total Investments (Amortized Cost $115,378,844) (a)--100.4% 115,378,844
Liabilities in excess of other assets (0.4)% (420,490)
------------
TOTAL NET ASSETS--100.0% $114,958,354
============
</TABLE>
- ------
(a) Cost for federal income tax and financial reporting purposes are the same.
* Floating Rate Certificates are securities with interest rates that change
whenever a specific interest rate changes. 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,
1997.
See notes to financial statements.
-15-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL VALUE EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (94.1%):
Aerospace (0.1%):
1,346 Raytheon Co. Class A................................... $ 66,352
-----------
Automotive Parts (3.2%):
76,650 Echlin, Inc............................................ 2,773,772
-----------
Chemicals--Specialty (1.1%):
22,000 Great Lakes Chemical Corp.............................. 987,250
-----------
Computers & Peripherals (3.3%):
26,900 International Business Machines Corp................... 2,812,731
-----------
Diversified Products (2.3%):
39,550 Aeroquip-Vickers Inc................................... 1,940,422
-----------
Electrical Equipment (2.5%):
44,835 Thomas & Betts Corp.................................... 2,118,454
-----------
Food Processing & Packaging (4.5%):
53,200 J & J Snack Foods Corp. (b)............................ 871,150
105,800 McCormick & Company, Inc............................... 2,962,400
-----------
3,833,550
-----------
Insurance (16.4%):
100,652 PXRE Corp.............................................. 3,340,388
49,800 SunAmerica, Inc........................................ 2,128,950
82,199 Travelers Group, Inc................................... 4,428,470
78,200 UNUM Corp.............................................. 4,252,125
-----------
14,149,933
-----------
Machinery (2.6%):
130,000 Global Industries Technology, Inc. (b)................. 2,201,875
-----------
Machinery & Equipment (2.0%):
28,000 Case Corp.............................................. 1,692,250
-----------
Manufactured Housing (1.4%):
42,600 Skyline Corp........................................... 1,171,500
-----------
Metal & Mineral Production (2.4%):
44,900 Cleveland Cliffs, Inc.................................. 2,056,981
-----------
Motor Vehicles (4.7%):
56,000 Ford Motor Co.......................................... 2,726,500
21,100 General Motors Corp.................................... 1,279,188
-----------
4,005,688
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Oil & Gas (5.6%):
76,000 Pride International Inc................................ $ 1,919,000
91,180 Valero Energy Corp..................................... 2,866,471
-----------
4,785,471
-----------
Oilfield Equipment & Services (3.4%):
40,750 BJ Services Co. (b).................................... 2,931,453
-----------
Pollution Control Services & Equipment (4.0%):
126,500 Safety-Kleen Corp...................................... 3,470,844
-----------
Real Estate Investment Trusts (7.5%):
157,500 Equity Inns, Inc....................................... 2,323,125
67,700 Mid-America Apartment Communities, Inc................. 1,933,681
57,710 Storage USA, Inc....................................... 2,304,793
-----------
6,561,599
-----------
Restaurants (3.2%):
221,750 Darden Restaurants, Inc................................ 2,771,875
-----------
Retail (4.0%):
239,100 Hancock Fabrics, Inc................................... 3,466,950
-----------
Savings & Loan Companies (3.2%):
41,400 H. F. Ahmanson & Co.................................... 2,771,213
-----------
Steel (2.9%):
160,000 Birmingham Steel Corp.................................. 2,520,000
-----------
Telecommunications (4.5%):
77,000 Century Telephone Enterprise........................... 3,835,563
-----------
Tobacco & Tobacco Products (2.8%):
64,500 UST, Inc............................................... 2,382,469
-----------
Toys (2.9%):
80,000 Hasbro, Inc............................................ 2,520,000
-----------
Trucking (3.6%):
150,650 Werner Enterprises, Inc................................ 3,088,325
-----------
Total Common Stocks 80,916,520
-----------
</TABLE>
Continued
-16-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL VALUE EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
REPURCHASE AGREEMENTS (2.8%):
2,445,550 Merrill Lynch Securities, Inc., Dated 12/31/97, 5.50%,
Matures 1/2/98, Proceeds at maturity $2,446,297,
(Collateralized by $2,480,000 U.S. Treasury Notes,
5.63%, 10/31/99, Market Value = $2,499,632).......... $ 2,445,550
-----------
Total Repurchase Agreements 2,445,550
-----------
Total Investments (Cost--$55,534,009)(a)--96.9% 83,362,070
Other assets in excess of liabilities 3.1% 2,650,358
-----------
Total Net Assets--100.0% $86,012,428
===========
</TABLE>
- ------
(a) Represents cost for federal income tax purposes and financial reporting and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation...................................... $28,974,472
Unrealized depreciation...................................... (1,146,411)
-----------
Net unrealized appreciation.................................. $27,828,061
===========
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements.
-17-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ------------------------------------------------------ -----------
<C> <S> <C>
COMMON STOCKS (62.1%):
Amusement & Recreation (2.3%):
36,000 Cedar Fair L.P........................................ $ 931,500
-----------
Banking (2.9%):
19,000 NationsBank Corp...................................... 1,155,438
-----------
Beverages (3.1%):
18,800 Coca-Cola Co.......................................... 1,252,550
-----------
Computers & Peripherals (2.3%):
15,000 Hewlett Packard Co.................................... 937,500
-----------
Electrical Component (2.2%):
15,500 Motorola, Inc......................................... 884,469
-----------
Electrical Equipment (4.4%):
24,000 General Electric Co................................... 1,761,000
-----------
Energy (2.0%):
24,000 Ensco International, Inc.............................. 804,000
-----------
Food Processing & Packaging (0.1%):
1,000 Sara Lee Corp......................................... 56,313
-----------
Household Products/Wares (2.8%):
14,000 Procter & Gamble Co................................... 1,117,375
-----------
Insurance (2.7%):
10,000 American International Group, Inc..................... 1,087,500
-----------
Office Equipment & Supplies (1.9%):
8,400 Pitney Bowes, Inc..................................... 755,475
-----------
Oil--Integrated Companies (5.3%):
14,800 Atlantic Richfield Co................................. 1,185,850
17,000 Texaco, Inc........................................... 924,375
-----------
2,110,225
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ------------------------------------------------------ -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Pharmaceuticals (6.0%):
17,500 Abbott Laboratories................................... $ 1,147,344
20,000 Schering-Plough Corp.................................. 1,242,499
-----------
2,389,843
-----------
Real Estate Investment Trusts (2.7%):
27,300 Storage USA, Inc...................................... 1,090,294
-----------
Restaurants (2.1%):
25,000 Cracker Barrel Old Country Store, Inc................. 834,375
-----------
Retail (6.8%):
27,000 Home Depot, Inc....................................... 1,589,624
29,000 Wal-Mart Stores, Inc.................................. 1,143,688
-----------
2,733,312
-----------
Semiconductors (3.3%):
18,800 Intel Corp............................................ 1,320,700
-----------
Telecommunications--Equipment (2.8%):
47,000 World Access, Inc. (b)................................ 1,122,125
-----------
Tobacco (4.5%):
39,600 Philip Morris Cos., Inc............................... 1,794,375
-----------
Toys & Bicycles--Manufacturing (1.9%):
20,000 Mattel, Inc........................................... 745,000
-----------
Total Common Stocks 24,883,369
-----------
INVESTMENT COMPANIES (0.0%):
4,297 Dreyfus Treasury Prime Fund........................... 4,297
4,297 Riverside Capital Money Market Fund................... 4,297
-----------
Total Investment Companies 8,594
-----------
</TABLE>
Continued
-18-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ---------------------------------------------------- -----------
<C> <S> <C>
REPURCHASE AGREEMENTS (26.4%):
10,554,521 Merrill Lynch Securities, Inc., Dated 12/31/97,
6.35%, Matures 1/2/98, Proceeds at maturity
$10,558,245, (Collateralized by $10,415,000 U.S.
Treasury Notes, 6.50%, 5/31/02, Market Value =
$10,759,067)....................................... $10,554,521
-----------
Total Repurchase Agreements 10,554,521
-----------
Total Investments
(Cost--$23,525,730)(a)--88.5% 35,446,484
Other assets in excess of liabilities--11.5% 4,591,098
-----------
Total Net Assets--100.0% $40,037,582
===========
</TABLE>
- ------
(a) Represents cost for federal income tax purposes and financial reporting and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation...................................... $11,939,718
Unrealized depreciation...................................... (18,964)
-----------
Net unrealized appreciation.................................. $11,920,754
===========
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements.
-19-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FIXED INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
CORPORATE BONDS (12.2%):
Industrial Goods & Services (7.1%):
1,600,000 Voyager Lines Private Placement, 9.50%, 11/1/99,
Callable 2/13/98 @ 100 (b), LC Bank of New York, see
note 5............................................... $ 1,600,000
-----------
Transportation & Shipping (5.1%):
1,125,000 Ray & Ross Transport, Inc., 10.00%, 2/1/06, LC Bank of
New York, see note 5................................. 1,125,000
-----------
Total Corporate Bonds 2,725,000
-----------
MUNICIPAL BONDS (5.1%):
California (5.1%):
1,100,000 California State Rural Home Mortgage, 7.25%, 5/1/28... 1,132,769
-----------
Total Municipal Bonds 1,132,769
-----------
TAXABLE MUNICIPAL BONDS (14.6%):
Illinois (0.5%):
102,884 Belleville, St. Clair County, CMO, 7.35%, 11/15/09.... 112,380
-----------
Oklahoma (4.7%):
980,000 Oklahoma County Financial Authority, 8.05%, 10/1/09,
Callable 10/01/03 @103............................... 1,035,693
-----------
Tennessee (3.5%):
745,000 Hamilton County, Tennessee Industrial Development
Board, Multifamily Housing Revenue, Waterford
Apartments, Project A, 8.50%, 8/1/10................. 782,757
-----------
Texas (5.9%):
1,250,000 Texas State Department of Housing & Community, 7.32%,
9/1/14, Callable 9/1/05 @102......................... 1,309,762
-----------
Total Taxable Municipal Bonds 3,240,592
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES (44.9%):
Federal Home Loan Bank: (17.4%):
2,230,000 7.25%, 5/14/04, Callable 5/14/99 @ 100................. $ 2,335,858
1,500,000 6.80%, 9/30/04, Callable 9/30/99 @ 100................. 1,542,150
-----------
3,878,008
-----------
Federal Home Loan Mortgage Corp.: (7.1%):
1,580,000 6.27%, 1/27/04......................................... 1,572,811
-----------
Federal National Mortgage Assoc.: (20.4%):
1,000,000 Medium Term Note, 7.90%, 6/28/06, Callable 6/28/99
@ 100................................................. 1,030,450
1,000,000 6.82%, 12/13/06, Callable 12/13/99 @ 100............... 995,970
2,500,000 Medium Term Note, 7.00%, 7/24/07, Callable 7/24/00
@ 100................................................. 2,531,025
-----------
4,557,445
-----------
Total U.S. Government Agencies 10,008,264
-----------
U.S. TREASURY BONDS (0.3%):
49,000 9.13%, 5/15/09......................................... 57,340
-----------
Total U.S. Treasury Bonds 57,340
-----------
</TABLE>
Continued
-20-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FIXED INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
REPURCHASE AGREEMENTS (21.7%):
4,827,526 Merrill Lynch Securities, Inc., Dated 12/31/97, 5.50%,
Matures 1/2/98, Proceeds at maturity $4,829,001
(Collateralized by $4,890,000 U.S. Treasury Notes,
5.63%, 10/31/99, Market Value = $4,928,710).......... $ 4,827,526
-----------
Total Repurchase Agreements 4,827,526
-----------
Total Investments
(Cost--$21,653,956)(a)--98.8% 21,991,491
Other assets in excess of
liabilities--1.2%.............................................. 266,051
-----------
Total Net Assets--100.0% $22,257,542
===========
</TABLE>
- --------
(a) Represents cost for federal income tax purposes and financial reporting
and differs from value by net unrealized appreciation of securities as
follows:
<TABLE>
<S> <C>
Unrealized appreciation......................................... $339,378
Unrealized depreciation......................................... (1,843)
--------
Net unrealized appreciation..................................... $337,535
========
</TABLE>
(b) Represents a restricted security, purchased under Rule 144A, which is
exempt from registration under the Securities Act of 1933, as amended.
CMO--Collateralized Mortgage Obligations
LC--Letter of Credit
See notes to financial statements.
-21-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL TENNESSEE MUNICIPAL OBLIGATIONS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
MUNICIPAL BONDS (81.5%):
Alabama (2.8%):
$500,000 Daphne Alabama Warrants, GO, 5.13%, 4/1/17, Callable
4/1/07 @ 102......................................... $ 500,595
-----------
Georgia (2.4%):
400,000 Atlanta, Georgia Housing Development Corp., Mortgage
Revenue, 7.00%, 12/1/20, Callable 12/1/05 @ 102...... 437,596
-----------
Puerto Rico (9.1%):
250,000 Puerto Rico CommonWealth, GO, 6.00%, 7/1/14, Callable
7/1/02 @ 101.5....................................... 266,140
500,000 Puerto Rico CommonWealth, GO, 5.38%, 7/1/25, Callable
7/1/07 @ 100......................................... 505,000
600,000 Puerto Rico CommonWealth, GO, 5.40%, 7/1/25, Callable
7/1/06 @ 101.5....................................... 609,132
250,000 Puerto Rico Electric Power Authority, 5.25%, 7/1/21,
Callable 7/1/05 @ 100................................ 251,385
-----------
1,631,657
-----------
Tennessee (67.2%):
5,000 Blount County, Tennessee Health & Educational
Facilities Board Revenue, Multifamily Mortgage,
Maryville Towers Project, 6.20%, 7/20/28, GNMA....... 5,195
400,000 Bristol, Tennessee Health & Educational, 5.25%,
9/1/21, Callable 9/1/03 @ 102........................ 398,360
250,000 Cleveland, Tennessee Water & Sewer, GO, 5.35%, 9/1/23,
Callable 9/1/07 @ 100................................ 252,993
125,000 Dickson County, Tennessee, GO, 5.00%, 4/1/15, Callable
4/1/08 @ 100......................................... 125,070
500,000 Hamilton County, Tennessee Industrial Development
Board Revenue, Multifamily Housing, Park at 58
Project, 6.70%, 3/1/21, Callable 3/1/06 @ 101........ 526,870
250,000 Hamilton County, Tennessee Industrial Development
Board Revenue, Multifamily Housing, Patten Towers,
6.38%, 8/1/26, Callable 8/1/05 @ 102................. 259,138
890,000 Hamilton County, Tennessee Industrial Development
Board Revenue, Multifamily Housing, Waterford Place
Apartments Project, Series B, 6.60%, 2/1/24, FGIC.... 908,805
300,000 Jackson, Tennessee Health, Educational & Housing,
Posthouse Apartments, 7.00%, 5/1/17.................. 319,914
350,000 Knoxville, Tennessee Community Development Corp.,
Clinton Towers Housing Revenue, Multifamily, 6.60%,
10/15/07............................................. 369,908
250,000 Knoxville, Tennessee Community Development Corp.,
Clinton Towers Housing Revenue, Multifamily, 6.65%,
10/15/10............................................. 264,630
115,000 Manchester, Tennessee Water & Sewer Revenue, Series
1992, GO, 6.00%, 7/1/06, AMBAC....................... 118,533
900,000 Maury County Industrial Development Board, PCR, 6.50%,
9/1/24, Callable 9/1/04 @ 102........................ 991,583
245,000 Memphis, Tennessee Health, Educational, & Housing
Facilities Board, Mortgage Revenue, Edgewater Terrace
Project, 7.38%, 1/20/27, FHA, LOC: First Alabama,
Birmingham........................................... 264,022
250,000 Memphis, Tennessee Health, Educational, & Housing
Facilities Board, Multifamily Refunding, River Trace
II-A, 6.45%, 4/1/26.................................. 265,580
340,000 Memphis, Tennessee Referendum GO, 5.60%, 8/1/10....... 369,345
</TABLE>
Continued
-22-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL TENNESSE MUNICIPAL OBLIGATIONS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Tennessee, continued:
$150,000 Memphis, Tennessee, GO, 5.00%, 7/1/12, Callable 7/1/05
@ 101................................................ $ 151,868
750,000 Metropolitan Government Nashville & Davidson County
Health & Educational Facility Board, 5.38%, 7/1/18,
Callable 7/1/07 @ 101................................ 771,067
240,000 Metropolitan Government, Nashville & Davidson County,
Tennessee, GO, 5.13%, 5/15/25, Callable 5/15/07 @
102.................................................. 238,066
45,000 Metropolitan Government, Nashville & Davidson County,
Tennessee Water & Sewer Revenue, 7.00%, 1/1/14....... 45,076
125,000 Metropolitan Nashville & Davidson County Tennessee,
GO, 6.13%, 5/15/19................................... 136,629
375,000 Metropolitan Nashville Airport, 4.95%, 7/1/11,
Callable 7/1/08 @ 102................................ 378,660
150,000 Morristown, Tennessee Housing Development Corp.,
Multifamily Revenue, 6.25%, 5/1/18................... 157,871
725,000 Shelby County, Tennessee Health, Educational & Housing
Facilities Board Revenue, Heritage Place Project B,
7.13%, 7/1/25, MBIA, FHA............................. 824,926
650,000 Shelby County, Tennessee Health, Educational & Housing
Facilities Board Revenue, Multifamily Housing,
Windsor Apartments, 6.75%, 10/1/17................... 688,097
500,000 Shelby County, Tennessee Health, Educational & Housing
Facilities Board Revenue, Trezevant Manor Project,
6.00%, 8/1/16........................................ 514,275
500,000 Shelby County, Tennessee, 6.00%, 4/15/24.............. 508,005
300,000 Shelby County, Tennessee, 6.63%, 7/1/17, Callable
12/1/06 @ 102........................................ 315,084
500,000 Shelby County, Tennessee, 6.75%, 1/1/28, Callable
12/1/06 @ 102........................................ 526,000
500,000 South Fulton, Tennessee Industrial Development
Revenue, 6.35%, 10/1/15, Callable 10/1/05 @102....... 539,050
310,000 South Fulton, Tennessee Industrial Revenue Authority,
6.00%, 10/1/10, Callable 10/1/05 @102................ 334,285
200,000 Tennessee Housing Development Agency, 5.50%, 7/1/17,
Callable 1/1/08 @ 102................................ 202,808
235,000 Tennessee Housing Development Agency, 5.90%, 7/1/18,
Callable 7/1/03 @ 102................................ 243,780
-----------
12,015,493
-----------
Total Municipal Bonds 14,585,341
-----------
ALTERNATIVE MINIMUM TAX PAPER (16.9%):
Tennessee (16.9%):
920,000 Loudon County, Tennessee Industrial Development Board,
Solid Waste Disposal Revenue, Kimberly-Clark Corp.
Project, 6.20%, 2/1/23............................... 979,183
100,000 Memphis Shelby County, Tennessee Airport Revenue,
8.13%, 2/15/12, MBIA................................. 102,476
145,000 Tennessee Housing Development Agency Mortgage, Series
A, 6.90%, 7/1/25, Callable 7/1/04 @ 102.............. 156,190
500,000 Tennessee Housing Development Agency Mortgage, Series
C, 6.10%, 7/1/15, Callable 7/1/05 @ 102.............. 522,345
740,000 Tennessee Housing Development Agency, 7.05%, 7/1/20,
Callable 1/1/05 @ 102................................ 795,433
</TABLE>
Continued
-23-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL TENNESSE MUNICIPAL OBLIGATIONS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Tennessee, continued:
$440,000 Tennessee Housing Development Agency, 6.45%, 7/1/21,
Callable 7/1/05 @ 102................................ $ 468,266
-----------
3,023,893
-----------
Total Alternative Minimum Tax Paper 3,023,893
-----------
INVESTMENT COMPANIES (1.6%):
284,835 Dreyfus Municipal Cash Management Plus Fund........... 284,835
-----------
Total Investment Companies 284,835
-----------
Total Investments (Cost $17,153,299)(a)--100.0%................. 17,894,069
Other assets in excess of liabilities 0.0%...................... 1,358
-----------
Total Net Assets--100.0%........................................ $17,895,427
===========
</TABLE>
- --------
(a) Represents cost for federal income tax purposes and financial reporting
and differs from value by net unrealized appreciation of securities as
follows:
<TABLE>
<S> <C>
Unrealized appreciation.......................................... $742,507
Unrealized depreciation.......................................... 1,737
--------
Net unrealized appreciation...................................... $740,770
========
</TABLE>
AMBAC--AMBAC Imdemnity Corp.
FGIC--Insured by the Financial Guaranty Insurance Corp.
FHA--Insured by the Federal Housing Administration
GNMA--Insured by the Government National Mortgage Assoc.
GO--General Obligation
LOC--Letter of Credit
MBIA--Insured by the Municipal Bond Insurance Assoc.
PCR--Pollution Control Revenue
See notes to financial statements.
-24-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(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"), as an open-end management investment company.
Between the date of organization and the dates of commencement of operations
of the Riverside Capital Money Market Fund, the Riverside Capital Value
Equity Fund, the Riverside Capital Growth Fund, the Riverside Capital Fixed
Income Fund, 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.
The investment objective of the Money Market Fund is to seek current income
with liquidity and stability of principal. The investment objective of the
Value Equity Fund is to seek growth of capital by investing primarily in a
diversified portfolio of common stocks and securities convertible into
common stocks. The investment objective of the Growth Fund is to seek growth
of capital by investing primarily in a diversified portfolio of common
stocks and securities convertible into common stocks. The investment
objective of the Fixed Income Fund is to seek current income as well as
preservation of capital through investment in high grade fixed income
securities. The investment objectives of the Tennessee Municipal Obligations
Fund are to seek (1) income which is exempt from federal income tax and
Tennessee state income tax, although such income may be subject to the
federal alternative minimum tax when received by certain shareholders, and
(2) preservation of capital.
The Group is authorized to issue an unlimited number of shares without par
value. Sales of shares of the Funds may be made to customers of National
Bank of Commerce ("NBC") and its affiliates, to all accounts of
correspondent banks of NBC and to the general public.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by
the Group in the preparation of its financial statements. The policies are
in conformity with generally accepted accounting principles. The preparation
of financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses for the period. Actual results could differ from those estimates.
SECURITIES VALUATION:
Investments of the Money Market Fund are valued at either amortized cost,
which approximates market value. Under the amortized cost method, discount
or premium is amortized on a constant basis to the maturity of the security.
Investments in common and preferred stocks of the Value Equity Fund, the
Growth Fund, the Fixed Income 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 current price in the
principal market (closing sales prices if the principal market is an
exchange) in which such securities are normally traded. Investments in
corporate bonds, municipal securities and U.S. Government securities of the
variable net asset value funds
Continued
-25-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1997
(UNAUDITED)
are valued at their market values determined on the basis of the mean of the
latest bid and asked quotations in the principal market (closing sales
prices if the principal market is an exchange) in which such securities are
normally traded. The variable net asset value funds may also use an
independent pricing service approved by the Board of Trustees to value
certain other securities. 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.
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 borrowing 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 liquid 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 borrowing by the
Funds under the 1940 Act.
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 Federal income tax regulations which may
differ from generally accepted accounting principles. These
Continued
-26-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1997
(UNAUDITED)
differences are primarily due to differing treatments for net operating
losses, expiring capital loss carry forwards, and deferral of certain
losses. The following reclassification has been made to the components of
net assets of the Money Market Fund as of December 31, 1997, 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 amounts of $49,048 and $225,421, respectively.
ORGANIZATION COSTS:
All expenses in connection with each Fund's organization and registration
under the 1940 Act and the Securities Act of 1933 were paid by that Fund.
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).
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
six months ended December 31, 1997 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Value Equity Fund..................................... $ 8,847,856 $17,059,034
Growth Fund........................................... $ 2,293,972 $16,828,781
Fixed Income Fund..................................... $11,955,618 $13,079,579
Tennessee Municipal Obligations Fund.................. $ 5,995,847 $ 5,795,715
</TABLE>
4. RELATED PARTY TRANSACTIONS:
Investment advisory services are provided to the Funds by NBC. Under the
terms of the investment advisory agreement, NBC's fees are computed daily as
a percentage of the average net assets of each 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 and distributor. 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 Ohio serves the Funds as transfer agent and 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 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
Continued
-27-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1997
(UNAUDITED)
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, 1997,
BISYS received $1,039 from commissions earned on sales of shares of the
variable net asset value funds, of which $93 was reallowed to affiliated
broker/dealers.
The Funds may and do invest available cash balances in the Riverside Capital
Money Market Fund.
Fees may be voluntarily reduced to assist the Funds in maintaining more
competitive expense ratios.
Information regarding these transactions is as follows for the six months
ended December 31, 1997:
<TABLE>
<CAPTION>
MONEY VALUE
MARKET EQUITY GROWTH
FUND FUND FUND
------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT ADVISORY
FEES:
Annual fee before .35% 1.00% of 1.00% of
voluntary fee first first
reductions $50 million $50 million
(percentage of average .75% of .75% of
net assets)............ remaining remaining
Voluntary fee
reductions............. -- -- $131,641
ADMINISTRATION FEES:
Annual fee before
voluntary fee
reductions
(percentage of average
net assets)............ .20% .20% .20%
Voluntary fee
reductions............. -- -- $6,766
12B-1 FEES:
Annual fee before
voluntary fee
reductions
(percentage of average
net assets)............ .25% .25% .25%
Voluntary fee
reductions............. $84,380 $56,223 $30,379
ADMINISTRATIVE SERVICES
FEES:
Annual fee before
voluntary fee
reductions
(percentage of average
net assets)............ .25% .25% .25%
Voluntary fee
reductions............. $63,286 $34,600 $12,151
FUND ACCOUNTANT AND
TRANSFER AGENT FEES.... $34,432 $30,534 $23,187
</TABLE>
Continued
-28-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
TENNESSEE
FIXED MUNICIPAL
INCOME OBLIGATIONS
FUND FUND
------- -----------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)................ .65% .65%
Voluntary fee reductions........................... -- $48,781
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)................ .20% .20%
Voluntary fee reductions........................... -- --
12B-1 FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)................ .25% .25%
Voluntary fee reductions........................... $18,187 $ 7,289
ADMINISTRATIVE SERVICES FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)................ .25% .25%
Voluntary fee reductions........................... $ 1,914 $11,843
FUND ACCOUNTANT AND TRANSFER AGENT FEES............ $24,275 $28,016
</TABLE>
5. CAPITAL CONTRIBUTIONS
During the six months ended December 31, 1997, NBC voluntarily contributed
$274,469 to reimburse the Money Market Fund for losses realized. During the
six months ended, December 31, 1997, NBC voluntarily contributed $23,192 of
its investment advisory fees and BISYS voluntarily contributed $6,846 of its
administration fees to the Money Market Fund. During the years ended June
30, 1996 and June 30, 1997, NBC voluntarily contributed $97,370 and
$134,389, respectively, of its investment advisory fees to the Money Market
Fund. In addition, during the years ended June 30, 1996 and June 30, 1997,
BISYS contributed $13,327 and $40,955, respectively, of its administration
fees to the Money Market Fund. The voluntary contribution of investment
advisory and administration fees, and the difference between the market
value and the carrying value of the securities on the transaction date are
reflected in the accompanying financial statements as a capital contribution
to the Money Market Fund.
During the year ended June 30, 1997, NBC voluntarily contributed $150,000 to
reimburse the Fixed Income Fund for a loss realized on the disposition of a
bond issued by Montalbano Builders. In addition, NBC voluntarily established
an Irrevocable Letter of Credit (LOC) with The Bank of New York on June 4,
1997, with the Fixed Income Fund as the beneficiary of the LOC, in order to
support the value of two defaulted fixed income securities issued by Voyager
Lines Private Placement and Ray & Ross Transport. Prior to the
Continued
-29-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1997
(UNAUDITED)
Letter of Credit NBC unconditionally and irrevocably committed to support
the value of these fixed income securities. The fixed income securities are
holdings of the Fixed Income Fund as of December 31, 1997.
The stated amount of the LOC is the lesser of $4,500,000 or the aggregate
amount of the unpaid par value and accrued interest on these defaulted fixed
income securities ($2,934,688 on the date the Letter of Credit was
established June 4, 1997). The Letter of Credit is payable to the Fixed
Income Fund upon certain payment events which include: (1) the issuer of one
or both of these fixed income securities has failed to repay the beneficiary
the par value and accrued interest due under the securities on the original
maturity date of the respective securities or such later date agreed to by
the Fixed Income Fund; (2) the Fixed Income Fund sells one or both of these
securities; (3) one or both of these fixed income securities have been
diposed of and the Fixed Income Fund has either not assented to such
disposition or has revoked assent to such disposition.
The stated amount of the LOC exceeded the fair value of these securities by
$2,725,000 on the date the LOC was established. This amount, including
accrued interest and contributed capital for the realized loss on the
Montalbano security, is accounted for in the accompanying financial
statements as a capital contribution to the Fixed Income Fund.
-30-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MONEY MARKET FUND
--------------------------------------------------------------------------
YEAR ENDED JUNE 30,
---------------------------------------------------------
SIX MONTHS
ENDED
DECEMBER 31,
1997 1997 1996 1995 1994 1993
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE,
BEGINNING OF PERIOD... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- -------- -------- --------
Investment Activities
Net investment
income.............. 0.023 0.044 0.046 0.044 0.026 0.032
Net realized losses.. (0.002) -- -- (0.004) -- --
----------- -------- -------- -------- -------- --------
Total from
Investment
Activities........ 0.021 0.044 0.046 0.040 0.026 0.032
----------- -------- -------- -------- -------- --------
Distributions
Net investment
income.............. (0.023) (0.044) (0.046) (0.044) (0.026) (0.032)
----------- -------- -------- -------- -------- --------
Capital transactions... 0.002 -- -- 0.044 -- --
----------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== ======== ======== ======== ======== ========
Total Return........... 2.30%(a) 4.44%(c) 4.75%(c) 4.44%(c) 2.65% 3.20%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, at end of
period (000).......... $114,958 $140,174 $134,146 $157,904 $128,001 $141,840
Ratio of expenses to
average
net assets............ 1.00%(b) 1.09% 0.99% 0.97% 0.95% 0.85%
Ratio of net investment
income to average net
assets................ 4.51%(b) 4.36% 4.65% 4.41% 2.62% 3.17%
Ratio of expenses to
average
net assets*........... 1.21%(b) 1.30% 1.20% 1.18% 1.09% 0.94%
Ratio of net investment
income to average net
assets*............... 4.30%(b) 4.15% 4.44% 4.20% 2.48% 3.08%
</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) Not annualized.
(b) Annualized.
(c) The capital contribution had no impact on the total return for the years
ended June 30, 1995, June 30, 1996, and June 30, 1997.
See notes to financial statements.
-31-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
VALUE EQUITY FUND
----------------------------------------------------------
YEAR ENDED JUNE 30,
-------------------------------------------
SIX MONTHS
ENDED
DECEMBER 31,
1997 1997 1996 1995 1994 1993
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 15.53 $ 14.54 $ 12.63 $ 12.67 $ 11.57 $ 11.04
------- ------- ------- ------- ------- -------
Investment Activities
Net investment income. 0.06 0.09 0.14 0.14 0.07 0.21
Net realized and
unrealized gains on
investments.......... 2.35 3.06 2.40 0.76 1.28 0.96
------- ------- ------- ------- ------- -------
Total from
Investment
Activities......... 2.41 3.15 2.54 0.90 1.35 1.17
------- ------- ------- ------- ------- -------
Distributions
Net investment income. (0.07) (0.10) (0.14) (0.13) (0.06) (0.22)
Net realized gains.... (1.66) (2.06) (0.49) (0.15) (0.19) (0.42)
In excess of net
realized gains....... -- -- -- (0.66) -- --
------- ------- ------- ------- ------- -------
Total Distributions. (1.73) (2.16) (0.63) (0.94) (0.25) (0.64)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 16.21 $ 15.53 $ 14.54 $ 12.63 $ 12.67 $ 11.57
======= ======= ======= ======= ======= =======
Total Return (excludes
sales charges)......... 15.78%(a) 23.66% 20.50% 8.03% 11.76% 10.94%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, at end of
period (000)........... $86,012 $79,564 $81,055 $80,264 $79,232 $52,629
Ratio of expenses to
average net assets..... 1.52%(b) 1.62% 1.58% 1.58% 1.36% 0.73%
Ratio of net investment
income to average
net assets............. 0.63%(b) 0.61% 1.01% 1.13% 0.52% 1.84%
Ratio of expenses to
average net assets*.... 1.73%(b) 1.83% 1.79% 1.79% 1.74% 1.69%
Ratio of net investment
income to average
net assets*............ 0.42%(b) 0.40% 0.80% 0.92% 0.14% 0.88%
Portfolio turnover...... 10.89% 11.47% 27.89% 35.64% 62.17% 16.13%
Average commission rate
paid (c)............... $0.0600 $0.0604 $0.0605 NA NA NA
</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) Not annualized.
(b) Annualized.
(c) Represents the total dollar amount of commissions paid on portfolio equity
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
See notes to financial statements.
-32-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH FUND
-----------------------------------------------------
YEAR ENDED JUNE 30,
-------------------------
SIX MONTHS APRIL 15,
ENDED 1994 TO
DECEMBER 31, JUNE 30,
1997 1997 1996 1995 1994 (A)
------------ ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 17.51 $ 14.01 $ 12.14 $ 9.82 $10.00
----------- ------- ------- ------- ------
Investment Activities
Net investment income. 0.10 0.16 0.18 0.16 --
Net realized and
unrealized gains
(losses)
on investments....... 1.86 3.92 2.13 2.30 (0.18)
----------- ------- ------- ------- ------
Total from
Investment
Activities......... 1.96 4.08 2.31 2.46 (0.18)
----------- ------- ------- ------- ------
Distributions
Net investment income. (0.10) (0.16) (0.18) (0.14) --
In excess of net
investment income.... -- -- (0.01) -- --
Net realized gains.... (0.51) (0.42) (0.25) -- --
----------- ------- ------- ------- ------
Total Distributions. (0.61) (0.58) (0.44) (0.14) --
----------- ------- ------- ------- ------
NET ASSET VALUE, END OF
PERIOD................. $ 17.86 $ 17.51 $ 14.01 $ 12.14 $ 9.82
=========== ======= ======= ======= ======
Total Return (excludes
sales charges)......... 11.20%(c) 29.91% 19.35% 25.27% (1.80)%(c)
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, at end of
period (000)........... $40,038 $37,405 $33,767 $21,485 $6,345
Ratio of expenses to
average net assets..... 0.98%(b) 1.08% 1.05% 1.24% 2.59%(b)
Ratio of net investment
income to average
net assets............. 1.09%(b) 1.06% 1.37% 1.64% 0.25%(b)
Ratio of expenses to
average net assets*.... 1.87%(b) 1.99% 1.97% 2.51% 3.90%(b)
Ratio of net investment
income (loss) to
average net assets*.... 0.20%(b) 0.15% 0.45% 0.37% (1.07)%(b)
Portfolio turnover...... 6.63% 24.07% 31.22% 29.36% 0.00%
Average commissions rate
paid (d)............... $0.0770 $0.0696 $0.0686 NA NA
</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) Annualized.
(c) Not annualized.
(d) Represents the total dollar amount of commissions paid on portfolio equity
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
See notes to financial statements.
-33-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FIXED INCOME FUND
----------------------------------------------------------------
YEAR ENDED JUNE 30,
-----------------------------------------------
SIX MONTHS
ENDED
DECEMBER 31,
1997 1997 1996 1995 1994 1993
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 8.68 $ 8.77 $ 9.27 $ 9.43 $ 10.44 $ 10.26
----------- ------- ------- ------- ------- -------
Investment Activities
Net investment income. 0.22 0.57 0.59 0.58 0.57 0.68
Net realized and
unrealized gains
(losses) on
investments.......... 0.08 (1.39) (0.48) (0.15) (0.76) 0.27
----------- ------- ------- ------- ------- -------
Total from
Investment
Activities......... 0.30 (.82) 0.11 0.43 (0.19) 0.95
----------- ------- ------- ------- ------- -------
Distributions
Net investment income. (0.26) (0.56) (0.58) (0.58) (0.57) (0.69)
In excess of net
investment income.... -- -- -- (0.01) -- --
Net realized gains.... -- -- -- -- -- (0.08)
In excess of net
realized gains....... -- -- (0.03) -- (0.25) --
----------- ------- ------- ------- ------- -------
Total Distributions. (0.26) (0.56) (0.61) (0.59) (0.82) (0.77)
----------- ------- ------- ------- ------- -------
Capital Transactions.... $ -- $ 1.29 -- -- -- --
----------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 8.72 $ 8.68 $ 8.77 $ 9.27 $ 9.43 $ 10.44
=========== ======= ======= ======= ======= =======
Total Return (excludes
sales charges)......... 3.52%(b) 5.55%(a) 1.05% 4.82% (2.20)% 9.64%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, at end of
period (000)........... $22,258 $18,227 $28,847 $39,496 $42,309 $35,951
Ratio of expenses to
average net assets..... 1.68%(c) 1.49% 1.48% 1.43% 1.37% 0.74%
Ratio of net investment
income to average
net assets............. 5.29%(c) 6.44% 6.32% 6.33% 5.61% 8.65%
Ratio of expenses to
average net assets*.... 1.89%(c) 1.70% 1.69% 1.64% 1.70% 1.42%
Ratio of net investment
income to average
net assets*............ 5.08%(c) 6.23% 6.11% 6.12% 5.28% 5.97%
Portfolio turnover...... 67.65% 196.97% 363.84% 223.29% 328.44% 234.71%
</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 total return for 1997 includes the effect of a capital contribution
from the Investment Advisor. Without the capital contribution the total
return would have been (12.33%).
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
-34-
<PAGE>
THE SESSIONS GROUP
RIVERSIDE CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TENNESSEE MUNICIPAL OBLIGATIONS FUND
-----------------------------------------------------------------
YEAR ENDED JUNE 30,
----------------------------------
SIX MONTHS NOVEMBER 4,
ENDED 1992 TO
DECEMBER 31, JUNE 30,
1997 1997 1996 1995 1994 1993 (A)
------------ ------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 9.95 $ 9.76 $ 9.84 $ 9.81 $ 10.44 $ 10.00
----------- ------- ------- ------- ------- -------
Investment Activities
Net investment income. 0.25 0.53 0.53 0.50 0.48 0.30
Net realized and
unrealized gains
(losses) on
investments.......... 0.21 0.17 (0.08) 0.03 (0.57) 0.43
----------- ------- ------- ------- ------- -------
Total from
Investment
Activities......... 0.46 0.70 0.45 0.53 (0.09) 0.73
----------- ------- ------- ------- ------- -------
Distributions
Net investment income. (0.29) (0.51) (0.53) (0.50) (0.48) (0.29)
In excess of net
realized gains....... -- -- -- -- (0.06) --
----------- ------- ------- ------- ------- -------
Total Distributions. (0.29) (0.51) (0.53) (0.50) (0.54) (0.29)
----------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 10.12 $ 9.95 $ 9.76 $ 9.84 $ 9.81 $ 10.44
=========== ======= ======= ======= ======= =======
Total Return (excludes
sales charges)......... 4.64%(c) 7.38% 4.67% 5.61% (1.00)% 7.39%(c)
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, at end of
period (000)........... $17,895 $18,352 $19,037 $20,827 $19,965 $17,425
Ratio of expenses to
average net assets..... 1.06%(b) 1.10% 0.98% 1.12% 1.19% 0.82%(b)
Ratio of net investment
income to average net
assets................. 4.83%(b) 5.33% 5.40% 5.24% 4.67% 4.76%(b)
Ratio of expenses to
average net assets*.... 1.76%(b) 1.91% 1.83% 1.98% 1.99% 1.62%(b)
Ratio of net investment
income to average net
assets*................ 4.11%(b) 4.52% 4.55% 4.38% 3.87% 3.96%(b)
Portfolio turnover...... 32.80% 38.66% 60.76% 62.59% 86.57% 52.52%
</TABLE>
- ------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Not annualized.
See notes to financial statements.
-35-
<PAGE>
- -----------------------------
Investment Adviser
National Bank of Commerce
One Commerce Square
Memphis, Tennessee 38150
Administrator and Distributor
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219-3035
Legal Counsel
Baker & Hostetler LLP
65 East State Street
Columbus, Ohio 43215
Auditors
KPMG Peat Marwick LLP2/98
Two Nationwide Plaza
Columbus, Ohio 43215
