<PAGE>
MESSAGE FROM THE CHAIRMAN THE RIVERFRONT FUNDS
- --------------------------------------------------------------------------------
Dear Shareholders:
The 12 months ended December 31, 1995, were a highly rewarding period for
investors in the financial markets. Coming on the heels of relatively poor
performance by stocks and dismal returns from bonds in 1994, the recent gains
remind us that patience is one of the primary virtues required for long-term
investment success.
The most successful investors are those who can maintain a steady commitment to
stocks and bonds regardless of short-term market fluctuations. Many investors
who were patient enough to stay fully invested through 1995 earned solid, and
in some cases, spectacular profits.
Today, intelligent investors are acutely aware that the risks of short-term
declines in those markets have climbed along with the rise in securities'
prices. More than ever, it is essential to maintain a broadly diversified
investment portfolio within and between market sectors, while searching for
opportunities to buy securities at attractive prices. It is the goal of The
Riverfront Funds to provide shareholders with the diversification options they
seek while striving to achieve their respective objectives.
ACQUISITION OF SIX MIM MUTUAL FUNDS COMPLETED
On September 30, 1995, Provident Bancorp, Inc., the parent of the investment
adviser to The Riverfront Funds, Inc., completed its acquisition of
Mathematical Investment Management, Inc. (MIM). The purchase included six
mutual funds managed by MIM's subsidiary, Mathematical Investing Systems, Inc.
The MIM Stock Growth and MIM Stock Appreciation Funds were acquired by The
Riverfront Stock Appreciation Fund on September 30, 1995. The new fund will
continue to operate under the same portfolio manager and pursue the same goals
and growth-oriented strategy as the MIM Stock Appreciation Fund. The four other
MIM funds were acquired by two Riverfront Funds on September 30, 1995.
On August 16, DePrince, Race & Zollo became the sub-investment adviser to The
Riverfront Income Equity Fund. Greg DePrince, the Fund's portfolio manager, has
continued to manage the Fund.
Thank you once again for your continued confidence in the Riverfront Funds.
During the coming year we will continue to manage the Funds with an eye toward
managing risk and delivering strong returns over the long term.
If you have any questions about your investment in the Funds, or would like a
prospectus, please call us at 1-800-424-2295.
Sincerely,
/s/Stephen G. Mintos
Stephen G. Mintos
Chairman
The Riverfront Funds, Inc.
January 26, 1996
THE RIVERFRONT FUNDS ARE NOT FDIC
INSURED AND ARE NOT OBLIGATIONS OR
DEPOSITS OF, OR ENDORSED OR
GUARANTEED BY, THE PROVIDENT BANK
OR ITS AFFILIATES. INVESTMENT
PRODUCTS INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
<PAGE>
MESSAGE FROM THE INVESTMENT ADVISER THE RIVERFRONT FUNDS
- --------------------------------------------------------------------------------
Dear Shareholders:
The 12 months ended December 31, 1995, rewarded many stock and bond investors
with outsized gains--yet another reminder that such gains often come at times
when investors may be feeling most disheartened about their investments.
By the start of 1995, the bond market had endured one of the worst years in its
recent history and stocks were coming off an unimpressive year. Yields on 30-
year Treasury bonds hovered near 8%, and investors feared that interest rates
would soon climb even higher and further disrupt both the stock and bond
markets. Some observers voiced concern that an overheating economy would cause
the inflation rate to soar and again lead to big losses for investors.
A FORTUNATE REVERSAL OF FORTUNE
Investors' perceptions--and the financial reality that they reflected--changed
dramatically during the recent period. It became clear that the economy was not
as strong as many had believed.
The Federal Reserve Board, which raised short-term interest rates by half a
percentage point in February in an attempt to slow the economy, reversed course
later in the year. It reduced the federal funds rate, a key indicator for
short-term rates, by a quarter of a percentage point in July and again in
December.
Those reductions were the Federal Reserve's response to lower inflation
expectations. Around mid-1995, the leading economic indicators clearly
suggested that the economy's rate of growth was falling. A number of factors
contributed to this decline, including high consumer debt and flat wages, which
lead to less consumer spending. Consumer spending accounts for about two-thirds
of economic growth.
In addition, many firms continued to lay off employees. For example, American
Home Products announced a plan to cut some 4,000 jobs, and even larger cuts
were contemplated at BellSouth (9,000 to 11,000 jobs) and Lockheed (15,000
jobs). AT&T's announcement in early January of an unprecedented 40,000 job cut
was the biggest jolt to public confidence in job security.
FALLING RATES BOLSTER MARKETS
As it became clear that the economy was slowing, long-term interest rates fell
sharply. Lower rates generally cause prices of stocks and existing bonds to
climb, in part because their future dividend and interest payments appear more
attractive relative to expected inflation. In addition, investors tend to turn
to stocks because of their relatively greater return potential.
The biggest gainers in the stock market included technology shares, which led
the way during the first half of the year. Investors were enthusiastic about
the prospects for semiconductor manufacturers as well as technology companies
that can help other firms become more productive through the use of computer
networks and other electronic efficiencies.
As the year progressed, nervousness about these new highs caused investors to
shift focus from high-flying technology stocks into shares of firms that are
well positioned to deliver steady earnings growth even in an economic slowdown,
notably companies that manufacture consumer staples such as food, beverages and
tobacco.
In the bond market, the biggest gainers were long-term issues, because their
prices are most sensitive to declines in interest rates. Investors who bought
long-term bonds and locked in yields of 8% or so early in the period were
rewarded with gains as high as 20% to 30%.
POCKETS OF VALUE
The sharp gains posted by broad market indices masked wide differences in
performance between different market sectors. As value-conscious
-2-
<PAGE>
MESSAGE FROM THE INVESTMENT ADVISER THE RIVERFRONT FUNDS
- --------------------------------------------------------------------------------
investors, we are alert to opportunities to invest in neglected sectors of the
market. We are willing to wait patiently for other investors to recognize those
values and bid up the securities' prices to what we believe to be more
realistic levels.
Currently, such pockets do exist for investors in stocks and bonds. We will
continue to seek out those opportunities while tending to avoid high-flying
securities that appear likely to deliver the biggest short-term gains. Such
investments may provide the highest rewards over short periods--but the
potential for such gains usually is not sufficient to justify the risks that
they carry.
WHAT'S NEXT?
It appears likely that 1996 will bring continued slow economic growth in the
United States. Consumer debt remains high and corporate layoffs will probably
persist as firms continue to look for ways to trim costs and boost their bottom
lines.
Christmas sales in 1995 appear to have been extremely weak, and it's likely
that government spending will decline in this country and abroad. Meanwhile,
our exports to such major trading partners as Mexico, Canada and Japan are
likely to remain weak as their economies struggle to regain steam.
We believe that the impressive gains of the past 12 months aren't likely to be
repeated in the next year.
Still, interest rates and inflation will likely remain low, and it's worth
noting that the average stock posted little, if any, gain from mid-September to
the end of the year.
In summary, we believe that there is still room for careful, skilled investors
to generate respectable returns on well-chosen individual securities. We will
continue to search for bonds that can deliver high current yields at reasonable
risk and seek promising stocks that short-sighted investors may neglect or
ignore. It may take time to realize the rewards of such a strategy, but as
long-term investors we are content to be patient.
Sincerely,
/s/Drew T. Kagan
Drew T. Kagan, Senior Vice President
Financial Services Group
The Provident Bank
Investment Adviser
-3-
<PAGE>
PERFORMANCE REVIEWS THE RIVERFRONT FUNDS
- --------------------------------------------------------------------------------
THE RIVERFRONT INCOME EQUITY FUND
During 1995, the broad market index continued its record pace with the Standard
& Poor's 500 Index climbing 37.12% for the year. With a return of 31.45%+
(Investor A Shares), the Fund turned in a strong return but trailed the index
due in part to the acquisition of the portfolios of three series of MIM Mutual
Funds, Inc. by the Riverfront Income Equity Fund. The assets transferred from
MIM underperformed the Income Equity Fund's core assets.
In addition, the S&P 500 includes a large number of technology stocks, which as
a group led the market. These stocks generally do not pay high dividends, which
is a key criterion for inclusion in the Fund.
Consolidation theme in 1995
Industry consolidation was the major theme in the Fund in 1995, with health-
care stocks taking center stage. The Fund owned UpJohn, Wellcome and Marion
Merrell Dow, which were all taken over at hefty premiums during the year.
The Fund also benefited from a high concentration of uniquely positioned
regional banks, which made them likely takeover candidates and boosted their
stock prices. Banks owned during the year that were merged or taken over
included BayBanks and Summit. Stocks of Firstar, Magna and Old Kent gained from
takeover speculation.
The Fund's holdings in the telephone industry profited from expected deregula-
tion and consolidation, as well. The core of the Fund's telephone holdings were
stocks of companies such as GTE, Sprint, Frontier and Southern New England,
which already operate outside of a consent decree governing Regional Bell Oper-
ating Companies, giving them a head start in bundling long distance, cellular
and local services.
The continuing consolidation in the retail sector bodes well for the Fund's po-
sitions in May Department Stores and Federated, which we expect to continue to
benefit from their acquisition of underperforming department stores.
Positioning for 1996
Heading into 1996, the Fund continues to have a large position in financial
services, including both regional banks as well as property and casualty insur-
ance companies, which are also trimming costs through consolidation. We also
expect specialty chemical firms, such as Rohm & Haas, to benefit from expected
declines in commodity chemical prices that could increase profit margins. The
Fund also holds companies with a large exposure to auto parts manufacturers
such as Tenneco, ITT Industries and Cooper Industries, which we expect to
profit from increased outsourcing by the Big Three auto makers and greater ac-
cess to Japanese markets.
Anticipating growth in international markets, the Fund recently acquired
holdings in Telefonica de Espana, Unilever and GrandMet.
As of December 31, 1995, the Fund's top five holdings were Warner-Lambert
(2.25%), Frontier Corp. (2.23%), Hanson Trust, PLC (2.19%), Tenneco Inc.
(2.17%) and General Signal Corp. (2.05%).
- ----------
+The return with the maximum sales
charge of 4.50% was 25.52% for the
period. The Fund's composition is
subject to change.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Average Annual Return:
1 Year Since Inception (10/8/92)
------ -------------------------
<S> <C> <C>
Investor A Shares* 25.52% 15.17%
Investor B Shares** 25.28% 15.54%
</TABLE>
<TABLE>
<CAPTION>
Value of $10,000 Investment
10/8/92 12/31/92 12/31/93 12/31/94 12/31/95
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Investor A Shares* 9,551 10,387 11,645 12,004 15,779
Investor B Shares** 9,600 10,475 11,792 12,168 15,947
S&P 500 Index 10,000 10,503 11,545 11,713 16,137
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
Past performance is not predictive of future performance. Investment return and
principal value of The Riverfront Funds will fluctuate so that the shares, when
redeemed, may be worth more or less than their original cost. Performance for
Investor B Shares for periods prior to initial offering, January 1995,
represent performance for Investor A Shares and is restated to reflect
applicable contingent deferred sales charges. Investor B Shares are subject to
distribution and services fees which would have reduced performance.
The Standard & Poor's 500 Index is an unmanaged index considered to be
representative of the stock market as a whole. It does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management and fund accounting fees. The performance of The Riverfront Income
Equity Fund reflects the deduction of fees for these value-added services.
-4-
<PAGE>
PERFORMANCE REVIEWS THE RIVERFRONT FUNDS
- --------------------------------------------------------------------------------
THE RIVERFRONT FLEXIBLE GROWTH FUND
During periods when stocks and bonds seem to offer comparable returns for the
risks they carry, the Fund generally invests about 55% of its assets in stocks.
During 1995, however, the Fund's exposure to stocks was a bit lower, at around
45% of total assets. At year-end, stocks comprised 44% of the portfolio. As a
result, the Fund's total return for the period was 20.83%+ (Investor A Shares),
compared to 37.12% for the Standard & Poor's 500 Index and 15.33% for the Leh-
man Brothers Intermediate Government/Corporate Bond Index, its two primary
benchmarks.
There were two reasons for the Fund's relatively conservative stance. First, we
felt that the risks in the stock market increased as stock prices continued to
climb during 1995. Second, bonds appeared to offer the potential for solid re-
turns at considerably less risk of significant losses.
An early boost from technology
During the early part of the year, we invested a sizable portion of the Fund's
assets in technology stocks such as Compaq Computer and Texas Instruments, as
well as shares of cyclical companies whose fortunes are closely linked to the
economy. Both groups seemed positioned to deliver strong earnings growth and
these shares performed well.
Opportunities in utilities and energy
We also invested in shares of utilities during the period, including Duke
Power, Pacific Gas & Electric and Ameritech, since utilities benefit from lower
interest rates--and their high yields offered a potential cushion against a
stock market down draft.
The Fund's holdings of energy stocks such as British Petroleum, Mobil and
Exxon, which have cut costs and increased profitability, performed well and
stand to benefit greatly from any rebound in energy prices. The stocks' above-
average dividend yields also contributed to the Fund's total return during the
period.
Among bonds, we maintained a longer-than-average duration of around 5.5 years.
Duration is a measure of a portfolio's price sensitivity to fluctuations in
interest rates. The longer a fund's duration, the more its bond prices rise as
interest rates decline, as they did during the period.
Looking ahead
We believe that the economy will continue to slow and interest rates will
remain stable or fall further. We will continue to concentrate on stock market
sectors that have been overlooked by investors and thus offer opportunities for
further gains. We plan to hold a significant portion of the Fund's bond
investments in intermediate-term issues, which we believe offer the greatest
potential for gains relative to their risk.
The Fund's top five equity holdings as of December 31, 1995, were Bristol-Myers
Squibb (2.32%), Philip Morris (2.02%), Ameritech (1.79%), Seagate Technology
(1.54%) and Kroger Co. (1.52%).
- ----------
+The return with the maximum sales
charge of 4.50% was 15.41% for the
period. The Fund's composition is
subject to change.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Since Inception
Average Annual Total Return: 1 year (9/1/94)
------ ---------------
<S> <C> <C>
Investor A Shares* 15.41% 10.67%
Investor B Shares** 16.53% 11.46%
</TABLE>
<TABLE>
<CAPTION>
Value of $10,000 Investment 8/1/94 12/31/94 12/31/95
------ -------- --------
<S> <C> <C> <C>
Investor A Shares* 9,551 9,473 11,446
Investor B Shares** 9,600 9,526 11,554
S&P 500 Index 10,000 9,800 13,475
Lehman Intermediate Gov't/
Corp Bond Index 10,000 9,896 11,413
U.S. Treasury Bills Index 10,000 10,157 10,731
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
Past performance is not predictive of future performance. Investment return and
principal value of The Riverfront Funds will fluctuate so that the shares, when
redeemed, may be worth more or less than their original cost. Performance for
Investor B Shares for periods prior to initial offering, January 1995,
represent performance for Investor A Shares and is restated to reflect
applicable contingent deferred sales charges. Investor B Shares are subject to
distribution and services fees which would have reduced performance.
The Standard & Poor's 500 Index, the Lehman Brothers Intermediate
Government/Corporate Bond Index and the U.S. Treasury Bills Index are
considered to be representative of the stock, bond and T-bill markets,
respectively. They are unmanaged and do not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund
accounting fees. The performance of The Riverfront Flexible Growth Fund
reflects the deduction of fees for these value-added services.
-5-
<PAGE>
PERFORMANCE REVIEWS THE RIVERFRONT FUNDS
- --------------------------------------------------------------------------------
THE RIVERFRONT STOCK APPRECIATION FUND
The Riverfront Stock Appreciation Fund is the successor fund to the MIM Stock
Appreciation Fund and MIM Stock Growth Fund and was formed in connection with
the acquisition of such series on September 30, 1995. Martin Weisberg continues
to manage the portfolio, and the Fund's objective remains the same as that of
MIM Stock Appreciation Fund: to invest in stocks of companies that seem likely
to deliver superior earnings growth, with an emphasis on small and mid-sized
firms. During the past five years, the average annual earnings growth rate of
the companies whose shares were owned by the Fund was roughly 35%.
The Fund gained 27.91%+ (Investor A Shares) during the 12 months ended December
31, 1995. That strong performance trailed the 37.12% total return delivered by
the S&P 500 index, and the 39.92% return of the NASDAQ Composite Index, the
Fund's benchmarks. One reason: A defensive strategy was employed during the
first quarter of the year.
A focus on productivity-enhancing technology
Nevertheless, the Fund benefited from the strong gains in the technology sec-
tor, especially during the first half of the year. Our investment in technology
rose to as much as 37% of the portfolio and stood at about 25% at the end of
the period.
We favored shares of companies in the technology sector whose products can help
businesses become more efficient such as Bay Networks and Cisco Systems, which
make computer networks and related products. We also held shares of modem manu-
facturer U.S. Robotics and HBO & Company, which designs, sells and services
hospital information processing systems.
Opportunities in health care, finance and retailing
We divided the Fund's other holdings among shares of companies in a variety of
other industries, including health care, financial services and retailing,
which offered opportunities to buy shares of fast-growing firms at reasonable
prices.
Many health-care companies have become more efficient in response to pricing
and other competitive pressures. The Fund's holdings included drug manufacturer
Merck as well as Medtronic, the world's leading producer of pacemakers.
The financial services industry benefited from economic growth and falling in-
terest rates, which increased loan demand as well as reduced price competition
in the insurance business. The Fund's holdings in that sector included fast-
growing savings & loans such as Coast Savings and insurers such as CNA Finan-
cial and Allstate.
Some specialty retailers also offered good opportunities despite a generally
poor environment. Fund investments included shares of Sunglass Hut, North Amer-
ica's largest seller of non-prescription sunglasses.
The market's recent gains have made it more difficult to find bargain-priced
shares in some sectors. However, we believe that there are still opportunities
to pursue our growth-oriented strategy. As always, investors should be prepared
to ride out volatile periods in the market.
As of December 31, 1995, the Fund's top five holdings were Nike (2.04%), Bay
Networks (2.03%), Medtronics (1.91%), HBO (1.87%) and Cisco Systems (1.82%).
- ----------
+ The return with the maximum sales
charge of 4.50% was 22.09% for the
period. The Fund's composition is
subject to change.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Since Inception
Average Annual Total Return 1 year 5 years (7/23/87)
------ ------- ---------------
<S> <C> <C> <C>
Investor A Shares* 22.09% 17.73% 9.40%
Investor B Shares** 24.27% 18.80% 10.04%
</TABLE>
<TABLE>
<CAPTION>
Value of $10,000 Investment 7/23/87 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investor A Shares* 9,548 7,530 7,369 8,572 9,015 15,955 16,883 18,642 16,697 21,357
Investor B Shares** 9,600 7,572 7,413 8,630 9,168 16,510 17,582 19,525 17,487 22,436
S&P 500 Index 10,000 8,027 9,339 12,255 11,871 15,433 16,580 18,228 18,462 25,315
NASDAQ Composite Index 10,000 7,728 8,919 10,636 8,742 13,712 15,830 18,166 17,584 24,604
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
Past performance is not predictive of future performance. Investment return and
principal value of The Riverfront Funds will fluctuate so that the shares, when
redeemed, may be worth more or less than their original cost. Performance for
Investor B Shares for periods prior to initial offering, January 1995,
represent performance for Investor A Shares and is restated to reflect
applicable contingent deferred sales charges. Investor B Shares are subject to
distribution and services fees which would have reduced performance. The return
includes the performance history of the MIM Stock Appreciation Fund and
excludes that of the MIM Stock Growth Fund prior to acquisition.
The Standard & Poor's 500 Index is an unmanaged index considered to be
representative of the stock market as a whole, and the NASDAQ Composite Index
is considered to be representative of stocks of small-capitalization companies.
They do not reflect the deduction of expenses associated with a mutual fund,
such as investment management and fund accounting fees. The performance of The
Riverfront Stock Appreciation Fund reflects the deduction of fees for these
value-added services.
-6-
<PAGE>
PERFORMANCE REVIEWS THE RIVERFRONT FUNDS
- --------------------------------------------------------------------------------
THE RIVERFRONT U.S. GOVERNMENT INCOME FUND
During the 12 months ended December 31, 1995, yields on 30-year Treasury bonds
declined from 7.87% to 5.94%. When interest rates fall, bond prices generally
rise; as a result, the Fund posted a solid return of 15.22%+ for the period
(Investor A Shares). That compared to a total return of 17.81% for the Lehman
Brothers Government/Mortgage Index and 15.33% for the Lehman Brothers Interme-
diate Government/Corporate Bond Index, the Fund's two benchmarks.
The decline in interest rates reflected growing evidence that the economy was
entering a period of slower growth brought on by weak consumer spending and low
wage growth, among other factors. It became apparent that the inflation rate
would likely remain low. As a result, bond yields declined and their prices
rose.
Prices of longer-term bonds tend to rise more than prices of short-term bonds
when interest rates decline. As a result, we extended the Fund's average
maturity slightly, from 3.3 years to around 8.5 years at period end.
A mix of bond market sectors
The Fund is required to hold at least 65% of its total investments in U.S.
Government securities. Nevertheless, we continued to invest some of the Fund's
assets in mortgage-backed issues and corporate bonds. These holdings helped
boost the Fund's yield modestly, without exposing shareholders to the risks
that can exist in a portfolio that is limited to a particular sector of the
market.
The year ahead
We believe that the economy will continue to grow at a modest rate, with low
inflation. That should allow interest rates to remain stable or perhaps decline
a bit more. While it's unlikely that fixed-income investors will enjoy a repeat
of 1995's gains in 1996, there is some room for them to earn respectable
returns in bonds. We will continue to maintain a broadly diversified portfolio
with some longer-term issues that could benefit from further rate declines.
- ----------
+The return with the maximum sales
charge of 4.50% was 10.04% for the
period.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Since Inception
Average Annual Total Return 1 year (9/1/94)
------ ---------------
<S> <C> <C>
Investor A Shares* 10.04% 3.32%
Investor B Shares** 9.96% 3.60%
</TABLE>
<TABLE>
<CAPTION>
Value of $10,000 Investment 10/1/92 12/31/92 12/31/93 12/31/94 12/31/95
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Investor A Shares* 9,551 9,426 10,122 9,653 11,121
Investor B Shares** 9,600 9,479 10,201 9,749 11,217
Lehman Government/Mortgage
Index 10,000 10,028 10,958 10,656 12,554
Lehman Intermediate Government/
Corporate Bond Index 10,000 9,964 10,840 10,631 12,261
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
Past performance is not predictive of future performance. Investment return and
principal value of The Riverfront Funds will fluctuate so that the shares, when
redeemed, may be worth more or less than their original cost. Performance for
Investor B Shares for periods prior to initial offering, January 1995,
represent performance for Investor A Shares and is restated to reflect
applicable contingent deferred sales charges. Investor B Shares are subject to
distribution and services fees which would have reduced performance.
The Fund's performance is measured against two indices considered to be
representative of mortgage-backed government bonds and intermediate-term bonds,
respectively: the Lehman Brothers Government/Mortgage Index and the Lehman
Brothers Intermediate Government/Corporate Bond Index. The indices are
unmanaged and do not reflect the deduction of expenses associated with a mutual
fund, such as investment management and fund accounting fees. The performance
of The Riverfront U.S. Government Income Fund reflects the deduction of fees
for these value-added services.
-7-
<PAGE>
PERFORMANCE REVIEWS THE RIVERFRONT FUNDS
- --------------------------------------------------------------------------------
THE RIVERFRONT OHIO TAX-FREE BOND FUND/1/
During the 12 months ended December 31, 1995, the Fund had a total return of
10.96%+ (Investor A Shares). That gain was fueled in part by falling interest
rates, the result of a slowing economy and low inflation. But the municipal
market did not perform as well as other sectors of the fixed-income market. The
reason: It suffered from concerns that lawmakers might impose a flat tax, which
could reduce the tax advantages of municipal issues. The Fund's return compares
to 17.45% for the Lehman Brothers Intermediate Municipal Bond Index for the
same period.
Weakened prospects for a flat tax improve outlook for munis
We are confident that municipal issues will continue to carry some tax benefit.
However, as bond prices rose, we reduced the average maturity of the Fund from
around 10 years last December to about seven years at the end of the 12-month
period. Short- and intermediate-term bonds tend to suffer smaller price
declines when interest rates rise than long-term bonds; thus, the move reduced
the Fund's risk of suffering significant losses should rates rebound after
their year-long decline. Moreover, the additional yields available on long-term
bonds were not sufficient, we believed, to compensate for their added risk.
High credit quality and diversification
We also maintained a portfolio of issues whose credit ratings averaged about
AA. A high-quality portfolio is likely to hold up better in a slower economy
than a portfolio of lower-quality issues. In addition, we maintained broad
exposure to different sectors of the Ohio market, while limiting exposure to
riskier securities such as hospital bonds.
Looking ahead, it appears likely that investor concerns about a flat tax will
recede, allowing municipal issues to make up some of the ground they lost
compared to taxable securities during the recent period. Moreover, the
continued slow economy reduces the risk of higher rates. In that environment,
we will continue to maintain a broadly diversified portfolio and take advantage
of opportunities to provide high current income without taking on undue risk.
- ----------
/1/The Fund's income may be subject
to certain state and local taxes
and, depending on your tax status,
the federal alternative minimum
tax.
+ The return with the maximum sales
charge of 4.50% was 6.00% for the
period.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Since Inception
Average Annual Total Return 1 year (8/1/94)
------ ---------------
<S> <C> <C>
Investor A Shares* 6.00% 3.84%
Investor B Shares** 6.10% 5.58%
</TABLE>
<TABLE>
<CAPTION>
Value of $10,000 Investment 8/1/94 12/31/94 12/31/95
------ -------- --------
<S> <C> <C> <C>
Investor A Shares* 9,551 9,506 10,548
Investor B Shares** 9,600 9,560 10,558
Lehman Intermediate Municipal
Bond Index 10,000 9,727 11,424
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
Past performance is not predictive of future performance. Investment return and
principal value of The Riverfront Funds will fluctuate so that the shares, when
redeemed, may be worth more or less than their original cost. Performance for
Investor B Shares for periods prior to initial offering, January 1995,
represent performance for Investor A Shares and is restated to reflect
applicable contingent deferred sales charges. Investor B Shares are subject to
distribution and services fees which would have reduced performance.
The Lehman Brothers Intermediate Municipal Bond Index is an unmanaged index
considered to be representative of the intermediate municipal bond market. It
does not reflect the deduction of expenses associated with a mutual fund, such
as investment management and fund accounting fees. The performance of The
Riverfront Ohio Tax-Free Bond Fund reflects the deduction of fees for these
value-added services.
-8-
<PAGE>
PERFORMANCE REVIEWS THE RIVERFRONT FUNDS
- --------------------------------------------------------------------------------
THE RIVERFRONT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND*
The Fund maintained a short average maturity of around 30 days during the
recent period. That strategy reflected our primary mission: to preserve
shareholders' principal while earning current income. A short average maturity
reduces the risk of even minor fluctuations in the Fund's net asset value.
Moreover, during the period it was possible to earn higher yields by investing
in shorter-term securities.
The Fund also added commercial paper--essentially, short-term corporate IOUs--
which improved the Fund's yield and served as a temporary substitute for agency
securities, which were not available in certain maturities.
During the coming months, we will likely extend the Fund's maturity to around
40 days. Reason: It appears likely that short-term rates will decline as the
Federal Reserve Board attempts to bolster the faltering economy. By locking in
current yields for a slightly longer period, the Fund might improve its return
without taking on significant risk.
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc., is a family of mutual funds distributed by BISYS
Fund Services, which is independent of The Provident Bank and its affiliates.
The composition of the Funds' holdings is subject to change. SHARES IN THE
FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE
PROVIDENT BANK OR ITS AFFILIATES, NOR ARE THEY FEDERALLY INSURED BY THE FDIC OR
ANY OTHER AGENCY. AN INVESTMENT IN MUTUAL FUND SHARES INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF THE AMOUNT INVESTED.
This material is authorized for distribution only when accompanied or preceded
by a prospectus.
- ----------
*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.
-9-
<PAGE>
TABLE OF CONTENTS
Report of Independent Auditors
Page 11
Statements of Assets and Liabilities
Page 12
Statements of Operations
Page 14
Statements of Changes in Net Assets
Page 16
Schedules of Portfolio Investments
Page 19
Notes to Financial Statements
Page 34
Financial Highlights
Page 43
-10-
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Directors
The Riverfront Funds, Inc.
We have audited the accompanying statements of assets and liabilities,
including the schedules of portfolio investments of The Riverfront Funds, Inc.
(comprising, respectively, U.S. Government Securities Money Market Fund, U.S.
Government Income Fund, Income Equity Fund, Ohio Tax-Free Bond Fund, Flexible
Growth Fund, and Stock Appreciation Fund) as of December 31, 1995, and the
related statements of operations, and changes in net assets and the financial
highlights for the year then ended of U.S. Government Securities Money Market
Fund, U.S. Government Income Fund, Income Equity Fund, Ohio Tax-Free Bond
Fund, and Flexible Growth Fund, and from October 1, 1995 to December 31, 1995
of Stock Appreciation Fund. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audits. The financial statements and financial
highlights of the U.S. Government Securities Money Market Fund, U.S.
Government Income Fund, Income Equity Fund, Ohio Tax-Free Bond Fund, and
Flexible Growth Fund for the periods prior to January 1, 1995, were audited by
other auditors whose report dated January 20, 1995, expressed an unqualified
opinion on those statements and financial highlights. The financial statements
and financial highlights of the Stock Appreciation Fund for the years ended
prior to October 1, 1995, were audited by other auditors whose report dated
October 11, 1995, expressed an unqualified opinion on those statements and
financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statements presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting The Riverfront Funds, Inc. at
December 31, 1995, the results of their operations, the changes in their net
assets and the financial highlights for the respective periods ended December
31, 1995 in conformity with generally accepted accounting principles.
[LOGO OF ERNST & YOUNG LLP]
Cincinnati, Ohio
January 15, 1996
-11-
<PAGE>
THE RIVERFRONT FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
U.S. GOVERNMENT
SECURITIES MONEY U.S. GOVERNMENT INCOME
MARKET FUND INCOME FUND EQUITY FUND
---------------- --------------- -----------
<S> <C> <C> <C>
ASSETS:
Investments, at value............ $ 99,079,165 $37,305,693 $62,969,968
Repurchase agreements............ 59,137,000
------------ ----------- -----------
Total Investments............ 158,216,165 37,305,693 62,969,968
Interest receivable.............. 32,077 495,240 218,178
Receivable for capital shares
issued.......................... 1,883 19,306
Receivable from brokers for
investments sold................ 1,123,881
Receivable from investment
adviser......................... 42,403 69,570
Prepaid expenses and other
assets.......................... 14,492 1,487 6,924
------------ ----------- -----------
Total Assets................. 158,262,734 37,846,706 64,407,827
------------ ----------- -----------
LIABILITIES:
Dividends payable................ 668,431 4,750 219,989
Payable for capital shares
redeemed........................ 13,933
Payable to brokers for
investments purchased........... 404,849
Accrued expenses and other
payables:
Investment advisory fees....... 24,438 12,899 48,471
Administration fees............ 29,047 6,450 10,203
Audit and legal fees........... 22,846 7,142 7,299
Other.......................... 22,473 14,290 24,694
------------ ----------- -----------
Total Liabilities............ 767,235 45,531 729,438
------------ ----------- -----------
NET ASSETS:
Capital.......................... 157,497,789 38,263,873 58,269,402
Undistributed net investment
income.......................... 7,806
Net unrealized appreciation from
investments..................... 1,436,834 5,381,996
Accumulated undistributed net
realized gains (losses) from
investment transactions......... (2,290) (1,907,338) 26,991
------------ ----------- -----------
Net Assets................... $157,495,499 $37,801,175 $63,678,389
============ =========== ===========
Net Assets
Investor A Shares.............. $157,495,499 $36,538,296 $60,845,149
Investor B Shares.............. 1,262,879 2,833,240
------------ ----------- -----------
Total........................ $157,495,499 $37,801,175 $63,678,389
============ =========== ===========
Shares of capital stock
Investor A Shares.............. 157,497,789 3,762,748 5,199,892
Investor B Shares.............. 115,283 239,090
------------ ----------- -----------
Total........................ 157,497,789 3,878,031 5,438,982
============ =========== ===========
Net asset value
Investor A Shares--redemption
price per share............... $ 1.00 $ 9.71 $ 11.70
Investor B Shares--offering
price per share*.............. 10.95 11.85
============ =========== ===========
Maximum Sales Charge
(Investor A)................... 4.50% 4.50%
=========== ===========
Maximum Offering Price
(100%/(100%--Maximum Sales
Charge) of net asset value
adjusted to nearest cent) per
share (Investor A).............. $ 1.00(a) $ 10.17 $ 12.25
============ =========== ===========
Investments, at cost............. $158,216,165 $35,868,859 $57,587,972
============ =========== ===========
</TABLE>
- ------
(a)Offering price and redemption price are the same for the U.S. Government
Securities Money Market Fund.
*Redemption price of Investor B Shares varies based on length of time shares
are held.
See notes to financial statements.
-12-
<PAGE>
THE RIVERFRONT FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
OHIO TAX-FREE FLEXIBLE GROWTH STOCK APPRECIATION
BOND FUND FUND FUND
------------- --------------- ------------------
<S> <C> <C> <C>
ASSETS:
Investments, at value.......... $11,650,714 $14,811,639 $39,420,991
Repurchase agreements.......... 1,579,159
----------- ----------- -----------
Total Investments.......... 11,650,714 14,811,639 41,000,150
Interest receivable............ 76,834 122,851 26,709
Receivable for capital shares
issued........................ 22,430 44,007
Receivable from investment
adviser....................... 612 58,705
Unamortized organization
costs......................... 5,825 2,049 48,231
Prepaid expenses and other
assets........................ 620 4,372 3,943
----------- ----------- -----------
Total Assets............... 11,734,605 15,022,046 41,123,040
----------- ----------- -----------
LIABILITIES:
Dividends payable.............. 1,449 51,444
Payable for capital shares
redeemed...................... 17,633
Payable to brokers for
investments purchased......... 474,680
Accrued expenses and other
payables:
Investment advisory fees..... 3,976 7,238 27,648
Administration fees.......... 1,988 2,413 6,912
Audit and legal fees......... 3,299 2,945 279
Other........................ 6,852 8,799 21,029
----------- ----------- -----------
Total Liabilities.......... 17,564 565,152 55,868
----------- ----------- -----------
NET ASSETS:
Capital........................ 11,153,013 13,247,718 33,949,349
Undistributed net investment
income........................ 5,459 9,166
Net unrealized appreciation
from investments.............. 558,379 1,200,010 7,117,823
Accumulated undistributed net
realized gains from
investment transactions....... 190
----------- ----------- -----------
Net Assets................. $11,717,041 $14,456,894 $41,067,172
=========== =========== ===========
Net Assets
Investor A Shares............ $11,090,807 $ 9,426,863 $40,994,847
Investor B Shares............ 626,234 5,030,031 72,325
----------- ----------- -----------
Total...................... $11,717,041 $14,456,894 $41,067,172
=========== =========== ===========
Shares of capital stock........
Investor A Shares............ 1,055,522 829,894 4,315,611
Investor B Shares............ 58,358 430,077 7,299
----------- ----------- -----------
Total...................... 1,113,880 1,259,971 4,322,910
=========== =========== ===========
Net asset value................
Investor A Shares--
redemption price per share.. $ 10.51 $ 11.36 $ 9.50
Investor B Shares--offering
price per share*............ 10.73 11.70 9.91
=========== =========== ===========
Maximum Sales Charge (Investor
A)............................ 4.50% 4.50% 4.50%
=========== =========== ===========
Maximum Offering Price
(100%/(100%--Maximum Sales
Charge) of net asset value
adjusted to nearest cent) per
share (Investor A)........... $ 11.01 $ 11.90 $ 9.95
=========== =========== ===========
Investments, at cost.......... $11,092,335 $13,611,629 $33,882,327
=========== =========== ===========
</TABLE>
- ------
* Redemption price of Investor B Shares varies based on length of time shares
are held.
See notes to financial statements.
-13-
<PAGE>
THE RIVERFRONT FUNDS, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
U.S. GOVERNMENT
SECURITIES MONEY U.S. GOVERNMENT INCOME EQUITY
MARKET FUND INCOME FUND FUND
---------------- --------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income................. $8,763,797 $2,465,709 $ 111,565
Dividend income................. 1,705,653
---------- ---------- -----------
Total Income................ 8,763,797 2,465,709 1,817,218
---------- ---------- -----------
EXPENSES:
Investment advisory fees........ 221,912 144,461 407,229
Administration fees............. 296,225 72,231 96,796
12b-1 fees (Investor A)......... 369,910 89,106 117,603
12b-1 fees (Investor B)......... 4,833 14,271
Custodian and accounting fees... 73,973 36,115 72,596
Audit and legal fees............ 133,254 29,458 59,767
Trustees' fees and expenses..... 16,050 3,364 4,765
Transfer agent fees............. 59,257 37,402 42,860
Registration and filing fees.... 13,235 4,600 7,802
Printing costs.................. 26,680 6,282 11,066
Other........................... 16,925 3,827 4,406
Expenses voluntarily reduced.... (369,910) (33,246) (41,897)
---------- ---------- -----------
Total expenses before
reimbursement by investment
adviser...................... 857,511 398,433 797,264
Reimbursement of expenses by
investment adviser........... (548) (62,119)
---------- ---------- -----------
Total Expenses.............. 857,511 397,885 735,145
---------- ---------- -----------
Net Investment Income........... 7,906,286 2,067,824 1,082,073
---------- ---------- -----------
REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS:
Net realized gains (losses) from
investment transactions........ (1,415) (517,451) 6,655,045
Net change in unrealized
appreciation from investments.. 3,520,908 5,311,784
---------- ---------- -----------
Net realized/unrealized gains
(losses) from investments...... (1,415) 3,003,457 11,966,829
---------- ---------- -----------
Change in net assets resulting
from operations................ $7,904,871 $5,071,281 $13,048,902
========== ========== ===========
</TABLE>
See notes to financial statements.
-14-
<PAGE>
THE RIVERFRONT FUNDS, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
FLEXIBLE STOCK STOCK
OHIO TAX-FREE GROWTH APPRECIATION APPRECIATION
BOND FUND FUND FUND (A) FUND (B)
------------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income............ $ 590,027 $ 311,142 $ 93,734 $ 368,293
Dividend income............ 91,106 39,950 384,381
---------- ---------- ----------- ----------
Total Income........... 590,027 402,248 133,684 752,674
---------- ---------- ----------- ----------
EXPENSES:
Investment advisory fees... 56,114 76,231 83,982 439,627
Administration fees........ 22,439 16,888 20,771
12b-1 fees (Investor A).... 26,953 15,101 26,239 279,882
12b-1 fees (Investor B).... 4,410 24,218 21
Custodian and accounting
fees...................... 15,708 12,666 15,578 48,947
Audit and legal fees....... 18,656 10,249 8,306 36,163
Organization costs......... 8,823 4,078 6,704
Trustees' fees and
expenses.................. 1,096 365 2,005 2,779
Transfer agent fees........ 25,445 22,857 9,834 75,871
Registration and filing
fees...................... 4,266 5,423 6,303 18,296
Printing costs............. 1,776 13,439 5,080
Other...................... 1,043 441 1,173 143,379
Expenses voluntarily
reduced................... (15,933) (31,119) (1,181)
---------- ---------- ----------- ----------
Total expenses before
reimbursement by
investment adviser...... 170,796 170,837 184,815 1,044,944
Reimbursement of expenses
by investment adviser... (544) (44,178)
---------- ---------- ----------- ----------
Total Expenses......... 170,252 126,659 184,815 1,044,944
---------- ---------- ----------- ----------
Net Investment Income
(Loss).................... 419,775 275,589 (51,131) (292,270)
---------- ---------- ----------- ----------
REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS:
Net realized gains from
investment transactions... 8,848 131,879 1,556,383 3,024,858
Net change in unrealized
appreciation (depreciation)
from investments.......... 713,315 1,230,202 (2,070,853) 5,538,265
---------- ---------- ----------- ----------
Net realized/unrealized
gains (losses) from
investments............... 722,163 1,362,081 (514,470) 8,563,123
---------- ---------- ----------- ----------
Change in net assets
resulting from operations. $1,141,938 $1,637,670 $ (565,601) $8,270,853
========== ========== =========== ==========
</TABLE>
- ------
(a) Period from October 1, 1995 (date acquired by Riverfront Stock Appreciation
Fund) through December 31, 1995.
(b) Represents statement of operations for the MIM Stock Appreciation Fund for
the year ended September 30, 1995 (prior fiscal year end). Audited by other
auditors.
See notes to financial statements.
-15-
<PAGE>
THE RIVERFRONT FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES U.S. GOVERNMENT INCOME EQUITY
MONEY MARKET FUND INCOME FUND FUND
---------------------------- -------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 (A) 1995 1994 (A) 1995 1994 (A)
------------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income.. $ 7,906,286 $ 5,452,996 $ 2,067,824 $ 1,797,395 $ 1,082,073 $ 936,433
Net realized gains
(losses) from
investment
transactions.......... (1,415) (875) (517,451) (1,525,031) 6,655,045 1,673,314
Net change in
unrealized
appreciation
(depreciation) from
investments........... 3,520,908 (1,773,015) 5,311,784 (1,806,498)
------------- ------------- ----------- ----------- ----------- -----------
Change in net assets
resulting from
operations............. 7,904,871 5,452,121 5,071,281 (1,500,651) 13,048,902 803,249
------------- ------------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO
INVESTOR A
SHAREHOLDERS:
From net investment
income................ (7,906,286) (5,452,996) (2,032,120) (1,797,395) (1,065,510) (936,243)
In excess of net
investment income..... (3,474) (6,742)
From net realized gains
from investments...... (6,293,075) (1,694,627)
DISTRIBUTIONS TO
INVESTOR B
SHAREHOLDERS:
From net investment
income................ (22,977) (16,563)
In excess of net
investment income..... (105)
From net realized gains
from investments...... (222,170)
------------- ------------- ----------- ----------- ----------- -----------
Change in net assets
from shareholder
distributions.......... (7,906,286) (5,452,996) (2,055,097) (1,800,869) (7,604,165) (2,630,870)
------------- ------------- ----------- ----------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................ 331,872,719 252,936,958 5,670,500 7,849,466 12,155,416 13,962,314
Proceeds from shares
issued in connection
with acquisition...... 4,865,634 9,727,219
Dividends reinvested... 1,518,099 569,500 578,837 333,435 8,648,647 900,398
Cost of shares
redeemed.............. (330,133,820) (237,338,519) (4,185,229) (2,238,879) (7,262,834) (2,457,054)
------------- ------------- ----------- ----------- ----------- -----------
Change in net assets
from capital
transactions........... 8,122,632 16,167,939 2,064,108 5,944,022 23,268,448 12,405,658
------------- ------------- ----------- ----------- ----------- -----------
Change in net assets.... 8,121,217 16,167,064 5,080,292 2,642,502 28,713,185 10,578,037
NET ASSETS:
Beginning of period.... 149,374,282 133,207,218 32,720,883 30,078,381 34,965,204 24,387,167
------------- ------------- ----------- ----------- ----------- -----------
End of period.......... $ 157,495,499 $ 149,374,282 $37,801,175 $32,720,883 $63,678,389 $34,965,204
============= ============= =========== =========== =========== ===========
SHARE TRANSACTIONS:
Issued................. 331,872,719 252,936,958 592,903 838,911 1,069,857 1,295,899
Issued in connection
with acquisition...... 4,865,634 793,942
Reinvested............. 1,518,099 569,500 61,636 36,232 764,131 84,342
Redeemed............... (330,133,820) (237,338,519) (444,444) (243,620) (634,159) (230,101)
------------- ------------- ----------- ----------- ----------- -----------
Change in shares........ 8,122,632 16,167,939 210,095 631,523 1,993,771 1,150,140
============= ============= =========== =========== =========== ===========
</TABLE>
- ------
(a)Audited by other auditors
See notes to financial statements.
-16-
<PAGE>
THE RIVERFRONT FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
OHIO TAX-FREE BOND FUND FLEXIBLE GROWTH FUND
----------------------------------- -----------------------------------
PERIOD PERIOD
YEAR ENDED FROM AUGUST 1, YEAR ENDED FROM SEPTEMBER 1,
DECEMBER 31, 1994 THROUGH DECEMBER 31, 1994 THROUGH
1995 DECEMBER 31, 1994 (A) 1995 DECEMBER 31, 1994 (A)
------------ --------------------- ------------ ---------------------
<S> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income.. $ 419,775 $ 121,843 $ 275,589 $ 22,610
Net realized gains
(losses) from
investment
transactions.......... 8,848 (8,658) 131,879 (2,876)
Net change in
unrealized
appreciation
(depreciation) from
investments........... 713,315 (154,936) 1,230,202 (30,192)
----------- ----------- ----------- ----------
Change in net assets
resulting from
operations............. 1,141,938 (41,751) 1,637,670 (10,458)
----------- ----------- ----------- ----------
DISTRIBUTIONS TO
INVESTOR A
SHAREHOLDERS:
From net investment
income................ (401,164) (123,784) (202,502) (27,057)
From net realized gains
from investments...... (85,787)
DISTRIBUTIONS TO
INVESTOR B
SHAREHOLDERS:
From net investment
income................ (13,152) (63,921)
From net realized gains
from investments...... (43,216)
----------- ----------- ----------- ----------
Change in net assets
from shareholder
distributions.......... (414,316) (123,784) (395,426) (27,057)
----------- ----------- ----------- ----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................ 895,943 10,355,088 11,076,750 2,833,344
Dividends reinvested... 18,208 27 334,888 13,957
Cost of shares
redeemed.............. (114,312) (906,216) (100,558)
----------- ----------- ----------- ----------
Change in net assets
from capital
transactions........... 799,839 10,355,115 10,505,422 2,746,743
----------- ----------- ----------- ----------
Change in net assets.... 1,527,461 10,189,580 11,747,666 2,709,228
NET ASSETS:
Beginning of period.... 10,189,580 2,709,228
----------- ----------- ----------- ----------
End of period.......... $11,717,041 $10,189,580 $14,456,894 $2,709,228
=========== =========== =========== ==========
SHARE TRANSACTIONS:
Issued................. 87,181 1,036,159 1,035,102 285,468
Reinvested............. 1,760 3 30,561 1,408
Redeemed............... (11,223) (82,394) (10,174)
----------- ----------- ----------- ----------
Change in shares........ 77,718 1,036,162 983,269 276,702
=========== =========== =========== ==========
</TABLE>
- ------
(a) Period from commencement of operations. Audited by other auditors.
See notes to financial statements.
-17-
<PAGE>
THE RIVERFRONT FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
STOCK APPRECIATION FUND
-------------------------------------------------------------------
PERIOD PERIOD PERIOD
FROM OCTOBER 1, FROM OCTOBER 1, FROM OCTOBER 1,
1995 THROUGH 1994 THROUGH 1993 THROUGH
DECEMBER 31, 1995 (A) SEPTEMBER 30, 1995 (B) SEPTEMBER 30, 1994 (B)
--------------------- ---------------------- ----------------------
<S> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment loss.... $ (51,131) $ (292,270) $ (725,732)
Net realized gains from
investment
transactions.......... 1,556,383 3,024,858 715,333
Net change in
unrealized
appreciation
(depreciation) from
investments........... (2,070,853) 5,538,265 (8,468,657)
----------- ------------ ------------
Change in net assets
resulting from
operations............. (565,601) 8,270,853 (8,479,056)
----------- ------------ ------------
DISTRIBUTIONS TO
INVESTOR A
SHAREHOLDERS:
From net investment
income................ (1,166,721) (1,869,901)
From net realized gains
from investments...... (1,556,383) (1,566,848)
Tax return of capital.. (6,824)
----------- ------------ ------------
Change in net assets
from shareholder
distributions.......... (1,563,207) (1,166,721) (3,436,749)
----------- ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................ 810,508
Dividends reinvested... 1,542,781
Cost of shares
redeemed.............. (3,611,887)
----------- ------------ ------------
Change in net assets
from capital
transactions........... (1,258,598) (10,529,141) 463,566
----------- ------------ ------------
Change in net assets.... (3,387,406) (3,425,009) (11,452,239)
NET ASSETS:
Beginning of period.... 44,454,578 47,879,587 59,331,826
----------- ------------ ------------
End of period.......... $41,067,172 $ 44,454,578 $ 47,879,587
=========== ============ ============
SHARE TRANSACTIONS:
Issued................. 83,381
Reinvested............. 164,279
Redeemed............... (370,208)
----------- ------------ ------------
Change in shares........ (122,548)
=========== ============ ============
</TABLE>
- ------
(a) Period from date acquired by Riverfront Stock Appreciation Fund.
(b) Represents statements of changes in net assets for the MIM Stock
Appreciation Fund. Audited by other auditors.
See notes to financial statements.
-18-
<PAGE>
THE RIVERFRONT FUNDS, INC.
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
---------- ---------------------------------------------------- ------------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES (35.2%):
Federal Farm Credit Bank:
3,000,000 Discount Note, 1/19/96.............................. $ 2,991,585
3,000,000 Discount Note, 2/21/96.............................. 2,976,540
Federal Home Loan Mortgage Corp.:
7,825,000 Discount Note, 1/2/96............................... 7,823,783
2,000,000 Discount Note, 2/26/96.............................. 1,982,764
3,000,000 Discount Note, 4/1/96............................... 2,959,050
Federal National Mortgage Assoc.:
100,000 9.35%, 2/12/96...................................... 100,306
5,000,000 Discount Note, 1/3/96............................... 4,998,447
6,000,000 Discount Note, 1/5/96............................... 5,996,270
3,000,000 Discount Note, 1/16/96.............................. 2,993,025
6,770,000 Discount Note, 2/2/96............................... 6,736,575
3,000,000 Discount Note, 2/22/96.............................. 2,975,714
3,000,000 Discount Note, 3/8/96............................... 2,969,515
3,000,000 Discount Note, 3/14/96.............................. 2,966,846
4,000,000 Discount Note, 3/28/96.............................. 3,948,573
World Bank:
3,000,000 Discount Note, 3/4/96............................... 2,971,020
------------
Total U.S. Government Agencies 55,390,013
------------
COMMERCIAL PAPER (27.7%):
British Commercial Paper (4.4%):
4,000,000 Glaxo PLC, Discount Note, 1/23/96................... 3,986,067
3,000,000 Hanson PLC, Discount Note, 3/6/96................... 2,969,829
------------
6,955,896
------------
Energy (1.9%):
3,000,000 Mid American Energy Co., Discount Note, 3/26/96..... 2,960,688
------------
Financial Services (5.6%):
2,000,000 International Lease Finance Corp., Discount Note,
2/23/96............................................ 1,983,393
4,000,000 Merrill Lynch, Discount Note, 1/17/96............... 3,989,867
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------------------------------------------------- ------------
<C> <S> <C>
COMMERCIAL PAPER, CONTINUED:
Financial Services, continued:
3,000,000 Merrill Lynch, Discount Note, 2/29/96................ $ 2,972,172
------------
8,945,432
------------
German Commercial Paper (2.5%):
4,000,000 Daimler--Benz North America Corp., Discount Note,
1/30/96............................................. 3,981,601
------------
Japanese Commercial Paper (4.4%):
3,000,000 Mitsubishi Corp., Discount Note, 3/15/96............. 2,965,343
4,000,000 Mitsui & Co., Discount Note, 4/17/96................. 3,934,611
------------
6,899,954
------------
Manufacturing (1.9%):
3,000,000 Case Equipment Corp., Discount Note, 1/12/96......... 2,994,729
------------
Pharmaceutical (1.9%):
3,000,000 Allergan Co., Discount Note, 1/9/96.................. 2,996,173
------------
Telecommunication (5.1%):
4,000,000 AT&T Corp., Discount Note, 1/23/96................... 3,986,067
4,000,000 MCI Communications Corp., Discount Note, 2/20/96..... 3,968,612
------------
7,954,679
------------
Total Commercial Paper 43,689,152
------------
Total Investments 99,079,165
------------
</TABLE>
Continued
-19-
<PAGE>
THE RIVERFRONT FUNDS, INC.
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
---------- ----------------------------------------------------- ------------
<C> <S> <C>
REPURCHASE AGREEMENTS (37.5%):
24,137,000 Dean Witter, 5.70%, dated 12/29/95, due 1/2/96
(Collateralized by various U.S. Government Agency
Securities, 0.00%-7.99%, 2/6/95-6/1/24, market
value-$24,619,742).................................. $ 24,137,000
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
---------- --------------------------------------------------- ------------
<C> <S> <C>
REPURCHASE AGREEMENTS, CONTINUED:
35,000,000 Prudential, 5.83%, dated 12/29/95, due 1/2/96
(Collateralized by various U.S. Treasury and U.S.
Government Agency Securities, 0.00%-8.50%,
5/15/04-12/1/25, market value--$35,700,146)....... $ 35,000,000
------------
Total Repurchase Agreements 59,137,000
------------
Total (Cost--$158,216,165)(a) $158,216,165
============
</TABLE>
- ------
Percentages indicated are based on net assets of $157,495,499.
(a) Cost for federal income tax and financial reporting purposes are the same.
See notes to financial statements.
-20-
<PAGE>
THE RIVERFRONT FUNDS, INC.
U.S. GOVERNMENT INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
CORPORATE BONDS (25.0%):
Automotive (1.3%):
500,000 Ford Motor Credit Corp., 6.25%, 12/8/05............... $ 498,125
-----------
Financial (18.3%):
1,000,000 Chemical Bank, 8.50%, 2/15/02......................... 1,126,250
1,000,000 Chemical Master Credit Card Trust I, 6.23%, 6/15/03,
Series 1995-2........................................ 1,018,680
1,000,000 Comerica, Inc., 7.25%, 8/1/07......................... 1,060,000
1,000,000 First Chicago Master Trust II, Series 1994L, 7.15%,
4/15/01.............................................. 1,055,260
500,000 Grand Metropolitan Investment, 7.45%, 4/15/35......... 548,750
500,000 Lehman Brothers Holdings, 7.13%, 9/15/03.............. 513,125
500,000 Lehman Brothers Holdings, 8.50%, 5/1/07............... 562,500
1,000,000 MBNA Master Credit Card Trust, 6.05%, 11/15/02........ 1,012,010
-----------
6,896,575
-----------
Telecommunication (2.7%):
1,000,000 U.S. West Capital Corp., 6.31%, 11/1/05............... 1,020,000
-----------
Tobacco (2.7%):
1,000,000 Philip Morris Cos., Inc., 7.50%, 3/15/97.............. 1,021,250
-----------
Total Corporate Bonds 9,435,950
-----------
U.S. GOVERNMENT AGENCIES (62.2%):
Federal Home Loan Bank:
1,000,000 5.60%, 7/24/97........................................ 1,004,240
500,000 8.07%, 2/27/02........................................ 534,675
875,000 6.38%, 4/29/03........................................ 883,470
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Federal Home Loan Mortgage Corp.:
1,000,000 6.55%, 1/4/00.......................................... $ 1,032,760
500,000 6.33%, 2/16/00......................................... 500,430
1,000,000 6.78%, 3/28/01 ........................................ 1,002,220
1,000,000 7.68%, 5/23/01......................................... 1,034,610
1,000,000 7.35%, 5/16/05......................................... 1,055,430
500,000 7.50%, 3/15/15......................................... 508,105
1,000,000 7.00%, 10/15/17........................................ 1,019,230
1,000,000 6.00%, 1/15/18......................................... 1,003,930
1,000,000 7.20%, 6/15/18......................................... 1,016,100
1,250,000 5.85%, 1/25/19......................................... 1,231,675
Federal National Mortgage Association:
1,000,000 5.33%, 6/26/98......................................... 995,160
500,000 9.05%, 4/10/00......................................... 564,235
625,000 6.38%, 6/25/03......................................... 630,481
625,000 6.05%, 6/30/03......................................... 637,400
888,146 6.75%, 8/25/04......................................... 888,769
1,050,000 8.50%, 2/1/05.......................................... 1,144,332
1,000,000 7.00%, 9/25/05......................................... 1,014,200
1,000,000 7.00%, 9/25/19......................................... 1,009,700
600,000 9.50%, 11/10/20........................................ 639,966
Government National Mortgage Association:
885,637 8.00%, 5/15/23
Pool #351752.......................................... 921,355
Student Loan Marketing Association:
1,000,000 6.05%, 9/14/00......................................... 1,019,500
1,000,000 7.20%, 11/9/00......................................... 1,066,250
Tennessee Valley Authority:
1,050,000 7.88%, 9/15/01......................................... 1,147,125
-----------
Total U.S. Government Agencies 23,505,348
-----------
U.S. TREASURY BONDS (2.6%):
410,000 6.50%, 4/30/99......................................... 425,039
500,000 7.25%, 5/15/04......................................... 555,215
-----------
Total U.S. Treasury Bonds 980,254
-----------
</TABLE>
Continued
-21-
<PAGE>
THE RIVERFRONT FUNDS, INC.
U.S. GOVERNMENT INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. TREASURY NOTES (5.5%):
500,000 5.88%, 3/31/99......................................... $ 508,870
250,000 5.88%, 2/15/04......................................... 255,242
1,000,000 6.50%, 5/15/05......................................... 1,064,190
250,00 6.25%, 8/15/23......................................... 257,170
-----------
Total U.S. Treasury Notes 2,085,472
-----------
YANKEE DOLLAR BONDS (1.1%):
365,000 Montreal Urban Community, 9.13%, 3/15/01............... 414,275
-----------
Total Yankee Dollar Bonds 414,275
-----------
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
INVESTMENT COMPANIES (2.3%):
884,394 Dreyfus Treasury Prime Fund............................ $ 884,394
-----------
Total Investment Companies 884,394
-----------
Total (Cost--$35,868,859)(a) $37,305,693
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $37,801,175.
(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........... $1,459,613
Unrealized depreciation........... (22,779)
----------
Net unrealized appreciation....... $1,436,834
==========
</TABLE>
See notes to financial statements.
-22-
<PAGE>
THE RIVERFRONT FUNDS, INC.
INCOME EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (97.0%):
Aerospace-Aircraft (0.8%):
800 B.F. Goodrich Co....................................... $ 54,500
3,000 Raytheon Co............................................ 141,750
2,000 Rockwell International Corp............................ 105,750
2,000 United Technologies Corp............................... 189,750
-----------
491,750
-----------
Apparel (2.2%):
51,700 Intimate Brands, Inc................................... 775,500
11,600 V F Corp............................................... 611,900
-----------
1,387,400
-----------
Automobile & Parts (2.2%):
15,100 Eaton Corp............................................. 809,737
800 Genuine Parts Co....................................... 32,800
7,100 TRW, Inc............................................... 550,250
-----------
1,392,787
-----------
Banks (8.9%):
11,500 AmSouth Bancorporation................................. 464,313
12,000 Bank of Boston Corp. .................................. 555,000
5,500 BayBanks, Inc. ........................................ 540,375
23,100 Central Fidelity Banks, Inc............................ 739,200
12,400 Crestar Financial Corp................................. 733,150
11,500 First American Corp.................................... 544,812
1,000 First Virginia Banks, Inc.............................. 41,750
24,200 Jefferson Bankshares, Inc.............................. 490,050
30,100 Magna Group, Inc....................................... 714,875
27,600 Summit Bancorp......................................... 869,400
-----------
5,692,925
-----------
Building Materials (2.0%):
37,200 Masco Corp............................................. 1,167,150
2,000 Sherwin Williams Co.................................... 81,500
-----------
1,248,650
-----------
Chemicals (7.9%):
11,700 Betz Laboratories, Inc................................. 479,700
42,300 Crompton & Knowles Corp................................ 560,475
900 Dexter Corp............................................ 21,263
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Chemicals, continued:
3,500 E.I. du Pont deNemours & Co. .......................... $ 244,563
91,400 Ethyl Corp............................................. 1,142,500
2,000 Great Lakes Chemical Corp.............................. 144,000
26,500 Lawter International, Inc.............................. 308,062
17,500 Nalco Chemical Co...................................... 527,187
3,000 PPG Industries, Inc.................................... 137,250
11,000 Rohm & Haas Co......................................... 708,125
25,600 Witco Corp............................................. 748,800
-----------
5,021,925
-----------
Chemicals & Drugs (0.2%):
1,600 Bristol Myers Squibb Co................................ 137,400
-----------
Consumer Products (1.3%):
23,000 Corning, Inc........................................... 736,000
2,000 Gillette Co............................................ 104,250
-----------
840,250
-----------
Cosmetics (0.2%):
2,000 International Flavors.................................. 96,000
-----------
Commercial Services (2.5%):
20,300 Kelly Services, Inc.-Class A........................... 563,325
47,500 Ogden Corp............................................. 1,015,312
-----------
1,578,637
-----------
Department Stores (4.1%):
27,600 May Department Stores Co............................... 1,166,100
16,600 Mercantile Stores Co., Inc............................. 767,750
11,800 J.C. Penney Co......................................... 561,975
3,000 Sears Roebuck & Co..................................... 117,000
-----------
2,612,825
-----------
Electrical (2.3%):
6,000 AMP, Inc............................................... 230,250
15,100 Thomas & Betts Corp.................................... 1,113,625
1,500 WW Grainger, Inc....................................... 99,375
-----------
1,443,250
-----------
</TABLE>
Continued
-23-
<PAGE>
THE RIVERFRONT FUNDS, INC.
INCOME EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Electronics (2.7%):
4,000 General Electric Co.................................... $ 288,000
39,800 General Signal Corp.................................... 1,288,525
3,000 Loral Corp............................................. 106,125
1,500 National Service Industries, Inc....................... 48,563
-----------
1,731,213
-----------
Energy & Oil (0.2%):
1,000 British Petroleum, PLC-ADR............................. 102,125
-----------
Financial Services (2.6%):
39,700 ITT Industries, Inc.................................... 952,800
5,500 J.P. Morgan & Co....................................... 441,375
4,000 Norwest Corp........................................... 132,000
2,000 Student Loan Marketing Assoc........................... 131,750
-----------
1,657,925
-----------
Food Processing (0.8%):
15,100 Dean Foods Co.......................................... 415,250
9,500 Tasty Baking Co........................................ 115,188
-----------
530,438
-----------
Foreign (2.2%):
90,500 Hanson Trust, PLC...................................... 1,380,125
-----------
Holding Company (1.7%):
7,800 Unilever N.V........................................... 1,097,850
-----------
Household Products/Wares (1.1%):
8,600 Colgate-Palmolive Co................................... 604,150
1,000 Procter & Gamble Co.................................... 83,000
-----------
687,150
-----------
Industrial Machinery (2.0%):
29,400 Cooper Industries, Inc................................. 1,080,450
7,900 Goulds Pumps, Inc...................................... 197,500
-----------
1,277,950
-----------
Insurance (5.3%):
2,781 Allstate Corp.......................................... 114,369
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Insurance, continued:
13,800 American Financial Group............................... $ 422,625
26,400 American General Corp.................................. 920,700
1,500 American International Group........................... 138,750
22,500 ITT Hartford Group, Inc.(b) 1,088,437
15,500 Torchmark Corp......................................... 701,375
-----------
3,386,256
-----------
Manufacturing--Miscellaneous (0.4%):
3,500 Minnesota Mining & Manufacturing Co.................... 231,875
-----------
Medical Services & Supplies (0.2%):
1,500 Becton Dickinson & Co.................................. 112,500
-----------
Metals (1.4%):
15,500 Reynolds Metals Co..................................... 877,687
-----------
Oil--International (0.5%):
5,000 Chevron Corp........................................... 262,500
1,000 Exxon Corp............................................. 80,125
-----------
342,625
-----------
Oil Equipment, Wells & Services (1.7%):
45,100 Dresser Industries, Inc................................ 1,099,312
-----------
Oil & Gas Production (10.4%):
10,800 Amoco Corp............................................. 776,250
19,200 Ashland, Inc........................................... 674,400
9,800 Atlantic Richfield Co.................................. 1,085,350
50,400 Occidental Petroleum Corp.............................. 1,077,300
34,000 Repsol, S.A.-ADR....................................... 1,117,750
42,800 USX-Marathon Group..................................... 834,600
38,500 Unocal Corp............................................ 1,121,312
-----------
6,686,962
-----------
Packaged Food (3.9%):
4,500 Flower's Industries, Inc............................... 54,563
11,800 General Mills, Inc..................................... 681,450
39,400 Grand Metropolitan, PLC-ADR............................ 1,132,750
33,000 Lance, Inc............................................. 540,375
</TABLE>
Continued
-24-
<PAGE>
THE RIVERFRONT FUNDS, INC.
INCOME EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Packaged Food, continued:
2,500 Sara Lee Corp.......................................... $ 79,688
-----------
2,488,826
-----------
Pharmaceuticals (4.2%):
3,000 Abbott Laboratories.................................... 125,250
9,000 Merck & Co., Inc....................................... 591,750
3,000 Pfizer, Inc............................................ 189,000
6,000 Schering-Plough........................................ 328,500
14,600 Warner-Lambert Co...................................... 1,418,025
-----------
2,652,525
-----------
Photography (0.6%):
5,500 Eastman Kodak Co....................................... 368,500
-----------
Pipelines (2.1%):
27,500 Tenneco, Inc........................................... 1,364,687
-----------
Printing & Publishing (1.8%):
17,900 Dun & Bradstreet Corp.................................. 1,159,025
-----------
Real Estate Investment Trusts (0.2%):
3,000 Federal Realty Investment Trust........................ 68,250
3,200 New Plan Realty Trust.................................. 70,000
-----------
138,250
-----------
Restaurants (0.1%):
1,800 Luby's Cafeterias, Inc................................. 40,050
-----------
Retail (0.4%):
5,000 Winn Dixie Stores, Inc................................. 184,375
5,000 Woolworth Corp......................................... 65,000
-----------
249,375
-----------
Savings & Loan (0.9%):
30,000 Roosevelt Financial Group, Inc......................... 581,250
-----------
Tobacco (1.2%):
5,000 American Brands, Inc................................... 223,125
5,000 Philip Morris Cos., Inc................................ 452,500
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Tobacco, continued:
1,300 UST, Inc............................................... $ 43,388
-----------
719,013
-----------
Tools (0.6%):
4,000 Illinois Tool Works.................................... 236,000
3,600 Snap-On, Inc........................................... 162,900
-----------
398,900
-----------
Transportation (1.1%):
5,800 Canadian National Railway Co.(b)....................... 87,000
2,500 Illinois Central Corp.................................. 95,938
2,500 Norfolk Southern Corp.................................. 198,438
13,500 Ryder System, Inc...................................... 334,125
-----------
715,501
-----------
Utilities--Electric (4.2%):
27,191 Cinergy Corp........................................... 832,724
1,000 KU Energy Corp......................................... 30,000
22,000 Peco Energy Co......................................... 662,750
18,300 Public Services Enterprise Group....................... 560,437
14,400 Texas Utilities Co..................................... 592,200
-----------
2,678,111
-----------
Utilities--Gas (0.1%):
1,500 Consolidated Natural Gas Co............................ 68,063
1,000 Washington Gas & Light Co.............................. 20,500
-----------
88,563
-----------
Utilities--Telecommunications (7.8%):
17,600 ALLTEL Corp............................................ 519,200
46,800 Frontier Corp.......................................... 1,404,000
15,600 GTE Corp............................................... 686,400
1,200 Pacific Telesis Group.................................. 40,350
30,200 Southern New England Telecommunications Corp........... 1,200,450
26,400 Sprint Corp............................................ 1,052,700
</TABLE>
Continued
-25-
<PAGE>
THE RIVERFRONT FUNDS, INC.
INCOME EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities--Telecommunications, continued:
1,500 US West, Inc........................................... $ 53,625
-----------
4,956,725
-----------
Total Common Stocks 61,745,093
-----------
CONVERTIBLE CORPORATE BONDS (1.9%):
Financial (0.4%):
50,000 Chubb Capital Corp., 6.00%, 5/15/98.................... 57,250
50,000 Cincinnati Financial Corp., 5.50%, 5/1/02.............. 69,500
50,000 South Carolina National Corp., 6.50%, 5/15/01.......... 118,375
-----------
245,125
-----------
Industrial (0.3%):
50,000 Hazleton Labs, 6.50%, 5/15/06.......................... 123,250
50,000 Liebert Corp., 8.00%, 11/15/10......................... 145,500
-----------
268,750
-----------
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
CONVERTIBLE CORPORATE BONDS, CONTINUED:
Manufacturing (0.2%):
100,000 Allegheny Ludlum Corp., 5.88%, 3/15/02................. $ 103,625
-----------
Oil & Gas--Domestic (0.2%):
100,000 Pennzoil Co., 6.50%, 1/15/03........................... 128,500
-----------
Restaurant (0.1%):
85,000 Cooker Restaurant, 6.75%, 10/1/02...................... 68,000
-----------
Retail (0.5%):
300,000 Federated Department Stores, 5.00%, 10/1/03............ 300,375
-----------
Toys (0.2%):
100,000 Hasbro, Inc., 6.00%,
11/15/98.............................................. 110,500
-----------
Total Convertible Corporate Bonds 1,224,875
-----------
Total (Cost--$57,587,972)(a) $62,969,968
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $63,678,389.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of $96,134. Cost for federal income tax purposes differs from value by net
unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation......... $ 6,388,955
Unrealized depreciation......... (1,103,093)
-----------
Net unrealized appreciation..... $ 5,285,862
===========
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements.
-26-
<PAGE>
THE RIVERFRONT FUNDS, INC.
OHIO TAX-FREE BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
OHIO MUNICIPAL BONDS (93.3%):
100,000 Aurora, City School District, 5.40%, 12/1/06........... $ 105,000
100,000 Bowling Green, City School District, 5.70%, 12/1/11.... 102,375
230,000 Butler County, Hospital Facilities, 6.00%, 11/15/10,
Callable 5/15/04...................................... 240,925
250,000 Butler County, Sewer System Revenue, Series B, 6.20%,
12/1/09............................................... 265,937
250,000 Canton, Waterworks System, 5.75%, 12/1/10.............. 262,187
100,000 Chillicothe, Water System Revenue, 5.10%, 12/1/05...... 101,625
200,000 Cincinnati, GO, 4.50%, 12/1/97......................... 202,250
250,000 Cincinnati, GO, 5.25%, 12/1/01......................... 262,813
250,000 Clermont County, Waterworks Revenue, 6.63%, 12/1/16.... 284,062
250,000 Columbus, GO, 5.90%, 1/1/01............................ 267,812
250,000 Columbus, GO, 5.50%, 5/15/08, Callable 5/15/06......... 263,125
250,000 Columbus, Sewer Revenue, 6.13%, 6/1/03................. 277,812
250,000 Columbus, Sewer Revenue, 8.00%, 6/1/08................. 259,275
200,000 Columbus, GO, 5.65%, 6/15/11........................... 207,750
100,000 Delaware County, GO, 5.60%, 12/1/10.................... 102,625
100,000 Dover, Municipal Electric System Revenue, 5.35%,
12/1/06............................................... 104,125
250,000 Franklin County, Hospital Revenue, Riverside United
Methodist-A, 5.30%, 5/15/02........................... 257,813
250,000 Franklin County, Hospital Revenue, 5.25%, 6/1/08....... 250,938
250,000 Fremont, GO, 5.45%, 12/15/07........................... 259,688
250,000 Gahanna, GO, 5.85%, 6/1/08............................. 267,812
250,000 Hamilton County, Building Improvement & Refunding
Museum Center, 5.75%, 12/1/00......................... 265,625
80,000 Hamilton County, Sewer Systems, Series A, 6.40%,
12/1/04............................................... 89,100
170,000 Hamilton County, Sewer System Unrefunded, Series A,
6.40%, 12/1/04........................................ 188,488
250,000 Hilliard, School District, 5.35%, 12/1/04.............. 261,875
250,000 Kings Local School District, 5.75%, 12/1/10............ 260,625
100,000 Lake County, Human Services Building, GO, 5.70%,
12/1/15............................................... 103,500
250,000 Lakota, Local School District, 6.00%, 12/1/07, Callable
12/1/02............................................... 265,313
250,000 Mahoning County, 5.60%, 12/1/02........................ 265,938
250,000 Mahoning County, GO, 5.70%, 12/1/08.................... 263,125
100,000 Marysville, School District, 5.30%, 12/1/09............ 101,250
200,000 Mason, City School District, GO, 5.20%, 12/1/08........ 203,750
250,000 Middletown, Capital Facilities Improvement Refunding,
5.60%, 12/1/05........................................ 261,250
100,000 Montgomery County, 5.40%, 9/1/09....................... 101,625
250,000 State Building Authority, 5.70%, 9/1/01................ 265,938
250,000 State Building Authority, 6.00%, 10/1/07............... 271,250
</TABLE>
Continued
-27-
<PAGE>
THE RIVERFRONT FUNDS, INC.
OHIO TAX-FREE BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
OHIO MUNICIPAL BONDS, CONTINUED:
245,000 State Building Authority, 6.13%, 10/1/09.............. $ 265,825
95,000 State Building Authority, 6.25%, 6/1/11............... 100,106
100,000 State, GO, 5.60%, 8/1/02.............................. 107,000
250,000 State Public Facilities Commission, Higher Education
Capital Facilities-Series II-B, 5.70%, 11/1/03....... 268,437
200,000 State Public Facilities Commission, Higher Education
Capital Facilities-Series II-A, 5.20%, 5/1/05........ 206,500
250,000 State Public Facilities Commission, Park & Recreations
Facilities, Series II-A, 5.25%, 6/1/06............... 255,000
250,000 State Special Obligation, 5.45%, 6/1/99............... 260,625
250,000 State Water Development Authority Revenue, 5.75%,
6/1/03............................................... 266,875
250,000 State Water Development Authority Revenue, 5.75%,
12/1/05, Callable 12/1/02............................ 265,937
150,000 State Water Development Authority Revenue, 5.70%,
12/1/11.............................................. 155,063
250,000 Olentangy Local School District-Series A, 5.70%,
12/1/05 270,312
100,000 Solon, GO, 5.25%, 12/1/07............................. 102,375
250,000 University of Cincinnati, Series R3, 5.80%, 6/1/04.... 267,500
250,000 Warren County, Waterworks Revenue, 5.75%, 12/1/09..... 259,688
100,000 West Clermont, Local School District, 5.55%, 12/1/06.. 105,250
250,000 Woodridge, Local School District, 5.75%, 12/1/07,
Callable 12/1/04..................................... 265,625
-----------
Total Ohio Municipal Bonds...................................... 10,936,719
-----------
INVESTMENT COMPANIES (6.1%):
375,000 Dreyfus Municipal Money Market Fund................... 375,000
338,995 Goldman Tax-Free Fund................................. 338,995
-----------
Total Investment Companies...................................... 713,995
-----------
Total (Cost--$11,092,335)(a).................................... $11,650,714
===========
</TABLE>
- --------
Percentages indicated are based on net assets of $11,717,041.
(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............ $ 562,460
Unrealized depreciation............ (4,081)
---------
Net unrealized appreciation........ $ 558,379
=========
</TABLE>
GO--General Obligation
See notes to financial statements.
-28-
<PAGE>
THE RIVERFRONT FUNDS, INC.
FLEXIBLE GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (45.1%):
Aerospace--Aircraft (1.8%):
2,200 Lockheed Martin Corp................................... $ 173,800
1,900 Watkin-Johnson Co...................................... 83,125
-----------
256,925
-----------
Banks (1.2%):
2,500 Citicorp............................................... 168,125
-----------
Beverages (0.9%):
2,000 Anheuser-Busch Cos., Inc............................... 133,750
-----------
Chemicals & Drugs (3.6%):
4,000 Bristol Myers Squibb Co................................ 343,500
2,500 E.I. du Pont deNemours & Co. .......................... 174,687
-----------
518,187
-----------
Computers & Software (2.2%):
2,000 Compaq Computer Corp.(b)............................... 96,000
4,800 Seagate Technology, Inc.(b)............................ 228,000
-----------
324,000
-----------
Electronics (2.9%):
3,500 Arrow Electronics, Inc.(b)............................. 150,937
2,000 Tektronix, Inc......................................... 98,250
3,200 Texas Instruments, Inc................................. 165,600
-----------
414,787
-----------
Energy--Oil (2.1%):
2,000 British Petroleum PLC-ADR.............................. 204,250
1,300 Exxon Corp............................................. 104,163
-----------
308,413
-----------
Food Processing (3.0%):
4,400 Archer Daniels Midland Co.............................. 79,200
4,500 H.J. Heinz Co.......................................... 149,062
4,000 IBP, Inc............................................... 202,000
-----------
430,262
-----------
Forest Products (0.5%):
2,000 International Paper Co................................. 75,750
-----------
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Grocery (1.6%):
6,000 Kroger Co.(b).......................................... $ 225,000
-----------
Household Products/Wares (1.3%):
2,700 Clorox Co.............................................. 193,388
-----------
Insurance--Fire & Casualty (1.5%):
3,000 Transatlantic Holdings, Inc............................ 220,125
-----------
Leisure Time (0.8%):
5,000 Brunswick Corp......................................... 120,000
-----------
Manufacturing (0.8%):
4,000 TRINOVA Corp........................................... 114,500
-----------
Metals (1.3%):
8,000 Placer Dome, Inc....................................... 193,000
-----------
Mining (2.5%):
5,000 Barrick Gold Corp...................................... 131,875
4,000 Homestake Mining Co.................................... 62,500
14,000 Santa Fe Pacific Gold Corp.(b)......................... 169,750
-----------
364,125
-----------
Natural Gas (3.6%):
3,500 Enron Corp............................................. 133,438
6,000 Pacific Enterprises.................................... 169,500
8,000 Panhandle Eastern Corp................................. 223,000
-----------
525,938
-----------
Oil & Gas Producers (2.3%):
1,200 Mobil Corp............................................. 134,400
9,000 YPF Sociedad Anonima-Sponsored-ADR..................... 194,625
-----------
329,025
-----------
Retail (1.9%):
6,000 Walgreen Co............................................ 179,250
3,000 Albertson's, Inc....................................... 98,625
-----------
277,875
-----------
</TABLE>
Continued
-29-
<PAGE>
THE RIVERFRONT FUNDS, INC.
FLEXIBLE GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Tobacco (2.1%):
3,300 Philip Morris Cos., Inc................................ $ 298,650
-----------
Utilities--Electric (4.0%):
3,000 Chilgener S.A.-ADR(b).................................. 75,000
7,000 Consolidated Edison of New York........................ 224,000
3,500 Duke Power Co.......................................... 165,812
1,900 Northern States Power Co............................... 93,338
-----------
558,150
-----------
Utilities--Telecommunications (3.2%):
4,500 Ameritech Corp......................................... 265,500
5,000 Telefonica De Argentina-ADR(b)......................... 136,250
2,000 Telefonos De Mexico, S.A.-ADR.......................... 63,750
-----------
465,500
-----------
Total Common Stocks 6,515,475
-----------
U.S. GOVERNMENT AGENCIES (3.5%):
Federal Home Loan Bank:
100,000 5.97%, 12/14/98........................................ 100,076
400,000 5.78%, 1/8/99.......................................... 400,000
-----------
Total U.S. Government Agencies 500,076
-----------
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. TREASURY BILLS (8.1%):
1,200,000 5/30/96................................................ $ 1,174,752
-----------
U.S. TREASURY BONDS (28.3%):
2,250,000 6.25%, 2/15/03......................................... 2,348,032
950,000 7.25%, 5/15/04......................................... 1,054,909
550,000 8.13%, 8/15/19......................................... 691,251
-----------
Total U.S. Treasury Bonds 4,094,192
-----------
U.S. TREASURY NOTES (15.1%):
300,000 7.50%, 1/31/96......................................... 300,567
300,000 6.88%, 4/30/97......................................... 306,372
700,000 6.50%, 5/15/97......................................... 711,914
200,000 6.25%, 5/31/00......................................... 206,774
400,000 7.25%, 5/15/16......................................... 456,508
200,000 6.25%, 8/15/23......................................... 205,736
-----------
Total U.S. Treasury Notes 2,187,871
-----------
U.S. TREASURY STRIPS (1.0%):
460,000 2/15/15................................................ 145,273
-----------
INVESTMENT COMPANIES (1.3%):
194,000 Dreyfus Treasury Prime Fund............................ 194,000
-----------
Total Investment Companies 194,000
-----------
Total (Cost--$13,611,629)(a) $14,811,639
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $14,456,894.
(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........... $1,256,995
Unrealized depreciation........... (56,985)
----------
Net unrealized appreciation....... $1,200,010
==========
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements.
-30-
<PAGE>
THE RIVERFRONT FUNDS, INC.
STOCK APPRECIATION FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (91.0%):
Aerospace--Aircraft (0.3%):
1,500 Lockheed Martin Corp................................... $ 118,500
-----------
Apparel (7.6%):
30,000 Donnkenny, Inc.(b)..................................... 543,750
15,000 Jones Apparel Group(b)................................. 590,625
24,000 The Men's Wearhouse, Inc.(b)........................... 618,000
12,000 Nike, Inc.-Class B..................................... 835,500
10,000 St. John's Knits, Inc.................................. 531,250
-----------
3,119,125
-----------
Banks (3.2%):
15,000 Bank of Boston Corp.................................... 693,750
14,000 Corestates Financial Corp.............................. 530,250
2,500 Norwest Corp........................................... 82,500
-----------
1,306,500
-----------
Beverages (0.3%):
2,000 PepsiCo, Inc........................................... 111,750
-----------
Brokerage (2.9%):
20,000 Raymond James Financial, Inc........................... 422,500
10,000 Charles Schwab Corp.................................... 201,250
5,000 Donaldson Lufkin & Jenrette............................ 156,250
16,875 Waterhouse Investor Services, Inc...................... 417,656
-----------
1,197,656
-----------
Chemicals (0.9%):
10,000 Union Carbide Holding Corp............................. 375,000
-----------
Commercial Services (3.1%):
12,500 Checkpoint Systems, Inc.(b)............................ 467,187
15,000 CUC International, Inc.(b)............................. 511,875
10,000 Franklin Quest Co.(b).................................. 195,000
2,000 Reuters Holdings-PLC ADR............................... 110,250
-----------
1,284,312
-----------
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Computer Services (3.1%):
10,000 HBO & Co............................................... $ 766,250
20,000 National Data Corp..................................... 495,000
-----------
1,261,250
-----------
Computers & Peripherals (3.0%):
15,000 Gateway 2000, Inc.(b).................................. 367,500
10,000 Read-Rite Corp.(b)..................................... 232,500
7,000 U.S. Robotics Corp.(b)................................. 614,250
-----------
1,214,250
-----------
Computers & Software (16.7%):
12,500 Active Voice Corp.(b).................................. 343,750
20,250 Bay Networks, Inc.(b).................................. 832,780
10,000 Cisco Systems, Inc.(b)................................. 746,250
12,000 Cognos, Inc.(b)........................................ 535,500
10,000 Dialogic Corp.(b)...................................... 385,000
20,000 Global Village Communication, Inc.(b).................. 387,500
12,300 In Focus Systems, Inc.(b).............................. 444,338
7,000 Microsoft Corp.(b)..................................... 614,250
10,000 Oracle Corp.(b)........................................ 423,750
15,000 Quarterdeck Corp.(b)................................... 412,500
10,000 Seagate Technology, Inc.(b)............................ 475,000
10,000 Sybase, Inc.(b)........................................ 360,000
13,500 Synopsys, Inc.(b)...................................... 513,000
9,000 3 Com Corp.(b)......................................... 419,625
-----------
6,893,243
-----------
Construction (1.7%):
10,000 Centex Corp............................................ 347,500
14,900 Toll Brothers, Inc.(b)................................. 342,700
-----------
690,200
-----------
Drugs (3.4%):
10,000 Amgen, Inc.(b)......................................... 593,750
1,500 Bristol Myers Squibb Co................................ 128,813
10,000 Glaxo Holdings-ADR..................................... 282,500
</TABLE>
Continued
-31-
<PAGE>
THE RIVERFRONT FUNDS, INC.
STOCK APPRECIATION FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Drugs, continued:
6,000 Merck & Co., Inc....................................... $ 394,500
-----------
1,399,563
-----------
Electronics (4.4%):
15,000 Alliance Semiconductor Corp.(b)........................ 174,375
15,000 Analog Devices, Inc.(b)................................ 530,625
14,000 Linear Technology Corp................................. 549,500
14,000 Maxim Integrated Products, Inc.(b)..................... 539,000
-----------
1,793,500
-----------
Environmental Control (0.7%):
11,400 Imco Recycling, Inc.................................... 279,300
-----------
Financial Services (3.6%):
10,000 Aames Financial Corp................................... 278,750
12,000 Green Tree Financial Corp.............................. 316,500
27,500 The Money Store, Inc................................... 429,688
20,000 Olympic Financial Ltd.(b).............................. 325,000
10 Transport Holdings, Inc.-Class A(b).................... 408
2,000 Travelers Group, Inc................................... 125,750
-----------
1,476,096
-----------
Food Services (3.1%):
19,000 Daka International, Inc.(b)............................ 522,500
20,000 Starbucks Corp.(b)..................................... 420,000
15,000 Wendy's International, Inc............................. 318,750
-----------
1,261,250
-----------
Healthcare Services (8.1%):
12,500 Columbia HCA Healthcare Corp........................... 634,375
20,000 HEALTHSOUTH Corp.(b)................................... 582,500
10,000 Integrated Health Services, Inc........................ 250,000
22,000 Maxicare Health Plans, Inc.(b)......................... 591,250
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Healthcare Services, continued:
7,000 Pacificare Health Systems, Inc. Class B(b)............. $ 609,000
10,000 United Healthcare Corp................................. 655,000
-----------
3,322,125
-----------
Household Products/Wares (0.3%):
1,500 Clorox Co.............................................. 107,438
-----------
Insurance (2.8%):
7,354 Allstate Corp.......................................... 302,433
10,000 W.R. Berkley Corp...................................... 537,500
2,000 CNA Financial Corp.(b)................................. 227,000
2,500 Providian Corp......................................... 101,875
-----------
1,168,808
-----------
Medical Supplies & Services (9.1%):
20,000 Amsco International, Inc.(b)........................... 297,500
15,000 Boston Scientific Corp.(b)............................. 735,000
15,000 Idexx Laboratories, Inc.(b)............................ 705,000
14,000 Medtronic, Inc......................................... 782,250
25,000 Mentor Corp............................................ 575,000
20,000 Steris Corp.(b)........................................ 645,000
-----------
3,739,750
-----------
Oil Equipment, Wells & Services (1.2%):
2,000 Halliburton Co......................................... 101,250
12,500 Tidewater, Inc......................................... 393,750
-----------
495,000
-----------
Retail-Office Supplies (2.7%):
15,000 Corporate Express, Inc.(b)............................. 451,875
15,000 Officemax, Inc.(b)..................................... 335,625
12,500 Staples, Inc.(b)....................................... 304,688
-----------
1,092,188
-----------
Retail-Specialty (2.5%):
26,000 Sunglass Hut International(b).......................... 617,500
10,000 Fastenal Co............................................ 422,500
-----------
1,040,000
-----------
</TABLE>
Continued
-32-
<PAGE>
THE RIVERFRONT FUNDS, INC.
STOCK APPRECIATION FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Savings & Loan (2.1%):
15,000 Coast Savings Financial, Inc.(b)....................... $ 519,375
20,000 Glendale Federal Bank(b)............................... 350,000
-----------
869,375
-----------
Telecommunications (3.0%):
10,000 Aspect Telecommunications Corp.(b)..................... 335,000
12,500 DSC Communications Corp.(b)............................ 460,937
12,500 Worldcom, Inc.(b)...................................... 440,625
-----------
1,236,562
-----------
Textiles (0.9%):
15,000 G&K Services, Inc.-Class A............................. 382,500
-----------
Tobacco (0.3%):
1,500 Philip Morris Cos., Inc................................ 135,750
-----------
Total Common Stocks 37,370,991
-----------
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
INVESTMENT COMPANIES (5.0%):
2,050,000 Dreyfus Treasury Prime Fund........................... $ 2,050,000
-----------
Total Investment Companies 2,050,000
-----------
Total Investments 39,420,991
-----------
REPURCHASE AGREEMENTS (3.8%):
1,579,159 Provident, 5.50%, dated 12/29/95, due 1/2/96
(Collateralized by 4,604,823 Federal National
Mortgage Association, 6.24%, 2/25/23, market value--
$4,596,189)(c)....................................... 1,579,159
-----------
Total Repurchase Agreements 1,579,159
-----------
Total (Cost--$33,882,327)(a) $41,000,150
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $41,067,172.
(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........... $8,076,748
Unrealized depreciation........... (958,925)
----------
Net unrealized appreciation....... $7,117,823
==========
</TABLE>
(b) Represents non-income producing securities.
(c) Provident Bank and The Riverfront Funds, Inc. are affiliated parties.
See notes to financial statements.
-33-
<PAGE>
THE RIVERFRONT FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1.ORGANIZATION:
The Riverfront Funds, Inc. (the "Fund"), was organized as a Maryland
Corporation on March 27, 1990, and is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. The Fund is authorized to issue six series of shares of
capital stock, representing interests in different portfolios of securities
as follows: The Riverfront U.S. Government Securities Money Market Fund,
The Riverfront U.S. Government Income Fund, The Riverfront Income Equity
Fund, The Riverfront Ohio Tax-Free Bond Fund, The Riverfront Flexible
Growth Fund and The Riverfront Stock Appreciation Fund (each, a
"Portfolio"; and collectively, the "Portfolios"). During the year, the Fund
acquired all six of the investment portfolios of MIM Mutual Funds, Inc. and
combined them with three of the Fund's Portfolios including the newly
created Stock Appreciation Fund.
The Fund is authorized to issue 3,000,000,000 shares with a par value of
$0.001. Sales of shares of the Portfolios may be made to customers of The
Provident Bank ("Provident") and its affiliates, to all accounts of
correspondent banks of Provident and to the general public.
The U.S. Government Income Fund, the Income Equity Fund, the Ohio Tax-Free
Bond Fund, the Flexible Growth Fund and the Stock Appreciation Fund
(collectively, "the variable net asset value funds") each offers two share
classes: Investor A Shares and Investor B Shares. The U.S. Government
Securities Money Market Fund (the "money market fund") offers only Investor
A Shares. Investor A shares of the variable net asset value funds are
subject to initial sales charges imposed at the time of purchase, in
accordance with the Portfolios' prospectuses. Certain redemptions of
Investor B shares of the variable net asset value funds made within six
years of purchase are subject to varying contingent deferred sales charges
in accordance with the Portfolios' prospectuses. Each share class has
identical rights and privileges, except with respect to distribution and
services (12b-1) fees paid by each share class, voting rights on matters
affecting a single share class, and the exchange privileges of each share
class.
2.SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The policies are
in conformity with generally accepted accounting principles.
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 money market fund may not (a)
purchase any instrument with a remaining maturity greater than 397 days
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, municipal
securities, commercial paper and U.S. Government securities of the variable
net asset value funds are valued at their market values determined on the
basis of the mean of the latest available bid and asked quotations on the
principal exchange
Continued
-34-
<PAGE>
THE RIVERFRONT FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1995
(closing sales prices if the over-the-counter National Market System) in
which such securities are normally traded. Short-term investments maturing
in 60 days or less are valued at amortized cost which, combined with
accrued interest, approximates market value. Investments in investment
companies are valued at their net asset values as reported by such
investment companies. Other securities for which quotations are not readily
available are valued at their fair value by the investment adviser under
the supervision of the Fund's Board of Directors. The differences between
the cost and market values of investments held by the variable net asset
value funds are reflected as either unrealized appreciation or
depreciation.
SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the
accrual basis and includes, where applicable, the pro rata amortization of
premium or discount. Dividend income is recorded on the ex-dividend date.
Realized gains or losses from sales of securities are determined by
comparing the identified cost of the security lot sold with the net sales
proceeds.
REPURCHASE AGREEMENTS:
The Portfolios may acquire repurchase agreements from financial
institutions such as banks and broker dealers which Provident, as
investment adviser, or the Portfolio's sub-investment adviser deems
creditworthy under guidelines approved by the Board of Directors, 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 Portfolio 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 each Portfolio's custodian or
another qualified custodian or in the Federal Reserve/Treasury book-entry
system. Repurchase agreements are considered to be loans by the Portfolios
under the 1940 Act.
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income are declared daily and paid monthly
for the money market fund. Dividends from net investment income are
declared and paid monthly for the variable net asset value funds.
Distributable net realized capital gains, if any, are declared and
distributed at least annually. Any taxable distributions declared in
December and paid in the following fiscal year will be taxable to
shareholders in the year declared.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. Timing differences relating to shareholder
distributions are reflected in the components of net assets and permanent
book and tax basis differences relating to shareholder distributions have
been reclassified to additional paid-in capital. These differences are
primarily due to differing treatments for dollar roll transactions,
deferral of certain losses and expiring capital loss carryforwards.
Continued
-35-
<PAGE>
THE RIVERFRONT FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1995
FEDERAL INCOME TAXES:
It is the policy of each Portfolio 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.
ESTIMATES:
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.
3.REORGANIZATION
On June 26, 1995, the Fund entered into an Agreement and Plan of
Reorganization and Liquidation (the "Plan") with MIM Mutual Funds, Inc.
("MIM"), a Maryland corporation. Pursuant to the Plan, the money market
fund acquired all or substantially all of the assets of the Money Market
Fund of MIM and the Income Equity Fund acquired all or substantially all of
the assets of each of the Bond Income Fund, AFA Equity Income Fund and
Stock Income Fund of MIM (collectively, the "Acquired Funds"), in exchange
for the assumption of such Acquired Funds' stated liabilities and a number
of full and fractional Investor A shares of the Money Market Fund or the
Income Equity Fund, having an aggregate net asset value equal to such
Acquired Funds' net assets (the "Reorganization"). Additionally, the MIM
Stock Appreciation Fund and MIM Stock Growth Fund were acquired by the
newly created Riverfront Stock Appreciation Fund. At a Special Meeting,
held September 27, 1995, the shareholders of MIM approved the
Reorganization which took effect September 30, 1995. The following is a
summary of shares outstanding, net asset value per share and unrealized
appreciation immediately before and after the Reorganization:
<TABLE>
<CAPTION>
BEFORE REORGANIZATION AFTER REORGANIZATION
----------------------------- --------------------
RIVERFRONT RIVERFRONT
MIM U.S. GOVERNMENT U.S. GOVERNMENT
MONEY MARKET SECURITIES MONEY SECURITIES MONEY
FUND MARKET FUND MARKET FUND
------------ ---------------- --------------------
<S> <C> <C> <C>
Shares.................... 4,865,634 139,885,336 144,750,970
Net Assets................ $4,865,634 $139,883,045 $144,748,679
Net Asset Value........... $1.00 $1.00 $1.00
</TABLE>
<TABLE>
<CAPTION>
BEFORE REORGANIZATION AFTER REORGANIZATION
---------------------------------------------------------- --------------------
MIM BOND MIM STOCK MIM AFA EQUITY RIVERFRONT INCOME RIVERFRONT INCOME
INCOME FUND INCOME FUND INCOME FUND EQUITY FUND EQUITY FUND
----------- ----------- -------------- ----------------- --------------------
<S> <C> <C> <C> <C> <C>
Shares.................. 175,098 555,565 66,038 4,174,301 4,968,243
Net Assets.............. $1,911,667 $7,001,927 $813,625 $51,090,349 $60,817,568
Net Asset Value:........ $10.92* $12.60* $12.32*
Investor A Shares...... $12.25 $12.25
Investor B Shares...... $12.00 $12.00
Unrealized Appreciation. $ 254,298 $1,425,640 $ 70,283 $ 2,235,485 $ 3,985,706
</TABLE>
------
* Prior to the reorganization, MIM offered only one class of shares of each
Acquired Fund.
Continued
-36-
<PAGE>
THE RIVERFRONT FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1995
4.CAPITAL SHARE TRANSACTIONS:
Transactions in capital shares for the Fund were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES U.S. GOVERNMENT
MONEY MARKET FUND INCOME FUND INCOME EQUITY FUND
---------------------------- ------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 (A) 1995 1994 (A) 1995 1994 (A)
------------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR A SHARES:
Proceeds from shares
issued................ $ 331,872,719 $ 252,936,958 $4,352,572 $7,849,466 $ 9,389,602 $13,962,314
Proceeds from shares
issued in connection
with acquisition...... 4,865,634 9,727,219
Dividends reinvested... 1,518,099 569,500 569,125 333,435 8,635,353 900,398
Cost of shares
redeemed.............. (330,133,820) (237,338,519) (4,089,227) (2,238,879) (7,219,484) (2,457,054)
------------- ------------- ---------- ---------- ----------- -----------
Change in net assets
from Investor A share
transactions.......... $ 8,122,632 $ 16,167,939 $ 832,470 $5,944,022 $20,532,690 $12,405,658
============= ============= ========== ========== =========== ===========
INVESTOR B SHARES:
Proceeds from shares
issued................ $1,317,928 $ 2,765,814
Dividends reinvested... 9,712 13,294
Cost of shares
redeemed.............. (96,002) (43,350)
---------- -----------
Change in net assets
from Investor B share
transactions.......... $1,231,638 $ 2,735,758
========== ===========
SHARE TRANSACTIONS:
INVESTOR A SHARES:
Issued................. 331,872,719 252,936,958 469,561 838,911 828,287 1,295,899
Issued in connection
with acquisition...... 4,865,634 793,942
Reinvested............. 1,518,099 569,500 60,733 36,232 763,006 84,342
Redeemed............... (330,133,820) (237,338,519) (435,482) (243,620) (630,554) (230,101)
------------- ------------- ---------- ---------- ----------- -----------
Change in Investor A
Shares................ 8,122,632 16,167,939 94,812 631,523 1,754,681 1,150,140
============= ============= ========== ========== =========== ===========
INVESTOR B SHARES:
Issued................. 123,342 241,570
Reinvested............. 903 1,125
Redeemed............... (8,962) (3,605)
---------- -----------
Change in Investor B
Shares................ 115,283 239,090
========== ===========
</TABLE>
- ------
(a) Audited by other auditors.
Continued
-37-
<PAGE>
THE RIVERFRONT FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1995
<TABLE>
<CAPTION>
FLEXIBLE GROWTH STOCK APPRECIATION
OHIO TAX-FREE BOND FUND FUND FUND
--------------------------- --------------------------- ------------------
PERIOD FROM PERIOD FROM
AUGUST 1, 1994 AUGUST 1, 1994
YEAR ENDED THROUGH YEAR ENDED THROUGH OCTOBER 1, 1995
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994(A) 1995 1994(A) 1995(B)
------------ -------------- ------------ -------------- ------------------
<S> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR A SHARES:
Proceeds from shares
issued................ $297,450 $10,355,088 $6,257,968 $2,833,344 $ 738,522
Dividends reinvested... 8,453 27 282,271 13,957 1,542,781
Cost of shares
redeemed.............. (109,278) (717,635) (100,558) (3,611,887)
-------- ----------- ---------- ---------- -----------
Change in net assets
from Investor A share
transactions.......... $196,625 $10,355,115 $5,822,604 $2,746,743 $(1,330,584)
======== =========== ========== ========== ===========
INVESTOR B SHARES:
Proceeds from shares
issued................ $598,493 $4,818,782 $ 71,986
Dividends reinvested... 9,755 52,617
Cost of shares
redeemed.............. (5,034) (188,581)
-------- ========== -----------
Change in net assets
from Investor B share
transactions.......... $603,214 $4,682,818 $ 71,986
======== ========== ===========
SHARE TRANSACTIONS:
INVESTOR A SHARES:
Issued................. 29,259 1,036,159 593,056 285,468 76,082
Reinvested............. 833 3 25,863 1,408 164,279
Redeemed............... (10,732) (65,727) (10,174) (370,208)
-------- ----------- ---------- ---------- -----------
Change in Investor A
Shares................ 19,360 1,036,162 553,192 276,702 (129,847)
======== =========== ========== ========== ===========
INVESTOR B SHARES:
Issued................. 57,922 442,046 7,299
Reinvested............. 927 4,698
Redeemed............... (491) (16,667)
-------- ---------- -----------
Change in Investor B
Shares................ 58,358 430,077 7,299
======== ========== ===========
</TABLE>
------
(a)Period from commencement of operations. Audited by other auditors.
(b)Period from date acquired by Riverfront Stock Appreciation Fund.
5.RELATED PARTY TRANSACTIONS
Provident has entered into an Investment Advisory Agreement with the Fund
whereby Provident supervises and manages the investment and reinvestment of
the assets of the U.S. Government Securities Money Market Fund, the U.S.
Government Income Fund, the Ohio Tax-Free Bond Fund and the Stock
Appreciation Fund. Under the terms of the Investment Advisory Agreement,
Provident is entitled to receive fees based on a percentage of the average
net assets of each Portfolio.
At meetings held on May 19, 1995 and June 26, 1995, the Board of Directors
of the Fund approved an increase from 0.75% to 0.95% in the investment
advisory fee paid to Provident by the Income Equity Fund. In addition, the
Board approved a new sub-investment advisory agreement between Provident
and DePrince, Race & Zollo, Inc. on behalf of the Income Equity Fund which
also increased the sub-investment advisory fees paid by Provident to the
new sub-investment adviser. At a Special Meeting, held July 31, 1995, the
Continued
-38-
<PAGE>
THE RIVERFRONT FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1995
shareholders of the Income Equity Fund approved the proposed amendments to
the investment advisory agreement to increase the investment advisory fees
and to enter into the agreement with the new sub-investment adviser. The
amendments took effect August 15, 1995.
Pursuant to the terms of the Investment Advisory Agreement with the Fund,
Provident has entered into Sub-Investment Advisory Agreements with
DePrince, Race & Zollo, Inc. ("DePrince"), for the Income Equity Fund and
with James Investment Research ("JIR") for the Flexible Growth Fund.
DePrince and JIR provide investment advice to and supervise the investment
program of the Income Equity Fund and the Flexible Growth Fund,
respectively. Under the terms of the Sub-Investment Advisory Agreements,
JIR receives from Provident fees calculated at 0.50% of the average daily
net assets of the Flexible Growth Fund, and DePrince receives from
Provident fees calculated at 0.50% of average daily net assets up to $55
million and 0.55% of average daily net assets up to $75 million of the
Income Equity Fund.
In addition to serving as Investment Adviser, Provident serves as custodian
and fund accountant to the Portfolios. Under the terms of the Custodian,
Fund Accounting and Recordkeeping Agreement, Provident is entitled to
receive fees based on a percentage of the average daily net assets of each
Portfolio.
During the year ended December 31, 1995, Provident Securities Investor,
Inc. ("PSI"), an affiliate of Provident which is a registered broker
dealer, executed transactions to purchase and sell portfolio investments on
behalf of the Fund. The Fund paid PSI approximately $85,000 that has been
included in investments at cost, as commissions for such transactions.
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 a director of the Fund are
affiliated, serves the Fund as Administrator, principal underwriter and
distributor. Such officers and director are paid no fees directly by the
Portfolios for serving as officers and as director of the Fund. Under the
terms of the Administration Agreement, BISYS' fees are computed at 0.20% of
the average daily net assets of each Portfolio.
Provident also serves as Transfer Agent and Shareholder Servicing Agent to
the Fund, and BISYS Ohio serves as Sub-Transfer Agent for the Investor B
Shares. Under the terms of the Master Transfer and Record-keeping
Agreement, Provident is entitled to receive fees based on the number of
shareholders of each Portfolio and certain out-of-pocket expenses. Under
the terms of the Shareholder Servicing Agreement, Provident may receive a
fee computed daily at an annual rate of up to 0.25% of the average daily
net assets of certain shares of each Portfolio. This fee may be used to
reimburse BISYS or other providers of Record keeping and/or administrative
support services. As of December 31, 1995, there were no shareholder
servicing agreements entered into on behalf of any of the Portfolios.
The Fund has adopted an Investor A Distribution and Shareholder Service
Plan ("Investor A Plan") and an Investor B Distribution and Shareholder
Service Plan ("Investor B Plan"), each in accordance with Rule 12b-1 under
the Investment Company Act of 1940. Pursuant to the Investor A Plan, each
Portfolio is
Continued
-39-
<PAGE>
THE RIVERFRONT FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1995
authorized to pay or reimburse BISYS, as distributor of Investor A shares,
a periodic amount, calculated at an annual rate not to exceed 0.25% of the
average daily net assets of Investor A Shares of each Portfolio. Pursuant
to the Investor B Plan, each variable net asset value fund is authorized to
pay or reimburse BISYS, as distributor of Investor B shares, (a) a
distribution fee in an amount not to exceed, on an annual basis, 0.75% of
the average daily net assets of Investor B shares of that Portfolio and (b)
a service fee in an amount not to exceed 0.25% of the average daily net
asset value of Investor B Shares of that Portfolio. These fees may be used
by BISYS to pay banks, broker dealers and other institutions, including
Provident, DePrince and JIR, or to reimburse BISYS or its affiliates, to
finance any activity which is principally intended to result in the sale of
shares or to compensate for providing shareholder services. For the year
ended December 31, 1995, BISYS received $214,820 from commissions on sales
of capital shares, of which $190,064 was reallowed to dealers of the Fund's
shares including $186,048 to affiliates of the Fund.
Provident and certain of its affiliates own shares of Portfolios of the
Fund. As of December 31, 1995, the aggregate values of Capital shares owned
by Provident and its affiliates were as follows (amounts in thousands):
<TABLE>
<S> <C>
U.S. Government Income Fund............................................. $31,623
Income Equity Fund...................................................... 5,273
Ohio Tax-Free Bond Fund................................................. 10,510
Flexible Growth Fund.................................................... 2,055
</TABLE>
Fees may be voluntarily reduced or reimbursed to assist the Portfolios in
maintaining competitive expense ratios.
Information regarding these transactions is as follows for the year ended
December 31, 1995:
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME
SECURITIES MONEY U.S. GOVERNMENT EQUITY
MARKET FUND INCOME FUND FUND
---------------- --------------- -------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee
reductions (percentage of average
daily net assets)................. 0.15% 0.40% 0.95%
Voluntary fee reductions........... $11,516
12B-1 FEES (INVESTOR A):
Voluntary fee reductions........... $369,910 $33,246 $30,381
CUSTODIAN AND ACCOUNTING FEES:..... $ 73,973 $36,115 $72,596
TRANSFER AGENT FEES:............... $ 59,257 $37,402 $42,860
REIMBURSED FEES:................... $ 548 $62,119
</TABLE>
Continued
-40-
<PAGE>
THE RIVERFRONT FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1995
<TABLE>
<CAPTION>
OHIO TAX-FREE FLEXIBLE STOCK APPRECIATION
BOND FUND GROWTH FUND FUND (A)
------------- ----------- ------------------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee
reductions
(percentage of average daily
net assets).................... 0.50% 0.90% 0.80%
Voluntary fee reductions........ $11,234 $25,567 $ 900
12B-1 FEES (INVESTOR A):
Voluntary fee reductions........ $ 4,699 $ 5,552 $ 281
CUSTODIAN AND ACCOUNTING FEES:.. $15,708 $12,666 $15,578
TRANSFER AGENT FEES:............ $25,445 $22,857 $ 9,834
REIMBURSED FEES:................ $ 544 $44,178
</TABLE>
--------
(a) For the period from October 1, 1995 (date acquired by Riverfront Stock
Appreciation Fund) through December 31, 1995.
6.PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
year ended December 31, 1995 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
U.S. Government Income
Fund.................... $26,035,286 $23,842,104
Income Equity Fund...... 90,884,221 83,829,266
Ohio Tax-Free Bond Fund. 6,043,089 3,396,960
Flexible Growth Fund.... 10,928,467 891,684
Stock Appreciation Fund. 23,560,396(a) 17,024,763(a)
</TABLE>
--------
(a) For the period from October 1, 1995 (date acquired by Riverfront Stock
Appreciation Fund) to December 31, 1995.
7.FEDERAL INCOME TAXES:
For federal income tax purposes, the following Portfolios have capital loss
carryforwards as of December 31, 1995, which are available to offset future
capital gains, if any:
<TABLE>
<CAPTION>
EXPIRES AMOUNT
------- ----------
<S> <C> <C>
U.S. Government Securities Money Market Fund.............. 2002 $ 875
U.S. Government Securities Money Market Fund.............. 2003 $ 1,415
U.S. Government Income Fund............................... 2002 $1,393,386
U.S. Government Income Fund............................... 2003 $ 513,952
Ohio Tax-Free Bond Fund................................... 2002 $ 8,658
</TABLE>
Continued
-41-
<PAGE>
THE RIVERFRONT FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1995
8.ELIGIBLE DISTRIBUTIONS (UNAUDITED):
The Fund designated the following eligible distributions for the dividends
received deduction for corporations for the taxable year ended December 31,
1995:
<TABLE>
<CAPTION>
INCOME FLEXIBLE
EQUITY FUND GROWTH FUND
----------- -----------
<S> <C> <C>
Dividend Income....................................... $1,590,886 $89,366
Dividend Income Per Share--Investor A Shares.......... $ 0.235 $ 0.075
Dividend Income Per Share--Investor B Shares.......... $ 0.113 $ 0.054
</TABLE>
9.EXEMPT-INTEREST INCOME DESIGNATION (UNAUDITED):
The Fund designated the following exempt-interest income for the Ohio Tax-
Free Bond Fund for the year ended December 31, 1995:
<TABLE>
<CAPTION>
INVESTOR A SHARES INVESTOR B SHARES
----------------- -----------------
<S> <C> <C>
Exempt-interest distributions............. $395,917 $12,980
Exempt-interest distribution per share.... $ 0.376 $ 0.267
</TABLE>
The percentage break-down of the exempt-interest by state for the Ohio Tax-
Free Bond Fund for the year ended December 31, 1995 was as follows:
<TABLE>
<S> <C>
Florida................................................................ 0.9%
Georgia................................................................ 0.5%
Louisiana.............................................................. 1.5%
Ohio................................................................... 94.6%
Tennessee.............................................................. 0.6%
Texas.................................................................. 1.9%
-----
100.0%
=====
</TABLE>
10.CAPITAL GAIN DISTRIBUTIONS (UNAUDITED)
The Fund declared and distributed capital gains to shareholders in the
following amounts per share for the taxable year ended December 31, 1995:
<TABLE>
<CAPTION>
LONG-TERM SHORT-TERM
--------- ----------
<S> <C> <C>
Income Equity Fund....................................... 0.1210 1.2140
Flexible Growth Fund..................................... 0.0162 0.0885
Stock Appreciation Fund(a)............................... 0.0585 0.3158
</TABLE>
- ------
(a) For the period from October 1, 1995 (date acquired by Riverfront Stock
Appreciation Fund) through December 31, 1995.
-42-
<PAGE>
THE RIVERFRONT FUNDS, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES MONEY MARKET
FUND
------------------------------------------
OCTOBER 1,
YEARS ENDED DECEMBER 31, 1992 TO
---------------------------- DECEMBER 31,
1995 1994 (D) 1993 (D) 1992 (A)(D)
-------- -------- -------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------
INVESTMENT ACTIVITIES
Net investment income............. 0.05 0.04 0.03 0.01
-------- -------- -------- -------
Total from Investment Activities. 0.05 0.04 0.03 0.01
-------- -------- -------- -------
DISTRIBUTIONS
Net investment income............. (0.05) (0.04) (0.03) (0.01)
-------- -------- -------- -------
Total Distributions.............. (0.05) (0.04) (0.03) (0.01)
-------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD..... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== =======
Total Return....................... 5.52% 3.78% 2.90% 0.80%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).. $157,495 $149,374 $133,207 $37,083
Ratio of expenses to average net
assets............................ 0.58% 0.51% 0.32% 0.01%(c)
Ratio of net investment income to
average net assets................ 5.34% 3.70% 2.85% 3.09%(c)
Ratio of expenses to average net
assets*........................... 0.83% 0.80% 0.42% 0.68%(c)
Ratio of net investment income to
average net assets*............... 5.09% 3.41% 2.75% 2.42%(c)
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. In addition, the
manager or investment adviser reimbursed expenses to the Portfolio. If such
voluntary fee reductions and expense reimbursements had not occurred, the
ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Audited by other auditors.
See notes to financial statements.
-43-
<PAGE>
THE RIVERFRONT FUNDS, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME FUND
-------------------------------------------------------------------
JANUARY 17,
YEAR ENDED 1995 TO YEARS ENDED DECEMBER 31,
DECEMBER 31, DECEMBER 31, --------------------------------------
1995 1995(A) 1994(F) 1993(F) 1992(B)(F) 1991(F)
------------ ------------ ------- ------- ---------- -------
INVESTOR A INVESTOR B
------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 8.92 $10.00 $ 9.91 $ 9.76 $ 10.00 $10.00
------- ------ ------- ------- ------- ------
INVESTMENT ACTIVITIES
Net investment income.. 0.54 0.43 0.54 0.51 0.10 0.73
Net realized and
unrealized gains
(losses) from
investments........... 0.79 0.94 (0.99) 0.20 (0.23)
------- ------ ------- ------- ------- ------
Total from Investment
Activities........... 1.33 1.37 (0.45) 0.71 (0.13) 0.73
------- ------ ------- ------- ------- ------
DISTRIBUTIONS
Net investment income.. (0.54) (0.42) (0.54) (0.50) (0.10) (0.73)
In excess of net
investment income..... (0.06) (0.01)
------- ------ ------- ------- ------- ------
Total Distributions... (0.54) (0.42) (0.54) (0.56) (0.11) (0.73)
------- ------ ------- ------- ------- ------
NET ASSET VALUE, END OF
PERIOD................. $ 9.71 $10.95 $ 8.92 $ 9.91 $ 9.76 $10.00
======= ====== ======= ======= ======= ======
Total Return (excludes
sales charge).......... 15.22% 13.96%(e) (4.64)% 7.38% (1.31)% NA
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)........... $36,538 $1,263 $32,721 $30,078 $24,588 $ 33
Ratio of expenses to
average net assets..... 1.09% 1.90%(c) 0.86% 0.65% 0.66% 0.00%
Ratio of net investment
income to average net
assets................. 5.74% 4.80%(c) 5.78% 5.05% 4.00% 7.34%
Ratio of expenses to
average net assets*.... 1.18% 1.90%(c) 1.14% 1.08% 1.06%
Ratio of net investment
income to average net
assets*................ 5.65% 4.80%(c) 5.49% 4.62% 3.60%
Portfolio Turnover...... 75%(d) 75%(d) 83% 220% 117% 0%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. In addition, the
manager or investment adviser reimbursed expenses to the Portfolio. If such
voluntary fee reductions and expense reimbursements had not occurred, the
ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Investment operations and sales of shares to the public began on October
1, 1992.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
(e) Represents total return for the Investor A Shares from January 1, 1995 to
January 16, 1995 plus the total return for the Investor B Shares from
January 17, 1995 to December 31, 1995.
(f) Audited by other auditors.
See notes to financial statements.
-44-
<PAGE>
THE RIVERFRONT FUNDS, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME EQUITY FUND
-----------------------------------------------------------------
JANUARY 17,
YEAR ENDED 1995 TO YEARS ENDED DECEMBER 31,
DECEMBER 31, DECEMBER 31, ------------------------------------
1995 1995(A) 1994(F) 1993(F) 1992(B)(F) 1991(F)
------------ ------------ ------- ------- ---------- -------
INVESTOR A INVESTOR B
------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 10.15 $10.00 $ 10.63 $ 10.78 $ 10.00 $10.00
------- ------ ------- ------- ------- ------
INVESTMENT ACTIVITIES
Net investment income.. 0.27 0.13 0.32 0.28 0.08 0.73
Net realized and
unrealized gains from
investments........... 2.89 2.78 1.01 0.80
------- ------ ------- ------- ------- ------
Total from Investment
Activities........... 3.16 2.91 0.32 1.29 0.88 0.73
------- ------ ------- ------- ------- ------
DISTRIBUTIONS
Net investment income.. (0.27) (0.13) (0.31) (0.27) (0.08) (0.73)
In excess of net
investment income..... (0.03) (0.01)
Net realized gains..... (1.34) (0.93) (0.49) (1.14)
In excess of net
realized gains........ (0.01)
------- ------ ------- ------- ------- ------
Total Distributions... (1.61) (1.06) (0.80) (1.44) (0.10) (0.73)
------- ------ ------- ------- ------- ------
NET ASSET VALUE, END OF
PERIOD................. $ 11.70 $11.85 $ 10.15 $ 10.63 $ 10.78 $10.00
======= ====== ======= ======= ======= ======
Total Return (excludes
sales charge).......... 31.45% 29.28%(e) 3.08% 12.11% 8.74% NA
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)........... $60,845 $2,833 $34,965 $24,387 $12,262 $ 43
Ratio of expenses to
average net assets..... 1.49% 2.46%(c) 1.30% 1.47% 1.48% 0.00%
Ratio of net investment
income to average net
assets................. 2.27% 1.12%(c) 2.93% 2.55% 3.16% 7.34%
Ratio of expenses to
average net assets*.... 1.74% 2.51%(c) 1.58% 1.64% 2.02%
Ratio of net investment
income to average net
assets*................ 2.02% 1.07%(c) 2.65% 2.38% 2.62%
Portfolio Turnover...... 180%(d) 180%(d) 119% 145% 12% 0%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. In addition, the
manager or investment adviser reimbursed expenses to the Portfolio. If such
voluntary fee reductions and expense reimbursements had not occurred, the
ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Investment operations and sales of shares to the public began on October
1, 1992.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
(e) Represents total return for the Investor A Shares from January 1, 1995 to
January 16, 1995 plus the total return for the Investor B Shares from
January 17, 1995 to December 31, 1995.
(f) Audited by other auditors.
See notes to financial statements.
-45-
<PAGE>
THE RIVERFRONT FUNDS, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OHIO TAX-FREE BOND FUND FLEXIBLE GROWTH FUND
------------------------------------------- ---------------------------------------------
JANUARY 17, FROM AUGUST 1, JANUARY 17, FROM SEPTEMBER 1,
YEAR ENDED 1995 TO 1994 THROUGH YEAR ENDED 1995 TO 1994 THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1995(A) 1994(A)(F) 1995 1995(A) 1994(A)(F)
------------ ------------ -------------- ------------ ------------ -----------------
INVESTOR A INVESTOR B INVESTOR A INVESTOR B
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 9.83 $10.00 $ 10.00 $ 9.79 $10.00 $10.00
------- ------ ------- ------ ------ ------
INVESTMENT ACTIVITIES
Net investment income.. 0.39 0.27 0.12 0.35 0.25 0.10
Net realized and
unrealized gains
(losses) from
investments........... 0.67 0.73 (0.17) 1.66 1.79 (0.18)
------- ------ ------- ------ ------ ------
Total from Investment
Activities.......... 1.06 1.00 (0.05) 2.01 2.04 (0.08)
------- ------ ------- ------ ------ ------
DISTRIBUTIONS
Net investment income.. (0.38) (0.27) (0.12) (0.34) (0.24) (0.13)
Net realized gains..... (0.10) (0.10)
------- ------ ------- ------ ------ ------
Total Distributions... (0.38) (0.27) (0.12) (0.44) (0.34) (0.13)
------- ------ ------- ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $ 10.51 $10.73 $ 9.83 $11.36 $11.70 $ 9.79
======= ====== ======= ====== ====== ======
Total Return (excludes
sales charge).......... 10.96% 10.10%(e) (0.47)%(e) 20.83% 20.53%(c) (0.82)%(e)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of
period (000)........... $11,091 $ 626 $10,190 $9,427 $5,030 $2,709
Ratio of expenses to
average net assets..... 1.49% 2.27%(d) 1.08%(d) 1.28% 2.04%(d) 1.48%(d)
Ratio of net investment
income to average net
assets................. 3.77% 3.01%(d) 2.92%(d) 3.48% 2.69%(d) 4.01%(d)
Ratio of expenses to
average net assets*.... 1.64% 2.41%(d) 1.44%(d) 1.67% 2.84%(d) 4.61%(d)
Ratio of net investment
income to average net
assets*................ 3.62% 2.87%(d) 2.56%(d) 3.09% 1.89%(d) 0.88%(d)
Portfolio Turnover...... 34%(b) 34%(b) 29% 13%(b) 13%(b) 1%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. In addition, the
manager or investment adviser reimbursed expenses to the Portfolios. If such
voluntary fee reductions and expense reimbursements had not occurred, the
ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
(c) Represents total return for the Investor A Shares from January 1, 1995 to
January 16, 1995 plus the total return for the Investor B Shares from
January 17, 1995 to December 31, 1995.
(d) Annualized.
(e) Not annualized.
(f) Audited by other auditors.
See notes to financial statements.
-46-
<PAGE>
THE RIVERFRONT FUNDS, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
STOCK APPRECIATION FUND
---------------------------------------------------------------------------------
FROM OCTOBER 1, FROM OCTOBER 1,
1995 THROUGH 1995 THROUGH YEARS ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, -----------------------------------------------
1995(B) 1995(A)(B) 1995(F) 1994(F) 1993(F) 1992(F) 1991(F)
--------------- --------------- ------- ------- ------- ------- -------
INVESTOR A INVESTOR B
--------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 10.00 $10.00 $ 8.25 $ 10.18 $ 7.98 $ 7.70 $ 4.64
------- ------ ------- ------- ------- ------- ------
INVESTMENT ACTIVITIES
Net investment loss.... (0.01) (0.01) (0.07) (0.12) (0.17) (0.08) (0.11)
Net realized and
unrealized gains
(losses) from
investments........... (0.12) (0.08) 2.14 (1.26) 2.57 1.41 3.17
------- ------ ------- ------- ------- ------- ------
Total from Investment
Activities........... (0.13) (0.09) 2.07 (1.38) 2.40 1.33 3.06
------- ------ ------- ------- ------- ------- ------
DISTRIBUTIONS
Net realized gains..... (0.37) (0.32) (0.55) (0.20) (1.05)
------- ------ ------- ------- ------- ------- ------
Total Distributions... (0.37) (0.32) (0.55) (0.20) (1.05)
------- ------ ------- ------- ------- ------- ------
NET ASSET VALUE, END OF
PERIOD................. $ 9.50 $ 9.91 $ 10.00 $ 8.25 $ 10.18 $ 7.98 $ 7.70
======= ====== ======= ======= ======= ======= ======
Total Return (excludes
sales charge).......... (1.20)%(c) (0.90)%(c) 25.12% (13.91)% 30.61% 16.69% 66.04%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end of
period (000)........... $40,995 $ 72 $44,500 $47,880 $59,330 $28,750 $9,600
Ratio of expenses to
average net assets..... 1.76%(d) 2.30%(d) 2.61% 2.44% 2.47% 2.70% 2.89%
Ratio of net investment
income to average net
assets................. (0.49)%(d) (1.69)%(d) (0.73)% (1.35)% (1.85)% (1.00)% (1.72)%
Ratio of expenses to
average net assets*.... 1.77%(d) 2.39%(d)
Ratio of net investment
income to average net
assets*................ (0.50)%(d) (1.78)%(d)
Portfolio turnover...... 46%(e) 46%(e) 197% 254% 216% 288% 240%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. In addition, the
investment adviser reimbursed expenses to the Portfolios. If such voluntary
fee reductions and expense reimbursements had not occurred, the ratios would
have been as indicated.
(a) Period from commencement of operations.
(b) As of September 30, 1995, the Stock Appreciation Fund acquired all of the
assets of the MIM Stock Appreciation Fund and the MIM Stock Growth Fund.
Financial highlights for periods prior to September 30, 1995 represent the
performance of the MIM Stock Appreciation Fund. The per share data for the
periods prior to September 30, 1995 have been restated to reflect the
impact of the change of the net asset value of the Stock Appreciation Fund
on September 30, 1995 from $17.34 to $10.00.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
(f) Audited by other auditors.
See notes to financial statements.
-47-
<PAGE>
- --------------------------------------------------------------------------------
THE RIVERFRONT THE RIVERFRONT THE RIVERFRONT
U.S. GOVERNMENT U.S. GOVERNMENT INCOME EQUITY
SECURITIES MONEY INCOME FUND FUND
MARKET FUND
THE RIVERFRONT THE RIVERFRONT THE RIVERFRONT
OHIO TAX-FREE FLEXIBLE GROWTH STOCK APPRECIATION
BOND FUND FUND FUND
[LOGO OF THE RIVERFRONT FUNDS]
THE RIVERFRONT FUNDS, INC.
Investment Adviser
The Provident Bank
One East Fourth Street
Cincinnati, Ohio 45202
Distributor
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
For additional information call
The Provident Bank
Mutual Fund Services
1-800-424-2295
ANNUAL REPORT
DECEMBER 31, 1995
