<PAGE> 1
As filed with the Securities and Exchange Commission
October 29, 1998
1933 Act Registration No. 33-34154
1940 Act File No. 811-6082
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE [X]
SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 26 [X]
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 27 [X]
THE RIVERFRONT FUNDS
(successor to The Riverfront Funds, Inc.)
(Exact name of Registrant as specified in Charter)
3435 Stelzer Road, Columbus, Ohio 43219
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number,
including Area Code: (614) 470-8000
Charles L. Booth
3435 Stelzer Road
Columbus, Ohio 43219
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
Immediately upon effectiveness
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] on December 29, 1998 pursuant to paragraph (a)(1)
<PAGE> 2
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered:
Shares of Beneficial Interest, without par value per share
<PAGE> 3
CROSS-REFERENCE SHEET
THE RIVERFRONT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
THE RIVERFRONT U.S. GOVERNMENT INCOME FUND
THE RIVERFRONT BALANCED FUND
THE RIVERFRONT INCOME EQUITY FUND
THE RIVERFRONT SMALL COMPANY SELECT FUND
THE RIVERFRONT LARGE COMPANY SELECT FUND
Six Funds of
The Riverfront Funds
Cross-Reference Sheet pursuant to Rule 481 under the Securities Act of 1933.
Item Number in
Part A of Form N-1A Prospectus Caption
- ------------------- ------------------
1 Cover Page
2 Fee Table
3 Financial Highlights; Performance Data and
Advertising
4 Cover Page; The Trust and its Funds; The
Funds' Investment Objectives and Policies
5 Management and Expenses; Additional
Information
5A Not Applicable
6 The Trust and its Funds; Dividends and
Taxes; Trust Shares; Pricing Shares
7 How to Buy Shares; Shareholder Services
8 How to Redeem Shares; How to Buy Shares
9 Not Applicable
<PAGE> 4
THE RIVERFRONT FUNDS
THE RIVERFRONT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
THE RIVERFRONT U.S. GOVERNMENT INCOME FUND
THE RIVERFRONT INCOME EQUITY FUND
THE RIVERFRONT SMALL COMPANY FUND
THE RIVERFRONT LARGE COMPANY SELECT FUND
THE RIVERFRONT BALANCED FUND
Supplement dated December 29, 1998,
to Prospectus dated April 30, 1998
Capitalized terms used in this Supplement have the meaning assigned to
them in the Prospectus.
Effective December 29, 1998, The Riverfront Funds, Inc., a Maryland
corporation, changed its form of organization from that of a Maryland
corporation to an Ohio business trust by completing a reorganization with The
Riverfront Funds, an Ohio business trust (the "Trust"), created for such
purpose. Therefore all references to the "Company" and to "Directors" in the
Prospectus are hereby deleted and are replaced with the "Trust" and "Trustees,"
respectively. In addition, as a part of such reorganization, the name of The
Riverfront Stock Appreciation Fund was changed to The Riverfront Small Company
Select Fund. Therefore, all references to "The Riverfront Stock Appreciation
Fund" and the "Stock Appreciation Fund" are hereby deleted and are replaced with
"The Riverfront Small Company Select Fund" and the "Small Company Fund,"
respectively.
The paragraph next to the heading "Shares Offered" at the top
of page 4 of the Prospectus is hereby deleted and replaced with the following:
Investors A shares of beneficial interest, without par value, of the
Money Market Fund, and Investor A and Investor B shares of beneficial
interest, without par value, of the Income Fund, the Balanced Fund, the
Income Equity Fund, the Large Company Fund and the Small Company Fund,
six separate series (collectively, the "Funds") of The Riverfront
Funds, an Ohio business trust (the "Trust").
The following financial highlights for each of the Funds for the
six-month period ended June 30, 1998, are unaudited and are added at the end of
the section entitled "FINANCIAL HIGHLIGHTS" in the Prospectus:
<TABLE>
<CAPTION>
For the Six Months Ended June 30, 1998
(Unaudited)
-----------------------------------------------------------------------------
Income Fund Income Equity Fund
Money Market ----------- ------------------
Fund Investor A Investor B Investor A Investor B
------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.............. $ 1.000 $ 9.48 $10.68 $11.68 $11.98
------- ------ ------ ------ ------
Investment Activities
Net investment income............ 0.024 0.24 0.21 0.05 --
Net realized and unrealized gains
(losses) from investments..... -- 0.05 0.05 0.56 0.57
------- ------ ------ ------ ------
Total from Investment
Activities................. 0.024 0.29 0.26 0.61 0.57
----- ------ ------ ------ ------
Distributions
Net investment income............ (0.024) (0.24) (0.18) (0.05) (0.01)
In excess of net investment
income......................... -- -- -- -- --
Net realized gains............... -- -- -- (0.14) (0.14)
------- ------ ------ ------ ------
Total Distributions.......... (0.024) (0.24) (0.18) (0.19) (0.15)
------- ------ ------ ------ ------
</TABLE>
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<TABLE>
<CAPTION>
For the Six Months Ended June 30, 1998
(Unaudited)
-----------------------------------------------------------------------------
Income Fund Income Equity Fund
Money Market ----------- ------------------
Fund Investor A Investor B Investor A Investor B
------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
END OF PERIOD.................... $ 1.000 $ 9.53 $10.76 $12.10 $12.40
======= ====== ====== ====== ======
Total Return (excludes
sales/redemption charge)......... 2.45%(a) 3.06%(a) 2.57%(a) 5.18%(a) 4.73%(a)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)... $155,772 $45,831 $1,284 $84,402 $19,453
Ratio of expenses to average
net assets....................... 0.67%(b) 1.14%(b) 1.95%(b) 1.76%(b) 2.54%(b)
Ratio of net investment income
to average net assets............ 4.90%(b) 4.97%(b) 4.16%(b) 0.79%(b) 0.01%(b)
Ratio of expenses to average
net assets*...................... 0.82%(b) 1.20%(b) 1.95%(b) 1.79%(b) (d)
Ratio of net investment income
to average net assets*........... 4.75%(b) 4.91%(b) 4.16%(b) 0.76%(b) (d)
Portfolio turnover rate (c)......... N/A 76% 76% 66% 66%
</TABLE>
<TABLE>
<CAPTION>
Balanced Fund Small Company Fund Large Company Fund
------------- ------------------ ------------------
Investor A Investor B Investor A Investor B Investor A Investor B
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.............. $12.30 $12.71 $ 9.17 $ 9.49 $11.34 $11.28
------ ------ ------ ------ ------ ------
Investment Activities
Net investment income............ 0.10 0.05 (0.04) (0.07) (0.02) (0.05)
Net realized and unrealized
gains (losses) from
investments.................... 1.46 1.51 0.72 0.74 2.06 2.03
------ ------ ------ ------ ------ ------
Total from Investment
Activities................. 1.56 1.56 0.68 0.67 2.04 1.98
------ ------ ------ ------ ------ ------
Distributions
Net investment income............ (0.10) (0.05) (1.18) (1.18) -- --
Net realized gains............... (0.08) (0.08) -- -- -- --
------ ------ ------ ------ ------ ------
Total Distributions.......... (0.18) (0.13) (1.18) (1.18) -- --
------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD.................... $13.68 $14.14 $ 8.67 $ 8.98 $13.38 $13.26
====== ====== ====== ====== ====== ======
Total Return (excludes
sales/redemption charge)......... 12.73%(a) 12.26%(a) 7.41%(a) 7.05%(a) 18.02%(a) 17.58%(a)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)... $10,200 $12,339 $20,437 $1,486 $41,472 $5,447
Ratio of expenses to average
net assets....................... 1.72%(b) 2.53%(b) 1.98%(b) 2.73%(b) 1.67%(b) 2.42%(b)
Ratio of net investment income
to average net assets............ 1.55%(b) 0.74%(b) (0.77)%(b) (1.57)%(b) (0.30)%(b) (1.05)%(b)
Ratio of expenses to average
net assets*...................... 1.88%(b) 2.63%(b) (d) (d) (d) (d)
Ratio of net investment income
to average net assets*........... 1.39%(b) 0.64%(b) (d) (d) (d) (d)
Portfolio turnover rate (c)......... 64% 64% 62% 62% 40% 40%
</TABLE>
- -------------------------
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or expense
reimbursement had not occurred, the ratios would have been as
indicated.
2
<PAGE> 6
(a) Not annualized.
(b) Annualized
(c) Portfolio turnover rate is calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
(d) There were no waivers or reimbursements during the period.
The fourth and fifth sentences in the first paragraph under the heading
"THE COMPANY AND ITS FUNDS" on page 20 of the Prospectus are hereby deleted and
are replaced with the following:
The Trust was originally incorporated as a Maryland corporation on
March 27, 1990. On October 11, 1996, the Trust was organized to acquire
all of the assets and liabilities of The Riverfront Funds, Inc., a
Maryland corporation (the "Conversion"). On December 29, 1998, upon
receipt of shareholder approval, pursuant to the terms of the
Conversion, each Fund became a separate series of the Trust.
The first paragraph under the heading "PRINCIPAL INVESTMENTS" on page
26 of the Prospectus is deleted and is replaced with the following:
The Small Company Fund, under normal market conditions, will
have substantially all, but in no event less than 65%, of its total
assets invested in common stocks of small companies, regardless of the
movement of stock prices generally. For purposes of this policy, the
Trust defines small companies to mean issuers with market
capitalizations between $100 million and $1.5 billion. It is expected
that such common stocks will normally be traded on exchanges or
established over-the-counter markets.
The fourth sentence in the second paragraph under the heading
"PRINCIPAL INVESTMENTS" on page 26 of the Prospectus is hereby deleted.
The fifth and sixth sentences under the heading "GENERAL" on page 39
of the Prospectus are hereby deleted.
The first paragraph under the heading "WAIVER OF SALES CHARGES" on page
44 of the Prospectus is deleted and replaced with the following:
Investor A shares may also be sold, to the extent permitted by
applicable law, at net asset value without the imposition of an initial
sales charge to: (1) personal trust, employee benefit, agency and
custodial (other than IRA) clients of Provident; (2) employees,
officers and directors of Provident and the Distributor and the
immediate families of each; (3) broker-dealers purchasing shares for
their own accounts; (4) all affiliates of Provident, including American
Financial Group, Inc., and any officers, directors or employees thereof
and their immediate families; (5) corporations; (6) employees, and
their immediate families, of any broker-dealer with which the
Distributor enters into a dealer agreement to sell Investor A shares of
the Company; (7) orders placed on behalf of other investment companies
distributed by The BISYS Group, Inc., or any of its affiliates,
including the Distributor; (8) persons investing directly through the
Distributor pursuant to a Systematic Investment Plan; and (9) persons
investing directly through a discount brokerage firm which has entered
into a dealer agreement with the Distributor. For purposes of this
paragraph, "immediate family" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or
sister-in-law, and includes adoptive relationships.
The first sentence in the first paragraph under the heading
"CHECKWRITING" on page 50 of the Prospectus is hereby amended to read as
follows:
3
<PAGE> 7
If requested on your account application and if you have your
account directly with the Trust through the Distributor (e.g., not
through a brokerage account), the Money Market Fund will establish a
checking account for you with Provident.
The following sentences are added at the end of the first paragraph
under the heading "HOW TO REDEEM SHARES" on page 48 of the Prospectus: "Should
a shareholder elect to have redemption proceeds wired, the Transfer Agent will
reduce the amount of the redemption proceeds by the custodian's then current
wire redemption charge (currently $15.00). In the absence of a request that the
proceeds be wired, sent EFT or mailed to such bank account, they will be sent
by check to the shareholder's address as it appears on the account
registration."
The fourth sentence in the first paragraph under the heading
"CHECKWRITING" on page 50 of the Prospectus is hereby deleted and is replaced
with the following: "You will receive daily dividends declared on the shares
redeemed to cover your check until the day Provident instructs the Money Market
Fund to redeem shares."
The heading "BOARD OF DIRECTORS" and the paragraph thereunder on page
53 of the Prospectus are hereby deleted and replaced with the following:
BOARD OF TRUSTEES
Overall responsibility for management of the Trust rests with
its Board of Trustees. Unless so required by the Trust's Declaration of
Trust or By-Laws or by Ohio law, at any given time all of the Trustees
may not have been elected by the shareholders of the Trust. The Trust
will be managed by the Trustees in accordance with the law of Ohio
governing business trusts. The Trustees, in turn, elect the officers of
the Trust to supervise actively its day-to-day operations. Subject to
the authority of the Board of Trustees, Provident, directly and through
DRZ as subadviser with respect to the Income Equity Fund, supervises
the investment programs of each Fund.
The first sentence under the heading "COMPANY SHARES" on page 60 of the
Prospectus is hereby deleted and replaced with the following: "The Trust
presently offers six series of shares of beneficial interest, without par value
(the "Funds")." The sixth sentence in such paragraph is hereby deleted and
replaced with the following: "Shareholders are entitled to one vote for each
dollar of value invested and a proportionate fractional vote for any fraction of
a dollar invested."
The second sentence in the fourth paragraph under the heading "COMPANY
SHARES" on page 60 of the Prospectus is hereby deleted and replaced with the
following: "The Trust has represented to the Commission that the Trustees will
call a special meeting of shareholders for purposes of considering the removal
of one or more Trustees upon written request therefor from shareholders holding
not less than 10% of the outstanding votes of the Trust."
The date in the first line of the first full paragraph on page 61 of
the Prospectus is hereby changed from April 20, 1998 to October 23, 1998.
INVESTORS SHOULD RETAIN THIS SUPPLEMENT WITH
THE PROSPECTUS FOR FUTURE REFERENCE
4
<PAGE> 8
THE RIVERFRONT FUNDS, INC.
THE RIVERFRONT U.S. GOVERNMENT SECURITIES
MONEY MARKET FUND
THE RIVERFRONT U.S. GOVERNMENT
INCOME FUND
THE RIVERFRONT INCOME EQUITY FUND
THE RIVERFRONT STOCK APPRECIATION FUND
THE RIVERFRONT LARGE COMPANY
SELECT FUND
THE RIVERFRONT BALANCED FUND
PROSPECTUS APRIL 30, 1998
The Riverfront Funds, Inc. (the "Company") is an open-end management
investment company which currently issues six series of shares (individually, a
"Fund" and collectively, the "Funds"), each having a different investment
objective and investing in a different portfolio of securities. The Funds
offered by the Company are: The Riverfront U.S. Government Securities Money
Market Fund, The Riverfront U.S. Government Income Fund, The Riverfront Income
Equity Fund, The Riverfront Stock Appreciation Fund, The Riverfront Large
Company Select Fund and The Riverfront Balanced Fund.
The Funds are offered both to customers of The Provident Bank ("Provident"),
including personal trust, employee benefit, agency and custodial clients, and to
the general public. Provident is a wholly owned subsidiary of Provident
Financial Group, Inc. ("PFG"). Provident, directly or through a sub-investment
adviser with respect to The Riverfront Income Equity Fund, serves as investment
adviser to each of the Funds.
SHARES OF THE FUNDS ARE NOT DEPOSITS OF, OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, PROVIDENT, PFG OR ANY OF THEIR AFFILIATES, AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY. AN INVESTMENT IN A FUND INVOLVES INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE VALUE OF THE RIVERFRONT U.S.
GOVERNMENT INCOME FUND, THE RIVERFRONT INCOME EQUITY FUND, THE RIVERFRONT STOCK
APPRECIATION FUND, THE RIVERFRONT LARGE COMPANY SELECT FUND AND THE RIVERFRONT
BALANCED FUND SHARES MAY FLUCTUATE, AND WHEN REDEEMED THEIR VALUE MAY BE HIGHER
OR LOWER THAN THE AMOUNT ORIGINALLY PAID BY THE PURCHASER.
AN INVESTMENT IN THE RIVERFRONT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT. WHILE THE RIVERFRONT
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND INTENDS TO MAINTAIN A NET ASSET
VALUE PER SHARE OF $1.00, THERE IS NO ASSURANCE THAT IT WILL BE ABLE TO DO SO.
For Information Contact:
THE RIVERFRONT FUNDS, INC.
ONE EAST FOURTH STREET
CINCINNATI, OHIO 45202
CALL TOLL FREE 1-800-424-2295
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
This prospectus relates to each of the Funds and sets forth concisely
information that a prospective investor should know about each Fund before
investing. Investors should read and retain this prospectus for future
reference.
<PAGE> 9
Additional information about the Company and the Funds is contained in a
Statement of Additional Information and Appendix thereto dated as of the date
hereof, which has been filed with the Securities and Exchange Commission (the
"Commission") and is incorporated by reference into this prospectus. For a free
copy of the Statement of Additional Information, or for other information about
the Company and the Funds, write to the address or call the telephone number
listed above.
The Company is designed to enable investors to pursue financial goals through
a choice of the following Funds:
-- THE RIVERFRONT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND (the "Money
Market Fund") seeks current income from U.S. Government short-term securities
while preserving capital and maintaining liquidity. The dollar weighted average
maturity of the Money Market Fund will not exceed 90 days.
-- THE RIVERFRONT U.S. GOVERNMENT INCOME FUND (the "Income Fund") seeks a high
level of current income, consistent with preservation of capital, by investing
primarily in securities issued or guaranteed by the U.S. Government, its
agencies and instrumentalities, and in high quality fixed rate and adjustable
rate mortgage-backed securities and other asset-backed securities. The Income
Fund intends to invest in securities with dollar-weighted average durations of
between three and seven years. The dollar-weighted average life of the Income
Fund's securities is expected to be in the range of four to ten years.
-- THE RIVERFRONT INCOME EQUITY FUND (the "Income Equity Fund") seeks a high
level of investment income, with capital appreciation as a secondary objective,
through investment primarily in income-producing equity securities of U.S.
issuers. To provide investment advisory services to the Income Equity Fund,
Provident has entered into a sub-investment advisory agreement with DePrince,
Race & Zollo, Inc., Orlando, Florida.
-- THE RIVERFRONT STOCK APPRECIATION FUND (the "Stock Appreciation Fund")
seeks capital growth.
-- THE RIVERFRONT LARGE COMPANY SELECT FUND (the "Large Company Fund") seeks
long-term growth of capital with some current income as a secondary objective.
-- THE RIVERFRONT BALANCED FUND (the "Balanced Fund") seeks long-term growth
of capital with some current income as a secondary objective.
The Money Market Fund, the Income Fund, the Income Equity Fund, the Stock
Appreciation Fund, the Large Company Fund and the Balanced Fund are hereinafter
collectively referred to as the "Funds" and individually as a "Fund."
Each Fund, other than the Money Market Fund, offers two classes of shares.
This prospectus describes the one class of shares of the Money Market Fund
- --Investor A shares, and the two classes of shares of each of the other Funds --
Investor A shares and Investor B shares.
2
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<TABLE>
<CAPTION>
Table of Contents Page
<S> <C>
Prospectus Summary.................... 4
Fee Table............................. 7
Financial Highlights.................. 10
The Company and Its Funds............. 20
The Funds' Investment Objectives and
Policies.......................... 20
Investment Restrictions............... 35
Pricing Shares........................ 38
How To Buy Shares..................... 39
Sales Charges......................... 41
Reduced Sales Charges -- Investor A
Shares............................ 42
Contingent Deferred Sales Charge --
Investor B Shares................. 44
Other Purchase Information............ 47
Exchanges............................. 47
How To Redeem Shares.................. 48
Shareholder Services.................. 51
Dividends and Taxes................... 51
Management and Expenses............... 53
Performance Data and Advertising...... 59
Company Shares........................ 60
Additional Information................ 61
</TABLE>
3
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PROSPECTUS SUMMARY
<TABLE>
<S> <C>
Shares Offered....................... Investor A shares of capital stock, $0.001 par value, of the
Money Market Fund, and Investor A and Investor B shares of
capital stock, $0.001 par value, of the Income Fund, the
Income Equity Fund, the Stock Appreciation Fund, the Large
Company Fund and the Balanced Fund, six separate series
(collectively, the "Funds") of The Riverfront Funds, Inc., a
Maryland corporation (the "Company").
Offering Price....................... The public offering price of the INVESTOR A SHARES of the
Money Market Fund is equal to the net asset value per share.
The public offering price of INVESTOR A SHARES of each of
the other Funds is equal to the net asset value per share
plus a sales charge equal to 4.50% of the public offering
price (4.71% of the net amount invested), reduced on
investments of $100,000 or more (See "Sales Charges --
Investor A Shares"). Under certain circumstances, the sales
charge may be eliminated (See "Reduced Sales Charges --
Investor A Shares").
The public offering price of INVESTOR B SHARES of each of
the Income Fund, the Income Equity Fund, the Stock
Appreciation Fund, the Large Company Fund and the Balanced
Fund is equal to the net asset value per share, but
investors may be subject to a contingent deferred sales
charge ranging from 4% to 1% when Investor B shares are
redeemed within the first six years after purchase.
Minimum Purchase..................... $1,000 minimum initial investment with $100 minimum subse-
quent investments. Such minimum initial and subsequent
investments are waived for employees of The Provident Bank
and BISYS Fund Services Limited Partnership. Investor B
shares may only be purchased in an amount of less than
$250,000.
Type of Company...................... Each Fund is a diversified series of the Company, an
open-end, management investment company.
Investment Objectives................ For the MONEY MARKET FUND, current income from U.S.
Government short-term securities while preserving capital
and maintaining liquidity.
For the INCOME FUND, a high level of current income,
consistent with preservation of capital, by investing
primarily in securities issued or guaranteed by the U.S.
Government, its agencies and instrumentalities, and in high
quality fixed rate and adjustable rate mortgage-backed
securities and other asset-backed securities.
</TABLE>
4
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<TABLE>
<S> <C>
For the INCOME EQUITY FUND, a high level of investment
income, with capital appreciation as a secondary objective,
through investment primarily in income-producing equity
securities of U.S. issuers.
For the STOCK APPRECIATION FUND, capital growth.
For the LARGE COMPANY FUND, long-term growth of capital with
some current income as a secondary objective.
For the BALANCED FUND, long-term growth of capital with some
current income as a secondary objective.
Investment Policies.................. Under normal market conditions, the MONEY MARKET FUND
invests at least 65% of its total assets in obligations
issued or guaranteed as to principal and interest by the
U.S. Government, its agencies or instrumentalities, and in
repurchase agreements secured by such obligations.
Under normal market conditions, the INCOME FUND invests
primarily in securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and in high
quality fixed rate and adjustable rate mortgage-backed
securities and other asset-backed securities which are
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or are rated no lower than one of the
three highest rating categories by a nationally recognized
statistical rating organization (an "NRSRO"), or if not so
rated, are deemed to be of comparable quality.
Under normal market conditions, the INCOME EQUITY FUND
invests at least 65% of its total assets in common stocks
and securities convertible into common stocks, such as bonds
and preferred stocks, rated in one of the four highest
rating categories by an NRSRO, or if not so rated, are
deemed to be of comparable quality.
Under normal market conditions, the STOCK APPRECIATION FUND
invests at least 65% of its total assets in a portfolio of
common stocks that, in the opinion of Provident based upon
its analysis of various fundamental and technical standards,
have appreciation potential.
Under normal market conditions, the LARGE COMPANY FUND
invests substantially all, but in no event less than 65%, of
its total assets in common stocks and securities convertible
into common stocks, such as bonds and preferred stocks, of
issuers with market capitalizations of at least $4 billion.
</TABLE>
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<TABLE>
<S> <C>
Under normal market conditions, the BALANCED FUND invests in
common stocks, preferred stocks, fixed income securities and
securities convertible into common stocks.
Risk Factors and Investment
Techniques......................... An investment in any of the Funds is subject to certain
risks, as set forth in detail below under "Risk Factors and
Investment Techniques." As with other mutual funds, there
can be no assurance that any of the Funds will achieve its
investment objective or objectives. The Funds, to the extent
set forth under "Risk Factors and Investment Techniques,"
may engage in the following practices: the use of repurchase
and reverse repurchase agreements, entering into options and
futures transactions, the lending of portfolio securities,
the purchase of securities on a when-issued or
delayed-delivery basis and investing in warrants, foreign
securities and derivatives.
Investment Adviser................... The Provident Bank ("Provident").
Sub-Investment Adviser............... DePrince, Race & Zollo, Inc. ("DRZ"), with respect to the
Income Equity Fund.
Dividends............................ For the Money Market Fund, dividends from net income are
declared daily and generally paid monthly. For the Stock
Appreciation Fund, dividends from net income, if any, are
declared and generally paid semi-annually. For each of the
other Funds, dividends from net income are declared and
generally paid monthly. Net realized capital gains are
distributed at least annually.
Distributor.......................... BISYS Fund Services Limited Partnership (the "Distributor").
</TABLE>
6
<PAGE> 14
FEE TABLE
The purpose of the fee table is to assist investors in understanding the costs
and expenses that an investor in a Fund will bear directly or indirectly. Such
costs and expenses do not include any fees charged by Provident or any of its
affiliates to its customers' accounts which may have invested in shares of the
Funds. For more complete descriptions of the various costs and expenses, see the
following sections of this prospectus: "Company Management and Expenses," "How
to Buy Shares," "Sales Charges," "Reduced Sales Charges -- Investor A Shares"
and "Distribution Plans."
INVESTOR A SHARES
<TABLE>
<CAPTION>
MONEY INCOME STOCK LARGE
MARKET INCOME EQUITY APPRECIATION COMPANY BALANCED
FUND FUND FUND FUND FUND FUND
------ ------ ------ ------------ ------- --------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Charge (as a percentage of offering
price)...................................... 0% 4.50%(1) 4.50%(1) 4.50%(1) 4.50%(1) 4.50%(1)
ANNUAL FUND EXPENSES (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Investment Advisory Fees After Voluntary Fee
Reduction................................... .15% .40% .95% .80% .80% .80%(2)
12b-1 Fees After Voluntary Fee Reduction...... .10(3) .19(3) .22(3) .25 .25 .19(3)
Other Expenses................................ .39 .55 .58 1.06 .64 .87
--- ---- ---- ---- ---- ----
Total Fund Operating Expenses After Voluntary
Fee Reductions.............................. .64% 1.14% 1.75% 2.11% 1.69% 1.86%
=== ==== ==== ==== ==== ====
</TABLE>
- ---------------
(1) The sales charge applied to purchases of Investor A shares declines as the
amount invested increases. In addition, all or a portion of the sales charge
may be waived by the Distributor on certain sales of Investor A shares. See
"Sales Charges -- Investor A Shares" and "Reduced Sales Charges -- Investor
A Shares."
(2) Provident agreed with the Company to reduce voluntarily the amount of its
investment advisory fee with respect to the Balanced Fund for the fiscal
year ended December 31, 1997 and the fiscal year ending December 31, 1998.
Absent such voluntary fee reduction, Investment Advisory Fees for the fiscal
year ended December 31, 1997, would have been 0.90% for the Balanced Fund.
(3) The Distributor has agreed with the Company to reduce voluntarily the amount
of its 12b-1 fees under the Investor A Plan, as described below, with
respect to the Money Market, Income, Income Equity and Balanced Funds, for
the fiscal year ended December 31, 1997, and the fiscal year ending December
31, 1998. Absent such voluntary fee reduction, 12b-1 Fees for such Funds
would have been .25%.
7
<PAGE> 15
INVESTOR B SHARES
<TABLE>
<CAPTION>
INCOME STOCK LARGE
INCOME EQUITY APPRECIATION COMPANY BALANCED
FUND FUND FUND FUND FUND
------ ------ ------------ ------- --------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as
applicable)(1)................................ 4.00% 4.00% 4.00% 4.00% 4.00%
ANNUAL FUND EXPENSES (AS A PERCENTAGE OF AVERAGE
NET ASSETS)
Investment Advisory Fees After Voluntary Fee
Reduction..................................... .40% .95% .80% .80% .80%(2)
12b-1 Fees...................................... 1.00 1.00 1.00 1.00 1.00
Other Expenses.................................. .55 .60 1.06 .67 .92
---- ---- ---- ---- ----
Total Fund Operating Expenses After Voluntary
Fee Reduction................................. 1.95%% 2.55% 2.86% 2.47% 2.72%
==== ==== ==== ==== ====
</TABLE>
- ---------------
(1) A contingent deferred sales load ranging from 4% to 1% is charged with
respect to Investor B shares redeemed within the first six years after
purchase. See "Contingent Deferred Sales Charge -- Investor B Shares" below.
(2) Provident agreed with the Company to reduce voluntarily the amount of its
investment advisory fee with respect to the Balanced Fund for the fiscal
year ended December 31, 1997 and the fiscal year ending December 31, 1998.
Absent such voluntary fee reduction, Investment Advisory Fees for the fiscal
year ended December 31, 1997, would have been .90% for the Balanced Fund.
EXAMPLE(4) -- INVESTOR A SHARES
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each period:
<TABLE>
<CAPTION>
MONEY INCOME STOCK LARGE
MARKET INCOME EQUITY APPRECIATION COMPANY BALANCED
FUND FUND FUND FUND FUND FUND
------ ------ ------ ------------ ------- --------
<S> <C> <C> <C> <C> <C> <C>
One Year............................. $ 7 $ 56 $ 62 $ 65 $ 61 $ 63
Three Years.......................... $20 $ 80 $ 98 $108 $ 96 $101
Five Years........................... $36 $105 $136 $153 $133 $141
Ten Years............................ $80 $177 $242 $278 $236 $253
</TABLE>
8
<PAGE> 16
EXAMPLE(4) -- INVESTOR B SHARES
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each period:
<TABLE>
<CAPTION>
INCOME STOCK LARGE
INCOME EQUITY APPRECIATION COMPANY BALANCED
FUND FUND FUND FUND FUND
------ ------ ------------ ------- --------
<S> <C> <C> <C> <C> <C>
One Year............................. $ 60 $ 66 $ 69 $ 65 $ 68
Three Years.......................... $101 $119 $129 $117 $124
Five Years........................... $125 $156 $171 $152 $164
Ten Years............................ $206 $269 $300 $261 $284
</TABLE>
You would pay the following expenses on the same investment, assuming no
redemption:
<TABLE>
<CAPTION>
INCOME STOCK LARGE
INCOME EQUITY APPRECIATION COMPANY BALANCED
FUND FUND FUND FUND FUND
------ ------ ------------ ------- --------
<S> <C> <C> <C> <C> <C>
One Year............................. $ 20 $ 26 $ 29 $ 25 $ 28
Three Years.......................... $ 61 $ 79 $ 89 $ 77 $ 84
Five Years........................... $105 $136 $151 $132 $144
Ten Years............................ $206 $269 $300 $261 $284
</TABLE>
- ---------------
(4) The Commission requires use of a 5% annual return figure for purposes of the
examples. Actual return for a Fund may be greater or less than 5%.
AMOUNTS SHOWN IN THE EXAMPLES ABOVE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. As a result of the payment of sales loads and Rule 12b-1
fees, long-term shareholders may pay more than the maximum front-end sales
charge permitted by the Rules of the National Association of Securities Dealers,
Inc. (the "NASD"). The NASD has adopted rules which generally limit the
aggregate of any sales charges paid and payments under a Fund's Investor A and
Investor B Distribution Plans to 6.25% of total new gross sales, plus interest.
A Fund would stop accruing payments under a Distribution Plan if, to the extent,
and for as long as, such limit would otherwise be exceeded.
9
<PAGE> 17
The information set forth in the foregoing Fee Tables and examples relates
to the Investor A and Investor B Shares (except with respect to the Money Market
Fund, which only has Investor A shares) of the Funds. The two classes of shares
are subject to the same expenses except that the level of Rule 12b-1 fees and
certain other class specific expenses paid by the holders of Investor A shares
and Investor B shares differs.
FINANCIAL HIGHLIGHTS
The Money Market Fund, the Income Fund, the Income Equity Fund, the Stock
Appreciation Fund, the Large Company Fund and the Balanced Fund (formerly known
as The Riverfront Flexible Growth Fund) are each a separate fund of the Company.
The financial highlights of each of the Funds appear in the following Financial
Highlights tables. Ernst & Young LLP, independent auditors, audited the
financial highlights of each of these Funds for the fiscal years ended December
31, 1997, 1996 and 1995, except that, with respect to the Stock Appreciation
Fund, Ernst & Young LLP audited the financial highlights for the three-month
period ended December 31, 1995. Other auditors audited the financial highlights
of each of the Funds for all of the other time periods in the Financial
Highlights tables.
The financial statements of the Funds and the report issued by Ernst &
Young LLP on these financial statements appear in the Statement of Additional
Information. Shareholders and prospective investors may obtain the Statement of
Additional Information upon request.
As of September 30, 1995, the Stock Appreciation Fund acquired all of the
assets of each of the Stock Appreciation Fund and the Stock Growth Fund of MIM
Mutual Funds, Inc., in exchange for the assumption of such Funds' stated
liabilities and a number of full and fractional Investor A shares of the Stock
Appreciation Fund having an aggregate net asset value equal to such Funds' net
assets (the "Reorganization"). For accounting purposes, the MIM Stock
Appreciation Fund is deemed to be the survivor of the Reorganization. The
following financial highlights of the Stock Appreciation Fund for each of the
fiscal years ended September 30, 1995, 1994, 1993, 1992, 1991, 1990, 1989 and
1988 have been audited by other auditors and, except for September 30, 1995 (the
effective date of the Reorganization), reflect the operations of the MIM Stock
Appreciation Fund prior to the Reorganization.
On July 29, 1994, the shareholders of the Company approved the
reclassification of the Funds' then outstanding shares into Investor A shares.
Such reclassification was effective as of August 1, 1994.
10
<PAGE> 18
THE RIVERFRONT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
INVESTOR A SHARES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, OCTOBER 1, 1992
----------------------------------------- TO DECEMBER 31,
1997 1996 1995 1994(D) 1993(D) 1992(a)(d)
---- ---- ---- ------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Investment Activities
Net Investment Income................ 0.049 0.046 0.050 0.04 0.03 0.01
-------- -------- -------- -------- -------- -------
Total from Investment
Activities......................... 0.049 0.046 0.050 0.04 0.03 0.01
-------- -------- -------- -------- -------- -------
Distributions
Net Investment Income................ (0.049) (0.046) (0.050) (0.04) (0.03) (0.01)
-------- -------- -------- -------- -------- -------
Total Distributions.................. (0.049) (0.046) (0.050) (0.04) (0.03) (0.01)
-------- -------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== =======
TOTAL RETURN......................... 5.02% 4.89% 5.52% 3.78% 2.90% 0.80%(b)
ANNUALIZED RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000)...... $142,569 $181,017 $157,495 $149,374 $133,207 $37,083
Ratio of expenses to average net
assets............................. 0.64% 0.59% 0.58% 0.51% 0.32% 0.01%(c)
Ratio of net investment income to
average net assets................. 4.90% 4.78% 5.34% 3.70% 2.85% 3.09%(c)
Ratio of expenses to average net
assets*............................ 0.79% 0.84% 0.83% 0.80% 0.42% 0.68%(c)
Ratio of net investment income to
average net assets*................ 4.75% 4.53% 5.09% 3.41% 2.75% 2.42%(c)
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed. If
such voluntary fee reductions and/or 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.
11
<PAGE> 19
THE RIVERFRONT U.S. GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
JANUARY 17,
YEAR ENDED DECEMBER 31, YEAR ENDED 1995 TO
------------------------------------------------- DECEMBER 31, DECEMBER 31,
1997 1996 1995 1995(a)
----------------------- ----------------------- ------------ ------------
INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A INVESTOR B
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........... $ 9.43 $ 10.64 $ 9.71 $ 10.95 $ 8.92 $ 10.00
Investment Activities
Net investment income........... 0.49 0.48 0.52 0.49 0.54 0.43
Net realized and unrealized
gains (losses) from
investments................... 0.14 0.14 (0.29) (0.31) 0.79 0.94
------- ------- ------- ------- ------- -------
Total from Investment
Activities.................... 0.63 0.62 0.23 0.18 1.33 1.37
------- ------- ------- ------- ------- -------
Distributions
Net investment income........... (0.50) (0.49) (0.51) (0.49) (0.54) (0.42)
In excess of net investment
income........................ (0.08) (0.09) -0- -0- -0- -0-
------- ------- ------- ------- ------- -------
Total Distributions............. (0.58) (0.58) (0.51) (0.49) (0.54) (0.42)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD........................ $ 9.48 $ 10.68 $ 9.43 $ 10.64 $ 9.71 $ 10.95
======= ======= ======= ======= ======= =======
TOTAL RETURN (EXCLUDING
SALES/REDEMPTION CHARGE)...... 6.94% 6.07% 2.51% 1.72% 15.22% 13.96%(e)
ANNUALIZED RATIOS/
SUPPLEMENTAL DATA:
Net assets at end of period
(000)......................... $49,017 $ 1,309 $33,694 $ 1,296 $36,538 $ 1,263
Ratio of expenses to average net
assets........................ 1.14% 1.95% 1.11% 1.96% 1.09% 1.90%(c)
Ratio of net investment income
to average net assets......... 5.40% 4.56% 5.45% 4.59% 5.74% 4.80%(c)
Ratio of expenses to average net
assets*....................... 1.20% 1.95% 1.20% 1.96% 1.18% 1.90%(c)
Ratio of net investment income
to average net assets*........ 5.34% 4.56% 5.36% 4.59% 5.65% 4.80%(c)
Portfolio turnover.............. 71%(d) 71%(d) 53%(d) 53%(d) 75%(d) 75%(d)
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed. If
such voluntary fee reductions and/or 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 Fund 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.
12
<PAGE> 20
<TABLE>
<CAPTION>
AUGUST 9, 1990
YEARS ENDED DECEMBER 31, TO
------------------------------------------------- DECEMBER 31,
1994(F) 1993(F) 1992(B)(F) 1991(F) 1990(a)(f)
------- ------- ---------- ------- --------------
<S> <C> <C> <C> <C> <C>
$ 9.91 $ 9.76 $ 10.00 $10.00 $10.00
0.54 0.51 0.10 0.73 0.12
(0.99) 0.20 (0.23) -0- -0-
------- ------- ------- ------ ------
(0.45) 0.71 (0.13) 0.73 0.12
------- ------- ------- ------ ------
(0.54) (0.50) (0.10) (0.73) (0.12)
-0- (0.06) (0.01) -0- -0-
------- ------- ------- ------ ------
(0.54) (0.56) (0.11) (0.73) (0.12)
------- ------- ------- ------ ------
$ 8.92 $ 9.91 $ 9.76 $10.00 $10.00
======= ======= ======= ====== ======
(4.64)% 7.38% (1.31)% N/A N/A
$32,721 $30,078 $24,588 $ 33 $ 0
0.86% 0.65% 0.66% 0.00% 1.67%(c)
5.78% 5.05% 4.00% 7.34% 1.17%(c)
1.14% 1.08% 1.06% N/A N/A
5.49% 4.62% 3.60% N/A N/A
83% 220% 117% 0% 0%
</TABLE>
13
<PAGE> 21
THE RIVERFRONT INCOME EQUITY FUND
<TABLE>
<CAPTION>
JANUARY 17,
YEAR ENDED DECEMBER 31, YEAR ENDED 1995 TO
---------------------------------------------------------- DECEMBER 31, DECEMBER 31,
1997 1996 1995 1995(a)
-------------------------- -------------------------- ------------ ------------
INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A INVESTOR B
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.............................. $ 11.92 $ 12.16 $ 11.70 $ 11.85 $ 10.15 $10.00
Investment Activities
Net investment income................. 0.16 0.06 0.21 0.12 0.27 0.13
Net realized and unrealized gains from
investments......................... 3.11 3.17 2.12 2.21 2.89 2.78
------- ------- ------- ------- ------- ------
Total from Investment Activities...... 3.27 3.23 2.33 2.33 3.16 2.91
------- ------- ------- ------- ------- ------
Distributions
Net investment income................. (0.16) (0.06) (0.21) (0.12) (0.27) (0.13)
In excess of net investment income.... -0- -0- -0- -0- -0- -0-
Net realized gains.................... (3.35) (3.35) (1.90) (1.90) (1.34) (0.93)
In excess of net realized gains....... -0- -0- -0- -0- -0- -0-
------- ------- ------- ------- ------- ------
Total Distributions................... (3.51) (3.41) (2.11) (2.02) (1.61) (1.06)
------- ------- ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD........ $ 11.68 $ 11.98 $ 11.92 $ 12.16 $ 11.70 $11.85
======= ======= ======= ======= ======= ======
TOTAL RETURN (EXCLUDING
SALES/REDEMPTION CHARGE)............ 28.20% 27.19% 19.88% 19.67% 31.45% 29.28%(e)
ANNUALIZED RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000)..... $83,841 $17,563 $73,368 $ 7,632 $60,845 $2,833
Ratio of expenses to average net
assets.............................. 1.75% 2.55% 1.76% 2.48% 1.49% 2.46%(c)
Ratio of net investment income to
average net assets.................. 1.21% 0.40% 1.62% 0.88% 2.27% 1.12%(c)
Ratio of expenses to average net
assets*............................. 1.80% 2.55% 1.85% 2.54% 1.74% 2.51%(c)
Ratio of net investment income to
average net assets*................. 1.16% 0.40% 1.53% 0.82% 2.02% 1.07%(c)
Portfolio turnover.................... 157%(d) 157%(d) 166%(d) 166%(d) 180%(d) 180%(d)
Average commission rate paid(g)....... $0.0544 $0.0544 $0.0541 $0.0541 -- --
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed. If
such voluntary fee reductions and/or expense reimbursements had not occurred,
the ratios would have been as indicated.
(a) Period from commencement of operation.
(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 Fund 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.
(g) Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of shares purchased and sold for which
commissions were charged and is calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
Disclosure is not required for periods ending prior to September 1, 1996.
14
<PAGE> 22
<TABLE>
<CAPTION>
AUGUST 9,
YEARS ENDED DECEMBER 31, 1990 TO
------------------------------------------------- DECEMBER 31,
1994(F) 1993(F) 1992(B)(F) 1991(F) 1990(a)(f)
------- ------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C>
$ 10.63 $ 10.78 $ 10.00 $10.00 $10.00
0.32 0.28 0.08 0.73 0.12
-0- 1.01 0.80 -0- -0-
------- ------- ------- ------ ------
0.32 1.29 0.88 0.73 0.12
------- ------- ------- ------ ------
(0.31) (0.27) (0.08) (0.73) (0.12)
-0- (0.03) (0.01) -0- -0-
(0.49) (1.14) -0- -0- -0-
-0- -0- (0.01) -0- -0-
------- ------- ------- ------ ------
(0.80) (1.44) (0.10) (0.73) (0.12)
------- ------- ------- ------ ------
$ 10.15 $ 10.63 $ 10.78 $10.00 $10.00
======= ======= ======= ====== ======
3.08% 12.11% 8.74% N/A N/A
$34,965 $24,387 $12,262 $ 43 $ 40
1.30% 1.47% 1.48% 0.00% 1.67%(c)
2.93% 2.55% 3.16% 7.34% 1.17%(c)
1.58% 1.64% 2.02% N/A N/A
2.65% 2.38% 2.62% N/A N/A
119% 145% 12% 0% 0%
-- -- -- -- --
</TABLE>
15
<PAGE> 23
THE RIVERFRONT STOCK APPRECIATION FUND
<TABLE>
<CAPTION>
FROM OCTOBER 1, FROM OCTOBER 1,
YEAR ENDED DECEMBER 31, 1995 THROUGH 1995 THROUGH
--------------------------------------------------- DECEMBER 31, DECEMBER 31,
1997 1996 1995(B) 1995(A)(B)
----------------------- ------------------------- --------------- ---------------
INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A INVESTOR B
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD......................... $ 9.43 $ 9.77 $ 9.50 $ 9.91 $ 10.00 $ 10.00
Investment Activities
Net investment loss............. (0.04) (0.08) (0.14) (0.15) (0.01) (0.01)
Net realized and unrealized
gains (losses) from
investments.................... 1.75 1.77 1.10 1.04 (0.12) (0.08)
------- ------- ------- ------- ------- -------
Total from Investment
Activities..................... 1.71 1.69 .96 0.89 (0.13) (0.09)
------- ------- ------- ------- ------- -------
Distributions
Net investment income........... -0- -0- -0- -0- -0- -0-
Net realized gains.............. (1.97) (1.97) (1.03) (1.03) (0.37) -0-
Returns of capital.............. -0- -0- -0- -0- -0- -0-
------- ------- ------- ------- ------- -------
Total Distributions............. (1.97) (1.97) -0- (1.03) (0.37) -0-
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD......................... $ 9.17 $ 9.49 $ 9.43 $ 9.77 $ 9.50 $ 9.91
======= ======= ======= ======= ======= =======
TOTAL RETURN (EXCLUDING
SALES/REDEMPTION CHARGE)....... 18.79% 17.86% 10.17% 9.05% (1.20)%(c) (0.90)%(c)
ANNUALIZED RATIOS/
SUPPLEMENTAL DATA:
Net assets at end of period
(000s)......................... $24,312 $ 1,265 $31,227 $ 687 $40,995 $ 72
Ratio of expenses to average net
assets......................... 2.11% 2.86% 1.91% 2.64% 1.76% (d) 2.30% (d)
Ratio of net investment income
to average net assets.......... (0.43)% (1.20)% (1.25)% (2.01)% (0.49)%(d) (1.69)%(d)
Ratio of expenses to average net
assets*........................ (g) (g) (g) (g) 1.77% (d) 2.39% (d)
Ratio of net investment income
to average net assets*......... (g) (g) (g) (g) (0.50)%(d) (1.78)%(d)
Portfolio turnover.............. 67%(e) 67%(e) 162%(e) 162%(e) 46% (e) 46% (e)
Average commission rate
paid(h)........................ $0.0601 $0.0601 $0.0597 $0.0597 -- --
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed. If
such voluntary fee reductions and/or 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 period prior to September 30, 1995 represents the
performance of the MIM Stock Appreciation Fund. The per share data for the
period 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.
16
<PAGE> 24
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------------------------
1995(F) 1994(F) 1993(F) 1992(F) 1991(F) 1990(F) 1989(F) 1988(F)
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 8.25 $ 10.18 $ 7.98 $ 7.70 $ 4.64 $ 4.86 $ 4.55 $ 5.81
(0.07) (0.12) (0.17) (0.08) (0.11) (0.01) 0.11 0.02
2.14 (1.26) 2.57 1.41 3.17 (0.21) 0.31 (1.26)
------- ------- ------- ------- ------ ------ ------ ------
2.07 (1.38) 2.40 1.33 3.06 (0.22) 0.42 (1.24)
------- ------- ------- ------- ------ ------ ------ ------
-0- -0- -0- -0- -0- -0- (0.11) (0.01)
(0.32) (0.55) (0.20) (1.05) -0- -0- -0- -0-
-0- -0- -0- -0- -0- (0.01) -0- (0.01)
------- ------- ------- ------- ------ ------ ------ ------
(0.32) (0.55) (0.20) (1.05) -0- (0.01) (0.11) (0.02)
------- ------- ------- ------- ------ ------ ------ ------
$ 10.00 $ 8.25 $ 10.18 $ 7.98 $ 7.70 $ 4.64 $ 4.86 $ 4.55
======= ======= ======= ======= ====== ====== ====== ======
25.12% (13.91)% 30.61% 16.69% 66.04% (4.44)% 9.41% (21.29)%
$44,500 $47,880 $59,330 $28,750 $9,600 $4,310 $1,420 $1,990
2.61% 2.44% 2.47% 2.70% 2.89% 2.76% 3.07% 2.82%
(0.73)% (1.35)% (1.85)% (1.00)% (1.72)% (0.62)% 2.25% 0.43%
(g) (g) (g) (g) (g) (g) (g) (g)
(g) (g) (g) (g) (g) (g) (g) (g)
197% 254% 216% 288% 240% 185% 71% 207%
-- -- -- -- -- -- -- --
</TABLE>
- ---------------
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
(f) Audited by other auditors.
(g) There were no waivers or reimbursements during the period.
(h) Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of shares purchased and sold for which
commissions were charged and is calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
Disclosure is not required for periods ending prior to September 1, 1996.
17
<PAGE> 25
THE RIVERFRONT BALANCED FUND
<TABLE>
<CAPTION>
YEAR JANUARY 17,
YEAR ENDED DECEMBER 31, ENDED 1995 TO FROM
--------------------------------------------------- DECEMBER 31, DECEMBER 31, SEPTEMBER 1,
1997 1996 1995 1995(A) 1994 THROUGH
----------------------- ------------------------- ---------- ---------- DECEMBER 31,
INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A INVESTOR B 1994(A)(F)
---------- ---------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................... $ 11.69 $ 12.04 $ 11.36 $ 11.70 $ 9.79 $10.00 $10.00
------- ------- ------- ------- ------ ------ ------
Investment Activities
Net investment income.............. 0.23 0.12 0.31 0.26 0.35 0.25 0.10
Net realized and unrealized gains
(losses) from investments........ 1.71 1.77 0.33 0.34 1.66 1.79 (0.18)
------- ------- ------- ------- ------ ------ ------
Total from Investment Activities... 1.94 1.89 0.64 0.60 2.01 2.04 (0.08)
------- ------- ------- ------- ------ ------ ------
Distributions
Net investment income.............. (0.23) (0.12) (0.31) (0.26) (0.34) (0.24) (0.13)
Net realized gains................. (1.10) (1.10) -- -- (0.10) (0.10) --
------- ------- ------- ------- ------ ------ ------
Total Distributions................ (1.33) (1.22) (0.31) (0.26) (0.44) (0.34) (0.13)
------- ------- ------- ------- ------ ------ ------
NET ASSET VALUE, END OF PERIOD..... $ 12.30 $ 12.71 $ 11.69 $ 12.04 $11.36 $11.70 $ 9.79
======= ======= ======= ======= ====== ====== ======
TOTAL RETURN (EXCLUDES SALES/
REDEMPTION CHARGE)............... 16.77% 15.82% 5.76% 5.27% 20.83% 20.53%(c) (0.82)%(e)
ANNUALIZED RATIOS/ SUPPLEMENTARY
DATA:
Net Assets at end of period
(000)............................ $ 9,563 $11,483 $10,786 $10,008 $9,427 $5,030 $2,709
Ratio of expenses to average net
assets........................... 1.86% 2.72% 1.70% 2.54% 1.28% 2.04%(d) 1.48%(d)
Ratio of net investment income to
average net assets............... 1.80% 0.93% 2.87% 2.03% 3.48% 2.69%(d) 4.01%(d)
Ratio of expenses to average net
assets*.......................... 2.07% 2.82% 1.94% 2.68% 1.67% 2.84%(d) 4.61%(d)
Ratio of net investment income to
average net assets*.............. 1.59% 0.83% 2.63% 1.89% 3.09% 1.89%(d) 0.88%(d)
Portfolio Turnover................. 102%(b) 102%(b) 98%(b) 98%(b) 13%(b) 13%(b) 1%
Average commission rate paid(g).... $0.0627 $0.0627 $0.0891 $0.0891 -- -- --
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or 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 Fund 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.
(g) Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of shares purchased and sold for which
commissions were charged and is calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
Disclosure is not required for periods ending prior to September 1, 1996.
18
<PAGE> 26
THE RIVERFRONT LARGE COMPANY SELECT FUND
<TABLE>
<CAPTION>
FROM JANUARY 2, 1997
THROUGH DECEMBER 31,
1997 (A)
-------------------------
INVESTOR A INVESTOR B
---------- ----------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.00 $ 10.00
Investment Activities
Net investment income (loss)................................ -- (0.04)
Net realized and unrealized gains (losses) from
investments............................................... 2.77 2.72
------- -------
Total from Investment Activities............................ 2.77 2.68
------- -------
Distributions
Net realized gains.......................................... (1.40) (1.40)
Tax return of capital....................................... (0.03) --
------- -------
Total Distributions......................................... (1.43) (1.40)
------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 11.34 $ 11.28
======= =======
Total Return (excludes sales/redemption charge)............. 27.93%(b) 26.97%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........................... $33,614 $ 2,464
Ratios of expenses to average net assets.................... 1.69%(c) 2.47%(c)
Ratio of net investment income (loss) to average net
assets.................................................... 0.00%(c) (1.10)%(c)
Ratio of expenses to average net assets..................... (f) (f)
Ratio of net investment income to average net assets........ (f) (f)
Portfolio turnover rate (d)................................. 39% 39%
Average commission rate paid (e)............................ $0.0960 $0.0960
</TABLE>
- ---------------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(e) Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of portfolio shares purchased and sold for which
commissions were charged and is calculated on the basis of the portfolio as
a whole without distinguishing between the classes of shares issued.
(f) There were no waivers or reimbursements during the period.
19
<PAGE> 27
THE COMPANY AND ITS FUNDS
The Riverfront Funds, Inc. is an open-end management investment company,
commonly known as a mutual fund (the "Company"), registered under the Investment
Company Act of 1940, as amended (the "1940 Act"). The Company currently offers
six series of shares of capital stock (individually a "Fund" and collectively
the "Funds"). Each Fund of the Company is diversified. The Company was
incorporated in Maryland on March 27, 1990. The Funds currently offered by the
Company are the Money Market Fund, the Income Fund, the Income Equity Fund, the
Stock Appreciation Fund, the Large Company Fund and the Balanced Fund (formerly
known as The Riverfront Flexible Growth Fund).
The investment objectives of each Fund are fundamental policies and as such
may not be changed without a vote of the holders of a majority of the
outstanding voting securities of that Fund (as defined below under "COMPANY
SHARES"). There can be no assurance that the investment objectives of any Fund
will be achieved.
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES
THE RIVERFRONT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
INVESTMENT OBJECTIVE AND POLICIES
The Money Market Fund seeks current income from U.S. Government short-term
securities while preserving capital and maintaining liquidity. The
dollar-weighted average maturity of the Money Market Fund will not exceed 90
days.
PRINCIPAL INVESTMENTS
The Money Market Fund invests at least 65% of its total assets in obligations
issued or guaranteed as to principal and interest by the U.S. Government, its
agencies or instrumentalities, and in repurchase agreements secured by such
obligations. Securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities include U.S. Treasury securities which differ only
in their interest rates, maturities and times of issuance. Treasury bills have
initial maturities of one year or less; Treasury notes have initial maturities
of one to ten years; and Treasury bonds generally have initial maturities of
greater than ten years. Some obligations issued or guaranteed by the U.S.
Government, such as those issued by the Government National Mortgage Association
("GNMA") and Federal Housing Administration ("FHA"), are backed by the full
faith and credit of the U.S. Government as to payment of principal and interest
and are the highest quality government securities. Other securities, such as
those issued by the Federal Farm Credit System, the Federal Land Bank
Association and the Federal National Mortgage Association ("FNMA"), are
supported by each agency's right to borrow money from the U.S. Treasury under
certain circumstances. Others, such as those issued by the Federal Home Loan
Mortgage Corporation ("FHLMC"), are supported only by the credit of the issuing
agency and not by the U.S. Government.
Under normal market conditions, the Money Market Fund may invest up to 35% of
its total assets in Short-Term Securities as described below under "THE
RIVERFRONT U.S. GOVERNMENT INCOME FUND -- OTHER ELIGIBLE INVESTMENTS," except
that with respect to corporate obligations, such securities will have or be
deemed to have remaining maturities of thirteen months or less and shall be
20
<PAGE> 28
rated in one of the two highest rating categories by an NRSRO or, if unrated,
are determined to be of comparable quality by Provident.
Pursuant to Rule 2a-7 under the 1940 Act, the Money Market Fund's investments
will be limited to U.S. dollar-denominated instruments with remaining maturities
of 397 days or less.
The Money Market Fund may purchase and sell securities on a when-issued or
delayed delivery basis, enter into repurchase agreements and lend securities to
broker-dealers and financial institutions. For expanded descriptions of these
investment techniques, see the "RISK FACTORS AND INVESTMENT TECHNIQUES" below.
The securities in which the Money Market Fund may invest may not earn as high a
level of current income as longer term or lower quality securities, which
generally have less liquidity, greater market risk and more price fluctuation.
THE RIVERFRONT U.S. GOVERNMENT INCOME FUND
INVESTMENT OBJECTIVES AND POLICIES
The Income Fund seeks a high level of current income, consistent with
preservation of capital, by investing primarily in securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and in high
quality fixed rate and adjustable rate mortgage-backed securities and other
asset-backed securities which are issued or guaranteed by the U.S. Government,
its agencies and instrumentalities or rated no lower than one of the three
highest rating categories by an NRSRO (e.g., at least "A" from Moody's Investors
Services ("Moody's") or Standard & Poor's Corporation ("S&P"), including all
sub-classifications indicated by a "plus" or "minus" sign or by a number) or, if
unrated, are determined to be of comparable quality by Provident. For a
description of these ratings by NRSROs, see the Appendix to the Statement of
Additional Information. It is expected that under normal circumstances the
dollar-weighted average duration of the Income Fund's securities will be between
three and seven years and that the dollar-weighted average life of the Income
Fund's securities will be in the range of four and ten years. While there is no
limit on the maturity of any single security purchased by the Income Fund, it is
expected that the maturity of any single security will not exceed 30 years.
The Income Fund seeks to achieve a high level of current income, consistent
with preservation of capital, by investing in a diversified portfolio of
securities which Provident believes will, in the aggregate, perform well in all
stages of the business and interest rate cycles. Although the values of
fixed-income securities generally increase during periods of declining interest
rates and decrease during periods of increasing interest rates, the extent of
these fluctuations has historically generally been smaller for shorter term
securities than for securities with longer maturities. Conversely, the yield
available on shorter term securities has also historically been lower on average
than those available from longer term securities.
PRINCIPAL INVESTMENTS
Under ordinary circumstances, the Income Fund intends to invest at least 65%
of its total assets in U.S. Government securities, U.S. Government agency
mortgage-backed securities and U.S. Government agency derivatives described
below under "COLLATERALIZED MORTGAGE OBLIGATIONS." U.S. Government securities
consist of U.S. Treasury bills, notes and bonds and securities issued by U.S.
Government agencies and instrumen-
21
<PAGE> 29
talities, such as GNMA, FHLMC, FNMA, Federal Home Loan Bank, Federal Farm
Credit, Student Loan Marketing Association and the Tennessee Valley Authority.
OTHER ELIGIBLE INVESTMENTS
The Income Fund may invest up to 35% of its total assets in non-government
agency mortgage-backed securities, asset-backed securities, corporate debt
securities, including adjustable rate securities, and foreign government bonds.
Each such security will be rated in one of the three highest rating categories
by an NRSRO or, if unrated, are determined to be of comparable quality by
Provident.
The Income Fund may also invest up to 35% of its total assets in the following
securities: (1) bankers' acceptances which are guaranteed by U.S. commercial
banks having total assets at the time of purchase in excess of $1.5 billion; (2)
certificates of deposit of domestic and foreign branches of U.S. banks which are
members of the Federal Reserve System or the Federal Deposit Insurance
Corporation and have total assets at the time of purchase in excess of $1.5
billion; (3) commercial paper (including master demand notes) rated in the
highest rating category by an NRSRO or, if unrated, determined to be of
comparable quality by Provident; (4) repurchase agreements; and (5) corporate
obligations with remaining maturities of one year or less and rated in one of
the three highest rating categories by an NRSRO or, if unrated, determined to be
of comparable quality by Provident. (Items (1) through (5) are hereafter
referred to as "Short-Term Securities.") For expanded descriptions of such
Short-Term Securities, see "INVESTMENT OBJECTIVES AND POLICIES -- Additional
Information on Portfolio Instruments" in the Company's Statement of Additional
Information. When, in Provident's opinion, market conditions warrant, Provident
may invest up to 100% of the Income Fund's assets for temporary defensive
purposes in such Short-Term Securities.
The Income Fund may also invest in securities issued by other investment
companies which invest in securities in which the Income Fund is permitted to
invest, as more fully described below under "RISK FACTORS AND INVESTMENT
TECHNIQUES."
The Income Fund is authorized to engage in options transactions, including the
writing of covered put and call options, the purchase of call and put options on
individual securities and interest rate index futures contracts, engage in
interest rate index futures contracts, enter into repurchase agreements, reverse
repurchase agreements, dollar rolls and when-issued, delayed delivery and
forward commitment transactions and lend securities to broker-dealers and
financial institutions. The Income Fund presently does not intend to enter into
options or futures transactions. For expanded descriptions of these investment
techniques, see below under "RISK FACTORS AND INVESTMENT TECHNIQUES" section of
this prospectus and the "INVESTMENT OBJECTIVES AND POLICIES -- Additional
Information on Portfolio Instruments" section in the Company's Statement of
Additional Information.
MORTGAGE-BACKED SECURITIES
Mortgage-backed securities are securities that directly or indirectly
represent a participation in, or are secured by and payable from, mortgage loans
secured by real property. The term mortgage-backed securities includes
adjustable rate mortgage securities and derivative mortgage products such as
collateralized mortgage obligations and other products described below.
22
<PAGE> 30
There are currently three basic types of mortgage-backed securities: (1) those
issued or guaranteed by the U.S. Government or one of its agencies or
instrumentalities, such as GNMA, FNMA and FHLMC; (2) those issued by private
issuers that represent an interest in or are collateralized by mortgage-backed
securities issued or guaranteed by the U.S. Government or one of its agencies or
instrumentalities; and (3) those issued by private issuers that represent an
interest in or are collateralized by whole mortgage loans or mortgage-backed
securities without a government guarantee but usually having some form of
private credit enhancement.
The Income Fund will invest in mortgage pass-through securities representing
participation interests in pools of residential mortgage loans originated by
governmental or private lenders. Such securities, which are ownership interests
in the underlying mortgage loans, differ from conventional debt securities,
which provide for periodic payment of interest in fixed amounts (usually
semi-annually) and principal payments at maturity or on specified call dates.
Mortgage pass-through securities provide for monthly payments that are a
"pass-through" of the monthly interest and principal payments (including any
pre-payments) made by the individual borrowers on the pooled mortgage loans, net
of any fees paid to the guarantor of such securities and for the servicing of
the underlying mortgage loans.
As with other interest-bearing securities, the prices of mortgage-backed
securities and asset-backed securities (described below) are inversely affected
by changes in interest rates. However, though the value of a mortgage-backed or
asset-backed security may decline when interest rates rise, the converse is not
necessarily true, since in periods of declining interest rates the mortgages or
other obligations underlying the security are more likely to be prepaid. For
this and other reasons, a mortgage-backed or asset-backed security's stated
maturity may be shortened by unscheduled prepayments on the underlying mortgages
or obligations, and, therefore, it is not possible to predict accurately the
security's return to the Fund.
PRIVATE MORTGAGE PASS-THROUGH SECURITIES
Private mortgage pass-through securities are structured similarly to GNMA,
FNMA and FHLMC mortgage pass-through securities and are issued by originators of
and investors in mortgage loans, including savings and loan associations,
mortgage banks, commercial banks, investment banks and special purpose
subsidiaries of the foregoing. These securities usually are backed by a pool of
conventional fixed rate or adjustable rate mortgage loans. Since private
mortgage pass-through securities typically are not guaranteed by an entity
having the credit status of GNMA, FNMA or FHLMC, such securities generally are
structured with one or more types of credit enhancement. Types of credit
enhancement are described below.
COLLATERALIZED MORTGAGE OBLIGATIONS
Collateralized mortgage obligations or "CMOs" are debt obligations
collateralized by mortgage loans or mortgage pass-through securities. Typically,
CMOs are collateralized by GNMA, FNMA or FHLMC certificates, but also may be
collateralized by whole loans or private mortgage pass-through securities (such
collateral collectively hereinafter referred to as "Mortgage Assets"). Payments
of principal of and interest on the Mortgage Assets, and any reinvestment income
thereon, provide the funds to pay debt service on the CMOs. CMOs may be issued
by agencies or instrumentalities of the U.S. Government or by private
originators of, or investors in, mortgage loans, including savings
23
<PAGE> 31
and loan associations, mortgage banks, commercial banks, investment banks and
special purpose subsidiaries of the foregoing. The Income Fund may purchase
portions or "tranches" of CMOs, which are designed to permit purchasers to
choose varying lengths of maturity. The shorter maturity tranches are less
volatile and carry less risk of non-payment on the underlying securities and
therefore may provide a lower yield than the longer maturity tranches. The
prices of CMOs are affected by changes in interest rates similar to the way
mortgage-backed securities are affected as is described above.
ASSET-BACKED SECURITIES
The securitization techniques used to develop mortgage-backed securities are
also applied to a broad range of other assets. Through the use of trusts and
special purpose corporations, various types of assets, primarily automobile and
credit card receivables and home equity loans, are being securitized in
pass-through structures similar to the mortgage pass-through structures
described above or in a pay-through structure similar to the CMO structure.
New instruments and variations of existing mortgage-backed securities and
asset-backed securities continue to be developed. The Income Fund may invest in
any such instruments to the extent consistent with its investment objectives and
policies and applicable regulatory requirements.
TYPES OF CREDIT ENHANCEMENT
Mortgage-backed securities and asset-backed securities are often backed by a
pool of assets representing the obligations of a number of different parties. To
lessen the effect of failures by obligors on underlying assets to make payments,
those securities may contain elements of credit support, which fall into two
categories: (1) liquidity protection and (2) protection against losses resulting
from ultimate default by an obligor on the underlying assets. Liquidity
protection refers to the provision of advances, generally by the entity
administering the pool of assets, to ensure that the receipt of payments on the
underlying pool occurs in a timely fashion. Protection against losses resulting
from default ensures ultimate payments of the obligations on at least a portion
of the assets in the pool. This protection may be provided through guarantees,
insurance policies or letters of credit obtained by the issuer or sponsor from
third parties, through various means of structuring the transaction or through a
combination of such approaches. The degree of credit support provided for each
issue is generally based on historical information respecting the level of
credit risk associated with the underlying assets. Delinquencies or losses in
excess of those anticipated could adversely affect the return on an investment
in a security. The Income Fund will not pay any fees for credit support,
although the existence of credit support may increase the price of a security.
THE RIVERFRONT INCOME EQUITY FUND
INVESTMENT OBJECTIVES AND POLICIES
The Income Equity Fund seeks a high level of investment income, with capital
appreciation as a secondary objective through investment primarily in
income-producing equity securities of U.S. issuers.
PRINCIPAL INVESTMENTS
The Income Equity Fund has a fundamental policy of investing at least 65% of
its total assets in common stocks and securities convertible into common stock,
such as bonds and preferred stocks, rated in one of the four
24
<PAGE> 32
highest rating categories by an NRSRO (or, if not rated, deemed by the Fund's
adviser to be of comparable quality to securities so rated) as to which there is
an expectation of dividend or other income generation. The Income Equity Fund
also may acquire rights and warrants to purchase such securities. The Income
Equity Fund generally will invest in equity securities of U.S. issuers with a
demonstrated record of dividend payments and high total returns which are listed
on the New York Stock Exchange or the American Stock Exchange or traded in the
over-the-counter market. The Income Equity Fund may invest in income-producing
equity securities of varying quality. For a discussion of securities rated
within the fourth highest rating group assigned by the NRSROs, see "RISK FACTORS
AND INVESTMENT TECHNIQUES" below.
OTHER ELIGIBLE INVESTMENTS
The Income Equity Fund may invest in non-investment grade convertible debt
securities rated no lower than B by an appropriate NRSRO or in unrated
securities which are deemed by DRZ or Provident, as the case may be, to be of
comparable quality. The Income Equity Fund currently expects that less than 5%
of its total assets will be invested in non-investment grade securities.
Non-investment grade securities are commonly referred to as high yield or high
risk securities. High yield, high risk securities are generally riskier than
higher quality securities and are subject to more credit risk, including risk of
default, and volatility than higher quality securities. In addition, such
securities may have less liquidity and experience more price fluctuation than
higher quality securities.
Convertible debt securities which are rated B by Moody's generally lack
characteristics of a desirable investment, since the assurance of interest and
principal payments or of maintenance of other terms of the contract over any
long period of time may be small. Debt rated B by S&P is regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. While such debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions.
The Income Equity Fund may also invest in foreign securities directly and
through the purchase of sponsored and unsponsored American Depositary Receipts
("ADRs"). ADRs are receipts typically issued by a United States bank or trust
company evidencing ownership of the underlying foreign securities and are
denominated in U.S. dollars. Institutions issuing ADRs may not be sponsored by
the issuer. Unsponsored ADRs may be less liquid than sponsored ADRs, and there
may be less information available regarding the underlying foreign issuer for
unsponsored ADRs since a non-sponsored institution is not required to provide
the same shareholder information that a sponsored institution is required to
provide under its contractual arrangements with the issuer.
The Income Equity Fund may also invest under ordinary circumstances up to 35%
of its total assets in the Short-Term Securities described above under "THE
RIVERFRONT U.S. GOVERNMENT INCOME FUND -- OTHER ELIGIBLE INVESTMENTS," and when,
in DRZ's or Provident's opinion, as the case may be, market conditions warrant,
up to 100% of the Income Equity Fund's assets may be invested in such Short-Term
Securities.
The Income Equity Fund may also invest in variable rate obligations,
fixed-income securities that are issued by or backed by the full faith and
credit of the U.S. Government
25
<PAGE> 33
and repurchase agreements with respect to such securities. Such fixed-income
securities may include U.S. Treasury bills, notes and bonds and securities of
agencies and instrumentalities of the U.S. Government which may not be direct
obligations of the U.S. Treasury. The maximum initial or remaining maturities of
the fixed-income securities at the time of purchase will generally be less than
ten years.
The Income Equity Fund may also invest in securities issued by other
investment companies which invest in securities in which the Income Equity Fund
is permitted to invest, as described more fully below.
The Income Equity Fund is authorized to engage in options transactions,
including the writing of covered put and call options, the purchase of call and
put options on individual stocks, equity indices and equity index futures
contracts, engage in equity index futures contracts, enter into reverse
repurchase agreements and when-issued, delayed delivery and forward commitment
transactions and lend securities to broker-dealers and financial institutions.
The Income Equity Fund presently does not intend to enter into options or
futures transactions. For expanded descriptions of these investment techniques,
see below under "RISK FACTORS AND INVESTMENT TECHNIQUES" section of this
prospectus and the "INVESTMENT OBJECTIVES AND POLICIES -- Additional Information
on Portfolio Instruments" section in the Company's Statement of Additional
Information.
THE RIVERFRONT STOCK APPRECIATION FUND
INVESTMENT OBJECTIVE AND POLICIES
The Stock Appreciation Fund seeks capital growth.
PRINCIPAL INVESTMENTS
The Stock Appreciation Fund, under normal market conditions, will have
substantially all, but in no event less than 65%, of its total assets invested
in common stocks regardless of the movement of stock prices generally. It is
expected that such common stocks will normally be traded on exchanges or
established over-the-counter markets.
The Stock Appreciation Fund seeks its investment objective by investing in
common stocks which, in the opinion of Provident, upon review of certain
fundamental and technical standards of selection, have appreciation potential.
Fundamental investment criteria include, but are not limited to, earnings
figures, price to earnings ratios, debt to equity ratios, and the general growth
prospects of the issuer. Technical selection considerations may include, but are
not limited to, relative stock price strength and magnitude of trading volume.
In addition, the Stock Appreciation Fund generally acquires common stocks of
issuers with market capitalizations between $100 million and $2 billion. The
Stock Appreciation Fund will also invest in securities of equity real estate
investment trusts ("REITs"), as described more fully below under "RISK FACTORS
AND INVESTMENT TECHNIQUES." However, Provident is not obligated to conform to
any particular fundamental or technical standard of selection, to the ranking of
such standards or to any particular level of market capitalization. Standards of
selection and their ranking and the level of market capitalization will vary
according to Provident's judgment.
OTHER ELIGIBLE INVESTMENTS
While the Stock Appreciation Fund intends to invest as fully as possible in
common stocks as described above, for cash management purposes the Stock
Appreciation Fund may also invest, under normal market condi-
26
<PAGE> 34
tions, up to 35% of its total assets in Short-Term Securities and in short-term
U.S. Government securities. For expanded descriptions of such Short-Term
Securities, see "THE RIVERFRONT U.S. GOVERNMENT INCOME FUND -- OTHER ELIGIBLE
INVESTMENTS" above. When, in Provident's opinion, market conditions warrant,
Provident may invest up to 100% of the Stock Appreciation Fund's total assets
for temporary defensive purposes in such Short-Term Securities and in short-term
U.S. Government securities. During any such defensive period, the Stock
Appreciation will not be able to pursue its investment objective.
The Stock Appreciation Fund is authorized to enter into repurchase agreements,
to invest no more than 5% of its net assets in warrants, to acquire securities
of other investment companies to achieve its investment objective and for cash
management purposes, to purchase and sell put and call options on securities and
security indices and to acquire foreign securities through ADRs. For expanded
descriptions of these investment techniques, see below under "RISK FACTORS AND
INVESTMENT TECHNIQUES."
THE RIVERFRONT LARGE COMPANY SELECT FUND
INVESTMENT OBJECTIVES AND POLICIES
The Large Company Fund seeks long-term growth of capital with some current
income as a secondary objective.
PRINCIPAL INVESTMENTS
The Large Company Fund, under normal market conditions, will have
substantially all, but in no event less than 65%, of its total assets invested
in common stocks and securities convertible into common stocks, such as bonds
and preferred stocks, of companies with market capitalizations of at least $4
billion. The Large Company Fund also may acquire rights and warrants to purchase
such securities. The Large Company Fund generally will invest in equity
securities of such issuers based upon certain fundamental criteria examined by
Provident, including price to earnings, price to book, price to cash flow,
return on equity and other ratios. Earnings and dividend growth are also
important factors analyzed by Provident. Generally such securities will be
traded on the New York Stock Exchange or the American Stock Exchange or traded
in the over-the-counter market. Such bonds or preferred stocks in which the
Large Company Fund may invest may be of varying quality. For a discussion of
securities rated within the fourth highest rating category assigned by the
NRSROS, see "RISK FACTORS AND INVESTMENT TECHNIQUES" below.
OTHER ELIGIBLE INVESTMENTS
The Large Company Fund may invest in non-investment grade convertible debt
securities rated no lower than B by an appropriate NRSRO or in unrated
securities which are deemed by Provident to be of comparable quality. The Large
Company Fund currently expects that less than 5% of its total assets will be
invested in non-investment grade securities. Further information regarding non-
investment grade securities and the risks associated with such securities is set
forth above under "THE RIVERFRONT INCOME EQUITY FUND -- OTHER ELIGIBLE
INVESTMENTS." The Large Company Fund may also invest in foreign securities
directly and through the purchase of sponsored and unsponsored ADRs and in
REITs. The Large Company Fund does not expect to invest more than 15% of its
total assets in such foreign securities, either directly or through ADRs.
The Large Company Fund may also invest under normal market conditions up to
35% of its total assets in the Short-Term Securities described above under "THE
RIVERFRONT U.S. GOVERNMENT INCOME FUND -- OTHER ELIGI-
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BLE INVESTMENTS" for cash management purposes and up to 100% of the Large
Company Fund's assets may be invested in such Short-Term Securities for
defensive purposes, when, in Provident's opinion, market conditions warrant.
The Large Company Fund may also invest in securities issued by other
investment companies, as described more fully below, and is authorized to engage
in options and futures transactions, including the writing of covered put and
call options, the purchase of call and put options on individual stocks, equity
indices and equity index futures contracts, engage in equity index futures
contracts, enter into reverse repurchase agreements and when-issued, delayed
delivery and forward commitment transactions and lend securities to
broker-dealers and financial institutions. The Large Company Fund presently does
not intend to enter into options or futures transactions. For expanded
descriptions of these investment techniques, see below under "RISK FACTORS AND
INVESTMENT TECHNIQUES" section of this prospectus and the "INVESTMENT OBJECTIVES
AND POLICIES -- Additional Information on Portfolio Instruments" section in the
Company's Statement of Additional Information.
THE RIVERFRONT BALANCED FUND
INVESTMENT OBJECTIVES AND POLICIES
The Balanced Fund seeks, as its primary investment objective, long-term growth
of capital with some current income as a secondary objective. The Balanced Fund
intends to invest based on combined considerations of risk, income and capital
enhancement.
PRINCIPAL INVESTMENTS
Under normal market conditions, the Balanced Fund will invest in common
stocks, preferred stocks, fixed income securities and securities convertible
into common stocks (i.e., warrants, rights, convertible preferred stock, fixed
rate preferred stock and convertible fixed-income securities). Under normal
market conditions, the Balanced Fund expects that at least 25% of its total
assets will be invested in fixed income senior securities. The proportion of the
Balanced Fund's portfolio that is invested in equity securities versus fixed
income securities may vary greatly depending upon Provident's judgment of market
conditions.
The common and preferred stocks and securities convertible into common stocks
selected for the Balanced Fund will be those that Provident believes will
contribute to the Balanced Fund's objective of providing long-term growth of
capital. The Balanced Fund will invest in common and preferred stocks and
securities convertible into common stocks of domestic issuers and foreign
issuers (subject to the limitations described below), with market
capitalizations of not less than $50 million and which are traded either in
established over-the-counter markets or on national exchanges.
The Balanced Fund's fixed income securities consist of high grade corporate
debt securities rated at the time of purchase in one of the four highest rating
categories assigned by an appropriate NRSRO, or if unrated, are deemed by
Provident to be of comparable quality to those so rated, and securities issued
or guaranteed by the U.S. Government or its agencies or instrumentalities. Such
U.S. Government securities consist of U.S. Treasury bills, notes and bonds and
securities issued by U.S. Government agencies and instrumentalities, such as
GNMA, FHLMC, FNMA, Federal Home Loan Bank, Federal Farm Credit, Student Loan
Marketing Association and the Tennessee Valley Authority. For a discussion of
debt securities rated within the fourth highest rating group as-
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<PAGE> 36
signed by the NRSROs, see "RISK FACTORS AND INVESTMENT TECHNIQUES" below.
OTHER ELIGIBLE INVESTMENTS
The Balanced Fund may also invest up to 25% of its total assets in Short-Term
Securities for cash management purposes. However, when in Provident's opinion,
market conditions warrant, Provident may invest up to 100% of the Balanced
Fund's assets for temporary defensive purposes in such Short-Term Securities.
For more information regarding such securities, see "INVESTMENT OBJECTIVES AND
POLICIES -- Additional Information on Portfolio Instruments" in the Company's
Statement of Additional Information.
Subject to the limitations described below, the Balanced Fund may invest in
securities issued by other investment companies which Provident believes will
contribute to the Balanced Fund's investment objectives and in money market
mutual funds for cash management purposes.
The Balanced Fund may also invest up to 20% of its total assets in foreign
securities directly and through the purchase of sponsored and unsponsored ADRs.
RISK FACTORS AND INVESTMENT TECHNIQUES
The risk inherent in investing in the Income Fund, the Income Equity Fund, the
Stock Appreciation Fund, the Large Company Fund and the Balanced Fund is that
risk common to any security, that the net asset value will fluctuate in response
to changes in economic conditions, interest rates and the market's perception of
the underlying securities of such Fund, and there can be no assurance that any
Fund will achieve its investment objective or objectives.
Like any investment program, an investment in any of the Funds entails certain
risks. Equity securities such as those in which the Income Equity, Large
Company, Stock Appreciation and Balanced Funds may invest are more volatile and
carry more risk than some other forms of investment including investments in
high grade fixed income securities. Therefore, such Funds are each subject to
stock market risk, i.e., the possibility that stock prices in general will
decline over short or even extended periods of time.
Since the Income Fund and the Balanced Fund each invest in bonds, investors in
those Funds are exposed to bond market risk, i.e., fluctuations in the market
value of bonds. Bond prices are influenced primarily by changes in the level of
interest rates. When interest rates rise, the prices of bonds generally fall;
conversely, when interest rates fall, bond prices generally rise although
certain types of bonds are subject to the risks of prepayment as described above
when interest rates fall. There have been in the recent past extended periods of
cyclical increases in interest rates that have caused significant declines in
bond prices and have caused the effective maturity of securities with prepayment
features to be extended, thus effectively converting short or intermediate term
securities (which tend to be less volatile) into longer term securities (which
tend to be more volatile).
Depending upon the performance of each Funds' investments, the net asset value
per share of a Fund may decrease instead of increase; except that with respect
to the Money Market Fund, Provident will attempt to maintain its net asset value
at $1.00.
Each Fund may invest in one or more of the following securities: certain
variable or floating rate securities, mortgage-backed securities and CMOs. Such
instruments may be considered to be "derivatives." A derivative is generally
defined as an instrument whose
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value is based upon, or derived from, some underlying index, reference rate
(e.g., interest rates), security, commodity or other asset.
In addition, the Funds may engage in any one or more of the following
investment techniques, as set forth below.
Medium Grade Debt Securities. As described above, the Income Equity Fund, the
Large Company Fund and the Balanced Fund may each invest in debt securities
rated within the fourth highest rating group assigned by one or more appropriate
NRSROs, in addition to debt securities rated in the three higher groups, and in
comparable unrated securities. Debt securities which are within such fourth
highest rating group are considered by Moody's to have some speculative
characteristics, and are more vulnerable to changes in economic conditions,
higher interest rates or adverse issuer specific developments which are more
likely to lead to a weaker capacity to make principal and interest payments than
comparable higher rated debt securities.
Should subsequent events cause the rating of a debt security purchased by any
such Fund to fall below the fourth highest rating category, Provident or DRZ, as
the case may be, will consider such an event in determining whether such Fund
should continue to hold that security. In no event, however, would the Fund be
required to liquidate any such portfolio security where such Fund would suffer a
loss on the sale of such security.
Repurchase Agreements. Securities held by any of the Funds may be subject to
repurchase agreements. Under the terms of a repurchase agreement, a Fund would
acquire securities, in exchange for cash, from banks and/or registered
broker-dealers which Provident or DRZ, as the case may be, deems creditworthy
under guidelines approved by the Company's Board of Directors. The seller agrees
to repurchase such securities at a mutually agreed upon date and price. The
repurchase price generally equals the price paid by the Fund plus interest
negotiated on the basis of current short-term rates, which may be more or less
than the rate on the underlying portfolio securities. Securities subject to
repurchase agreements must be of the same type and quality as those in which a
Fund may invest directly. For further information about repurchase agreements,
see "INVESTMENT OBJECTIVES AND POLICIES -- Additional Information on Portfolio
Instruments -- Repurchase Agreements" in the Company's Statement of Additional
Information.
Reverse Repurchase Agreements. Each of the Funds, other than the Money Market
Fund and the Stock Appreciation Fund, may borrow funds for temporary purposes by
entering into reverse repurchase agreements in accordance with the investment
restrictions described below. Pursuant to such agreements, a Fund would sell
portfolio securities to financial institutions such as banks and broker-dealers,
and agree to repurchase them at a mutually agreed-upon date and price. At the
time the Fund enters into a reverse repurchase agreement, it will place in a
segregated custodial account assets such as U.S. Government securities or other
liquid securities, consistent with the Fund's investment restrictions, having a
value equal to the repurchase price (including accrued interest), and will
continually monitor the account to ensure that such equivalent value is
maintained at all times. Reverse repurchase agreements involve the risk that the
market value of the securities sold by the Fund may decline below the price at
which the Fund is obligated to repurchase the securities. Reverse repurchase
agreements are considered to be borrowings by a Fund under
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the 1940 Act. For further information about reverse repurchase agreements, see
"INVESTMENT OBJECTIVE AND POLICIES -- Additional Information on Portfolio
Instruments -- Reverse Repurchase Agreements" in the Company's Statement of
Additional Information.
Except as otherwise disclosed to the shareholders of the Funds, the Company
will not acquire portfolio securities issued by, make savings deposits in, or
enter into repurchase or reverse repurchase agreements with Provident, the
Distributor, or their affiliates, and will not give preference to Provident's
correspondents with respect to such transactions, securities, savings deposits,
repurchase agreements, and reverse repurchase agreements.
Foreign Securities. The Balanced Fund, the Income Equity Fund, the Large
Company Fund and the Stock Appreciation Fund may each invest in foreign
securities, either directly or through ADRs. Investment in foreign securities,
including ADRs, is subject to special risks, such as future adverse political
and economic developments, possible seizure, nationalization, or expropriation
of foreign investments, less stringent disclosure requirements, the possible
establishment of exchange controls or taxation at the source, or the adoption of
other foreign governmental restrictions. In addition, securities markets in
foreign countries may be structured differently from and may not be as liquid as
the U.S. markets. Where purchases of foreign securities are made in foreign
currencies, a Fund may incur currency conversion costs and may be affected
favorably or unfavorably by changes in the value of foreign currencies against
the U.S. dollar.
REITS. The Large Company Fund and the Stock Appreciation Fund may invest in
REITS. REITs pool investors' funds for investment primarily in commercial real
estate properties. Investment in REITs may subject a Fund to certain risks.
REITs may be affected by changes in the value of the underlying property owned
by the trusts. REITs are dependent upon specialized management skill, may not be
diversified and are subject to the risks of financing projects. REITs are also
subject to heavy cash flow dependency, defaults by borrowers, self liquidation
and the possibility of failing to qualify for the beneficial tax treatment
available to REITs under the Internal Revenue Code and to maintain its exemption
from the 1940 Act. As a shareholder in a REIT, a Fund would bear, along with
other shareholders, its pro rata portion of the REIT's operating expenses. These
expenses would be in addition to the advisory and other expenses that such Fund
bears directly in connection with its own operations.
Lending Portfolio Securities. In order to generate additional income, each
Fund, other than the Stock Appreciation Fund, may, from time to time, lend its
portfolio securities to broker-dealers, banks, or institutional borrowers of
securities. A Fund must receive at least 100% collateral in the form of cash or
eligible securities. This collateral will be valued daily by Provident or DRZ,
as the case may be. Should the market value of the loaned securities increase,
the borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest received on such securities. Loans are subject to termination by the
Fund or the borrower at any time. While a Fund does not have the right to vote
securities on loan, each Fund intends to terminate the loan and regain the right
to vote if that is considered important with respect to the investment. In the
event the borrower would default in its obligations, the Fund bears the
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risk of delay in recovery of the portfolio securities and the loss of rights in
the collateral. The Funds will enter into loan agreements only with
broker-dealers, banks, or other institutions that Provident or DRZ, as the case
may be, has determined are creditworthy under guidelines established by the
Company's Board of Directors.
When-Issued or Delayed-Delivery
Purchases. Each of the Funds, other than the Stock Appreciation Fund, may
purchase securities on a when-issued or delayed-delivery basis. These
transactions are arrangements in which a Fund purchases securities with payment
and delivery scheduled for a future time. A Fund will engage in when-issued and
delayed-delivery transactions only for the purpose of acquiring portfolio
securities consistent with and in furtherance of its investment objectives and
policies, not for investment leverage, although such transactions represent a
form of leveraging. When-issued securities are securities purchased for delivery
beyond the normal settlement date at a stated price and yield and thereby
involve a risk that the yield obtained in the transaction will be less than
those available in the market when delivery takes place. A Fund will generally
not pay for such securities or start earning interest on them until they are
received on the settlement date. When a Fund agrees to purchase such securities,
however, its custodian will set aside in a separate account cash or liquid
securities equal to the amount of the commitment. Securities purchased on a
when-issued basis are recorded as an asset and are subject to changes in the
value based upon changes in the general level of interest rates. In when-issued
and delayed-delivery transactions, a Fund relies on the seller to complete the
transaction; the seller's failure to do so may cause the Fund to miss a price or
yield considered to be advantageous.
Securities of Other Investment Companies. Each of the Funds other than the
Money Market Fund, may acquire securities of other investment companies for the
purposes described above. A Fund may invest in securities of other investment
companies within the limits prescribed by the 1940 Act, which include, subject
to certain exceptions, limiting its investment to (1) no more than 5% of its
total assets in the securities of any one investment company, (2) no more than
3% of the securities of any investment company, and (3) no more than 10% of its
total assets in such securities. Investment companies in which a Fund may invest
may impose a sales or distribution charge in connection with the purchase or
redemption of their shares as well as other types of commissions or charges.
Such investment companies will charge management and other fees which will be
borne by the Fund. Such charges will be payable by the Fund and, therefore, will
be borne indirectly by its shareholders. The income on securities of other
investment companies may be taxable at the state or local level.
Mortgage- or Asset-Backed Securities.
Mortgage-backed and asset-backed securities have certain characteristics which
are different from traditional debt securities. Among the major differences are
that interest and principal payments are made more frequently, usually monthly,
and that principal may be prepaid at any time because the underlying mortgage
loans or other assets generally may be prepaid at any time. As a result, if the
Income Fund purchases such a security at a premium, a prepayment rate that is
faster than expected will reduce yield to maturity, while a prepayment rate that
is slower than expected will have the opposite effect of increasing yield to
maturity. Alternatively, if the Income Fund purchases these securities at a
discount, faster than expected
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prepayments will increase, while slower than expected prepayments will reduce,
yield to maturity. Provident will seek to manage these risks (and potential
benefits) by investing in a variety of such securities and through hedging
techniques.
Although the extent of prepayments on a pool of mortgage loans depends on
various economic and other factors, as a general rule prepayments on fixed rate
mortgage loans will increase during a period of declining interest rates.
Accordingly, amounts available for reinvestment by the Income Fund are likely to
be greater during a period of declining interest rates and, as a result, likely
to be reinvested at lower interest rates than during a period of rising interest
rates. Asset-backed securities, although less likely to experience the same
prepayment rates as mortgage-backed securities, may respond to certain of the
same factors influencing prepayments, while at other times different factors,
such as changes in credit use and payment patterns resulting from social, legal
and economic factors, will predominate. Mortgage-backed securities and
asset-backed securities generally decrease in value as a result of increases in
interest rates and may benefit less than other fixed income securities from
declining interest rates because of the risk of prepayment.
There are certain risks associated specifically with CMOs. CMOs issued by
private entities are not U.S. government securities and are not guaranteed by
any government agency, although the securities underlying a CMO may be subject
to a guarantee. Therefore, if the collateral securing the CMO, as well as any
third party credit support or guarantees, is insufficient to make payment, the
holder could sustain a loss. However, as stated above, the Income Fund will
invest only in CMOs which are rated in one of the three highest rating
categories by an NRSRO or, if unrated, are determined to be of comparable
quality. Also, a number of different factors, including the extent of prepayment
of principal of the Mortgage Assets, affect the availability of cash for
principal payments by the CMO issuer on any payment date and, accordingly,
affect the timing of principal payments on each CMO class.
Asset-backed securities involve certain risks that are not posed by
mortgage-backed securities, resulting mainly from the fact that asset-backed
securities do not usually contain the complete benefit of a security interest in
the related collateral. For example, credit card receivables generally are
unsecured, and the debtors are entitled to the protection of a number of state
and federal consumer credit laws, some of which may reduce the ability to obtain
full payment. In case of automobile receivables, due to various legal and
economic factors, proceeds from repossessed collateral may not always be
sufficient to support payments on these securities.
Put and Call Options. Subject to its investment policies and for purposes of
hedging against market risks related to its portfolio securities, the Stock
Appreciation Fund may purchase exchange-traded put and call options on
securities. Purchasing options is a specialized investment technique that
entails a substantial risk of a complete loss of the amounts paid as premiums to
writers of options. The Stock Appreciation Fund will purchase put and call
options only on securities in which such Fund may otherwise invest. The Stock
Appreciation Fund may also engage in selling (writing) exchange-traded call
options from time to time as Provident deems appropriate for purposes of gaining
additional income in the form of premiums paid by the purchaser of the option
and/or for hedging purposes. The Stock Appreciation Fund will write only covered
call options
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(options on securities owned by that Fund). In order to close out a call option
it has written, the Stock Appreciation Fund will enter into a "closing purchase
transaction"--the purchase of a call option on the same security with the same
exercise price and expiration date as the call option which the Fund previously
had written. When a portfolio security to a call option is sold, such Fund will
effect a closing purchase transaction to close out any existing call option on
that security. If the Stock Appreciation Fund is unable to effect a closing
purchase transaction, it will not be able to sell the underlying security until
the option expires or the Fund delivers the underlying security upon exercise.
The Stock Appreciation Fund, as part of its option transactions, also may
purchase exchange-traded index put and call options and write exchange-traded
index options. Through the writing or purchase of index options the Stock
Appreciation Fund can achieve many of the same objectives as through the use of
options on individual securities. Options on securities indices are similar to
options on a security except that, rather than the right to take or make
delivery of a security at a specified price, an option on a securities index
gives the holder the right to receive, upon exercise of the option, an amount of
cash if the closing level of the securities index upon which the option is based
is greater than, in the case of a call, or less than, in the case of a put, the
exercise price of the option.
Price movements in securities which the Stock Appreciation Fund owns or
intends to purchase probably will not correlate perfectly with movements in the
level of an index and, therefore, the Stock Appreciation Fund bears the risk of
a loss on an index option that is not completely offset by movements in the
price of such securities. Because index options are settled in cash, a call
writer cannot determine the amount of its settlement obligations in advance and,
unlike call writing on specific securities, cannot provide in advance for, or
cover, its potential settlement obligations by acquiring and holding the
underlying securities. The Stock Appreciation Fund will be required to segregate
assets and/or provide an initial margin to cover index options that would
require it to pay cash upon exercise. Under normal market conditions, it is not
expected that the underlying value of portfolio securities and/or cash subject
to such options written by the Stock Appreciation Fund (including any assets
segregated in connection therewith), when added to the greater of the market
value or the cost of any options purchased by that Fund, will exceed 25% of the
net assets of that Fund at any one time.
ADDITIONAL INFORMATION
The rating requirements stated for the securities of each Fund refer to the
required rating at the time of purchase of a security. Provident or DRZ, as the
case may be, retains the discretion to determine disposition of a security if
its rating is subsequently reduced. For further information about the types of
investments and investment techniques available to each Fund, including the
risks associated with such investments and investment techniques, see the
Company's Statement of Additional Information.
PORTFOLIO TURNOVER
For regulatory purposes, the portfolio turnover rate for the Money Market Fund
is expected to be zero. For information about the portfolio turnover rates for
each of the other Funds for the year ended December 31, 1997, see "FINANCIAL
HIGHLIGHTS" above. The portfolio turnover rate for a Fund may vary greatly from
year to year as
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well as within a particular year, and may also be affected by cash requirements
for redemptions of shares. A high portfolio turnover will generally result in
higher brokerage commissions and other transaction costs, which would be borne
directly by the Fund, as well as additional realized gain/losses to its
shareholders.
INVESTMENT RESTRICTIONS
The Funds have adopted the following restrictions and policies relating to the
investment of their respective assets. These restrictions and policies are
fundamental and may not be changed with respect to a Fund without the approval
of the holders of a majority of such Fund's outstanding voting securities.
Unless otherwise stated, all references to a Fund's assets are in terms of
current market value.
The Money Market Fund may not:
1. Purchase any security (other than obligations issued or guaranteed by the
U.S. government, its agencies or instrumentalities) of any issuer if as a result
more than 5% of its total assets would be invested in securities of the issuer;
2. Purchase securities on margin, except that it may obtain such short-term
credit as may be necessary for the clearance of purchases and sales of
securities;
3. Borrow money, except that the Money Market Fund may borrow money from banks
for temporary or emergency purposes in aggregate amounts up to one-third of the
value of the Money Market Fund's net assets; provided that while borrowings from
banks exceed 5% of the Money Market Fund's net assets, any such borrowings will
be repaid before additional investments are made;
4. Pledge more than 15% of its net assets to secure indebtedness; the purchase
or sale of securities on a "when issued" basis is not deemed to be a pledge of
assets;
5. Issue senior securities; the purchase or sale of securities on a "when
issued" basis is not deemed to be the issuance of a senior security;
6. Make loans, except that the Money Market Fund may purchase or hold debt
securities consistent with its investment
objective, lend portfolio securities valued at not more than 15% of its total
assets to brokers, dealers and financial institutions and enter into repurchase
agreements;
7. Purchase any security of any issuer if as a result more than 25% of its
total assets would be invested in a single industry; there is no restriction
with respect to obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; and
8. Invest more than 15% of its total assets in repurchase agreements maturing
in more than seven days.
With respect to Investment Restriction (8), the Money Market Fund will limit
its investments in repurchase agreements maturing in more than seven days to no
more than 10% of its total assets.
Each of the Income Fund and the Income Equity Fund may not:
1. Invest in securities of any one issuer (other than the U.S. government, its
agencies and instrumentalities) if, immediately after and as a result of such
investment, the current market value of the holdings of such Fund in the
securities of such issuer exceeds 5% of the Fund's total assets;
2. Invest in the securities of companies primarily engaged in any one industry
(other than the U.S. government, its agencies and instrumentalities) if,
immediately after and as a result of such investment, the current
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market value of the aggregate holdings of the Fund in the securities of
companies in such industry exceeds 25% of the Fund's total assets. However, an
industry concentration in excess of such percentage limitation is permitted if
it occurs incidentally as a result of changes in the market value of portfolio
securities;
3. Acquire the outstanding voting securities of any one issuer if, immediately
after and as a result of such investment, the current market value of the
holdings of the Fund in the securities of such issuer exceeds 10% of the market
value of such issuer's outstanding voting securities;
4. Borrow money, which includes entering into reverse repurchase agreements,
except that each Fund may enter into reverse repurchase agreements or borrow
money from banks for temporary or emergency purposes in aggregate amounts up to
one-third of the value of the Fund's net assets; provided that while borrowings
from banks exceed 5% of a Fund's net assets, any such borrowings and reverse
repurchase agreements will be repaid before additional investments are made;
5. Pledge more than 15% of its net assets to secure indebtedness; the purchase
or sale of securities on a "when issued" basis is not deemed to be a pledge of
assets;
6. Invest more than 15% of the value of the Fund's net assets in restricted or
illiquid securities or instruments including, but not limited to, securities for
which there are no readily available market quotations, dealer (OTC) options,
assets used to cover dealer options written by the Fund or repurchase agreements
that mature in more than 7 days; and
7. Lend more than 30% in value of the Fund's securities to brokers, dealers or
other financial organizations. All such loans will be collateralized by cash or
U.S. government obligations that are maintained at all times in an amount equal
to at least 102% of the current value of the loaned securities.
With respect to investment restrictions 1 and 3, the percentage limits stated
therein apply to 75% of each Fund's total assets.
The Stock Appreciation Fund and the Large Company Fund may each not:
1. Purchase securities of any one issuer (except securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
repurchase agreements involving such securities) if as a result more than 5% of
the total assets of such Fund would be invested in the securities of such issuer
or the Fund would hold more than 10% of the outstanding voting securities of
such issuer. This restriction applies to 75% of the Fund's total assets.
2. Purchase any securities which would cause 25% or more of the Fund's total
assets at the time of purchase to be invested in securities of one or more
issuers conducting their principal business activities in the same industry,
provided that (a) there is no limitation with respect to obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities and
repurchase agreements secured by obligations of the U.S. Government or its
agencies or instrumentalities; (b) wholly owned finance companies will be
considered to be in the industries of their parents if their activities are
primarily related to financing the activities of their parents; and (c)
utilities will be divided according to their services. For example, gas, gas
transmission, electric and gas, electric, and telephone will each be considered
a separate industry.
3. Borrow money or issue senior securities, except that the Fund may borrow
from
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banks or enter into reverse repurchase agreements for temporary purposes in
amounts up to one-third of its total assets at the time of such borrowing, and
except as permitted pursuant to appropriate exemptions from the 1940 Act. The
Fund will not purchase securities while its borrowings (including reverse
repurchase agreements) exceed 5% of its total assets.
4. Make loans, except that the Fund may purchase or hold debt instruments and
lend portfolio securities in accordance with its investment objective and
policies, make time deposits with financial institutions, and enter into
repurchase agreements.
The Balanced Fund may not:
1. Purchase securities of any one issuer, other than obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities, if,
immediately after such purchase, more than 5% of the value of the Balanced
Fund's total assets would be invested in such issuer, or the Balanced Fund would
hold more than 10% of any class of securities of the issuer, except that up to
25% of the value of the Balanced Fund's total assets may be invested without
regard to such limitations. There is no limit to the percentage of assets that
may be invested in U.S. Treasury bills, notes, or other obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities.
2. Purchase any securities which would cause more than 25% of the value of the
Balanced Fund's total assets at the time of purchase to be invested in
securities of one or more issuers conducting their principal business activities
in the same industry, provided that (a) there is no limitation with respect to
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities and repurchase agreements secured by obligations of the U.S.
Government or its agencies or instrumentalities; (b) wholly owned finance
companies will be considered to be in the industries of their parents if their
activities are primarily related to financing the activities of their parents;
and (c) utilities will be divided according to their services. For examples,
gas, gas transmission, electric and gas, electric, and telephone will each be
considered a separate industry.
3. Borrow money or issue senior securities, except that the Balanced Fund may
borrow from banks or enter into reverse repurchase agreements or dollar roll
agreements for temporary purposes in amounts up to one-third of the value of its
total assets at the time of such borrowing, and except as permitted pursuant to
appropriate exemptions from the 1940 Act.
4. Make loans, except that the Balanced Fund may purchase or hold debt
instruments and lend portfolio securities in accordance with its investment
objectives and policies, make time deposits with financial institutions, and
enter into repurchase agreements.
The following additional investment restriction of the Stock Appreciation
Fund, the Large Company Fund and the Balanced Fund is non-fundamental and may be
changed by the Company's Board of Directors without shareholder approval. Such
Funds may not:
1. Purchase or otherwise acquire any securities, if as a result, more than 15%
of its net assets would be invested in securities that are illiquid.
In addition to the above investment restrictions, the Funds are subject to
certain other investment restrictions set forth under "INVESTMENT OBJECTIVES AND
POLICIES -- Investment Restrictions" in the Company's Statement of Additional
Information.
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<PAGE> 45
PRICING SHARES
The net asset value of each Fund is computed each day on which the New York
Stock Exchange (the "Exchange") is open as of the close of trading on the
Exchange (generally 4:00 p.m. Eastern Time for the purpose of pricing Fund
shares) (the "Valuation Time") except on days when changes in the value of a
Fund's securities do not affect the current net asset value of its shares or on
days during which no shares are tendered for redemption and no orders to
purchase shares are received. The Exchange is currently closed on weekends, New
Year's Day, Martin Luther King Jr.'s Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net
asset value per share for a particular class of each Fund is determined by
valuing each Fund's assets allocable to such class, subtracting its liabilities
allocable to such class and any liabilities charged directly to that class and
dividing the result by the number of its shares of that class outstanding.
The Directors have determined that the best method currently available for
valuing the Money Market Fund's investments is amortized cost, which means that
the investments are valued at their acquisition costs (as adjusted for
amortization of premium or discount) rather than at current market values.
Calculations are made to compare the value of the Money Market Fund's
investments valued at amortized cost with market values. Market valuations are
obtained by using actual quotations provided by market makers, estimates of
market value, or values obtained from yield data relating to classes of money
market instruments published by reputable sources at the mean between the bid
and asked prices for the instruments. If a deviation of 1/2 of 1% or more were
to occur between the Money Market Fund's net asset value per share calculated by
reference to market values and the Money Market Fund's $1.00 per share net asset
value, or if there were any other deviation which the Board of Directors
believed would result in a material dilution to shareholders or purchasers, the
Board of Directors would promptly consider what action, if any, should be
initiated.
Since the net income of the Money Market Fund is declared as a dividend each
time net income is determined, the net asset value per share remains at $1.00
per share immediately after each dividend declaration. If for any reason there
is a net loss, the loss will be first offset pro rata against dividends accrued
during the month in each shareholder account. To the extent that such a net loss
would exceed such accrued dividends, the Money Market Fund will reduce the
number of its outstanding shares by having each shareholder contribute to
capital his pro rata portion of the total number of shares required to be
cancelled in order to maintain a net asset value of $1.00. EACH SHAREHOLDER WILL
BE DEEMED TO HAVE AGREED TO SUCH A CONTRIBUTION IN THESE CIRCUMSTANCES BY HIS
INVESTMENT IN THE MONEY MARKET FUND.
With respect to each of the other Funds, portfolio securities, the principal
market for which is a securities exchange or the over-the-counter National
Market System ("NMS"), are valued at the closing sale price on that exchange or
NMS or, in the absence of any sales, at the mean of the bid and asked price on
such exchange or NMS. Other securities and instruments for which market
quotations are not readily available are valued at fair value, as determined in
good faith by the Board of Directors. Securities, including mortgage-backed and
asset-backed securities, may be valued on the basis of independent pricing
services approved by the Board of Directors, which use information
38
<PAGE> 46
with respect to transactions in such securities, quotations from dealers, market
transactions in comparable securities and various relationships between
securities in determining value.
HOW TO BUY SHARES
Shares of the Funds are offered on each day on which the Exchange is open for
business.
THE MONEY MARKET FUND
There is no sales charge when an investor purchases shares of the Money Market
Fund. Purchase payments are fully invested. Broker-dealers (other than the
Distributor) through whom shares are purchased may charge fees for their
services. Orders for the purchase of the Money Market Fund's shares become
effective after good funds become available to the Money Market Fund. If a
purchase order in proper form is received prior to 12:00 Noon (Eastern time) and
payment in Federal funds is received by the close of the Federal funds wire on
the day the purchase order is received, dividends will accrue starting that day.
If a purchase order is received after 12:00 Noon (Eastern time) and payment in
Federal funds is received by the close of the Federal funds wire on the day the
purchase order is received, the order will be effected that day as of the close
of business of the Company, but dividends will not begin to accrue until the
following business day. The Money Market Fund's shares are sold at the offering
price which is the net asset value per share next computed after the Company
receives the purchase order. The net asset value for the Money Market Fund is
expected to be $1.00 per share. Shares are held in "Open Accounts," i.e., they
are credited to the shareholder's account on the Money Market Fund's books. No
certificates are issued.
THE OTHER FUNDS
Orders for the purchase of the shares of any of the other Funds will be
confirmed at the offering price, which is the net asset value per share next
computed after the Company receives the purchase order in proper form, plus any
applicable sales charge. Therefore, orders for shares of a Fund received by the
Company prior to the close of the Exchange will receive the offering price
computed at the close of trading on the Exchange on the same day. Orders
received after that day's close of trading on the Exchange will receive the next
business day's offering price. A confirmation will be sent by the Transfer Agent
for every new purchase. No certificates are issued.
GENERAL
There is a $1,000 minimum initial purchase requirement for both Investor A and
Investor B shares of each of the Funds and a $100 minimum subsequent purchase
requirement (except for reinvestment of dividends and distributions). The
initial and subsequent minimum investment amounts have been waived for employees
of Provident and the Distributor. The minimum initial purchase requirement is
lowered to $500 for IRAs. Shareholders receiving banking or other services from
Provident or its affiliates will be charged the usual and customary fees for
such services even if such services include the purchase of a Fund's shares.
However, a shareholder who maintains an investment balance of $10,000 or more in
a Fund and has either a Provident Advantage or Provident Silver Advantage
checking account will be eligible to have his/her monthly service charge waived
on his/her respective Advantage account (one per customer). If a balance of
$30,000 or more is maintained in a Fund by a shareholder, the monthly service
39
<PAGE> 47
charge on a Premier Advantage checking account will be waived.
Shares may be purchased through the Distributor. The Distributor is located at
3435 Stelzer Road, Columbus, Ohio 43219. Shares also may be purchased through
other broker-dealers, including broker-dealers affiliated with the Company,
Provident and the Distributor. In the case of an order for the purchase of
shares placed through a broker-dealer, the applicable public offering price will
be the net asset value as so determined, plus any applicable sales charge, but
only if the broker-dealer receives the order prior to the Valuation Time for
that day and transmits it to the Distributor prior to the Valuation Time for
that day. The broker-dealer is responsible for transmitting such orders
promptly. If the broker-dealer fails to do so, the investor's right to that
day's closing price must be settled between the investor and the broker-dealer.
If the broker-dealer receives the order after the Valuation Time for that day,
the price will be based on the net asset value determined as of the Valuation
Time for the next business day.
Shares may also be purchased through procedures established by the Distributor
in connection with the requirements of qualified accounts maintained by or on
behalf of certain persons ("Customers") by Provident or its correspondent or
affiliated banks (collectively, the "Banks").
Shares of a Fund sold to the Banks acting in a fiduciary, advisory, custodial
(other than for IRAs), agency, or other similar capacity on behalf of Customers
will normally be held of record by the Banks. With respect to shares of the
Funds so sold, it is the responsibility of the particular Bank to transmit
purchase or redemption orders to the Distributor and to deliver Federal funds
for purchase on a timely basis. Beneficial ownership of shares will be recorded
by the Banks and reflected in the account statements provided by the Banks to
Customers. A Bank will exercise voting authority for those shares for which it
is granted authority by the Customer.
In addition, an account for the purchase of shares of a Fund may be opened by
mailing to the Company, c/o The Provident Bank, Mutual Fund Services, P.O. Box
14967, Cincinnati, Ohio 45250-0967, a completed account application and a check
made payable to the appropriate Fund for $1,000 or more. An account may also be
opened by contacting The Provident Bank, Mutual Fund Services, at
1-800-424-2295, to obtain the number of an account to which wire or electronic
funds transfer ("EFT") can be made and by sending in a completed account
application. Subsequent investments in a Fund in the minimum amount of $100 may
be made by check, by wiring Federal funds or by an EFT.
If payment is made by Federal funds wire with respect to any Fund, other than
the Money Market Fund, funds must be received by 3:00 p.m., Eastern time, on the
next business day following the order. Purchases of any of the Funds may be made
by wiring the Fund's custodian in accordance with the following procedures:
1. Telephone Provident at 1-800-424-2295 and specify the Fund in which the
investment is to be made, provide the name, address, telephone number and tax
identification number of the investor, the amount being wired and by which bank.
Provident will then provide the investor with a Fund account number.
2. The bank wiring the funds to be invested must designate the Fund account
num-
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<PAGE> 48
ber which Provident has assigned to the investor and wire the Federal Funds to:
The Provident Bank/Cincinnati
ABA: 042000424
Mutual Fund Services
Account 0895-261
for further credit to:
________ Fund
of The Riverfront Funds
Account Number ____________
Account Name ____________
The Company and the Distributor reserve the right to reject any order for the
purchase of shares in whole or in part, including purchases made with foreign or
third party drafts or checks, or to limit or suspend without prior notice the
offering of any Fund's shares.
IN KIND PURCHASES
Payment for shares of a Fund may, in the discretion of Provident, be made in
the form of securities that are permissible investments for that Fund as
described in this Prospectus. For further information about this form of
payment, contact Provident. In connection with an in-kind securities payment, a
Fund will require, among other things, that the securities be valued on the day
of purchase in accordance with the pricing methods used by the Fund and that the
Fund receive satisfactory assurances that it will have good and marketable title
to the securities received by it; that the securities be in proper form for
transfer to the Fund; and that adequate information be provided concerning the
basis and other tax matters relating to the securities.
SALES CHARGES
INVESTOR A SHARES
There is a sales charge imposed at the time of purchase of each Fund's
Investor A shares (other than the Money Market Fund) which is a percentage of
the offering price. The sales charge is paid to the Distributor which in turn
may reallow all or a portion of the sales charge to other broker-dealers. The
applicable sales charges are as follows:
SALES CHARGE SCHEDULE
<TABLE>
<CAPTION>
CONCESSION
AS A % TO DEALERS
AS A % OF OF NET AS A % OF
OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED* PRICE
------------------ --------- --------- ----------
<S> <C> <C> <C>
Under $100,000......... 4.50% 4.71% 4.00%
$100,000--$249,999..... 3.50% 3.63% 3.00%
$250,000--$499,999..... 2.50% 2.56% 2.00%
$500,000--$999,999..... 1.50% 1.52% 1.00%
$1,000,000 and over.... 0.0% 0.0% 0.0%
</TABLE>
- ------------
* Rounded to the nearest one-hundredth percent.
The Sales Charge Schedule is applicable to (1) purchases of Investor A shares
of the Income, Income Equity, Stock Appreciation, Large Company and Balanced
Funds and any other Fund sold with a sales charge (a "Load Portfolio") made at
one time, (2) concurrent purchases of Investor A shares (see "Concurrent
Purchases"), or (3) purchases of Investor A shares made pursuant to Rights of
Accumulation or Letters of Intent by any purchaser ("Purchaser"), which includes
the following persons: an individual; an individual, his or her spouse and
children under the age of 21; a trustee or other fiduciary of a single trust
estate or single fiduciary account established for their benefit; an
organization exempt from federal income tax under Section 501(c)(3) or (13) of
the Code; a pension, profit-sharing or other employee benefit plan whether or
not qualified under Section 401 of the Code; or other organized groups of
persons, whether
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<PAGE> 49
incorporated or not, provided the organization has been in existence for at
least six months and has some purpose other than the purchase of redeemable
securities of a registered investment company at a discount. In order to qualify
for a lower sales charge, all orders from an organized group will have to be
placed through a single investment dealer or other firm and identified as
originating from a qualifying Purchaser.
INVESTOR B SHARES
Investor B shares may only be purchased in amounts of less than $250,000.
There is no sales charge imposed upon purchases of Investor B shares, but
investors may be subject to a contingent deferred sales charge ranging from 4%
to 1% when Investor B shares are redeemed within the first six years after
purchase. See "CONTINGENT DEFERRED SALES CHARGE -- Investor B Shares" below. The
Money Market Fund does not offer Investor B shares.
GENERAL
Upon written notice to dealers with whom it has dealer agreements, the
Distributor may reallow up to the full applicable sales charge. Dealers to whom
more than 90% of the entire sales charge is reallowed may be deemed to be
underwriters as that term is defined under the Securities Act of 1933.
The Distributor, at its expense, will also provide additional compensation to
dealers in connection with sales of Shares of any of the Funds. Such
compensation will include financial assistance to dealers in connection with
conferences, sales or training programs for their employees, seminars for the
public, advertising campaigns regarding one or more Funds of the Company, and/or
other dealer-sponsored special events. In some instances, this compensation will
be made available only to certain dealers whose representatives have sold a
significant amount of such Shares. Compensation will include payment for travel
expenses, including lodging, incurred in connection with trips taken by invited
registered representatives and members of their families to locations within or
outside of the United States for meetings or seminars of a business nature.
Compensation will also include the following types of non-cash compensation
offered through sales contests: (1) vacation trips, including the provision of
travel arrangements and lodging at luxury resorts at an exotic location, (2)
tickets for entertainment events (such as concerts, cruises and sporting events)
and (3) merchandise (such as clothing, trophies, clocks and pens). Dealers may
not use sales of a Fund's Shares to qualify for this compensation to the extent
such may be prohibited by the laws of any state or any self-regulatory agency,
such as the NASD. None of the aforementioned compensation is paid for by any
Fund or its Shareholders.
Provident Securities & Investment Company, an affiliate of Provident ("PSI"),
will pay additional consideration to dealers not to exceed 4.0% of the offering
price per share on all sales of Investor B shares as an expense of PSI for which
PSI will be reimbursed by the Distributor under the Investor B Plan or upon
receipt of a contingent deferred sales charge. Any additional consideration or
incentive program may be terminated at any time by the Distributor.
REDUCED SALES CHARGES --
INVESTOR A SHARES
The sales charges set forth in the Sales Charge Schedule set forth above may
be reduced as follows:
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<PAGE> 50
CONCURRENT PURCHASES
For purposes of qualifying for a reduced sales charge, a Purchaser may combine
concurrent direct purchases of a Fund's Investor A shares sold with a sales load
and Investor A shares of any other Load Portfolio.
RIGHTS OF ACCUMULATION
In calculating the sales charge applicable to current purchases of a Fund's
Investor A shares, a Purchaser is entitled to accumulate current purchases with
the current value of previously purchased Investor A shares of a Load Portfolio
and which are still held by the Purchaser. As an example, if a Purchaser held
Investor A shares of the Income Fund valued at $100,000 in aggregate and
purchased an additional $5,000 of Investor A shares of the Income Fund, the
sales charge for the $5,000 purchase would be 3.50% as indicated in the Sales
Charge Schedule applicable to a $105,000 purchase. The Distributor must be
notified at the time of purchase that a Purchaser is entitled to a reduced sales
charge which will be granted subject to confirmation of the Purchaser's
holdings. Rights of Accumulation may be modified or discontinued at any time.
LETTER OF INTENT
A Purchaser may qualify for a reduced sales charge on a purchase of Investor A
shares of a Load Portfolio alone or in combination with purchases of Investor A
shares of any of the other Load Portfolios by completing the Letter of Intent
section of the application. By doing so, the Purchaser agrees to invest within a
thirteen-month period a specified amount which, if invested at one time, would
qualify for a reduced sales charge. Each purchase will be made at a public
offering price applicable to a single transaction in the dollar amount specified
on the application, as described herein, after receipt of the Letter of Intent
by the Distributor. The Letter of Intent does not obligate the Purchaser to
purchase, nor the Company to sell, the amount indicated.
The Letter of Intent may be back-dated up to ninety days so that any
investments made in any of the Load Portfolios during the preceding ninety day
period, valued at the Purchaser's cost, can be applied toward fulfillment of the
Letter of Intent. However, there will be no refund of sales charges already paid
during the ninety-day period. No retroactive adjustment will be made if
purchases exceed the amount specified in the Letter of Intent. Income and
capital gains distributions taken in additional shares will not apply toward
completion of the Letter of Intent.
Out of the initial purchase (or subsequent purchases, if necessary), 5% of the
dollar amount specified on the application will be held in escrow by Provident
in the form of Investor A shares registered in the Purchaser's name. The
escrowed Investor A shares will not be available for redemption, transfer or
encumbrance by the Purchaser until the Letter of Intent is completed or the
higher sales charge is paid. All income and capital gains distributions on
escrowed Investor A shares will be paid to the Purchaser.
When the minimum investment specified in the Letter of Intent is completed
(either prior to or by the end of the thirteen month period), the Purchaser will
be notified and the escrowed Investor A shares will be released. If the intended
investment is not completed, the Purchaser will be asked to remit to the
Distributor any difference between the sales charge on the amount specified and
on the amount actually purchased. If the Purchaser does not, within 20 days
after receipt of a written request by the Distributor or the shareholder's
dealer, pay such
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<PAGE> 51
difference in sales charge, Provident, as transfer agent (the "Transfer Agent"),
will redeem an appropriate number of the escrowed Investor A shares in order to
realize such difference. Investor A shares remaining after any such redemption
will be released by the Transfer Agent. Any redemptions made by the Purchaser
during the thirteen-month period will be subtracted from the amount of the
purchases for purposes of determining whether the Letter of Intent has been
completed. In the event of a total redemption of the account prior to completion
of the Letter of Intent, the additional sales charge due will be deducted from
the proceeds of the redemption and the balance will be forwarded to the
Purchaser.
By signing the application, the Purchaser irrevocably constitutes and appoints
the Transfer Agent its attorney to surrender for redemption any or all escrowed
shares with full power of substitution. The Purchaser or his dealer must inform
the Distributor or the Transfer Agent that a Letter of Intent is in effect each
time a purchase is made.
WAIVER OF SALES CHARGES
Investor A shares may also be sold, to the extent permitted by applicable law,
at net asset value without the imposition of an initial sales charge to: (1)
personal trust, employee benefit, agency and custodial (other than IRA) clients
of Provident; (2) employees, officers and directors of Provident, the
Distributor, and their spouses; (3) broker/ dealers purchasing shares for their
own accounts; (4) all affiliates of Provident, including American Financial
Group, Inc., and any officers, directors or employees thereof, and their
spouses; (5) corporations; (6) employees (and their spouses and children under
the age of 21) of any broker-dealer with which the Distributor enters into a
dealer agreement to sell Investor A shares of the Company; (7) orders placed on
behalf of other investment companies distributed by The BISYS Group, Inc., or
any of its affiliates, including the Distributor; (8) persons investing directly
through the Distributor pursuant to a Systematic Investment Plan; and (9)
persons investing directly through a discount brokerage firm which has entered
into a dealer agreement with the Distributor.
In addition, a shareholder who has redeemed all or any portion of his or her
investment in Investor A shares of a Load Portfolio may purchase without a sales
charge Investor A shares of any other Load Portfolio in an amount up to a
maximum dollar amount of such shares redeemed within 30 days after such
redemption. In order to so purchase Investor A shares without a sales charge,
the shareholder, or his or her dealer, must notify the Company at the time an
order is placed that such a purchase qualifies for this exemption from sales
charges and must provide any other information necessary for confirmation of
qualification.
CONTINGENT DEFERRED SALES CHARGE -- INVESTOR B SHARES
Investor B shares which are redeemed within the first six years of purchase
will be subject to a contingent deferred sales charge equal to the applicable
percentage set forth below of an amount equal to the lesser of the net asset
value at the time of purchase of the Investor B shares being redeemed or the net
asset value of such shares at the time of redemption. Accordingly, a contingent
deferred sales charge will not be imposed on amounts representing increases in
net asset value above the net asset value at the time of purchase. In addition,
a charge will not be assessed on Investor B shares purchased through
reinvestment of dividends or capital gains distributions. The Money Market Fund
does not offer Investor B shares.
44
<PAGE> 52
<TABLE>
<CAPTION>
YEAR OF REDEMPTION CONTINGENT DEFERRED
AFTER PURCHASE SALES CHARGE
------------------ -------------------
<S> <C>
First.......................... 4%
Second......................... 4%
Third.......................... 4%
Fourth......................... 3%
Fifth.......................... 2%
Sixth.......................... 1%
Seventh and following.......... 0%
</TABLE>
Solely for purposes of determining whether a year has elapsed from the time of
purchase of any Investor B shares, all purchases during a month will be
aggregated and deemed to have been made on the last day of the month. In
determining whether a contingent deferred sales charge is applicable to a
redemption, the calculation will be made in the manner that results in the
lowest possible charge being assessed. In this regard, it will be assumed that
the redemption is first of shares acquired pursuant to reinvestment of dividends
or distributions and then from the earliest purchase of shares.
For example, assume an investor purchased 100 Investor B shares with a net
asset value of $10 per share (i.e., at an aggregate net asset value of $1,000)
and in the eleventh month after purchase, the net asset value per share is $12
and, during such time, the investor has acquired five additional Investor B
shares through dividend reinvestment. If the investor makes an initial
redemption of 50 Investor B shares (producing proceeds of $600), five of such
shares will not be subject to the charge because of dividend reinvestment. With
respect to the remaining 45 Investor B shares being redeemed, the charge will be
applied only to the original cost of $10 per share and not to the increase in
net asset value of $2 per share. Therefore, $450 of the $600 redemption proceeds
will be subject to the charge of 4% ($18.00).
The contingent deferred sales charge is waived on redemptions of Investor B
shares (i) following the death or disability (as defined in the Code) of a
shareholder, (ii) to the extent that the redemption represents a minimum
required distribution from an IRA or a Custodial Account under Code Section
403(b)(7) to a shareholder who has
reached age 70 1/2, and (iii) to the extent the redemption represents the
minimum distribution from retirement plans under Code Section 401(a) where such
redemption is necessary to make distributions to plan participants.
FACTORS TO CONSIDER WHEN SELECTING INVESTOR A SHARES OR INVESTOR B SHARES
Before purchasing Investor A shares or Investor B shares of a Fund, investors
should consider whether, during the anticipated life of their investment in a
Fund, the accumulated Rule 12b-1 fee and potential contingent deferred sales
charges on Investor B shares prior to conversion (as described below) would be
less than the initial sales charge and accumulated Rule 12b-1 fee on Investor A
shares purchased at the same time, and to what extent such differential would be
offset by the higher yield of Investor A shares. In this regard, to the extent
that the sales charge for the Investor A shares is waived or reduced by one of
the methods described above or the investment is $100,000 or more, investments
in Investor A shares become more desirable. The Company will refuse all purchase
orders for Investor B shares of over $250,000.
Although Investor A shares are subject to a Rule 12b-1 fee, they are not
subject to the higher Rule 12b-1 fee applicable to Investor B shares. For this
reason, Investor A shares can be expected to pay correspondingly higher
dividends per share. However, because initial sales charges are deducted at the
45
<PAGE> 53
time of purchase, purchasers of Investor A shares who do not qualify for waivers
of or reductions in the initial sales charge would have less of their purchase
price initially invested in the Fund than purchasers of Investor B shares.
As described above, purchasers of Investor B shares will have more of their
initial purchase price invested. Any positive investment return on this
additional invested amount would partially or wholly offset the expected higher
annual expenses borne by Investor B shares. Because a Fund's future returns
cannot be predicted, there can be no assurance that this will be the case.
Investors in Investor B shares would, however, own shares that are subject to
higher annual expenses and, for a six-year period, such shares would be subject
to a contingent deferred sales charge ranging from 4.00% to 1.00% upon
redemption. Investors expecting to redeem during this six-year period should
compare the cost of the contingent deferred sales charge plus the aggregate
annual Investor B shares' Rule 12b-1 fees to the cost of the initial sales
charge and Rule 12b-1 fee on the Investor A shares. Over time, the expense of
the annual Rule 12b-1 fee on the Investor B shares may equal or exceed the
initial sales charge and annual Rule 12b-1 fee applicable to Investor A shares.
For example, if net asset value remains constant and assuming no waiving of any
Rule 12b-1 fees, the aggregate Rule 12b-1 fee with respect to Investor B shares
of a Fund would equal or exceed the initial sales charge and aggregate Rule
12b-1 fee of Investor A shares approximately seven years after the purchase. In
order to reduce such fees of investors that hold Investor B shares for seven
years or more, Investor B shares will be automatically converted to Investor A
shares, as described below, at the end of an eight-year period. This example
assumes that the initial purchase of Investor A shares would be subject to the
maximum initial sales charge of 4.50%. This example does not take into account
the time value of money which reduces the impact of the Investor B shares' Rule
12b-1 fee on the investment, the benefit of having the additional initial
purchase price invested during the period before it is effectively paid out as a
Rule 12b-1 fee, fluctuations in net asset value, any waiver of Rule 12b-1 fees
or the effect of different performance assumptions.
If a shareholder who owns both Investor A shares and Investor B shares redeems
less than his or her entire investment, then shares will be redeemed in the
following order: (a) any Investor B shares that are not subject to a contingent
deferred sales charge; (b) Investor A shares; and (c) Investor B shares subject
to a contingent deferred sales charge, unless shareholder has made a specific
election otherwise.
CONVERSION FEATURE
Investor B shares which have been outstanding for eight years after the end of
the month in which the shares were initially purchased will automatically
convert to Investor A shares and, consequently, will no longer be subject to the
higher Rule 12b-1 fee. Such conversion will be on the basis of the relative net
asset values of the two classes, without the imposition of any sales charge or
other charge except that the Rule 12b-1 fee applicable to Investor A shares
shall thereafter be applied to such converted shares. Such investors will then
benefit from the lower Rule 12b-1 fee of Investor A shares. Because the per
share net asset value of the Investor A shares may be higher than that of the
Investor B shares at the time of conversion, a Shareholder may receive fewer
Investor A shares than the number of Investor B shares converted, although the
dollar
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value will be the same. Reinvestments of dividends and distributions in Investor
B shares will not be considered a new purchase for purposes of the conversion
feature and will convert to Investor A shares in the same proportion as the
number of the shareholder's Investor B shares converting to Investor A shares
bears to the shareholder's total Investor B shares not acquired through
dividends and distributions.
If a shareholder effects one or more exchanges among Investor B shares of the
Funds during the eight-year period, the holding period for shares so exchanged
will be counted toward such period.
OTHER PURCHASE INFORMATION
SYSTEMATIC INVESTMENT PLAN
Shareholders may also arrange for systematic monthly or quarterly investments
in their accounts. Once proper authorization has been given, a shareholder's
bank account will be debited on the date specified to purchase shares in a Fund.
A confirmation will be received from the Transfer Agent for every transaction.
INDIVIDUAL RETIREMENT ACCOUNTS
Provident offers tax-advantaged Individual Retirement Accounts ("IRAs") for
which the Money Market Fund, the Income Fund, the Income Equity Fund, the Stock
Appreciation Fund, the Large Company Fund or the Balanced Fund may be an
appropriate investment. A minimum initial investment of $500 is required. For
details, including fees and an application form, please call the telephone
number listed below under "Shareholder Services" or contact Mutual Fund
Services, P.O. Box 14967, Cincinnati, Ohio 45250-0967.
Investment in shares of any tax-exempt fund would not be appropriate for an
IRA. Shareholders are advised to consult a tax adviser on IRA contribution and
withdrawal requirements and restrictions and whether an investment in a tax
exempt fund would be appropriate.
EXCHANGES
If a shareholder has obtained the appropriate prospectus, he or she may
exchange Investor A or Investor B shares of a Fund for shares of the same class
of any of the other Funds on the basis of their respective net asset values by
calling toll free 1-800-424-2295 or by writing The Provident Bank, c/o Mutual
Fund Services, P.O. Box 14967, Cincinnati, Ohio 45250-0967. Subject to the
qualifications and limitations described below under "How to Redeem Shares --
Telephone," neither the Company nor any of its service providers assumes
responsibility for the authenticity of any telephone request for an exchange.
Shares purchased by check are eligible for exchange after 15 days. No contingent
deferred sales charge is imposed upon exchanges of Investor B shares of one Fund
for Investor B shares of another Fund.
If Investor B shares of a Fund are exchanged into the Money Market Fund, no
contingent deferred sales charge will be imposed; however, the exchange will
freeze the running of the time periods applicable to contingent deferred sales
charges and the conversion feature. An exchange back into Investor B shares will
restart such time periods. If less than all of a shareholder's Investor B shares
of a Fund are exchanged into the Money Market Fund, the shareholder's Investor B
shares will be deemed to be exchanged in the following order: (1) Investor B
shares that are not subject to a contingent deferred sales charge, and (2)
Investor B shares in the reverse order in which such
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shares were acquired (i.e., last in, first out). Effective July 1, 1998,
exchanges of Investor B shares of a Fund for shares of the Money Market Fund
will no longer be permitted.
Orders to exchange Investor A or Investor B shares of a Fund for shares of the
Money Market Fund will be executed by redeeming the shares of the Fund and
purchasing Investor A shares of the Money Market Fund at the net asset value of
such shares next determined after the proceeds from such redemption become
available, which may be up to seven days after such redemption. In all other
cases, orders for exchanges received by the Company prior to the close of
business on any day the Company is open for business will be executed at the
respective net asset values determined as of the close of business that day.
Orders for exchanges received after the close of business will be executed at
the respective net asset values next determined after the close of the next
business day.
An excessive number of exchanges may be disadvantageous to the Company.
Therefore the Company, in addition to its right to reject any exchange, reserves
the right to terminate the exchange privilege of any shareholder who makes more
than five exchanges of shares of the Funds in a year or three in a calendar
quarter.
An exchange order must comply with the requirements for a redemption or
repurchase order and must specify the dollar value or number of shares to be
exchanged. Exchanges are subject to the minimum initial purchase requirements of
the Fund being acquired. An exchange constitutes a sale for federal income tax
purposes.
The exchange privilege is available only in states where shares of the Fund
being acquired may legally be sold. The Company reserves the right, at any time,
to modify or terminate any of the foregoing exchange privileges. The Company,
however, will give shareholders 60 days' advance written notice of any such
modification or termination.
HOW TO REDEEM SHARES
Shares of the Funds may be redeemed for cash at their net asset value, less
any applicable contingent deferred sales charge, upon written order by the
shareholder to the Company, c/o The Provident Bank, Mutual Fund Services, P.O.
Box 14967, Cincinnati, Ohio 45250-0967. A shareholder's signature(s) on the
written order must be guaranteed as described below. In order to redeem by
telephone, shareholders must have completed the authorization in their account
applications. Proceeds for shares redeemed on telephonic order will be deposited
by wire or EFT only to the bank account designated in the account application.
The redemption value is the net asset value per share, less any applicable
contingent deferred sales charge, and may be more or less than the shareholder's
cost of the Fund's shares depending upon changes in the value of the Fund's
securities between purchase and redemption. The Company computes the amount due
a shareholder at the next Valuation Time after it has received all proper
documentation. Payment of the amount due on redemption will be made within seven
days thereafter except as discussed below.
At various times, the Company may be requested to redeem shares for which it
has not yet received good payment. In such a case, the Company may delay the
mailing of a redemption check or the wiring or EFT of redemption proceeds until
good payment has been collected for the purchase of such shares. This may take
up to 15 days. Any delay may be avoided by purchasing shares either with a
certified check or by Federal
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Reserve or bank wire of funds or EFT. Although the mailing of a redemption
check, wiring or EFT of redemption proceeds may be delayed, the redemption value
will be determined and the redemption processed in the ordinary course of
business upon receipt of proper documentation. In such a case, after the
redemption and prior to the release of the proceeds, no appreciation or
depreciation will occur in the value of the redeemed shares and no interest will
be paid on the redemption proceeds. If the payment of a redemption has been
delayed, the check will be mailed or the proceeds wired or sent EFT promptly
after good payment has been collected.
Shareholders may also redeem their shares through broker-dealers. The
Distributor, acting as agent for the Company, stands ready to repurchase the
Funds' shares upon orders from dealers at the net asset value next computed
after the Distributor receives the order. When the Distributor has received
proper documentation, it will pay the redemption proceeds to the broker-dealer
placing the order within three business days thereafter. The Distributor charges
no fees for this service, except to the extent that a contingent deferred sales
charge may be imposed upon redemptions of Investor B shares. However, a
shareholder's broker-dealer may charge a service fee.
For the protection of shareholders, regardless of the number of shares or
amount of money involved in a redemption or repurchase, signatures on stock
powers and all written orders or authorizations must be guaranteed by a U.S.
stock exchange member, a U.S. commercial bank or trust company or other person
eligible to guarantee signatures under the Securities Exchange Act of 1934 and
the Transfer Agent's policies. The Company or the Transfer Agent may waive this
requirement but may also require additional documents in certain cases.
Currently the requirement for a signature guarantee has been waived on
redemptions of $50,000 or less where the account address of record has been the
same for a minimum period of 90 days. The Company and the Transfer Agent reserve
the right to withdraw this waiver at any time.
If the Company receives a redemption order but a shareholder has not clearly
indicated the amount of money or number of shares involved, the Company cannot
execute the order. In such cases, the Company will request the missing
information and process the order on the day such information is received.
If a shareholder requests redemption by telephone and a bank account has
previously been designated, the shareholder should state whether the proceeds
should be wired, sent EFT or mailed to such bank. In the absence of a request
that the proceeds be wired, sent EFT or mailed to such bank, they will be sent
by check to the shareholder's address as it appears on the account registration.
The redemption order also should include the account name as registered with the
Company and the account number.
TELEPHONE
Under ordinary circumstances, shareholders may redeem up to $50,000 from their
accounts by telephoning Mutual Fund Services at: 1-800-424-2295.
In order to ensure that instructions received by the Transfer Agent are
genuine when a telephone transaction is initiated, a shareholder will be asked
to verify certain information specific to its account. At the conclusion of the
transaction, the shareholder will be given a transaction number confirming the
request, and written confirmation of the transaction will be mailed within
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72 hours of the telephone transaction. The shareholder's telephone instructions
will be recorded. Redemptions by telephone are allowed only if the address and
bank account of record have been the same for a minimum period of 30 days.
The Company reserves the right at any time to terminate, suspend or change the
terms of any redemption method described in this prospectus, except redemption
by mail, and to impose fees. Except as otherwise noted, neither the Company nor
any of its service providers assumes responsibility for the authenticity of any
instructions received by any of them from a shareholder in writing or by
telephone nor will any of them be liable when following instructions received by
telephone that the Transfer Agent reasonably believes to be genuine. The
Transfer Agent will employ procedures designed to provide reasonable assurance
that instructions received by telephone are genuine. If, for any reason,
reasonable procedures are not followed, the Company or its service providers may
be liable for any losses due to unauthorized or fraudulent instructions. The
Company may temporarily suspend the right to redeem its shares when (1) the
Exchange is closed, other than customary weekend and holiday closings; (2)
trading on the Exchange is restricted; (3) an emergency exists and the Company
cannot dispose of its investments or fairly determine their value; or (4) the
Commission so orders.
If the redemption proceeds are less than $2,500, they will be mailed by check.
If they are $2,500 or more, they will be mailed, wired or sent EFT to a
previously designated bank account as directed by the shareholder. If the
Company cannot be reached by telephone, shareholders should follow the
procedures for redeeming by mail or through a broker as set forth above.
AUTOMATIC WITHDRAWAL PLAN
Investor A Shares -- Under an Automatic Withdrawal Plan, if an account has a
value of at least $10,000 in Investor A shares of a Fund, a shareholder may
arrange for regular monthly or quarterly fixed withdrawal payments. Each payment
must be at least $100 and may be as much as 1.5% per month or 4.5% per quarter
of the total net asset value of the Fund's Investor A shares in the account when
the Automatic Withdrawal Plan is opened.
Investor B Shares -- If an account has a value of at least $10,000 in Investor
B shares of a Fund, a shareholder may arrange for regular monthly or quarterly
withdrawal payments. Each payment must be at least $100 and may be as much as
.833% per month or 2.5% per quarter of the total net asset value of the Fund's
Investor B shares in the account when the Automatic Withdrawal Plan is opened.
The contingent deferred sales charge on such withdrawal payments will be waived.
General -- Excessive withdrawals may decrease or deplete the value of an
account. Purchases of additional shares, including use of the Systematic
Investment Plan, concurrent with withdrawals may be disadvantageous to certain
shareholders because of tax liabilities and sales charges.
CHECKWRITING
If requested on your account application, the Money Market Fund will establish
a checking account for you with Provident. Checks may be drawn for $250 or more
payable to anyone. When a check is presented to Provident for payment, it will
cause the Money Market Fund to redeem at the net asset value next determined a
sufficient number of your shares to cover the check. You will receive the daily
dividends declared on
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the shares redeemed to cover your check through the day Provident instructs the
Money Market Fund to redeem the shares. There is currently no charge to you for
this checking account. Money Market Fund checking accounts are subject to
Provident's rules and regulations governing checking accounts. If there is an
insufficient number of shares in your account when a check is presented to
Provident for payment, the check will be returned. If you present a check on
your account in person to Provident it will be treated as a redemption by mail
received that day.
Since the aggregate amount in your account changes each day because of the
daily dividend, you should not attempt to withdraw the full amount in your
account by using a check.
SMALL ACCOUNTS
Because of the high cost of maintaining small accounts, the Company reserves
the right to redeem an account if its value has fallen below $500 as a result of
your redemptions (but not as a result of market action). The shareholder will be
notified in writing and allowed at least 45 days to purchase additional shares
in order to increase the balance over $500.
REDEMPTIONS IN KIND
If conditions arise that would make it undesirable for the Company to pay for
all redemptions in cash, the Company may authorize payment to be made in
portfolio securities or other property. However, the Company has obligated
itself under the 1940 Act to redeem for cash all shares presented for redemption
by any one shareholder up to $250,000, or 1% of the applicable Fund's net assets
if that is less, in any 90-day period. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving such securities would incur
brokerage costs when the securities are sold.
SHAREHOLDER SERVICES
Details on all shareholder services may be obtained from Provident by calling
toll free 1-800-424-2295 or by writing the Distributor at 3435 Stelzer Road,
Columbus, Ohio, 43219.
DIVIDENDS AND TAXES
DIVIDENDS
The Money Market Fund intends to declare dividends daily from its net
investment income and to distribute all of its net investment income to its
shareholders monthly. The Stock Appreciation Fund intends to declare and
distribute to its shareholders dividends from net investment income, if any,
semi-annually. Each of the other Funds intends to declare and distribute to its
shareholders dividends from net investment income monthly. Each Fund intends to
declare and distribute all net realized mid-term and long-term capital gains. if
any, annually as capital gains dividends.
Each Fund's net investment income available for distribution to the holders of
Investor A shares and Investor B shares (if any) will be reduced by the amount
of Rule 12b-1 fees payable under the respective Plan and certain other class
specific expenses paid by the respective class.
Unless the Company receives instructions to the contrary before the record
date, it will assume that a shareholder wishes to receive that distribution and
future capital gains and income distributions in additional shares. Instructions
continue in effect until changed
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in writing. Account statements and/or checks as appropriate will be mailed to
shareholders within seven days after the Fund pays the distribution.
If a shareholder elects to receive distributions in cash and checks (1) are
returned and marked as "undeliverable" or (2) remain uncashed for six months,
the shareholder's cash election will be changed automatically and future
dividend and capital gains distributions will be reinvested in the applicable
Fund at the per share net asset value determined as of the date of payment of
the distribution. In addition, any undeliverable checks or checks that remain
uncashed for six months will be canceled and will be reinvested in the
applicable Fund at the per share net asset value determined as of the date of
cancellation.
FEDERAL TAXES
Each of the Funds is treated as a separate entity for federal income tax
purposes and intends to qualify as a "regulated investment company" under the
Code for so long as such qualification is in the best interest of that Fund's
shareholders. Qualification as a regulated investment company under the Code
requires, among other things, that the regulated investment company distribute
to its shareholders at least 90% of its investment company taxable income and
90% of its interest income excludable from gross income under Section 103(a) of
the Code. Each Fund contemplates declaring as dividends all or substantially all
of such Fund's investment company taxable income and its exempt income (before
deduction of dividends paid).
A non-deductible 4% excise tax is imposed on regulated investment companies
that do not distribute in each calendar year (regardless of whether they
otherwise have a non-calendar taxable year) an amount equal to 98% of their
ordinary income for the calendar year plus 98% of their capital gain net income
for the one-year period ending on October 31 of such calendar year. The balance
of such income must be distributed during the next calendar year. If
distributions during a calendar year were less than the required amount, a Fund
would be subject to a nondeductible excise tax equal to 4% of the deficiency.
It is expected that each Fund will distribute annually to shareholders all or
substantially all of the Fund's net ordinary income and net recognized capital
gains, if any, and that such distributed net ordinary income and distributed net
realized capital gains will be taxable income to shareholders for federal income
tax purposes, even if paid in additional shares of the Fund and not in cash. The
dividends-received deduction for corporations will apply to the aggregate of
such ordinary income distributions in the same proportion as the aggregate
dividends eligible for the dividends received deduction, if any, received by the
Fund bear to its gross income.
Distribution by a Fund of the excess of net mid-term or net long-term capital
gain over net short-term capital loss is taxable to shareholders as mid-term or
long-term capital gain, respectively, in the year in which it is received,
regardless of how long the shareholder has held the shares. Such distributions
are not eligible for the dividends-received deduction.
Prior to purchasing shares, the impact of dividends or capital gains
distributions which are expected to be declared or have been declared, but have
not been paid, should be carefully considered. Any such dividends or capital
gains distributions paid shortly after a purchase of shares prior to the record
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date will have the effect of reducing the per share net asset value of the
shares by the amount of the dividends or distributions. All or a portion of such
dividends or distributions, although in effect a return of capital, is subject
to tax.
The foregoing is intended only as a brief summary of some of the important tax
considerations generally affecting the Funds and their shareholders. Potential
investors in a Fund are urged to consult their tax advisers concerning the
application of federal, state and local taxes as such laws and regulations
affect their own tax situations.
The Transfer Agent will inform shareholders at least annually of the amount
and nature of such income and capital gains.
MANAGEMENT AND EXPENSES
BOARD OF DIRECTORS
Under Maryland law, the Company's Board of Directors, which is elected by the
Company's shareholders, has absolute and exclusive control over the management
and disposition of all assets of each Fund of the Company. The Directors, in
turn, elect the officers of the Company to supervise actively its day-to-day
operations. Subject to the authority of the Board of Directors, Provident,
directly and through DRZ as subadviser with respect to the Income Equity Fund,
supervises the investment programs of each Fund.
INVESTMENT ADVISER
Provident, an Ohio banking corporation located at One East Fourth Street,
Cincinnati, Ohio 45202, has entered into a Investment Advisory Agreement with
the Company whereby Provident supervises and manages the investment and
reinvestment of the assets of the Money Market Fund, the Income Fund, the Stock
Appreciation Fund, the Large Company Fund, the Balanced Fund and, with DRZ, the
Income Equity Fund. Provident has been providing investment advisory services to
individual and corporate trust accounts since 1902.
Provident is a subsidiary of Provident Financial Group, Inc. ("PFG"), a bank
holding company located in Cincinnati, Ohio with approximately $7.1 billion in
consolidated assets as of December 31, 1997. Through offices in Ohio and
Kentucky, PFG and its subsidiaries provide a broad range of financial services
to individuals and businesses. Under the Investment Advisory Agreement with the
Company, for services rendered and expenses assumed as investment adviser,
Provident receives annually a fee (1) from the Money Market Fund equal to .15%
of the Money Market Fund's average net assets; (2) from the Income Fund equal to
.40% of the Income Fund's average net assets; (3) from the Income Equity Fund
equal to .95% of the Income Equity Fund's average net assets; (4) from the Stock
Appreciation Fund equal to .80% of the Stock Appreciation Fund's average net
assets; (5) from the Large Company Fund equal to .80% of the Large Company
Fund's average net assets; and (6) from the Balanced Fund equal to .90% of the
Balanced Fund's average net assets. Provident may periodically voluntarily
reduce all or a portion of its advisory fee with respect to a Fund to increase
the net income of that Fund available for distribution as dividends. The
voluntary fee reduction will cause the yield of that Fund to be higher than it
would otherwise be in the absence of such a reduction. The advisory fees with
respect to the Income Equity Fund, the Stock Appreciation Fund, the Large
Company Fund and the Balanced Fund are higher, in the opinion of the Commission,
than that paid by most investment compa-
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nies, but Provident believes the fees to be fair and reasonable.
Provident uses a team approach and disciplined investment strategy in
providing investment advisory services to all its accounts, including the Funds.
As of November 15, 1996, Provident adopted a team approach with respect to each
of the Funds in order to take advantage of the experience of its entire
portfolio management team. Provident's investment staff consists of seven
individuals. All Funds are reviewed on a regular basis by Provident's Investment
Policy Committee to ensure they are invested in accordance with the Funds' and
Provident's investment policies.
Pursuant to the terms of its Investment Advisory Agreement with the Company,
Provident has entered into a Sub-Investment Advisory Agreement with DRZ, a
registered investment adviser, 201 South Orange Avenue, Suite 850, Orlando,
Florida 32801, with respect to the Income Equity Fund. DRZ is owned equally by
Mr. Gregory DePrince, Mr. John D. Race and Mr. Victor A. Zollo, Jr., each of
whom are former employees of SunBank Capital Management N.A., the former
sub-investment adviser of the Income Equity Fund ("SunBank"). In April, 1995,
Messrs. DePrince, Race and Zollo left SunBank to form DRZ. In addition to the
Income Equity Fund, DRZ provides investment management services to mutual funds
and other institutions and currently manages assets of approximately $2.3
billion. Pursuant to the terms of such Sub-Investment Advisory Agreement, DRZ
was retained by Provident to manage the day-to-day investment and reinvestment
of that portion of the assets of the Income Equity Fund allocated to DRZ by the
Company's Board of Directors. The remainder of the Income Equity Fund's assets
are managed on a day-to-day basis by Provident. The amount of the assets of the
Income Equity Fund to be allocated between DRZ and Provident from time to time
is subject to the discretion of the Company's Board of Directors. Currently
approximately $5.7 million of the Income Equity Fund's assets are managed
directly by Provident. The remainder of the Income Equity Fund's assets are
managed by DRZ up to approximately $75 million (exclusive of capital
appreciation or depreciation and reinvested dividends). Any assets in excess of
such $75 million limit would be managed directly by Provident. Both DRZ's and
Provident's day-to-day management of the Income Equity Fund's portfolio is
subject to the direction and control of the Company's Board of Directors, and
Provident is responsible for selecting and monitoring DRZ and reporting the
activities of DRZ to the Company's Board of Directors.
For its services provided and expenses assumed pursuant to its Sub-Investment
Advisory Agreement with Provident, DRZ receives from Provident a fee, computed
daily and paid monthly, at the annual rate of 0.50% of the Income Equity Fund's
average daily net assets up to $55 million and 0.55% of the average daily net
assets of such Fund of $55 million and above. In addition, DRZ will manage net
assets of the Income Equity Fund up to $75 million, but not beyond. The
Directors of the Company shall take such limitation into account when
determining the allocation of the Income Equity Fund's assets between Provident
and DRZ.
Gregory M. DePrince is primarily responsible for the management of that
portion of the Income Equity Fund's portfolio allocated to DRZ to manage. Since
April 1995, Mr. DePrince has been a director and Executive Vice President of
DRZ. Prior to April 1995, Mr. DePrince served as the Equity Income Portfolio
Manager at SunBank where he also
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managed the STI Classic Value Income Fund.
In addition to serving as investment adviser, Provident has entered into an
agreement with the Company to provide transfer agency services to each Fund.
Under the Master Transfer and Recordkeeping Agreement, the Funds pay Provident
the following fees for such services. The Money Market Fund pays a minimum
annual fee of $24,000 for the first 500 shareholder accounts. For shareholder
accounts of the Money Market Fund in excess of 500, the Money Market Fund pays
an additional annual fee of $24 for each open shareholder account and $12 for
each closed shareholder account. The Stock Appreciation Fund pays a minimum
annual fee of $36,000 for the first 750 shareholder accounts. For shareholder
accounts of the Stock Appreciation Fund in excess of 750, the Stock Appreciation
Fund pays an additional annual fee of $18 for each open shareholder account and
$9 for each closed shareholder account. All other Funds pay a minimum annual fee
of $40,000 for the first 750 shareholder accounts and, for shareholder accounts
of that Fund in excess of 750, an additional annual fee of $20 for each open
shareholder account and $10 for each closed shareholder account.
CUSTODIAN AND FUND ACCOUNTANT
The Provident Bank (the "Custodian") also serves as custodian for and provides
certain fund accounting services to each of the Funds. Pursuant to the
Custodian, Fund Accounting and Recordkeeping Agreement with the Company, the
Custodian receives compensation from the Funds for such services in an amount
equal to a fee, computed daily and paid monthly, at the following annual rate of
.05% of the Money Market Fund's average daily net assets; .10% of the Income
Fund's average daily net assets; and .15% of the Income Equity Fund's, the Stock
Appreciation Fund's, the Large Company Fund's and the Balanced Fund's average
daily net assets.
ADMINISTRATOR AND DISTRIBUTOR
The Distributor, located at 3435 Stelzer Road, Columbus, Ohio 43219, is the
administrator for each Fund, and also acts as the Funds' principal underwriter
(the "Administrator" or the "Distributor," as the context indicates).
The Administrator generally assists in all aspects of a Fund's administration
and operation. For expenses assumed and services provided as administrator
pursuant to its administration agreement with the Company, the Administrator
receives a fee from each Fund, computed daily and paid periodically, at an
annual rate of 0.20% of such Fund's average daily net assets. The Administrator
may periodically voluntarily reduce all or a portion of its administration fee
with respect to a Fund to increase the net income of that Fund available for
distribution as dividends. The voluntary fee reduction will cause the yield of
the Fund to be higher than it would otherwise be in the absence of such a
reduction.
The Distributor acts as agent for the Funds in the distribution of their
shares and, in that capacity, solicits orders for the sale of shares,
advertises, and pays the cost of that advertising, office space and its
personnel involved in such activities. The Distributor receives no compensation
under its Distribution Agreement with the Company, but may retain some or all of
any sales charge imposed upon the shares and may receive compensation under the
Distribution Plans described below.
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DISTRIBUTION PLANS -- INVESTOR A SHARES
The Investor A shares of each Fund may bear some of the costs of selling such
shares under an Investor A Distribution Plan adopted pursuant to Rule 12b-1
under the 1940 Act (the "Investor A Plan"). The Investor A Plan of each Fund
provides that such Fund may expend daily amounts at an annual rate of up to
0.25% of the average daily net asset value of that Fund's Investor A shares to
finance any activity which is principally intended to result in the sale of such
Fund's Investor A shares including, without limitation, expenditures consisting
of payments to the Distributor (1) to enable the Distributor to pay or to have
paid to others who sell Investor A shares of that Fund a maintenance or other
fee, at such intervals as the Distributor may determine, with respect to
Investor A shares of the Fund previously sold by others and remaining
outstanding during the period with respect to which such fee is or has been
paid; and/or (2) to compensate the Distributor for its efforts with respect to
sales of Investor A shares of the Fund since inception of the Plan.
Fees paid pursuant to the Investor A Plan are accrued daily and paid monthly,
and are charged as expenses of Investor A shares of such Fund as accrued.
DISTRIBUTION PLANS -- INVESTOR B SHARES
Pursuant to Rule 12b-1, the Company has also adopted an Investor B
Distribution Plan (the "Investor B Plan") with respect to Investor B shares of
the Income Fund, the Income Equity Fund, the Stock Appreciation Fund, the Large
Company Fund and the Balanced Fund. Pursuant to the Investor B Plan, a Fund is
authorized to pay or reimburse the Distributor (a) a distribution fee in an
amount not to exceed on an annual basis 0.75% of the average daily net asset
value of Investor B shares of such Fund (the "Distribution Fee") and (b) a
service fee in an amount not to exceed on an annual basis 0.25% of the average
daily net asset value of the Investor B shares of such Fund (the "Service Fee").
Payments under the Investor B Plan will be calculated daily and paid monthly at
a rate not to exceed the limits described above, which rates are set from time
to time by the Company's Board of Directors. Payments of the Distribution Fee to
the Distributor pursuant to the Investor B Plan will be used (i) to compensate
Participating Organizations (as defined below) for providing distribution
assistance relating to Investor B shares, and (ii) for promotional activities
intended to result in the sale of Investor B shares such as to pay for the
preparation, printing and distribution of prospectuses to other than current
shareholders, and payments of the Service Fee to the Distributor pursuant to the
Investor B Plan will be used to compensate Participating Organizations for
providing shareholder services with respect to their customers who are, from
time to time, beneficial and record holders of Investor B shares. Participating
Organizations include banks (including Provident and its affiliates),
broker-dealers and other financial institutions.
Fees paid pursuant to the Investor B Plan are accrued daily and paid monthly,
and are charged as expenses of Investor B shares of such Fund as accrued.
Pursuant to the Investor B Plan, the Distributor may enter into Rule 12b-1
Agreements with Participating Organizations for providing distribution and
shareholder services to their customers who are the record or beneficial owners
of Investor B shares. Such Participating Organizations will be compensated at
the annual rate of up to 1.00% of the average daily net asset value of
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the Investor B shares held of record or beneficially by such customers. The
distribution services provided by Participating Organizations for which the
Distribution Fee may be paid may include promoting the purchase of Investor B
shares of such Funds by their customers; processing purchase, exchange, and
redemption requests from customers and placing orders with the Distributor or
the transfer agent; processing dividend and distribution payments from a Fund on
behalf of customers; providing information periodically to customers, including
information showing their positions in Investor B shares; responding to
inquiries from customers concerning their investment in Investor B shares; and
providing other similar services as may be reasonably requested. The services
provided by Participating Organizations for which the Service Fee may be paid
may include providing shareholders information about their investment in the
Investor B shares of a Fund and providing other continuing personal services to
holders of Investor B shares.
As required by Rule 12b-1, the Investor A Plan and the Investor B Plan (the
"Plans") were each approved by the Directors of the Company, including a
majority of the Directors who are not "interested persons" (as defined in the
1940 Act) of the Company and who have no direct or indirect financial interest
in the operation of the Plans or in any agreements related to the Plans
("Independent Directors"). The Plans continue in effect as long as such
continuance is specifically approved at least annually by the Company's
Directors, including a majority of the Independent Directors.
The Plans may be terminated by a vote of a majority of the Independent
Directors, or by a vote of a majority of the holders of the outstanding voting
securities of the class of shares subject thereto. Any change in the Plans that
would increase materially the distribution expenses paid by a Fund requires
shareholder approval; otherwise, the Plans may be amended by the Directors,
including a majority of the Independent Directors, by a vote cast in person at a
meeting called for the purpose of voting upon the amendment. As long as either
Plan is in effect, the selection or nomination of the Independent Directors is
committed to the discretion of the Independent Directors.
SHAREHOLDER SERVICES PLAN
The Company has adopted a Shareholder Services Plan (the "Services Plan")
pursuant to which each Fund is authorized to pay compensation to banks and other
financial institutions (each a "Service Organization"), which may include
Provident, its correspondent and affiliated banks, and the Distributor, which
agree to provide certain ministerial, recordkeeping and/or administrative
support services for their customers or account holders (collectively
"customers") who are the beneficial or record owners of shares of that Fund. In
consideration for such services, a Service Organization receives a fee from the
Fund computed daily and paid monthly, at an annual rate of up to 0.25% of the
average daily net asset value of shares of that Fund owned beneficially or of
record by such Service Organization's customers for whom the Service
Organization provides such services.
The servicing agreements adopted under the Services Plan (the "Servicing
Agreements") require the Services Organizations receiving such compensation to
perform certain ministerial, recordkeeping and/or administrative support
services with respect to the beneficial or record owners of shares of a Fund,
including activities such as responding to shareholder inquiries regarding
accounts, collecting information regarding
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changes in accounts and further assisting the Transfer Agent in maintaining the
Fund's records, processing dividend and distribution payments from the Fund on
behalf of customers, providing periodic statements to customers showing their
positions in the shares of the Fund, providing sub-accounting with respect to
shares beneficially owned by such customers and providing customers with a
service that invests the assets of their accounts in shares of that Fund
pursuant to specific or pre-authorized instructions. As of the date of this
Prospectus, no Servicing Agreements have been entered into on behalf of any of
the Funds.
BANKING LAWS
Provident believes that it possesses the legal authority to perform the
investment advisory services for the Funds as set forth in its Investment
Advisory Agreement with the Company, as described in this Prospectus, without
violation of applicable banking laws and regulations, and has so represented in
its Investment Advisory Agreement with the Company. Future changes in Federal or
state statutes and regulations relating to permissible activities of banks or
bank holding companies and their subsidiaries and affiliates as well as further
judicial or administrative decisions or interpretations of present and future
statutes and regulations could change the manner in which Provident performs
such services for the Funds. See "MANAGEMENT OF THE COMPANY - Glass-Steagall
Act" in the Statement of Additional Information for further discussion of
applicable law and regulations.
FUND EXPENSES
Provident, DRZ and the Administrator each bear all expenses in connection with
the performance of their services as investment adviser, sub-investment adviser
and administrator, respectively, other than the cost of securities (including
brokerage commissions, if any) purchased for the Funds.
The Directors reserve the right, subject to the receipt of any necessary
relevant regulatory approvals or rulings, to allocate certain expenses (other
than those associated with the applicable Plan) to the shareholders of a
particular class on a basis other than relative net asset value as the Directors
deem appropriate ("Class Expenses"). In such event, Class Expenses would be
limited to: transfer agency fees identified by the Transfer Agent as
attributable to a specific class; printing and postage expenses related to
preparing and distributing materials such as shareholder reports, prospectuses
and proxies to current shareholders; Blue Sky registration fees incurred by a
class of shares; Commission registration fees incurred by a class of shares;
expenses related to administrative personnel and services as required to support
the shareholders of a specific class; litigation or other legal expenses
relating solely to one class of shares; and Directors' fees incurred as a result
of issues relating solely to one class of shares.
SECURITIES TRANSACTIONS
Under policies established by the Board of Directors, Provident and DRZ, as
the case may be, selects broker-dealers to execute portfolio transactions for
the Funds subject to receipt of best execution. When selecting broker-dealers,
Provident and DRZ may consider as a factor the number of shares of the Funds
sold by a broker-dealer. In addition, broker-dealers executing transactions for
a Fund may from time to time be affiliated with the Company, Provident, DRZ or
their affiliates. The Funds may pay higher commissions to broker-dealers which
provide research services. Provident and DRZ each may use these services in
advising the
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Funds as well as in advising their other clients.
PERFORMANCE DATA AND ADVERTISING
From time to time the Money Market Fund may advertise "yield" and "effective
yield," and the other Funds may advertise "total return" and/or "current yield."
Such figures are based on historical earnings and are not intended to indicate
future performance. The yield of the Money Market Fund refers to the income
generated by the Money Market Fund over a seven-day period (which period will be
stated in the advertisement). This income is then annualized. That is, the
amount of income generated by the Money Market Fund during that week is assumed
to be generated each week over a 52-week period and is shown as a percentage.
The effective yield is calculated similarly but, when annualized, the income
earned from the Money Market Fund is assumed to be reinvested. The effective
yield will be slightly higher than the yield because of the compounding effect
of this assumed reinvestment. Average annual total return refers to a Fund's
average annual compounded rates of return over specified periods determined by
comparing the initial amount invested to the ending redeemable value of that
amount. The resulting equation assumes reinvestment of all dividends and
distributions and deduction of any sales charge and all recurring charges, if
any, applicable to all shareholder accounts. Performance of a Fund may also be
presented excluding the effect of a sales charge, if any.
Current yield quotations for the Funds, other than the Money Market Fund,
represent the yield on an investment for a stated 30-day period computed by
dividing net investment income earned per share during the base period by the
maximum offering price per share on the last day of the base period.
The Large Company Fund has been initially funded by the transfer of all of the
assets of two corresponding common trust funds managed by Provident (the
"CIFs"). Because the management of the Large Company Fund is substantially the
same as the CIFs, the quoted performance of such Fund includes the performance
of the CIFs for the periods prior to the effectiveness of the Company's
registration statement as it relates to the Large Company Fund. The CIFs were
not registered under the 1940 Act, and therefore were not subject to certain
investment restrictions that are imposed by the 1940 Act. If the CIFs had been
so registered, their performance might have been adversely affected.
The Funds may also include comparative performance information in advertising
or marketing their shares, such as data from Lipper Analytical Services, Inc.,
Standard & Poor's 500 Composite Stock Price Index or other industry
publications. The Funds may include in sales and advertising material general
mutual fund industry information compiled from financial and industry
publications. The Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1997, contains additional performance information and will be
made available to prospective investors and shareholders without cost.
In addition, from time to time each Fund may present its distribution rates
for a class of shares in supplemental sales literature which is accompanied or
preceded by a prospectus and in shareholder reports. Distribution rates will be
computed by dividing the distribution per share of a class made by a Fund over a
twelve-month period by the maximum offering price per share. The calculation of
income in the distribution rate includes both income and capital gain dividends
and does not reflect unrealized
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gains or losses, although the Funds may also present a distribution rate
excluding the effect of capital gains. The distribution rate differs from the
yield, because it includes capital gains which are often non-recurring in
nature, whereas yield does not include such items. Distribution rates may also
be presented excluding the effect of a sales charge, if any.
Standardized yield and total return quotations will be computed separately for
Investor A and Investor B shares. Because of differences in the fees and/or
expenses borne by Investor A and Investor B shares of the Funds, the net yield
and total return on Investor A shares can be expected, at any given time, to
differ from the net yield and total return on Investor B shares for the same
period.
COMPANY SHARES
The Company presently offers six series of shares of capital stock, par value
$.001 per share (the "Funds"). The shares of each of the Funds, other than the
Money Market Fund, are offered in two separate classes: Investor A shares and
Investor B shares. The Money Market Fund has only the Investor A class of
shares. When issued and paid for, shares of each Fund are fully paid and
nonassessable by the Company. Shares may be exchanged or converted as explained
above but will have no other preference, conversion, exchange or preemptive
rights. Shareholders are entitled to one vote for each full share owned and
fractional votes for fractional shares. Shares are transferable, redeemable and
freely assignable as collateral. There are no sinking fund provisions.
Each share represents an equal proportionate interest in a Fund with other
shares of the same Fund based upon such share's net asset value, and is entitled
to such dividends and distributions out of the income earned on the assets
belonging to that Fund as are declared at the discretion of the Directors.
Shareholders will vote in the aggregate and not by Fund except as otherwise
expressly required by law. For example, Shareholders of a Fund will vote in the
aggregate with other shareholders of the Company with respect to the election of
Directors and ratification of the selection of independent accountants. However,
Shareholders of a Fund will vote as a Fund, and not in the aggregate with other
shareholders of the Company, for purposes of approval of the Investment Advisory
Agreement with respect to that Fund. In addition, holders of one class of
Investor Shares of a Fund will vote as a class and not with holders of the other
class of Investor Shares with respect to the approval of its respective
Distribution Plan.
The Company may dispense with an annual meeting of shareholders in any fiscal
year in which it is not required in order to elect directors under the 1940 Act
or state law. However, shareholders are entitled to call a special meeting of
shareholders for purposes of voting on the removal of a director or directors
when 10% of the outstanding shares request such a meeting. Shareholders may be
eligible for shareholder communication assistance in connection with a special
meeting.
As used in this Prospectus and the Statement of Additional Information, a
"vote of the holders of a majority of the outstanding voting securities" of a
Fund means the affirmative vote, at a meeting of shareholders duly called, of
the lesser of (a) 67% or more of the outstanding shares of such Fund present at
such meeting, if holders of more than 50% of the shares are present or
represented by proxy, or (b) more than 50% of the shares of such Fund.
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As of April 20, 1998, Provident possessed, directly or on behalf of its
underlying accounts, voting or investment power with respect to more than 25% of
the outstanding shares of each of the Money Market, Income, Balanced and Large
Company Funds and therefore may be presumed to control each of these Funds
within the meaning of the 1940 Act.
ADDITIONAL INFORMATION
Except as otherwise stated in this prospectus or required by law, the Company
reserves the right to change the terms of the offer stated in this prospectus
without shareholder approval, including the right to impose or change fees for
services provided.
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---------------------------------------
<TABLE>
<S> <C> <C>
THE THE RIVERFRONT
RIVERFRONT U.S. GOVERNMENT
FUNDS, INC. SECURITIES MONEY
MARKET FUND
PROSPECTUS THE RIVERFRONT
APRIL 30, 1998 U.S. GOVERNMENT
INCOME FUND
THE RIVERFRONT
INCOME EQUITY
FUND
THE RIVERFRONT
STOCK APPRECIATION
FUND
THE RIVERFRONT
LARGE COMPANY
SELECT FUND
THE RIVERFRONT
BALANCED FUND
THE RIVERFRONT FUNDS, INC.
Investment Adviser
The Provident Bank
One East Fourth Street
Cincinnati, Ohio 45202
Distributor
BISYS Fund Services Limited Partnership
3435 Stelzer Rd.
Columbus, Ohio 43219
For additional information call
The Provident Bank
Mutual Fund Services
1-800-424-2295
</TABLE>
<PAGE> 72
STATEMENT OF ADDITIONAL INFORMATION
THE RIVERFRONT FUNDS
THE RIVERFRONT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
THE RIVERFRONT U.S. GOVERNMENT INCOME FUND
THE RIVERFRONT BALANCED FUND
THE RIVERFRONT INCOME EQUITY FUND
THE RIVERFRONT LARGE COMPANY SELECT FUND
THE RIVERFRONT SMALL COMPANY SELECT FUND
December 29, 1998
This Statement of Additional Information is not a prospectus but
relates to, and should be read in conjunction with, the prospectus (the
"Prospectus") of The Riverfront U.S. Government Securities Money Market Fund
(the "Money Market Fund"), The Riverfront U.S. Government Income Fund (the
"Income Fund"), The Riverfront Balanced Fund (the "Balanced Fund"), The
Riverfront Income Equity Fund (the "Income Equity Fund"), The Riverfront Large
Company Select Fund (the "Large Company Fund") and The Riverfront Small Company
Select Fund (the "Small Company Fund") (the Money Market Fund, the Income Fund,
the Balanced Fund, the Income Equity Fund, the Large Company Fund and the Small
Company Fund are hereinafter collectively referred to as the "Funds" and
individually as a "Fund") dated the date hereof. The Funds are currently six
series or portfolios of The Riverfront Funds, an Ohio business trust (the
"Trust"). On January 2, 1997, the Balanced Fund changed its name from The
Riverfront Flexible Growth Fund to The Riverfront Balanced Fund. On December 29,
1998, the Small Company Fund changed its name from The Riverfront Stock
Appreciation Fund to The Riverfront Small Company Select Fund. This Statement of
Additional Information is incorporated in its entirety into the Prospectus. A
copy of the Prospectus may be obtained from BISYS Fund Services Limited
Partnership, 3435 Stelzer Road, Columbus, Ohio 43219.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
THE TRUST AND ITS FUNDS B-2
INVESTMENT OBJECTIVES AND POLICIES B-3
DIVIDENDS AND TAXES B-14
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION B-16
VALUATION OF SECURITIES B-17
TRUSTEES AND OFFICERS B-19
MANAGEMENT OF THE FUNDS B-20
SECURITIES TRANSACTIONS B-26
ADMINISTRATOR B-30
DISTRIBUTOR B-31
DISTRIBUTION PLANS B-32
CAPITAL STOCK B-34
STANDARDIZED TOTAL RETURN AND YIELD QUOTATIONS B-34
ADDITIONAL INFORMATION B-40
FINANCIAL STATEMENTS B-42
APPENDIX A-1
<PAGE> 73
- --------------------------------------------------------------------------------
THE TRUST AND ITS FUNDS
- --------------------------------------------------------------------------------
The Riverfront Funds (the "Trust") is an open-end management investment
company, commonly known as a mutual fund, which currently issues six series of
shares of beneficial interest which are described in this Statement of
Additional Information (the "Funds"). Each Fund of the Trust is diversified.
The Trust was organized under Ohio law on October 6, 1996. On December
29, 1998, The Riverfront Funds, Inc., a Maryland corporation, changed its form
of organization by completing a reorganization with The Riverfront Funds, an
Ohio business trust, created for such purpose. References herein to the Trust
and its Funds are intended to include The Riverfront Funds, Inc. and its
corresponding funds prior to the reorganization.
The Provident Bank ("Provident") serves as investment adviser, either
directly or through a sub-adviser, to each Fund, and BISYS Fund Services Limited
Partnership (the "Distributor") serves as Administrator and Distributor.
Provident also serves as custodian and transfer agent for each of the Funds, and
provides certain fund accounting and record keeping services for the Funds.
DePrince, Race & Zollo, Inc. ("DRZ") serves as the sub-adviser to the Income
Equity Fund.
As of September 30, 1995, pursuant to an Agreement and Plan of
Reorganization and Liquidation with MIM Mutual Funds, Inc. ("MIM"): (a) the
Money Market Fund acquired all of the assets and liabilities of the MIM Money
Market Fund; (b) the Income Equity Fund acquired all of the assets and
liabilities of the MIM Bond Income Fund, the MIM Stock Income Fund and the AFA
Equity Income Fund; and (c) the Small Company Fund acquired all of the assets
and liabilities of the MIM Stock Growth Fund and the MIM Stock Appreciation Fund
(collectively, the "Reorganization"). In exchange for such assets and
liabilities, the respective Fund issued a number of its Investor A shares equal
in value to the net assets of the corresponding MIM Fund acquired in the
Reorganization. For accounting and performance purposes, the MIM Stock
Appreciation Fund is considered to be the successor of the Small Company Fund;
therefore, the performance and financial information of the Small Company Fund
included in this Statement of Additional Information prior to September 30,
1995, relates to the operations of the MIM Stock Appreciation Fund prior to the
Reorganization.
The essential information about the Trust and its Funds is contained in
the Prospectus. This Statement of Additional Information provides additional
information about the Trust and each of the Funds that may be of interest to
investors.
Much of the information contained in this Statement of Additional
Information expands upon subjects discussed in the Prospectus of the Funds.
Capitalized terms not defined herein are defined in the Prospectus. No
investment in shares of a Fund should be made without first reading such Fund's
Prospectus.
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INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
THE RIVERFRONT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
The Riverfront U.S. Government Securities Money Market Fund (the "Money
Market Fund") seeks current income from U.S. Government short-term securities
while preserving capital and maintaining liquidity.
The Money Market Fund is designed for investors who wish to keep
temporary cash balances in a fund invested in short-term securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.
THE RIVERFRONT U.S. GOVERNMENT INCOME FUND
The Riverfront U.S. Government Income Fund (the "Income Fund") seeks a
high level of current income, consistent with preservation of capital, by
investing primarily in securities issued or guaranteed by the U.S. Government,
its agencies and instrumentalities and in high quality fixed rate and adjustable
rate mortgage-backed securities and other asset-backed securities. The Income
Fund intends to invest in securities with dollar-weighted average durations of
between three and seven years. The dollar-weighted average life of the Income
Fund's securities is expected to be in the range of four to ten years.
The Income Fund is designed for investors seeking to provide for
near-term income needs by investing in a fund which seeks to provide higher
returns than those offered by certificates of deposits or U.S. Government money
market funds.
THE RIVERFRONT INCOME EQUITY FUND
The Riverfront Income Equity Fund (the "Income Equity Fund") seeks a
high level of investment income, with capital appreciation as a secondary
objective, through investment primarily in income-producing equity securities of
U.S. issuers. To provide investment advisory services to the Income Equity Fund,
Provident has entered into a sub-investment advisory agreement with DRZ.
The Income Equity Fund is designed for investors seeking to invest for
retirement, educational and other long-term needs.
THE RIVERFRONT LARGE COMPANY SELECT FUND
The Riverfront Large Company Select Fund (the "Large Company Fund")
seeks long-term growth of capital with current income as a secondary objective.
The Large Company Fund is designed for investors seeking long-term
growth of capital with some current income.
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THE RIVERFRONT SMALL COMPANY SELECT FUND
The Riverfront Small Company Select Fund (the "Small Company Fund")
seeks capital growth.
The Small Company Fund is designed for investors seeking growth of
capital.
THE RIVERFRONT BALANCED FUND
The Riverfront Balanced Fund (the "Balanced Fund") seeks long-term
growth of capital with some current income as a secondary objective.
The Balanced Fund is designed for investors seeking to invest in a fund
which generates long-term growth of capital with some current income.
ADDITIONAL INFORMATION ON PORTFOLIO INSTRUMENTS
The following policies supplement the investment objectives and
policies of each Fund as set forth in the Prospectus.
Bank Obligations. Each Fund may invest in bank obligations such as
bankers' acceptances, certificates of deposit, and demand and time deposits.
Bankers' acceptances are negotiable drafts or bills of exchange
typically drawn by an importer or exporter to pay for specific merchandise,
which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Bankers' acceptances invested in by such Funds will be those guaranteed by U.S.
commercial banks having, at the time of investment, capital, surplus, and
undivided profits in excess of $1,500,000,000 (as of the date of their most
recently published financial statements).
Certificates of deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return. Certificates of deposit
will be those of domestic and foreign branches of U.S. banks which are members
of the Federal Reserve System or the Federal Deposit Insurance Corporation, if
at the time of investment the depository institution has capital, surplus, and
undivided profits in excess of $1,500,000,000 (as of the date of its most
recently published financial statements).
The Income Fund, the Balanced Fund, the Income Equity Fund, the Large
Company Fund and the Small Company Fund may also each invest in Eurodollar
Certificates of Deposit, which are U.S. dollar denominated certificates of
deposit issued by offices of foreign and domestic banks located outside the
United States ("ECDs") and Yankee Certificates of Deposit, which are
certificates of deposit issued by a U.S. branch of a foreign bank denominated in
U.S. dollars and held in the United States.
ECDs may be general obligations of the parent bank in addition to the
issuing branch or may be limited by the terms of a specific obligation and by
government regulation. Payment of interest and principal upon these obligations
may also be affected by governmental action in the country of domicile of the
branch (generally referred to as sovereign risk). In addition, evidences of
ownership of such obligations may be held outside the U.S. and a Fund may be
subject to the risks associated with the holding of such property overseas.
Examples of governmental actions would be the imposition of
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currency controls, interest limitations, withholding taxes, seizure of assets or
the declaration of a moratorium. Various provisions of federal law governing
domestic branches do not apply to foreign branches of domestic or foreign banks.
Commercial Paper. Commercial paper consists of unsecured promissory
notes issued by corporations. Except as noted below with respect to variable
amount master demand notes, issues of commercial paper normally have maturities
of less than nine months and fixed rates of return.
The Income Fund, the Balanced Fund, the Income Equity Fund, the Large
Company Fund and the Small Company Fund may invest in commercial paper which is
rated by applicable nationally recognized statistical rating organizations
("NRSROs") in the highest rating category, or if unrated, is deemed by that
Fund's investment adviser to be of comparable quality to commercial paper so
rated.
Variable Amount Master Demand Notes. Variable amount master demand
notes, in which the Income Fund, the Balanced Fund, the Income Equity Fund, the
Large Company Fund and the Small Company Fund may invest, are unsecured demand
notes that permit the indebtedness thereunder to vary and provide for periodic
adjustments in the interest rate according to the terms of the instrument.
Because master demand notes are direct lending arrangements between a Fund and
the issuer, they are not normally traded. Although there is no secondary market
in the notes, a Fund may demand payment of principal and accrued interest at any
time within 30 days. While such notes are not typically rated by credit rating
agencies, variable amount master demand notes must be determined by Provident or
DRZ, as the case may be, to be of comparable quality to the commercial paper
which such Fund may purchase. The Fund's investment adviser or sub-adviser, as
the case may be, will consider the earning power, cash flow, and other liquidity
ratios of the issuers of such notes and will continuously monitor their
financial status and ability to meet payment on demand. In determining average
weighted portfolio maturity, a variable amount master demand note will be deemed
to have a maturity equal to the longer of the period of time remaining until the
next interest rate adjustment or the period of time remaining until the
principal amount can be recovered from the issuer through demand.
Foreign Investment. Investments in securities issued by foreign
branches of U.S. banks, foreign banks, or other foreign issuers, including ADRs,
may subject a Fund to investment risks that differ in some respects from those
related to investment in obligations of U.S. domestic issuers or in U.S.
securities markets. Such risks include future adverse political and economic
developments, possible seizure, nationalization, or expropriation of foreign
investments, less stringent disclosure requirements, the possible establishment
of exchange controls or taxation at the source, or the adoption of other foreign
governmental restrictions. The Income Equity Fund, the Balanced Fund, the Large
Company Fund and the Small Company Fund will acquire such securities only when
such Fund's investment adviser or sub-adviser, as the case may be, believes the
risks associated with such investments are minimal.
U.S. Government Obligations. Each Fund may invest in obligations issued
or guaranteed as to principal and interest by the U.S. Government or its
agencies or instrumentalities. Obligations of certain agencies and
instrumentalities of the U.S. Government are supported by the full faith and
credit of the U.S. Treasury; others are supported by the right of the issuer to
borrow from the Treasury; others are supported by the discretionary authority of
the U.S. Government to purchase the agency's obligations; and still others are
supported only by the credit of the instrumentality. No assurance can be given
that the U.S. Government would provide financial support to U.S.
Government-sponsored agencies or instrumentalities if it is not obligated to do
so by law.
Variable and Floating Rate Notes. Each Fund may acquire variable and
floating rate notes, subject to such Fund's investment objective, policies and
restrictions. A variable rate note is one whose
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terms provide for the adjustment of its interest rate on set dates and which,
upon such adjustment, can reasonably be expected to have a market value that
approximates its par value or amortized cost, as the case may be. A floating
rate note is one whose terms provide for the adjustment of its interest rate
whenever a specified interest rate changes and which, at any time, can
reasonably be expected to have a market value that approximates its par value or
amortized cost, as the case may be.
Such notes are frequently not rated by credit rating agencies; however,
unrated variable and floating rate notes purchased by such Funds will be
determined by Provident or DRZ, as the case may be, to be of comparable quality
at the time of purchase to rated instruments eligible for purchase under that
particular Fund's investment policies. In making such determinations, Provident
or DRZ, as the case may be, will consider the earning power, cash flow and other
liquidity ratios of the issuers of such notes (such issuers include financial,
merchandising, bank holding and other companies) and will continuously monitor
their financial condition. Although there may be no active secondary market with
respect to a particular variable or floating rate note purchased by a Fund, the
Fund may attempt to resell the note at any time to a third party. The absence of
an active secondary market, however, could make it difficult for a Fund to
dispose of a variable or floating rate note in the event the issuer of the note
defaulted on its payment obligations and the Fund could, as a result or for
other reasons, suffer a loss to the extent of the default.
When-Issued Securities. As discussed in the Prospectus, each of the
Funds, other than the Small Company Fund, may purchase securities on a
"when-issued" basis (i.e., for delivery beyond the normal settlement date at a
stated price and yield). When such a Fund agrees to purchase securities on a
"when-issued" basis, the Fund's custodian will set aside cash or liquid
securities equal to the amount of the commitment in a separate account.
Normally, the Fund's custodian will set aside portfolio securities to satisfy
the purchase commitment, and in such a case, the Fund may be required
subsequently to place additional assets in the separate account in order to
assure that the value of the account remains equal to the amount of the Fund's
commitment. It may be expected that the Fund's net assets will fluctuate to a
greater degree when it sets aside portfolio securities to cover such purchase
commitments than when it sets aside cash. In addition, because a Fund will set
aside cash or high quality liquid debt securities to satisfy its purchase
commitments in the manner described above, such Fund's liquidity and the ability
of Provident or DRZ, as the case may be, to manage it might be affected in the
event its commitments to purchase "when-issued" securities ever exceeded 25% of
its total assets. Under normal market conditions, however, a Fund's commitment
to purchase "when-issued" or "delayed-delivery" securities will not exceed 25%
of its total assets.
When a Fund engages in "when-issued" transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may cause the
Fund to incur a loss or miss an opportunity to obtain a price considered to be
advantageous. Such Funds will engage in "when-issued" delivery transactions only
for the purpose of acquiring portfolio securities consistent with the Funds'
investment objectives and policies and not for investment leverage.
Repurchase Agreements. Securities held by each of the Funds may be
subject to repurchase agreements. Under the terms of a repurchase agreement, a
Fund would acquire securities from banks and registered broker-dealers which the
investment adviser deems creditworthy under guidelines approved by the Trust's
Board of Trustees, subject to the seller's agreement to repurchase such
securities at a mutually agreed-upon date and price. The repurchase price would
generally equal the price paid by the Fund plus interest negotiated on the basis
of current short-term rates, which may be more or less than the rate on the
underlying portfolio securities. The seller under a repurchase agreement will be
required to maintain continually the value of collateral held pursuant to the
agreement at not less than the repurchase price (including accrued interest).
This requirement will be continually monitored by Provident or DRZ, as the
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case may be. If the seller were to default on its repurchase obligation or
become insolvent, the Fund holding such obligation would suffer a loss to the
extent that the proceeds from a sale of the underlying portfolio securities were
less than the repurchase price under the agreement, or to the extent that the
disposition of such securities by the Fund were delayed pending court action.
Additionally, there is no controlling legal precedent confirming that a Fund
would be entitled, as against a claim by such seller or its receiver or trustee
in bankruptcy, to retain the underlying securities, although the Board of
Trustees of the Trust believes that, under the regular procedures normally in
effect for custody of a Fund's securities subject to repurchase agreements and
under federal laws, a court of competent jurisdiction would rule in favor of the
Trust if presented with the question. Securities subject to repurchase
agreements will be held by that Fund's custodian or another qualified custodian
or in the Federal Reserve/Treasury book-entry system. Repurchase agreements are
considered to be loans by a Fund under the 1940 Act.
Reverse Repurchase Agreements. As discussed in the Prospectus, each of
the Funds, other than the Money Market Fund, may borrow funds for temporary
purposes by entering into reverse repurchase agreements in accordance with that
Fund's investment restrictions. Pursuant to such agreements, a Fund would sell
portfolio securities to financial institutions such as banks and broker-dealers
and agree to repurchase the securities at a mutually agreed-upon date and price.
Each Fund intends to enter into reverse repurchase agreements only to avoid
otherwise selling securities during unfavorable market conditions to meet
redemptions. At the time a Fund enters into a reverse repurchase agreement, it
will place in a segregated custodial account assets such as U.S. Government
securities or other liquid securities consistent with the Fund's investment
restrictions having a value equal to the repurchase price (including accrued
interest), and will subsequently continually monitor the account to ensure that
such equivalent value is maintained at all times. Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the price at which a Fund is obligated to repurchase the
securities. Reverse repurchase agreements are considered to be borrowings by a
Fund under the 1940 Act.
Except as otherwise disclosed to the shareholders of the particular
Fund, the Trust will not acquire portfolio securities issued by, make savings
deposits in, or enter into repurchase agreements with, Provident, DRZ, the
Distributor, or their affiliates, and will not give preference to Provident's
correspondents with respect to such transactions, securities, savings deposits
and repurchase agreements. In addition, while the Small Company Fund's
investment restrictions permit it to engage in reverse repurchase agreements
without prior shareholder approval, the Small Company Fund does not currently
intend to enter into such agreements.
Hedging Transactions. Hedging transactions, including the use of
options and futures, in which a Fund may be authorized to engage as described in
the Prospectus or below, have risks associated with them, including possible
default by the other party to the transaction, illiquidity and, to the extent
the investment adviser's view as to certain market movements is incorrect, the
risk that the use of such hedging transactions could result in losses greater
than if they had not been used.
Use of put and call options may result in losses to a Fund, force the
sale or purchase of portfolio securities at inopportune times or for prices
higher than (in the case of put options) or lower than (in the case of call
options) current market values, limit the amount of appreciation a Fund can
realize on its investments or cause the Fund to hold a security it might
otherwise sell. The use of options and futures transactions entails certain
other risks. In particular, the variable degree of correlation between price
movements of futures contracts and price movements in the related portfolio
position of the Fund create the possibility that losses on the hedging
instrument may be greater than gains in the value of such Fund's position. In
addition, futures and options markets may not be liquid at all circumstances. As
a result, in certain markets, a Fund might not be able to close out a
transaction without incurring substantial losses, if
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at all. Although the use of futures and options transactions for hedging should
tend to minimize the risk of loss due to a decline in the value of the hedged
position, at the same time they tend to limit any potential gain which might
result from an increase in the value of such position. Finally, the daily
variation margin requirements for futures contracts would create a greater
ongoing potential financial risk than would purchases of options, where the
exposure is limited to the cost of the initial premium. Losses resulting from
the use of hedging transactions would reduce net asset value, and possible
income, and such losses can be greater than if the hedging transactions had not
been utilized.
Writing Covered Call and Put Options. Each of the Income, Balanced,
Income Equity, Large Company and Small Company Funds may write covered call and
covered put options on securities or on futures contracts regarding securities,
in which the particular Fund may invest, in an effort to realize additional
income. A put option gives the purchaser the right to sell the underlying
security at the stated exercise price at any time prior to the expiration date
of the option, regardless of the market price of the security. A call option
gives the purchaser of the option the right to buy, and a writer the obligation
to sell, the underlying security at the stated exercise price at any time prior
to the expiration of the option, regardless of the market price of the security.
The premium paid to the writer is consideration for undertaking the obligations
under the option contract. Put and call options purchased by a Fund will be
valued at the last sale price, or in the absence of such a price, at the mean
between the bid and asked price. Such options will be listed on national
securities or futures exchanges or will be available in the over-the-counter
market through pricing reports of broker-dealers. A Fund may write covered call
options as a means of seeking to enhance its income through the receipt of
premiums in instances in which the adviser determines that the underlying
securities or futures contracts are not likely to increase in value above the
exercise price. A Fund also may seek to earn additional income through the
receipt of premiums by writing put options. Covered call options give the
purchaser the right, for a stated period, to buy the underlying securities from
a Fund at a stated price, while put options give the purchaser the right, for a
stated period, to sell the underlying securities to a Fund at a stated price. By
writing a call option, a Fund limits its opportunity to profit from any increase
in the market value of the underlying security above the exercise price of the
option; by writing a put option, a Fund assumes the risk that it may be required
to purchase the underlying security at a price in excess of its then current
market value.
When a Fund writes an option, an amount equal to the net premium (the
premium less the commission) received by the Fund is included in the liability
section of the Fund's statement of assets and liabilities as a deferred credit.
The amount of the deferred credit will be subsequently marked-to-market to
reflect the current value of the option written. The current value of the traded
option is the last sale price or, in the absence of a sale, the mean between the
closing bid and asked prices. If an option expires on the stipulated expiration
date or if the Fund enters into a closing purchase transaction, it will realize
a gain (or a loss if the cost of a closing purchase transaction exceeds the net
premium received when the option is sold) and the deferred credit related to
such option will be eliminated. If an option is exercised, the Fund may deliver
the underlying security in the open market. In either event, the proceeds of the
sale will be increased by the net premium originally received and the Fund will
realize a gain or loss.
Such Funds may also purchase or sell index options. Index options (or
options on securities indices) are similar in many respects to options on
securities except that an index option gives the holder the right to receive,
upon exercise, cash instead of securities, if the closing level of the
securities index upon which the option is based is greater than, in the case of
a call, or less than, in the case of a put, the exercise price of the option.
Options and Futures Strategies. In addition, each of the Income,
Balanced, Income Equity, Large Company and Small Company Funds may purchase put
and call options written by third parties covering those types of financial
instruments in which such Fund may invest to attempt to provide protection
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against adverse price effects from anticipated changes in prevailing prices for
such instruments. The purchase of a put option is intended to protect the value
of a Fund's holdings in a falling market while the purchase of a call option is
intended to protect the value of a Fund's positions in a rising market.
In purchasing a call option, a Fund would be in a position to realize a
gain if, during the option period, the price of the underlying security, index
or futures contract increased by an amount in excess of the premium paid for the
call option. It would realize a loss if the price of the underlying security,
index or futures contract declined or remained the same or did not increase
during the period by more than the amount of the premium. By purchasing a put
option, a Fund would be in a position to realize a gain if, during the option
period, the price of the security, index or futures contract declined by an
amount in excess of the premium paid. It would realize a loss if the price of
the security, index or futures contract increased or remained the same or did
not decrease during that period by more than the amount of the premium. If a put
or call option purchased by a Fund were permitted to expire without being sold
or exercised, its premium would represent a realized loss to a Fund.
General Characteristics of Options. Put options and call options
typically have similar structural characteristics and operational mechanics
regardless of the underlying instrument on which they are purchased or sold.
Thus, the following general discussion relates to each of the particular types
of options discussed below and in the Prospectus. In addition, many hedging
transactions involving options require segregation of a Fund's assets in special
accounts, as described further below. The Funds that are authorized to engage in
options transactions will only deal with exchange traded options, as opposed to
over-the-counter traded options. Exchange traded options, unlike
over-the-counter traded options, have standardized terms and performance
mechanics. Exchange-traded options generally are guaranteed by the clearing
agency which is the issuer or counterparty to such options. This guarantee
usually is supported by a daily payment system (i.e., variation margin
requirements) operated by the clearing agency in order to reduce overall credit
risk. As a result, unless the clearing agency defaults, there is relatively
little counterparty credit risk associated with options purchased on an
exchange.
With certain exceptions, exchange-listed options generally settle by
physical delivery of the underlying security or currency, although in the future
cash settlement may become available. Index options are cash settled for the net
amount, if any, by which the option is "in-the-money" (i.e., where the value of
the underlying instrument exceeds, in the case of a call option, or is less
than, in the case of a put option, the exercise price of the option) at the time
the option is exercised. Frequently, rather than taking or making delivery of
the underlying instrument through the process of exercising the option, listed
options are closed by entering into offsetting purchase or sale transactions
that do not result in ownership of the new option. A Fund's ability to close out
its position as a purchaser or seller of a put or call option is dependent in
part, upon the liquidity of the option market. In addition, the hours of trading
for listed options may not coincide with the hours during which the underlying
financial instruments are traded. To the extent that the option markets close
before the markets for the underlying financial instruments, significant price
and rate movements can take place in the underlying markets that cannot be
reflected in the option markets.
All options written by a Fund must be "covered" (e.g., the Fund must
own the securities or futures contract subject to a call option or must meet the
asset segregation requirements) as long as the option is outstanding. Even
though a Fund will receive the option premium to help protect it against loss, a
call option written by a Fund exposes the Fund during the term of the option to
possible loss of opportunity to realize appreciation in the market price of the
underlying security or instrument and may require the Fund to hold a security or
instrument which it might otherwise have sold. With respect to put options
written by a Fund, such Fund will place liquid securities in a segregated
account to cover its
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obligations under such put option and will monitor the value of the assets in
such account and its obligations under the put option daily.
Futures Contracts. Each of the Income, Balanced, Income Equity, Large
Company and Small Company Funds may purchase or sell contracts for the future
delivery of the specific financial instruments in which the particular Fund may
invest, and indices based upon the types of securities in which the particular
Fund may invest (collectively, "Futures Contracts"). A Fund may use this
investment technique to hedge against anticipated future changes in market
interest rates, which otherwise might adversely affect either the value of the
Fund's securities or the prices of securities which the Fund intends to purchase
at a later date. Alternatively, the Funds may purchase or sell futures contracts
to hedge against changes in market interest rates which may result in the
premature call at par value of certain securities which the Fund has purchased
at a premium.
The Income Equity Fund and the Large Company Fund may purchase or sell
futures contracts based upon an equity index, commonly referred to as "equity
index futures contracts." This type of futures contract is an agreement by the
Fund to buy or sell by a specified date and at a specified price the market
value of equity securities included in a particular equity index. No payment is
made for the index or securities when the Fund buys an equity index futures
contract and neither the index nor any securities are delivered when the Fund
sells an equity index futures contract. Instead, the Fund makes a deposit of
"initial margin" equal to a percentage of the value of the futures contract.
Payment or delivery is made upon the closing out of the futures position or the
expiration of the equity index futures contract. Equity index futures contracts
will be used only as a hedge against anticipated changes in the level of stock
prices.
The Income Fund may purchase or sell futures contracts based upon fixed
income securities, commonly referred to as "interest rate futures contracts." An
interest rate futures contract is an agreement by the Fund to buy or sell, by a
specified date and at a specified price, the market value of fixed income
securities included in a particular fixed income index. As with the futures
contracts, no payment is made for securities when the Fund buys an interest rate
futures contract and no securities are delivered when the Fund sells an interest
rate futures contract; instead, the Fund makes an initial margin deposit and
payment or delivery is made upon the closing out of the futures position or the
expiration of the interest rate futures contract. Interest rate futures
contracts will be used only as a hedge against anticipated changes in the level
of interest rates.
In general, the value of futures contracts sold by a Fund to offset
declines in its portfolio securities will not exceed the total market value of
the portfolio securities to be hedged, and futures contracts purchased by the
Fund will be covered by a segregated account consisting of cash or liquid
securities in an amount equal to the total market value of such futures
contracts, less the initial margin deposited therefor.
When selling futures contracts short, when buying futures contracts and
when writing put options, a Fund will be required to segregate in a separate
account cash and/or liquid securities in an amount sufficient to meets its
obligations. When writing call options, a Fund will be required to own the
financial instrument or futures contract underlying the option or segregate cash
and/or liquid securities in an amount sufficient to meet its obligations under
written calls.
This investment technique is designed primarily to hedge against
anticipated future changes in market conditions or interest rates which
otherwise might adversely affect the value of securities which such a Fund holds
or intends to purchase. For example, when interest rates are expected to rise or
market values of portfolio securities are expected to fall, a Fund can seek
through the sale of futures contracts to
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offset a decline in the value of its portfolio securities. When interest rates
are expected to fall or market values are expected to rise, a Fund, through the
purchase of such contracts, can attempt to secure better rates or prices for the
Fund than might later be available in the market when it effects anticipated
purchases.
The acquisition of put and call options on futures contracts will,
respectively, give a Fund the right (but not the obligation), for a specified
price, to sell or to purchase the underlying futures contract, upon exercise of
the option, at any time during the option period.
Futures transactions involve brokerage costs and require a Fund to
segregate liquid assets, such as cash, U.S. Government securities or other
liquid securities, to cover its performance under such contracts. A Fund may
lose the expected benefit of futures transactions if interest rates or
securities prices move in an unanticipated manner. Such unanticipated changes
may also result in poorer overall performance than if the Fund had not entered
into any futures transactions. In addition, the value of a Fund's futures
positions may not prove to be perfectly or even highly correlated with the value
of its portfolio securities, limiting the Fund's ability to hedge effectively
against interest rate and/or market risk and giving rise to additional risks.
There is no assurance of liquidity in the secondary market for purposes of
closing out futures positions.
Regulatory Restrictions. To the extent required to comply with
Securities and Exchange Commission Release No. IC-10666, when purchasing a
futures contract or writing a put option, a Fund will maintain in a segregated
account cash or liquid securities equal to the value of such contracts.
To the extent required to comply with Commodity Futures Trading
Commission Regulation 4.5 and thereby avoid being classified as a "commodity
pool operator," a Fund will not enter into a futures contract or purchase an
option thereon if immediately thereafter the initial margin deposits for futures
contracts held by such Fund plus premiums paid by it for open options on futures
would exceed 5% of the liquidation value of such Fund's total assets after
taking into account unrealized profits and unrealized losses on any contracts
entered into. Such Fund will not engage in transactions in futures contracts or
options thereon for speculation, but only to attempt to hedge against changes in
market conditions affecting the values of securities which such Fund holds or
intends to purchase.
FUNDAMENTAL NATURE OF INVESTMENT OBJECTIVES
The investment objective of each of the Funds is fundamental and may
not be changed without approval of the holders of a majority of such Fund's
outstanding voting shares (which means the lesser of (1) 67% of the votes of
shareholders of that Fund at a meeting at which more than 50% of the votes
attributable to shareholders of record of such Fund are represented in person or
by proxy or (2) the holders of more than 50% of the outstanding votes of
shareholders of that Fund).
In addition to the investment restrictions set forth in the Prospectus,
the Money Market Fund may not:
1. Invest more than 5% of its total assets in securities of any company
having a record, together with its predecessors, of less than three years of
continuous operation;
2. Make short sales of securities or maintain a short position, unless
at all times when a short position is open it owns an equal amount of such
securities or of securities which, without payment of any further consideration,
are convertible into or exchangeable for securities of the same issue as, and
equal in amount to, the securities sold short; and
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3. Underwrite securities of other issuers, except that the Money Market
Fund may purchase securities from the issuer or others and dispose of such
securities in a manner consistent with its investment objective.
Each of the Income Fund and the Income Equity Fund may not:
1. Invest in securities of an issuer (other than an agency or
instrumentality of the U.S. Government) which, together with any predecessor of
the issuer, has been in operation for less than three years if, immediately
after and as a result of such investment, more than 5% of the value of the
Fund's total assets would then be invested in the securities of such issuer; and
2. Invest more than 10% of the value of the Fund's net assets in fixed
time deposits which are non-negotiable and/or which impose a penalty for early
withdrawal and which have maturities of more than 7 days.
Finally, each of the Balanced Fund, the Large Company Fund and the
Small Company Fund may not:
1. Purchase securities on margin, except for use of short-term credit
necessary for clearance of purchases of portfolio securities and except as may
be necessary to make margin payments in connection with derivative securities
transactions;
2. Underwrite the securities issued by other persons, except to the
extent that a Fund may be deemed to be an underwriter under certain securities
laws in the disposition of "restricted securities";
3. Purchase or sell commodities or commodity contracts, except to the
extent disclosed in the current Prospectus of the Fund; and
4. Purchase or sell real estate (although investments in marketable
securities of companies engaged in such activities and securities secured by
real estate or interests therein are not prohibited by this restriction).
In addition to the investment restrictions contained in the Prospectus,
the Balanced Fund, the Large Company Fund and the Small Company Fund have
adopted the following additional restrictions, which may be changed by the Board
of Trustees without the vote of a Fund's shareholders. Each such Fund may not:
1. Engage in any short sales, except to the extent disclosed in the
current Prospectus of the Fund;
2. Purchase participation or direct interests in oil, gas or other
mineral exploration or development programs (although investments by such Funds
in marketable securities of companies engaged in such activities are not
prohibited by this restriction);
3. Purchase securities of other investment companies, except (a) in
connection with a merger, consolidation, acquisition or reorganization, and (b)
to the extent permitted by the 1940 Act or pursuant to any exemptions therefrom;
and
4. Mortgage or hypothecate the Fund's assets in excess of one third of
the Fund's total assets.
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If a percentage limit is satisfied at the time of investment or
borrowing, a later increase or decrease resulting from a change in asset value
is not a violation of the limit.
PORTFOLIO TURNOVER
The portfolio turnover rate for each of the Funds is calculated by
dividing the lesser of a Fund's purchases or sales of portfolio securities for
the year by the monthly average value of the portfolio securities. The
calculation excludes all securities whose remaining maturities at the time of
acquisition were one year or less.
Because the Money Market Fund invests entirely in securities with
maturities of less than one year and because the Commission requires such
securities to be excluded from the calculation of portfolio turnover rate, the
portfolio turnover rate with respect to the Money Market Fund is expected to be
zero percent for regulatory purposes.
The portfolio turnover rates for each of the Funds (other than the
Money Market Fund) for the two fiscal years ended December 31, 1997 and 1996 are
as follows:
Year Ended Year Ended
Fund 12/31/97 12/31/96
---- ---------- ----------
Income Fund 71% 53%
Income Equity Fund 157% 166%
Balanced Fund 102% 98%
Small Company Fund 67%(1) 162%
Large Company Fund 39%(2) N/A
- --------------------
(1) The portfolio turnover rate for the Small Company Fund decreased
materially for the fiscal year ended December 31, 1997 as a result of a
change in strategy of the management of such Fund.
(2) The Large Company Fund commenced operations January 2, 1997.
The portfolio turnover rate for each Fund may vary greatly from year to
year, as well as within a particular year, and may also be affected by cash
requirements for redemptions of shares. High portfolio turnover rates will
generally result in higher transaction costs, including brokerage commissions to
a Fund, and may result in additional tax consequences to such Fund's
shareholders. Portfolio turnover will not be a limiting factor in making
investment decisions.
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- --------------------------------------------------------------------------------
DIVIDENDS AND TAXES
- --------------------------------------------------------------------------------
Each Fund intends to distribute to its shareholders dividends from net
investment income monthly (semi-annually with respect to the Small Company Fund)
and all or substantially all of any net realized long-term capital gains
annually in shares of the Fund or, at the option of the shareholder, in cash.
Shareholders who have not opted prior to the record date for any distribution to
receive cash will have the number of such shares determined on the basis of the
Fund's net asset value per share computed at the end of the next business day
following the record date. Net asset value is used in computing the number of
shares in both gains and income distribution reinvestments. Account statements
and/or checks as appropriate will be mailed to shareholders within seven days
after a Fund pays the distribution. Unless a Fund receives instructions to the
contrary from a shareholder before the record date, it will assume that the
shareholder wishes to receive that distribution and all future gains and income
distributions in shares. Instructions continue in effect until changed in
writing.
ADDITIONAL TAX INFORMATION
Each of the Funds of the Trust is treated as a separate entity for
federal income tax purposes and intends to qualify as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code") for so
long as such qualification is in the best interest of that Fund's shareholders.
In order to qualify as a regulated investment company, each Fund must, among
other things: derive at least 90% of its gross income from dividends, interest,
payments with respect to securities loans, and gains from the sale or other
disposition of stock or securities or foreign currencies, or other income
derived with respect to its business of investing in such stock, securities, or
currencies; and diversify its investments within certain prescribed limits. In
addition, to utilize the tax provisions specially applicable to regulated
investment companies, each Fund must distribute to its shareholders at least 90%
of its investment company taxable income for the year and 90% of its interest
income which is excludable from income under Section 103(a) of the Code. In
general, a Fund's investment company taxable income will be its taxable income
subject to certain adjustments and excluding the excess of any net long-term
capital gain for the taxable year over the net short-term capital loss, if any,
for such year.
A non-deductible 4% excise tax is imposed on regulated investment
companies that do not distribute in each calendar year (regardless of whether
they otherwise have a non-calendar taxable year) an amount equal to 98% of their
ordinary income for the calendar year plus 98% of their capital gain net income
for the one-year period ending on October 31 of such calendar year. The balance
of such income must be distributed during the next calendar year. Dividends
declared in October, November and December in any year and distributed in
January of the following year will be treated as having been paid in the prior
year. If distributions during a calendar year were less than the required
amount, a Fund would be subject to a non-deductible excise tax equal to 4% of
the deficiency.
Although each such Fund expects to qualify as a "regulated investment
company" and to be relieved of all or substantially all federal income taxes,
depending upon the extent of its activities in states and localities in which
its offices are maintained, in which its agents or independent contractors are
located, or in which it is otherwise deemed to be conducting business, a Fund
may be subject to the tax laws of such states or localities. In addition, if for
any taxable year a Fund does not qualify for the special tax treatment afforded
regulated investment companies, all of its taxable income will be subject to
federal tax at regular corporate rates (without any deduction for distributions
to its shareholders). In such event,
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dividend distributions would be taxable to shareholders to the extent of
earnings and profits and would be eligible for the dividends received deduction
for corporations.
It is expected that each Fund will distribute annually to shareholders
all or substantially all of the Fund's net ordinary income and net realized
capital gains and that such distributed net ordinary income and distributed net
realized capital gains will be taxable income to shareholders for federal income
tax purposes, even if paid in additional shares of the Fund and not in cash.
Distribution by a Fund of the excess of net long-term capital gain over
net short-term capital loss is taxable to shareholders as long-term capital gain
in the year in which it is received, regardless of how long the shareholder has
held the shares. Such distributions are not eligible for the dividends-received
deduction.
Federal taxable income of individuals is subject to graduated tax rates
of 15%, 28%, 31%, 36% and 39.6%. Further, the marginal tax rate may be in excess
of 39.6%, because adjustments reduce or eliminate the benefit of the personal
exemption and itemized deductions for individuals with gross income in excess of
certain threshold amounts.
Long-term capital gains of individuals are subject to a maximum tax
rate of 20% (10% for individuals in the 15% ordinary income tax bracket).
Capital losses may be used to offset capital gains. In addition, individuals may
deduct up to $3,000 of net capital loss each year to offset ordinary income.
Excess net capital loss may be carried forward to future years. The holding
period for long-term capital gains is more than one year.
Federal taxable income of corporations in excess of $75,000 up to $10
million is subject to a 34% tax rate; however, because the benefit of lower tax
rates on a corporation's taxable income of less than $75,000 is phased out for
corporations with income in excess of $100,000 but lower than $335,000, a
maximum marginal tax rate of 39% may result. Federal taxable income of
corporations in excess of $10 million is subject to a tax rate of 35%. Further,
a corporation's federal taxable income in excess of $15 million is subject to an
additional tax equal to 3% of taxable income over $15 million, but not more than
$100,000.
Capital gains of corporations are subject to tax at the same rates
applicable to ordinary income. Capital losses may be used only to offset capital
gains and excess net capital loss may be carried back three years and forward
five years.
Certain corporations are entitled to a 70% dividends received deduction
for distributions from certain domestic corporations. Each Fund will designate
the portion of any distributions which qualify for the 70% dividends received
deduction. The amount so designated may not exceed the amount received by the
Fund for its taxable year that qualifies for the dividends received deduction.
Because all of the Money Market Fund's and Income Fund's net investment income
is expected to be derived from earned interest, it is anticipated that no
distributions from those Funds will qualify for the 70% dividends received
deduction.
Foreign taxes may be imposed on a Fund by foreign countries with
respect to its income from foreign securities, if any. Since less than 50% of
the value of any Fund's total assets at the end of its fiscal year is expected
to be invested in stock or securities of foreign corporations, a Fund will not
be entitled under the Code to pass through to its shareholders their pro rata
share of the foreign taxes paid by the Fund, if any. These taxes will be taken
as a deduction by such Fund.
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Each Fund may be required by federal law to withhold and remit to the
U.S. Treasury 31% of taxable dividends, if any, and capital gain distributions
to any shareholder, and the proceeds of redemption or the values of any
exchanges of shares of the Fund, if such shareholder (1) fails to furnish the
Fund with a correct taxpayer identification number, (2) under-reports dividend
or interest income, or (3) fails to certify to the Fund that he or she is not
subject to such withholding. An individual's taxpayer identification number is
his or her Social Security number.
Information set forth in the Prospectus and this Statement of
Additional Information which relates to federal taxation is only a summary of
some of the important federal tax considerations generally affecting purchasers
of shares of a Fund. No attempt has been made to present a detailed explanation
of the federal income tax treatment of a Fund or its shareholders and this
discussion is not intended as a substitute for careful tax planning.
Accordingly, potential purchasers of shares of a Fund are urged to consult their
tax advisers with specific reference to their own tax situation. In addition,
the tax discussion in the Prospectus and this Statement of Additional
Information is based on tax laws and regulations which are in effect on the date
of the Prospectus and this Statement of Additional Information; such laws and
regulations may be changed by legislative or administrative action. As of the
date hereof, several proposals have been introduced by the 105th Congress which,
if enacted, could affect much of the information contained in this section.
However, it is not possible at this time to assess which, if any, of such
proposals will be acted upon and the effect thereof, if any, on this
information.
Information as to the federal income tax status of all distributions
will be mailed annually to each shareholder.
FISCAL YEAR
Each Fund's fiscal year ends December 31.
- --------------------------------------------------------------------------------
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
- --------------------------------------------------------------------------------
Shares of each of the Trust's Funds are sold on a continuous basis by
the Distributor, and the Distributor has agreed to use appropriate efforts to
solicit all purchase orders. In addition to purchasing shares directly from the
Distributor, shares may be purchased through procedures established by the
Distributor in connection with the requirements of accounts at Provident or
Provident's affiliated entities (collectively, "Entities"). Customers purchasing
shares of the Funds may include officers, directors, or employees of Provident
or the Entities.
The Trust may suspend the right of redemption or postpone the date of
payment for shares during any period when (a) trading on the New York Stock
Exchange (the "Exchange") is restricted by applicable rules and regulations of
the Commission, (b) the Exchange is closed for other than customary weekend and
holiday closings, (c) the Commission has by order permitted such suspension, or
(d) an emergency exists as a result of which (i) disposal by the Trust of
securities owned by it is not reasonably practical, or (ii) it is not reasonably
practical for the Trust to determine the fair value of its net assets.
B-16
<PAGE> 88
- --------------------------------------------------------------------------------
VALUATION OF SECURITIES
- --------------------------------------------------------------------------------
THE RIVERFRONT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
The Trustees have determined that the amortized cost method for valuing
the Money Market Fund's securities is the best method currently available. The
Trustees review this method of valuation to ensure that such Fund's securities
are valued at their fair value, as determined by the Trustees in good faith. The
Trustees are obligated, as a particular responsibility within the overall duty
of care owed to shareholders, to establish procedures reasonably designed,
taking into account current market conditions and the Money Market Fund's
investment objective, to stabilize the net asset value per share as computed for
the purposes of distribution and redemption at $1.00 per share.
The Trustees' procedures include periodically monitoring, as
appropriate and at such intervals as are reasonable in light of current market
conditions, the relationship between the amortized cost value per share and a
net asset value per share based upon available indications of market value. The
Trustees will consider what steps should be taken, if any, in the event of a
difference of more than one-half of one percent between the two. The Trustees
will take such steps as they consider appropriate including (1) the sale of the
Money Market Fund's instruments prior to maturity to realize capital gains or
losses or to shorten the average portfolio maturity; (2) withholding dividends
or payment of distributions from capital or capital gains; (3) redemptions of
shares in kind; or (4) establishing a net asset value per share by using
available market quotations or equivalents in order to minimize any material
dilution or other unfair results which might arise from differences between the
two.
The Money Market Fund limits its investments to instruments which the
Trustees have determined present minimal credit risk and which are "Eligible
Securities" as defined by Rule 2a-7 of the 1940 Act. The Money Market Fund is
also required to maintain a dollar weighted average portfolio maturity (not more
than 90 days) appropriate to its objective of maintaining a stable net asset
value of $1.00 per share, and this precludes the purchase of any security with a
remaining maturity of more than 397 days. Should the disposition of a security
result in a dollar weighted average portfolio maturity of more than 90 days, the
Money Market Fund will invest its available cash in such a manner as to reduce
such maturity to 90 days or less as soon as practicable.
It is the normal practice of the Money Market Fund to hold securities
to maturity and realize par therefor, unless a sale or other disposition is
mandated by redemption requirements or other extraordinary circumstances. Under
the amortized cost method of valuation traditionally employed by institutions
for valuation of money market instruments, neither the amount of daily income
nor the net asset value is affected by any unrealized appreciation or
depreciation of the Money Market Fund. In periods of declining interest rates,
the indicated daily yield on shares of the Money Market Fund, computed by
dividing its annualized daily income by the net asset value computed as above,
may tend to be lower than similar computations made by utilizing a method of
valuation based upon market prices and estimates. In periods of rising interest
rates, the daily yield of shares at the value computed as described above may
tend to be higher than a similar computation made by utilizing a method of
calculation based upon market prices and estimates.
B-17
<PAGE> 89
Since the net income of the Money Market Fund is declared as a dividend
each time net income is determined, the net asset value per share remains at
$1.00 per share immediately after each dividend declaration. The Money Market
Fund expects to have net income at the time of each dividend determination made
at the close of the Exchange. If for any reason there is a net loss which would
result in the Money Market Fund's not being able to price its shares at $1.00
per share, the Money Market Fund will first offset such amount pro rata against
dividends accrued during the month in each shareholder account. To the extent
that such a net loss would exceed such accrued dividends, the Money Market Fund
will reduce the number of its outstanding shares by having each shareholder
contribute to the Money Market Fund's capital his pro rata portion of the total
number of shares required to be cancelled in order to maintain a net asset value
of $1.00. EACH SHAREHOLDER WILL BE DEEMED TO HAVE AGREED TO SUCH A CONTRIBUTION
IN THESE CIRCUMSTANCES BY HIS INVESTMENT IN THE MONEY MARKET FUND.
THE RIVERFRONT U.S. GOVERNMENT INCOME FUND, THE RIVERFRONT INCOME EQUITY FUND,
THE RIVERFRONT BALANCED FUND, THE RIVERFRONT LARGE COMPANY FUND AND THE
RIVERFRONT SMALL COMPANY SELECT FUND
Current values for such Funds' securities are determined as follows:
(1) Securities that are traded on a securities exchange or the
over-the-counter National Market System (NMS) are valued on the basis of the
closing sales price on the exchange where primarily traded or NMS prior to the
time of the valuation, provided that a sale has occurred and that this price
reflects current market value according to procedures established by the Board
of Trustees;
(2) Securities traded in the over-the-counter market, other than on
NMS, for which market quotations are readily available, or in the event no sale
has occurred under (1) above, are valued at the mean of the bid and asked prices
at the time of valuation;
(3) Short-term instruments which are purchased with maturities of sixty
days or less are valued at amortized cost (original purchase cost as adjusted
for amortization of premium or accretion of discount) which, when combined with
accrued interest, approximates market; short-term instruments maturing in more
than sixty days when purchased which are held on the sixtieth day prior to
maturity are valued at amortized cost (market value on the sixtieth day adjusted
for amortization of premium or accretion of discount) which, when combined with
accrued interest, approximates market; and which in either case reflects fair
value as determined by the Board of Trustees;
(4) Short-term money market instruments having maturities of more than
sixty days for which market quotations are readily available are valued at
current market value; where market quotations are not available, such
instruments are valued at fair value as determined by the Board of Trustees; and
(5) The following are valued at prices deemed in good faith to be fair
under procedures established by the Board of Trustees: (a) securities, including
restricted securities, for which complete quotations are not readily available,
(b) listed securities or those on NMS if, in the Trust's opinion, the last sales
price does not reflect a current market value or if no sale occurred, and (c)
other assets.
B-18
<PAGE> 90
- --------------------------------------------------------------------------------
TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
The Trustees and officers of the Trust are:
J. VIRGIL EARLY, Age 60, Trustee; Principal in J. Virgil Early &
Associates (business consulting); Vice President of Synovus Trust Company since
September 1997; former Chief Financial Officer of Integrated Motor Tech
(manufacturing) from February 1996 to November 1996; former Executive Vice
President of Huntington Bankshares, Inc. Mr. Early's business address is
J. Virgil Early & Associates, 11 Bliss Lane, Jekyll Island, Georgia 31527.
*WALTER B. GRIMM, Age 52, Trustee and President; employee of BISYS Fund
Services Limited Partnership since June, 1992.
WILLIAM M. HIGGINS, Age 54, Trustee; Senior Vice President and Director
of Sena Weller Rohs Williams Inc. (investment advisory services); Mr. Higgins'
business address is Sena Weller Rohs Williams, Inc., 300 Main Street, 3rd Fl.,
Cincinnati, OH 45202.
*HARVEY M. SALKIN, PH.D., Age 52, Trustee; Professor, Case Western
Reserve University and President of Marshall Plan Advisers, Inc. (investment
advisory services); former President and major shareholder of Mathematical
Investing Systems, Inc. Dr. Salkin's business address is Case Western Reserve
University, Department of Operations Research, 10900 Euclid Avenue, Cleveland,
Ohio 44106-7235.
DONALD C. SIEKMANN, Age 59, Trustee; retired; former partner of Arthur
Andersen (independent public accountants). Mr. Siekmann's business address is
425 Walnut Street, Cincinnati, Ohio 45243.
*WILLIAM N. STRATMAN, Age 55, Trustee; co-owner of Mariners Inn Banquet
Halls since 1995; former owner of Bohlender Engraving Company. Mr. Stratman's
business address is 7949 Graves Road, Cincinnati, Ohio 45243.
CHARLES L. BOOTH, Age 38, Vice President; employee of BISYS Fund
Services Limited Partnership since April, 1988.
GARY R. TENKMAN, Age 27, Treasurer; employee of BISYS Fund Services
Limited Partnership since March 1998; prior to March 1998, Audit Manager for
Ernst & Young LLP (independent public accountants).
C. DAVID BUNSTINE, Age 31, Secretary; employee of BISYS Fund Services
Limited Partnership since December, 1987.
ALAINA V. METZ, Age 31, Assistant Secretary; employee of BISYS Fund
Services Limited Partnership since June, 1995; prior to June, 1995, supervisor
at Alliance Capital Management, L.P. (investment management firm).
*These Trustees are interested persons of the Trust as defined under
the 1940 Act.
B-19
<PAGE> 91
Except as set forth above, the address of all Trustees and officers of
the Trust is 3435 Stelzer Road, Columbus, Ohio 43219.
During the fiscal year ended December 31, 1997, no Trustee or officer
affiliated with Provident, DRZ, any other sub-adviser, the Distributor or BISYS
Fund Services Ohio, Inc. received any direct remuneration from the Trust.
The following table sets forth information regarding all compensation
paid by the Trust to its trustees for their services as trustees during the
fiscal year ended December 31, 1997. The Trust has no pension or retirement
plans.
COMPENSATION TABLE
Total Compensation from
Name and Position Aggregate Compensation the Trust and the Fund
with the Trust from the Trust Complex*
----------------- ---------------------- -----------------------
J. Virgil Early, Trustee $7,000 $7,000
William M. Higgins, Trustee 7,000 7,000
Harvey M. Salkin, Trustee 7,000 7,000
Donald C. Siekmann, Trustee(1) -0- -0-
William N. Stratman(1) -0- -0-
Stephen G. Mintos, Trustee(2) -0- -0-
* For purposes of this Table, Fund Complex means one or more mutual
funds, including the Funds, which have a common investment adviser or
affiliated investment advisers or which hold themselves out to the
public as being related.
(1) Mr. Siekmann did not become a Trustee of the Trust until February 27,
1998. Mr. Stratman did not become a Trustee of the Trust until May 29,
1998.
(2) Mr. Mintos served as a Director of The Riverfront Funds, Inc. until
January 30, 1998, when Mr. Grimm was elected to fill such position.
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Subject to the general supervision of the Trust's Board of Trustees and
in accordance with the Funds' investment objectives, policies and restrictions,
investment advisory services are provided to the Funds by The Provident Bank,
One East Fourth Street, Cincinnati, Ohio 45202 ("Provident") pursuant to
B-20
<PAGE> 92
an Investment Advisory Agreement dated as of December 29, 1998 (the "Investment
Advisory Agreement").
Provident's services as investment adviser are provided through its
Capital Management Group. Provident's Trust and Financial Services Group
currently manages assets of approximately $800 million. The Trust is the first
registered investment company for which Provident has provided investment
advisory services.
Provident is an Ohio banking corporation which, with its affiliates, as
of December 31, 1997, provided commercial lending, lease financing, consumer
credit, credit card, discount brokering, data processing, personal loan
financing and trust and asset management services through over 70 branch offices
located in Ohio and Kentucky. Provident is a subsidiary of Provident Financial
Group, Inc., a bank holding company headquartered in Cincinnati, Ohio, with
approximately $7.1 billion in total consolidated assets as of December 31, 1997.
Through its Ohio and Kentucky banking subsidiaries, Provident Financial Group,
Inc. provides a wide range of banking services to individuals and businesses.
Provident's Capital Management Group employs an experienced staff of
professional investment analysts, portfolio managers and traders and uses
several proprietary computer-based systems in conjunction with fundamental
analysis to identify investment opportunities.
Under the Investment Advisory Agreement, Provident has agreed to
provide, either directly or through one or more sub-advisers, investment
advisory services for each of the Funds as described in the Prospectus. For the
services provided and expenses assumed pursuant to the Investment Advisory
Agreement, each of the Funds pays Provident a fee, computed daily and paid
monthly, at an annual rate calculated as a percentage of the average daily net
assets of that Fund. The annual rates for the Funds are as follows: fifteen
one-hundredths of one percent (.15%) for the Money Market Fund; forty
one-hundredths of one percent (.40%) for the Income Fund; ninety-five
one-hundredths of one percent (.95%) for the Income Equity Fund; eighty
one-hundredths of one percent (.80%) for each of the Small Company Fund and the
Large Company Fund; and ninety one-hundredths of one percent (.90%) for the
Balanced Fund. Provident may periodically voluntarily reduce all or a portion of
its advisory fee with respect to a Fund to increase the net income of that Fund
available for distribution as dividends.
For the fiscal years ended December 31, 1997, 1996 and 1995, the Funds
incurred the following investment advisory fees:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
Fund 12/31/97 12/31/96 12/31/95
---- ---------- ---------- ----------
<S> <C> <C> <C>
Money Market $242,900 $259,214 $221,912
Income 200,909 143,483 144,461
Income Equity 898,800 688,484 407,229
Small Company 214,758 294,183 83,982(1)
Balanced 185,950 183,256 76,231
Large Company 251,705(2) N/A N/A
</TABLE>
B-21
<PAGE> 93
- --------------------
(1) Commenced operations on September 30, 1995.
(2) Commenced operations on January 2, 1997.
For the fiscal years ended December 31, 1997, 1996, and 1995, Provident
waived investment advisory fees or reimbursed the Funds for certain expenses in
the following amounts:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
Fund 12/31/97 12/31/96 12/31/95
---- ---------- ---------- ----------
<S> <C> <C> <C>
Money Market -- -- --
Income -- -- $ 548
Income Equity -- $36,661 73,635
Small Company -- -- 900
Balanced $20,662 28,720 69,745
Large Company -- N/A(1) N/A(1)
</TABLE>
- --------------------
(1) Commenced operations on January 2, 1997.
The Directors of Provident are Robert L. Hoverson, Jack M. Cook, Allen
L. Davis, Thomas D. Grote, Jr., Philip R. Myers, Joseph A. Pedoto, Sidney A.
Peerless, M.D., and Joseph A. Steger.
The principal executive officers of Provident are Robert L. Hoverson,
President and Chief Executive Officer; Philip R. Myers, Senior Executive Vice
President; John R. Farrenkopf, Senior Vice President and Chief Financial
Officer; and Mark E. Magee, Senior Vice President, General Counsel and
Secretary.
Unless sooner terminated, the Investment Advisory Agreement and the
Sub-Investment Advisory Agreement (as described below) continue in effect as to
a particular Fund for successive one-year periods ending December 31 of each
year if such continuance is approved at least annually by the Trust's Board of
Trustees or by vote of a majority of the outstanding shares of such Fund (as
defined above under "Fundamental Nature of Investment Objectives") and a
majority of the Trustees who are not parties to the Investment Advisory
Agreement or the Sub-Investment Advisory Agreement or interested persons (as
defined in the 1940 Act) of any party to the Investment Advisory Agreement or
the Sub-Investment Advisory Agreement by votes cast in person at a meeting
called for such purpose. The Investment Advisory Agreement and the
Sub-Investment Advisory Agreement are terminable as to a particular Fund at any
time on 60 days' written notice without penalty by the Fund, by vote of a
majority of the outstanding shares of that Fund, or by Provident, or, in the
case of a sub-adviser, on 60 days' prior written notice from such sub-adviser.
Such Agreements also terminate automatically in the event of any assignment, as
defined in the 1940 Act.
B-22
<PAGE> 94
The Investment Advisory Agreement and the Sub-Investment Advisory
Agreement provide that the respective investment adviser or sub-investment
adviser shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Trust in connection with the performance of their
duties, except a loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith, or gross negligence on the part of the respective
investment advisers or sub-investment adviser in the performance of their
duties, or from reckless disregard of their duties and obligations thereunder.
SUB-ADVISER
Pursuant to the terms of the Investment Advisory Agreement, Provident
has entered into a Sub-Investment Advisory Agreement dated as of December 29,
1998, with DePrince, Race & Zollo, Inc., 201 South Orange Avenue, Suite 850,
Orlando, Florida 32801 ("DRZ"). Pursuant to the terms of such Sub-Investment
Advisory Agreement, DRZ has been retained by Provident to manage the investment
and reinvestment of that portion of the assets of the Income Equity Fund
allocated to DRZ by the Trust's Board of Trustees subject to the direction and
control of the Trust's Board of Trustees.
Under this arrangement, DRZ is responsible for the day-to-day
management of that specified portion of the Income Equity Fund's assets,
investment performance, policies and guidelines, and maintaining certain books
and records, and Provident is responsible for selecting and monitoring the
performance of DRZ, the day-to-day management of that portion of the Income
Equity Fund's assets allocated to it by the Trust's Board of Trustees, and for
reporting the activities of DRZ in managing the Income Equity Fund to the
Trust's Board of Trustees.
For its services provided and expenses assumed pursuant to its
Sub-Investment Advisory Agreement with Provident, DRZ receives from Provident, a
fee computed daily and paid monthly, at the annual rate of fifty one-hundredths
of one percent (0.50%) of the Income Equity Fund's average daily net assets of
up to $55 million and fifty-five one-hundredths of one percent (0.55%) of the
Income Equity Fund's average daily net assets of $55 million and above. In
addition, DRZ has indicated a willingness to manage net assets of the Income
Equity Fund up to $75 million (exclusive of capital appreciation and
depreciation and reinvestment of dividends), but not beyond. The Board of
Trustees have considered and shall continue to consider such limitation in
determining what portion of the Income Equity Fund's assets should be allocated
to DRZ to be managed.
DRZ is owned jointly by Gregory M. DePrince, John D. Race and Victor A.
Zollo, Jr. DRZ was established on March 1, 1995, to provide mutual funds and
other institutional investors with investment management services. Prior to
April 1995, Messrs. DePrince, Race and Zollo were officers and directors of
SunBank Capital Management, N.A., 200 South Orange Avenue, Orlando, Florida
32801 ("SunBank"), and now serve as the directors and officers of DRZ.
From August 1, 1994, to August 14, 1995, SunBank served as the
sub-investment adviser to the Income Equity Fund pursuant to a Sub-Investment
Advisory Agreement dated August 1, 1994 (the "SunBank Sub-Advisory Agreement").
Pursuant to the SunBank Sub-Advisory Agreement, SunBank received a fee, computed
daily and paid monthly, at the annual rate of thirty-five one-hundredths of one
percent (0.35%) of the Income Equity Fund's average daily net assets.
Pursuant to the terms of the SunBank Sub-Advisory Agreement, for the
period from January 1, 1995, to August 14, 1995, Provident paid $51,630 and
$92,579, respectively, to SunBank in sub-investment advisory fees. For the
fiscal years ended December 31, 1997 and 1996 and for the period
B-23
<PAGE> 95
from August 15, 1995 to December 31, 1995, Provident paid $470,539, $298,193 and
$77,303, respectively, to DRZ in sub-investment advisory fees.
From August 1, 1994 to December 31, 1996, James Investment Research,
Inc., 1349 Fairground Road, Beavercreek, Ohio 45385 ("JIR"), served as the
sub-investment adviser to the Balanced Fund pursuant to a Sub-Investment
Advisory Agreement dated August 1, 1994 (the "JIR Sub-Advisory Agreement"). For
its services provided and expenses assumed pursuant to the JIR Sub-Advisory
Agreement with Provident, JIR received from Provident a fee, computed daily and
paid monthly, at the annual rate of fifty one-hundredths of one percent (.50%)
of the Balanced Fund's average daily net assets. Pursuant to the terms of the
JIR Sub-Advisory Agreement, for the fiscal years ended December 31, 1996 and
1995, Provident paid JIR a total of $77,267 and $25,332, respectively, in
sub-investment advisory fees.
CUSTODIAN, TRANSFER AGENT AND FUND ACCOUNTANT
In addition to serving as investment adviser, Provident has entered
into an Amended and Restated Custodian, Fund Accounting and Recordkeeping
Agreement with the Trust to provide custody and certain fund accounting services
to the Funds. Under the Amended and Restated Custodian, Fund Accounting and
Recordkeeping Agreement dated as of December 29, 1998, Provident receives an
annual fee from each Fund, computed daily and paid monthly, at an annual rate
calculated as a percentage of the average daily net assets of that Fund. The
annual rates for the Funds are as follows: .05% for the Money Market Fund; .10%
for the Income Fund; and .15% for each of the Income Equity Fund, the Balanced
Fund, the Large Company Fund and the Small Company Fund. As custodian, Provident
is responsible for safeguarding all securities and cash of the Funds.
The following table sets forth the fees incurred by the Funds for the
custody and fund accounting services provided by Provident for the fiscal years
ended December 31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
Fiscal Year Ended
December 31,
-----------------
Fund 1997 1996 1995
---- ---- ---- ----
<S> <C> <C> <C>
Money Market $ 81,531 $ 86,401 $73,973
Income 55,655 35,870 36,115
Income Equity 144,048 108,638 72,596
Balanced 33,160 30,516 12,666
Small Company 42,139 55,160 15,578(1)
Large Company 49,119(2) N/A N/A
</TABLE>
B-24
<PAGE> 96
- --------------------
(1) Commenced operations September 30, 1995.
(2) Commenced operations January 2, 1997.
Under the Master Transfer and Recordkeeping Agreement dated as of
December 29, 1998, the Funds pay Provident the following fees for transfer
agency services. The Money Market Fund pays a minimum annual fee of $24,000 for
the first 500 shareholder accounts. For shareholder accounts of the Money Market
Fund in excess of 500, the Money Market Fund pays an additional annual fee of
$24 for each open shareholder account and $12 for each closed shareholder
account. The Small Company Fund pays a minimum annual fee of $36,000 for the
first 750 shareholder accounts. For shareholder accounts in excess of 750, the
Small Company Fund pays an additional annual fee of $18 for each open
shareholder account and $9 for each closed shareholder account. All other Funds
pay a minimum annual fee of $40,000 for the first 750 shareholder accounts and,
for shareholder accounts in excess of 750, an additional annual fee of $20 for
each open shareholder account and $10 for each closed shareholder account.
The following table sets forth the total amount of fees incurred by the
Funds with respect to transfer agency and recordkeeping services for the fiscal
years ended December 31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
Fund 12/31/97 12/31/96 12/31/95
---- ---------- ---------- ----------
<S> <C> <C> <C>
Money Market $ 33,896 $79,137 $59,257
Income 50,879 38,891 37,402
Income Equity 96,037 58,165 42,860
Balanced 61,796 44,600 22,857
Small Company 118,492 38,988 9,834(1)
Large Company 41,424(2) N/A N/A
</TABLE>
- --------------------
(1) Commenced operations September 30, 1995.
(2) Commenced operations January 2, 1997.
B-25
<PAGE> 97
- --------------------------------------------------------------------------------
SECURITIES TRANSACTIONS
- --------------------------------------------------------------------------------
Each adviser, under policies established by the Board of Trustees,
selects broker-dealers to execute transactions for the Funds. It is the policy
of the Trust, in effecting transactions in portfolio securities, to seek best
execution of and best price for orders. The determination of what may constitute
best execution and price in the execution of a transaction by a broker involves
a number of considerations, including, without limitation, the overall direct
net economic result to a Fund, involving both the price paid or received and any
commissions and other costs paid, the breadth of the market where executed, the
efficiency with which the transaction is effected, the ability to effect the
transaction at all where a large block is involved, the availability of the
broker to stand ready to execute potentially difficult transactions in the
future and the financial strength and stability of the broker. Such
considerations are judgmental and are weighed by the Board of Trustees in
determining the overall reasonableness of brokerage commissions paid. In
determining best execution and selecting brokers to execute transactions, the
advisers may consider brokerage and research services, such as analyses and
reports concerning issuers, industries, securities, economic factors and trends
and other statistical and factual information provided to the Funds or to any
other account over which the advisers or their affiliates exercise investment
discretion. Each adviser is authorized to pay broker-dealers who provide such
brokerage and research services a commission for executing each such Fund's
transactions which is in excess of the amount of commission another broker would
have charged for effecting that transaction if, but only if, the adviser
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such broker viewed in
terms of that particular transaction or in terms of all of the accounts over
which it exercises investment discretion. Any such research and other
statistical and factual information provided by brokers to a Fund or to the
adviser is considered to be in addition to and not in lieu of services required
to be performed by such adviser under its agreement with the Trust. The cost,
value and specific application of such information are indeterminable and hence
are not practicably allocable among the Funds and other clients of the adviser
who may indirectly benefit from the availability of such information. Similarly,
the Funds may indirectly benefit from information made available as a result of
transactions effected for such other clients. Under the Investment Advisory
Agreements, the advisers are permitted to pay higher brokerage commissions for
brokerage and research services in accordance with Section 28(e) of the
Securities Exchange Act of 1934. In the event the advisers do follow such a
practice, they will do so on a basis which is fair and equitable to the Trust
and its Funds.
From time to time DRZ may direct brokerage transactions for the Income
Equity Fund to brokerage firms in return for research services from such firms.
Such research services include performance measurement services, databases
containing financial and other information on companies, news retrieval systems,
stock quote systems, and computer software programs that measure performance,
identify companies on the basis of certain selection criteria, and allocate
trades. For the fiscal year ended December 31, 1997, DRZ directed such
transactions to the following brokers in the following amounts and paid the
following brokerage commissions:
B-26
<PAGE> 98
Amount of Brokerage
Broker Transaction Commissions
------ ----------- -----------
Alpha Management $ 63,453 $ 1,300
Bear Stearns 1,384,457 1,740
Cantor Fitzgerald 1,484,117 2,385
First Boston Co. 17,739,821 23,356
Merrill Lynch Co. 3,584,547 5,665
Paine Webber Co. 7,752,097 13,128
Robertson, Stephens Company 11,638,800 18,523
Standard & Poors Co. 762,219 875
----------- -------
TOTAL $44,409,511 $66,972
=========== =======
In addition, DRZ, on behalf of the Income Equity Fund, in the past has
directed brokerage transactions to certain brokerage firms, including First
Boston Corporation, which participate in a "step-out" program. In such program,
the brokerage firm initiates the trade for the Fund and then steps away from a
portion of that trade and its related commission. Another broker then steps in
to complete the "stepped-out" trade, receives the commission and then refunds a
portion of such commissions to the Income Equity Fund. To date, Provident
Securities & Investment Company, an affiliate of Provident, has been the broker
which has stepped in to complete such trades. For the fiscal year ended December
31, 1997, the total amount of brokerage transactions so directed by DRZ was
$63,479,843, and the total amount of brokerage commissions paid on such
transactions was $94,429.
On behalf of the Small Company Fund, Provident from time to time
directs brokerage transactions to Autranet (a subsidiary of Donaldson, Lufkin &
Jenrette) in return for fundamental and technical research on equity securities.
For the fiscal year ended December 31, 1997, Provident directed brokerage
transactions to Autranet in the aggregate amount of $2,074,409, and paid in
connection therewith, on behalf of the Small Company Fund, $3,264 in brokerage
commissions for those transactions.
The Money Market Fund and the Income Fund expect that purchases and
sales of income securities usually will be principal transactions. Income
securities are normally purchased directly from the issuer or from an
underwriter or market maker for the securities. There usually will be no
brokerage commissions paid by such Fund for such purchases. Purchases from
underwriters will include the underwriting commission or concession, and
purchases from dealers serving as market makers will include a dealer's mark up
or reflect a dealer's mark down. Where transactions are made in the
over-the-counter market, the Fund will deal with primary market makers unless
more favorable prices are otherwise obtainable.
The Income Fund may seek to maximize the rate of return on its
portfolio by engaging in short-term trading consistent with its investment
objective. Trading will occur primarily in anticipation of or in
B-27
<PAGE> 99
response to market developments or to take advantage of a market decline (a rise
in interest rates) or to purchase in anticipation of a market rise (a decline in
interest rates) and later sell. In addition, a security may be sold and another
purchased at approximately the same time to take advantage of what Provident
believes to be a temporary disparity in the normal yield relationship between
the two securities. Yield disparities may occur for reasons not directly related
to the investment quality of particular issues or the general movement of
interest rates, due to such things as changes in the overall demand for, or
supply of, various types of U.S. government securities and other eligible
securities or changes in the investment objectives of investors. This policy of
short-term trading may result in a higher portfolio turnover and increased
expenses.
The Income Equity Fund, the Small Company Fund, the Large Company Fund
and the Balanced Fund expect that purchases and sales of equity securities
usually will be effected through brokerage transactions for which commissions
will be payable. Purchases from underwriters will include the underwriting
commission or concession, and purchases from dealers serving as market makers
will include a dealer's mark up or mark down. Where transactions are made in the
over-the-counter market, such Fund will deal with primary market makers unless
more favorable prices are otherwise obtainable.
The Income Equity Fund may participate, if and when practicable, in
group bidding for the purchase directly from an issuer of certain securities for
such Fund in order to take advantage of the lower purchase price available to
members of such a group.
The Trust's Board of Trustees has determined that each Fund may follow
a policy of considering sales of shares as a factor in the selection of
broker-dealers to execute portfolio transactions, subject to the requirements of
best execution, including best price, described above.
The policy of the Trust with respect to brokerage is and will be
reviewed by the Board of Trustees from time to time. Because of the possibility
of further regulatory developments affecting the securities exchanges and
brokerage practices generally, the foregoing practices may be changed, modified
or eliminated.
Investment decisions for the Funds are made independently from similar
accounts managed by the advisers. Such similar accounts may also invest in the
same securities as the Funds. When a purchase or sale of the same security is
made at substantially the same time on behalf of a Fund and such accounts
managed by the advisers, the transaction will be averaged as to price and
available investments allocated as to amount in the manner which each adviser
believes to be equitable to a Fund and such accounts. In some instances, these
investment procedures may adversely affect the price paid or received by a Fund
or the size of the position obtained by a Fund. To the extent permitted by law,
each adviser may aggregate the securities to be sold or purchased for a Fund
with those to be sold or purchased for its similar accounts in order to obtain
best execution.
The following table sets forth brokerage commissions paid by the Funds
for the past three fiscal years:
B-28
<PAGE> 100
For the Year Ended(1)
Fund 12/31/97 12/31/96 12/31/95
---- -------- -------- --------
Money Market $ -0- $ -0- $ -0-
Income -0- -0- -0-
Income Equity 405,332(2) 304,979(3) 269,007(4)
Balanced 31,075 27,535 15,465
Small Company 55,999 218,171 446,816(5)
Large Company(6) 49,791 N/A N/A
- --------------------
(1) Unless otherwise indicated, no brokerage commissions were paid to an
affiliated broker-dealer.
(2) Of this amount, $94,429 was paid to Provident Securities & Investment
Company, an affiliate of Provident ("PSI"). Such amount does not
reflect any commissions refunded to such Fund as described above. Such
commissions paid to PSI constituted approximately 23.3% of all
brokerage commissions paid by such Fund during the past fiscal year.
Approximately 22.2% of the aggregate dollar amount of brokerage
transactions, as a percentage of such Fund's total brokerage
transactions, were effected through PSI.
(3) Of this amount, $76,751 was paid to PSI.
(4) Of this amount, $67,723 was paid to PSI.
(5) Includes the fiscal year ended September 30, 1995 and the fiscal period
of October 1, 1995, through December 30, 1995.
(6) Commenced operations January 2, 1997.
The amount of brokerage commissions paid by the Small Company Fund has
decreased substantially from previous fiscal years as a result of such Fund's
decreased portfolio turnover due to a change in the strategy for managing such
Fund.
During the fiscal year ended December 31, 1997, each Fund, other than
the Small Company Fund, held securities of the Company's regular brokers or
dealers, as defined in Rule 10b-1 under the 1940 Act, or their parent companies,
including those of Morgan Stanley Dean Witter Discover & Co., Lehman Brothers
Holdings, Inc., Travelers Insurance, Merrill Lynch & Co., Inc., A.G. Edwards and
Prudential Funding Corp. At December 31, 1997, the Money Market Fund held
approximately $5,500,000 of Merrill Lynch discount notes, a $15,000,000
repurchase agreement with Merrill Lynch, a $16,408,000 repurchase agreement with
Dean Witter and approximately $6,000,000 of Morgan Stanley,
B-29
<PAGE> 101
Dean Witter Discover & Co. discount notes. As of such date, the Income Fund held
approximately $335,000 of Discover Card Trust bonds, the Income Equity Fund held
approximately $785,000 of A.G. Edwards common stock, the Large Company Fund held
approximately $485,000 of Travelers common stock and the Balanced Fund held
approximately $165,000 of Merrill Lynch & Co., Inc. bonds.
- --------------------------------------------------------------------------------
ADMINISTRATOR
- --------------------------------------------------------------------------------
BISYS Fund Services Limited Partnership serves as administrator (the
"Administrator") to the Trust and each Fund pursuant to the Administration
Agreement dated as of December 29, 1998 (the "Administration Agreement"). The
Administrator assists in supervising all operations of each Fund (other than
those performed by Provident and DRZ under the Investment Advisory Agreement and
Sub-Investment Advisory Agreement, as applicable, and by Provident under the
Custodian, Fund Accounting and Recordkeeping Agreement and under the Master
Transfer and Recordkeeping Agreement). The Administrator is a broker-dealer
registered with the Commission, and is a member of the National Association of
Securities Dealers, Inc. The Administrator provides financial services to
institutional clients.
Under the Administration Agreement, the Administrator has agreed to
maintain office facilities for the Trust, furnish statistical and research data,
clerical and certain bookkeeping services and stationery and office supplies;
prepare the periodic reports to the Commission on Form N-SAR or any replacement
forms therefor; compile data for, prepare for execution by the Funds and file
all the Funds' federal and state tax returns and required tax filings other than
those required to be made by the Funds' custodian and transfer agent; prepare
compliance filings pursuant to state securities laws; assist to the extent
requested by the Trust with the Trust's preparation of its Annual and
Semi-Annual Reports to Shareholders and its Registration Statements (on Form
N-1A or any replacement therefor); compile data for, prepare and file timely
Notices to the Commission required pursuant to Rule 24f-2 under the 1940 Act;
keep and maintain the financial accounts and records of the Funds, including
calculation of daily expense accruals; in the case of the Money Market Fund,
periodic review of the amount of the deviation, if any, of the current net asset
value per share (calculated using available market quotations or an appropriate
substitute that reflects current market conditions) from the Money Market Fund's
amortized cost price per share; and generally assist in all aspects of the
Trust's operations other than those performed by Provident and DRZ under the
Investment Advisory Agreement and Sub-Investment Advisory Agreement, and by
Provident under the Custodian, Fund Accounting and Recordkeeping Agreement and
under the Master Transfer and Recordkeeping Agreement. Under the Administration
Agreement, the Administrator may delegate all or any part of its
responsibilities thereunder.
The Administrator receives a fee from each Fund for its services as
Administrator and expenses assumed pursuant to the Administration Agreement,
calculated daily and paid periodically, at the annual rate of 0.20% of that
Fund's average daily net assets. The Administrator may voluntarily reduce all or
a portion of its fee with respect to any Fund in order to increase the net
income of one or more of the Funds available for distribution as dividends.
Unless sooner terminated as provided therein, the Administration
Agreement will continue in effect until January 1, 1999. The Administration
B-30
<PAGE> 102
Agreement is terminable with respect to a particular Fund only upon mutual
agreement of the parties to the Administration Agreement and for cause (as
defined in the Administration Agreement) by the party alleging cause, on no less
than 60 days' written notice by the Trust's Board of Trustees or by the
Administrator.
The Administration Agreement provides that the Administrator shall not
be liable for any error or judgment or mistake of law or any loss suffered by
the Trust in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or from the reckless disregard by
the Administrator of its obligations and duties thereunder.
The following table sets forth the fees paid by the Funds for
administrative services for the past three fiscal years:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
Fund 12/31/97 12/31/96 12/31/95
---- ---------- ---------- ----------
<S> <C> <C> <C>
Money Market $323,868 $345,611 $296,255
Income 100,455 71,742 72,231
Income Equity 189,223 144,850 96,796
Small Company 53,690 73,546 20,771(1)
Balanced 41,323 40,688 16,888
Large Company 62,927(2) N/A N/A
</TABLE>
- --------------------
(1) Commenced operations October 1, 1995.
(2) Commenced operations January 2, 1997.
- --------------------------------------------------------------------------------
DISTRIBUTOR
- --------------------------------------------------------------------------------
The Distributor serves as distributor to each of the Funds pursuant to
a Distribution Agreement dated as of December 29, 1998 (the "Distribution
Agreement"). Unless otherwise terminated, the Distribution Agreement continues
until January 31, 1999. The Distribution Agreement may be terminated in the
event of any assignment, as defined in the 1940 Act.
For the fiscal years ended December 31, 1997, 1996 and 1995,
commissions paid to the Distributor with respect to the sale of shares of the
Funds, after discounts to dealers, were $279,254,
B-31
<PAGE> 103
$675,842 and $314,870, respectively. For the fiscal year ended December 31,
1997, $386 were reallowed by the Distributor to PSI.
- --------------------------------------------------------------------------------
DISTRIBUTION PLANS
- --------------------------------------------------------------------------------
Each Fund has adopted a Distribution and Shareholder Service Plan
relating to its Investor A class of shares (the "Investor A Plan") pursuant to
Rule 12b-1 under the 1940 Act. In addition, each of the Income Fund, the Income
Equity Fund, the Small Company Fund, the Large Company Fund and the Balanced
Fund has adopted a Distribution and Shareholder Service Plan pursuant to Rule
12b-1 under the 1940 Act relating to its Investor B Class of Shares (the
"Investor B Plan"). The Investor A Plan and the Investor B Plan are hereinafter
referred to as the "Plans." Rule 12b-1 regulates circumstances under which an
investment company may bear expenses associated with the distribution of its
shares. Each Fund adopted both its Investor A Plan and Investor B Plan prior to
the public offering of its shares of that class. The Investor A Plan provides
that a Fund may incur certain expenses which may not exceed a maximum amount up
to 0.25% of such Fund's average daily net assets for any fiscal year occurring
after the inception of the Investor A Plan. Amounts paid under the Investor A
Plan are to be paid to the Distributor in order to pay costs of distribution of
a Fund's Investor A shares, including payment to the Distributor for efforts
expended in respect of or in furtherance of sales of Investor A shares of the
Fund and to enable the Distributor to pay or to have paid to others who sell or
have sold Fund Investor A shares a maintenance or other fee, at such intervals
as the Distributor may determine in respect of Fund Investor A shares previously
sold by any such others at any time and remaining outstanding during the period
in respect of which such fee is or has been paid. Such payments would be made
through the Distributor to compensate broker-dealers and others whose clients
invest in Investor A shares of a Fund for continuing services to their clients
based on the average daily net asset value of such accounts remaining
outstanding on the books of the Fund for specified periods.
The Investor B Plan authorizes a Fund to make payments to the
Distributor in an amount not in excess, on an annual basis, of 1.00% of the
average daily net asset value of the Investor B shares of that Fund. Pursuant to
the Investor B Plan, a Fund is authorized to pay or reimburse the Distributor
(a) a distribution fee in an amount not to exceed on an annual basis .75% of the
average daily net asset value of Investor B shares of that Fund (the
"Distribution Fee") and (b) a service fee in an amount not to exceed on an
annual basis .25% of the average daily net asset value of the Investor B shares
of such Fund (the "Service Fee"). Payments of the Distribution Fee to the
Distributor pursuant to the Investor B Plan will be used (i) to compensate
Participating Organizations (as defined below) for providing distribution
assistance relating to Investor B shares, and (ii) for promotional activities
intended to result in the sale of Investor B shares such as to pay for the
preparation, printing and distribution of prospectuses to other than current
shareholders. Payments of the Service Fee to the Distributor pursuant to the
Investor B Plan will be used to compensate Participating Organizations for
providing shareholder services with respect to their customers who are, from
time to time, beneficial and record holders of Investor B shares. Participating
Organizations include banks (including Provident and its affiliates),
broker-dealers and other institutions.
The Funds make no payments in connection with the sales of their shares
other than the fees paid to the Distributor under the respective Plans. As a
result, the Funds do not pay for unreimbursed expenses of the Distributor,
including amounts expended by the Distributor in excess of amounts received by
it from the Funds, or interest, carrying or other financing charges in
connection with excess amounts expended.
B-32
<PAGE> 104
All persons authorized to direct the disposition of monies paid or
payable by a Fund pursuant to a Plan or any related agreement must provide to
the Trust's Board of Trustees at least quarterly a written report of the amounts
so expended and the purposes for which such expenditures were made.
Representatives, brokers, dealers or others receiving payments from the
Distributor pursuant to a Plan must determine that such payments and the
services provided in connection with such payments are appropriate for such
persons and are not in violation of regulatory limitations applicable to such
persons.
While each Plan is in effect, the selection and nomination of Trustees
of the Trust who are not "interested persons" as defined by the 1940 Act
("Independent Trustees") is committed to the discretion of the Independent
Trustees then in office.
Each Plan was approved by the Board of Trustees and by those
Independent Trustees who have no direct or indirect financial interest in the
operation of each Plan or any agreements of the Trust or any other person
related to a Plan ("Rule 12b-1 Trustees"), cast in person at a meeting called
for the purpose of voting on such Plan. Each Plan may be continued annually if
approved by a majority vote of the Trustees, and by a majority of the Rule 12b-1
Trustees, cast in person at a meeting called for that purpose. Each Plan may not
be amended in order to increase materially the amount of distribution expenses
permitted under a Plan without being approved by a majority vote of the
outstanding voting shares of that class of the Fund. Each Plan may be terminated
as to a specific class of a Fund at any time by a majority vote of the Rule
12b-1 Trustees or a majority of the outstanding voting shares of the effected
class of that Fund.
For the fiscal year ended December 31, 1997, the following amounts were
payable by the Funds to the Distributor and waived by the Distributor,
respectively, under the Plans.
<TABLE>
<CAPTION>
Investor A Plan Investor B Plan
--------------- ---------------
Fund Payable Waived Payable Waived
---- ------- ------ ------- ------
<S> <C> <C> <C> <C>
Money Market Fund $404,830 $242,899 N/A(1)
Income Fund 122,072 29,297 $ 13,985 $0
Income Equity Fund 202,966 41,154 134,238 0
Small Company Fund 64,711 0 9,604 0
Balanced Fund 24,764 10,678 107,557 0
Large Company Fund(2) 76,802 0 7,423 0
</TABLE>
- --------------------
(1) The Money Market Fund does not offer Investor B shares and therefore
does not make payments under the Investor B Plan.
(2) Commenced operations January 2, 1997.
B-33
<PAGE> 105
- --------------------------------------------------------------------------------
CAPITAL STOCK
- --------------------------------------------------------------------------------
The Trust is an Ohio business trust. The Trust was organized on October
11, 1996, and the Trust's Declaration of Trust was filed with the Secretary of
Ohio on May 2, 1997. On October 31, 1998, the Trust acquired all of the assets
and liabilities of The Riverfront Funds, Inc., a Maryland corporation. The
Declaration of Trust authorizes the Board of Trustees to issue an unlimited
number of shares, which are shares of beneficial interest, without par value.
The Trust presently has six series of shares which represent interests in the
Funds of the Trust. The shares of each Fund, other than the Money Market Fund,
are offered in two separate Classes: Investor A shares and Investor B shares.
Shares of the Money Market Fund are only offered in the Investor A class of
shares. The Trust's Declaration of Trust authorizes the Board of Trustees to
divide or redivide any unissued shares of the Trust into one or more additional
series by setting or changing in any one or more respects their respective
preferences, conversion or other rights, voting power, restrictions, limitations
as to dividends, qualifications, and terms and conditions of redemption.
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Board of Trustees may grant in its
discretion. When issued for payment as described in the Prospectus and this
Statement of Additional Information, the Shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Trust,
shareholders of a Fund are entitled to receive the assets available for
distribution belonging to that Fund, and a proportionate distribution, based
upon the relative asset values of the respective Funds, of any general assets
not belonging to any particular Fund which are available for distribution.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Trust shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding shares of
each fund affected by the matter. For purposes of determining whether the
approval of a majority of the outstanding shares of a Fund will be required in
connection with a matter, a Fund will be deemed to be affected by a matter
unless it is clear that the interests of each Fund in the matter are identical,
or that the matter does not affect any interest of the Fund. Under Rule 18f-2,
the approval of an investment advisory agreement or any change in investment
policy would be effectively acted upon with respect to a Fund only if approved
by a majority of the outstanding shares of such Fund. However, Rule 18f-2 also
provides that the election of Trustees may be effectively acted upon by
shareholders of the Trust voting without regard to series.
- --------------------------------------------------------------------------------
STANDARDIZED TOTAL RETURN AND YIELD QUOTATIONS
- --------------------------------------------------------------------------------
TOTAL RETURN
Total return quotations for each of the Income Fund, the Income Equity
Fund, the Small Company Fund, the Large Company Fund and the Balanced Fund as
they may appear from time to time in advertisements are calculated by finding
the average annual compounded rates of return over one, five
B-34
<PAGE> 106
and ten year periods, or the time periods for which a Fund has had operations,
whichever is relevant, on a hypothetical $1,000 investment that would equate the
initial amount invested to the ending redeemable value. To the initial
investment all dividends and distributions are added, and all recurring fees
charged to all shareholder accounts are deducted. The ending redeemable value
assumes a complete redemption at the end of the relevant periods.
The average annual total returns of each of the Investor A Shares of
the Funds are as follows:
<TABLE>
<CAPTION>
Investor A Shares
With Front-End Sales Loads*
---------------------------
One Year Five Years Ten Years Inception
Ended Ended Ended to
Fund 6/30/98 6/30/98 6/30/98 6/30/98(1)
---- -------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Money Market 5.05% 4.62% N/A 4.42%
Income 2.66% 3.84% N/A 4.06%
Income Equity 11.02% 17.64% N/A 17.75%
Small Company(2) 15.36% 9.29% 13.56% 10.56%
Balanced 15.67% N/A N/A 12.93%
</TABLE>
<TABLE>
<CAPTION>
Investor A Shares
Without Front-End Sales Loads
-----------------------------
One Year Five Years Ten Years Inception
Ended Ended Ended to
Fund 6/30/98 6/30/98 6/30/98 6/30/98(1)
---- -------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Money Market 5.05% 4.62% N/A 4.42%
Income 7.48% 4.79% N/A 4.90%
Income Equity 16.24% 4.79% N/A 18.69%
Small Company(2) 20.80% 10.29% 14.08% 11.03%
Balanced 21.09% N/A N/A 14.29%
</TABLE>
- --------------------
* Investor A Shares of the Money Market Fund are not subject to a
front-end sales load.
(1) Dates of Inception: Money Market and Income Funds -- 10/1/92; Income
Equity Fund -- 10/8/92; Small Company Fund -- 7/23/87; and the Balanced
Fund -- 9/1/94.
B-35
<PAGE> 107
(2) The performance for the Small Company Fund includes the performance of
the MIM Stock Appreciation Fund, the Small Company Fund's predecessor.
The average annual total returns of each of the Investor B Shares of
the Funds are as follows:
<TABLE>
<CAPTION>
Investor B Shares
(with Contingent Deferred Sales Load)(3)
----------------------------------------
One Year Five Years Ten Years Inception
Ended Ended Ended to
Fund 6/30/98 6/30/98 6/30/98 6/30/98(4)
---- -------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Income 2.58% 3.79% N/A 4.18%
Income Equity 11.79% 17.77% N/A 17.98%
Small Company 16.19% 9.62% 13.88% 10.84%
Balanced 16.10% N/A N/A 13.16%
</TABLE>
<TABLE>
<CAPTION>
Investor B Shares
(without Contingent Deferred Sales Load)(3)
-------------------------------------------
One Year Five Years Ten Years Inception
Ended Ended Ended to
Fund 6/30/98 6/30/98 6/30/98 6/30/98(4)
---- -------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Income 6.58% 4.13% N/A 4.32%
Income Equity 15.33% 21.34% N/A 18.06%
Small Company 19.68% 9.89% 13.88% 10.84%
Balanced 20.10% N/A N/A 13.71%
</TABLE>
- --------------------
(3) Includes the total return for the Investor A shares for periods prior
to the date Investor B shares were first offered to the public (January
16, 1995 for all Funds except the Small Company Fund; October 1, 1995
for the Small Company Fund).
(4) Dates of Inception - the Income Fund - 10/1/92; the Income Equity Fund
- 10/8/92; the Balanced Fund - 9/1/94; and the Small Company Fund -
7/23/87.
B-36
<PAGE> 108
Without reimbursement of expenses and/or waiver of fees by Provident,
the average annual total returns of the Money Market Fund, the Income Fund, the
Income Equity Fund and the Balanced Fund for such periods would have been lower.
For the one year, five year and ten year periods ended June 30, 1998,
the average annual total returns for the Large Company Fund including the CIFs
(the predecessors to the Large Company Fund whose returns have been restated to
reflect the estimated fees for the Large Company Fund for the past fiscal year)
are as follows:
<TABLE>
<CAPTION>
Investor A Shares
-----------------
With Front-End Sales Loads Without Front-End Sales Loads
-------------------------- -----------------------------
One Year Five Year Ten Year One Year Five Year Ten Year
-------- --------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
21.24% 20.59% 15.87% 26.97% 21.69% 16.42%
</TABLE>
<TABLE>
<CAPTION>
Investor B Shares
-----------------
With Contingent Deferred Sales Loads Without Contingent Deferred Sales Loads
------------------------------------ ---------------------------------------
One Year Five Year Ten Year One Year Five Year Ten Year
-------- --------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
22.00% 20.60% 15.55% 26.00% 20.78% 15.55%
</TABLE>
These performance figures for periods prior to January 2, 1997, are not
those of the Large Company Fund. And, of course, past performance is no
guarantee as to future performance.
30-DAY YIELD
Current yield quotations as they may appear from time to time in
advertisements will consist of a quotation based on a recent 30-day period,
computed by dividing the net investment income per share earned during the
period by the maximum offering price per share on the last day of the base
period.
For the 30-day period ended June 30, 1998, the yields of the indicated
Funds are as follows:
<TABLE>
<CAPTION>
INVESTOR A SHARES INVESTOR B SHARES
With Front-End Sales Without Front-End Without Contingent Deferred
Loads Sales Loads Sales Load
-------------------- ----------------- ---------------------------
<S> <C> <C> <C>
Income Fund 4.79% 5.02% 4.20%
Balanced Fund 2.02% 2.11% 1.32%
Income Equity Fund 1.03% 1.08% 0.28%
Large Company Fund (0.25)% (0.26)% (0.98)%
</TABLE>
B-37
<PAGE> 109
Without reimbursement of expenses and/or waiver of fees, the current
yields of the Income Fund, the Income Equity Fund and the Balanced Fund for the
same period would have been lower.
SEVEN-DAY YIELD
The yield for the Money Market Fund as it may appear from time to time
in advertisements will be calculated by determining the net change, exclusive of
capital changes (all realized and unrealized gains and losses), in the value of
a hypothetical pre-existing account having a balance of one share at the
beginning of the period, dividing the net change in account value by the value
of the account at the beginning of the base period to obtain the base period
return, multiplying the base period return by (365/7) and carrying the resulting
yield figure to the nearest hundredth of one percent. The determination of net
change in account value will reflect the value of additional shares purchased
with dividends from the original share and dividends declared on both the
original share and any such additional shares and all fees charged to all
shareholder accounts in proportion to the length of the base period and the
Money Market Fund's average account size.
If realized and unrealized gains and losses were included in the yield
calculation, the yield of the Money Market Fund might vary materially from that
reported in advertisements. For the seven-day period ended June 30, 1998, the
current yield of the Money Market Fund was 4.96%.
In addition to the yield of the Money Market Fund, its effective yield
may appear from time to time in advertisements. The effective yield will be
calculated by compounding the unannualized base period yield by adding 1 to the
quotient, raising the sum to a power equal to 365 divided by 7, subtracting 1
from the result and carrying the resulting effective yield figure to the nearest
hundredth of one percent. For the seven-day period ended June 30, 1998, the
effective yield of the Money Market Fund was 5.08%.
The yield and effective yield as quoted in such advertisements will not
be based on information as of a date more than fourteen days prior to the date
of their publication. Each yield will vary depending on market conditions and
principal. Each yield also depends on the quality, maturity and type of
instruments held and operating expenses. The advertisements will include, among
other things, the length of the base period and the date of the last day in the
base period used in computing the quotation.
DISTRIBUTION RATES
Each of the Income Fund, the Income Equity Fund, the Balanced Fund, the
Small Company Fund and the Large Company Fund may from time to time advertise
current distribution rates which are calculated in accordance with the method
disclosed in the Prospectus. The following table sets forth the distribution
rates of the Investor A and B Shares for the 12-month period ended June 30,
1998.
B-38
<PAGE> 110
<TABLE>
<CAPTION>
Investor A Shares
With Front-End Sales Loads Without Front-End Sales Loads
Includes Capital Excludes Capital Includes Capital Excludes Capital
Fund Gains Gains Gains Gains
- ---- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Income 5.25% 5.25% 5.50% 5.50%
Income Equity 28.51% 0.95% 29.85% 0.99%
Balanced 9.66% 1.46% 10.11% 1.53%
Small Company 34.66% 0.00% 36.30% 0.00%
Large Company 9.98% 0.00% 10.45% 0.00%
</TABLE>
<TABLE>
<CAPTION>
Without Contingent Deferred Sales Loads
Fund Includes Capital Gains Excludes Capital Gains
- ---- ---------------------- ----------------------
<S> <C> <C>
Income 4.10% 4.10%
Income Equity 28.37% 0.21%
Balanced 8.91% 0.61%
Small Company 35.05% 0.00%
Large Company 10.55% 0.00%
</TABLE>
GENERAL
The yield and total return of any investment are generally a function
of quality and maturity, type of investment and operating expenses. A Fund's
yields and total return will fluctuate from time to time and are not necessarily
representative of future results.
Yield and total return information is useful in reviewing a Fund's
performance, but because yield and total return will fluctuate, such information
may not provide a basis for comparison with bank deposits or other investments
that pay a fixed yield for a stated period of time. An investor's principal is
not guaranteed by the Fund.
From time to time, the Trust may include the following types of
information in advertisements, supplemental sales literature and reports to
shareholders: (a) discussions of general economic or financial principles (such
as the effects of inflation, the power of compounding and the benefits of
dollar-cost averaging); (b) discussions of general economic trends; (c)
presentations of statistical data to supplement such discussions; (d)
descriptions of past or anticipated portfolio holdings for one or more of the
Funds within the Trust; (e) descriptions of investment strategies for one or
more of the Funds within the Trust; (f) descriptions of investment strategies
for one or more of such Funds; (g) descriptions or comparisons of various
investment products, which may or may not include the Funds; (h) comparisons of
investments
B-39
<PAGE> 111
products (including the Funds) with relevant market or industry indices or other
appropriate benchmarks; (i) discussions of fund rankings or ratings by
recognized rating organizations; and (j) testimonials describing the experience
of persons who have invested in one or more of the Funds.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
PRINCIPAL HOLDERS OF SECURITIES
To the knowledge of the Trust, as of October 23, 1998, the persons
listed below owned of record 5% or more of the outstanding shares of the
following Funds:
<TABLE>
<CAPTION>
Name and Address
Fund of Owner of Record % Ownership
- ---- ------------------ -----------
<S> <C> <C>
Money Market, The Provident Bank Trust Department(1)
Investor A Shares P.O. Box 691198
Cincinnati, Ohio 45269-1198 69.18%
BHC Securities, Inc.(2)
One Commerce Square
Philadelphia, Pennsylvania 19103 19.49%
Balanced, BHC Securities, Inc.(2)
Investor A Shares One Commerce Square
Philadelphia, Pennsylvania 19103 58.71%
The Provident Bank(1)
RPO Provident Bancorp
Retirement Plan
One East Fourth Street
Cincinnati, Ohio 45202 16.84%
The Provident Bank as
Trustee FBO Provident Bancorp. 401K Equity(1)
P.O. Box 691198
Cincinnati, Ohio 45269-1198 13.83%
Large Company, Provident Bank Trust Department(1)
Investor A Shares Attn: Securities Processing
P.O. Box 691198
Cincinnati, Ohio 45269-1198 86.95%
The Provident Bank Trust Department
Attn: Employee Benefit Plan
P.O. Box 691198
Cincinnati, Ohio 45241 6.95%
</TABLE>
B-40
<PAGE> 112
<TABLE>
<CAPTION>
Name and Address
Fund of Owner of Record % Ownership
- ---- ------------------ -----------
<S> <C> <C>
Income Equity, The Chase Manhattan Bank as Trustee for
Investor A Shares The General Cable Corporation
4 Tesseneer Drive
Highland Heights, Kentucky 41076 51.58%
BHC Securities, Inc.(2)
One Commerce Square
Philadelphia, Pennsylvania 19103 27.30%
The Provident Bank(1)
RPO Provident Retirement Plan
P.O. Box 691198
Cincinnati, Ohio 45269-1198 6.30%
Income, The Provident Bank
Investor A Shares One East Fourth Street
Cincinnati, Ohio 45202 53.83%
Provident Bank Trust Department(1)
P.O. Box 691198
Cincinnati, Ohio 45269-1198 36.39%
Income, Fifth Third Bank as Trustee for
Investor B Shares Cincinnati Institute of Fine Arts
P.O. Box 630074
Cincinnati, Ohio 45263 21.98%
</TABLE>
- --------------------
(1) The designated owner of record may possess on behalf of its underlying
accounts voting or investment power with respect to these Shares.
(2) BHC Securities, Inc. holds such shares for various underlying
beneficial owners.
AUDITORS
The financial statements of each of the Funds at and for the fiscal
year ended December 31, 1997, appearing in this Statement of Additional
Information have been audited by Ernst & Young LLP, 1300 Chiquita Center, 250
East Fifth Street, Cincinnati, Ohio 45202, independent certified public
accountants as set forth in their report appearing elsewhere herein and are
included in reliance upon such report given on the authority of Ernst & Young
LLP as experts in auditing and accounting.
LEGAL COUNSEL
Baker & Hostetler LLP, 65 East State Street, Columbus, Ohio 43215, is
counsel to the Trust and will pass upon the legality of the shares offered
hereby.
B-41
<PAGE> 113
GENERAL
Except as otherwise stated in the Prospectus, this Statement of
Additional Information, or required by law, the Trust reserves the right to
change the terms of the offer stated in the Prospectus or this Statement of
Additional Information without shareholder approval, including the right to
impose or change fees for services provided.
No dealer, salesman or other person is authorized to give any
information or to make any representation not contained in the Prospectus, this
Statement of Additional Information or in supplemental sales literature issued
by the Trust or the Distributor, and no person is entitled to rely on any
information or representation not contained therein.
The Prospectus and this Statement of Additional Information omit
certain information contained in the registration statement filed with the
Securities and Exchange Commission (the "Commission") which may be obtained from
the Commission's principal office in Washington, D.C. upon payment of the fee
prescribed by the Rules and Regulations promulgated by the Commission.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following financial statements relate to each of the Funds and to
The Riverfront Ohio Tax-Free Bond Fund at and for the fiscal year ended December
31, 1997. Effective April 30, 1998, The Riverfront Ohio Tax-Free Bond Fund
ceased operations and was liquidated and dissolved.
The following unaudited financial statements for the Funds for the
period ended June 30, 1998, reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the interim periods
presented. Of course, there can be no guarantee that such results will be
reflected in the financial statements as of December 31, 1998.
B-42
<PAGE> 114
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
U.S. GOVERNMENT U.S. GOVERNMENT INCOME
SECURITIES MONEY INCOME EQUITY
MARKET FUND FUND FUND
---------------- --------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost
$117,471,203; $46,194,828; and
$104,811,106, respectively)...... $117,471,203 $46,732,283 $104,165,056
Repurchase agreements (Cost
$39,792,000; $0; and $0,
respectively).................... 39,792,000 -- --
------------ ----------- ------------
TOTAL INVESTMENTS................ 157,263,203 46,732,283 104,165,056
Cash............................. 51 -- --
Interest and dividends
receivable....................... 266,210 641,081 233,668
Receivable for capital shares
issued........................... -- 811 134,358
Receivable for investments sold.. -- -- 871,352
Prepaid expenses and other
assets........................... 9,681 4,924 14,171
------------ ----------- ------------
TOTAL ASSETS..................... 157,539,145 47,379,099 105,418,605
------------ ----------- ------------
LIABILITIES:
Dividends payable................ 662,487 206,024 115,955
Capital gains distribution
payable.......................... -- -- 1,185,476
Payable for capital shares
redeemed......................... -- -- 31,457
Payable for investments
purchased........................ 1,000,000 -- 63,677
Accrued expenses and other
payables:
Investment advisory fees........ 19,805 15,576 83,348
Administration fees............. 4,279 1,297 2,866
Custodian and accounting fees... 6,582 6,853 13,856
12b-1 fees (Investor A)......... 13,203 7,292 14,294
12b-1 fees (Investor B)......... -- 1,062 16,385
Transfer agent fees............. 1,456 4,029 4,622
Audit and legal fees............ 49,886 15,499 31,455
Other........................... 9,312 6,825 165
------------ ----------- ------------
TOTAL LIABILITIES................ 1,767,010 264,457 1,563,556
------------ ----------- ------------
NET ASSETS:
Capital.......................... 155,775,888 47,361,500 94,684,973
Accumulated undistributed net
investment income................ -- 2 528
Net unrealized
appreciation/depreciation on
investments...................... -- 537,455 (646,050)
Accumulated undistributed net
realized gains (losses) on
investment transactions.......... (3,753) (784,315) 9,815,598
------------ ----------- ------------
NET ASSETS...................... $155,772,135 $47,114,642 $103,855,049
============ =========== ============
Net Assets
Investor A Shares............... $155,772,135 $45,831,005 $ 84,401,580
Investor B Shares............... N/A 1,283,637 19,453,469
------------ ----------- ------------
Total......................... $155,772,135 $47,114,642 $103,855,049
============ =========== ============
Shares of capital stock
Investor A Shares............... 155,772,135 4,809,781 6,974,638
Investor B Shares............... N/A 119,280 1,568,909
------------ ----------- ------------
Total......................... 155,772,135 4,929,061 8,543,547
============ =========== ============
Net asset value
Investor A Shares--redemption
price per share................. $ 1.00 $ 9.53 $ 12.10
Investor B Shares--offering
price per share*................ N/A 10.76 12.40
============ =========== ============
Maximum Sales Charge (Investor
A)............................... N/A 4.50% 4.50%
============ =========== ============
Maximum Offering Price per share
(100%/(100%- Maximum Sales
Charge) of net asset
value adjusted to nearest cent)
(Investor A) (a)................ $ 1.00 $ 9.98 $ 12.67
============ =========== ============
</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.
NA Not applicable
See Notes to Financial Statements.
B-43
<PAGE> 115
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
STOCK LARGE
BALANCED APPRECIATION COMPANY
FUND FUND SELECT FUND
----------- ------------ -----------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost $19,161,077;
$19,644,619; and $28,598,922,
respectively)............................ $22,592,517 $24,464,735 $47,111,075
Interest and dividends receivable........ 155,528 7,910 46,545
Receivable for capital shares issued..... 45,480 99,898 136,335
Receivable for investments sold.......... -- 380,822 --
Unamortized organization costs........... -- -- 4,111
Prepaid expenses and other assets........ 4,222 4,098 6,515
----------- ----------- -----------
TOTAL ASSETS............................. 22,797,747 24,957,463 47,304,581
----------- ----------- -----------
LIABILITIES:
Dividends payable........................ 30,354 -- --
Capital gains distribution payable....... 127,214 2,974,895 10,823
Payable for capital shares redeemed...... 11,522 3,265 503
Payable for investments purchased........ 44,373 -- 311,490
Accrued expenses and other payables:
Investment advisory fees................ 14,645 15,819 29,201
Administration fees..................... 621 672 1,281
Custodian and accounting fees........... 3,654 3,883 6,485
12b-1 fees (Investor A)................. 1,457 4,806 7,125
12b-1 fees (Investor B)................. 10,002 1,242 4,191
Transfer agent fees..................... 5,225 9,797 2,794
Audit and legal fees.................... 8,753 7,877 10,934
Other................................... 786 11,519 78
----------- ----------- -----------
TOTAL LIABILITIES........................ 258,606 3,033,775 384,905
----------- ----------- -----------
NET ASSETS:
Capital.................................. 17,170,391 16,066,652 24,169,454
Accumulated undistributed net investment
income (loss)............................ 3,949 (105,757) (74,636)
Net unrealized appreciation/depreciation
on investments........................... 3,431,440 4,820,116 18,512,153
Accumulated undistributed net realized
gains on investment transactions......... 1,933,361 1,142,677 4,312,705
----------- ----------- -----------
NET ASSETS.............................. $22,539,141 $21,923,688 $46,919,676
=========== =========== ===========
Net Assets
Investor A Shares....................... $10,199,689 $20,437,296 $41,472,357
Investor B Shares....................... 12,339,452 1,486,392 5,447,319
----------- ----------- -----------
Total................................. $22,539,141 $21,923,688 $46,919,676
=========== =========== ===========
Shares of capital stock
Investor A Shares....................... 745,474 2,357,230 3,098,555
Investor B Shares....................... 872,536 165,610 410,819
----------- ----------- -----------
Total................................. 1,618,010 2,522,840 3,509,374
=========== =========== ===========
Net asset value
Investor A Shares--redemption price per
share................................... $ 13.68 $ 8.67 $ 13.38
Investor B Shares--offering price per
share*.................................. 14.14 8.98 13.26
=========== =========== ===========
Maximum Sales Charge (Investor A)........ 4.50% 4.50% 4.50%
=========== =========== ===========
Maximum Offering Price per share
(100%/(100%- Maximum Sales Charge) of
net asset value adjusted to nearest
cent) (Investor A)...................... $ 14.32 $ 9.08 $ 14.01
=========== =========== ===========
</TABLE>
- --------
* Redemption price of Investor B shares varies based on length of time shares
are held.
See Notes to Financial Statements.
B-44
<PAGE> 116
- --------------------------------------------------------------------------------
Statements of Operations
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. For the Six Months Ended June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
U.S. GOVERNMENT U.S. GOVERNMENT INCOME
SECURITIES MONEY INCOME EQUITY
MARKET FUND FUND FUND
---------------- --------------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income.................... $4,114,204 $1,444,715 $ 36,837
Dividend income.................... -- 39,662 1,327,668
---------- ---------- ----------
TOTAL INCOME....................... 4,114,204 1,484,377 1,364,505
---------- ---------- ----------
EXPENSES:
Investment advisory fees........... 110,833 97,286 509,287
Administration fees................ 147,778 48,643 107,219
12b-1 fees (Investor A)............ 184,719 59,197 109,815
12b-1 fees (Investor B)............ 6,424 96,831
Custodian and accounting fees...... 37,705 28,926 82,585
Audit and legal fees............... 42,959 14,466 32,540
Directors' fees and expenses....... 8,147 2,725 5,997
Transfer agent fees................ 22,042 22,174 45,002
Registration and filing fees....... 2,840 1,783 3,583
Printing costs..................... 41,977 12,096 34,198
Other.............................. 5,331 1,903 3,028
---------- ---------- ----------
GROSS EXPENSES..................... 604,331 295,623 1,030,085
Less: Fee waivers................ (110,832) (14,207) (13,463)
---------- ---------- ----------
Net Expenses................... 493,499 281,416 1,016,622
---------- ---------- ----------
Net Investment Income.............. 3,620,705 1,202,961 347,883
---------- ---------- ----------
REALIZED/UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS
Net realized gains (losses) from
investment transactions............ -- 284,301 10,149,818
Net change in unrealized
appreciation/depreciation from
investments........................ -- (51,244) (5,382,846)
---------- ---------- ----------
Net realized/unrealized gains
(losses) from investments.......... -- 233,057 4,766,972
---------- ---------- ----------
Change in net assets resulting from
operations......................... $3,620,705 $1,436,018 $5,114,855
========== ========== ==========
</TABLE>
See Notes to Financial Statements.
B-45
<PAGE> 117
- --------------------------------------------------------------------------------
Statements of Operations
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. For the Six Months Ended June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
STOCK LARGE
BALANCED APPRECIATION COMPANY
FUND FUND SELECT FUND
---------- ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income............................ $ 231,960 $ 20,127 $ 2,225
Dividend income............................ 123,193 131,491 275,275
---------- ---------- ----------
TOTAL INCOME............................... 355,153 151,618 277,500
---------- ---------- ----------
EXPENSES:
Investment advisory fees................... 97,807 101,183 161,987
Administration fees........................ 21,735 25,296 40,497
12b-1 fees (Investor A).................... 12,280 29,832 45,832
12b-1 fees (Investor B).................... 59,558 7,149 19,156
Custodian and accounting fees.............. 18,340 20,826 31,618
Audit and legal fees....................... 4,922 7,497 11,972
Organization costs......................... -- 146 833
Directors' fees and expenses............... 1,136 1,341 2,055
Transfer agent fees........................ 23,203 52,161 22,946
Registration and filing fees............... 964 1,128 2,032
Printing costs............................. 8,190 7,647 11,729
Other...................................... 809 975 1,479
---------- ---------- ----------
GROSS EXPENSES............................. 248,944 255,181 352,136
Less: Fee waivers........................ (13,890) -- --
---------- ---------- ----------
Net Expenses........................... 235,054 255,181 352,136
---------- ---------- ----------
Net Investment Income (Loss)............... 120,099 (103,563) (74,636)
---------- ---------- ----------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS
Net realized gains (losses) from investment
transactions............................... 1,933,362 1,144,439 4,312,705
Net change in unrealized
appreciation/depreciation from investments. 506,958 781,767 2,505,192
---------- ---------- ----------
Net realized/unrealized gains (losses) from
investments................................ 2,440,320 1,926,206 6,817,897
---------- ---------- ----------
Change in net assets resulting from
operations................................. $2,560,419 $1,822,643 $6,743,261
========== ========== ==========
</TABLE>
See Notes to Financial Statements.
B-46
<PAGE> 118
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
U.S. GOVERNMENT
SECURITIES MONEY MARKET U.S. GOVERNMENT INCOME
FUND FUND INCOME EQUITY FUND
---------------------------- -------------------------- --------------------------
SIX MONTHS SIX MONTHS
SIX MONTHS YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
ENDED DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
JUNE 30, 1998 1997 1998 1997 1998 1997
------------- ------------- ------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income.... $ 3,620,705 $ 7,931,905 $ 1,202,961 $ 2,698,288 $ 347,883 $ 1,039,879
Net realized gains
(losses) from investment
transactions............ -- (1,463) 284,301 781,702 10,149,818 21,576,605
Net change in unrealized
appreciation/depreciation
from investments........ -- -- (51,244) (56,510) (5,382,846) 752,438
------------- ------------- ------------ ----------- ------------ ------------
Change in net assets
resulting from operations. 3,620,705 7,930,442 1,436,018 3,423,480 5,114,855 23,368,922
------------- ------------- ------------ ----------- ------------ ------------
DISTRIBUTIONS TO INVESTOR
A SHAREHOLDERS:
From net investment
income................. (3,620,705) (7,931,905) (1,179,850) (2,663,877) (335,755) (981,986)
In excess of net
investment income...... -- -- -- (412,137) -- --
From net realized gains
from investments....... -- -- -- -- (967,780) (19,246,795)
DISTRIBUTIONS TO INVESTOR
B SHAREHOLDERS:
From net investment
income................. -- -- (23,109) (64,440) (12,134) (57,359)
In excess of net
investment income...... -- -- -- (11,526) -- --
From net realized gains
from investments....... -- -- -- -- (217,697) (3,879,842)
------------- ------------- ------------ ----------- ------------ ------------
Change in net assets from
shareholder distributions. (3,620,705) (7,931,905) (1,202,959) (3,151,980) (1,533,366) (24,165,982)
------------- ------------- ------------ ----------- ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................. 152,232,732 374,303,813 1,047,768 4,236,017 6,594,194 15,853,924
Proceeds from shares
issued in connection
with common trust fund
acquisition............ -- -- -- 16,606,766 -- --
Dividends reinvested.... 986,136 2,327,411 131,122 506,586 227,290 23,523,261
Cost of shares redeemed. (140,015,490) (415,078,263) (4,623,735) (6,285,274) (7,951,714) (18,176,359)
------------- ------------- ------------ ----------- ------------ ------------
Change in net assets from
capital transactions...... 13,203,378 (38,447,039) (3,444,845) 15,064,095 (1,130,230) 21,200,826
------------- ------------- ------------ ----------- ------------ ------------
Change in net assets...... 13,203,378 (38,448,502) (3,211,786) 15,335,595 2,451,259 20,403,766
NET ASSETS:
Beginning of period..... 142,568,757 181,017,259 50,326,428 34,990,833 101,403,790 81,000,024
------------- ------------- ------------ ----------- ------------ ------------
End of period........... $ 155,772,135 $ 142,568,757 $ 47,114,642 $50,326,428 $103,855,049 $101,403,790
============= ============= ============ =========== ============ ============
SHARE TRANSACTIONS:
Issued.................. 152,232,732 374,303,813 108,699 448,161 519,548 1,186,068
Issued in connection
with common trust fund
acquisition............ -- -- -- 1,761,057 -- --
Reinvested.............. 986,136 2,327,411 13,622 53,203 17,857 1,989,492
Redeemed................ (140,015,490) (415,078,263) (484,527) (664,598) (635,208) (1,316,119)
------------- ------------- ------------ ----------- ------------ ------------
Change in shares.......... 13,203,378 (38,447,039) (362,206) 1,597,823 (97,803) 1,859,441
============= ============= ============ =========== ============ ============
</TABLE>
See Notes to Financial Statements.
B-47
<PAGE> 119
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
BALANCED FUND STOCK APPRECIATION FUND LARGE COMPANY SELECT FUND
------------------------- ------------------------- ---------------------------
SIX MONTHS SIX MONTHS SIX MONTHS FOR THE
ENDED YEAR ENDED ENDED YEAR ENDED ENDED PERIOD ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1998 1997 1998 1997 1998 1997*
----------- ------------ ----------- ------------ ------------ -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income
(loss)................... $ 120,099 $ 277,959 $ (103,563) $ (123,137) $ (74,636) $ (7,932)
Net realized gains
(losses) from investment
transactions............. 1,933,362 1,983,851 1,144,439 5,867,571 4,312,705 4,033,588
Net change in unrealized
appreciation/depreciation
from investments........ 506,958 870,883 781,767 (1,404,729) 2,505,192 3,414,575
----------- ----------- ----------- ------------ ------------ ------------
Change in net assets
resulting from operations. 2,560,419 3,132,693 1,822,643 4,339,705 6,743,261 7,440,231
----------- ----------- ----------- ------------ ------------ ------------
DISTRIBUTIONS TO INVESTOR
A SHAREHOLDERS:
From net investment
income................... (77,604) (180,288) -- -- -- --
From net realized gains
from investments......... (58,612) (786,461) (2,779,610) (4,562,955) (9,556) (3,675,987)
Tax return of capital.... -- -- -- -- -- (76,753)
DISTRIBUTIONS TO INVESTOR
B SHAREHOLDERS:
From net investment
income................... (42,525) (99,558) -- -- -- --
From net realized gains
from investments......... (68,602) (913,202) (195,285) (216,879) (1,267) (270,025)
----------- ----------- ----------- ------------ ------------ ------------
Change in net assets from
shareholder distributions. (247,343) (1,979,509) (2,974,895) (4,779,834) (10,823) (4,022,765)
----------- ----------- ----------- ------------ ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................... 1,309,272 2,623,393 1,189,983 3,536,148 6,104,572 4,882,547
Proceeds from shares
issued in connection
with common trust fund
acquisition............. -- -- -- -- -- 27,813,338
Dividends reinvested..... 87,832 1,948,716 119 4,580,891 2,216 3,939,671
Cost of shares redeemed.. (2,216,887) (5,473,923) (3,691,741) (14,013,668) (1,997,139) (3,975,433)
----------- ----------- ----------- ------------ ------------ ------------
Change in net assets from
capital transactions...... (819,783) (901,814) (2,501,639) (5,896,629) 4,109,649 32,660,123
----------- ----------- ----------- ------------ ------------ ------------
Change in net assets...... 1,493,293 251,370 (3,653,891) (6,336,758) 10,842,087 36,077,589
NET ASSETS:
Beginning of period...... 21,045,848 20,794,478 25,577,579 31,914,337 36,077,589 --
----------- ----------- ----------- ------------ ------------ ------------
End of period............ $22,539,141 $21,045,848 $21,923,688 $ 25,577,579 $ 46,919,676 $ 36,077,589
=========== =========== =========== ============ ============ ============
SHARE TRANSACTIONS:
Issued................... 97,777 207,417 120,443 359,468 486,244 403,509
Issued in connection with
common trust fund
acquisition............. -- -- -- -- -- 2,781,335
Reinvested............... 6,644 156,705 13 490,460 200 353,440
Redeemed................. (166,823) (437,775) (381,968) (1,448,614) (159,759) (355,595)
----------- ----------- ----------- ------------ ------------ ------------
Change in shares.......... (62,402) (73,653) (261,512) (598,686) 326,685 3,182,689
=========== =========== =========== ============ ============ ============
</TABLE>
- --------
* For the period January 2, 1997 (commencement of operations) through December
31, 1997.
See Notes to Financial Statements.
B-48
<PAGE> 120
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
U.S. Government Securities Money Market Fund
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
---------- ------------------------------------------------------ ----------
<C> <S> <C>
COMMERCIAL PAPER (32.0%)
Automotive (1.9%)
$1,500,000 Ford Motor Co., Discount Note, 7/16/98................ $1,496,557
1,500,000 Ford Motor Co., Discount Note, 8/25/98................ 1,487,510
----------
2,984,067
----------
Banks (4.1%)
2,400,000 Banc One Corp., Discount Note, 7/10/98................ 2,396,628
4,000,000 Banc One Corp., Discount Note, 8/21/98................ 3,968,720
----------
6,365,348
----------
Brokerage Services (3.1%)
2,000,000 Merrill Lynch & Co., Inc., Discount Note, 10/20/98.... 1,966,084
1,500,000 Merrill Lynch & Co., Inc., Discount Note, 11/20/98.... 1,467,340
1,500,000 Merrill Lynch & Co., Inc., Discount Note, 11/30/98.... 1,465,293
----------
4,898,717
----------
Chemicals-General (3.0%)
1,750,000 Monsanto Co., Discount Note, 7/17/98.................. 1,745,854
3,000,000 Sherman-Williams Co., Discount Note, 7/10/98.......... 2,995,883
----------
4,741,737
----------
Entertainment (2.2%)
1,500,000 The Walt Disney Co., Discount Note, 7/15/98........... 1,496,850
2,000,000 The Walt Disney Co., Discount Note, 8/10/98........... 1,988,067
----------
3,484,917
----------
Financial Services (7.4%)
3,000,000 General Electric Capital Corp., Discount Note, 7/6/98. 2,997,691
2,000,000 General Electric Capital Corp., Discount Note,
8/20/98.............................................. 1,984,722
3,000,000 General Electric Capital Corp., Discount Note,
10/20/98............................................. 2,949,958
2,000,000 IBM Credit Corp., Discount Note, 7/21/98.............. 1,993,911
1,500,000 IBM Credit Corp., Discount Note, 7/23/98.............. 1,494,867
----------
11,421,149
----------
Food Distributors, Supermarkets & Wholesalers (2.6%)
2,000,000 Winn Dixie Stores, Inc., Discount Note, 7/28/98....... 1,991,750
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
---------- ------------------------------------------------------ -----------
<C> <S> <C>
COMMERCIAL PAPER, CONTINUED:
Food Distributors, Supermarkets & Wholesalers, continued
$2,000,000 Winn Dixie Stores, Inc., Discount Note, 8/11/98....... $ 1,987,358
-----------
3,979,108
-----------
Manufacturing-Consumer Goods (6.4%)
3,000,000 Eaton Corp., Discount Note, 7/8/98.................... 2,996,820
1,500,000 Eaton Corp., Discount Note, 7/10/98................... 1,497,938
1,500,000 Eaton Corp., Discount Note, 7/31/98................... 1,493,163
2,000,000 Eaton Corp., Discount Note, 11/17/98.................. 1,957,759
2,000,000 Gillette Co., Discount Note, 8/24/98.................. 1,983,590
-----------
9,929,270
-----------
Pharmaceuticals (1.3%)
2,000,000 Glaxo Wellcome PLC, Discount Note, 7/16/98............ 1,995,450
-----------
Total Commercial Paper (Cost $49,799,763) 49,799,763
-----------
U.S. GOVERNMENT AGENCIES (43.4%)
Federal Farm Credit Bank (3.9%)
2,000,000 5.51%, 8/3/98......................................... 2,000,000
1,000,000 5.53%, 10/1/98........................................ 1,000,000
3,000,000 5.50%, 4/1/99, MTN.................................... 2,998,040
-----------
5,998,040
-----------
Federal Home Loan Bank (5.7%)
2,000,000 5.72%, 7/7/98......................................... 2,000,040
2,000,000 5.45%, 7/30/98........................................ 2,000,000
3,000,000 Discount Note, 10/21/98............................... 2,950,347
2,000,000 Discount Note, 10/30/98............................... 1,964,036
-----------
8,914,423
-----------
Federal Maritime Commission (18.5%)
5,000,000 Discount Note, 7/1/98................................. 4,999,999
2,000,000 Discount Note, 7/8/98................................. 1,997,916
2,000,000 Discount Note, 7/14/98................................ 1,996,093
4,000,000 Discount Note, 7/24/98................................ 3,986,123
2,000,000 Discount Note, 7/30/98................................ 1,991,316
2,000,000 Discount Note, 8/3/98................................. 1,990,118
2,000,000 Discount Note, 8/5/98................................. 1,989,539
2,000,000 Discount Note, 8/7/98................................. 1,988,921
2,000,000 Discount Note, 8/13/98................................ 1,987,124
3,000,000 Discount Note, 8/27/98................................ 2,974,255
1,100,000 Discount Note, 9/18/98................................ 1,087,134
2,000,000 Discount Note, 12/2/98................................ 1,954,228
-----------
28,942,766
-----------
</TABLE>
Continued
B-49
<PAGE> 121
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
U.S. Government Securities Money Market Fund
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Federal National Mortgage Assoc. (15.3%)
3,000,000 Discount Note, 7/15/98................................. $ 2,993,700
2,000,000 Discount Note, 7/17/98................................. 1,995,200
3,000,000 Discount Note, 8/7/98.................................. 2,983,381
3,000,000 5.63%, 8/14/98, MTN.................................... 2,999,355
1,500,000 Discount Note, 8/27/98................................. 1,487,175
4,500,000 Discount Note, 9/24/98................................. 4,443,298
3,000,000 Discount Note, 10/19/98................................ 2,950,775
2,000,000 Discount Note, 12/15/98................................ 1,950,364
2,000,000 6.61%, 3/24/99......................................... 2,012,963
-----------
23,816,211
-----------
Total U.S. Government Agencies (Cost $67,671,440) 67,671,440
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
----------- ------------------------------------------------- ------------
<C> <S> <C>
REPURCHASE AGREEMENTS (25.6%)
$14,792,000 Dean Witter, 6.00%, 7/1/98, (Collaterized by
$14,553,040 various U.S. Treasury and U.S.
Government Agency Securities, 0.00%-9.05%,
7/6/98-2/15/25, market value--$15,087,937)...... $ 14,792,000
25,000,000 Merrill Lynch, 6.00%, 7/1/98, (Collateralized by
$60,406,350 various U.S. Government Agency
Securities, 6.50%-10.50%, 12/1/04-7/1/28, market
value--$25,500,531)............................. 25,000,000
------------
Total Repurchase Agreements (Cost $39,792,000) 39,792,000
------------
Total Investments (Cost $157,263,203) (a)--101.0% 157,263,203
Liabilities in excess of other assets (1.0)% (1,491,068)
------------
Total Net Assets--100.0% $155,772,135
============
</TABLE>
- --------
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
MTN--Medium Term Note
PLC--Public Liability Co.
See Notes to Financial Statements.
B-50
<PAGE> 122
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
U.S. Government Income Fund
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
CORPORATE BONDS (25.6%)
Banks (5.8%)
600,000 Chase Capital I, Series A, 7.67%, 12/1/26, Callable
12/1/06 @ 103.84, Guaranteed by Chase Manhattan
Corp................................................. $ 644,250
500,000 Mellon Capital I, 7.72%, 12/1/26, Callable 12/1/06 @
103.86, Guaranteed by Mellon Bank Corp............... 536,875
1,000,000 Midland Bank PLC (HSBC), 6.95%, 3/15/11............... 1,042,500
487,570 PNC Mortgage Securities Corp., Series 1997-3, Class
2A3, 7.50%, 5/25/27 CMO.............................. 492,241
-----------
2,715,866
-----------
Financial Services (13.9%)
1,000,000 American Express Master Trust, Series 1998-1, Class A,
5.90%, 4/15/04, ABS.................................. 1,004,520
200,000 American Express Master Trust, Series 1994-1, Class A,
7.15%, 8/15/99, ABS.................................. 200,590
200,000 Associates Corp., N.A., 5.25%, 3/30/00................ 197,750
1,000,000 Boatmen's Auto Trust, Series 1996-A, Class A3, 6.75%,
1/15/03, ABS......................................... 1,022,790
1,190,000 California Infrastructure SCE-1, Series 1997-1, Class
A5, 6.28%, 9/25/05, ABS.............................. 1,200,472
1,000,000 Countrywide Home Loans, Inc., Series 1998-1, Class
AF2, 6.27%, 4/25/28.................................. 999,947
998,652 Green Tree Home Improvement Loan, Series 1997-D, Class
HEA4, 6.54%, 9/15/28................................. 1,006,721
650,000 Security Pacific Acceptance Corp., Series 1995-1,
Class A2, 6.70%, 4/10/20, ABS........................ 658,008
250,000 Toyota Motor Credit Corp., 7.13%, 9/26/06, Callable
9/26/99 @ 100, MTN................................... 261,563
-----------
6,552,361
-----------
Food Processing & Packaging (1.1%)
500,000 McCormick & Co., Inc., 8.95%, 7/1/01.................. 540,000
-----------
Office Equipment & Supplies (Non-Computer Related) (3.2%)
1,455,000 Pitney Bowes Credit Corp., 6.63%, 6/1/02.............. 1,491,375
-----------
Oil & Gas Transmission (0.8%)
356,000 Trans-Canada Pipelines Ltd., 6.77%, 4/30/01, MTN...... 362,230
-----------
Steel (0.4%)
200,000 Worthington Industries, Inc., 7.13%, 5/15/06.......... 211,750
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Utilities-Electric & Gas (0.4%)
200,000 Oklahoma Gas & Electric Co., 6.25%, 10/15/00.......... $ 201,500
-----------
Total Corporate Bonds (Cost $11,862,667) 12,075,082
-----------
U.S. GOVERNMENT AGENCIES (63.4%)
Federal Farm Credit Bank (3.2%)
1,500,000 5.90%, 2/5/08, MTN.................................... 1,508,625
-----------
Federal Home Loan Bank (6.0%)
2,000,000 5.63%, 3/19/01........................................ 1,996,540
690,000 9.50%, 2/25/04........................................ 814,676
-----------
2,811,216
-----------
Federal Home Loan Mortgage Corp. (9.1%)
1,047,893 6.00%, 12/1/99, Gold Pool #M80147..................... 1,046,415
225,000 6.20%, 4/15/03........................................ 229,538
3,000,000 6.50%, 5/25/21, Series 13, Class PK, CMO.............. 3,030,938
-----------
4,306,891
-----------
Federal National Mortgage Assoc. (35.5%)
6,400,000 6.38%, 1/16/02........................................ 6,542,720
1,000,000 6.71%, 3/13/02, Callable 3/13/00 @ 100, MTN........... 1,017,150
893,971 6.00%, 2/1/03, Pool #335463........................... 892,111
1,500,000 5.75%, 4/15/03........................................ 1,502,325
996,043 6.00%, 5/1/03, Pool #347156........................... 993,852
811,195 7.00%, 9/25/05, Series 1992-110, Class G, CMO......... 812,955
1,000,000 7.55%, 3/27/07, Series 07-B, Callable 3/27/00 @ 100... 1,027,580
1,000,000 6.50%, 12/25/07....................................... 1,013,110
629,294 7.50%, 3/17/14, Series 1997-39, Class A, CMO.......... 632,824
286,487 7.00%, 9/25/19, Series 1991-155, Class PE, CMO........ 287,123
2,000,000 6.50%, 8/18/20, Series 1997-57, Class PM, CMO......... 2,006,860
-----------
16,728,610
-----------
Government National Mortgage Assoc. (1.1%)
520,357 8.00%, 5/15/23, Pool #351752.......................... 538,033
-----------
Private Export Funding Corp. (2.2%)
1,000,000 6.24%, 5/15/02, Series VV, Guaranteed by Export-Import
Bank of The United States............................ 1,017,500
-----------
</TABLE>
Continued
B-51
<PAGE> 123
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
U.S. Government Income Fund
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Student Loan Marketing Assoc. (3.6%)
1,000,000 6.05%, 9/14/00........................................ $ 1,007,450
669,354 5.61%*, 10/25/04, Series 1996-3, Class A1, ABS........ 668,752
-----------
1,676,202
-----------
Tennessee Valley Authority (2.7%)
1,250,000 6.24%, 7/15/45, Series B, Callable 7/15/20 @ 100,
Putable 7/15/01 @ 100................................ 1,292,188
-----------
Total U.S. Government Agencies (Cost $29,672,070) 29,879,265
-----------
U.S. TREASURY BONDS (3.4%)
1,500,000 6.25%, 8/15/23........................................ 1,606,290
-----------
Total U.S. Treasury Bonds (Cost $1,545,475) 1,606,290
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. TREASURY NOTES (4.4%)
1,000,000 5.50%, 5/31/03......................................... $ 999,300
950,000 7.00%, 7/15/06......................................... 1,037,096
-----------
Total U.S. Treasury Notes (Cost $1,979,366) 2,036,396
-----------
INVESTMENT COMPANIES (2.4%)
225,048 Dreyfus Treasury Prime Fund............................ 225,048
910,202 Federated U.S. Treasury Services Fund.................. 910,202
-----------
Total Investment Companies (Cost $1,135,250) 1,135,250
-----------
Total Investments (Cost $46,194,828) (a)--99.2% 46,732,283
Other assets in excess of liabilities 0.8% 382,359
-----------
Total Net Assets--100.0% $47,114,642
===========
</TABLE>
- --------
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation...................................... $594,357
Unrealized depreciation...................................... (56,902)
--------
Net unrealized appreciation.................................. $537,455
========
</TABLE>
* Variable Rate. Rate presented represents rate in effect at June 30, 1998.
ABS--Asset Backed Security
CMO--Collateralized Mortgage Obligation
MTN--Medium Term Note
See Notes to Financial Statements.
B-52
<PAGE> 124
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
Income Equity Fund
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY
AMOUNT DESCRIPTION MARKET VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS (100.1%)
Aerospace/Defense (1.8%)
35,800 B.F. Goodrich Co...................................... $ 1,776,575
1,900 Boeing Co............................................. 84,669
------------
1,861,244
------------
Aluminum (0.9%)
16,500 Reynolds Metals Co.................................... 922,969
------------
Automotive (0.2%)
3,000 Ford Motor Co......................................... 177,000
------------
Automotive Parts (3.0%)
37,400 Genuine Parts Co...................................... 1,292,638
34,100 TRW, Inc.............................................. 1,862,712
------------
3,155,350
------------
Banks (1.2%)
23,100 Crestar Financial Corp................................ 1,260,394
------------
Beverages (1.2%)
8,100 Brown-Forman Corp., Class B........................... 520,425
17,600 Seagram Co. Ltd....................................... 720,500
------------
1,240,925
------------
Building Materials (1.8%)
28,200 Armstrong World Industries, Inc....................... 1,899,975
------------
Chemicals-General (2.9%)
3,875 E.I. DuPont de Nemours & Co........................... 289,172
51,500 Hercules, Inc......................................... 2,117,937
5,025 Monsanto Co........................................... 280,772
4,450 PPG Industries, Inc................................... 309,553
------------
2,997,434
------------
Chemicals-Specialty (3.2%)
29,800 BetzDearborn, Inc..................................... 1,257,188
23,200 Eastman Chemical Co................................... 1,444,200
35,100 RPM, Inc.............................................. 596,700
------------
3,298,088
------------
Computers & Peripherals (0.2%)
750 Cisco Systems, Inc. (b)............................... 69,047
3,215 Compaq Computer Corp.................................. 91,226
------------
160,273
------------
Consumer Goods & Services (1.3%)
31,275 Fortune Brands, Inc................................... 1,202,133
1,600 Procter & Gamble Co................................... 145,700
------------
1,347,833
------------
Containers & Packaging (1.8%)
38,800 Crown Cork & Seal Co., Inc............................ 1,843,000
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY
AMOUNT DESCRIPTION MARKET VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Diversified (2.3%)
1,800 General Electric Co................................... $ 163,800
22,500 National Service Industries, Inc...................... 1,144,687
25,000 Tenneco, Inc.......................................... 951,563
2,050 Tyco International Ltd................................ 129,150
------------
2,389,200
------------
Electrical Equipment (1.6%)
2,200 Emerson Electric Co................................... 132,688
37,300 Hubbell, Inc., Class B................................ 1,552,612
------------
1,685,300
------------
Electronic & Electrical-General (6.4%)
53,800 General Signal Corp................................... 1,936,800
28,800 GPU, Inc.............................................. 1,089,000
48,000 Harris Corp........................................... 2,144,999
31,500 Thomas & Betts Corp................................... 1,551,375
------------
6,722,174
------------
Financial Services (2.1%)
786 Associates First Capital Corp......................... 60,424
18,300 TransAmerica Corp..................................... 2,106,787
------------
2,167,211
------------
Food Distributors, Supermarkets & Wholesalers (4.9%)
56,100 American Stores Co.................................... 1,356,919
44,900 Dean Foods Co......................................... 2,466,693
47,000 Flowers Industries, Inc............................... 960,563
5,000 Winn-Dixie Stores, Inc................................ 255,938
------------
5,040,113
------------
Food Processing & Packaging (4.8%)
60,800 ConAgra, Inc.......................................... 1,926,600
20,500 General Mills, Inc.................................... 1,039,094
35,300 H. J. Heinz Co........................................ 1,981,212
------------
4,946,906
------------
Forest Products-Lumber & Paper (9.1%)
52,400 Boise Cascade Corp.................................... 1,716,099
23,400 Consolidated Papers, Inc.............................. 637,650
26,600 Georgia-Pacific Timber Group.......................... 611,800
44,400 Kimberly-Clark Corp................................... 2,036,849
16,700 Rayonier, Inc......................................... 768,200
19,700 Temple-Inland, Inc.................................... 1,061,338
18,700 Union Camp Corp....................................... 927,988
20,000 Westvaco Corp......................................... 565,000
37,600 Willamette Industries, Inc............................ 1,203,200
------------
9,528,124
------------
</TABLE>
Continued
B-53
<PAGE> 125
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
Income Equity Fund
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY
AMOUNT DESCRIPTION MARKET VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Heavy Machinery (0.1%)
2,650 Deere & Co............................................ $ 140,119
------------
Industrial Goods & Services (0.9%)
21,500 Harsco Corp........................................... 984,969
------------
Insurance (0.8%)
38,200 TIG Holdings, Inc..................................... 878,600
------------
Leisure-Recreation, Gaming (1.0%)
40,900 Brunswick Corp........................................ 1,012,275
------------
Manufacturing-Miscellaneous (2.8%)
24,800 Olin Corp............................................. 1,033,850
89,400 Pall Corp............................................. 1,832,700
------------
2,866,550
------------
Medical Supplies (3.9%)
42,900 Bard (C.R.), Inc...................................... 1,632,881
42,000 Baxter International, Inc............................. 2,260,125
1,750 Johnson & Johnson..................................... 129,063
------------
4,022,069
------------
Office Equipment & Supplies (1.1%)
47,100 Wallace Computer Services, Inc........................ 1,118,625
------------
Office Equipment & Supplies (Non-Computer Related) (0.0%)
1,075 Pitney-Bowes, Inc..................................... 51,734
------------
Oil & Gas Exploration, Production & Services (9.5%)
1,950 Enron Corp............................................ 105,422
37,800 Kerr-McGee Corp....................................... 2,187,674
49,400 Mitchell Energy & Development, Class A................ 988,000
48,100 Mitchell Energy & Development, Class B................ 974,025
31,700 Murphy Oil Corp....................................... 2,167,487
18,800 National Fuel Gas Co.................................. 818,975
625 Schlumberger, Ltd..................................... 42,695
39,000 Sonat, Inc............................................ 1,506,375
35,900 Ultramar Diamond Shamrock Corp........................ 1,133,094
------------
9,923,747
------------
Oil-Integrated Companies (5.6%)
22,300 Atlantic Richfield Co................................. 1,742,187
2,275 British Petroleum PLC, ADR............................ 200,769
2,350 Chevron Corp.......................................... 195,197
1,800 Exxon Corp............................................ 128,363
22,900 Mobil Corp............................................ 1,754,712
2,300 Royal Dutch Petroleum Co.--New York Shares............ 126,069
28,950 Texaco, Inc........................................... 1,727,953
------------
5,875,250
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY
AMOUNT DESCRIPTION MARKET VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Pharmaceuticals (1.6%)
1,200 Merck & Co., Inc...................................... $ 160,500
32,100 Pharmacia & Upjohn, Inc............................... 1,480,613
------------
1,641,113
------------
Precision Instruments & Related (1.4%)
57,300 Flowserve Corp........................................ 1,411,013
------------
Publishing (0.2%)
2,000 McGraw-Hill Cos., Inc................................. 163,125
------------
Real Estate Investment Trusts (2.3%)
16,700 Developers Diversified Realty Corp.................... 654,431
5,250 Duke Realty Investments, Inc.......................... 124,359
13,475 Equity Residential Properties Trust................... 639,220
30,200 FelCor Suite Hotels, Inc.............................. 947,526
------------
2,365,536
------------
Retail-Department Stores (0.9%)
1,600 J.C. Penney Co........................................ 115,700
13,100 May Department Stores Co.............................. 858,050
------------
973,750
------------
Rubber & Rubber Products (1.0%)
47,900 Cooper Tire & Rubber Co............................... 987,938
------------
Semiconductors (0.0%)
600 Intel Corp............................................ 44,475
------------
Steel (1.8%)
73,321 Allegheny Teledyne, Inc............................... 1,677,218
4,500 Carpenter Technology Corp............................. 226,125
------------
1,903,343
------------
Tax Return Preparation (2.0%)
48,700 H&R Block, Inc........................................ 2,051,488
------------
Textile Products (1.3%)
38,500 Unifi, Inc............................................ 1,318,625
------------
Utilities-Electric (3.1%)
24,600 CINergy Corp.......................................... 861,000
23,400 DPL, Inc.............................................. 424,125
34,700 PacifiCorp............................................ 785,088
44,500 Potomac Electric Power................................ 1,115,281
------------
3,185,494
------------
Utilities-Electric & Gas (1.2%)
46,000 OGE Energy Corp....................................... 1,242,000
------------
Utilities-Natural Gas (2.5%)
38,800 AGL Resources, Inc.................................... 771,150
18,500 NICOR, Inc............................................ 742,313
25,800 People's Energy Corp.................................. 996,524
</TABLE>
Continued
B-54
<PAGE> 126
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
Income Equity Fund
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY
AMOUNT DESCRIPTION MARKET VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities-Natural Gas, continued:
3,225 Williams Companies, Inc............................... $ 108,844
------------
2,618,831
------------
Utilities-Telecommunications (4.4%)
36,100 Alltel Corp........................................... 1,678,650
7,775 Cincinnati Bell, Inc.................................. 222,558
33,200 Frontier Corp......................................... 1,045,800
28,400 GTE Corp.............................................. 1,579,750
------------
4,526,758
------------
Total Common Stocks (Cost $104,596,990) 103,950,940
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY
AMOUNT DESCRIPTION MARKET VALUE
--------- ----------------------------------------------------- ------------
<C> <S> <C>
INVESTMENT COMPANIES (0.2%)
195,072 Dreyfus Treasury Prime Fund.......................... $ 195,072
19,044 Federated U.S. Treasury Services Fund................ 19,044
------------
Total Investment Companies (Cost $214,116) 214,116
------------
Total Investments (Cost $104,811,106) (a)--100.3% 104,165,056
Liabilities in excess of other assets (0.3)% (310,007)
------------
Total Net Assets--100.0% $103,855,049
============
</TABLE>
- --------
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.................................. $ 5,570,097
Unrealized depreciation.................................. (6,216,147)
-----------
Net unrealized appreciation.............................. $ (646,050)
===========
</TABLE>
(b) Represents non-income producing securities.
ADR--American Depository Receipt
PLC--Public Liability Co.
See Notes to Financial Statements.
B-55
<PAGE> 127
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
Balanced Fund
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------- -----------
<C> <S> <C>
COMMON STOCKS (51.1%)
Apparel/Footwear (0.4%)
1,500 Gap, Inc............................................... $ 92,438
-----------
Automotive (0.9%)
3,350 Ford Motor Co.......................................... 197,650
-----------
Banks (7.7%)
900 Bank of New York Co., Inc.............................. 54,619
2,500 BankAmerica Corp....................................... 216,094
9,200 BankBoston Corp........................................ 511,749
3,000 Chase Manhattan Corp................................... 226,500
1,800 First Union Corp....................................... 104,850
2,650 J.P. Morgan & Co....................................... 310,381
1,500 Mellon Bank Corp....................................... 104,438
700 SunTrust Banks, Inc.................................... 56,919
650 Wachovia Corp.......................................... 54,925
1,050 Washington Mutual, Inc................................. 45,609
200 Wells Fargo & Co....................................... 73,800
-----------
1,759,884
-----------
Beverages (2.2%)
4,600 Coca-Cola Co........................................... 393,300
2,700 PepsiCo, Inc........................................... 111,206
-----------
504,506
-----------
Chemicals-General (0.3%)
1,000 E.I. DuPont de Nemours & Co............................ 74,625
-----------
Computers & Peripherals (2.5%)
3,000 Cisco Systems, Inc.(b)................................. 276,188
3,000 Dell Computer Corp.(b)................................. 278,437
-----------
554,625
-----------
Consumer Goods & Services (2.0%)
5,000 Procter & Gamble Co.................................... 455,313
-----------
Cosmetics & Toiletries (1.5%)
6,000 Gillette Co............................................ 340,125
-----------
Diversified (2.6%)
4,000 General Electric Co.................................... 364,000
3,500 Tyco International Ltd................................. 220,500
-----------
584,500
-----------
Entertainment (0.7%)
1,400 The Walt Disney Co..................................... 147,088
-----------
Financial Services (2.2%)
3,000 Fannie Mae............................................. 182,250
3,200 FINOVA Group, Inc...................................... 181,200
2,000 Travelers Group, Inc................................... 121,250
-----------
484,700
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED
Insurance (2.1%)
8,050 SunAmerica, Inc....................................... $ 462,372
-----------
Medical Supplies (0.9%)
2,800 Johnson & Johnson..................................... 206,500
-----------
Newspapers (1.0%)
2,800 New York Times Co., Class A........................... 221,900
-----------
Oil & Gas Exploration, Production & Services (0.8%)
2,500 Schlumberger, Ltd..................................... 170,781
-----------
Oil-Integrated Companies (3.9%)
3,500 British Petroleum PLC, ADR............................ 308,875
4,600 Exxon Corp............................................ 328,038
4,000 Texaco, Inc........................................... 238,750
-----------
875,663
-----------
Pharmaceuticals (9.6%)
4,000 Bristol-Myers Squibb Co............................... 459,750
3,500 Eli Lilly & Co........................................ 231,219
4,000 Merck & Co., Inc...................................... 534,999
4,600 Pfizer, Inc........................................... 499,962
2,000 Schering-Plough Corp.................................. 183,250
4,000 Warner-Lambert Co..................................... 277,500
-----------
2,186,680
-----------
Retail (4.6%)
1,500 Dayton Hudson Corp.................................... 72,750
1,500 Home Depot, Inc....................................... 124,594
10,000 Staples, Inc.(b)...................................... 289,374
4,600 Wal-Mart Stores, Inc.................................. 279,450
7,000 Walgreen Co........................................... 289,188
-----------
1,055,356
-----------
Software & Computer Services (3.3%)
3,150 Computer Associates International, Inc................ 175,022
6,800 HBO & Co.............................................. 239,700
3,000 Microsoft Corp.(b).................................... 325,125
-----------
739,847
-----------
Telecommunications (0.6%)
1,500 Lucent Technologies, Inc.............................. 124,781
-----------
Utilities-Telecommunications (1.3%)
10,000 Cincinnati Bell, Inc.................................. 286,250
-----------
Total Common Stocks (Cost $8,205,754) 11,525,584
-----------
CORPORATE BONDS (6.4%)
Banks (1.9%)
400,000 Chase Capital I, Series A, 7.67%, 12/1/26, Callable
12/1/06 @103.84, Guaranteed by Chase Manhattan Corp.. 429,500
-----------
</TABLE>
Continued
B-56
<PAGE> 128
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
Balanced Fund
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------------
<C> <S> <C>
CORPORATE BONDS, CONTINUED
Financial Services (4.5%)
400,000 Ford Motor Credit Co., 6.25%, 12/8/05................ $ 400,000
615,000 Green Tree Financial Corp., Series 1997-6, Class A3,
6.32%, 1/15/29, ABS................................. 618,733
------------
1,018,733
------------
Total Corporate Bonds (Cost $1,416,890) 1,448,233
------------
U.S. GOVERNMENT AGENCIES (21.3%)
Federal Home Loan Bank (7.5%)
1,000,000 5.53%, 1/15/03, Series KL03.......................... 993,250
700,000 5.42%, 1/22/03, Series LF03.......................... 692,188
------------
1,685,438
------------
Federal National Mortgage Assoc. (13.8%)
1,450,000 6.67%, 8/1/01, MTN................................... 1,489,150
500,000 6.01%, 1/14/03, Callable 1/14/00 @ 100, MTN.......... 499,780
300,000 5.75%, 4/15/03....................................... 300,465
500,000 6.89%, 7/12/04, Callable 7/12/00 @ 100, MTN.......... 509,990
300,000 6.95%, 11/13/06, Callable 11/13/01 @ 100............. 308,172
------------
3,107,557
------------
Total U.S. Government Agencies (Cost $4,776,325) 4,792,995
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------- -----------
<C> <S> <C>
U.S. TREASURY NOTES (12.0%)
2,000,000 5.50%, 5/31/00........................................ $ 1,999,500
700,000 6.25%, 5/31/00........................................ 708,995
-----------
Total U.S. Treasury Notes (Cost $2,697,838) 2,708,495
-----------
U.S. TREASURY STRIPS (4.7%)
2,000,000 11/15/20, Series SO................................... 557,740
2,000,000 11/15/22, Series SO................................... 499,940
-----------
Total U.S. Treasury Strips (Cost $1,004,740) 1,057,680
-----------
INVESTMENT COMPANIES (4.7%)
669,555 Dreyfus Treasury Prime Fund........................... 669,555
389,975 Federated U.S. Treasury Services Fund................. 389,975
-----------
Total Investment Companies (Cost $1,059,530) 1,059,530
-----------
Total Investments (Cost $19,161,077) (a)--100.2% 22,592,517
Liabilities in excess of other assets (0.2)% (53,376)
-----------
Total Net Assets--100.0% $22,539,141
===========
</TABLE>
- --------
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.................................... $3,481,940
Unrealized depreciation.................................... (50,500)
----------
Net unrealized appreciation................................ $3,431,440
==========
</TABLE>
(b) Represents non-income producing securities.
ABS--Asset Backed Security
ADR--American Depository Receipt
MTN--Medium Term Note
PLC--Public Liability Co.
See Notes to Financial Statements.
B-57
<PAGE> 129
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
Stock Appreciation Fund
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (108.5%)
Aerospace/Defense (2.7%)
20,000 BE Aerospace, Inc. (b)................................. $ 582,500
-----------
Apparel/Footwear (6.2%)
37,200 Jones Apparel Group, Inc. (b).......................... 1,360,125
-----------
Automotive Parts (2.6%)
32,000 Gentex Corp. (b)....................................... 580,000
-----------
Banks (17.6%)
15,000 AmSouth Bancorp........................................ 589,688
25,000 Colonial BancGroup, Inc................................ 806,249
10,000 First American Corp.................................... 481,250
10,000 Legg Mason, Inc........................................ 575,625
26,200 Peoples Heritage Financial Group, Inc.................. 618,975
17,000 Sterling Bancorp....................................... 442,000
12,000 Vermont Financial Services Corp........................ 329,250
-----------
3,843,037
-----------
Building Materials (3.1%)
11,000 Medusa Corp............................................ 690,250
-----------
Chemicals-Specialty (0.9%)
6,000 Cabot Corp............................................. 193,875
-----------
Computers & Peripherals (6.1%)
17,000 Complete Business Solutions, Inc. (b).................. 610,937
3,500 Comverse Technology, Inc. (b).......................... 181,563
26,000 Quantum Corp. (b)...................................... 539,500
-----------
1,332,000
-----------
Cosmetics & Toiletries (1.5%)
15,000 Nature's Sunshine Products, Inc........................ 338,438
-----------
Educational Institutions (1.0%)
9,600 DeVry, Inc............................................. 210,600
-----------
Electronic & Electrical-General (2.5%)
18,000 American Power Conversion Corp. (b).................... 540,000
-----------
Financial Services (4.5%)
7,000 Astoria Financial Corp................................. 374,500
11,000 FINOVA Group, Inc...................................... 622,875
-----------
997,375
-----------
Health Care (5.7%)
24,000 First Health Group Corp. (b)........................... 684,000
14,000 Safeskin Corp.......................................... 575,750
-----------
1,259,750
-----------
Heavy Machinery (5.0%)
43,250 JLG Industries, Inc.................................... 873,109
8,000 Regal-Beloit Corp...................................... 230,000
-----------
1,103,109
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Insurance (1.5%)
4,000 Life Re Corp........................................... $ 331,500
-----------
Medical Supplies (3.2%)
11,000 STERIS Corp. (b)....................................... 699,531
-----------
Metals-Fabrication (2.5%)
14,400 Wolverine Tube, Inc. (b)............................... 547,200
-----------
Oilfield Services & Equipment (2.1%)
23,350 Tuboscope, Inc. (b).................................... 461,163
-----------
Pharmaceuticals (9.8%)
7,000 Genetech, Inc.......................................... 475,125
25,800 Kendle International, Inc.............................. 780,450
48,000 NBTY, Inc. (b)......................................... 881,999
-----------
2,137,574
-----------
Printing & Publishing (1.0%)
5,000 Multi-Color Corp. (b).................................. 37,500
5,000 World Color Press, Inc. (b)............................ 175,000
-----------
212,500
-----------
Radio (3.1%)
11,500 Jacor Communications, Inc.............................. 678,500
-----------
Restaurants (2.7%)
15,000 Papa John's International, Inc. (b).................... 591,563
-----------
Retail (2.6%)
11,000 Bed Bath & Beyond, Inc................................. 569,938
-----------
Semiconductors (2.8%)
31,000 Plexus Corp............................................ 616,125
-----------
Software & Computer Services (7.0%)
10,000 Claremont Technology Group............................. 268,125
14,000 J. D. Edwards & Co..................................... 601,125
14,000 PeopleSoft, Inc........................................ 658,000
-----------
1,527,250
-----------
Steel (2.1%)
9,000 Carpenter Technology Corp.............................. 452,250
-----------
Telecommunications (3.3%)
20,000 Aspect Telecommunications Corp. (b).................... 547,500
12,500 SmarTalk Teleservices, Inc............................. 182,031
-----------
729,531
-----------
Textile Products (2.3%)
16,000 Mohawk Industries, Inc................................. 507,000
-----------
Wholesale Distribution (3.1%)
16,000 Tech Data Corp. (b).................................... 686,000
-----------
Total Common Stocks (Cost $18,958,568) 23,778,684
-----------
</TABLE>
Continued
B-58
<PAGE> 130
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
Stock Appreciation Fund
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
INVESTMENT COMPANIES (3.1%)
207,927 Dreyfus Treasury Prime Fund........................... $ 207,927
478,124 Federated U.S. Treasury Services Fund................. 478,124
-----------
Total Investment Companies (Cost $686,051) 686,051
-----------
Total Investments (Cost $19,644,619) (a)--111.6% 24,464,735
Liabilities in excess of other assets (11.6)% (2,541,047)
-----------
Total Net Assets--100.0% $21,923,688
===========
</TABLE>
- --------
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.................................... $5,173,480
Unrealized depreciation.................................... (353,364)
----------
Net unrealized appreciation................................ $4,820,116
==========
</TABLE>
(b)Represents non-income producing securities.
See Notes to Financial Statements.
B-59
<PAGE> 131
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
Large Company Select Fund
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (94.1%)
Apparel/Footwear (3.7%)
16,000 Gap, Inc............................................... $ 986,000
20,400 Jones Apparel Group, Inc. (b).......................... 745,875
-----------
1,731,875
-----------
Automotive (1.8%)
14,150 Ford Motor Co.......................................... 834,850
-----------
Banks (7.6%)
3,800 Bank of New York Co., Inc.............................. 230,613
10,000 BankAmerica Corp....................................... 864,374
10,800 BankBoston Corp........................................ 600,750
700 Citicorp............................................... 104,475
2,000 Fifth Third Bancorp.................................... 126,000
7,400 First Union Corp....................................... 431,050
5,200 KeyCorp................................................ 185,250
2,700 Mellon Bank Corp....................................... 187,988
2,500 SunTrust Banks, Inc.................................... 203,281
2,300 Wachovia Corp.......................................... 194,350
3,750 Washington Mutual, Inc................................. 162,891
800 Wells Fargo & Co....................................... 295,200
-----------
3,586,222
-----------
Beverages (3.1%)
13,100 Coca-Cola Co........................................... 1,120,050
8,000 PepsiCo, Inc........................................... 329,500
-----------
1,449,550
-----------
Chemicals-General (0.8%)
5,000 E.I. DuPont de Nemours & Co............................ 373,125
-----------
Computers & Peripherals (6.9%)
17,775 Cisco Systems, Inc. (b)................................ 1,636,411
20,000 Compaq Computer Corp................................... 567,500
8,000 Dell Computer Corp. (b)................................ 742,500
2,700 International Business Machines Corp................... 309,994
-----------
3,256,405
-----------
Consumer Goods & Services (2.9%)
11,600 Procter & Gamble Co.................................... 1,056,325
4,000 Unilever N.V........................................... 315,750
-----------
1,372,075
-----------
Cosmetics & Toiletries (2.2%)
18,400 Gillette Co............................................ 1,043,050
-----------
Diversified (6.0%)
22,000 General Electric Co.................................... 2,002,000
13,000 Tyco International Ltd................................. 819,000
-----------
2,821,000
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Electrical Equipment (0.8%)
6,200 Emerson Electric Co.................................... $ 373,938
-----------
Entertainment (1.6%)
7,000 The Walt Disney Co..................................... 735,438
-----------
Financial Services (7.6%)
8,000 American Express Co.................................... 912,000
3,708 Associates First Capital Corp.......................... 285,053
15,200 Fannie Mae............................................. 923,399
5,200 FINOVA Group, Inc...................................... 294,450
2,000 Merrill Lynch & Co, Inc................................ 184,500
3,700 Morgan Stanley Dean Witter & Co........................ 338,088
10,000 Travelers Group, Inc................................... 606,250
-----------
3,543,740
-----------
Food Distributors, Supermarkets & Wholesalers (1.0%)
8,000 Bestfoods.............................................. 464,500
-----------
Insurance (4.8%)
6,600 American International Group, Inc...................... 963,600
3,200 Chubb Corp............................................. 257,200
7,200 Marsh & McLennan Cos., Inc............................. 435,150
10,650 SunAmerica, Inc........................................ 611,709
-----------
2,267,659
-----------
Medical Supplies (1.0%)
6,300 Johnson & Johnson...................................... 464,625
-----------
Newspapers (1.2%)
8,000 Gannett Co., Inc....................................... 568,500
-----------
Office Equipment & Supplies (Non-Computer Related) (0.6%)
6,300 Pitney-Bowes, Inc...................................... 303,188
-----------
Oil & Gas Exploration, Production & Services (1.9%)
1,300 Camco International, Inc............................... 101,238
11,300 Schlumberger, Ltd...................................... 771,931
-----------
873,169
-----------
Oil-Integrated Companies (4.5%)
12,150 Exxon Corp............................................. 866,447
7,200 Mobil Corp............................................. 551,700
12,400 Royal Dutch Petroleum Co.--New York Shares............. 679,675
-----------
2,097,822
-----------
Pharmaceuticals (12.9%)
9,000 Bristol-Myers Squibb Co................................ 1,034,437
15,000 Eli Lilly & Co......................................... 990,938
8,300 Merck & Co., Inc....................................... 1,110,124
13,700 Pfizer, Inc............................................ 1,489,018
</TABLE>
Continued
B-60
<PAGE> 132
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
Large Company Select Fund
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Pharmaceuticals, continued:
7,500 Schering-Plough Corp................................... $ 687,188
11,000 Warner-Lambert Co...................................... 763,125
-----------
6,074,830
-----------
Retail (8.4%)
14,000 Home Depot, Inc........................................ 1,162,875
30,000 Staples, Inc. (b)...................................... 868,125
23,000 Wal-Mart Stores, Inc................................... 1,397,250
12,000 Walgreen Co............................................ 495,750
-----------
3,924,000
-----------
Semiconductors (0.8%)
5,000 Intel Corp............................................. 370,625
-----------
Software & Computer Services (5.9%)
15,000 Computer Associates International, Inc................. 833,438
14,000 HBO & Co............................................... 493,500
13,300 Microsoft Corp. (b).................................... 1,441,387
-----------
2,768,325
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Telecommunications (3.8%)
28,000 Ericsson (L.M.) Telefonaktiebolaget, Sponsored ADR..... $ 801,500
12,000 Lucent Technologies, Inc............................... 998,250
-----------
1,799,750
-----------
Transportation (0.8%)
6,000 FDX Corp. (b).......................................... 376,500
-----------
Utilities-Telecommunications (1.5%)
23,800 Cincinnati Bell, Inc................................... 681,275
-----------
Total Common Stocks (Cost $25,643,883) 44,156,036
-----------
INVESTMENT COMPANIES (6.3%)
1,072,520 Dreyfus Treasury Prime Fund............................ 1,072,520
1,882,519 Federated U.S. Treasury Services Fund.................. 1,882,519
-----------
Total Investment Companies (Cost $2,955,039) 2,955,039
-----------
Total Investments (Cost $28,598,922) (a)--100.4% 47,111,075
Liabilities in excess of other assets (0.4)% (191,399)
-----------
Total Net Assets--100.0% $46,919,676
===========
</TABLE>
- --------
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation................................... $18,670,409
Unrealized depreciation................................... (158,256)
-----------
Net unrealized appreciation............................... $18,512,153
===========
</TABLE>
(b) Represents non-income producing securities.
See Notes to Financial Statements.
B-61
<PAGE> 133
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
(Unaudited)
1. ORGANIZATION:
The Riverfront Funds, Inc. (the "Company"), 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 Company 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 Balanced Fund, The Riverfront Stock Appreciation
Fund and The Riverfront Large Company Select Fund (each, a "Fund"; and
collectively, the "Funds").
The investment objective of the U.S. Government Securities Money Market Fund
is to seek current income from U.S. Government short-term securities while
preserving capital and maintaining liquidity. The investment objective of the
U.S. Government Income Fund is to seek a high level of current income,
consistent with preservation of capital, by investing primarily in securities
issued or guaranteed by the U.S. Government, its agencies and
instrumentalities and in high quality fixed rate and adjustable rate
mortgage-backed securities and other asset-backed securities. The investment
objective of the Income Equity Fund is to seek a high level of investment
income, with capital appreciation as a secondary objective, through
investment primarily in income-producing equity securities of U.S. issuers.
The investment objective of the Balanced Fund is to seek long-term growth of
capital with some current income as a secondary objective. The investment
objective of the Stock Appreciation Fund is to seek capital growth. The
investment objective of the Large Company Select Fund is to seek long term
growth of capital with some current income as a secondary objective.
The Company is authorized to issue 3,000,000,000 shares with a par value of
$.001 per share. Sales of shares of the Funds 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 Balanced Fund,
the Stock Appreciation Fund and the Large Company Select Fund (collectively,
"the variable net asset value funds") each offer two share classes: Investor
A Shares and Investor B Shares. The U.S. Government Securities Money Market
Fund (the "money market fund") offers only the 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 Funds'
prospectus. Certain redemptions of the 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 Funds' prospectus.
Each share class has identical rights and privileges, except with respect to
(i) distribution and shareholder services (12b-1) fees paid by each share
class, (ii) voting rights on matters specifically affecting a single share
class, (iii) and the exchange privileges.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Funds in preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
Continued
B-62
<PAGE> 134
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
(Unaudited)
SECURITIES VALUATION:
Investments of the money market fund are valued at amortized cost. 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 an appropriate demand feature, or (b)
maintain a dollar-weighted-average fund maturity which exceeds 90 days.
Investments in common and preferred stocks, corporate bonds, 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 or closing sale prices on the
principal exchange (closing sales prices on the over-the-counter National
Market System) in which such securities are normally traded. Municipal bonds
are valued by using market quotations or independent services that use prices
provided by market makers or estimates of market values obtained from yield
data relating to instruments or securities with similar characteristics.
Short-term investments maturing in 60 days or less are valued at amortized
cost, which 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 as determined in good faith by Provident, as
the investment adviser, or by the sub-investment advisor, as the case may be,
under the supervision of the Company'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 on an identified cost basis.
REPURCHASE AGREEMENTS:
The Funds may enter into repurchase agreements from financial institutions
such as banks and broker dealers which Provident, as investment adviser or
the Fund's sub-investment adviser, as applicable, deems creditworthy under
guidelines approved by the Company's 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
Fund plus interest negotiated on the basis of current short-term rates, which
may be more or less than the rate on the underlying fund 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 Fund's custodian or another qualified custodian
or in the Federal Reserve/Treasury book-entry system. Repurchase agreements
are considered to be loans by the Funds under the 1940 Act.
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
generally paid monthly for each variable net asset value fund with the
exception of the Stock Appreciation Fund which declares and pays any
dividends semi-annually.
Continued
B-63
<PAGE> 135
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
(Unaudited)
Distributable net realized capital gains, if any, are declared and
distributed at least annually for each of the Funds. Any taxable
distributions declared in December and paid in the following fiscal year will
be taxable to shareholders in the year declared.
The amounts of dividends from net investment income and of distributions from
net realized gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require classification.
Dividends and distributions to shareholders which exceed net investment
income and net realized capital gains for financial reporting purposes are
reported as dividends in excess of net investment income or distributions in
excess of net realized gains. To the extent they exceed net investment income
and net realized gains for tax purposes, they are reported as distributions
of capital.
FEDERAL INCOME TAXES:
It is the policy of the Funds to comply with all requirements of the Internal
Revenue Code (the "Code") applicable to regulated investment companies and to
distribute substantially all of their taxable income to their shareholders;
therefore, no federal tax provision was required.
EXPENSE ALLOCATIONS:
Expenses that are directly related to one of the Funds are charged directly
to that Fund. Other operating expenses of the Company are prorated to the
Funds, generally on the basis of relative net assets. Fees paid under a
Fund's shareholder servicing or distribution plans are borne by the specific
class of shares to which they apply.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
period ended June 30, 1998 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
U.S. Government Income Fund.......................... $34,533,954 $36,206,174
Income Equity Fund................................... $71,039,842 $72,528,879
Balanced Fund........................................ $13,362,427 $14,485,631
Stock Appreciation Fund.............................. $15,237,859 $15,167,586
Large Company Select Fund............................ $18,732,125 $15,307,122
</TABLE>
Continued
B-64
<PAGE> 136
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
(Unaudited)
4. CAPITAL SHARE TRANSACTIONS:
Transactions in capital shares for the Fund were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME FUND INCOME EQUITY FUND
----------------------------- -------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1998 1997 1998 1997
------------- -------------- ----------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares
issued............... $ 1,007,823 $ 3,965,162 $ 3,613,972 $ 7,333,378
Proceeds from shares
issued in connection
with common trust
fund acquisition..... -- 16,606,766 -- --
Dividends reinvested.. 116,184 447,813 225,198 19,742,254
Shares redeemed....... (4,533,540) (5,969,304) (6,310,236) (16,662,273)
------------- ------------- ----------- ------------
Change in net assets
from Investor A share
transactions......... $ (3,409,533) $ 15,050,437 $(2,471,066) $ 10,413,359
============= ============= =========== ============
Investor B Shares:
Proceeds from shares
issued............... $ 39,946 $ 270,855 $ 2,980,222 $ 8,520,546
Dividends reinvested.. 14,938 58,773 2,092 3,781,007
Shares redeemed....... (90,196) (315,970) (1,641,478) (1,514,086)
------------- ------------- ----------- ------------
Change in net assets
from Investor B share
transactions......... $ (35,312) $ 13,658 $ 1,340,836 $ 10,787,467
============= ============= =========== ============
SHARE TRANSACTIONS:
Investor A Shares:
Issued................ 104,981 423,205 287,981 552,976
Issued in connection
with common trust
fund acquisition..... -- 1,761,057 -- --
Reinvested............ 12,228 47,635 17,693 1,674,497
Redeemed.............. (476,125) (634,837) (506,172) (1,206,389)
------------- ------------- ----------- ------------
Change in Investor A
Shares............... (358,916) 1,597,060 (200,498) 1,021,084
============= ============= =========== ============
Investor B Shares:
Issued................ 3,719 24,956 231,567 633,092
Reinvested............ 1,394 5,568 164 314,995
Redeemed.............. (8,403) (29,761) (129,036) (109,730)
------------- ------------- ----------- ------------
Change in Investor B
Shares............... (3,290) 763 102,695 838,357
============= ============= =========== ============
</TABLE>
Continued
B-65
<PAGE> 137
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
(Unaudited)
4. CAPITAL SHARE TRANSACTIONS, CONTINUED:
<TABLE>
<CAPTION>
BALANCED FUND STOCK APPRECIATION FUND
------------------------- -------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1998 1997 1998 1997
----------- ------------ ----------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares
issued................. $ 745,182 $ 1,140,421 $ 786,933 $ 3,009,538
Dividends reinvested.... 59,021 969,400 116 4,366,182
Shares redeemed......... (1,211,431) (3,919,227) (3,616,145) (13,898,332)
----------- ----------- ----------- ------------
Change in net assets
from Investor A share
transactions........... $ (407,228) $(1,809,406) $(2,829,096) $ (6,522,612)
=========== =========== =========== ============
Investor B Shares:
Proceeds from shares
issued................. $ 564,091 $ 1,482,972 $ 403,050 $ 526,610
Dividends reinvested.... 28,811 979,316 3 214,709
Shares redeemed......... (1,005,457) (1,554,696) (75,596) (115,336)
----------- ----------- ----------- ------------
Change in net assets
from Investor B share
transactions........... $ (412,555) $ 907,592 $ 327,457 $ 625,983
=========== =========== =========== ============
SHARE TRANSACTIONS:
Investor A Shares:
Issued.................. 56,456 91,585 80,520 307,000
Reinvested.............. 4,511 79,188 13 468,165
Redeemed................ (92,668) (316,498) (374,315) (1,436,813)
----------- ----------- ----------- ------------
Change in Investor A
Shares................. (31,701) (145,725) (293,782) (661,648)
=========== =========== =========== ============
Investor B Shares:
Issued.................. 41,321 115,832 39,923 52,468
Reinvested.............. 2,133 77,517 -- 22,295
Redeemed................ (74,155) (121,277) (7,653) (11,801)
----------- ----------- ----------- ------------
Change in Investor B
Shares................. (30,701) 72,072 32,270 62,962
=========== =========== =========== ============
</TABLE>
Continued
B-66
<PAGE> 138
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
(Unaudited)
4. CAPITAL SHARE TRANSACTIONS, CONTINUED:
<TABLE>
<CAPTION>
LARGE COMPANY SELECT FUND
---------------------------
SIX MONTHS
ENDED PERIOD ENDED
JUNE 30, DECEMBER 31,
1998 1997*
------------ -------------
(UNAUDITED)
<S> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued...................... $ 3,386,765 $ 2,486,334
Proceeds from shares issued in connection with
common trust fund acquisition................... -- 27,813,338
Dividends reinvested............................. 5 3,676,075
Shares redeemed.................................. (1,651,637) (3,937,879)
------------ ------------
Change in net assets from Investor A share
transactions.................................... $ 1,735,133 $ 30,037,868
============ ============
Investor B Shares:
Proceeds from shares issued...................... $ 2,717,808 $ 2,396,213
Dividends reinvested............................. 2,210 263,596
Shares redeemed.................................. (345,502) (37,554)
------------ ------------
Change in net assets from Investor B share
transactions.................................... $ 2,374,516 $ 2,622,255
============ ============
SHARE TRANSACTIONS:
Investor A Shares:
Issued........................................... 266,592 205,316
Issued in connection with common trust fund
acquisition..................................... -- 2,781,335
Reinvested....................................... -- 329,693
Redeemed......................................... (132,191) (352,190)
------------ ------------
Change in Investor A Shares...................... 134,401 2,964,154
============ ============
Investor B Shares:
Issued........................................... 219,652 198,193
Reinvested....................................... 199 23,747
Redeemed......................................... (27,567) (3,405)
------------ ------------
Change in Investor B Shares...................... 192,284 218,535
============ ============
</TABLE>
- - -------
* For the period January 2, 1997 (commencement of operations) through December
31, 1997.
5. RELATED PARTY TRANSACTIONS
Provident has entered into an Investment Advisory Agreement with the Company
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 Income Equity Fund, the Balanced Fund, the Stock
Appreciation Fund and the Large Company Select 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 Fund.
Continued
B-67
<PAGE> 139
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
(Unaudited)
5. RELATED PARTY TRANSACTIONS, CONTINUED:
Pursuant to the terms of the Investment Advisory Agreement with the Company,
Provident has entered into a Sub-Investment Advisory Agreement with DePrince,
Race & Zollo, Inc. ("DRZ") for the Income Equity Fund. DRZ provides
investment advice to and supervises the investment program of that portion of
the assets of the Income Equity Fund allocated to DRZ by the Fund's Board of
Directors. Under the terms of the Sub-Investment Advisory Agreements, DRZ
receives from Provident fees calculated at 0.50% of average daily net assets
up to $55 million of the Income Equity Fund managed by DRZ and 0.55% of
average daily net assets above $55 million for this Fund managed by DRZ.
In addition to serving as Investment Adviser, Provident serves as custodian
and fund accountant to the Funds. 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 Fund.
During the period ended June 30, 1998, Provident Securities & Investment
Company ("PSI"), an affiliate of Provident which is a registered broker
dealer, executed transactions to purchase and sell Fund investments on an
agency basis on behalf of the Company. The Company paid PSI approximately
$44,141 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")
is an Ohio limited partnership. BISYS Fund Services Ohio, Inc. ("BISYS
Ohio"), and BISYS are subsidiaries of the BISYS Group, Inc.
BISYS, with whom certain officers and a director of the Company are
affiliated, serves the Company as administrator, principal underwriter and
distributor. Such officers and director are paid no fees directly by the
Funds for serving as officers and as director of the Company. Under the terms
of the Administration Agreement, BISYS' fees are computed at 0.20% of the
average daily net assets of each Fund.
Provident also serves as transfer agent and shareholder servicing agent to
the Company. BISYS Ohio served as sub-transfer agent for the Investor B
Shares through March 24, 1997. On March 25, 1997, Provident became the
Transfer Agent for all shares of the Company. 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 Fund and certain out-of-pocket
expenses. Under the terms of the Shareholder Services Plan, each Fund is
authorized to pay compensation to banks and other financial institutions,
including Provident and BISYS or other providers for Record keeping and/or
administrative support services. As of June 30, 1998, there were no
shareholder servicing agreements entered into on behalf of any of the Funds.
The Company has adopted an Investor A Distribution and Shareholder Service
Plan and Agreement ("Investor A Plan") and an Investor B Distribution and
Shareholder Services Plan and Agreement ("Investor B Plan"), each in
accordance with Rule 12b-1 under the 1940 Act. Pursuant to the Investor A
Plan, each Fund is 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 asset value of Investor A Shares of
each Fund. 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 asset value of Investor B Shares of
that Fund 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 Fund. These fees
may be used by BISYS to pay banks, broker dealers and other institutions,
Continued
B-68
<PAGE> 140
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
(Unaudited)
5. RELATED PARTY TRANSACTIONS, CONTINUED:
including Provident, 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 six-month period ended June 30, 1998, BISYS received $317,473 from
commissions on sales of capital shares of the Funds. BISYS, as
dealer/underwriter, retained $317,077 and reallowed $396 to brokers
affiliated with Provident.
As of June 30, 1998, Provident and certain of its affiliates own shares in
the Riverfront U.S. Government Income Fund totaling $23,968,517 or 51% of the
Fund.
Fees may be voluntarily reduced or reimbursed to assist the Funds in
maintaining competitive expense ratios. Information regarding these
transactions is as follows for the period ended June 30, 1998:
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME
SECURITIES MONEY U.S. GOVERNMENT EQUITY
MARKET FUND INCOME FUND FUND
---------------- --------------- -------
<S> <C> <C> <C>
INVESTMENT ADVISOR FEES:
Annual fee before voluntary fee
reductions
(percentage of average net assets).. 0.15% 0.40% 0.95%
Voluntary fee reductions............. NA NA NA
ADMINISTRATION FEES:
Annual fee (percentage of average net
assets).............................. 0.20% 0.20% 0.20%
12B-1 FEES (INVESTOR A):
Annual fee before voluntary fee
reductions
(percentage of average net assets).. 0.25% 0.25% 0.25%
Voluntary fee reductions............. $110,832 $14,207 $13,463
12B-1 FEES (INVESTOR B):
Annual fee before voluntary fee
reductions
(percentage of average net assets).. NA 1.00% 1.00%
Custodian and Accounting Fees:....... $ 37,705 $28,926 $82,585
Transfer Agent Fees:................. $ 22,042 $22,174 $45,002
</TABLE>
Continued
B-69
<PAGE> 141
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
(Unaudited)
5. RELATED PARTY TRANSACTIONS, CONTINUED:
<TABLE>
<CAPTION>
STOCK
BALANCED APPRECIATION LARGE COMPANY
FUND FUND SELECT FUND
-------- ------------ -------------
<S> <C> <C> <C>
INVESTMENT ADVISOR FEES:
Annual fee before voluntary fee
reductions
(percentage of average net assets)...... 0.90% 0.80% 0.80%
Voluntary fee reductions................. $10,867 NA NA
ADMINISTRATION FEES:
Annual fee before voluntary fee
reductions
(percentage of average net assets)...... 0.20% 0.20% 0.20%
12B-1 FEES (INVESTOR A):
Annual fee before voluntary fee
reductions
(percentage of average net assets)...... 0.25% 0.25% 0.25%
Voluntary fee reductions................. $3,023 NA NA
12B-1 FEES (INVESTOR B):
Annual fee (percentage of average net
assets).................................. 1.00% 1.00% 1.00%
Custodian and Accounting Fees:........... $18,340 $20,826 $31,618
Transfer Agent Fees:..................... $23,203 $52,161 $22,946
NA--Not applicable
</TABLE>
6. ACQUISITION OF COMMON TRUST FUNDS A, B, C AND G
On January 2, 1997, the Large Company Select Fund issued Investor A shares to
acquire the assets and liabilities, including distributions payable of
$26,562, of the Common Trust A and Common Trust G of The Provident Bank. The
following is a summary of Investor A shares issued, net assets acquired, net
asset value per share and unrealized appreciation as of the date acquired:
<TABLE>
<S> <C>
Investor A Shares (000)'s.............................................. 2,781
Net assets acquired (000)'s............................................ $27,813
Net asset value........................................................ $10.00
Unrealized appreciation (000)'s........................................ $12,592
</TABLE>
On January 23, 1997, the U.S. Government Income Fund issued Investor A shares
to acquire the assets and liabilities, including distributions payable of
$26,148, of the Common Trust Fund C of The Provident Bank. The following is a
summary of Investor A shares issued, net assets acquired, net asset value per
share and unrealized appreciation as of the date acquired.
<TABLE>
<S> <C>
Investor A Shares (000)'s.............................................. 1,761
Net assets acquired (000)'s............................................ $16,607
Net asset value........................................................ $9.43
Unrealized appreciation (000)'s........................................ $392
</TABLE>
Continued
B-70
<PAGE> 142
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. June 30, 1998
(Unaudited)
7. SUBSEQUENT EVENTS
The Company has entered into an Agreement and Plan of Reorganization and
Liquidation, dated as of March 21, 1997 (the "Plan"), with The Riverfront
Funds, an Ohio business trust (the "Trust"), where by each Fund of the
Company will become a separate series of an Ohio business trust rather than a
separate series of a Maryland corporation (the "Conversion").
The Conversion is subject to certain regulatory approvals and to approval by
the shareholders. A special Shareholder Meeting was held on August 7, 1998,
at which the reorganization was approved. It is anticipated that the
conversion from a Maryland corporation to an Ohio business trust will become
effective October 30, 1998.
B-71
<PAGE> 143
- --------------------------------------------------------------------------------
[This Page Intentionally Left Blank]
B-72
<PAGE> 144
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
---------------------------------------------------------------
SIX MONTHS
ENDED YEARS ENDED DECEMBER 31,
JUNE 30, ------------------------------------------------
1998 1997 1996 1995 1994 (A) 1993 (A)
----------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- --------
Investment Activities
Net investment income.. 0.024 0.049 0.046 0.050 0.040 0.030
-------- -------- -------- -------- -------- --------
Distributions
Net investment income.. (0.024) (0.049) (0.046) (0.050) (0.040) (0.030)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD.......... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ========
Total Return............ 2.45%(b) 5.02% 4.89% 5.52% 3.78% 2.90%
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of $155,772 $142,569 $181,017 $157,495 $149,374 $133,207
period (000)............
Ratio of expenses to 0.67%(c) 0.64% 0.59% 0.58% 0.51% 0.32%
average net assets......
Ratio of net investment 4.90%(c) 4.90% 4.78% 5.34% 3.70% 2.85%
income to average net
assets..................
Ratio of expenses to 0.82%(c) 0.79% 0.84% 0.83% 0.80% 0.42%
average net assets*.....
Ratio of net investment 4.75%(c) 4.75% 4.53% 5.09% 3.41% 2.75%
income to average net
assets*.................
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or expense reimbursements had not
occurred, the ratios would have been as indicated.
(a) Audited by other auditors.
(b) Not annualized.
(c) Annualized.
See Notes to Financial Statements.
B-73
<PAGE> 145
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME FUND
-----------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 1998 YEARS ENDED DECEMBER 31,
------------------------- -------------------------------------------
1997 1996
--------------------- ---------------------
INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A INVESTOR B
----------- ----------- ---------- ---------- ---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 9.48 $10.68 $ 9.43 $10.64 $ 9.71 $10.95
------- ------ ------- ------ ------- ------
Investment Activities
Net investment income.. 0.24 0.21 0.49 0.48 0.52 0.49
Net realized and
unrealized gains
(losses) from
investments........... 0.05 0.05 0.14 0.14 (0.29) (0.31)
------- ------ ------- ------ ------- ------
Total from Investment
Activities............ 0.29 0.26 0.63 0.62 0.23 0.18
------- ------ ------- ------ ------- ------
Distributions
Net investment income.. (0.24) (0.18) (0.50) (0.49) (0.51) (0.49)
In excess of net
investment income..... -- -- (0.08) (0.09) -- --
------- ------ ------- ------ ------- ------
Total Distributions.... (0.24) (0.18) (0.58) (0.58) (0.51) (0.49)
------- ------ ------- ------ ------- ------
NET ASSET VALUE,
END OF PERIOD.......... $ 9.53 $10.76 $ 9.48 $10.68 $ 9.43 $10.64
======= ====== ======= ====== ======= ======
Total Return (excludes
sales/redemption
charge)................ 3.06%(b) 2.57% 6.94% 6.07% 2.51% 1.72%
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)........... $45,831 $1,284 $49,017 $1,309 $33,694 $1,296
Ratio of expenses to
average net assets..... 1.14%(c) 1.95%(c) 1.14% 1.95% 1.11% 1.96%
Ratio of net investment
income to average net
assets................. 4.97%(c) 4.16%(c) 5.40% 4.56% 5.45% 4.59%
Ratio of expenses to
average net assets*.... 1.20%(c) 1.95%(c) 1.20% 1.95% 1.20% 1.96%
Ratio of net investment
income to average net
assets*................ 4.91%(c) 4.16%(c) 5.34% 4.56% 5.36% 4.59%
Portfolio turnover rate
(d).................... 76% 76% 71% 71% 53% 53%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or expense reimbursements had not
occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover rate 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.
B-74
<PAGE> 146
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME FUND
----------------------------------------------
JANUARY 17, YEARS ENDED
YEAR ENDED 1995 TO DECEMBER 31,
DECEMBER 31, DECEMBER 31, -------------------
1995 1995(A) 1994 (F) 1993 (F)
------------ ------------ -------- --------
INVESTOR A INVESTOR B
------------ ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............ $ 8.92 $10.00 $ 9.91 $ 9.76
------- ------ ------- -------
Investment Activities
Net investment income.......... 0.54 0.43 0.54 0.51
Net realized and unrealized
gains (losses) from
investments................... 0.79 0.94 (0.99) 0.20
------- ------ ------- -------
Total from Investment
Activities.................... 1.33 1.37 (0.45) 0.71
------- ------ ------- -------
Distributions
Net investment income.......... (0.54) (0.42) (0.54) (0.50)
In excess of net investment
income........................ -- -- -- (0.06)
------- ------ ------- -------
Total Distributions............ (0.54) (0.42) (0.54) (0.56)
------- ------ ------- -------
NET ASSET VALUE,
END OF PERIOD.................. $ 9.71 $10.95 $ 8.92 $ 9.91
======= ====== ======= =======
Total Return (excludes
sales/redemption charge)....... 15.22% 13.96%(e) (4.64)% 7.38%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000)................... $36,538 $1,263 $32,721 $30,078
Ratio of expenses to average net
assets......................... 1.09% 1.90%(c) 0.86% 0.65%
Ratio of net investment income
to average net assets.......... 5.74% 4.80%(c) 5.78% 5.05%
Ratio of expenses to average net
assets*........................ 1.18% 1.90%(c) 1.14% 1.08%
Ratio of net investment income
to average net assets*......... 5.65% 4.80%(c) 5.49% 4.62%
Portfolio turnover rate (d)..... 75% 75% 83% 220%
</TABLE>
See Notes to Financial Statements.
B-75
<PAGE> 147
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
INCOME EQUITY FUND
-----------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 1998 YEARS ENDED DECEMBER 31,
------------------------- -------------------------------------------
1997 1996
--------------------- ---------------------
INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A INVESTOR B
----------- ----------- ---------- ---------- ---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 11.68 $ 11.98 $ 11.92 $ 12.16 $ 11.70 $11.85
------- ------- ------- ------- ------- ------
Investment Activities
Net investment income.. 0.05 -- 0.16 0.06 0.21 0.12
Net realized and
unrealized gains from
investments........... 0.56 0.57 3.11 3.17 2.12 2.21
------- ------- ------- ------- ------- ------
Total from Investment
Activities............. 0.61 0.57 3.27 3.23 2.33 2.33
------- ------- ------- ------- ------- ------
Distributions
Net investment income.. (0.05) (0.01) (0.16) (0.06) (0.21) (0.12)
In excess of net
investment income...... -- -- -- -- -- --
Net realized gains..... (0.14) (0.14) (3.35) (3.35) (1.90) (1.90)
------- ------- ------- ------- ------- ------
Total Distributions.... (0.19) (0.15) (3.51) (3.41) (2.11) (2.02)
------- ------- ------- ------- ------- ------
NET ASSET VALUE,
END OF PERIOD.......... $ 12.10 $ 12.40 $ 11.68 $ 11.98 $ 11.92 $12.16
======= ======= ======= ======= ======= ======
Total Return (excludes
sales/redemption
charge)................. 5.18%(b) 4.73%(b) 28.20% 27.19% 19.88% 19.67%
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)............ $84,402 $19,453 $83,841 $17,563 $73,368 $7,632
Ratio of expenses to
average net assets...... 1.76%(c) 2.54%(c) 1.75% 2.55% 1.76% 2.48%
Ratio of net investment
income to average net
assets.................. 0.79%(c) 0.01%(c) 1.21% 0.40% 1.62% 0.88%
Ratio of expenses to
average net assets*..... 1.79%(c) (g) 1.80% (g) 1.85% 2.54%
Ratio of net investment
income to average net
assets*................. 0.76%(c) (g) 1.16% (g) 1.53% 0.82%
Portfolio Turnover (d).. 66% 66% 157% 157% 166% 166%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or expense reimbursements had not
occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(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.
(g) There were no waivers or reimbursements during the period.
See Notes to Financial Statements.
B-76
<PAGE> 148
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Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
INCOME EQUITY FUND
-------------------------------------------
JANUARY 17, YEARS ENDED
YEAR ENDED 1995 TO DECEMBER 31,
DECEMBER 31, DECEMBER 31, ----------------
1995 1995(A) 1994(F) 1993(F)
------------ ------------ ------- -------
INVESTOR A INVESTOR B
------------ ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............. $ 10.15 $10.00 $ 10.63 $ 10.78
------- ------ ------- -------
Investment Activities
Net investment income........... 0.27 0.13 0.32 0.28
Net realized and unrealized
gains from investments......... 2.89 2.78 -- 1.01
------- ------ ------- -------
Total from Investment
Activities...................... 3.16 2.91 0.32 1.29
------- ------ ------- -------
Distributions
Net investment income........... (0.27) (0.13) (0.31) (0.27)
In excess of net investment
income.......................... -- -- -- (0.03)
Net realized gains.............. (1.34) (0.93) (0.49) (1.14)
------- ------ ------- -------
Total Distributions............. (1.61) (1.06) (0.80) (1.44)
------- ------ ------- -------
NET ASSET VALUE,
END OF PERIOD................... $ 11.70 $11.85 $ 10.15 $ 10.63
======= ====== ======= =======
Total Return (excludes
sales/redemption charge)......... 31.45% 29.28%(e) 3.08% 12.11%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)............................ $60,845 $2,833 $34,965 $24,387
Ratio of expenses to average net
assets........................... 1.49% 2.46%(c) 1.30% 1.47%
Ratio of net investment income to
average net assets............... 2.27% 1.12%(c) 2.93% 2.55%
Ratio of expenses to average net
assets*.......................... 1.74% 2.51%(c) 1.58% 1.64%
Ratio of net investment income to
average net assets*.............. 2.02% 1.07%(c) 2.65% 2.38%
Portfolio Turnover (d)........... 180% 180% 119% 145%
</TABLE>
See Notes to Financial Statements.
B-77
<PAGE> 149
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Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
BALANCED FUND
-----------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 1998 YEARS ENDED DECEMBER 31,
------------------------- -------------------------------------------
1997 1996
--------------------- ---------------------
INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A INVESTOR B
----------- ----------- ---------- ---------- ---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 12.30 $ 12.71 $11.69 $ 12.04 $ 11.36 $ 11.70
------- ------- ------ ------- ------- -------
Investment Activities
Net investment income.. 0.10 0.05 0.23 0.12 0.31 0.26
Net realized and
unrealized gains
(losses) from
investments........... 1.46 1.51 1.71 1.77 0.33 0.34
------- ------- ------ ------- ------- -------
Total from Investment
Activities............. 1.56 1.56 1.94 1.89 0.64 0.60
------- ------- ------ ------- ------- -------
Distributions
Net investment income.. (0.10) (0.05) (0.23) (0.12) (0.31) (0.26)
Net realized gains..... (0.08) (0.08) (1.10) (1.10) -- --
------- ------- ------ ------- ------- -------
Total Distributions.... (0.18) (0.13) (1.33) (1.22) (0.31) (0.26)
------- ------- ------ ------- ------- -------
NET ASSET VALUE,
END OF PERIOD.......... $ 13.68 $ 14.14 $12.30 $ 12.71 $ 11.69 $ 12.04
======= ======= ====== ======= ======= =======
Total Return (excludes
sales/redemption
charge)................. 12.73%(c) 12.26%(c) 16.77% 15.82% 5.76% 5.27%
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)............ $10,200 $12,339 $9,563 $11,483 $10,786 $10,008
Ratio of expenses to
average net assets...... 1.72%(d) 2.53%(d) 1.86% 2.72% 1.70% 2.54%
Ratio of net investment
income to average net
assets.................. 1.55%(d) 0.74%(d) 1.80% 0.93% 2.87% 2.03%
Ratio of expenses to
average net assets*..... 1.88%(d) 2.63%(d) 2.07% 2.82% 1.94% 2.68%
Ratio of net investment
income to average net
assets*................. 1.39%(d) 0.64%(d) 1.59% 0.83% 2.63% 1.89%
Portfolio Turnover (e).. 64% 64% 102% 102% 98% 98%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or expense reimbursements had not
occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) 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.
(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.
B-78
<PAGE> 150
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
BALANCED FUND
--------------------------------------------
YEAR JANUARY 17, FROM SEPTEMBER 1,
ENDED 1995 TO 1994 THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1995(A) 1994(A)(F)
------------ ------------ -----------------
INVESTOR A INVESTOR B
------------ ------------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............. $ 9.79 $10.00 $10.00
------ ------ ------
Investment Activities
Net investment income........... 0.35 0.25 0.10
Net realized and unrealized
gains (losses) from
investments.................... 1.66 1.79 (0.18)
------ ------ ------
Total from Investment
Activities...................... 2.01 2.04 (0.08)
------ ------ ------
Distributions
Net investment income........... (0.34) (0.24) (0.13)
Net realized gains.............. (0.10) (0.10) --
------ ------ ------
Total Distributions............. (0.44) (0.34) (0.13)
------ ------ ------
NET ASSET VALUE,
END OF PERIOD................... $11.36 $11.70 $ 9.79
====== ====== ======
Total Return (excludes
sales/redemption charge)......... 20.83% 20.53%(b) (0.82)%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)............................ $9,427 $5,030 $2,709
Ratio of expenses to average net
assets........................... 1.28% 2.04%(d) 1.48%(d)
Ratio of net investment income to
average net assets............... 3.48% 2.69%(d) 4.01%(d)
Ratio of expenses to average net
assets*.......................... 1.67% 2.84%(d) 4.61%(d)
Ratio of net investment income to
average net assets*.............. 3.09% 1.89%(d) 0.88%(d)
Portfolio Turnover (e)........... 13% 13% 1%
</TABLE>
See Notes to Financial Statements.
B-79
<PAGE> 151
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Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
STOCK APPRECIATION FUND
-------------------------------------------------------------------------------------------
FROM OCTOBER 1,
SIX MONTHS ENDED YEARS ENDED DECEMBER 31, 1995 THROUGH
JUNE 30, 1998 --------------------------------------------- DECEMBER 31,
1997 1996 1995(B)
-------------------------- ---------------------- ---------------------- ---------------
INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A
----------- ----------- ---------- ---------- ---------- ---------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 9.17 $ 9.49 $ 9.43 $ 9.77 $ 9.50 $ 9.91 $ 10.00
------- ------ ------- ------ ------- ------ -------
Investment Activities
Net investment loss.... (0.04) (0.07) (0.04) (0.08) (0.14) (0.15) (0.01)
Net realized and
unrealized gains
(losses)
from investments...... 0.72 0.74 1.75 1.77 1.10 1.04 (0.12)
------- ------ ------- ------ ------- ------ -------
Total from Investment
Activities............. 0.68 0.67 1.71 1.69 0.96 0.89 (0.13)
------- ------ ------- ------ ------- ------ -------
Distributions
Net realized gains..... (1.18) (1.18) (1.97) (1.97) (1.03) (1.03) (0.37)
------- ------ ------- ------ ------- ------ -------
NET ASSET VALUE,
END OF PERIOD.......... $ 8.67 $ 8.98 $ 9.17 $ 9.49 $ 9.43 $ 9.77 $ 9.50
======= ====== ======= ====== ======= ====== =======
Total Return (excludes
sales/redemption
charge)................ 7.41%(c) 7.05%(c) 18.79% 17.86% 10.17% 9.05% (1.20)%(c)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)............ $20,437 $1,486 $24,312 $1,265 $31,227 $ 687 $40,995
Ratio of expenses to
average net assets...... 1.98%(d) 2.73%(d) 2.11% 2.86% 1.91% 2.64% 1.76%(d)
Ratio of net investment
loss to average
net assets............. (0.77)%(d) (1.57)%(d) (0.43)% (1.20)% (1.25)% (2.01)% (0.49)%(d)
Ratio of expenses to
average net assets*..... (g) (g) (g) (g) (g) (g) 1.77%(d)
Ratio of net investment
loss to average net
assets*................ (g) (g) (g) (g) (g) (g) (0.50)%(d)
Portfolio Turnover (e).. 62% 62% 67% 67% 162% 162% 46%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or 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 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.
(g) There were no waivers or reimbursements during the period.
See Notes to Financial Statements.
B-80
<PAGE> 152
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<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)
--------------- --------------- -------- -------- --------
INVESTOR A INVESTOR B
--------------- ---------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 10.00 $10.00 $ 8.25 $ 10.18 $ 7.98
------- ------ -------- -------- --------
Investment Activities
Net investment loss.... (0.01) (0.01) (0.07) (0.12) (0.17)
Net realized and
unrealized gains
(losses)
from investments...... (0.12) (0.08) 2.14 (1.26) 2.57
------- ------ -------- -------- --------
Total from Investment
Activities............. (0.13) (0.09) 2.07 (1.38) 2.40
------- ------ -------- -------- --------
Distributions
Net realized gains..... (0.37) -- (0.32) (0.55) (0.20)
------- ------ -------- -------- --------
NET ASSET VALUE,
END OF PERIOD.......... $ 9.50 $ 9.91 $ 10.00 $ 8.25 $ 10.18
======= ====== ======== ======== ========
Total Return (excludes
sales/redemption
charge)................. (1.20)%(c) (0.90)%(c) 25.12% (13.91)% 30.61%
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)............ $40,995 $ 72 $ 44,500 $ 47,880 $ 59,330
Ratio of expenses to
average net assets...... 1.76%(d) 2.30%(d) 2.61% 2.44% 2.47%
Ratio of net investment
loss to average
net assets............. (0.49)%(d) (1.69)%(d) (0.73)% (1.35)% (1.85)%
Ratio of expenses to
average net assets*..... 1.77%(d) 2.39%(d) (g) (g) (g)
Ratio of net investment
loss to average net
assets*................ (0.50)%(d) (1.78)%(d) (g) (g) (g)
Portfolio Turnover (e).. 46% 46% 197% 254% 216%
</TABLE>
See Notes to Financial Statements.
B-81
<PAGE> 153
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
LARGE COMPANY SELECT FUND
------------------------------------------------------
FROM JANUARY 2,
SIX MONTHS ENDED 1997 THROUGH
JUNE 30, 1998 DECEMBER 31, 1997(A)
-------------------------- ------------------------
INVESTOR A INVESTOR B INVESTOR A INVESTOR B
----------- ----------- ---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 11.34 $11.28 $ 10.00 $10.00
------- ------ ------- ------
Investment Activities
Net investment income
(loss)................. (0.02) (0.05) -- (0.04)
Net realized and
unrealized gains
(losses) from
investments........... 2.06 2.03 2.77 2.72
------- ------ ------- ------
Total from Investment
Activities............. 2.04 1.98 2.77 2.68
------- ------ ------- ------
Distributions
Net realized gains..... -- -- (1.40) (1.40)
Tax return of capital.. -- -- (0.03) --
------- ------ ------- ------
Total Distributions.... -- -- (1.43) (1.40)
------- ------ ------- ------
NET ASSET VALUE,
END OF PERIOD.......... $ 13.38 $13.26 $ 11.34 $11.28
======= ====== ======= ======
Total Return (excludes
sales/redemption
charge)................. 18.02%(b) 17.58%(b) 27.93%(b) 26.97%(b)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)............ $41,472 $5,447 $33,614 $2,464
Ratio of expenses to
average net assets...... 1.67%(c) 2.42%(c) 1.69%(c) 2.47%(c)
Ratio of net investment
income (loss) to average
net assets.............. (0.30)%(c) (1.05)%(c) 0.00%(c) (1.10)%(c)
Ratio of expenses to
average net assets...... (e) (e) (e) (e)
Ratio of net investment
income to average net
assets.................. (e) (e) (e) (e)
Portfolio Turnover (d).. 40% 40% 39% 39%
</TABLE>
- --------
(a) Period from commencement of operations.
(b) Not annualized.
(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) There were no waivers or reimbursements during the period.
See Notes to Financial Statements.
B-82
<PAGE> 154
- --------------------------------------------------------------------------------
Report of Independent Auditors
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
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, Balanced
Fund, Stock Appreciation Fund, and Large Company Select Fund) as of December
31, 1997, the related statements of operations for the year then ended of the
U.S. Government Securities Money Market Fund, U.S. Government Income Fund,
Income Equity Fund, Ohio Tax-Free Bond Fund, Balanced Fund, and Stock
Appreciation Fund and for the period January 2, 1997 to December 31, 1997 for
the Large Company Select Fund and the statements of changes in net assets for
each of the two years in the period then ended of the U.S. Government
Securities Money Market Fund, U.S. Government Income Fund, Income Equity Fund,
Ohio Tax-Free Bond Fund, Balanced Fund, and Stock Appreciation Fund, and for
the period January 2, 1997 to December 31, 1997 of the Large Company Select
Fund, and the financial highlights for each of the three years in the period
then ended of the U.S. Government Securities Money Market Fund, U.S. Government
Income Fund, Income Equity Fund, Ohio Tax-Free Bond Fund, and Balanced Fund,
and for the two years ended December 31, 1997 and for the period October 1,
1995 to December 31, 1995 of the Stock Appreciation Fund, and for the period
January 2, 1997 to December 31, 1997 of the Large Company Select 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.
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 and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1997, 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 statement 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, 1997, the results of their operations, the changes in their net
assets and the financial highlights for the respective periods ended December
31, 1997 in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Cincinnati, Ohio
February 13, 1998
B-84
<PAGE> 155
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
<TABLE>
<CAPTION>
U.S. GOVERNMENT U.S. GOVERNMENT INCOME
SECURITIES MONEY INCOME EQUITY
MARKET FUND FUND FUND
---------------- --------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost
$111,358,087; $49,153,218; and
$96,679,453, respectively)..... $111,358,087 $49,741,917 $101,416,249
Repurchase agreements (Cost
$31,408,000; $0; and $0,
respectively).................. 31,408,000 -- --
------------ ----------- ------------
TOTAL INVESTMENTS............... 142,766,087 49,741,917 101,416,249
Cash............................ 439 -- --
Interest and dividends
receivable..................... 484,466 631,997 283,533
Receivable for capital shares
issued......................... -- 76 104,504
Receivable for investments sold. -- -- 468,154
Prepaid expenses and other
assets......................... 10,642 5,482 21,273
------------ ----------- ------------
TOTAL ASSETS.................... 143,261,634 50,379,472 102,293,713
------------ ----------- ------------
LIABILITIES:
Dividends payable............... 615,066 412 --
Payable for capital shares
redeemed....................... -- -- 1,534
Payable for investments
purchased...................... -- -- 743,993
Accrued expenses and other
payables:
Investment advisory fees....... 18,229 17,134 80,325
Administration fees............ 3,812 1,381 2,621
Custodian and accounting fees.. 5,937 6,420 13,363
12b-1 fees (Investor A)........ 12,152 8,022 12,562
12b-1 fees (Investor B)........ -- 1,115 14,485
Transfer agent fees............ -- 3,841 1,626
Audit and legal fees........... 36,872 11,007 19,414
Other.......................... 809 3,712 --
------------ ----------- ------------
TOTAL LIABILITIES............... 692,877 53,044 889,923
------------ ----------- ------------
NET ASSETS:
Capital......................... 142,572,510 50,806,345 95,815,203
Accumulated undistributed
(distributions in excess of)
net investment income.......... -- -- 534
Net unrealized appreciation/
depreciation on investments.... -- 588,699 4,736,796
Accumulated undistributed net
realized gains (losses) on
investment transactions........ (3,753) (1,068,616) 851,257
------------ ----------- ------------
NET ASSETS..................... $142,568,757 $50,326,428 $101,403,790
============ =========== ============
Net Assets
Investor A Shares.............. $142,568,757 $49,017,391 $ 83,840,700
Investor B Shares.............. NA 1,309,037 17,563,090
------------ ----------- ------------
Total........................ $142,568,757 $50,326,428 $101,403,790
============ =========== ============
Shares of capital stock
Investor A Shares.............. 142,572,510 5,168,697 7,175,136
Investor B Shares.............. NA 122,570 1,466,214
------------ ----------- ------------
Total........................ 142,572,510 5,291,267 8,641,350
============ =========== ============
Net asset value
Investor A Shares--redemption
price per share............... $ 1.00 $ 9.48 $ 11.68
Investor B Shares--offering
price per share*.............. NA 10.68 11.98
============ =========== ============
Maximum Sales Charge (Investor
A)............................. NA 4.50% 4.50%
============ =========== ============
Maximum Offering Price per share
(100%/(100%--Maximum Sales
Charge) of net asset value
adjusted to nearest cent)
(Investor A) (a)............... $ 1.00 $ 9.93 $ 12.23
============ =========== ============
</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.
NA Not applicable
See Notes to Financial Statements.
B-85
<PAGE> 156
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
<TABLE>
<CAPTION>
STOCK LARGE COMPANY
OHIO TAX-FREE BALANCED APPRECIATION SELECT
BOND FUND FUND FUND FUND
------------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value
(Cost $3,289,469;
$18,057,693;
$18,089,347; and
$20,020,952,
respectively)........... $3,512,105 $20,982,175 $22,127,696 $36,027,913
Interest and dividends
receivable.............. 34,701 97,044 11,588 46,735
Receivable for capital
shares issued........... -- 8,434 481 37,836
Receivable for
investments sold........ -- -- 5,138,936 --
Unamortized organization
costs................... -- -- -- 4,944
Prepaid expenses and
other assets............ 8,385 7,734 -- 6,576
---------- ----------- ----------- -----------
TOTAL ASSETS............. 3,555,191 21,095,387 27,278,701 36,124,004
---------- ----------- ----------- -----------
LIABILITIES:
Payable for capital
shares redeemed......... -- 7,725 1,540 --
Payable for investments
purchased............... -- -- 1,650,192 --
Accrued expenses and
other payables:
Investment advisory
fees................... 1,317 14,221 17,129 24,009
Administration fees..... 102 562 668 943
Custodian and
accounting fees........ 1,303 3,390 3,860 5,481
12b-1 fees (Investor
A)..................... 749 1,039 5,263 6,075
12b-1 fees (Investor
B)..................... 1,007 9,622 1,051 1,900
Transfer agent fees..... 1,751 3,738 7,541 1,832
Audit and legal fees.... 2,589 3,995 5,489 6,067
Other................... 198 5,247 8,389 108
---------- ----------- ----------- -----------
TOTAL LIABILITIES........ 9,016 49,539 1,701,122 46,415
---------- ----------- ----------- -----------
NET ASSETS:
Capital.................. 3,178,243 17,990,174 18,568,291 20,059,805
Accumulated undistributed
net investment income
(loss).................. 93,730 3,979 (2,194) --
Net unrealized
appreciation/
depreciation on
investments............. 222,636 2,924,482 4,038,349 16,006,961
Accumulated undistributed
net realized gains
(losses) on investment
transactions............ 51,566 127,213 2,973,133 10,823
---------- ----------- ----------- -----------
NET ASSETS.............. $3,546,175 $21,045,848 $25,577,579 $36,077,589
========== =========== =========== ===========
Net Assets
Investor A Shares....... $2,410,683 $ 9,562,897 $24,312,196 $33,613,506
Investor B Shares....... 1,135,492 11,482,951 1,265,383 2,464,083
---------- ----------- ----------- -----------
Total................. $3,546,175 $21,045,848 $25,577,579 $36,077,589
========== =========== =========== ===========
Shares of capital stock
Investor A Shares....... 268,544 777,175 2,651,012 2,964,154
Investor B Shares....... 123,530 903,237 133,340 218,535
---------- ----------- ----------- -----------
Total................. 392,074 1,680,412 2,784,352 3,182,689
========== =========== =========== ===========
Net asset value
Investor A Shares--
redemption price per
share.................. $ 8.98 $ 12.30 $ 9.17 $ 11.34
Investor B Shares--
offering price per
share*................. 9.19 12.71 9.49 11.28
========== =========== =========== ===========
Maximum Sales Charge
(Investor A)............ 4.50% 4.50% 4.50% 4.50%
========== =========== =========== ===========
Maximum Offering Price
per share (100%/(100%--
Maximum Sales Charge)
of net asset value
adjusted to nearest
cent) (Investor A)...... $ 9.40 $ 12.88 $ 9.60 $ 11.87
========== =========== =========== ===========
</TABLE>
- -------
*Redemption price of Investor B shares varies based on length of time shares
are held.
See Notes to Financial Statements.
B-86
<PAGE> 157
- --------------------------------------------------------------------------------
Statements of Operations
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
U.S. GOVERNMENT U.S. GOVERNMENT INCOME
SECURITIES MONEY INCOME EQUITY
MARKET FUND FUND FUND
---------------- --------------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income................... $8,966,454 $3,195,536 $ 114,843
Dividend income................... -- 85,440 2,688,652
---------- ---------- -----------
TOTAL INCOME...................... 8,966,454 3,280,976 2,803,495
---------- ---------- -----------
EXPENSES:
Investment advisory fees.......... 242,900 200,909 898,800
Administration fees............... 323,868 100,455 189,223
12b-1 fees (Investor A)........... 404,830 122,072 202,966
12b-1 fees (Investor B)........... -- 13,985 134,238
Custodian and accounting fees..... 81,531 55,655 144,048
Audit and legal fees.............. 77,217 32,257 65,211
Directors' fees and expenses...... 9,635 3,922 5,554
Transfer agent fees............... 33,896 50,879 96,037
Registration and filing fees...... 9,072 8,076 2,324
Printing costs.................... 79,667 19,245 48,278
Other............................. 14,832 4,530 18,091
---------- ---------- -----------
GROSS EXPENSES.................... 1,277,448 611,985 1,804,770
Less: Fee waivers............... (242,899) (29,297) (41,154)
---------- ---------- -----------
Net Expenses.................. 1,034,549 582,688 1,763,616
---------- ---------- -----------
Net Investment Income............. 7,931,905 2,698,288 1,039,879
---------- ---------- -----------
REALIZED/UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS:
Net realized gains (losses) from
investment transactions.......... (1,463) 781,702 21,576,605
Net change in unrealized
appreciation/depreciation from
investments...................... -- (56,510) 752,438
---------- ---------- -----------
Net realized/unrealized gains
(losses) from investments........ (1,463) 725,192 22,329,043
---------- ---------- -----------
Change in net assets resulting
from operations.................. $7,930,442 $3,423,480 $23,368,922
========== ========== ===========
</TABLE>
See Notes to Financial Statements.
B-87
<PAGE> 158
- --------------------------------------------------------------------------------
Statements of Operations
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
OHIO STOCK LARGE
TAX-FREE BALANCED APPRECIATION COMPANY
BOND FUND FUND FUND SELECT FUND*
--------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income................. $ 436,799 $ 520,993 $ 84,507 $ 67,812
Dividend income................. 15,627 233,985 365,157 461,398
--------- ---------- ----------- ----------
TOTAL INCOME.................... 452,426 754,978 449,664 529,210
--------- ---------- ----------- ----------
EXPENSES:
Investment advisory fees........ 40,980 185,950 214,758 251,705
Administration fees............. 16,689 41,323 53,690 62,927
12b-1 fees (Investor A)......... 17,534 24,764 64,711 76,802
12b-1 fees (Investor B)......... 11,823 107,557 9,604 7,423
Custodian and accounting fees... 13,711 33,160 42,139 49,119
Audit and legal fees............ 9,985 20,656 15,518 21,646
Organization costs.............. -- 56 14,394 3,872
Directors' fees and expenses.... 594 1,235 1,556 2,026
Transfer agent fees............. 39,534 61,796 118,492 41,424
Registration and filing fees.... 4,199 6,474 15,908 7,294
Printing costs.................. 3,513 11,766 19,283 10,459
Other........................... 727 13,622 2,748 2,445
--------- ---------- ----------- ----------
GROSS EXPENSES.................. 159,289 508,359 572,801 537,142
Less: Fee waivers............. (8,196) (31,340) -- --
Less: Expense reimbursements.. (23,066) -- -- --
--------- ---------- ----------- ----------
Net Expenses................ 128,027 477,019 572,801 537,142
--------- ---------- ----------- ----------
Net Investment Income (Loss).... 324,399 277,959 (123,137) (7,932)
--------- ---------- ----------- ----------
REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS:
Net realized gains (losses) from
investment transactions........ 656,758 1,983,851 5,867,571 4,033,588
Net change in unrealized
appreciation/depreciation from
investments.................... (692,569) 870,883 (1,404,729) 3,414,575
--------- ---------- ----------- ----------
Net realized/unrealized gains
(losses) from investments...... (35,811) 2,854,734 4,462,842 7,448,163
--------- ---------- ----------- ----------
Change in net assets resulting
from operations................ $ 288,588 $3,132,693 $ 4,339,705 $7,440,231
========= ========== =========== ==========
</TABLE>
- -------
* For the period January 2, 1997 (commencement of operations) through December
31, 1997.
See Notes to Financial Statements.
B-88
<PAGE> 159
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
U.S. GOVERNMENT U.S. GOVERNMENT
SECURITIES MONEY MARKET INCOME INCOME EQUITY
FUND 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,
1997 1996 1997 1996 1997 1996
------------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income.. $ 7,931,905 $ 8,268,622 $ 2,698,288 $ 1,942,237 $ 1,039,879 $ 1,134,267
Net realized gains
(losses) from
investment
transactions.......... (1,463) -- 781,702 90,347 21,576,605 13,473,952
Net change in
unrealized
appreciation/
depreciation from
investments........... -- -- (56,510) (1,183,269) 752,438 (1,397,638)
------------- ------------- ----------- ----------- ------------ -----------
Change in net assets
resulting from
operations............. 7,930,442 8,268,622 3,423,480 849,315 23,368,922 13,210,581
------------- ------------- ----------- ----------- ------------ -----------
DISTRIBUTIONS TO
INVESTOR A SHAREHOLDERS:
From net investment
income................ (7,931,905) (8,268,622) (2,663,877) (1,865,718) (981,986) (1,089,197)
In excess of net
investment income..... -- -- (412,137) -- -- (11,775)
From net realized gains
from investments...... -- -- -- -- (19,246,795) (10,109,545)
DISTRIBUTIONS TO
INVESTOR B SHAREHOLDERS:
From net investment
income................ -- -- (64,440) (56,824) (57,359) (45,070)
In excess of net
investment income..... -- -- (11,526) -- -- (1,105)
From net realized gains
from investments...... -- -- -- -- (3,879,842) (941,583)
In excess of net
realized gains........ -- -- -- -- -- (94,220)
------------- ------------- ----------- ----------- ------------ -----------
Change in net assets
from shareholder
distributions.......... (7,931,905) (8,268,622) (3,151,980) (1,922,542) (24,165,982) (12,292,495)
------------- ------------- ----------- ----------- ------------ -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................ 374,303,813 413,837,358 4,236,017 2,867,087 15,853,924 12,638,065
Proceeds from shares
issued in connection
with common trust fund
acquisition........... -- -- 16,606,766 -- -- --
Dividends reinvested... 2,327,411 2,193,920 506,586 486,495 23,523,261 12,143,803
Cost of shares
redeemed.............. (415,078,263) (392,509,518) (6,285,274) (5,090,697) (18,176,359) (8,378,319)
------------- ------------- ----------- ----------- ------------ -----------
Change in net assets
from capital
transactions........... (38,447,039) 23,521,760 15,064,095 (1,737,115) 21,200,826 16,403,549
------------- ------------- ----------- ----------- ------------ -----------
Change in net assets.... (38,448,502) 23,521,760 15,335,595 (2,810,342) 20,403,766 17,321,635
NET ASSETS:
Beginning of period.... 181,017,259 157,495,499 34,990,833 37,801,175 81,000,024 63,678,389
------------- ------------- ----------- ----------- ------------ -----------
End of period.......... $ 142,568,757 $ 181,017,259 $50,326,428 $34,990,833 $101,403,790 $81,000,024
============= ============= =========== =========== ============ ===========
SHARE TRANSACTIONS:
Issued................. 374,303,813 413,837,358 448,161 299,041 1,186,068 997,947
Issued in connection
with common trust fund
acquisition........... -- -- 1,761,057 -- -- --
Reinvested............. 2,327,411 2,193,920 53,203 51,049 1,989,492 1,001,471
Redeemed............... (415,078,263) (392,509,518) (664,598) (534,677) (1,316,119) (656,491)
------------- ------------- ----------- ----------- ------------ -----------
Change in shares........ (38,447,039) 23,521,760 1,597,823 (184,587) 1,859,441 1,342,927
============= ============= =========== =========== ============ ===========
</TABLE>
See Notes to Financial Statements.
B-89
<PAGE> 160
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
STOCK LARGE
APPRECIATION COMPANY
OHIO TAX-FREE BOND FUND BALANCED FUND FUND SELECT FUND
-------------------------- -------------------------- -------------------------- -------------
FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996 1997 1996 1997*
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income
(loss).............. $ 324,399 $ 434,913 $ 277,959 $ 514,538 $ (123,137) $ (462,477) $ (7,932)
Net realized gains
(losses) from
investment
transactions......... 656,758 (2,919) 1,983,851 (153,623) 5,867,571 5,645,154 4,033,588
Net change in
unrealized
appreciation/depreciation
from investments..... (692,569) (107,900) 870,883 853,589 (1,404,729) (1,674,745) 3,414,575
------------ ----------- ----------- ----------- ------------ ------------ -----------
Change in net assets
resulting from
operations............ 288,588 324,094 3,132,693 1,214,504 4,339,705 3,507,932 7,440,231
------------ ----------- ----------- ----------- ------------ ------------ -----------
DISTRIBUTIONS TO
INVESTOR A
SHAREHOLDERS:
From net investment
income............... (200,793) (412,215) (180,288) (346,017) -- -- --
In excess of net
investment income.... (113,570) -- -- (1,775) -- (289) --
From net realized
gains from
investments.......... (446,337) -- (786,461) -- (4,562,955) (3,106,226) (3,675,987)
From tax return of
capital.............. (32,451) -- -- -- -- -- (76,753)
DISTRIBUTIONS TO
INVESTOR B
SHAREHOLDERS:
From net investment
income............... (36,634) (21,400) (99,558) (168,520) -- -- --
In excess of net
investment income.... (8,728) -- -- (1,028) -- -- --
From net realized
gains from
investments.......... (156,126) -- (913,202) -- (216,879) (65,866) (270,025)
From tax return of
capital.............. (2,494) -- -- -- -- -- --
------------ ----------- ----------- ----------- ------------ ------------ -----------
Change in net assets
from shareholder
distributions......... (997,133) (433,615) (1,979,509) (517,340) (4,779,834) (3,172,381) (4,022,765)
------------ ----------- ----------- ----------- ------------ ------------ -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued............... 516,123 632,048 2,623,393 11,628,310 3,536,148 3,709,128 4,882,547
Proceeds from shares
issued in connection
with common trust
fund acquisition..... 11,399,841 -- -- -- -- -- 27,813,338
Dividends reinvested.. 201,688 26,194 1,948,716 546,821 4,580,891 2,969,201 3,939,671
Cost of shares
redeemed............. (19,539,956) (588,738) (5,473,923) (6,534,711) (14,013,668) (16,166,715) (3,975,433)
------------ ----------- ----------- ----------- ------------ ------------ -----------
Change in net assets
from capital
transactions.......... (7,422,304) 69,504 (901,814) 5,640,420 (5,896,629) (9,488,386) 32,660,123
------------ ----------- ----------- ----------- ------------ ------------ -----------
Change in net assets... (8,130,849) (40,017) 251,370 6,337,584 (6,336,758) (9,152,835) 36,077,589
NET ASSETS:
Beginning of period... 11,677,024 11,717,041 20,794,478 14,456,894 31,914,337 41,067,172 --
------------ ----------- ----------- ----------- ------------ ------------ -----------
End of period......... $ 3,546,175 $11,677,024 $21,045,848 $20,794,478 $ 25,577,579 $ 31,914,337 $36,077,589
============ =========== =========== =========== ============ ============ ===========
SHARE TRANSACTIONS:
Issued................ 49,102 59,532 207,417 1,017,399 359,468 373,503 403,509
Issued in connection
with common trust
fund acquisition..... 1,097,194 -- -- -- -- -- 2,781,335
Reinvested............ 20,948 2,490 156,705 47,842 490,460 315,294 353,440
Redeemed.............. (1,895,117) (55,955) (437,775) (571,147) (1,448,614) (1,628,669) (355,595)
------------ ----------- ----------- ----------- ------------ ------------ -----------
Change in shares....... (727,873) 6,067 (73,653) 494,094 (598,686) (939,872) 3,182,689
============ =========== =========== =========== ============ ============ ===========
</TABLE>
- -------
* For the period January 2, 1997 (commencement of operations) through December
31, 1997.
See Notes to Financial Statements.
B-90
<PAGE> 161
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
U.S. Government Securities Money Market Fund
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
----------- --------------------------------------------------- ------------
<C> <S> <C>
COMMERCIAL PAPER (31.8%)
Agriculture (1.8%)
$ 2,500,000 Cargill, Inc., Discount Note, 1/9/98............... $ 2,496,894
------------
Automotive (1.4%)
2,000,000 Ford Motor Co., Discount Note, 1/7/98.............. 1,998,137
------------
Banks (2.8%)
4,000,000 Bankers Trust, Discount Note, 4/6/98............... 3,941,628
------------
Brokerage Services (8.0%)
4,000,000 Merrill Lynch & Co., Inc., Discount Note, 1/5/98... 3,997,531
1,500,000 Merrill Lynch & Co., Inc., Discount Note, 3/27/98.. 1,479,813
2,000,000 Morgan Stanley, Dean Witter Discover & Co.,
Discount Note, 1/23/98............................ 1,993,033
4,000,000 Morgan Stanley, Dean Witter Discover & Co.,
Discount Note, 2/13/98............................ 3,972,432
------------
11,442,809
------------
Financial Services (9.1%)
2,000,000 Associates Corp., N.A., Discount Note, 3/23/98..... 1,975,340
2,900,000 General Electric Capital Corp., Discount Note,
1/21/98........................................... 2,890,834
500,000 General Electric Capital Corp., Discount Note,
2/2/98............................................ 497,533
1,000,000 General Electric Capital Corp., Discount Note,
2/5/98............................................ 994,604
1,500,000 General Electric Capital Corp., Discount Note,
3/13/98........................................... 1,483,315
1,750,000 IBM Credit Corp., Discount Note, 1/16/98........... 1,745,858
1,500,000 Sunbelt-Dix, Inc., Discount Note, 1/6/98........... 1,498,829
2,000,000 Sunbelt-Dix, Inc., Discount Note, 1/20/98.......... 1,994,089
------------
13,080,402
------------
Food Distributors, Supermarkets & Wholesalers (2.4%)
1,500,000 Winn Dixie Stores, Inc., Discount Note, 1/13/98.... 1,497,215
2,000,000 Winn Dixie Stores, Inc., Discount Note, 2/10/98.... 1,987,400
------------
3,484,615
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
----------- --------------------------------------------------- ------------
<C> <S> <C>
COMMERCIAL PAPER, CONTINUED:
Manufacturing--Consumer Goods (2.1%)
$ 3,000,000 Eaton Corp., Discount Note, 2/9/98................. $ 2,981,172
------------
Pharmaceuticals (4.2%)
1,000,000 Glaxo Wellcome PLC, Discount Note, 1/12/98......... 998,298
1,500,000 Glaxo Wellcome PLC, Discount Note, 1/16/98......... 1,496,456
3,500,000 Glaxo Wellcome PLC, Discount Note, 1/27/98......... 3,485,895
------------
5,980,649
------------
Total Commercial Paper (Amortized Cost $45,406,306) 45,406,306
------------
REPURCHASE AGREEMENTS (22.0%)
16,408,000 Dean Witter, 6.70%, 1/2/98, (Collateralized by
$16,277,000 various U.S. Treasury and U.S.
Government Agency Securities, 0.00%-9.38%, 1/2/98-
10/17/16, market value--$16,736,802).............. 16,408,000
15,000,000 Merrill Lynch, 6.50%, 1/2/98, (Collateralized by
$56,704,342 various U.S Government Agency
Securities, 6.95%-8.00%, 7/1/15-7/1/20, market
value--$15,300,307)............................... 15,000,000
------------
Total Repurchase Agreements
(Cost $31,408,000) 31,408,000
------------
U.S. GOVERNMENT AGENCIES (46.3%)
Federal Agricultural Mortgage Corp. (1.4%)
2,000,000 Discount Note, 1/6/98.............................. 1,998,478
------------
Federal Farm Credit Bank (4.9%)
2,000,000 5.50%, 1/2/98...................................... 2,000,000
3,000,000 5.65%, 2/2/98...................................... 3,000,000
2,000,000 5.55%, 3/2/98...................................... 2,000,000
------------
7,000,000
------------
Federal Home Loan Bank (2.1%)
3,000,000 Discount Note, 1/5/98.............................. 2,998,197
------------
Federal Home Loan Mortgage Corp. (5.2%)
2,500,000 Discount Note, 1/2/98.............................. 2,499,625
3,000,000 Discount Note, 2/17/98............................. 2,978,419
2,000,000 5.84%, 4/8/98...................................... 1,999,063
------------
7,477,107
------------
</TABLE>
Continued
B-91
<PAGE> 162
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
U.S. Government Securities Money Market Fund
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
----------- ----------------------------------------------------- ------------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Federal National Mortgage Assoc. (30.7%)
$ 1,000,000 4.01%*, 1/6/98....................................... $ 999,785
1,100,000 6.06%*, 1/8/98....................................... 1,100,064
4,000,000 Discount Note, 1/9/98................................ 3,995,119
3,000,000 Discount Note, 1/15/98............................... 2,993,677
2,000,000 Discount Note, 1/16/98............................... 1,995,442
3,000,000 Discount Note, 1/20/98............................... 2,991,418
4,000,000 Discount Note, 1/21/98............................... 3,987,856
3,000,000 Discount Note, 2/5/98................................ 2,984,046
3,000,000 Discount Note, 2/13/98............................... 2,980,363
1,500,000 4.50%*, 2/25/98...................................... 1,497,549
4,000,000 5.71%, 3/18/98, MTN.................................. 3,998,474
2,190,000 8.15%, 5/11/98....................................... 2,208,916
3,000,000 5.63%, 8/14/98, MTN.................................. 2,996,760
2,000,000 Series 98-AA, 5.54%, 3/12/98......................... 2,000,000
2,000,000 Series 98-AC, 5.74%, 6/9/98.......................... 2,000,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
----------- --------------------------------------------------- ------------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Federal National Mortgage Assoc., continued:
$ 2,000,000 Series 98-Y, 5.52%, 1/15/98........................ $ 2,000,000
3,000,000 Series 98-Z, 5.63%, 2/12/98........................ 3,000,000
------------
43,729,469
------------
Student Loan Marketing Assoc. (1.1%)
1,500,000 5.73%*, 1/6/98..................................... 1,499,597
------------
Tennessee Valley Authority (0.9%)
1,250,000 5.13%, 3/4/98, Continuously callable @ 100......... 1,248,933
------------
Total U.S. Government Agencies (Amortized Cost $65,951,781) 65,951,781
------------
Total Investments (Amortized Cost $142,766,087) (a)--100.1% 142,766,087
Liabilities in excess of other assets (0.1)% (197,330)
------------
Total Net Assets--100.0% $142,568,757
============
</TABLE>
- -------
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable Rate. Rate presented represents rate in effect at December 31, 1997.
Maturity date reflects the next rate change date.
MTN--Medium Term Note.
PLC--Public Liability Co.
See Notes to Financial Statements.
B-92
<PAGE> 163
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
U.S. Government Income Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
COMMERCIAL PAPER (1.0%)
Financial Services (1.0%)
500,000 Sunbelt-Dix. Inc., Discount Note, 1/27/98............. $ 497,967
-----------
Total Commercial Paper (Cost $497,967) 497,967
-----------
CORPORATE BONDS (27.0%)
Banks (7.2%)
600,000 Chase Capital I, Series A, 7.67%, 12/1/26, Callable
12/1/06 @ 103.84, Guaranteed by Chase Manhattan
Corp................................................. 621,000
500,000 Mellon Capital I, 7.72%, 12/1/26, Callable 12/1/06 @
103.86, Guaranteed by Mellon Bank Corp............... 518,125
1,000,000 Midland Bank PLC (HSBC), 6.95%, 3/15/11............... 1,026,250
1,461,382 PNC Mortgage Securities Corp., Series 1997-3, Class
2A3, 7.50%, 5/25/27 CMO.............................. 1,474,271
-----------
3,639,646
-----------
Computers & Peripherals (2.0%)
1,000,000 International Business Machines Corp., 6.22%, 8/1/27,
Putable 8/1/04 @ 100................................. 1,012,500
-----------
Financial Services (9.3%)
200,000 American Express Master Trust, Series 1994-1, Class A,
7.15%, 8/15/99 ABS................................... 201,556
200,000 Associates Corp., N.A., 5.25%, 3/30/00................ 196,500
1,000,000 Boatmen's Auto Trust, Series 1996-A, Class A3, 6.75%,
1/15/03 ABS.......................................... 1,019,800
345,000 Discover Card Trust, Series 1992-B, Class A, 6.80%,
6/16/00 ABS.......................................... 344,762
500,000 Ford Motor Credit Co., 6.25%, 12/8/05................. 493,125
1,000,000 Premier Auto Trust, Series 1994-4, Class CTFS, 6.85%,
5/2/99 ABS........................................... 1,007,340
650,000 Security Pacific Acceptance Corp., Series 1995-1,
Class A2, 6.70%, 4/10/20 ABS......................... 655,824
430,424 The Money Store Home Equity Trust, Series 1995-A,
Class A2, 7.93%, 2/15/14 ABS......................... 432,202
250,000 Toyota Motor Credit Corp., 7.13%, 9/26/06, Callable
9/26/99 @ 100, MTN................................... 264,063
-----------
4,615,172
-----------
Food Processing & Packaging (1.1%)
500,000 McCormick & Co., Inc., 8.95%, 7/1/01.................. 542,500
-----------
Office Equipment & Supplies (Non-Computer Related) (2.9%)
1,455,000 Pitney Bowes Credit Corp., 6.63%, 6/1/02.............. 1,484,100
-----------
Oil & Gas Exploration, Production & Services (1.0%)
500,000 Kerr-McGee Corp., 6.63%, 10/15/07..................... 514,375
-----------
Oil & Gas Transmission (0.7%)
356,000 Trans-Canada Pipelines Ltd., 6.77%, 4/30/01, MTN...... 363,565
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Steel (0.4%)
200,000 Worthington Industries, Inc., 7.13%, 5/15/06.......... $ 210,000
-----------
Telecommunications (2.0%)
1,000,000 U.S. West Capital Funding, Inc., 6.31%, 11/1/05,
Putable 11/1/00 @ 100................................ 1,005,000
-----------
Utilities--Electric & Gas (0.4%)
200,000 Oklahoma Gas & Electric Co., 6.25%, 10/15/00.......... 201,000
-----------
Total Corporate Bonds (Cost $13,409,547) 13,587,858
-----------
U.S. GOVERNMENT AGENCIES (48.9%)
Federal Home Loan Bank (5.9%)
300,000 5.88%*, 5/26/98, Series BR98.......................... 299,970
1,000,000 5.95%, 3/5/01, Series ID01, Callable 3/5/98 @ 100..... 997,180
875,000 6.38%, 4/29/03, Series A-03, Callable 4/29/98 @ 100... 874,816
690,000 9.50%, 2/25/04........................................ 810,895
-----------
2,982,861
-----------
Federal Home Loan Mortgage Corp. (5.3%)
300,000 Discount Note, 1/14/98................................ 299,427
1,226,320 6.00%, 12/1/99, Gold Pool #M80147..................... 1,216,436
700,000 6.80%, 9/18/02, Continuously Callable @ 100, (Called
2/4/98).............................................. 699,930
225,000 6.20%, 4/15/03........................................ 227,108
242,742 7.50%, 3/15/15, Series 1262, Class F CMO.............. 243,048
-----------
2,685,949
-----------
Federal National Mortgage Assoc. (28.3%)
500,000 9.05%, 4/10/00........................................ 533,715
1,500,000 6.45%, 4/12/01, Series 01-M, Callable 4/12/99 @ 100... 1,505,490
1,000,000 6.71%, 3/13/02, Callable 3/13/00 @ 100, MTN........... 1,011,330
1,500,000 6.54%, 10/8/02, Callable 10/8/98 @ 100, MTN........... 1,497,900
1,039,823 6.00%, 2/1/03, Pool #335463........................... 1,029,882
1,221,329 6.00%, 5/1/03, Pool #347156........................... 1,208,566
625,000 6.38%, 6/25/03, Continuously Callable @ 100, MTN...... 623,844
1,000,000 6.38%, 7/8/03, Continuously Callable @ 100 (Called
2/13/98), MTN........................................ 998,130
300,000 6.85%, 4/5/04......................................... 313,362
1,000,000 7.00%, 9/25/05, Series 1992-110, Class G CMO.......... 1,006,030
1,000,000 7.55%, 3/27/07, Series 07-B, Callable 3/27/00 @ 100... 1,029,370
912,341 7.50%, 3/17/14, Series 1997-39, Class A CMO........... 922,404
</TABLE>
Continued
B-93
<PAGE> 164
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
U.S. Government Income Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Federal National Mortgage Assoc., continued:
515,675 7.00%, 9/25/19, Series 1991-155, Class PE CMO......... $ 517,696
2,000,000 6.50%, 8/18/20, Series 1997-57, Class PM CMO.......... 2,018,672
-----------
14,216,391
-----------
Government National Mortgage Assoc. (1.3%)
618,267 8.00%, 5/15/23, Pool #351752.......................... 639,789
-----------
Private Export Funding Corp. (2.0%)
1,000,000 6.24%, 5/15/02, Series VV, Guaranteed by Export-Import
Bank of The United States............................ 1,008,750
-----------
Student Loan Marketing Assoc. (3.5%)
1,000,000 6.05%, 9/14/00........................................ 1,004,070
762,235 5.92%*, 10/25/04, Series 1996-3, Class A1 ABS......... 761,549
-----------
1,765,619
-----------
Tennessee Valley Authority (2.6%)
1,250,000 6.24%, 7/15/45, Series B, Callable 7/15/20 @ 100,
Putable 7/15/01 @ 100................................ 1,290,625
-----------
Total U.S. Government Agencies (Cost $24,365,654) 24,589,984
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. TREASURY BONDS (2.0%)
1,000,000 6.25%, 8/15/23......................................... $ 1,029,140
-----------
Total U.S. Treasury Bonds (Cost $977,561) 1,029,140
-----------
U.S. TREASURY NOTES (17.9%)
1,000,000 5.88%, 3/31/99......................................... 1,002,680
4,000,000 6.50%, 5/31/01......................................... 4,093,960
1,000,000 6.38%, 9/30/01......................................... 1,020,330
1,000,000 6.25%, 8/31/02......................................... 1,020,300
850,000 6.25%, 2/15/03......................................... 869,134
950,000 7.00%, 7/15/06......................................... 1,025,259
-----------
Total U.S. Treasury Notes (Cost $8,897,184) 9,031,663
-----------
INVESTMENT COMPANIES (2.0%)
169,434 Dreyfus Treasury Prime Fund............................ 169,434
835,871 Federated U.S. Treasury Services Fund.................. 835,871
-----------
Total Investment Companies (Cost $1,005,305) 1,005,305
-----------
Total Investments (Cost $49,153,218) (a)--98.8% 49,741,917
Other assets in excess of liabilities 1.2% 584,511
-----------
Total Net Assets--100.0% $50,326,428
===========
</TABLE>
- -------
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation...................................... $669,355
Unrealized depreciation...................................... (80,656)
--------
Net unrealized appreciation.................................. $588,699
========
</TABLE>
*Variable Rate.
ABS--Asset Backed Security
CMO--Collateralized Mortgage Obligation
MTN--Medium Term Note
PLC--Public Liability Co.
See Notes to Financial Statements.
B-94
<PAGE> 165
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
Income Equity Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS (99.3%)
Aerospace/Defense (2.1%)
48,200 B.F. Goodrich Co...................................... $ 1,997,288
1,900 Boeing Co............................................. 92,981
------------
2,090,269
------------
Aluminum (1.4%)
23,700 Reynolds Metal Co..................................... 1,422,000
------------
Automotive (0.1%)
3,000 Ford Motor Co......................................... 146,063
------------
Automotive Parts (3.6%)
3,100 Dana Corp............................................. 147,250
56,000 Echlin, Inc........................................... 2,026,500
28,300 TRW, Inc.............................................. 1,510,513
------------
3,684,263
------------
Banks (3.1%)
1,750 BankAmerica Corp...................................... 127,750
2,050 BankBoston Corp....................................... 192,572
23,100 Crestar Financial Corp................................ 1,316,699
10,700 Magna Group, Inc...................................... 489,525
3,000 Wells Fargo & Co...................................... 1,018,313
------------
3,144,859
------------
Beverages (2.0%)
10,700 Brown-Forman Corp., Class B........................... 591,175
44,100 Seagram Co. Ltd....................................... 1,424,981
------------
2,016,156
------------
Brokerage Services (0.8%)
19,750 Edwards (A.G.), Inc................................... 785,063
------------
Building Materials (1.5%)
20,100 Armstrong World Industries, Inc....................... 1,502,475
------------
Chemicals--General (3.3%)
30,300 Hercules, Inc......................................... 1,516,894
31,850 PPG Industries, Inc................................... 1,819,431
------------
3,336,325
------------
Chemicals--Specialty (2.2%)
23,200 Eastman Chemical Co................................... 1,381,850
49,900 Engelhard Corp........................................ 867,013
------------
2,248,863
------------
Computers & Peripherals (0.1%)
750 Cisco Systems, Inc.(b)................................ 41,813
770 Compaq Computer Corp.................................. 43,456
------------
85,269
------------
Consumer Goods & Services (3.1%)
20,500 Newell Co............................................. 871,250
1,600 Procter & Gamble Co................................... 127,700
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Consumer Goods & Services, continued:
85,400 Rubbermaid, Inc....................................... $ 2,135,000
------------
3,133,950
------------
Containers & Packaging (2.1%)
41,900 Crown Cork & Seal Co., Inc............................ 2,100,238
------------
Cosmetics & Toiletries (1.9%)
38,200 International Flavors & Fragrances, Inc............... 1,967,300
------------
Diversified (2.7%)
1,800 General Electric Co................................... 132,075
13,500 National Service Industries, Inc...................... 669,094
47,800 Tenneco, Inc.......................................... 1,888,100
------------
2,689,269
------------
Electrical Equipment (4.3%)
2,200 Emerson Electric Co................................... 124,163
25,500 Hubbell, Inc., Class B................................ 1,257,469
31,200 Johnson Controls, Inc................................. 1,489,800
30,900 Tecumseh Products Co., Class A........................ 1,506,374
------------
4,377,806
------------
Electronic & Electrical--General (7.6%)
57,900 General Signal Corp................................... 2,442,655
44,200 Harris Corp........................................... 2,027,675
27,900 Honeywell, Inc........................................ 1,911,150
28,900 Thomas & Betts Corp................................... 1,365,525
------------
7,747,005
------------
Financial Services (1.9%)
3,600 Federal National Mortgage Assoc....................... 205,425
16,100 TransAmerica Corp..................................... 1,714,650
------------
1,920,075
------------
Food Distributors, Supermarkets & Wholesalers (2.2%)
56,300 Food Lion, Inc., Class A.............................. 475,031
45,300 Giant Food, Inc., Class A............................. 1,526,044
5,000 Winn-Dixie Stores, Inc................................ 218,438
------------
2,219,513
------------
Forest Products--Lumber & Paper (9.0%)
27,900 Consolidated Papers, Inc.............................. 1,489,163
51,100 Fort James Corp....................................... 1,954,574
11,600 International Paper Co................................ 500,250
39,800 Kimberly-Clark Corp................................... 1,962,637
13,800 Rayonier, Inc......................................... 587,363
17,600 Temple-Inland, Inc.................................... 920,700
18,800 Union Camp Corp....................................... 1,009,325
20,000 Westvaco Corp......................................... 628,750
------------
9,052,762
------------
</TABLE>
Continued
B-95
<PAGE> 166
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
Income Equity Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Heavy Machinery (0.2%)
2,650 Deere & Co............................................ $ 154,528
------------
Industrial Goods & Services (1.9%)
57,200 Federal Signal Corp................................... 1,236,950
16,200 Harsco Corp........................................... 698,625
------------
1,935,575
------------
Insurance (1.4%)
42,500 TIG Holdings, Inc..................................... 1,410,469
------------
Leisure--Recreation, Gaming (1.0%)
33,200 Brunswick Corp........................................ 1,006,375
------------
Manufacturing--Miscellaneous (1.9%)
93,200 Pall Corp............................................. 1,928,075
------------
Medical Supplies (2.7%)
47,500 Bard (C.R.), Inc...................................... 1,487,344
1,750 Johnson & Johnson..................................... 115,281
30,500 Mallinckrodt, Inc..................................... 1,159,000
------------
2,761,625
------------
Metals--Nonferrous (0.2%)
6,900 Oregon Metallurgical Corp. (b)........................ 230,288
------------
Mining (0.2%)
2,000 Potash Corp. of Saskatchewan, Inc..................... 166,000
------------
Oil & Gas Exploration, Production & Services (5.9%)
28,700 Kerr McGee Corp....................................... 1,817,068
46,000 Mitchell Energy & Development, Class A................ 1,351,250
9,600 Mitchell Energy & Development, Class B................ 279,600
14,600 National Fuel Gas Co.................................. 710,838
15,900 Sonat, Inc............................................ 727,425
34,400 Ultramar Diamond Shamrock Corp........................ 1,096,500
------------
5,982,681
------------
Oil--Integrated Companies (2.8%)
1,750 Amoco Corp............................................ 148,969
6,000 Atlantic Richfield Co................................. 480,750
1,800 Exxon Corp............................................ 110,138
7,800 Mobil Corp............................................ 563,063
2,300 Royal Dutch Petroleum Co.--New York Shares............ 124,631
26,300 Texaco, Inc........................................... 1,430,062
------------
2,857,613
------------
Pharmaceuticals (4.3%)
25,500 American Home Products Corp........................... 1,950,750
1,500 Bristol-Myers Squibb Co............................... 141,938
1,200 Merck & Co., Inc...................................... 127,500
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Pharmaceuticals, continued:
59,500 Pharmacia & Upjohn, Inc............................... $ 2,179,187
------------
4,399,375
------------
Precision Instruments & Related (1.0%)
36,800 Flowserve Corp........................................ 1,028,100
------------
Publishing (0.1%)
2,000 McGraw-Hill Cos., Inc................................. 148,000
------------
Railroads (1.7%)
50,300 Illinois Central Corp................................. 1,713,344
------------
Real Estate Investment Trusts (0.7%)
18,900 FelCor Suite Hotels, Inc.............................. 670,950
------------
Retail--Department Stores (1.9%)
15,400 J.C. Penney Co........................................ 928,813
15,600 Mercantile Stores Co., Inc............................ 949,650
------------
1,878,463
------------
Retail--Specialty Stores (0.1%)
5,700 Intimate Brands, Inc.................................. 137,156
------------
Semiconductors (0.0%)
600 Intel Corp............................................ 42,150
------------
Steel (2.6%)
35,000 Allegheny Teledyne, Inc............................... 905,625
60,000 British Steel PLC-Sponsored ADR....................... 1,286,250
4,500 Carpenter Technology Corp............................. 216,281
12,100 Worthington Industries, Inc........................... 199,650
------------
2,607,806
------------
Tax Return Preparation (1.9%)
42,900 H&R Block, Inc........................................ 1,922,456
------------
Tobacco & Tobacco Products (0.3%)
5,000 Fortune Brands, Inc................................... 185,312
2,300 Philip Morris Cos., Inc............................... 104,219
------------
289,531
------------
Utilities--Electric (2.2%)
6,250 CINergy Corp.......................................... 239,453
15,300 DPL, Inc.............................................. 439,875
7,300 KU Energy Corp........................................ 286,525
17,500 PacifiCorp............................................ 477,968
16,600 Potomac Electric Power................................ 428,488
13,200 SCANA Corp............................................ 395,175
------------
2,267,484
------------
Utilities--Electric & Gas (0.9%)
28,800 LG&E Energy Corp...................................... 665,946
4,900 OGE Energy Corp....................................... 267,969
------------
933,915
------------
</TABLE>
Continued
B-96
<PAGE> 167
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
Income Equity Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities--Natural Gas (2.5%)
36,000 AGL Resources, Inc.................................... $ 735,750
17,100 NICOR, Inc............................................ 721,406
26,800 People's Energy Corp.................................. 1,055,250
------------
2,512,406
------------
Utilities--Telecommunications (5.9%)
33,800 Alltel Corp........................................... 1,387,913
10,800 Cincinnati Bell, Inc.................................. 334,800
38,900 Frontier Corp......................................... 936,031
33,500 GTE Corp.............................................. 1,750,374
32,000 Southern New England Telecommunications Corp.......... 1,610,000
------------
6,019,118
------------
Total Common Stocks (Cost $95,936,210) 100,673,006
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------- ------------
<C> <S> <C>
INVESTMENT COMPANIES (0.7%)
18,888 Dreyfus Treasury Prime Fund.......................... $ 18,888
724,355 Federated U.S. Treasury Services Fund................ 724,355
------------
Total Investment Companies (Cost $743,243) 743,243
------------
Total Investments (Cost $96,679,453) (a)--100.0% 101,416,249
Liabilities in excess of other assets 0.0% (12,459)
------------
Total Net Assets--100.0% $101,403,790
============
</TABLE>
- -------
(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 approximately $214,353. Cost for federal income tax purposes differs
from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation................................... $ 7,422,288
Unrealized depreciation................................... (2,899,845)
-----------
Net unrealized appreciation............................... $ 4,522,443
===========
</TABLE>
(b) Represents non-income producing securities.
See Notes to Financial Statements.
B-97
<PAGE> 168
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
Ohio Tax-Free Bond Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- ----------
<C> <S> <C>
MUNICIPAL BONDS (93.8%)
Indiana (3.1%)
100,000 Columbus, Multi-School Building Corp., 7.15%, 1/15/02,
Pre-Refunded 1/15/01 @ 102............................ $ 110,250
----------
Ohio (85.1%)
130,000 Butler County, Hospital Facilities Revenue, Middletown
Regional Hospital Project, 6.00%, 11/15/10,
Callable 5/15/04 @ 101, FGIC.......................... 140,238
150,000 Clermont County, Hospital Facilities Revenue, Mercy
Health System, 6.38%, 9/1/01, AMBAC................... 161,063
100,000 Clermont County, Waterworks Revenue, 6.63%, 12/1/16,
Pre-Refunded 12/1/01 @ 102, AMBAC..................... 110,750
250,000 Columbus, Sewer Revenue, 6.13%, 6/1/03, Callable 6/1/02
@ 102................................................. 275,312
175,000 Edgewood, City School District, GO, 6.30%, 12/1/02,
Callable 12/1/01 @ 102, FGIC.......................... 191,406
100,000 Franklin County, Hospital Revenue, Children's Hospital
Project, Series A, GO, 6.40%, 11/1/06,
Pre-Refunded 11/1/01 @ 102............................ 109,625
155,000 Hamilton County, Sewer System Revenue, Series A, 6.40%,
12/1/03, Callable 6/1/01 @ 102........................ 168,756
100,000 Mentor, GO, 5.25%, 12/1/09, Callable 12/1/06 @ 102..... 104,625
100,000 Montgomery County, Issue I, Series A, Limited GO,
6.55%, 9/1/06, Pre-Refunded 9/1/01
@ 100................................................. 108,000
160,000 Olentangy Local School District, Series A, GO, 5.70%,
12/1/05, Callable 12/1/04 @ 102....................... 174,200
100,000 Springboro City School District, GO, 6.60%, 12/1/02,
Pre-Refunded 12/1/01 @ 102............................ 110,500
95,000 State Building Authority, State Facilities, James
Rhodes Project, 6.25%, 6/1/11, Callable 6/1/01 @ 102,
MBIA-IBC.............................................. 101,650
100,000 State Building Authority, State Transportation
Facilities, Series A, 7.00%, 9/1/07, Callable 9/1/00 @
102, MBIA............................................. 108,875
155,000 State Housing Finance Agency, Single Family Mortgage
Revenue, Series D, 6.80%, 9/1/05, Callable 9/1/01 @
102,
GNMA Coll............................................. 165,463
100,000 State Public Facilities Commission, Higher Education
Capital Facilities, Series II-B, 4.50%, 11/1/05....... 100,750
100,000 State Public Facilities Commission, Higher Education
Public Facilities, Series II-B, 4.50%, 11/1/08,
Callable 11/1/07 @ 100................................ 99,500
175,000 State Public Facilities Commission, Higher Educational
Facilities, Series B, 6.50%, 12/1/02,
Pre-Refunded 12/1/99 @ 102, AMBAC..................... 186,375
160,000 State Water Development Authority Revenue, 5.75%,
6/1/03, Callable 12/1/02 @ 102, MBIA.................. 171,600
200,000 University of Cincinnati, General Receipts, Series I-1,
6.95%, 6/1/00, Pre-Refunded 6/1/99
@ 102................................................. 212,000
200,000 University of Toledo, 7.00%, 6/1/03, Pre-Refunded
6/1/00 @ 102, MBIA.................................... 217,250
----------
3,017,938
----------
Oregon (5.6%)
185,000 Tri-County Metropolitan Transportation District, Light
Rail Extension, Series A, GO, 5.70%, 7/1/04,
Callable 7/1/02 @ 101................................. 198,875
----------
Total Municipal Bonds (Cost $3,104,427) 3,327,063
----------
</TABLE>
Continued
B-98
<PAGE> 169
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
Ohio Tax-Free Bond Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------- ----------
INVESTMENT COMPANIES (5.2%)
<C> <S> <C>
100,000 Dreyfus Municipal Money Market Fund................. $ 100,000
85,042 Federated Tax Free Money Market Fund................ 85,042
----------
Total Investment Companies (Cost $185,042) 185,042
----------
Total Investments (Cost $3,289,469) (a)--99.0% 3,512,105
Other assets in excess of liabilities 1.0% 34,070
----------
Total Net Assets--100.0% $3,546,175
==========
</TABLE>
- -------
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....................................... $222,636
Unrealized depreciation....................................... 0
--------
Net unrealized appreciation................................... $222,636
========
</TABLE>
AMBAC--Insured by AMBAC Indemnity Corp.
FGIC--Insured by Financial Guaranty Insurance Corp.
GNMA--Government National Mortgage Assoc.
GO--General Obligation.
MBIA--Insured by Municipal Bond Insurance Assoc.
See Notes to Financial Statements.
B-99
<PAGE> 170
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
Balanced Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (64.0%)
Aerospace/Defense (0.8%)
3,400 Boeing Co.............................................. $ 166,388
-----------
Apparel/Footwear (0.8%)
4,100 Nike, Inc., Class B.................................... 160,925
-----------
Automotive (1.0%)
4,350 Ford Motor Co.......................................... 211,791
-----------
Banks (4.3%)
4,600 BankBoston Corp........................................ 432,112
1,500 Chase Manhattan Corp................................... 164,250
2,650 J.P. Morgan & Co....................................... 299,118
-----------
895,480
-----------
Beverages (2.3%)
4,000 Anheuser-Busch Cos., Inc............................... 176,000
4,600 Coca-Cola Co........................................... 306,475
-----------
482,475
-----------
Chemicals--General (0.9%)
3,000 E.I. du Pont de Nemours & Co........................... 180,188
-----------
Chemicals--Specialty (0.7%)
3,500 Praxair, Inc........................................... 157,500
-----------
Computers & Peripherals (6.0%)
8,000 Cisco Systems, Inc.(b)................................. 445,999
7,000 Compaq Computer Corp................................... 395,062
2,400 Hewlett-Packard Co..................................... 150,000
7,500 Sun Microsystems, Inc.(b).............................. 299,063
-----------
1,290,124
-----------
Consumer Goods & Services (2.3%)
6,000 Procter & Gamble Co.................................... 478,875
-----------
Cosmetics & Toiletries (2.7%)
4,400 Avon Products, Inc..................................... 270,050
3,000 Gillette Co............................................ 301,313
-----------
571,363
-----------
Diversified (2.0%)
5,600 General Electric Co.................................... 410,900
-----------
Financial Services (4.5%)
7,000 Federal National Mortgage Assoc........................ 399,437
3,200 FINOVA Group, Inc...................................... 159,000
2,750 SLM Holding Corp....................................... 382,593
-----------
941,030
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCK, CONTINUED:
Heavy Machinery (2.7%)
3,400 Caterpillar, Inc....................................... $ 165,113
6,800 Deere & Co............................................. 396,525
-----------
561,638
-----------
Hotels & Motels (1.3%)
12,000 Mirage Resorts, Inc.(b)................................ 273,000
-----------
Insurance (2.0%)
10,050 SunAmerica, Inc........................................ 429,638
-----------
Medical Supplies (0.9%)
2,800 Johnson & Johnson...................................... 184,450
-----------
Newspapers (0.9%)
2,800 New York Times Co., Class A............................ 185,150
-----------
Oil--Integrated Companies (5.6%)
4,600 Amoco Corp............................................. 391,574
3,500 British Petroleum PLC, ADR............................. 278,906
4,600 Exxon Corp............................................. 281,463
4,000 Texaco, Inc............................................ 217,500
-----------
1,169,443
-----------
Pharmaceuticals (5.8%)
4,000 Bristol-Myers Squibb Co................................ 378,500
4,900 Merck & Co., Inc....................................... 520,624
4,600 Pfizer, Inc............................................ 342,988
-----------
1,242,112
-----------
Real Estate Investment Trusts (1.6%)
17,000 Health & Retirement Property Trust..................... 340,000
-----------
Restaurants (1.4%)
12,150 Wendy's International, Inc............................. 292,359
-----------
Rubber & Rubber Products (0.8%)
2,550 Goodyear Tire & Rubber Co.............................. 162,244
-----------
Semiconductors (1.7%)
5,000 Intel Corp............................................. 351,250
-----------
Software & Computer Services (2.1%)
3,150 Computer Associates International, Inc................. 166,556
2,150 Microsoft Corp.(b)..................................... 277,888
-----------
444,444
-----------
Steel (0.6%)
8,000 Worthington Industries, Inc............................ 132,000
-----------
Telecommunications (1.0%)
5,500 Ericsson (L.M.) Telefonaktiebolaget, Sponsored ADR..... 205,219
-----------
</TABLE>
Continued
B-100
<PAGE> 171
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
Balanced Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
COMMON STOCK, CONTINUED:
Tobacco & Tobacco Products (0.8%)
3,900 Philip Morris Cos., Inc............................... $ 176,719
-----------
Tools & Hardware Manufacturing (1.0%)
5,400 Black & Decker Corp................................... 210,938
-----------
Utilities--Electric (2.3%)
6,000 CINergy Corp.......................................... 229,875
4,500 Duke Energy Corp...................................... 249,188
-----------
479,063
-----------
Utilities--Telecommunications (3.2%)
14,600 Cincinnati Bell, Inc.................................. 452,600
4,300 GTE Corp.............................................. 224,675
-----------
677,275
-----------
Total Common Stocks (Cost $10,610,807) 13,463,981
-----------
CORPORATE BONDS (6.6%)
Banks (2.0%)
400,000 Chase Capital I, Series A, 7.67%, 12/1/26, Callable
12/1/06 @ 103.84, Guaranteed by Chase Manhattan
Corp................................................. 414,000
-----------
Brokerage Services (0.8%)
163,000 Merrill Lynch & Co., Inc., 9.00%, 5/1/98.............. 164,566
-----------
Financial Services (2.9%)
615,000 Green Tree Financial Corp., Series 1997-6, Class A3,
6.32%, 1/15/29 ABS................................... 616,901
-----------
Retail--Department Stores (0.9%)
200,000 Sears Roebuck & Co., Series 7, 5.82%, 2/22/99 MTN..... 199,500
-----------
Total Corporate Bonds (Cost $1,384,366) 1,394,967
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES (7.2%)
Federal Home Loan Bank (1.4%)
300,000 6.04%, 2/14/01, Callable 2/14/98 @ 100................. $ 298,884
-----------
Federal Home Loan Mortgage Corp. (1.9%)
410,000 5.69% 11/29/00, Continuously Callable @ 100............ 406,946
-----------
Federal National Mortgage Assoc. (3.9%)
500,000 6.89%, 7/12/04, Callable 7/12/00 @ 100, MTN............ 505,380
300,000 6.95%, 11/13/06, Callable 11/13/01 @ 100............... 306,750
-----------
812,130
-----------
Total U.S. Government Agencies (Cost $1,505,941) 1,517,960
-----------
U.S. TREASURY NOTES (18.2%)
1,000,000 5.75%, 12/31/98........................................ 1,001,520
700,000 6.25%, 5/31/00......................................... 708,512
300,000 6.25%, 10/31/01........................................ 304,956
300,000 6.38%, 8/15/02......................................... 307,668
1,000,000 5.88%, 9/30/02......................................... 1,005,220
500,000 5.75%, 8/15/03......................................... 500,115
-----------
Total U.S. Treasury Notes (Cost $3,779,303) 3,827,991
-----------
INVESTMENT COMPANIES (3.7%)
777,276 Federated U.S. Treasury Services Fund.................. 777,276
-----------
Total Investment Companies (Cost $777,276) 777,276
-----------
Total Investments (Cost $18,057,693)(a)--99.7% 20,982,175
Other assets in excess of liabilities 0.3% 63,673
-----------
Total Net Assets--100.0% $21,045,848
===========
</TABLE>
- -------
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.................................... $3,102,778
Unrealized depreciation.................................... (178,296)
----------
Net unrealized appreciation................................ $2,924,482
==========
</TABLE>
(b) Represents non-income producing securities.
ABS--Asset Backed Security
ADR--American Depositary Receipt
MTN--Medium Term Note
PLC--Public Liability Co.
See Notes to Financial Statements.
B-101
<PAGE> 172
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
Stock Appreciation Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (85.1%)
Advertising (1.3%)
7,000 Catalina Marketing Corp. (b)........................... $ 323,750
-----------
Aerospace/Defense (1.8%)
17,500 BE Aerospace, Inc. (b)................................. 468,125
-----------
Apparel/Footwear (3.1%)
18,600 Jones Apparel Group, Inc. (b).......................... 799,800
-----------
Automotive Parts (2.1%)
16,000 Gentex Corp. (b)....................................... 430,000
10,000 Simpson Industries, Inc................................ 117,500
-----------
547,500
-----------
Banks (7.3%)
20,000 Colonial BancGroup, Inc................................ 688,750
10,920 HUBCO, Inc............................................. 427,245
17,000 Sterling Bancorp....................................... 408,000
12,000 Vermont Financial Services Corp........................ 333,000
-----------
1,856,995
-----------
Building Materials (0.7%)
4,500 Medusa Corp............................................ 188,156
-----------
Chemicals--General (1.5%)
33,000 CFC International, Inc. (b)............................ 387,750
-----------
Chemicals--Specialty (0.6%)
6,000 Cabot Corp............................................. 165,750
-----------
Commercial Services (2.9%)
10,000 Alternative Resources Corp. (b)........................ 230,625
10,000 Healthcare Compare Corp. (b) (c)....................... 511,250
-----------
741,875
-----------
Computers & Peripherals (1.3%)
3,200 Adaptec, Inc. (b)...................................... 118,800
2,000 Complete Business Solutions, Inc. (b).................. 87,000
3,500 Comverse Technology, Inc. (b).......................... 136,500
-----------
342,300
-----------
Cosmetics & Toiletries (1.5%)
15,000 Nature's Sunshine Products, Inc........................ 390,000
-----------
Electronic & Electrical--General (5.3%)
15,000 ADFlex Solutions, Inc. (b)............................. 241,875
18,000 American Power Conversion Corp. (b).................... 425,250
15,000 Chicago Miniature Lamp, Inc. (b)....................... 506,250
10,000 Nimbus CD International, Inc. (b)...................... 107,500
5,000 Optical Coating Laboratory, Inc........................ 68,750
-----------
1,349,625
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCK, CONTINUED:
Environmental Control (1.6%)
13,400 U.S. Filter Corp. (b).................................. $ 401,163
-----------
Financial Services (1.5%)
7,000 Astoria Financial Corp................................. 390,250
-----------
Heavy Machinery (2.0%)
8,000 AGCO Corp.............................................. 234,000
19,250 JLG Industries, Inc.................................... 271,906
-----------
505,906
-----------
Hotels & Motels (0.9%)
6,500 MGM Grand, Inc. (b).................................... 234,406
-----------
Industrial Goods & Services (0.7%)
7,900 Federal Signal Corp.................................... 170,838
-----------
Insurance (1.0%)
4,000 Life Re Corp........................................... 260,750
-----------
Leisure--Recreation, Gaming (3.2%)
12,000 Callaway Golf Co....................................... 342,750
22,000 Cannondale Corp. (b)................................... 478,500
-----------
821,250
-----------
Manufactured Housing (1.2%)
9,000 National R.V. Holdings, Inc. (b)....................... 295,875
-----------
Medical Supplies (3.5%)
11,000 STERIS Corp. (b)....................................... 530,750
12,000 U.S. Surgical Corp..................................... 351,750
-----------
882,500
-----------
Metals--Fabrication (0.3%)
2,200 Wolverine Tube, Inc. (b)............................... 68,200
-----------
Oilfield Services & Equipment (2.2%)
23,350 Tuboscope, Inc. (b).................................... 561,859
-----------
Pharmaceuticals (4.1%)
8,000 Jones Medical Industries, Inc.......................... 306,000
22,000 NBTY, Inc. (b)......................................... 734,250
-----------
1,040,250
-----------
Precision Instruments & Related (0.9%)
6,600 Millipore Corp......................................... 223,988
-----------
Printing & Publishing (0.6%)
5,000 Multi-Color Corp. (b).................................. 31,875
5,000 World Color Press, Inc. (b)............................ 132,813
-----------
164,688
-----------
</TABLE>
Continued
B-102
<PAGE> 173
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
Stock Appreciation Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCK, CONTINUED:
Real Estate Investment Trusts (14.4%)
4,200 American Health Properties, Inc........................ $ 115,763
4,200 Amli Residential Properties Trust...................... 93,450
3,200 CarrAmerica Realty Corp................................ 101,400
2,800 Chelsea GCA Realty, Inc................................ 106,925
20,000 Duke Realty Investments, Inc........................... 484,999
3,500 Essex Property Trust, Inc.............................. 122,500
2,700 FelCor Suite Hotels, Inc............................... 95,850
8,000 Health & Retirement Property Trust..................... 159,999
2,800 Health Care Property Investors, Inc.................... 105,875
2,900 Highwoods Properties, Inc.............................. 107,844
10,000 Jameson Inns, Inc...................................... 116,875
4,000 JP Realty, Inc......................................... 103,750
3,000 Mack-Cali Realty Corp.................................. 123,000
4,500 Manufactured Home Communities, Inc..................... 121,500
8,000 National Golf Properties, Inc.......................... 262,499
3,000 OMEGA Healthcare Investors, Inc........................ 115,875
5,000 Pacific Gulf Properties, Inc........................... 118,750
3,000 Realty Income Corp..................................... 76,313
4,400 Reckson Associates Realty Corp......................... 111,650
4,200 Security Capital Pacific Trust......................... 101,850
3,300 Shurgard Storage Centers, Inc. Class A................. 95,700
3,200 Sovran Self Storage, Inc............................... 103,800
4,450 Storage Trust Realty................................... 117,091
8,500 Summit Properties, Inc................................. 179,562
5,000 Tanger Factory Outlet Centers, Inc..................... 152,813
3,400 Urban Shopping Centers, Inc............................ 118,575
6,000 Walden Residential Properties, Inc..................... 153,000
-----------
3,667,208
-----------
Restaurants (3.1%)
6,000 Papa John's International, Inc. (b).................... 209,250
24,000 Wendy's International, Inc............................. 577,500
-----------
786,750
-----------
Software & Computer Services (1.6%)
5,000 National Data Corp..................................... 180,625
10,000 Structural Dynamics Research Corp. (b)................. 225,000
-----------
405,625
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCK, CONTINUED:
Steel (2.7%)
9,000 Carpenter Technology Corp.............................. $ 432,563
16,400 Worthington Industries, Inc............................ 270,600
-----------
703,163
-----------
Telecommunications (1.3%)
16,000 Aspect Telecommunications Corp. (b).................... 334,000
-----------
Tobacco & Tobacco Products (0.5%)
5,000 DIMON, Inc............................................. 131,250
-----------
Tools & Hardware Manufacturing (1.2%)
8,000 Black & Decker Corp.................................... 312,500
-----------
Utilities--Telecommunications (4.8%)
20,000 Cincinnati Bell, Inc................................... 620,000
20,000 LCI International, Inc. (b)............................ 615,000
-----------
1,235,000
-----------
Wholesale Distribution (2.4%)
16,000 Tech Data Corp. (b).................................... 622,000
-----------
Total Common Stocks (Cost $17,743,856) 21,781,045
-----------
WARRANTS (0.0%)
Real Estate Investment Trusts (0.0%)
221 Security Capital Group, expire
9/19/98 (b)........................................... 1,160
-----------
Total Warrants (Cost $0) 1,160
-----------
INVESTMENT COMPANIES (1.4%)
19,744 Dreyfus Treasury Prime Fund............................ 19,744
325,747 Federated U.S. Treasury Services Fund.................. 325,747
-----------
Total Investment Companies (Cost $345,491) 345,491
-----------
Total Investments (Cost $18,089,347) (a)--86.5% 22,127,696
Other assets in excess of liabilities 13.5% 3,449,883
-----------
Total Net Assets--100.0% $25,577,579
===========
</TABLE>
- -------
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.................................... $4,517,684
Unrealized depreciation.................................... (479,335)
----------
Net unrealized appreciation................................ $4,038,349
==========
</TABLE>
(b) Represents non-income producing securities.
(c) Name changed to First Health Group Corp. 1/2/98.
See Notes to Financial Statements.
B-103
<PAGE> 174
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
Large Company Select Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (94.0%)
Aerospace/Defense (1.8%)
13,600 Boeing Co.............................................. $ 665,550
-----------
Apparel/Footwear (1.5%)
5,500 Jones Apparel Group, Inc. (b).......................... 236,500
7,500 Nike, Inc., Class B.................................... 294,375
-----------
530,875
-----------
Automotive (1.9%)
14,150 Ford Motor Co.......................................... 688,928
-----------
Banks (4.1%)
6,900 BankAmerica Corp....................................... 503,700
5,400 BankBoston Corp........................................ 507,263
5,200 KeyCorp................................................ 368,225
1,600 Mellon Bank Corp....................................... 97,000
-----------
1,476,188
-----------
Beverages (2.7%)
11,600 Coca-Cola Co........................................... 772,850
6,000 PepsiCo, Inc........................................... 218,625
-----------
991,475
-----------
Chemicals--Specialty (1.2%)
10,000 Praxair, Inc........................................... 450,000
-----------
Commercial Services (0.5%)
2,800 Federal Express Corp. (b).............................. 170,975
-----------
Computers & Peripherals (9.2%)
17,775 Cisco Systems, Inc. (b)................................ 990,955
13,500 Compaq Computer Corp................................... 761,906
10,000 Hewlett-Packard Co..................................... 625,000
2,700 International Business Machines Corp................... 282,319
9,500 Quantum Corp. (b)...................................... 190,594
12,000 Sun Microsystems, Inc. (b)............................. 478,500
-----------
3,329,274
-----------
Consumer Goods & Services (2.6%)
11,600 Procter & Gamble Co.................................... 925,825
-----------
Cosmetics & Toiletries (3.4%)
4,900 Avon Products, Inc..................................... 300,738
9,200 Gillette Co............................................ 924,025
-----------
1,224,763
-----------
Diversified (3.3%)
16,100 General Electric Co.................................... 1,181,338
-----------
Electrical Equipment (1.0%)
6,200 Emerson Electric Co.................................... 349,913
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCK, CONTINUED:
Entertainment (1.5%)
5,600 The Walt Disney Co..................................... $ 554,750
-----------
Financial Services (7.6%)
8,000 American Express Co.................................... 714,000
15,200 Federal National Mortgage Assoc........................ 867,349
5,200 FINOVA Group, Inc...................................... 258,375
2,900 SLM Holding Corp....................................... 403,463
8,998 Travelers Group, Inc................................... 484,767
-----------
2,727,954
-----------
Food Processing & Packaging (2.3%)
7,800 CPC International, Inc. (c)............................ 840,450
-----------
Heavy Machinery (3.6%)
6,000 Caterpillar, Inc....................................... 291,375
17,000 Deere & Co............................................. 991,313
-----------
1,282,688
-----------
Hotels & Motels (1.1%)
18,200 Mirage Resorts, Inc. (b)............................... 414,050
-----------
Insurance (4.9%)
6,600 American International Group, Inc...................... 717,749
3,200 Chubb Corp............................................. 242,000
4,800 Marsh & McLennan Cos., Inc............................. 357,900
10,650 SunAmerica, Inc........................................ 455,288
-----------
1,772,937
-----------
Medical Supplies (0.9%)
5,000 Johnson & Johnson...................................... 329,375
-----------
Mining (0.9%)
4,000 Potash Corp. of Saskatchewan, Inc...................... 332,000
-----------
Newspapers (1.4%)
8,000 Gannett Co., Inc....................................... 494,500
-----------
Oil--Integrated Companies (6.0%)
3,100 Amoco Corp............................................. 263,888
11,600 Exxon Corp............................................. 709,774
7,200 Mobil Corp............................................. 519,750
12,400 Royal Dutch Petroleum Co.--New York Shares............. 671,925
-----------
2,165,337
-----------
Oilfield Services & Equipment (2.2%)
9,800 Schlumberger, Ltd...................................... 788,900
-----------
Pharmaceuticals (6.9%)
6,100 Bristol-Myers Squibb Co................................ 577,213
</TABLE>
Continued
B-104
<PAGE> 175
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
Large Company Select Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCK, CONTINUED:
Pharmaceuticals, continued
8,300 Merck & Co., Inc....................................... $ 881,875
13,700 Pfizer, Inc............................................ 1,021,505
-----------
2,480,593
-----------
Real Estate Investment Trusts (2.1%)
19,000 Duke Realty Investments, Inc........................... 460,750
6,000 Equity Residential Properties Trust.................... 303,375
-----------
764,125
-----------
Restaurants (2.2%)
32,325 Wendy's International, Inc............................. 777,820
-----------
Retail (0.7%)
6,600 Wal-Mart Stores, Inc................................... 260,288
-----------
Rubber & Rubber Products (2.0%)
11,100 Goodyear Tire & Rubber Co.............................. 706,238
-----------
Semiconductors (3.4%)
17,500 Intel Corp............................................. 1,229,375
-----------
Software & Computer Services (4.0%)
12,000 Computer Associates International, Inc................. 634,500
6,200 Microsoft Corp. (b).................................... 801,350
-----------
1,435,850
-----------
Steel (0.9%)
3,000 Carpenter Technology Corp.............................. 144,188
10,250 Worthington Industries, Inc............................ 169,125
-----------
313,313
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCK, CONTINUED:
Telecommunications (2.1%)
14,000 Ericsson (L.M.) Telefonaktiebolaget, Sponsored ADR..... $ 522,375
3,000 Lucent Technologies, Inc............................... 239,625
-----------
762,000
-----------
Tobacco & Tobacco Products (1.0%)
7,800 Philip Morris Cos., Inc................................ 353,438
-----------
Tools & Hardware Manufacturing (0.4%)
4,000 Black & Decker Corp.................................... 156,250
-----------
Utilities--Telecommunications (2.7%)
31,800 Cincinnati Bell, Inc................................... 985,800
-----------
Total Common Stocks (Cost $17,906,174) 33,913,135
-----------
INVESTMENT COMPANIES (5.9%)
1,263,213 Dreyfus Treasury Prime Fund............................ 1,263,213
851,565 Federated U.S. Treasury Services Fund.................. 851,565
-----------
Total Investment Companies (Cost $2,114,778) 2,114,778
-----------
Total Investments (Cost $20,020,952) (a)--99.9% 36,027,913
Other assets in excess of liabilities 0.1% 49,676
-----------
Total Net Assets--100.0% $36,077,589
===========
</TABLE>
- -------
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation................................... $16,403,931
Unrealized depreciation................................... (396,970)
-----------
Net unrealized appreciation............................... $16,006,961
===========
</TABLE>
(b) Represents non-income producing securities.
(c) Name changed to BestFoods 1/2/98.
See Notes to Financial Statements.
B-105
<PAGE> 176
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
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 seven 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 Balanced Fund
(formerly the Riverfront Flexible Growth Fund), The Riverfront Stock
Appreciation Fund and The Riverfront Large Company Select Fund (each, a
"Portfolio"; and collectively, the "Portfolios").
The investment objective of the U.S. Government Securities Money Market Fund
is to seek current income from U.S. Government short-term securities while
preserving capital and maintaining liquidity. The investment objective of the
U.S. Government Income Fund is to seek a high level of current income,
consistent with preservation of capital, by investing primarily in securities
issued or guaranteed by the U.S. Government, its agencies and
instrumentalities and in high quality fixed rate and adjustable rate
mortgaged back securities and other asset-backed securities. The investment
objective of the Income Equity Fund is to seek a high level of investment
income, with capital appreciation as a secondary objective, through
investment primarily in income-producing equity securities of U.S. issuers.
The investment objective of the Ohio Tax-Free Bond Fund is to seek income
exempt from federal and Ohio state income taxes and preservation of capital.
The investment objective of the Balanced Fund is to seek long-term growth of
capital with some current income as a secondary objective. The investment
objective of the Stock Appreciation Fund is to seek capital growth. The
investment objective of the Large Company Select Fund is to seek long term
growth of capital with some current income as a secondary objective.
The Fund is authorized to issue 3,000,000,000 shares with a par value of
$.001 per share. 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 Balanced Fund, The Stock Appreciation Fund and The Large
Company Select Fund (collectively, "the variable net asset value funds") each
offer two share classes: Investor A Shares and Investor B Shares. The U.S.
Government Securities Money Market Fund (the "money market fund") offers only
the 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' prospectus. Certain redemptions of the
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' prospectus. Each share class has identical
rights and privileges, except with respect to (i) distribution and
shareholder services (12b-1) fees paid by each share class, (ii) voting
rights on matters specifically affecting a single share class, (iii) and the
exchange privileges.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Portfolios in preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
Continued
B-106
<PAGE> 177
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITIES VALUATION:
Investments of the money market fund are valued at amortized cost. 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 an appropriate demand
feature, or (b) maintain a dollar-weighted-average portfolio maturity which
exceeds 90 days.
Investments in common and preferred stocks, corporate bonds, commercial
paper 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 or closing sale prices on the
principal exchange (closing sales prices on the over-the-counter National
Market System) in which such securities are normally traded. Municipal
bonds are valued by using market quotations or independent services that
use prices provided by market makers or estimates of market values obtained
from yield data relating to instruments or securities with similar
characteristics. Short-term investments maturing in 60 days or less are
valued at amortized cost, which 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 as determined in good
faith by Provident, as the investment adviser, or by the sub-investment
advisor, as the case may be, 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 on an
identified cost basis.
REPURCHASE AGREEMENTS:
The Portfolios may enter into repurchase agreements from financial
institutions such as banks and broker dealers which Provident, as
investment adviser or the Portfolio's sub-investment adviser, as
applicable, deems creditworthy under guidelines approved by the Fund's
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.
Continued
B-107
<PAGE> 178
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
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 generally paid monthly for each variable net asset value fund
with the exception of the Stock Appreciation Fund which declares and pays
any dividends semi annually.
Distributable net realized capital gains, if any, are declared and
distributed at least annually for each of the Portfolios. Any taxable
distributions declared in December and paid in the following fiscal year
will be taxable to shareholders in the year declared.
The amounts of dividends from net investment income and of distributions
from net realized gains are determined in accordance with federal income
tax regulations which may differ from generally accepted accounting
principles. These "book/tax" differences are either considered temporary or
permanent in nature. To the extent these differences are permanent in
nature, such amounts are reclassified within the composition of net assets
based on their federal tax-basis treatment; temporary differences do not
require reclassification. Dividends and distributions to shareholders which
exceed net investment income and net realized capital gains for financial
reporting purposes are reported as dividends in excess of net investment
income or distributions in excess of net realized gains. To the extent they
exceed net investment income and net realized gains for tax purposes, they
are reported as distributions of capital.
As of December 31, 1997, the following reclassifications have been made to
increase (decrease) the following components of net assets with offsetting
adjustments made to paid-in capital:
<TABLE>
<CAPTION>
ACCUMULATED
UNDISTRIBUTED ACCUMULATED NET
NET INVESTMENT REALIZED GAINS
INCOME ON INVESTMENTS
-------------- ---------------
<S> <C> <C>
U.S. Government Income Fund.................... $423,663 $ 5,121
Income Equity Fund............................. $ -- $ 40,162
Ohio Tax-Free Fund............................. $157,244 $ --
Balanced Fund.................................. $ 3,313 $ (3,313)
Stock Appreciation Fund........................ $150,736 $(150,736)
Large Company Select Fund...................... $ 84,685 $ (76,753)
</TABLE>
FEDERAL INCOME TAXES:
It is the policy of each Portfolio to qualify as a regulated investment
company by complying with the provisions available to certain investment
companies, as defined in the Internal Revenue Code of 1986, as amended, 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.
EXPENSE ALLOCATIONS:
Expenses that are directly related to one of the Portfolios are charged
directly to that Portfolio. Other operating expenses of the Fund are
prorated to the Portfolios, generally on the basis of relative net assets.
Fees paid under a Portfolio's shareholder servicing or distribution plans
are borne by the specific class of shares to which they apply.
Continued
B-108
<PAGE> 179
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
year ended December 31, 1997 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
U.S. Government Income Fund........................ $ 41,906,699 $ 32,091,752
Income Equity Fund................................. $145,292,462 $146,249,889
Ohio Tax-Free Bond Fund............................ $ 301,373 $ 17,617,471
Balanced Fund...................................... $ 19,491,370 $ 20,305,049
Stock Appreciation Fund............................ $ 16,980,604 $ 28,878,942
Large Company Select Fund.......................... $ 11,725,461 $ 12,289,867
</TABLE>
4. CAPITAL SHARE TRANSACTIONS:
Transactions in capital shares for the Fund were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME FUND INCOME EQUITY FUND
----------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares
issued............... $ 3,965,162 $ 2,494,252 $ 7,333,378 $ 8,709,609
Proceeds from shares
issued in connection
with common trust
fund acquisition..... 16,606,766 -- -- --
Dividends reinvested.. 447,813 440,531 19,742,254 10,845,880
Shares redeemed....... (5,969,304) (4,741,047) (16,662,273) (7,958,218)
------------- ------------- ------------ -----------
Change in net assets
from Investor A share
transactions......... $ 15,050,437 $ (1,806,264) $ 10,413,359 $11,597,271
============= ============= ============ ===========
Investor B Shares:
Proceeds from shares
issued............... $ 270,855 $ 372,835 $ 8,520,546 $ 3,928,456
Dividends reinvested.. 58,773 45,964 3,781,007 1,297,923
Shares redeemed....... (315,970) (349,650) (1,514,086) (420,101)
------------- ------------- ------------ -----------
Change in net assets
from Investor B share
transactions......... $ 13,658 $ 69,149 $ 10,787,467 $ 4,806,278
============= ============= ============ ===========
SHARE TRANSACTIONS:
Investor A Shares:
Issued................ 423,205 264,167 552,976 680,679
Issued in connection
with common trust
fund acquisition..... 1,761,057 -- -- --
Reinvested............ 47,635 46,735 1,674,497 898,119
Redeemed.............. (634,837) (502,013) (1,206,389) (624,637)
------------- ------------- ------------ -----------
Change in Investor A
Shares............... 1,597,060 (191,111) 1,021,084 954,161
============= ============= ============ ===========
Investor B Shares:
Issued................ 24,956 34,874 633,092 317,268
Reinvested............ 5,568 4,314 314,995 103,352
Redeemed.............. (29,761) (32,664) (109,730) (31,854)
------------- ------------- ------------ -----------
Change in Investor B
Shares............... 763 6,524 838,357 388,766
============= ============= ============ ===========
</TABLE>
Continued
B-109
<PAGE> 180
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
4. CAPITAL SHARE TRANSACTIONS, CONTINUED:
<TABLE>
<CAPTION>
OHIO TAX-FREE FUND BALANCED FUND
-------------------------- --------------------------
<S> <C> <C> <C> <C>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ ------------ ------------
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares
issued............... $ 119,446 $ 39,457 $ 1,140,421 $ 5,979,948
Proceeds from shares
issued in connection
with common trust
fund acquisition..... 11,399,841 -- -- --
Dividends reinvested.. 20,138 6,134 969,400 318,997
Shares redeemed....... (19,309,599) (340,435) (3,919,227) (5,316,451)
------------ ------------ ------------ ------------
Change in net assets
from Investor A share
transactions......... $ (7,770,174) $ (294,844) $ (1,809,406) $ 982,494
============ ============ ============ ============
Investor B Shares:
Proceeds from shares
issued............... $ 396,677 $ 592,591 $ 1,482,972 $ 5,648,362
Dividends reinvested.. 181,550 20,060 979,316 227,824
Shares redeemed....... (230,357) (248,303) (1,554,696) (1,218,260)
------------ ------------ ------------ ------------
Change in net assets
from Investor B share
transactions......... $ 347,870 $ 364,348 $ 907,592 $ 4,657,926
============ ============ ============ ============
SHARE TRANSACTIONS:
Investor A Shares:
Issued................ 14,309 3,737 91,585 531,651
Issued in connection
with common trust
fund acquisition..... 1,097,194 -- -- --
Reinvested............ 2,125 593 79,188 28,295
Redeemed.............. (1,872,553) (32,383) (316,498) (466,939)
------------ ------------ ------------ ------------
Change in Investor A
Shares............... (758,925) (28,053) (145,725) 93,007
============ ============ ============ ============
Investor B Shares:
Issued................ 34,793 55,795 115,832 485,748
Reinvested............ 18,823 1,897 77,517 19,547
Redeemed.............. (22,564) (23,572) (121,277) (104,208)
------------ ------------ ------------ ------------
Change in Investor B
Shares............... 31,052 34,120 72,072 401,087
============ ============ ============ ============
</TABLE>
Continued
B-110
<PAGE> 181
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
4. CAPITAL SHARE TRANSACTIONS, CONTINUED:
<TABLE>
<CAPTION>
LARGE COMPANY
STOCK APPRECIATION FUND SELECT FUND
-------------------------- -------------
YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997*
------------ ------------ -------------
<S> <C> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued........ $ 3,009,538 $ 3,225,171 $ 2,486,334
Proceeds from shares issued in
connection with common
trust fund acquisition............ -- -- 27,813,338
Dividends reinvested............... 4,366,182 2,903,615 3,676,075
Shares redeemed.................... (13,898,332) (16,060,775) (3,937,879)
------------ ------------ -----------
Change in net assets from Investor
A share transactions.............. $ (6,522,612) $ (9,931,989) $30,037,868
============ ============ ===========
Investor B Shares:
Proceeds from shares issued........ $ 526,610 $ 483,957 $ 2,396,213
Dividends reinvested............... 214,709 65,586 263,596
Shares redeemed.................... (115,336) (105,940) (37,554)
------------ ------------ -----------
Change in net assets from Investor
B share transactions.............. $ 625,983 $ 443,603 $ 2,622,255
============ ============ ===========
SHARE TRANSACTIONS:
Investor A Shares:
Issued............................. 307,000 307,057 205,316
Issued in connection with common
trust fund acquisition............ -- -- 2,781,335
Reinvested......................... 468,165 308,567 329,693
Redeemed........................... (1,436,813) (1,618,575) (352,190)
------------ ------------ -----------
Change in Investor A Shares........ (661,648) (1,002,951) 2,964,154
============ ============ ===========
Investor B Shares:
Issued............................. 52,468 66,446 198,193
Reinvested......................... 22,295 6,727 23,747
Redeemed........................... (11,801) (10,094) (3,405)
------------ ------------ -----------
Change in Investor B Shares........ 62,962 63,079 218,535
============ ============ ===========
</TABLE>
- -------
* For the period January 2, 1997 (commencement of operations) through December
31, 1997.
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 Income Equity Fund, the Ohio Tax-Free Bond Fund,
the Balanced Fund, the Stock Appreciation Fund and the Large Company Select
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.
Continued
B-111
<PAGE> 182
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
5. RELATED PARTY TRANSACTIONS, CONTINUED:
Pursuant to the terms of the Investment Advisory Agreement with the Fund,
Provident has entered into a Sub-Investment Advisory Agreement with DePrince,
Race & Zollo, Inc. ("DRZ") for the Income Equity Fund. DRZ provides
investment advice to and supervises the investment program of that portion of
the assets of the Income Equity Fund allocated to DRZ by the Fund's Board of
Directors. Under the terms of the Sub-Investment Advisory Agreements, DRZ
receives from Provident fees calculated at 0.50% of average daily net assets
up to $55 million of the Income Equity Fund managed by DRZ and 0.55% of
average daily net assets above $55 million for this Portfolio managed by DRZ.
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, 1997, Provident Securities & Investment
Company ("PSI"), an affiliate of Provident which is a registered broker
dealer, executed transactions to purchase and sell portfolio investments on
an agency basis on behalf of the Fund. The Fund paid PSI approximately
$92,057 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")
is an Ohio limited partnership. BISYS Fund Services Ohio, Inc. ("BISYS
Ohio"), and BISYS 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 the 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. BISYS Ohio served as sub-transfer agent for the Investor B Shares
through March 24, 1997. On March 25, 1997, Provident became the Transfer
Agent for all shares of the Fund. 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 Services Plan, each Portfolio is
authorized to pay compensation to banks and other financial institutions,
including Provident and BISYS or other providers for record keeping and/or
administrative support services. As of December 31, 1997, 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
and Agreement ("Investor A Plan") and an Investor B Distribution and
Shareholder Services Plan and Agreement ("Investor B Plan"), each in
accordance with Rule 12b-1 under the 1940 Act. Pursuant to the Investor A
Plan, each Portfolio is 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 asset value 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 asset value 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
Continued
B-112
<PAGE> 183
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
5. RELATED PARTY TRANSACTIONS, CONTINUED:
institutions, including Provident, 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, 1997, BISYS received $279,254 from
commissions on sales of capital shares, of which $386 was reallowed to
brokers affiliated with Provident.
Provident and certain of its affiliates own shares in the U.S. Government
Income Fund. As of December 31, 1997, Provident owns $23,842,765 or 47% of
the Portfolio.
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, 1997:
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME
SECURITIES MONEY U.S. GOVERNMENT EQUITY
MARKET FUND INCOME FUND FUND
---------------- --------------- --------
<S> <C> <C> <C>
INVESTMENT ADVISOR FEES:
Annual fee before voluntary fee
reductions
(percentage of average net
assets).......................... 0.15% 0.40% 0.95%
Voluntary fee reductions.......... NA NA NA
ADMINISTRATION FEES:
Annual fee (percentage of average
net assets)...................... 0.20% 0.20% 0.20%
12B-1 FEES (INVESTOR A):
Annual fee before voluntary fee
reductions
(percentage of average net
assets).......................... 0.25% 0.25% 0.25%
Voluntary fee reductions.......... $242,899 $29,297 $ 41,154
12B-1 FEES (INVESTOR B):
Annual fee (percentage of average
net assets)...................... NA 1.00% 1.00%
Custodian and Accounting Fees:.... $ 81,531 $55,655 $144,048
Transfer Agent Fees:.............. $ 33,896 $50,879 $ 96,037
</TABLE>
Continued
B-113
<PAGE> 184
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
5. RELATED PARTY TRANSACTIONS, CONTINUED:
<TABLE>
<CAPTION>
OHIO
TAX-FREE BALANCED
BOND FUND FUND
--------- --------
<S> <C> <C>
INVESTMENT ADVISOR FEES:
Annual fee before voluntary fee reductions (percentage of
average net assets)...................................... 0.50% 0.90%
Voluntary fee reductions.................................. $ 8,196 $20,662
ADMINISTRATION FEES:
Annual fee (percentage of average net assets)............. 0.20% 0.20%
12B-1 FEES (INVESTOR A):
Annual fee before voluntary fee reductions (percentage of
average net assets)...................................... 0.25% 0.25%
Voluntary fee reductions.................................. NA $10,678
12B-1 FEES (INVESTOR B):
Annual fee (percentage of average net assets)............. 1.00% 1.00%
CUSTODIAN AND ACCOUNTING FEES:............................ $13,711 $33,160
TRANSFER AGENT FEES:...................................... $39,534 $61,796
EXPENSE REIMBURSEMENTS:................................... $23,066 NA
</TABLE>
<TABLE>
<CAPTION>
STOCK
APPRECIATION LARGE COMPANY
FUND SELECT FUND
------------ -------------
<S> <C> <C>
INVESTMENT ADVISOR FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)............... 0.80% 0.80%
ADMINISTRATION FEES:
Annual fee (percentage of average net assets)..... 0.20% 0.20%
12B-1 FEES (INVESTOR A):
Annual fee before voluntary fee reductions
(percentage of average net assets)............... 0.25% 0.25%
12B-1 FEES (INVESTOR B):
Annual fee (percentage of average net assets)..... 100% 1.00%
CUSTODIAN AND ACCOUNTING FEES:.................... $42,139 $49,119
TRANSFER AGENT FEES:.............................. $118,492 $41,424
Expense reimbursements............................ NA NA
</TABLE>
NA--Not applicable
6. ACQUISITION OF COMMON TRUST FUNDS A, B, C, F-1 AND G
On January 2, 1997, the Large Company Select Fund issued Investor A shares in
a tax free conversion to acquire the assets and liabilities, including
distributions payable of $26,562, of the Common Trust A and Common Trust G of
The Provident Bank. The following is a summary of Investor A shares issued,
net assets acquired, net asset value per share and unrealized appreciation as
of the date acquired:
<TABLE>
<S> <C>
Investor A Shares (000)'s............................................ 2,781
Net assets acquired (000)'s.......................................... $27,813
Net asset value...................................................... $ 10.00
Unrealized appreciation (000)'s...................................... $12,592
Net assets of mutual fund before acquisition......................... $ 0
</TABLE>
Continued
B-114
<PAGE> 185
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
6. ACQUISITION OF COMMON TRUST FUNDS A, B, C, F-1 AND G, CONTINUED:
On January 9, 1997, the Ohio Tax Free Fund issued Investor A shares in a tax
free conversion to acquire the assets and liabilities, including
distributions payable of $15,577, of the Common Trust Fund B of The Provident
Bank. The following is a summary of Investor A shares issued, net assets
acquired, net asset value per share and unrealized appreciation as of the
date acquired.
<TABLE>
<S> <C>
Investor A Shares (000)'s............................................ 1,097
Net assets acquired (000)'s.......................................... $11,400
Net asset value...................................................... $ 10.39
Unrealized appreciation (000)'s...................................... $ 465
Net assets of mutual fund before acquisition......................... $11,624
</TABLE>
On January 23, 1997, the U.S. Government Income Fund issued Investor A shares
in a tax free conversion to acquire the assets and liabilities, including
distributions payable of $26,148, of the Common Trust Fund C and Common Trust
Fund F-1 of The Provident Bank. The following is a summary of Investor A
shares issued, net assets acquired, net asset value per share and unrealized
appreciation as of the date acquired.
<TABLE>
<S> <C>
Investor A Shares (000)'s............................................ 1,761
Net assets acquired (000)'s.......................................... $16,607
Net asset value...................................................... $ 9.43
Unrealized appreciation (000)'s...................................... $ 392
Net assets of mutual fund before acquisition......................... $34,983
</TABLE>
7. SUBSEQUENT EVENTS
The Company has entered into an Agreement and Plan of Reorganization and
Liquidation, dated as of March 21, 1997 (the "Plan"), with The Riverfront
Funds, an Ohio business trust (the "Trust"), whereby each Fund of the Company
will become a separate series of an Ohio business trust rather than a
separate series of a Maryland corporation (the "Conversion").
The Conversion is subject to certain regulatory approvals and to approval by
the shareholders of the Funds as a special Shareholder Meeting which has been
adjourned to seek further proxies and is currently expected to be held in the
first quarter of 1998. If the shareholders approve the Conversion and the
necessary regulatory approval is obtained, it is expected that the Conversion
will take place.
8. ELIGIBLE DISTRIBUTIONS (UNAUDITED):
The Riverfront Funds designates the following percentage of distributions
eligible for the dividends received deductions for the following funds:
<TABLE>
<CAPTION>
PERCENTAGE
----------
<S> <C>
Income Equity Fund................................................. 12.79%
Balanced Fund...................................................... 39.26%
Stock Appreciation Fund............................................ 10.60%
</TABLE>
Continued
B-115
<PAGE> 186
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc. December 31, 1997
9. EXEMPT-INTEREST INCOME DESIGNATIONS (UNAUDITED):
The Riverfront Funds designate the following exempt-interest dividends for
the taxable year ended December 31, 1997:
<TABLE>
<CAPTION>
TAX-
EXEMPT
DISTRIBUTION
------------
<S> <C>
Ohio Tax-Free Bond Fund......................................... $312,690
</TABLE>
10. FEDERAL INCOME TAX INFORMATION (UNAUDITED):
The accompanying table details distributions from mid-term and long-term
capital gains for the following Portfolios for the period ended December 31,
1997:
<TABLE>
<CAPTION>
MID-TERM LONG-TERM
28% 20%
---------- ----------
<S> <C> <C>
Income Equity Fund..................................... $3,522,442 $3,052,514
Ohio Tax-Free Fund..................................... $ 377,842 $ 219,421
Balanced Fund.......................................... $1,065,887 $ 486,992
Stock Appreciation Fund................................ $2,032,827 $ 291,201
Large Company Select Fund.............................. $2,117,560 $1,905,205
</TABLE>
At December 31, 1997, the following Portfolios have capital loss
carryforwards for tax purposes which are available to offset future capital
gains, if any:
<TABLE>
<CAPTION>
CAPITAL LOSS
CARRYFORWARD EXPIRES
------------ -------
<S> <C> <C>
U.S. Government Securities Money Market Fund............. $ 875 2002
U.S. Government Securities Money Market Fund............. $ 1,415 2003
U.S. Government Securities Money Market Fund............. $ 31 2005
U.S. Government Income Fund.............................. $552,136 2002
U.S. Government Income Fund.............................. $516,479 2003
</TABLE>
Under current tax law, capital losses realized October 31 may be deferred and
treated as occurring on the first day of the following fiscal year. The
following deferred losses will be treated as arising on the first day of the
fiscal year ended December 31, 1998:
<TABLE>
<CAPTION>
POST-OCTOBER
CAPITAL LOSSES
--------------
<S> <C>
U.S. Government Securities Money Market Fund................... $ 1,432
Income Equity Fund............................................. $119,866
</TABLE>
Continued
B-116
<PAGE> 187
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
------------------------------------------------
YEARS ENDED DECEMBER 31,
------------------------------------------------
1997 1996 1995 1994 (A) 1993 (A)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- --------
Investment Activities
Net investment income... 0.049 0.046 0.050 0.040 0.030
-------- -------- -------- -------- --------
Distributions
Net investment income... (0.049) (0.046) (0.050) (0.040) (0.030)
-------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD........... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ========
Total Return............. 5.02% 4.89% 5.52% 3.78% 2.90%
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of $142,569 $181,017 $157,495 $149,374 $133,207
period (000)............
Ratio of expenses to 0.64% 0.59% 0.58% 0.51% 0.32%
average net assets......
Ratio of net investment 4.90% 4.78% 5.34% 3.70% 2.85%
income to average net
assets..................
Ratio of expenses to 0.79% 0.84% 0.83% 0.80% 0.42%
average net assets*.....
Ratio of net investment 4.75% 4.53% 5.09% 3.41% 2.75%
income to average net
assets*.................
</TABLE>
- -------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or expense reimbursements had not
occurred, the ratios would have been as indicated.
(a)Audited by other auditors.
See Notes to Financial Statements.
B-117
<PAGE> 188
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME FUND
------------------------------------------------------------------------------------------
JANUARY 17, YEARS ENDED
YEAR ENDED DECEMBER 31, YEAR ENDED 1995 TO DECEMBER 31,
------------------------------------------- DECEMBER 31, DECEMBER 31, -------------------
1997 1996 1995 1995 (A) 1994 (E) 1993 (E)
--------------------- --------------------- ------------ ------------ -------- --------
INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A INVESTOR B
---------- ---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 9.43 $10.64 $ 9.71 $10.95 $ 8.92 $10.00 $ 9.91 $ 9.76
------- ------ ------- ------ ------- ------ ------- -------
Investment Activities
Net investment income.. 0.49 0.48 0.52 0.49 0.54 0.43 0.54 0.51
Net realized and
unrealized gains
(losses) from
investments........... 0.14 0.14 (0.29) (0.31) 0.79 0.94 (0.99) 0.20
------- ------ ------- ------ ------- ------ ------- -------
Total from Investment
Activities............ 0.63 0.62 0.23 0.18 1.33 1.37 (0.45) 0.71
------- ------ ------- ------ ------- ------ ------- -------
Distributions
Net investment income.. (0.50) (0.49) (0.51) (0.49) (0.54) (0.42) (0.54) (0.50)
In excess of net
investment income..... (0.08) (0.09) -- -- -- -- -- (0.06)
------- ------ ------- ------ ------- ------ ------- -------
Total Distributions.... (0.58) (0.58) (0.51) (0.49) (0.54) (0.42) (0.54) (0.56)
------- ------ ------- ------ ------- ------ ------- -------
NET ASSET VALUE,
END OF PERIOD.......... $ 9.48 $10.68 $ 9.43 $10.64 $ 9.71 $10.95 $ 8.92 $ 9.91
======= ====== ======= ====== ======= ====== ======= =======
Total Return (excludes
sales/redemption
charge)................ 6.94% 6.07% 2.51% 1.72% 15.22% 13.96%(d) (4.64)% 7.38%
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)........... $49,017 $1,309 $33,694 $1,296 $36,538 $1,263 $32,721 $30,078
Ratio of expenses to
average net assets..... 1.14% 1.95% 1.11% 1.96% 1.09% 1.90%(b) 0.86% 0.65%
Ratio of net investment
income to average net
assets................. 5.40% 4.56% 5.45% 4.59% 5.74% 4.80%(b) 5.78% 5.05%
Ratio of expenses to
average net assets*.... 1.20% 1.95% 1.20% 1.96% 1.18% 1.90%(b) 1.14% 1.08%
Ratio of net investment
income to average net
assets*................ 5.34% 4.56% 5.36% 4.59% 5.65% 4.80%(b) 5.49% 4.62%
Portfolio turnover rate
(c).................... 71% 71% 53% 53% 75% 75% 83% 220%
</TABLE>
- -------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or expense reimbursements had not
occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Portfolio turnover rate is calculated on the basis of the Portfolio as a
whole without distinguishing between the classes of shares issued.
(d) 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.
(e) Audited by other auditors.
See Notes to Financial Statements.
B-118
<PAGE> 189
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
INCOME EQUITY FUND
----------------------------------------------------------------------------------------
JANUARY 17, YEARS ENDED
YEAR ENDED DECEMBER 31, YEAR ENDED 1995 TO DECEMBER 31,
------------------------------------------- DECEMBER 31 DECEMBER 31, ------------------
1997 1996 1995 1995 (A) 1994 (E) 1993 (E)
--------------------- --------------------- ----------- ------------ -------- --------
INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A INVESTOR B
---------- ---------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 11.92 $ 12.16 $ 11.70 $ 11.85 $ 10.15 $10.00 $ 10.63 $ 10.78
------- ------- ------- ------- ------- ------ ------- -------
Investment Activities
Net investment income.. 0.16 0.06 0.21 0.12 0.27 0.13 0.32 0.28
Net realized and
unrealized gains
from investments...... 3.11 3.17 2.12 2.21 2.89 2.78 -- 1.01
------- ------- ------- ------- ------- ------ ------- -------
Total from Investment
Activities............ 3.27 3.23 2.33 2.33 3.16 2.91 0.32 1.29
------- ------- ------- ------- ------- ------ ------- -------
Distributions
Net investment income.. (0.16) (0.06) (0.21) (0.12) (0.27) (0.13) (0.31) (0.27)
In excess of net
investment income..... -- -- -- -- -- -- -- (0.03)
Net realized gains..... (3.35) (3.35) (1.90) (1.90) (1.34) (0.93) (0.49) (1.14)
------- ------- ------- ------- ------- ------ ------- -------
Total Distributions.... (3.51) (3.41) (2.11) (2.02) (1.61) (1.06) (0.80) (1.44)
------- ------- ------- ------- ------- ------ ------- -------
NET ASSET VALUE,
END OF PERIOD.......... $ 11.68 $ 11.98 $ 11.92 $ 12.16 $ 11.70 $11.85 $ 10.15 $ 10.63
======= ======= ======= ======= ======= ====== ======= =======
Total Return (excludes
sales/redemption
charge)................ 28.20% 27.19% 19.88% 19.67% 31.45% 29.28%(d) 3.08% 12.11%
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)........... $83,841 $17,563 $73,368 $ 7,632 $60,845 $2,833 $34,965 $24,387
Ratio of expenses to
average net assets..... 1.75% 2.55% 1.76% 2.48% 1.49% 2.46%(b) 1.30% 1.47%
Ratio of net investment
income to
average net assets..... 1.21% 0.40% 1.62% 0.88% 2.27% 1.12%(b) 2.93% 2.55%
Ratio of expenses to
average net assets*.... 1.80% 2.55% 1.85% 2.54% 1.74% 2.51%(b) 1.58% 1.64%
Ratio of net investment
income to
average net assets*.... 1.16% 0.40% 1.53% 0.82% 2.02% 1.07%(b) 2.65% 2.38%
Portfolio turnover rate
(c).................... 157% 157% 166% 166% 180% 180% 119% 145%
Average commission rate
paid (f)............... $0.0544 $0.0544 $0.0541 $0.0541
</TABLE>
- -------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or expense reimbursements had not
occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Portfolio turnover rate is calculated on the basis of the Portfolio as a
whole without distinguishing between the classes of shares issued.
(d) 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.
(e) Audited by other auditors.
(f) Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of portfolio shares purchased and sold for
which commissions were charged and is calculated on the basis of the
portfolio as a whole without distinguishing between the classes of shares
issued. Disclosure is not required for periods ending prior to September 1,
1996.
See Notes to Financial Statements.
B-119
<PAGE> 190
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
OHIO TAX-FREE BOND FUND
-------------------------------------------------------------------------------------
JANUARY 17, FROM AUGUST 1,
YEAR ENDED DECEMBER 31, YEAR ENDED 1995 TO 1994 THROUGH
------------------------------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995 1995 (A) 1994 (A)(E)
--------------------- --------------------- ------------ ------------ --------------
INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A INVESTOR B
---------- ---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $10.41 $10.64 $ 10.51 $10.73 $ 9.83 $10.00 $ 10.00
------ ------ ------- ------ ------- ------ -------
Investment Activities
Net investment income.. 0.42** 0.35** 0.40 0.32 0.39 0.27 0.12
Net realized and
unrealized gains
(losses) from
investments........... -- (0.02) (0.10) (0.09) 0.67 0.73 (0.17)
------ ------ ------- ------ ------- ------ -------
Total from Investment
Activities............ 0.42 0.33 0.30 0.23 1.06 1.00 (0.05)
------ ------ ------- ------ ------- ------ -------
Distributions
Net investment income.. (0.38) (0.31) (0.40) (0.32) (0.38) (0.27) (0.12)
In excess of net
investment income..... (0.09) (0.09) -- -- -- -- --
Net realized gains..... (1.35) (1.35) -- -- -- -- --
Tax return of capital.. (0.03) (0.03) -- -- -- -- --
------ ------ ------- ------ ------- ------ -------
Total Distributions.... (1.85) (1.78) (0.40) (0.32) (0.38) (0.27) (0.12)
------ ------ ------- ------ ------- ------ -------
NET ASSET VALUE,
END OF PERIOD.......... $ 8.98 $ 9.19 $ 10.41 $10.64 $ 10.51 $10.73 $ 9.83
====== ====== ======= ====== ======= ====== =======
Total Return (excludes
sales/redemption
charge)................ 4.27% 3.24% 2.95% 2.21% 10.96% 10.10%(b) (0.47)%(b)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)........... $2,411 $1,135 $10,693 $ 984 $11,091 $ 626 $10,190
Ratio of expenses to
average net assets..... 1.34% 2.14% 1.45% 2.25% 1.49% 2.27%(c) 1.08%(c)
Ratio of net investment
income to
average net assets..... 4.19% 3.39% 3.87% 3.07% 3.77% 3.01%(c) 2.92%(c)
Ratio of expenses to
average net assets*.... 1.96% 2.77% 1.55% 2.36% 1.64% 2.41%(c) 1.44%(c)
Ratio of net investment
income to
average net assets*.... 3.57% 2.76% 3.77% 2.96% 3.62% 2.87%(c) 2.56%(c)
Portfolio turnover rate
(d).................... 4% 4% 6% 6% 34% 34% 29%
</TABLE>
- -------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or expense reimbursements had not
occurred, the ratios would have been as indicated.
** Calculated using average shares outstanding throughout the year.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover rate is calculated on the basis of the Portfolio as a
whole without distinguishing between the classes of shares issued.
(e) Audited by other auditors.
See Notes to Financial Statements.
B-120
<PAGE> 191
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
BALANCED FUND
----------------------------------------------------------------------------------------
JANUARY 17, FROM SEPTEMBER 1,
YEAR ENDED DECEMBER 31, YEAR ENDED 1995 TO 1994 THROUGH
------------------------------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995 1995 (A) 1994 (A)(F)
--------------------- --------------------- ------------ ------------ -----------------
INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A INVESTOR B
---------- ---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 11.69 $ 12.04 $ 11.36 $ 11.70 $ 9.79 $10.00 $10.00
------- ------- ------- ------- ------ ------ ------
Investment Activities
Net investment income.. 0.23 0.12 0.31 0.26 0.35 0.25 0.10
Net realized and
unrealized gains
(losses) from
investments........... 1.71 1.77 0.33 0.34 1.66 1.79 (0.18)
------- ------- ------- ------- ------ ------ ------
Total from Investment
Activities............. 1.94 1.89 0.64 0.60 2.01 2.04 (0.08)
------- ------- ------- ------- ------ ------ ------
Distributions
Net investment income.. (0.23) (0.12) (0.31) (0.26) (0.34) (0.24) (0.13)
Net realized gains..... (1.10) (1.10) -- -- (0.10) (0.10) --
------- ------- ------- ------- ------ ------ ------
Total Distributions.... (1.33) (1.22) (0.31) (0.26) (0.44) (0.34) (0.13)
------- ------- ------- ------- ------ ------ ------
NET ASSET VALUE,
END OF PERIOD.......... $ 12.30 $ 12.71 $ 11.69 $ 12.04 $11.36 $11.70 $ 9.79
======= ======= ======= ======= ====== ====== ======
Total Return (excludes
sales/redemption
charge)................ 16.77% 15.82% 5.76% 5.27% 20.83% 20.53%(b) (0.82)%(c)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)........... $ 9,563 $11,483 $10,786 $10,008 $9,427 $5,030 $2,709
Ratio of expenses to
average net assets..... 1.86% 2.72% 1.70% 2.54% 1.28% 2.04%(d) 1.48%(d)
Ratio of net investment
income to average net
assets................. 1.80% 0.93% 2.87% 2.03% 3.48% 2.69%(d) 4.01%(d)
Ratio of expenses to
average net assets*.... 2.07% 2.82% 1.94% 2.68% 1.67% 2.84%(d) 4.61%(d)
Ratio of net investment
income to average net
assets*................ 1.59% 0.83% 2.63% 1.89% 3.09% 1.89%(d) 0.88%(d)
Portfolio turnover rate
(e).................... 102% 102% 98% 98% 13% 13% 1%
Average commission rate
paid (g)............... $0.0627 $0.0627 $0.0891 $0.0891
</TABLE>
- -------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or expense reimbursements had not
occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) 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.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover rate is calculated on the basis of the Portfolio as a
whole without distinguishing between the classes of shares issued.
(f) Audited by other auditors.
(g) Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of portfolio shares purchased and sold for
which commissions were charged and is calculated on the basis of the
portfolio as a whole without distinguishing between the classes of shares
issued. Disclosure is not required for periods ending prior to September 1,
1996.
See Notes to Financial Statements.
B-121
<PAGE> 192
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[This Page Intentionally Left Blank]
B-122
<PAGE> 193
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
STOCK APPRECIATION FUND
------------------------------------------------------------------------------------
FROM OCTOBER 1, FROM OCTOBER 1,
YEAR ENDED DECEMBER 31, 1995 THROUGH 1995 THROUGH
------------------------------------------------- DECEMBER 31, DECEMBER 31,
1997 1996 1995 (B) 1995 (A)(B)
----------------------- ----------------------- --------------- ---------------
INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A INVESTOR B
---------- ---------- ---------- ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 9.43 $ 9.77 $ 9.50 $ 9.91 $ 10.00 $10.00
------- ------- ------- ------- ------- ------
Investment Activities
Net investment loss.... (0.04) (0.08) (0.14) (0.15) (0.01) (0.01)
Net realized and
unrealized gains
(losses) from
investments........... 1.75 1.77 1.10 1.04 (0.12) (0.08)
------- ------- ------- ------- ------- ------
Total from Investment
Activities............ 1.71 1.69 0.96 0.89 (0.13) (0.09)
------- ------- ------- ------- ------- ------
Distributions
Net realized gains..... (1.97) (1.97) (1.03) (1.03) (0.37) --
------- ------- ------- ------- ------- ------
NET ASSET VALUE,
END OF PERIOD.......... $ 9.17 $ 9.49 $ 9.43 $ 9.77 $ 9.50 $ 9.91
======= ======= ======= ======= ======= ======
Total Return (excludes
sales/redemption
charge)................ 18.79% 17.86% 10.17% 9.05% (1.20)%(c) (0.90)%(c)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)........... $24,312 $ 1,265 $31,227 $ 687 $40,995 $ 72
Ratio of expenses to
average net assets..... 2.11% 2.86% 1.91% 2.64% 1.76%(d) 2.30%(d)
Ratio of net investment
loss to average net
assets................. (0.43)% (1.20)% (1.25)% (2.01)% (0.49)%(d) (1.69)%(d)
Ratio of expenses to
average net assets*.... (g) (g) (g) (g) 1.77%(d) 2.39%(d)
Ratio of net investment
loss to average net
assets*................ (g) (g) (g) (g) (0.50)%(d) (1.78)%(d)
Portfolio turnover rate
(e).................... 67% 67% 162% 162% 46% 46%
Average commission rate
paid (h)............... $0.0601 $0.0601 $0.0597 $0.0597
</TABLE>
- -------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or 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 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 rate is calculated on the basis of the Portfolio as a
whole without distinguishing between the classes of shares issued.
(f) Audited by other auditors.
(g) There were no waivers or reimbursements during the period.
(h) Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of portfolio shares purchased and sold for
which commissions were charged and is calculated on the basis of the
portfolio as a whole without distinguishing between the classes of shares
issued. Disclosure is not required for periods ending prior to September 1,
1996.
See Notes to Financial Statements.
B-123
<PAGE> 194
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Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
STOCK APPRECIATION FUND
--------------------------------
YEARS ENDED SEPTEMBER 30,
--------------------------------
1995 (F) 1994 (F) 1993 (F)
-------- -------- --------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD....................... $ 8.25 $ 10.18 $ 7.98
------- ------- -------
Investment Activities
Net investment loss....................... (0.07) (0.12) (0.17)
Net realized and unrealized gains
(losses) from investments................ 2.14 (1.26) 2.57
------- ------- -------
Total from Investment Activities.......... 2.07 (1.38) 2.40
------- ------- -------
Distributions
Net realized gains........................ (0.32) (0.55) (0.20)
------- ------- -------
NET ASSET VALUE,
END OF PERIOD............................. $ 10.00 $ 8.25 $ 10.18
======= ======= =======
Total Return (excludes sales/redemption
charge)................................... 25.12% (13.91)% 30.61%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).......... $44,500 $47,880 $59,330
Ratio of expenses to average net assets.... 2.61% 2.44% 2.47%
Ratio of net investment loss to average net (0.73)% (1.35)% (1.85)%
assets....................................
Ratio of expenses to average net assets*... (g) (g) (g)
Ratio of net investment loss to average net (g) (g) (g)
assets*...................................
Portfolio turnover rate (e)................ 197% 254% 216%
</TABLE>
See Notes to Financial Statements.
B-124
<PAGE> 195
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Riverfront Funds, Inc.
<TABLE>
<CAPTION>
LARGE COMPANY
SELECT FUND
------------------------
FROM JANUARY 2, 1997
THROUGH DECEMBER 31,
1997 (A)
------------------------
INVESTOR A INVESTOR B
---------- ----------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............................... $ 10.00 $ 10.00
------- -------
Investment Activities
Net investment income (loss)...................... -- (0.04)
Net realized and unrealized gains (losses) from
investments...................................... 2.77 2.72
------- -------
Total from Investment Activities.................. 2.77 2.68
------- -------
Distributions
Net realized gains................................ (1.40) (1.40)
Tax return of capital............................. (0.03) --
------- -------
Total Distributions............................... (1.43) (1.40)
------- -------
NET ASSET VALUE,
END OF PERIOD..................................... $ 11.34 $ 11.28
======= =======
Total Return (excludes sales/redemption charge).... 27.93%(b) 26.97%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000).................. $33,614 $ 2,464
Ratio of expenses to average net assets............ 1.69%(c) 2.47%(c)
Ratio of net investment income (loss) to average 0.00%(c) (1.10)%(c)
net assets........................................
Ratio of expenses to average net assets............ (f) (f)
Ratio of net investment income to average net (f) (f)
assets............................................
Portfolio turnover rate (d)........................ 39% 39%
Average commission rate paid (e)................... $0.0960 $0.0960
</TABLE>
- -------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover rate is calculated on the basis of the Portfolio as a
whole without distinguishing between the classes of shares issued.
(e) Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of portfolio shares purchased and sold for
which commissions were charged and is calculated on the basis of the
portfolio as a whole without distinguishing between the classes of shares
issued.
(f) There were no waivers or reimbursements during the period.
See Notes to Financial Statements.
B-125
<PAGE> 196
- --------------------------------------------------------------------------------
APPENDIX
- --------------------------------------------------------------------------------
The nationally recognized statistical rating organizations
(individually, an "NRSRO") that may be utilized by the Fund with regard to
portfolio investments for the Funds including Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Corporation ("S&P"), Duff & Phelps, Inc.
("Duff"), Fitch IBCA Information Services, Inc. ("Fitch") and Thomson BankWatch,
Inc. ("Thomson"). Set forth below is a description of the relevant ratings of
each such NRSRO. The NRSROs that may be utilized by the Fund and the description
of each NRSRO's ratings is as of the date of this Statement of Additional
Information, and may subsequently change.
Long-Term Debt Ratings (may be assigned, for example, to corporate bonds)
Description of the six highest long-term debt ratings by Moody's
(Moody's applies numerical modifiers (1, 2, and 3) in each rating category to
indicate the security's ranking within the category):
Aaa Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins or
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.
Baa Bonds are considered as medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba Bonds which are rate Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
A-1
<PAGE> 197
Description of the six highest long-term debt ratings by S&P (S&P may
apply a plus (+) or minus (-) to a particular rating classification to show
relative standing within that classification):
AAA Debt rated AAA has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
AA Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in small
degree.
A Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated circumstances.
BBB Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
BB Bonds which are rated BB have less near-term vulnerability to
default than other speculative issues. However, they face major ongoing
uncertainties or exposure to adverse business, financial or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied BBB rating.
B Bonds rated B have a greater vulnerability to default but
currently have the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions will
likely impair capacity or willingness to pay interest and repay
principal. The B rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BB or BB- rating.
Description of four highest long-term debt ratings by Duff:
AAA Highest credit quality. The risk factors are negligible being
only slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality. Protection factors are strong.
AA Risk is modest but may vary slightly from time to time
A- because of economic conditions.
A+ Protection factors are average but adequate. However,
A risk factors are more variable and greater in periods
A- of economic stress.
BBB Debt has below average protection factors but is still
considered sufficient for prudent investment. However, there
is considerable variability in risk during economic cycles.
Description of the six highest long-term debt ratings by Fitch (plus or
minus signs are used with a rating symbol to indicate the relative position of
the credit within the rating category):
A-2
<PAGE> 198
AAA (Highest credit quality). This rating denotes the lowest
expectation of credit risk. This rating is assigned only in case of
exceptionally strong capacity for timely payment of financial
commitments, a capacity that is highly unlikely to be adversely
affected by foreseeable events.
AA (Very high credit quality). This rating denotes a very low
expectation of credit risk. This rating indicates very strong capacity
for timely payment of financial commitments, a capacity that is not
significantly vulnerable to foreseeable events.
A (High credit quality). This rating denotes a low expectation
of credit risk. This rating indicates a strong capacity for timely
payment of financial commitments. This capacity may, nevertheless, be
more vulnerable to changes in circumstances or in economic conditions
than is the case for long-term debt rate "AAA" or "AA."
BBB (Good credit quality). This rating indicates that there is
currently a low expectation of credit risk. The capacity for timely
payment of financial commitments is considered adequate, but adverse
changes in circumstances and in economic conditions are more likely to
impair this capacity.
The "BBB" category is the lowest investment-grade category.
BB (Speculative). This rating indicates that there is a
possibility of credit risk developing, particularly as the result of
adverse economic change over time; however, business or financial
alternatives may be available to allow financial commitments to be met.
Securities rated in the "BB" category are not investment grade.
B (Highly speculative). This rating indicates that significant
credit risk is present, but a limited margin of safety remains.
Financial commitments are currently being met; however, capacity for
continued payment is contingent upon a sustained, favorable business
and economic environment.
Thomson's description of its six highest long-term debt ratings
(Thomson may include a plus (+) or minus (-) designation to indicated where
within the respective category the issue is placed):
AAA The highest category; indicates ability to repay principal and
interest on a timely basis is very high.
AA The second highest category; indicates a superior ability to
repay principal and interest on a timely basis with limited incremental
risk versus issues rated in the highest category.
A The third highest category; indicates the ability to repay
principal and interest is strong. Issues rated "A" could be more
vulnerable to adverse developments (both internal and external) than
obligations with higher ratings.
BBB The lowest investment grade category and indicates an
acceptable capacity to repay principal and interest. Issues rated BBB
are, however, more vulnerable to adverse developments (both internal
and external) than obligations with higher ratings.
BB While not investment grade, the BB rating suggests that the
likelihood of default is considerably less than for lower-rated issues.
However, there are significant uncertainties that could affect the
ability to adequately service debt obligations.
A-3
<PAGE> 199
B Issues rated B show a higher degree of uncertainty and
therefore greater likelihood of default than higher-rated issues.
Adverse developments could well negatively affect the payment of
interest and principal on a timely basis.
Short-Term Debt Ratings (may be assigned, for example, to commercial paper,
master demand notes, bank instruments, and letters of credit)
Moody's description of its three highest short-term debt ratings:
Prime-1 Issuers rated Prime-1 (or supporting institutions) have a
superior capacity for repayment of senior short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by
many of the following characteristics:
- Leading market positions in well-established
industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate
reliance on debt and ample asset protection.
- Broad margins in earnings coverage of fixed
financial charges and high internal cash generation.
- Well-established access to a range of financial
markets and assured sources of alternate liquidity.
Prime-2 Issuers rated Prime-2 (or supporting institutions) have a
strong capacity for repayment of senior short-term debt obligations.
This will normally be evidenced by many of the characteristics cited
above but to a lesser degree. Earnings trends and coverage ratios,
while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
Prime-3 Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The
effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require
relatively high financial leverage. Adequate liquidity is maintained.
S&P's description of its three highest short-term debt ratings:
A-1 This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to have extremely
strong safety characteristics are denoted with a plus sign (+).
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated "A-1."
A-4
<PAGE> 200
A-3 Issues carrying this designation have adequate capacity for
timely payment. They are, however, more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the
higher designations.
Duff's description of its three highest short-term debt ratings (Duff
incorporates gradations of "1+" (one plus) and "1-" (one minus) to assist
investors in recognizing quality differences within the highest rating
category):
Duff 1+ Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.
Duff 1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk
factors are minor.
Duff 1- High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk factors are
very small.
Duff 2 Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is
good. Risk factors are small.
Duff 3 Satisfactory liquidity and other protection factors qualify
issue as to investment grade. Risk factors are larger and subject to
more variation. Nevertheless, timely payment is expected.
Fitch's description of its three highest short-term debt ratings:
F1+ Issues assigned this rating are regarded as having the
strongest capacity for timely payment of financial commitments; an
added "+" denotes any exceptionally strong credit feature.
F1 Issues assigned this rating are regarded as having a capacity
for timely payment only slightly less than the highest rating,
i.e., F1+.
F2 Issues assigned this rating have a satisfactory capacity for
timely payment of financial commitments, but the margin of safety is
not as great as it is for issues assigned ratings of F1+ or F1.
Thomson's description of its three highest short-term ratings:
TBW-1 The highest category; indicates a very high degree of
likelihood that principal and interest will be paid on a timely basis.
TBW-2 The second highest category; while the degree of safety
regarding timely repayment of principal and interest is strong, the
relative degree of safety is not as high as for issues rated "TBW-1".
TBW-3 The lowest investment grade category; indicates that while
more susceptible to adverse developments (both internal and external)
than obligations with higher ratings, capacity to service principal and
interest in a timely fashion is considered adequate.
A-5
<PAGE> 201
Registration Statement
of
THE RIVERFRONT FUNDS
on
Form N-1A
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
(i) The Riverfront U.S. Government Securities Money Market Fund
Financial Highlights
(ii) The Riverfront U.S. Government Income Fund
Financial Highlights
(iii) The Riverfront Income Equity Fund
Financial Highlights
(iv) The Riverfront Balanced Fund
Financial Highlights
(v) The Riverfront Small Company Select Fund
Financial Highlights
(vi) The Riverfront Large Company Select Fund
Financial Highlights
Included in Part B:
(i) The Riverfront U.S. Government Securities Money Market Fund
Statement of Assets and Liabilities dated June 30, 1998
(unaudited)
Statement of Operations for the period ended June 30, 1998
(unaudited)
Statement of Changes in Net Assets for the period ended June
30, 1998 (unaudited)
C-1
<PAGE> 202
Schedule of Portfolio Investments dated June 30, 1998
(unaudited)
Notes to Financial Statements as of June 30, 1998 (unaudited)
Financial Highlights for the six month period ended June 30,
1998 (unaudited)
Report of Independent Auditors dated February 13, 1998
Statement of Assets and Liabilities dated December 31, 1997
Statement of Operations for the year ended December 31, 1997
Statements of Changes in Net Assets for the years ended
December 31, 1997 and 1996
Schedule of Portfolio Investments dated December 31, 1997
Notes to Financial Statements as of December 31, 1997
Financial Highlights for the years ended December 31, 1997,
1996, 1995, 1994 and 1993
(ii) The Riverfront U.S. Government Income Fund
Statement of Assets and Liabilities dated June 30, 1998
(unaudited)
Statement of Operations for the period ended June 30, 1998
(unaudited)
Statement of Changes in Net Assets for the period ended June
30, 1998 (unaudited)
Schedule of Portfolio Investments dated June 30, 1998
(unaudited)
Notes to Financial Statements as of June 30, 1998 (unaudited)
Financial Highlights for the six month period ended June 30,
1998 (Investor A and B shares) (unaudited)
Report of Independent Auditors dated February 13, 1998
Statement of Assets and Liabilities dated December 31, 1997
Statement of Operations for the year ended December 31, 1997
Statements of Changes in Net Assets for the years ended
December 31, 1997 and 1996
Schedule of Portfolio Investments dated December 31, 1997
Notes to Financial Statements as of December 31, 1997
Financial Highlights for the years ended December 31, 1997,
1996, 1995, 1994 and 1993 (Investor A Shares) and for the
years ended December 31, 1997 and 1996 and the period from
commencement of operations (January 17, 1995) to December 31,
1995 (Investor B Shares)
C-2
<PAGE> 203
(iii) The Riverfront Income Equity Fund
Statement of Assets and Liabilities dated June 30, 1998
(unaudited)
Statement of Operations for the period ended June 30, 1998
(unaudited)
Statement of Changes in Net Assets for the period ended June
30, 1998 (unaudited)
Schedule of Portfolio Investments dated June 30, 1998
(unaudited)
Notes to Financial Statements as of June 30, 1998 (unaudited)
Financial Highlights for the six month period ended June 30,
1998 (Investor A and B shares) (unaudited)
Report of Independent Auditors dated February 13, 1998
Statement of Assets and Liabilities dated December 31, 1997
Statement of Operations for the year ended December 31, 1997
Statements of Changes in Net Assets for the years ended
December 31, 1997 and 1996
Schedule of Portfolio Investments dated December 31, 1997
Notes to Financial Statements as of December 31, 1997
Financial Highlights for the years ended December 31, 1997,
1996, 1995, 1994 and 1993 (Investor A Shares) and for the
years ended December 31, 1997 and 1996 and the period from
commencement of operations (January 17, 1995) to December 31,
1995 (Investor B Shares)
(iv) The Riverfront Balanced Fund
Statement of Assets and Liabilities dated June 30, 1998
(unaudited)
Statement of Operations for the period ended June 30, 1998
(unaudited)
Statement of Changes in Net Assets for the period ended June
30, 1998 (unaudited)
Schedule of Portfolio Investments dated June 30, 1998
(unaudited)
Notes to Financial Statements as of June 30, 1998 (unaudited)
Financial Highlights for the six month period ended June 30,
1998 (Investor A and B shares) (unaudited)
Report of Independent Auditors dated February 13, 1998
Statement of Assets and Liabilities dated December 31, 1997
Statement of Operations for the year ended December 31, 1997
C-3
<PAGE> 204
Statements of Changes in Net Assets for the years ended
December 31, 1997 and 1996
Schedule of Portfolio Investments dated December 31, 1997
Notes to Financial Statements as of December 31, 1997
Financial Highlights for the years ended December 31, 1997,
1996 and 1995 and the period from commencement of operations
(September 1, 1994) to December 31, 1994 (Investor A shares)
and for the years ended December 31, 1997 and 1996 and the
period from commencement of operations (January 17, 1995) to
December 31, 1995 (Investor B shares)
(v) The Riverfront Small Company Select Fund
Statement of Assets and Liabilities dated June 30, 1998
(unaudited)
Statement of Operations for the period ended June 30, 1998
(unaudited)
Statement of Changes in Net Assets for the period ended June
30, 1998 (unaudited)
Schedule of Portfolio Investments dated June 30, 1998
(unaudited)
Notes to Financial Statements as of June 30, 1998 (unaudited)
Financial Highlights for the six month period ended June 30,
1998 (Investor A and B shares) (unaudited)
Report of Independent Auditors dated February 13, 1998
Statement of Assets and Liabilities dated December 31, 1997
Statement of Operations for the year ended December 31, 1997
Statements of Changes in Net Assets for the years ended
December 31, 1997 and 1996
Schedule of Portfolio Investments dated December 31, 1997
Notes to Financial Statements as of December 31, 1997
Financial Highlights for the years ended December 31, 1997 and
1996, the period from the date of acquisition (October 1,
1995) through December 31, 1995, and the years ended September
30, 1995, 1994 and 1993 (Investor A shares) and for the years
ended December 31, 1997 and 1996 and the period from
commencement of operations (October 1, 1995) through December
31, 1995 (Investor B shares)
(vi) The Riverfront Large Company Select Fund
Statement of Assets and Liabilities dated June 30, 1998
(unaudited)
Statement of Operations for the period ended June 30, 1998
(unaudited)
Statement of Changes in Net Assets for the period ended June
30, 1998 (unaudited)
Statement of Changes in Net Assets for the period ended June
30, 1998 (unaudited)
C-4
<PAGE> 205
Schedule of Portfolio Investments dated June 30, 1998
(unaudited)
Notes to Financial Statements as of June 30, 1998 (unaudited)
Financial Highlights for the six month period ended June 30,
1998 (Investor A and B shares) (unaudited)
Report of Independent Auditors dated February 13, 1998
Statement of Assets and Liabilities dated December 31, 1997
Statement of Operations for the period from commencement of
operations (January 2, 1997) through December 31, 1997
Statements of Changes in Net Assets for the period from
commencement of operations (January 2, 1997) through December
31, 1997
Schedule of Portfolio Investments dated December 31, 1997
Notes to Financial Statements as of December 31, 1997
Financial Highlights for the period from commencement of
operations (January 2, 1997) through December 31, 1997
(Investor A Shares and Investor B Shares)
(vii) All required financial statements are included in Part B
hereof. All other financial statements and schedules are
inapplicable.
(b) Exhibits
(1) Registrant's Declaration of Trust dated October 11, 1996.
(2) Registrant's By-Laws.
(3) Not applicable.
(4) Certificates for shares are not issued. Articles IV, V, VI and
VII of the Declaration of Trust, filed as Exhibit (1) hereto,
define rights of holders of Shares.
(5)(a) Proposed Investment Advisory Agreement dated as of December
29, 1998, between the Registrant and The Provident Bank.
(b) Proposed Sub-Investment Advisory Agreement dated as of
December 29, 1998, between The Provident Bank and DePrince,
Race & Zollo, Inc.
(6)(a) Proposed Distribution Agreement dated as of December 29, 1998,
between Registrant and BISYS Fund Services Limited
Partnership.
(b) Form of Dealer Agreement between BISYS Fund Services Limited
Partnership and Provident Securities & Investment Company.
(7) Not applicable.
C-5
<PAGE> 206
(8) Proposed Custodian, Fund Accounting and Recordkeeping
Agreement dated as of December 29, 1998, between the
Registrant and The Provident Bank.
(9)(a) Proposed Administration Agreement dated as of December 29,
1998, between the Registrant and BISYS Fund Services Limited
Partnership.
(b) Proposed Master Transfer and Recordkeeping Agreement dated as
of December 29, 1998, between the Registrant and The Provident
Bank.
(c) Proposed Shareholder Services Plan.
(d) Proposed form of Servicing Agreement to Shareholder Services
Plan.
(e) Agreement and Plan of Reorganization and Liquidation dated as
of May 29, 1998, between the Registrant and The Riverfront
Funds, Inc.
(10) Opinion of counsel as to the legality of the shares of The
Riverfront Funds.
(11) Consent of Ernst & Young LLP, independent auditors.
(12) Not applicable.
(13) A copy of the Subscription Agreement is incorporated by
reference to Exhibit (13) of Registrant's Registration
Statement (No. 33-34154) filed on April 10, 1990.
(14) Not applicable.
(15)(a) Proposed Investor A Distribution and Shareholder Service
Plan.
(b) Proposed Investor B Distribution and Shareholder Service Plan.
(c) Proposed form of Dealer Agreement between BISYS Fund Services
Limited Partnership and Provident Securities & Investment
Company.
(16)(a) Computation of Performance Quotations for The Riverfront
U.S. Government Securities Money Market Fund was filed on June
2, 1994, with Post-Effective Amendment No. 7 as Exhibit (16)
(a) and is incorporated by reference herein.
(b) Computation of Performance Quotations for The Riverfront U.S.
Government Income Fund and The Riverfront Income Equity Fund
was filed on June 2, 1994, with Post-Effective Amendment No. 7
as Exhibit (16)(b) and is incorporated by reference herein.
(d) Computation of Performance Quotations for The Riverfront
Balanced Fund (f/k/a The Riverfront Flexible Growth Fund) was
filed on January 31, 1995, with Post-Effective Amendment No. 9
as Exhibit (16)(d) and is incorporated by reference herein.
(e) Computation of Performance Quotations for The Riverfront Small
Company Select Fund (f/k/a The Riverfront Stock Appreciation
Fund) was filed on September 21, 1995, with Post-Effective
Amendment No. 14 as Exhibit (16)(e) and is incorporated by
reference herein.
C-6
<PAGE> 207
(f) Computation of Performance Quotations for The Riverfront Large
Company Select Fund was filed on October 18, 1996, as Exhibit
(16)(f) to Post-Effective Amendment No. 17 of Registrant's
Registration Statement (No. 33-34154) and is incorporated
herein by reference.
(17) Financial Data Schedules.
(18) Rule 18f-3 Plan.
(19)(a) Powers of Attorney for J. Virgil Early and William M.
Higgins are incorporated by reference to Exhibit (17) of
Post-Effective Amendment No. 6 to Registrant's Registration
Statement (No. 33-34154) filed on March 1, 1994.
(b) Power of Attorney for Walter B. Grimm is incorporated by
reference to Exhibit (18)(c) of Post-Effective Amendment No.
10 to Registrant's Registration Statement (No. 33-34154) filed
on April 11, 1995.
(c) Power of Attorney for Harvey W. Salkin is incorporated by
reference to Exhibit (19)(d) of Post-Effective Amendment No.
16 to Registrant's Registration Statement (No. 33-34154) filed
on April 26, 1996.
(d) Power of Attorney for Donald C. Siekmann is incorporated by
reference to Exhibit (19)(e) of Post-Effective Amendment No.
25 to Registrant's Registration Statement (No. 33-34154) filed
on April 29, 1998.
(e) Power of Attorney for William M. Stratman.
(f) Powers of Attorney for the Trustees and Officers of The
Riverfront Funds.
(g) Consent of Baker & Hostetler LLP
Item 25. Persons Controlled by or Under Common Control With Registrant
Not Applicable.
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Record Holders
as of October 23, 1998
------------------------
Investor A Investor B
Title of Series Shares Shares
--------------- ---------- ----------
<S> <C> <C>
The Riverfront U.S. Government Securities Money Market Fund, shares of 395 N/A
capital stock, $.001 par value
The Riverfront U.S. Government Income Fund, shares of capital stock, 33 58
$.001 par value
The Riverfront Income Equity Fund, shares of capital stock, $.001 par 754 1,236
value
</TABLE>
C-7
<PAGE> 208
<TABLE>
<CAPTION>
Number of Record Holders
as of October _, 1998
------------------------
Investor A Investor B
Title of Series Shares Shares
--------------- ---------- ----------
<S> <C> <C>
The Riverfront Balanced Fund, shares of capital stock, $.001 par value 41 650
The Riverfront Stock Appreciation Fund, shares of capital stock, $.001 2,878 168
par value
The Riverfront Large Company Select Fund, shares of capital stock, 122 630
$.001 par value
</TABLE>
Item 27. Indemnification
Article VI, Section 6.4 of the Registrant's Declaration of
Trust, filed as Exhibit 1 hereto, provides for the
indemnification of Registrant's Trustees and officers.
Indemnification of the Registrant's principal underwriter,
custodian, investment adviser, administrator and transfer
agent is provided for, respectively, in Section 1.12 of the
Distribution Agreement filed as Exhibit 6(a) hereto, Section
7.A. of the Custodian, Fund Accounting and Recordkeeping
Agreement filed as Exhibit 8 hereto, Section 8 of the
Investment Advisory Agreement filed as Exhibit 5(a) hereto,
Section 8 of the Administration Agreement filed as Exhibit
9(a) hereto, and Section 8 of the Master Transfer and
Recordkeeping Agreement filed as Exhibits 9(b) hereto. As of
the effective date of this Registration Statement, the
Registrant will have obtained from a major insurance carrier a
trustees' and officers' liability policy covering certain
types of errors and omissions. In no event will Registrant
indemnify any of its trustees, officers, employees or agents
against any liability to which such person would otherwise be
subject by reason of his willful misfeasance, bad faith, or
gross negligence in the performance of his duties, or by
reason of his reckless disregard of the duties involved in the
conduct of his office or under his agreement with Registrant.
Registrant will comply with Rule 484 under the Securities Act
of 1933 and Release 11330 under the Investment Company Act of
1940 in connection with any indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to trustees, officers,
and controlling persons of Registrant pursuant to the
foregoing provisions, or otherwise, Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses
incurred or paid by a trustee, officer, or controlling person
of Registrant in the successful defense of any action, suit,
or proceeding) is asserted by such trustee, officer, or
controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed
by the final adjudication of such issue.
Item 28. Businesses and Other Connections of Investment Adviser
(a) To the knowledge of Registrant, none of the officers
or directors of The Provident Bank, except those set
forth below, is or has been at any time during the
past two fiscal years engaged in any other business,
profession, vocation or employment. Set forth below
are the names and principal business addresses of the
directors and officers who are engaged in any other
business, profession, vocation, or employment of a
substantial nature.
C-8
<PAGE> 209
<TABLE>
<CAPTION>
Position with
Name The Provident Bank Other Business
---- ------------------ --------------
<S> <C> <C>
Jack M. Cook Director President and Chief Executive Officer
of Health Alliance of Greater
Cincinnati
Thomas D. Grote, Jr. Director President, Thomas J. Dyer Company
Joseph A. Podoto Director President, JLM Financial, Inc.
Sidney A. Peerless, M.D. Director President of E.N.T. Associates; staff
member at several hospitals in the
Cincinnati area
Edwin Riley Director Managing Director of Phoenix
Investment Council
Joseph A. Steger, Ph.D. Director President, University of Cincinnati
</TABLE>
(b) To the knowledge of Registrant, none of the officers or
directors of DePrince, Race & Zollo, Inc. ("DRZ") is or has
been at any time during the past two fiscal years engaged in
any other business, profession, vocation or employment.
Item 29. Principal Underwriter
(a) BISYS Fund Services Limited Partnership, d/b/a BISYS Fund
Services, acts as administrator and distributor for Registrant. BISYS Fund
Services currently serves as distributor of the following management investment
companies: Alpine Equity Trust, American Performance Funds, AmSouth Mutual
Funds, The ARCH Fund, Inc., The BB&T Mutual Funds Group, The Coventry Group, ESC
Strategic Funds, Inc., The Eureka Funds, Inc., Fountain Square Funds, Hirtle
Callaghan Trust, HSBC Family of Funds, The Infinity Mutual Funds, Inc., INTRUST
Funds Trust, The Kent Funds, Magna Funds, Meyers Investment Trust, MMA Praxis
Mutual Funds, M.S.D.& T. Funds, Pacific Capital Funds, Parkstone Group of Funds,
The Parkstone Advantage Funds, Pegasus Funds, Puget Sound Alternative Investment
Series Trust, The Republic Funds Trust, The Republic Advisors Funds Trust, SBSF
Funds, Inc., d/b/a Key Mutual Funds, Sefton Funds, The Sessions Group, Summit
Investment Trust, Variable Insurance Funds, The Victory Portfolios, The Victory
Variable Funds, and Vintage Funds, Inc.
(b) To the best of Registrant's knowledge, the partners of
BISYS Fund Services are as follows:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Positions and Offices
Business Address BISYS Fund Services with Registrant
------------------ -------------------------- ---------------------
<S> <C> <C>
The BISYS Group, Inc. Sole Shareholder of BISYS Fund None
150 Clove Road Services, Inc.
Little Falls, New Jersey 07424
</TABLE>
C-9
<PAGE> 210
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Positions and Offices
Business Address BISYS Fund Services with Registrant
------------------ -------------------------- ---------------------
<S> <C> <C>
BISYS Fund Services, Inc. Sole General Partner None
150 Clove Road
Little Falls, New Jersey 07424
WC Subsidiary Corporation Limited Partner None
150 Clove Road
Little Falls, New Jersey 07424
</TABLE>
(c) None
Item 30. Location of Accounts and Records
(1) BISYS Fund Services, 3435 Stelzer Road, Columbus,
Ohio 43219 (records relating to its functions as
administrator and distributor).
(2) The Provident Bank, One East Fourth Street,
Cincinnati, Ohio 45202 (records relating to its
functions as investment adviser, manager, custodian,
transfer agent and fund accountant).
(3) DePrince, Race & Zollo, Inc., 201 South Orange
Avenue, Suite 850, Orlando, Florida 32801 (records
relating to its functions as sub-investment adviser
for The Riverfront Income Equity Fund).
(4) Baker & Hostetler LLP, 65 East State Street,
Columbus, Ohio 43215 (Declaration of Trust, Bylaws
and Minutes).
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Registrant hereby undertakes to hold a special meeting of
shareholders of the Trust for the purpose of considering the
removal of one or more of the Trust's Trustees upon the
written request therefor from shareholders owning not less
than 10% of the outstanding votes of the Trust entitled to
vote and to assist in communications with other shareholders
as required by Section 16(c) of the Investment Company Act of
1940.
C-10
<PAGE> 211
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Columbus, in the State of Ohio, on the 28th day
of October, 1998.
THE RIVERFRONT FUNDS, INC.
By /s/ Walter B. Grimm
------------------------------------
Walter B. Grimm
President and Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
designated on the 28th day of October, 1998.
SIGNATURES TITLE
- ---------- -----
/s/ Walter B. Grimm President and Director
- ------------------------
Walter B. Grimm
/s/ Gary R. Tenkman Treasurer (Principal Accounting
- ------------------------ and Financial Officer)
Gary R. Tenkman
/s/* J. Virgil Early Director
- ------------------------
J. Virgil Early
/s/* William M. Higgins Director
- ------------------------
William M. Higgins
/s/* Harvey M. Salkin Director
- ------------------------
Harvey M. Salkin
/s/* Donald C. Siekmann Director
- ------------------------
Donald C. Siekmann
/s/* William N. Stratman Director
- ------------------------
William N. Stratman
*By /s/ Stephen G. Mintos
------------------------
Stephen G. Mintos, Attorney-in-Fact
* Stephen G. Mintos, by signing his name hereto, does hereby sign this document
on behalf of each of the above-named Directors and Officer of the Registrant
pursuant to powers of attorney duly executed by such persons.
C-11
<PAGE> 212
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, The Riverfront Funds (i) expressly adopts this Registration
Statement, including prior amendments, of The Riverfront Funds, Inc. as its own
for all purposes, as set forth in Rule 414(d) of the Securities Act of 1933, and
(ii) certifies that it has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Columbus, in the State of Ohio, on the 28th day of October, 1998.
THE RIVERFRONT FUNDS
By /s/ Walter B. Grimm
------------------------
Walter B. Grimm
President and Trustee
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
designated on the 28th day of October, 1998.
SIGNATURES TITLE
- ---------- -----
/s/ Walter B. Grimm President and Trustee
- ------------------------
Walter B. Grimm
/s/ Gary R. Tenkman Treasurer (Principal Accounting and
- ------------------------ Financial Officer)
Gary R. Tenkman
/s/* J. Virgil Early Trustee
- ------------------------
J. Virgil Early
/s/* William M. Higgins Trustee
- ------------------------
William M. Higgins
/s/* Harvey M. Salkin Trustee
- ------------------------
Harvey M. Salkin
/s/* Donald C. Siekmann Trustee
- ------------------------
Donald C. Siekmann
/s/* William N. Stratman Trustee
- ------------------------
William N. Stratman
*By /s/ Walter B. Grimm
-------------------
Walter B. Grimm
Attorney-in-Fact
* Walter B. Grimm, by signing his name hereto, does hereby sign this document
on behalf of each of the above-named Trustees of The Riverfront Funds
pursuant to powers of attorney duly executed by such persons.
C-12
<PAGE> 213
Index to Exhibits
Sequentially
Numbered
Exhibit No.
- -----------
(1) The Registrant's Declaration of Trust.
(2) Bylaws of Registrant.
(5)(a) Proposed Investment Advisory Agreement dated as of
December 29, 1998, between Registrant and The
Provident Bank.
(b) Proposed Sub-Investment Advisory Agreement dated as
of December 29, 1998, between The Provident Bank and
DePrince, Race & Zollo, Inc.
(6)(a) Proposed Distribution Agreement dated as of December
29, 1998, between Registrant and BISYS Fund Services
Limited Partnership.
(b) Proposed form of Dealer Agreement between BISYS Fund
Services Limited Partnership and Provident Securities
& Investment Company.
(8) Proposed Custodian, Fund Accounting and Recordkeeping
Agreement dated as of December 29, 1998, between
Registrant and The Provident Bank.
(9)(a) Proposed Administration Agreement dated as of
December 29, 1998, between the Registrant and BISYS
Fund Services Limited Partnership.
(b) Proposed Master Transfer and Recordkeeping Agreement
dated as of December 29, 1998, between Registrant and
The Provident Bank.
(c) Proposed Shareholder Services Plan.
(d) Proposed form of Servicing Agreement to Shareholder
Services Plan.
(e) Agreement and Plan of Reorganization and Liquidation
dated as of May 29, 1998, between the Registrant and
The Riverfront Funds, Inc.
(10) An Opinion of Counsel as to the legality of the
shares of Registrant.
(11) Consent of Ernst & Young LLP, independent auditors.
(13) The Subscription Agreement. Filed as an Exhibit to
Registrant's Registration Statement on April 10,
1990.
(15)(a) Proposed Investor A Distribution and Shareholder
Service Plan.
(b) Proposed Investor B Distribution and Shareholder
Service Plan.
(c) Proposed form of Dealer Agreement between BISYS Fund
Services Limited Partnership and Provident Securities
& Investment Company.
C-13
<PAGE> 214
(16)(a) Schedules for the calculation of performance
quotations for The Riverfront U.S. Government
Securities Money Market Fund were filed as Exhibit
(16)(a) to Registrant's Post-Effective Amendment No.
7 on June 2, 1994.
(b) Schedules for the calculation of performance
quotations for The Riverfront U.S. Government Income
Fund and The Riverfront Income Equity Fund were filed
as Exhibit (16)(b) to Registrant's Post-Effective
Amendment No. 7 on June 2, 1994.
(d) Schedule for the calculation of performance
quotations for The Riverfront Balanced Fund (f/k/a
The Riverfront Flexible Growth Fund) was filed as
Exhibit (16)(d) to Registrant's Post-Effective
Amendment No. 9 on January 31, 1995.
(e) Schedule for the calculation of performance
quotations for The Riverfront Stock Appreciation Fund
was filed as Exhibit (16)(e) to Registrant's
Post-Effective Amendment No. 14 on September 21,
1995.
(f) Schedule for the calculation of performance
quotations for The Riverfront Large Company Select
Fund was filed as Exhibit (16)(f) to Post-Effective
Amendment No. 17 to Registrant's Registration
Statement (No. 33-34154) filed on October 18, 1996.
(17) Financial Data Schedules.
(18) Proposed Rule 18f-3 Plan.
(19)(a) Powers of Attorney for J. Virgil Early and William M.
Higgins were filed as Exhibit (17) to Registrant's
Post-Effective Amendment No. 6 to Registrant's
Registration Statement (No. 33-34154) on March 1,
1994.
(a) Power of Attorney for Walter B. Grimm was filed as
Exhibit (18)(c) to Post-Effective Amendment No. 10 to
Registrant's Registration Statement (No. 33-34154) on
April 11, 1995.
(c) Power of Attorney for Harvey W. Salkin was filed as
Exhibit (19)(d) to Post-Effective Amendment No. 16 to
Registrant's Registration Statement (No. 33-34154) on
April 26, 1996.
(d) Power of Attorney for Donald C. Siekmann was filed as
Exhibit (19)(d) to Post-Effective Amendment No. 25 to
Registrant's Registration Statement (No. 33-34154) on
April 29, 1998.
(e) Power of Attorney for William M. Stratman.
(f) Powers of Attorney for the Trustees and Officers of
The Riverfront Funds.
(g) Consent of Baker & Hostetler LLP.
C-14
<PAGE> 215
As filed with the Securities and Exchange Commission October 29, 1998.
1933 Act Registration No. 33-34154
1940 Act File No. 811-6082
EXHIBITS TO
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 26 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT [X]
COMPANY ACT OF 1940
Amendment No. 27 [X]
The Riverfront Funds
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road
Columbus, Ohio 43219
(Address of Principal Executive Offices)
Registrant's Telephone Number:
(614) 470-8000
C-15
<PAGE> 1
EXHIBIT (1)
THE RIVERFRONT FUNDS
DECLARATION OF TRUST
DATED AS OF OCTOBER 11, 1996
<PAGE> 2
<TABLE>
<CAPTION>
THE RIVERFRONT FUNDS
--------------------
DECLARATION OF TRUST
--------------------
TABLE OF CONTENTS
-----------------
PAGE
----
<S> <C> <C> <C>
ARTICLE I NAME, PRINCIPAL OFFICE AND DEFINITIONS.................................. 1
Section 1.1 Name and Principal Office........................................... 1
Section 1.2 Definitions......................................................... 1
ARTICLE II PURPOSES OF TRUST....................................................... 2
ARTICLE III THE TRUSTEES............................................................ 3
Section 3.1 Number, Designation, Election, Term,
etc................................................................. 3
(a) Initial Trustees................................................. 3
(b) Number........................................................... 3
(c) Term............................................................. 3
(d) Resignation...................................................... 3
(e) Removal.......................................................... 3
(f) Vacancies........................................................ 4
(g) Effect of Death, Resignation, etc................................ 4
(h) No Accounting.................................................... 4
Section 3.2 Powers of Trustees............................................... 5
(a) Investments...................................................... 6
(b) Disposition of Assets............................................ 6
(c) Distribution of Securities....................................... 6
(d) Ownership Powers................................................. 6
(e) Subscription..................................................... 6
(f) Form of Holding.................................................. 6
(g) Allocation of Assets, Liabilities and Expenses
to Series or Sub-Series.......................................... 6
(h) Reorganization, Merger and Consolidation......................... 6
(i) Voting Trusts, etc............................................... 7
(j) Compromise....................................................... 7
(k) Partnerships, etc................................................ 7
(l) Borrowing and Security........................................... 7
(m) Guarantees, etc.................................................. 7
(n) Insurance........................................................ 7
(o) Pensions, etc.................................................... 8
(p) Corporate Acts or Activities..................................... 8
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
Section 3.3 Certain Contracts................................................... 8
(a) Advisory................................................................ 8
(b) Administration.......................................................... 9
(c) Distribution............................................................ 9
(d) Custodian and Depository................................................ 9
(e) Transfer and Dividend Disbursing Agency................................. 9
(f) Shareholder Servicing................................................... 9
(g) Accounting.............................................................. 9
Section 3.4 Payment of Trust Expenses and
Compensation of Trustees............................................ 10
ARTICLE IV SHARES.............................................................................. 11
Section 4.1 Description of Shares............................................... 11
Section 4.2 Establishment and Designation of Series
and Sub-Series. .................................................... 13
(a) Assets Belonging to a Series............................................ 14
(b) Liabilities Belonging to a Series....................................... 14
(c) Dividends............................................................... 14
(d) Liquidation............................................................. 15
(e) Voting ................................................................ 16
(f) Redemption by Shareholder............................................... 16
(g) Redemption by Trust..................................................... 16
(h) Net Asset Value......................................................... 17
(i) Transfer................................................................ 18
(j) Equality................................................................ 18
(k) Fractions............................................................... 18
(l) Conversion Rights....................................................... 18
(m) Provisions Applicable to Sub-Series .................................... 18
Section 4.3 Ownership of Shares................................................. 20
Section 4.4 Investments in the Trust............................................ 21
Section 4.5 No Preemptive Rights................................................ 21
Section 4.6 Status of Shares and Limitation of . . .
Personal Liability.................................................. 21
ARTICLE V SHAREHOLDERS' VOTING POWERS AND MEETINGS............................................ 21
Section 5.1 Voting Powers....................................................... 21
Section 5.2 Meetings............................................................ 22
Section 5.3 Record Dates........................................................ 23
Section 5.4 Quorum and Required Vote............................................ 23
Section 5.5 Action by Written Consent........................................... 24
Section 5.6 Inspection of Records............................................... 24
Section 5.7 Additional Provisions............................................... 24
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE VI LIMITATION OF LIABILITY; INDEMNIFICATION................................... 24
Section 6.1 Trustees, Shareholders, etc. Not
Personally Liable; Notice...................................... 24
Section 6.2 Trustee's Good Faith Action; Expert
Advice; No Bond or Surety...................................... 25
Section 6.3 Indemnification of Shareholders................................ 26
Section 6.4 Indemnification of Trustees, Officers,
etc............................................................ 26
Section 6.5 Advances of Expenses........................................... 26
Section 6.6 Indemnification Not Exclusive, etc............................. 27
Section 6.7 Liability of Series............................................ 27
ARTICLE VII MISCELLANEOUS.............................................................. 27
Section 7.1 Duration and Termination of Trust ............................. 27
Section 7.2 Sale or Disposition of Assets ................................. 28
Section 7.3 Merger or Consolidation ....................................... 28
Section 7.4 Amendments .................................................... 29
Section 7.5 Absence of Dissenters' Rights ................................. 29
Section 7.6 Filing of Copies; References; Headings......................... 29
Section 7.7 Applicable Law ................................................ 30
</TABLE>
- iii -
<PAGE> 5
THE RIVERFRONT FUNDS
DECLARATION OF TRUST
--------------------
DECLARATION OF TRUST made at Columbus, Ohio, as of the 11th day of
October, 1996, by the Trustee hereunder, and by the holders of Shares of
beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH:
WHEREAS, the Trust has been formed to carry on the business of
an investment company; and
WHEREAS, the Trustee has agreed to manage all property coming into his
hands as trustee of an Ohio business trust in accordance with the provisions of
Chapter 1746, Ohio Revised Code, and as hereinafter set forth.
NOW, THEREFORE, the Trustee hereby declares that he will hold all cash,
securities and other assets which he may from time to time acquire in any manner
as Trustee hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the benefit of the holders from time to time
of Shares of beneficial interest in this Trust as hereinafter set forth.
ARTICLE I
---------
NAME, PRINCIPAL OFFICE AND DEFINITIONS
--------------------------------------
SECTION 1.1 NAME AND PRINCIPAL OFFICE. The Trust shall be known as "The
Riverfront Funds" and the Trustee shall conduct the business of the Trust under
that name or any other name as he may from time to time determine. The principal
office of the Trust is located in Columbus, Ohio.
SECTION 1.2 DEFINITIONS. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) The "By-Laws" shall mean the By-Laws of the Trust as
amended from time to time;
(b) "Commission" shall have the meaning given it in the
1940 Act;
- 1 -
<PAGE> 6
(c) "Declaration of Trust" shall mean this Declaration
of Trust as amended or restated from time to time;
(d) The "1940 Act" refers to the Investment Company Act of
1940, the Rules, Regulations and any Orders of the Commission
applicable to the Trust thereunder, all as amended from time to time;
(e) "Series" refers to a series of Shares established
and designated under or in accordance with the provisions of
Article IV;
(f) "Share" or "Shares" refers to the transferable unit or
units of interest into which the beneficial interest in the Trust or
any Series of the Trust (as the context may require) shall be divided
from time to time;
(g) "Shareholder" or "Shareholders" means a record owner
or owners of a Share or Shares;
(h) "Sub-Series" refers to one or more classes or subseries of
Shares established and designated under or in accordance with the
provisions of Article IV.
(i) The "Trust" refers to the Ohio business trust established
by this Declaration of Trust, as amended from time to time; and
(j) "Trustee" or "Trustees" refers to the trustee or trustees
of the Trust named herein or selected in accordance with Article III.
So long as there is a single Trustee, references herein to "Trustees"
shall mean the single Trustee.
ARTICLE II
----------
PURPOSES OF TRUST
-----------------
The purposes of the Trust are to operate as an investment company as
defined in the 1940 Act and to engage in any lawful act or activity for which
business trusts may be formed under Chapter 1746, Ohio Revised Code.
- 2 -
<PAGE> 7
ARTICLE III
-----------
THE TRUSTEES
------------
SECTION 3.1 NUMBER, DESIGNATION, ELECTION, TERM, ETC.
----------- -----------------------------------------
(a) INITIAL TRUSTEE. Upon his execution of this
Declaration of Trust or a counterpart hereof or some other
writing in which he accepts such trusteeship and agrees to the
provisions hereof, Walter B. Grimm shall become the initial
Trustee of the Trust.
(b) NUMBER. The Trustees serving as such, whether named above
or hereafter becoming a Trustee, may increase or decrease the number of
Trustees to a number other than the number theretofore determined. A
Trustee shall qualify by accepting in writing his election or
appointment and agreeing to be bound by the Declaration of Trust. No
decrease in the number of Trustees shall have the effect of removing
any Trustee from office prior to the expiration of his term, but the
number of Trustees may be decreased in conjunction with the removal of
a Trustee pursuant to subsection (e) of this Section 3.1. Except as set
forth in subsection (f) of this Section 3.1, Trustees (other than the
Initial Trustee described in Section 3.1(a)) shall be elected by the
Shareholders, who shall vote as a single class and not by Series and at
such times as the Trustees shall determine that such election is
required by the 1940 Act or is otherwise advisable.
(c) TERM. Each Trustee, whether named above or hereafter
becoming a Trustee, shall serve as a Trustee during the continued
lifetime of the Trust until he dies, resigns or is removed, or, if
sooner, until the next meeting of Shareholders called for the purpose
of electing Trustees, and until the election and qualification of his
successor.
(d) RESIGNATION. Any Trustee may resign his trust as a
Trustee, by written instrument signed by him and delivered to the other
Trustees or to any officer of the Trust or at a meeting of the
Trustees, and such resignation shall take effect upon such delivery or
upon such later date as is specified in such instrument.
(e) REMOVAL. Any Trustee may be removed with or without cause
at any time either by written instrument, signed by at least two-thirds
of the number of Trustees prior to such removal, specifying the date
upon which such removal shall become effective, or by the Shareholders
at any meeting called
- 3 -
<PAGE> 8
for that purpose. No Trustee shall be entitled to any damages
on account of such removal.
(f) VACANCIES. Any vacancy or anticipated vacancy resulting
from any reason, including without limitation the death, resignation,
removal or incapacity of any of the Trustees, or resulting from an
increase in the number of Trustees by the Trustees, may (but need not
unless required by the 1940 Act) be filled either by a majority of the
remaining Trustees through the appointment in writing of such other
person as such remaining Trustees in their discretion shall determine
(unless a shareholder election is required by the 1940 Act) or by the
election by the Shareholders, at a meeting called for the purpose, of a
person to fill such vacancy, and such appointment or election shall be
effective upon the written acceptance of the person named therein to
serve as a Trustee and agreement by such person to be bound by the
provisions of this Declaration of Trust, except that any such
appointment or election in anticipation of a vacancy to occur by reason
of resignation or increase in number of Trustees to be effective at a
later date shall become effective only at or after the effective date
of said resignation or increase in number of Trustees. As soon as any
Trustee so appointed or elected shall have accepted such appointment or
election and shall have agreed in writing to be bound by this
Declaration of Trust and the appointment or election is effective, the
Trust estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act of conveyance.
Notwithstanding the foregoing, to the extent the
Trust adopts and implements a written plan pursuant to Rule 12b-1 under
the 1940 Act, and so long as required by the 1940 Act, the selection
and nomination of Trustees who are not "interested persons" of the
Trust as defined in the 1940 Act, shall be committed to the discretion
of the Trustees who are not "interested persons," as so defined.
(g) EFFECT OF DEATH, RESIGNATION, ETC. The death, resignation,
removal, or incapacity of the Trustees, or any one of them, shall not
operate to annul or terminate the Trust or to revoke or terminate any
existing agency or contract created or entered into pursuant to the
terms of this Declaration of Trust.
(h) NO ACCOUNTING. Except to the extent required by the 1940
Act or under circumstances which would justify his removal for cause,
no person ceasing to be a Trustee as a result of his death,
resignation, removal or incapacity (nor the estate of any such person)
shall be required to make an
- 4 -
<PAGE> 9
accounting to the Shareholders or remaining Trustees upon such
cessation.
SECTION 3.2 POWERS OF TRUSTEES. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purposes of the Trust. Without limiting the
foregoing, the Trustees may adopt By-Laws not inconsistent with this Declaration
of Trust providing for the conduct of the business and affairs of the Trust and
may amend and repeal them to the extent that such By-Laws do not reserve that
right to the Shareholders; they may as they consider appropriate elect and
remove officers and appoint and terminate agents and consultants and hire and
terminate employees, any one or more of the foregoing of whom may be a Trustee,
and may provide for the compensation of all of the foregoing; they may appoint
from their own number, define the responsibility and authority of, and
terminate, any one or more committees consisting of two or more Trustees,
including without implied limitation an executive committee, which may, when the
Trustees are not in session and subject to the 1940 Act, exercise some or all of
the power and authority of the Trustees as the Trustees may determine; in
accordance with Section 3.3 they may employ one or more Advisers,
Administrators, Depositories and Custodians and may authorize any Depository or
Custodian to employ sub-custodians or agents which may deposit all or any part
of the assets of the Trust in a system or systems for the central handling of
securities and debt instruments, retain transfer, dividend, accounting and
Shareholder servicing agents or any of the foregoing, provide for the
distribution of Shares by the Trust through one or more distributors, principal
underwriters or otherwise, set record dates or times for the determination of
Shareholders or various of them with respect to various matters; they may
compensate or provide for the compensation of the Trustees, officers, advisers,
administrators, custodians, other agents, consultants and employees of the Trust
or the Trustees on such terms as they deem appropriate; and in general they may
delegate to any officer of the Trust, to any committee of the Trustees and to
any employee, adviser, administrator, distributor, depository, custodian,
transfer and dividend disbursing agent, or any other agent or consultant of the
Trust such authority, powers, functions and duties as they consider desirable or
appropriate for the conduct of the business and affairs of the Trust, including
without implied limitation the power and authority to act in the name of the
Trust and of the Trustees, to sign documents and to act as attorney-in-fact for
the Trustees.
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustees shall have power and
authority:
- 5 -
<PAGE> 10
(a) INVESTMENTS. To invest and reinvest cash and other
property, and to hold cash or other property uninvested
without in any event being bound or limited by any present or
future law or custom in regard to investments by trustees;
(b) DISPOSITION OF ASSETS. To sell, exchange, lend,
pledge, mortgage, hypothecate, write options on and lease any
or all of the assets of the Trust;
(c) DISTRIBUTION OF SECURITIES. To act as a distributor
of shares and as underwriter of, or broker or dealer in,
securities or other property;
(d) OWNERSHIP POWERS. To vote or give assent, or exercise any
rights of ownership, with respect to stock or other securities, debt
instruments or property; and to execute and deliver proxies or powers
of attorney to such person or persons as the Trustees shall deem
proper, granting to such person or persons such power and discretion
with relation to securities, debt instruments or property as the
Trustees shall deem proper;
(e) SUBSCRIPTION. To exercise powers and rights of
subscription or otherwise which in any manner arise out of
ownership of securities or debt instruments;
(f) FORM OF HOLDING. To hold any security, debt instrument or
property in a form not indicating any trust, whether in bearer,
unregistered or other negotiable form, or in the name of the Trustees
or of the Trust or in the name of a custodian, sub-custodian or other
depository or a nominee or nominees or otherwise;
(g) ALLOCATION OF ASSETS, LIABILITIES AND EXPENSES TO SERIES
OR SUB-SERIES. To allocate assets, liabilities and expenses of the
Trust to a particular Series or Sub-Series of Shares or to apportion
the same among two or more Series or Sub-Series, provided that any
liabilities or expenses incurred by a particular Series or Sub-Series
of Shares shall be payable solely out of the assets of that Series;
(h) REORGANIZATION, MERGER AND CONSOLIDATION. To consent to or
participate in any plan for the reorganization, consolidation or merger
of any corporation or issuer the security or debt instrument of which
is or was held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale or property by such corporation or issuer,
and to pay calls or subscriptions with respect to any security or debt
instrument held in the Trust;
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(i) VOTING TRUSTS, ETC. To join with other holders of any
securities or debt instruments in acting through a committee,
depository, voting trustee or otherwise, and in that connection to
deposit any security or debt instrument with, or transfer any security
or debt instrument to, any such committee, depository or trustee, and
to delegate to them such power and authority with relation to any
security or debt instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay,
and to pay, such portion of the expenses and compensation of such
committee, depository or trustee as the Trustees shall deem proper;
(j) COMPROMISE. To compromise, arbitrate or otherwise
adjust claims in favor of or against the Trust or any matter
in controversy, including but not limited to claims for taxes;
(k) PARTNERSHIPS, ETC. To enter into joint ventures,
general or limited partnerships and any other combinations or
associations;
(l) BORROWING AND SECURITY. To borrow funds and to
mortgage and pledge the assets of the Trust or any part
thereof to secure obligations arising in connection with such
borrowing;
(m) GUARANTEES, ETC. To endorse or guarantee the payment of
any notes or other obligations of any person; to make contracts of
guaranty or suretyship, or otherwise assume liability for payment
thereof; and to mortgage and pledge the Trust property or any part
thereof to secure any of or all such obligations;
(n) INSURANCE. To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or appropriate for
the conduct of the business, including, without limitation, insurance
policies insuring the assets of the Trust and payment of distributions
and principal on its portfolio investments, and insurance policies
insuring the Shareholders, Trustees, officers, employees, agents,
consultants, investment advisers, managers, administrators,
distributors, principal underwriters, or independent contractors, or
any thereof (or any person connected therewith), of the Trust
individually against all claims and liabilities of every nature arising
by reason of holding, being or having held any such office or position,
or by reason of any action alleged to have been taken or omitted by any
such person in any such capacity, including any action taken or omitted
that may be determined to constitute negligence, whether or not the
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Trust would have the power to indemnify such person against
such liability;
(o) PENSIONS, ETC. To pay pensions for faithful service, as
deemed appropriate by the Trustees, and to adopt, establish and carry
out pension, profit-sharing, share bonus, share purchase, savings,
thrift and other retirement, incentive and benefit plans, trusts and
provisions, including the purchasing of life insurance and annuity
contracts as a means of providing such retirement and other benefits,
for any or all of the Trustees, officers, employees and agents of the
Trust; and
(p) CORPORATE ACTS OR ACTIVITIES. To engage in any
other lawful act or activity in which corporations organized
under Chapter 1701, Ohio Revised Code, may engage.
Except as otherwise provided by the 1940 Act or other applicable law,
this Declaration of Trust or the By-Laws, any action to be taken by the Trustees
may be taken by a majority of the Trustees present at a meeting of Trustees (a
quorum, consisting of at least a majority of the Trustees then in office, being
present), within or without Ohio, including any meeting held by means of a
conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting, or
by written consents of a majority of the Trustees then in office (or such larger
or different number as may be required by the 1940 Act or other applicable law).
SECTION 3.3 CERTAIN CONTRACTS. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustees may, at any time and from time to time and without limiting the
generality of their powers and authority otherwise set forth herein, enter into
one or more exclusive or non-exclusive contracts with any one or more
corporations, trusts, associations, partnerships, limited partnerships, other
types of organizations, or individuals ("Contracting Party") to provide for the
performance and assumption of some or all of the following services, duties and
responsibilities to, for or of the Trust and/or the Trustees, and to provide for
the performance and assumption of such other services, duties and
responsibilities in addition to those set forth below as the Trustees may
determine appropriate:
(a) ADVISORY. Subject to the general supervision of the
Trustees and in conformity with the stated policy of the
Trustees with respect to the investments of the Trust or of
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the assets belonging to a Series of Shares (as that phrase is defined
in subsection (a) of Section 4.2), to manage such investments and
assets, make investment decisions with respect thereto, and to place
purchase and sale orders for portfolio transactions relating to such
investments and assets;
(b) ADMINISTRATION. Subject to the general supervision of the
Trustees and in conformity with any policies of the Trustees with
respect to the operations of the Trust, to supervise all or any part of
the operations of the Trust, and to provide all or any part of the
administrative and clerical personnel, office space and office
equipment and services appropriate for the efficient administration and
operations of the Trust;
(c) DISTRIBUTION. To distribute the Shares of the
Trust, to be principal underwriter of such Shares, and/or to
act as agent of the Trust in the sale of Shares and the
acceptance or rejection of orders for the purchase of Shares;
(d) CUSTODIAN AND DEPOSITORY. To act as depository for
and to maintain custody of the property of the Trust and
accounting records in connection therewith;
(e) TRANSFER AND DIVIDEND DISBURSING AGENCY. To
maintain records of the ownership of outstanding Shares, the
issuance and redemption and the transfer thereof, and to
disburse any dividends declared by the Trustees and in
accordance with the policies of the Trustees and/or the
instructions of any particular Shareholder to reinvest any
such dividends;
(f) SHAREHOLDER SERVICING. To provide service with
respect to the relationship of the Trust and its Shareholders,
records with respect to Shareholders and their Shares, and
similar matters; and
(g) ACCOUNTING. To handle all or any part of the
accounting responsibilities, whether with respect to the
Trust's properties, Shareholders or otherwise.
The same person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
relating to the standard of duty of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine. Nothing herein
shall preclude, prevent or limit the
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Trust or a Contracting Party from entering into sub-contractual arrangements
relative to any of the matters referred to in Sections 3.3(a) through (g)
hereof.
Subject to the provisions of the 1940 Act, the fact that:
(a) any of the Shareholders, Trustees or officers of the Trust
is a shareholder, director, officer, partner, trustee, employee,
manager, adviser, principal underwriter or distributor or agent of or
for any Contracting Party, or of or for any parent or affiliate of any
Contracting Party or that the Contracting Party or any parent or
affiliate thereof is a Shareholder or has an interest in the Trust, or
that
(b) any Contracting Party may have a contract providing for
the rendering of any similar services to one or more other
corporations, trusts, associations, partnerships, limited partnerships
or other organizations, or has other business or interests,shall not
affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust and/or
the Trustees or disqualify any Shareholder, Trustee or officer of the
Trust from voting upon or executing the same or create any liability or
accountability to the Trust or its Shareholders, provided that in the
case of any relationship or interest referred to in the preceding
clause (a) on the part of any Trustee or officer of the Trust either
(i) the material facts as to such relationship or interest have been
disclosed to or are known by the Trustees not having any such
relationship or interest and the contract involved is approved in good
faith by a majority of such Trustees not having any such relationship
or interest (even though such unrelated or disinterested Trustees are
less than a quorum of all of the Trustees), (ii) the material facts as
to such relationship or interest and as to the contract have been
disclosed to or are known by the Shareholders entitled to vote thereon
and the contract involved is specifically approved in good faith by
vote of the Shareholders, or (iii) the specific contract involved is
fair to the Trust as of the time it is authorized, approved or ratified
by the Trustees or by the Shareholders.
SECTION 3.4 PAYMENT OF TRUST EXPENSES AND COMPENSATION OF TRUSTEES. The
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust, or partly out of principal and partly out of income, and to
charge or allocate the same to, between or among such one or more of the Series
or SubSeries that may be established and designated pursuant to Article IV, as
the Trustees deem fair, all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust, or in connection with the
management thereof, including, but
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not limited to, the Trustees' compensation and such expenses and charges for the
services of the Trust's officers, employees, investment adviser or advisers,
administrator, distributor, principal underwriter, auditor, counsel, depository,
custodian, transfer agent, dividend disbursing agent, accounting agent,
Shareholder servicing agent, and such other agents, consultants and independent
contractors and such other expenses and charges as the Trustees may deem
necessary or proper to incur. Without limiting the generality of any other
provision hereof, the Trustees shall be entitled to reasonable compensation from
the Trust for their services as Trustees and may fix the amount of such
compensation.
ARTICLE IV
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SHARES
------
SECTION 4.1 DESCRIPTION OF SHARES. The beneficial interest in the Trust
shall be divided into Shares, all without par value and, except as hereinafter
set forth, of one class, but the Trustees shall have the authority from time to
time, without the approval of Shareholders and upon the amendment of the
Declaration of Trust, to divide the class of Shares into two or more Series of
Shares (in addition to the Series initially established and designated in
Section 4.2), as they deem necessary or desirable, to establish and designate
such Series, and to fix, determine and amend the relative rights and preferences
as between the different Series of Shares as to right of redemption and the
price, terms and manner of redemption, special and relative rights as to
dividends and other distributions and on liquidation, sinking or purchase fund
provisions,conversion rights, and conditions under which the several Series
shall have separate voting rights or no voting rights and such other matters as
the Trustees deem appropriate. Except as aforesaid all Shares of the different
Series shall be identical.
The Shares of each Series may be issued or reissued from time to time
in one or more classes or Sub-Series, as determined by the Board of Trustees
without the approval of Shareholders and upon the amendment of the Declaration
of Trust. Each Sub-Series shall be appropriately designated by some
distinguishing letter, number or title. All Shares within a Sub-Series shall be
alike in every particular. All Shares of each Series shall be of equal rank and
have the same powers, preferences and rights, and shall be subject to the same
qualifications, limitations and restrictions without distinction between the
Shares of different Sub-Series thereof, except such differences among such
Sub-Series as the Board of Trustees shall from time to time determine to be
appropriate and determined to be necessary to comply with the 1940 Act and other
applicable laws, including differences in the allocation of
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expenses, right of redemption, rate or rates of dividends or distributions,
conversion rights and separate voting rights. The Board of Trustees is hereby
empowered to classify or reclassify from time to time any unissued Shares of
each Series by fixing or altering the terms thereof and by assigning such
unissued Shares to an existing or newly created Sub-Series. In addition, the
Board of Trustees is empowered, without shareholder approval, (a) to classify
all or any part of the issued Shares of any Series to make them part of an
existing or newly created Sub-Series, and (b) to redesignate any issued Shares
of any Series by assigning a distinguishing letter, number or title to such
Shares.
The number of authorized Shares and the number of Shares of each Series
and Sub-Series that may be issued is unlimited, and the Trustees may issue
Shares of any Series for such consideration and on such terms as they may
determine (or for no consideration if pursuant to a Share dividend or split-up),
all without action or approval of the Shareholders. All Shares when so issued on
the terms determined by the Trustees shall be fully paid and non-assessable (but
may be subject to mandatory contribution back to the Trust as provided in
subsection (g) of Section 4.2). The Trustees may classify or reclassify any
unissued Shares or any Shares previously issued and reacquired of any Series
into one or more Series that may be established and designated from time to
time. The Trustees may hold as treasury Shares (of the same or some other
Series), reissue for such consideration and on such terms as they may determine,
or cancel, at their discretion from time to time, any Shares of any Series
reacquired by the Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the holders of
Shares entitled to be treated as such, to the extent provided or referred to in
Section 5.3.
The establishment and designation of any Series of Shares in addition
to those initially established and designated in Section 4.2, or of any
Sub-Series of Shares, shall be effective upon the amendment of the Declaration
of Trust, which may take place without Shareholder approval, setting forth the
establishment and designation and relative rights and preferences of such Series
or Sub-Series. At any time that there are no Shares outstanding of any
particular Series or Sub-Series previously established and designated the
Trustees may by an amendment to the Declaration of Trust and without Shareholder
approval abolish that Series or SubSeries and the establishment and designation
thereof.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares of any Series of the Trust to the
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same extent as if such person were not a Trustee, officer, or other agent of the
Trust; and the Trust may issue and sell or cause to be issued and sold and may
purchase Shares of any Series from any such person or any such organization
subject only to the general limitations, restrictions or other provisions
applicable to the sale or purchase of Shares of such Series generally.
SECTION 4.2 ESTABLISHMENT AND DESIGNATION OF SERIES AND SUB-SERIES.
Without limiting the authority of the Trustees set forth in Section 4.1 to
establish and designate any further Series or Sub-Series or to classify all or
any part of the issued Shares of any Series to make them part of an existing or
newly created Sub-Series or to amend the rights and preferences of new or
existing Series or Sub-Series, including the following Series, all without
Shareholder approval, there are hereby established and designated (i) initial
Series of Shares designated Series A, which shall represent interests in The
Riverfront U.S. Government Securities Money Market Fund, Series B, which shall
represent interests in The Riverfront U.S. Government Income Fund, Series C,
which shall represent interests in The Riverfront Income Equity Fund, Series D,
which shall represent interests in The Riverfront Ohio Tax-Free Bond Fund,
Series E, which shall represent interests in The Riverfront Balanced Fund,
Series F, which shall represent interests in The Riverfront Small Company Select
Fund, and Series G, which shall represent interests in The Riverfront Large
Company Select Fund, and (ii) two classes or Sub-Series of Shares for each
current and future Series of the Trust, other than Series A, The Riverfront U.S.
Government Securities Money Market Fund (the "Money Market Fund"), which classes
or Sub-Series shall be known as Investor A Shares and Investor B Shares. The
Money Market Fund shall only have Investor A Shares. Shares of Series A, Series
B, Series C, Series D, Series E, Series F and Series G, Shares of each Class or
Sub-Series of Shares, and, unless provisions to the contrary are set forth in an
amendment of the Declaration of Trust, Shares of each additional Series and
Sub-Series shall, subject to the provisions of Section 4.2(m) hereof, have the
following relative rights and preferences:
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(a) ASSETS BELONGING TO A SERIES. All consideration received
by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any reinvestment
of such proceeds in whatever form the same may be, shall irrevocably
belong to that Series for all purposes, subject only to the rights of
creditors, and shall be so recorded upon the books of account of the
Trust. Such consideration, assets, income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds, in whatever form the
same may be, together with any General Items allocated to that Series
as provided in the following sentence, are herein referred to as
"assets belonging to" that Series. In the event that there are any
assets, income, earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as belonging to any
particular Series (collectively "General Items"), the Trustees shall
allocate such General Items to and among any one or more of the Series
established and designated from time to time in such manner and on
such basis as they, in their sole discretion, deem fair and equitable;
and any General Items so allocated to a particular Series shall belong
to that Series. Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Series for all
purposes.
The Trustees shall have full discretion, to the
extent not inconsistent with the 1940 Act, to determine which items
shall be treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon the
Shareholders.
(b) LIABILITIES BELONGING TO A SERIES. The assets belonging to
each particular Series shall be charged with the liabilities of the
Trust in respect of that Series and all expenses, costs, charges and
reserves attributable to that Series, and any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular Series shall be allocated
and charged by the Trustees to and among any one or more of the Series
established and designated from time to time in such manner and on such
basis as the Trustees in their sole discretion deem fair and equitable.
The liabilities, expenses, costs, charges and reserves allocated and so
charged to a Series are herein referred to as "liabilities belonging
to" that Series. Each allocation of liabilities, expenses,
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costs, charges and reserves by the Trustees shall be conclusive and
binding upon the Shareholders of all Series for all purposes.
(c) DIVIDENDS. Dividends and distributions on Shares of a
particular Series may be paid with such frequency as the Trustees may
determine, which may be daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such frequency as
the Trustees may determine, to the holders of Shares of that Series,
from such of the income and capital gains, accrued or realized, from
the assets belonging to that Series, as the Trustees may determine,
after providing for actual and accrued liabilities belonging to that
Series. All dividends and distributions on Shares of a particular
Series shall be distributed pro rata to the holders of that Series in
proportion to the number of Shares of that Series held by such holders
at the date and time of record established for the payment of such
dividends and distributions, except that in connection with any
dividend or distribution program or procedure the Trustees may
determine that no dividend or distribution shall be payable on Shares
as to which the Shareholder's purchase order and/or payment have not
been received by the time or times established by the Trustees under
such program or procedure. Such dividends and distributions may be
made in cash or Shares or a combination thereof as determined by the
Trustees or pursuant to any program that the Trustees may have in
effect at the time for the election by each Shareholder of the mode of
the making of such dividend or distribution to that Shareholder. Any
such dividend or distribution paid in Shares will be paid at the net
asset value thereof as determined in accordance with subsection (h) of
Section 4.2.
Each Series of the Trust intends to qualify as a
"regulated investment company" under the Internal Revenue Code of
1986, as amended, or any successor or comparable statute thereto, and
regulations promulgated thereunder. Inasmuch as the computation of net
income and gains for federal income tax purposes may vary from the
computation thereof on the books of the Trust, the Board of Trustees
shall have the power, in its sole discretion, to distribute in any
fiscal year as dividends, including dividends designated in whole or
in part as capital gains distributions, amounts sufficient, in the
opinion of the Board of Trustees, to enable the applicable series of
the Trust to qualify as a regulated investment company and to avoid
liability of the Trust and such series for federal income and excise
tax in respect to that year. However, nothing in the foregoing shall
limit the authority of the Board of Trustees to make distributions
greater than or less than the amount necessary to qualify as a
regulated
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investment company and to avoid liability of the Trust and such Series
for such tax.
(d) LIQUIDATION. In event of the liquidation and dissolution
of the Trust or any one or more of the Series, the Shareholders of
each Series that has been established and designated and which is to
be liquidated and dissolved shall be entitled to receive, as a Series,
when and as declared by the Trustees, the excess of the assets
belonging to that Series over the liabilities belonging to that
Series. The assets so distributable to the Shareholders of any
particular Series shall be distributed among such Shareholders in
proportion to the number of Shares of that Series held by them and
recorded on the books of the Trust.
(e) VOTING. All Shares of all Series shall have "equal voting
rights" as provided in Section 18(i) of the Investment Company Act of
1940, as amended, except as otherwise permitted by the 1940 Act,
including Rule 18f-2 thereunder. The holder of each of the Shares
shall be entitled to one vote for each dollar of value attributable
thereto. On each matter submitted to a vote of the Shareholders, all
Shares of all Series shall vote as a single class ("Single Class
Voting"), provided, however, that (a) as to any matter with respect to
which a separate vote of any Series is required by the 1940 Act, such
requirements as to a separate vote by that Series shall apply in lieu
of Single Class Voting as described above; (b) in the event that the
separate vote requirements referred to in (a) above apply with respect
to one or more Series, then, subject to (c) below, the Shares of all
other Series shall vote as a single class; and (c) as to any matter
which does not affect the interest of a particular Series, only the
holders of Shares of the one or more affected Series shall be entitled
to vote.
(f) REDEMPTION BY SHAREHOLDER. Each holder of Shares of a
particular Series shall have the right at such times as may be
permitted by the Trust, but no less frequently than once each week, to
require the Trust to redeem all or any part of his Shares of that
Series at a redemption price equal to the net asset value per Share of
that Series next determined in accordance with subsection (h) of this
Section 4.2 after the Shares are properly tendered for redemption.
Payment of the redemption price shall be in cash; provided, however,
that if the Trustees determine, which determination shall be
conclusive, that conditions exist which make payment wholly in cash
unwise or undesirable, the Trust may make payment wholly or partly in
securities or other assets belonging to the Series of which the Shares
being redeemed are part at the
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value of such securities or assets used in such determination of net
asset value.
Notwithstanding the foregoing, the Trust may postpone
payment of the redemption price and may suspend the right of the
holders of Shares of any Series to require the Trust to redeem Shares
of that Series during any period or at any time when and to the extent
permissible under the 1940 Act, and such redemption is conditioned
upon the Trust having funds or property legally available therefor.
(g) REDEMPTION BY TRUST. Each Share of each Series that
has been established and designated is subject to redemption by the
Trust at the redemption price which would be applicable if such Share
was then being redeemed by the Shareholder pursuant to subsection (f)
of this Section 4.2: (i) at any time, if the Trustees determine in
their sole discretion that failure to so redeem may have materially
adverse consequences to all or any of the holders of the Shares, or
any Series thereof, of the Trust, or (ii) upon such other conditions
as may from time to time be determined by the Trustees and set forth
in the then current Prospectus of the Trust applicable to such Shares
or any Series thereof with respect to maintenance of Shareholder
accounts of a minimum amount. Upon such redemption the holders of the
Shares so redeemed shall have no further right with respect thereto
other than to receive payment of such redemption price.
(h) NET ASSET VALUE. The net asset value per Share of the
Shares of any Series shall be the quotient obtained by dividing the
value of the net assets of that Series (being the value of the assets
belonging to that Series less the liabilities belonging to that
Series) by the total number of Shares of that Series outstanding, all
determined in accordance with the methods and procedures, including
without limitation those with respect to rounding, established by the
Trustees from time to time.
The Trustees may determine to maintain the net asset
value per Share of any Series at a designated constant dollar amount
and in connection therewith may adopt procedures not inconsistent with
the 1940 Act for the continuing declarations of income attributable to
that Series as dividends payable in additional Shares of that Series at
the designated constant dollar amount and for the handling of any
losses attributable to that Series. Such procedures may provide that in
the event of any loss each Shareholder shall be deemed to have
contributed to the capital of the Trust attributable to that Series his
pro rata portion of the total number of Shares required to be cancelled
in order to permit the net asset
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value per Share of that Series to be maintained, after reflecting such
loss, at the designated constant dollar amount. Each Shareholder of
the Trust shall be deemed to have agreed, by his investment in any
Series with respect to which the Trustees shall have adopted any such
procedure, to make the contribution referred to in the preceding
sentence in the event of any such loss.
(i) TRANSFER. All Shares of each particular Series shall be
transferable, but transfers of Shares of a particular Series will be
recorded on the Share transfer records of the Trust applicable to that
Series only at such times as Shareholders shall have the right to
require the Trust to redeem Shares of that Series and at such other
times as may be permitted by the Trustees.
(j) EQUALITY. Except as otherwise may be set forth in this
Declaration of Trust all Shares of each particular Series shall
represent an equal proportionate interest in the assets belonging to
that Series (subject to the liabilities belonging to that Series), and
each Share of any particular Series shall be equal to each other Share
of that Series; but the provisions of this sentence shall not restrict
any distinctions permissible under subsection (c) of this Section 4.2
that may exist with respect to dividends and distributions on Shares
of the same Series. The Trustees may from time to time divide or
combine the Shares of any particular Series into a greater or lesser
number of Shares of that Series without thereby changing the
proportionate beneficial interest in the assets belonging to that
Series or in any way affecting the rights of Shares of any other
Series.
(k) FRACTIONS. Any fractional Share of any Series, if any such
fractional Share is outstanding, shall carry proportionately all the
rights and obligations of a whole share of that Series, including with
respect to voting, receipt of dividends and distributions, redemption
of Shares, and liquidation of the Trust.
(l) CONVERSION RIGHTS. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority to
provide that holders of Shares of any Series shall have the right to
convert said Shares into Shares of one or more other Series in
accordance with such requirements and procedures as may be established
by the Trustees.
(m) PROVISIONS APPLICABLE TO SUB-SERIES. The Investor A Shares
and Investor B Shares represent interests in the same investment
portfolio of each Series. Investor A Shares and Investor B Shares
shall be subject to all provisions of
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Article IV hereof relating to the Shares of the Trust generally and
shall have the same preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption except as follows:
(1) The dividends and distributions of investment income and
capital gains with respect to the Investor A Shares and Investor B
Shares shall be in such amount as may be declared from time to time by
the Trustees, and such dividends and distributions may vary between the
Sub-Series to reflect differing allocations of the expenses of the
Trust between the Sub-Series to such extent and for such purposes as
the Trustees may deem appropriate.
(2) The proceeds of the redemption of an Investor B Share
(including a fractional share), except those purchased through
reinvestment of a dividend or a distribution, shall be reduced by the
amount of any applicable contingent deferred sales charge payable on
such redemption to the distributor of the Investor B Shares pursuant to
the terms of the issuance of the shares (to the extent consistent with
the 1940 Act, or regulations or exemptions thereunder) and the Trust
shall promptly pay to such distributor the amount of any such
contingent deferred sales charge.
(3)(a) Each Investor B Share, other than a share purchased
through the reinvestment of a dividend or a distribution with respect
to the Investor B Share, shall be converted automatically, and without
any action or choice on the part of the holder thereof, into Investor A
Shares, at the relative net asset value of each Sub-Series, at the time
of the calculation of the net asset value of such Sub-Series of Shares
on the date that is the first business day of the month in which the
eighth anniversary of the issuance of such Investor B Shares occurs
(which for the purpose of calculating the holding period required for
conversion, shall mean (i) the date on which the issuance of such
Investor B Shares occurred or (ii) for Investor B Shares obtained
through an exchange, the date on which the issuance of the Investor B
Shares of an eligible Trust Series occurred, if such Shares were
exchanged directly, or through a series of exchanges, for the Trust's
Investor B Shares (the "Conversion Date")). The Trustees shall adopt a
resolution setting forth a list of eligible Trust Series for purposes
of this subsection.
(b) Each Investor B Share purchased through the reinvestment
of a dividend or a distribution with respect to the Investor B Shares
and the dividends and distributions on such Shares shall be segregated
in a separate sub-account on
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<PAGE> 24
the share records of the Trust for each of the holders of record
thereof. On any Conversion Date, a number of the Shares held in the
sub-account of the holder of record of the Share or Shares being
converted, calculated in accordance with the next following sentence,
shall be converted automatically, and without any action or choice on
the part of the holder thereof, into Investor A Shares of the same
Series. The number of Shares in the holder's sub-account so conveyed
shall bear the same relation to the total number of Shares maintained
in the sub-account on the Conversion Date as the number of Shares of
the holder converted on the Conversion Date pursuant to subsection
(m)(3)(a) hereof bears to the total number of Investor B Shares of the
holder on the Conversion Date not purchased through the automatic
reinvestment of dividends or distributions with respect to the
Investor B Shares.
(c) The number of Shares of Investor A Shares into which an
Investor B Share is converted pursuant to subsections (m)(3)(a) and
(m)(3)(b) hereof shall equal the number (including for this purpose
fractions of a Share) obtained by dividing the net asset value per
Share of the Investor B Shares for purposes of sales and redemptions
thereof at the time of the calculation of the net asset value on the
Conversion Date by the net asset value per Share of the Investor A
Shares for purposes of sales and redemptions thereof at the time of the
calculation of the net asset value on the Conversion Date.
(d) On the Conversion Date, the Investor B Shares converted
into Investor A Shares will cease to accrue dividends and will no
longer be outstanding and the rights of the holders thereof will cease
(except the right to receive declared but unpaid dividends to the
Conversion Date).
(e) The Trustees shall have full power and authority to adopt
such other terms and conditions concerning the conversion of Investor B
Shares to Investor A Shares as they deem appropriate; provided such
terms and conditions are not inconsistent with the terms contained in
this subsection (m) and subject to any restrictions or requirements
under the 1940 Act and the rules, regulations and interpretations
thereof promulgated or issued by the Commission or any conditions or
limitations contained in an order issued by the Commission applicable
to the Trust.
SECTION 4.3 OWNERSHIP OF SHARES. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each Series
and Sub-Series that has
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been established and designated. No certificates certifying the ownership of
Shares need be issued except as the Trustees may otherwise determine from time
to time. The Trustees may make such rules as they consider appropriate for the
issuance of Share certificates, the use of facsimile signatures, the transfer of
Shares and similar matters. The record books of the Trust which are kept by the
Trust or any transfer or similar agent, as the case may be, shall be conclusive
as to who are the Shareholders and as to the number of Shares of each Series and
Sub-Series held from time to time by each such Shareholder.
SECTION 4.4 INVESTMENTS IN THE TRUST. The Trustees may accept
investments in the Trust from such persons and on such terms and for such
consideration, not inconsistent with the provisions of the 1940 Act, as they
from time to time authorize. The Trustees may authorize any distributor,
principal underwriter, custodian, transfer agent or other person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any purchase orders for Shares whether or not conforming to such
authorized terms.
SECTION 4.5 NO PREEMPTIVE RIGHTS. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares
or other securities issued by the Trust.
SECTION 4.6 STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the Trust nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Declaration of Trust. Ownership of Shares
shall not entitle the Shareholder to any title in or to the whole or any part of
the Trust property or right to call for a partition or division of the same or
for an accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
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<PAGE> 26
ARTICLE V
---------
SHAREHOLDERS' VOTING POWERS AND MEETINGS
----------------------------------------
SECTION 5.1 VOTING POWERS. The Shareholders shall have power, and shall
be entitled, to vote only (i) for the election or removal of Trustees as
provided in Section 3.1, (ii) with respect to any contract with a Contracting
Party as provided in Section 3.3 as to which Shareholder approval is required by
the 1940 Act, (iii) with respect to any termination or reorganization of the
Trust or any Series to the extent and as provided in Sections 7.1, 7.2 and 7.3,
(iv) with respect to any amendment of this Declaration of Trust to the extent
and as provided in Section 7.4, (v) to the same extent as the stockholders of an
Ohio corporation organized under Chapter 1701, Ohio Revised Code, as to whether
or not a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders, and (vi) with respect to such additional matters relating to the
Trust as may be required by the 1940 Act, this Declaration of Trust, the By-Laws
or any registration of the Trust with the Commission (or any successor agency)
or any state, or as the Trustees otherwise may consider necessary or desirable.
There shall be no cumulative voting in the election of any Trustee or Trustees.
Shares may be voted in person or by proxy. A proxy with respect to Shares may be
voted in person or by proxy. A proxy with respect to Shares held in the name of
two or more persons shall be valid if executed by any one of them unless at or
prior to exercise of the proxy the Trust receives a specific written notice to
the contrary from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise and the burden or proving invalidity shall rest on the challenger.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required by law, this Declaration of Trust or the
By-Laws to be taken by Shareholders.
SECTION 5.2 MEETINGS. Meetings of the Shareholders of Trust or of any
one or more of its Series or Sub-Series may be called by the Trustees, and shall
be called by the Trustees whenever required by law or upon the written request
of holders of at least twenty percent of all votes attributable to the
outstanding Shares of the Trust or, as applicable, any one or more of its Series
or Sub-Series, entitled to vote.
Written notice, stating the place, day, and hour of each meeting of
Shareholders and the general nature of the business to be transacted, shall be
given by, or at the direction of, the person calling the meeting to each
Shareholder of record entitled to vote at the meeting at least ten days prior to
the day named for
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<PAGE> 27
the meeting, unless in a particular case a different period of
notice is required by law.
SECTION 5.3 RECORD DATES. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and time not more
than 90 days prior to the date of any meeting of Shareholders or other action as
the date and time of record for the determination of Shareholders entitled to
vote at such meeting or any adjournment thereof or to be treated as Shareholders
of record for purposes of such other action, and any Shareholder who was a
Shareholder at the date and time so fixed shall be entitled to vote at such
meeting or any adjournment thereof or (subject to any provisions permissible
under subsection (c) of Section 4.2 with respect to dividends or distributions
on Shares that have not been ordered and/or paid for by the time or times
established by the Trustees under the applicable dividend or distribution
program or procedure then in effect) to be treated as a Shareholder of record
for purposes of such other action, even though he has since that date and time
disposed of his Shares, and no Shareholder becoming such after that date and
time shall be so entitled to vote at such meeting or any adjournment thereof or
to be treated as a Shareholder of record for purposes of such other action.
SECTION 5.4 QUORUM AND REQUIRED VOTE. At any meeting of the
Shareholders at which the only actions to be taken are actions permitted by the
1940 Act to be taken by vote of all Shareholders of the Trust, voting together,
a quorum for the transaction of business shall consist of a majority represented
in person or by proxy of all votes attributable to the outstanding Shares
(without regard to individual Series or Sub-Series) entitled to vote with
respect to the matters; provided, however, that at any meeting at which the only
actions to be taken are actions involving matters required by the 1940 Act to be
taken by vote of the Shareholders of one or more individual Series or
Sub-Series, voting separately by Series or Sub-Series, a quorum with respect to
such matters shall consist of a majority of all votes attributable to the
outstanding Shares of such individual Series or Sub-Series entitled to vote
thereon, and provided further that at any meeting at which the actions to be
taken shall have been determined by the Board of Trustees to include both
actions permitted by the 1940 Act to be voted on by all Shareholders of the
Trust, voting together, and actions required by the 1940 Act to be voted on by
the Shareholders of one or more of the Series or Sub-Series, voting separately
by Series or Sub-Series, the meeting shall be divided into the number
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<PAGE> 28
of meetings equal to the number of matters being voted upon and a quorum shall
be determined by issue or matter to be voted on as set forth in the foregoing
provisions; and provided further, that reasonable adjournments of such meeting
or meetings or any portion thereof until a quorum is obtained may be made by a
vote attributable to the Shares present in person or by proxy and entitled to
vote on the matter or matters.
A majority of the votes shall decide any question and a plurality shall
elect a Trustee, subject to any applicable requirements of law or of this
Declaration of Trust or the By-Laws; provided, however, that when any provision
of law or of this Declaration of Trust requires the holders of Shares of any
particular Series or Sub-Series to vote by Series or Sub-Series and not in the
aggregate with respect to a matter, then a majority of all votes attributable to
the outstanding Shares of that Series or Sub-Series shall decide such matter
insofar as that particular Series or Sub-Series shall be concerned.
SECTION 5.5 ACTION BY WRITTEN CONSENT. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote on the matter
(or such other proportion thereof as shall be required by the 1940 Act or by any
express provision of this Declaration of Trust or the By-Laws) consent to the
action in writing and such written consents are filed with the records of the
meetings of Shareholders. Such consent shall be treated for all purposes as a
vote taken at a meeting of Shareholders.
SECTION 5.6 INSPECTION OF RECORDS. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of an Ohio corporation organized under Chapter 1701, Ohio Revised
Code.
SECTION 5.7 ADDITIONAL PROVISIONS. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
ARTICLE VI
----------
LIMITATION OF LIABILITY; INDEMNIFICATION
----------------------------------------
SECTION 6.1 TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Trust for payment under such
credit, contract or claim; and neither the Shareholders nor the Trustees, nor
any of the Trust's officers, employees or agents, whether past, present or
future,
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<PAGE> 29
shall be personally liable therefor. Every note, bond, contract,
instrument, certificate or undertaking and every other act or thing whatsoever
executed or done by or on behalf of the Trust or the Trustees or any of them in
connection with the Trust shall be conclusively deemed to have been executed or
done only by or for the Trust or the Trustees and not personally. Nothing in
this Declaration of Trust shall protect any Trustee or officer against any
liability to the Trust or the Shareholders to which such Trustee or officer
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee or of such officer.
A note, bond, contract, instrument, certificate or undertaking made or
issued by the Trust or Trustees or by any officer, employee or agent in writing
may give notice that this Declaration of Trust is on file with the Secretary of
State of Ohio and may recite to the effect that the same was executed or made by
or on behalf of the Trust or by them as Trustee, officer, employee or agent and
not individually and that the obligations of such instrument are not binding
upon any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, as set forth in Section 1746.13(A), Ohio
Revised Code, but the omission thereof shall not operate to bind any Trustee,
officer, employee, agent or Shareholder individually.
SECTION 6.2 TRUSTEE'S GOOD FAITH ACTION; EXPERT ADVICE; NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing else,
and shall not be liable for errors of judgment or mistakes of fact or law.
Subject to the foregoing, (a) the Trustees shall not be responsible or liable in
any event for any neglect or wrongdoing of any officer, agent, employee,
consultant, adviser, administrator, distributor or principal underwriter,
custodian or transfer, dividend disbursing, Shareholder servicing or accounting
agent of the Trust, nor shall any Trustee be responsible for the act or omission
of any other Trustee; (b) the Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration of Trust
and their duties as Trustees, and shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice;
and (c) in discharging their duties, the Trustees, when acting in good faith,
shall be entitled to rely upon the books of account of the Trust and upon
written reports made to the Trustees by any officer appointed by them, any
independent public accountant, and (with respect to the subject matter of the
contract involved) any officer, partner or responsible employee of a
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<PAGE> 30
Contracting Party authorized by the Trustees pursuant to Section 3.3. The
Trustees as such shall not be required to give any bond or surety or any other
security for the performance of their duties.
SECTION 6.3 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder
or former Shareholder shall be charged or held to be personally liable for any
obligation or liability of the Trust solely by reason of being or having been a
Shareholder and not because of such Shareholder's acts or omissions or for some
other reason, the Trust (upon proper and timely request by the Shareholder)
shall assume the defense against such charge and satisfy any judgment thereon,
and the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled out of
the assets of the Trust estate to be held harmless from and indemnified against
all loss and expense arising from such liability.
SECTION 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. The Trust shall
indemnify each of its Trustees and officers (including persons who serve at the
Trust's request as directors, officers or trustees of another organization in
which the Trust has any interest as a shareholder, creditor or otherwise)
(hereinafter referred to as a "Covered Person") against all liabilities,
including but not limited to amounts paid in satisfaction of judgments, in
compromise or settlement or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Covered Person and except that no Covered Person shall be indemnified
against any liability to the Trust or its Shareholders to which such Covered
Person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
such Covered Person's office ("disabling conduct"). Anything herein contained to
the contrary notwithstanding, no Covered Person shall be indemnified for any
liability to the Trust or its Shareholders to which such Covered Person would
otherwise be subject unless (a) a final decision on the merits is made by a
court or other body before whom the proceeding was brought that the Covered
Person to be indemnified was not liable by reason of disabling conduct or, (b)
in the absence of such a decision, a reasonable determination is made, based
upon a review of the facts, that the Covered Person was not liable by reason of
disabling conduct, by (i) the vote of a majority of a quorum of Trustees who
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<PAGE> 31
are neither "interested persons" of the Trust as defined in the 1940 Act nor
parties to the proceeding ("disinterested, non-party Trustees"), or (ii) an
independent legal counsel in a written opinion.
SECTION 6.5 ADVANCES OF EXPENSES. The Trust shall advance attorneys'
fees or other expenses incurred by a Covered Person in defending a proceeding,
upon the undertaking by or on behalf of the Covered Person to repay the advance
unless it is ultimately determined that such Covered Person is entitled to
indemnification, so long as one of the following conditions is met: (a) the
Covered Person shall provide security for his undertaking, (b) the Trust shall
be insured against losses arising by reason of any lawful advances, or (c) a
majority of a quorum of the disinterested non-party Trustees of the Trust, or an
independent legal counsel in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Covered Person ultimately will be found
entitled to indemnification.
SECTION 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "Covered Person" shall include such person's heirs, executors
and administrators. Nothing contained in this Article VI shall affect any
rights to indemnification to which personnel of the Trust, other than any
Covered Person, may be entitled, by contract or otherwise under law, nor the
power of the Trust to purchase and maintain liability insurance on behalf of any
such person.
SECTION 6.7 LIABILITY OF SERIES. Liabilities belonging to any Series or
Sub-Series of the Trust, including, without limitation, expenses, fees, charges,
taxes, and liabilities incurred or arising in connection with a particular
Series or Sub- Series, or in connection with the management thereof, shall be
paid only from the assets belonging to that Series or Sub-Series.
ARTICLE VII
-----------
MISCELLANEOUS
-------------
SECTION 7.1 DURATION AND TERMINATION OF TRUST. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by the vote of Shareholders holding at least a
majority of the votes attributable to the outstanding Shares without regard to
Series or Sub-Series, or by the Trustees by written notice to the Shareholders.
Any Series of Shares may be terminated at any time
- 27 -
<PAGE> 32
by vote of Shareholders holding at least a majority of the votes attributable to
the outstanding Shares of such Series, without regard to Sub-Series, or by the
Trustees by written notice to the Shareholders of such Series.
Upon termination of the Trust or of any one or more Series, after
paying or otherwise providing for all charges, taxes, expenses and liabilities,
whether due or accrued or anticipated, of the Trust or of the particular Series
as may be determined by the Trustees, the Trust shall, in accordance with such
procedures as the Trustees consider appropriate, reduce the remaining assets to
distributable form in cash or shares or other securities, or any combination
thereof, and distribute the proceeds to the Shareholders of the Series involved,
ratably according to the number of Shares of such Series held by the several
Shareholders of such Series on the date of termination, all as set forth in
subsection (d) of Section 4.2.
SECTION 7.2 SALE OR DISPOSITION OF ASSETS. The Trustees may sell,
convey and transfer the assets of the Trust, or the assets belonging to any one
or more Series, to another trust, partnership, association or corporation
organized under the laws of any state of the United States, or to the Trust to
be held as assets belonging to another Series of the Trust, in exchange for
cash, shares or other securities (including, in the case of a transfer to
another Series of the Trust, Shares of such other Series) with such transfer
being made subject to, or with the assumption by the transferee of, the
liabilities belonging to each Series the assets of which are so transferred;
provided, however, that if shareholder approval is required by the 1940 Act, no
assets belonging to any particular Series shall be so transferred unless the
terms of such transfer shall have first been approved at a meeting called for
that purpose by the affirmative vote of Shareholders holding a majority of the
voting power of that Series. Following such transfer, the Trustees shall
distribute such cash, shares or other securities (giving due effect to the
assets and liabilities belonging to and any other differences among the various
Series the assets belonging to which have so been transferred) among the
Shareholders of the Series the assets belonging to which have been so
transferred; and if all of the assets of the Trust have been so transferred, the
Trust shall be terminated.
SECTION 7.3 MERGER OR CONSOLIDATION. The Trust or any Series thereof
may be a party, with one or more entities (including another Series) to an
agreement of merger or consolidation; provided, however, that any such agreement
of merger or consolidation shall be approved by the Trustees and, if Shareholder
approval is required by the 1940 Act, by the affirmative vote of
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<PAGE> 33
Shareholders holding a majority of the voting power of the Trust or of each
Series affected.
SECTION 7.4 AMENDMENTS. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time by an instrument in
writing signed by a majority of the then Trustees (or by an officer of the Trust
pursuant to the vote of a majority of such Trustees), when authorized so to do
by the vote, in accordance with subsection (e) of Section 4.2, of Shareholders
holding a majority of the voting power of Shares entitled to vote, except that
amendments either (i) establishing and designating any new Series or Sub-Series
of Shares and changing the rights of the Shares of any existing or new Series or
Sub-Series, or (ii) abolishing any Series or Sub-Series under the circumstances
described in Sections 4.1 or 7.1, or having the purpose of changing the name of
the Trust or the name of any Series or Sub-Series theretofore established and
designated or of conforming the provisions hereof to the requirements of state
or federal law or of supplying any omission, curing any ambiguity or curing,
correcting or supplementing any provision hereof which is internally
inconsistent with any other provision hereof or which is defective or
inconsistent with the 1940 Act or with the requirements of the Internal Revenue
Code of 1986 and applicable regulations for the Trust's obtaining the most
favorable treatment thereunder available to regulated investment companies,
shall not require authorization by Shareholder vote. In addition, amendment of
this Declaration of Trust as it may affect any one or more Series may be
effected by vote of the Trustees at any time when the Trust has no outstanding
Shares or Shareholders of such Series. Subject to the foregoing, any such
amendment shall be effective as provided in the instrument containing the terms
of such amendment or, if there is no provision therein with respect to
effectiveness, upon the execution of such instrument and of a certificate (which
may be a part of such instrument) executed by a Trustee or officer of the Trust
to the effect that such amendment has been duly adopted.
SECTION 7.5 ABSENCE OF DISSENTERS' RIGHTS. No shareholder shall be
entitled, as a matter of right, to relief as a dissenting shareholder in respect
of any proposal or action involving the Trust.
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<PAGE> 34
SECTION 7.6 FILING OF COPIES; REFERENCES; HEADINGS. The original or a
copy of this instrument and of each amendment hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. An original of this
instrument and each amendment hereto, or a copy of this instrument and of each
amendment hereto certified as true and correct by a Trustee before a Notary
Public, shall be filed by the Trust with the Secretary of the State of Ohio,
together with the report required by Section 1746.04, Ohio Revised Code. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust as
to whether or not any such amendments have been made, as to the identities of
the Trustees and officers, and as to any matters in connection with the Trust
hereunder; and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this instrument or of
any such amendments. In this instrument and in any such amendment, references to
this instrument, and all expressions like "herein", "hereof" and "hereunder"
shall be deemed to refer to this instrument as a whole as the same may be
amended or affected by any such amendments. The masculine gender shall include
the feminine and neuter genders. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control or affect the
meaning, construction or effect of this instrument. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
SECTION 7.7 APPLICABLE LAW. This Declaration of Trust is made in the
State of Ohio and it is created under and is to be governed by and construed and
administered according to the laws of said State, as the same may be amended
from time to time, to which reference is made.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand in the
City of Columbus, Ohio for himself and his assigns, as of the day and year first
above written.
/s/ Walter B. Grimm
------------------------
Walter B. Grimm
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<PAGE> 1
Exhibit (2)
BY-LAWS
OF
THE RIVERFRONT FUNDS
--------------------
ARTICLE I
---------
Declaration of Trust and Offices
--------------------------------
1.1 DECLARATION OF TRUST. These By-Laws shall be subject to the
Declaration of Trust, as from time to time in effect (the "Declaration of
Trust"), of The Riverfront Funds, the Ohio business trust established by the
Declaration of Trust (the "Trust").
1.2 OFFICES. The Trust shall maintain its principal office in
Cincinnati, Ohio, or in such other city as the Trustees otherwise may determine.
ARTICLE II
----------
Trustees
--------
2.1 REGULAR MEETINGS. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees.
2.2 SPECIAL MEETINGS. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when called by
the Chairman of the Board, President or the Treasurer or by two or more
Trustees, sufficient notice thereof being given to each Trustee by the Secretary
or an Assistant Secretary or by the officer of the Trustees calling the meeting.
2.3 NOTICE. It shall be sufficient notice to a Trustee of a special
meeting to send notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting addressed to the Trustee at his or
her usual or last known business or residence address or to give notice to him
or her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him or
her. Neither notice of a meeting nor a waiver of a notice need specify the
purposes of the meeting.
<PAGE> 2
2.4 QUORUM. At any meeting of the Trustees a majority of the Trustees
then in office shall constitute a quorum. Any meeting may be adjourned from time
to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.
2.5 PARTICIPATION BY TELEPHONE. One or more of the Trustees or of any
committee of the Trustees may participate in a meeting thereof by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting except as
otherwise provided by the Investment Company Act of 1940.
2.6 ACTION BY CONSENT. Unless otherwise required by the Investment
Company Act of 1940, any action required or permitted to be taken at any meeting
of the Trustees or any committee thereof may be taken without a meeting, if a
written consent of such action is signed by a majority of the Trustees then in
office or a majority of the members of such committee, as the case may be, and
such written consent is filed with the minutes of the proceedings of the
Trustees of such committee.
2.7 CHAIRMAN OF THE BOARD. The Trustees may at any time appoint one of
their number as Chairman of the Board, who shall serve at the pleasure of the
Trustees and who shall perform and execute such duties as the Trustees may from
time to time provide but who shall not by reason of performing or executing
these duties be deemed an officer or employee of the Trust.
ARTICLE III
-----------
Officers
--------
3.1 NUMBER. The officers of the Trust shall be chosen by the Trustees
and shall include a President, who shall be a Trustee, a Secretary and a
Treasurer. the Board of Trustees may, from time to time, elect or appoint one or
more Vice Presidents, Assistant Secretaries, and Assistant Treasurers.
3.2 OTHER OFFICERS. The Trustees may from time to time appoint such
other officers and agents as they shall deem advisable, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Trustees. The Trustees may delegate
to one or more officers or agents the power to appoint any such subordinate
officers or agents and to prescribe their respective rights, terms of office,
authorities, and duties.
3.3 ELECTION AND TENURE. The officers of the Trust shall be
chosen annually by the Trustees. Two or more offices may be held
-2-
<PAGE> 3
by the same person but no officer shall execute, acknowledge, or verify any
instrument in more than one capacity, if such instrument is required by law, the
Declaration of Trust, or these By-Laws to be executed, acknowledged, or verified
by two or more officers. Any officer or agent may be removed by the Trustees. An
officer of the Trust may resign by filing a written resignation with the
President, with the Trustees, or with the Secretary. Any vacancy occurring in
any office of the Trust by death, resignation, removal, or otherwise shall be
filled by the Trustees.
3.4 COMPENSATION. The salaries or other compensation of all officers
and agents of the Trust shall be fixed by the Trustees, except that the Trustees
may delegate to any committee the power to fix the salary or other compensation
of any officer of the Trust.
3.5 PRESIDENT. The President shall be the chief executive officer of
the Trust, shall preside at all meetings of the Shareholders and the Trustees
unless a chairman has been designated, shall be a member EX OFFICIO of all
standing committees, and shall see that all orders and resolutions of the
Trustees are carried into effect. The President, or such person as the President
may designate, shall sign, execute, and acknowledge, in the name of the Trust,
deeds, mortgages, bonds, contracts, and other instruments authorized by the
Trustees, except in the case where the signing and execution thereof shall be
delegated by the Trustees to some other officer or agent of the Trust. The
President shall also be the chief administrative officer of the Trust and shall
perform such other duties and have such other powers as the Trustees may from
time to time prescribe.
3.6 VICE PRESIDENTS. The Vice Presidents, if any, in the order of their
seniority, shall, in the absence or disability of the President, perform the
duties and exercise the powers of the President and shall perform such other
duties as the Trustees may from time to time prescribe.
3.7 SECRETARY. The Secretary shall attend meetings of the Trustees and
meetings of the Shareholders and record all the proceedings thereof and shall
perform like duties for any committee when required. The Secretary shall give,
or cause to be given, notice of meetings of the Shareholders and of the
Trustees, and shall perform such other duties as may be prescribed by the
Trustees or the President, under whose supervision he or she shall be.
3.8 ASSISTANT SECRETARIES. The Assistant Secretaries, if any, when so
directed by the Secretary, or in the absence or disability of the Secretary, in
order of their seniority, shall perform the duties and exercise the powers of
the Secretary and shall perform such other duties as the Trustees shall
prescribe.
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<PAGE> 4
3.9 TREASURER. The Treasurer shall be the chief financial officer of
the Trust and shall be responsible for the maintenance of its accounting records
and shall render to the Trustees when the Trustees so require an account of all
the Trust's financial transactions and a report of the financial condition of
the Trust.
3.10 ASSISTANT TREASURERS. The Assistant Treasurers, if any, when so
directed by the Treasurer, or in the absence or disability of the Treasurer, in
the order of their seniority, shall perform the duties and exercise the powers
of the Treasurer and shall perform such other duties as the Trustees may from
time to time prescribe.
ARTICLE IV
----------
Committees
----------
4.1 GENERAL. The Trustees, by vote of a majority of the Trustees then
in office, may elect from their number an Executive Committee or other
committees and may delegate thereto some or all of their powers except those
which by law, by the Declaration of Trust, or by these By-Laws may not be
delegated. Except as the Trustees may otherwise determine, any such committee
may make rules for the conduct of its business, but unless otherwise provided by
the Trustees or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by these By-Laws for the Trustees
themselves. All members of such committees shall hold offices at the pleasure of
the Trustees. The Trustees shall have power to rescind any action of any
committee, but no such rescission shall have retroactive effect.
ARTICLE V
---------
Reports
-------
5.1 GENERAL. The Trustees and officers shall render reports at the time
and in the manner required by the Declaration of Trust or any applicable laws.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
ARTICLE VI
----------
Fiscal Year
-----------
6.1 GENERAL. The fiscal year of the Trust shall be fixed,
and shall be subject to change by the Trustees.
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<PAGE> 5
ARTICLE VII
-----------
Seal
----
7.1 GENERAL. If required by applicable law, the seal of the Trust shall
consist of a flat-faced die with the word "Ohio," together with the name of the
Trust and the year of its organization cut or engraved thereon, but, unless
otherwise required by the Trustees, the seal shall not be necessary to be placed
on, and its absence shall not impair the validity of, any document, instrument
or other paper executed and delivered by or on behalf of the Trust.
ARTICLE VIII
------------
Issuance of Share Certificates
------------------------------
8.1 SHARE CERTIFICATES. In lieu of issuing certificates for shares, the
Trustees or the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled to a certificate
stating the number of shares owned by him, in such form as shall be prescribed
from time to time by the Trustees. Such certificate shall be signed by the
President or a Vice President and by the Treasurer or Assistant Treasurer. Such
signatures may be facsimiles if the certificate is signed by a transfer agent,
or by a registrar, other than a Trustee, officer or employee of the Trust. In
case any officer who has signed or whose facsimile signature has been placed on
such certificate shall cease to be such officer before such certificate is
issued, it may be issued by the Trust with the same effect as if he were such
officer at the time of its issue.
8.2 LOSS OF CERTIFICATES. In case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
8.3 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. In the event certificates
have been issued, a pledgee of shares transferred as collateral security shall
be entitled to a new certificate if the instrument of transfer substantially
describes the debt or duty that is intended to be secured thereby. Such new
certificate shall express on its face that it is held as collateral security,
and the
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<PAGE> 6
name of the pledgor shall be stated thereon, who alone shall be liable as a
shareholder and entitled to vote thereon.
8.4 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees may at any
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of share certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
of shares in the Trust.
ARTICLE IX
----------
Custodian
---------
9.1 GENERAL. The Trust shall at all times employ a bank or trust
company having a capital, surplus and undivided profits of at least Twenty-Five
Million Dollars ($25,000,000) as Custodian of the capital assets of the Trust.
The Custodian shall be compensated for its services by the Trust and upon such
basis as shall be agreed upon from time to time between the Trust and the
Custodian.
ARTICLE X
---------
Dealings with Trustees and Officers
-----------------------------------
10.1 GENERAL. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of shares of the Trust to the same extent as if he were
not a Trustee, officer or agent; and the Trust may accept subscriptions to
shares or repurchase shares from any firm or company in which he or she is
interested.
ARTICLE XI
----------
Amendments to the By-laws
-------------------------
11.1 GENERAL. These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
-6-
<PAGE> 1
Exhibit (5)(a)
INVESTMENT ADVISORY AGREEMENT
This Agreement is made as of the 29th day of December, 1998, between
The Riverfront Funds, an Ohio business trust (the "Trust"), and The Provident
Bank, an Ohio banking corporation (the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust desires to retain the Investment Adviser to provide,
or arrange for the provision of, investment advisory services to one or more
investment portfolios of the Trust (the "Portfolios"), and the Investment
Adviser represents that it is willing and possesses legal authority to so
furnish such services without violation of applicable laws (including the
Glass-Steagall Act); and
WHEREAS, the Investment Adviser is engaged in the business of rendering
investment advisory services to the Trust and to others and desires to provide
the services described herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Trust and the Investment Adviser hereby agree as follows:
1. APPOINTMENT. The Trust hereby appoints the Investment Adviser to act
as investment adviser to the Portfolios identified on Schedule A hereto for the
period and on the terms set forth in this Agreement. The Investment Adviser
accepts such appointment and agrees to furnish the services herein set forth for
the compensation herein provided. Additional investment portfolios may from time
to time be added to those covered by this Agreement by the parties executing a
new Schedule A which shall become effective upon its execution and shall
supersede any Schedule A having an earlier date.
2. DELIVERY OF DOCUMENTS. The Trust has furnished the Investment
Adviser with copies properly certified or authenticated of each of the
following:
(a) the Trust's Declaration of Trust (the
"Declaration");
(b) the Trust's By-Laws;
(c) resolutions of the Trust's Board of Trustees
authorizing the appointment of the Investment Adviser and
approving this Agreement;
<PAGE> 2
(d) Post-Effective Amendment No. 19 to the Trust's
Registration Statement on Form N-1A filed under the Securities
Act of 1933, as amended ("1933 Act") (File No. 33-34154), and
under the 1940 Act, as filed with the Securities and Exchange
Commission; and
(e) each Portfolio's most recent Prospectus and Statement of
Additional Information (such Prospectus and Statement of Additional
Information, as presently in effect, and all amendments and supplements
thereto are herein collectively called the "Prospectus").
The Trust will furnish the Investment Adviser from time to time with
copies of all amendments of or supplements to the foregoing.
3. MANAGEMENT. Except as specifically provided in the following
paragraph, subject to the supervision of the Trust's Board of Trustees, the
Investment Adviser will provide, or arrange for the provision of, a continuous
investment program for each of the Portfolios, including investment research and
management with respect to all securities and investments and cash equivalents
in the Portfolios. The Investment Adviser will determine, or arrange for others
to determine, from time to time what securities and other investments will be
purchased, retained or sold by the Trust with respect to the Portfolios and will
implement, or arrange for others to implement, such determinations through the
placement, in the name of the Portfolios, of orders for the execution of
portfolio transactions with or through such brokers or dealers as it may select.
The Investment Adviser will provide, or arrange for the provision of, the
services under this Agreement in accordance with each of the Portfolios'
investment objectives, policies and restrictions as stated in the Prospectus and
resolutions of the Trust's Board of Trustees.
With respect to The Riverfront Income Equity Fund, the Investment
Adviser shall directly provide and make the determinations set forth in the
immediately preceding paragraph with respect to that portion of such Portfolio's
portfolio as the Trust's Board of Trustees determines to allocate to the
Investment Adviser from time to time. The Board of Directors may, from time to
time, make additions to and withdrawals from the assets of The Riverfront Income
Equity Fund allocated to the Investment Adviser.
Subject to the provisions of this Agreement, the Declaration and the
1940 Act, the Investment Adviser directly and indirectly may select and enter
into contracts with one or more qualified investment advisers ("Sub-Advisers")
to provide to the Trust some or all of the services required by this Agreement.
With respect to any such appointment by the Investment Adviser of any of the
Sub- Advisers, the Investment Adviser will, as appropriate:
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<PAGE> 3
(a) advise the Sub-Advisers with respect to economic
conditions and trends;
(b) assist Sub-Advisers with the placement of orders for the
purchase and sale of securities;
(c) assist and consult with the Sub-Advisers in connection
with the Portfolios' continuous investment programs; and
(d) periodically review, evaluate and report to the Trust's
Board of Trustees with respect to the performance of the
Sub-Advisers.
In fulfilling its responsibilities hereunder, the Investment Adviser
agrees that it will, or, with respect to services provided to the Trust by any
of the Sub-Advisers appointed by the Investment Adviser, that it will require
that each of the Sub-Advisers:
(a) use the same skill and care in providing such
services as it uses in providing services to fiduciary
accounts for which it has investment responsibilities;
(b) conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and in addition will conduct its
activities under this Agreement (or any applicable sub-investment
advisory agreement) in accordance with any applicable regulations of
any governmental authority pertaining to the investment advisory
activities of the Investment Adviser or Sub-Advisers;
(c) not make loans to any person to purchase or carry
shares of beneficial interest in the Trust or make loans to
the Trust;
(d) place orders pursuant to investment determinations for the
Trust either directly with the issuer or with an underwriter, market
maker or broker or dealer. In placing orders with brokers and dealers,
the Investment Adviser will use its reasonable best efforts to obtain,
or require that each of the Sub-Advisers obtain, prompt execution of
orders in an effective manner at the most favorable price. In assessing
the best execution available for any transaction, the Investment
Adviser or any of the Sub-Advisers shall consider all factors it deems
relevant, including the breadth of the market in the security, the
price of the security, the financial condition and execution capability
of the broker-dealer and the reasonableness of the commission, if any
(for the specific transaction and on a continuing basis). Consistent
with this obligation, the Investment Adviser and any of the
Sub-Advisers may, to the extent permitted by law, purchase and sell
portfolio securities to and from brokers and dealers who provide
brokerage and research services (within
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<PAGE> 4
the meaning of Section 28(e) of the Securities Exchange Act of 1934) to
or for the benefit of the Portfolios and/or other accounts over which
the Investment Adviser or any of the Sub-Advisers or any of their
respective affiliates exercises investment discretion. Subject to the
review of the Trust's Board of Trustees from time to time with respect
to the extent and continuation of the policy, the Investment Adviser
and any of the Sub-Advisers are authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
effecting a securities transaction for any of the Portfolios which is
in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if, but only if, the
Investment Adviser or Sub- Advisers determine in good faith that such
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of
either that particular transaction or the overall responsibilities of
the Investment Adviser or Sub-Advisers with respect to the accounts as
to which it exercises investment discretion. In no instance will
portfolio securities be purchased from or sold to BISYS Fund Services,
the Investment Adviser or any Sub-Adviser, or any affiliated person of
the Trust, except as may be permitted by the 1940 Act;
(e) maintain all books and records with respect to the Trust's
securities transactions and will furnish the Trust's Board of Trustees
such periodic and special reports as the Board reasonably may request;
(f) treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and
prior, present, or potential shareholders, and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except that, subject to prompt
notification of the Trust, the Investment Adviser and any of the
Sub-Advisers may divulge such information to duly constituted
authorities, or when so requested by the Trust, PROVIDED, HOWEVER, that
nothing contained herein shall prohibit the Investment Adviser or any
of the Sub-Advisers from advertising or soliciting the public generally
with respect to other products or services regardless of whether such
advertisement or solicitation may include prior, present or potential
shareholders of the Portfolios; and
(g) maintain its policy and practice of conducting its
fiduciary functions independently. In making investment recommendations
for the Trust, the Investment Adviser's or Sub-Adviser's personnel will
not inquire or take into consideration whether the issuers of
securities proposed for purchase or sale for the Trust's account are
customers of the
-4-
<PAGE> 5
Investment Adviser or Sub-Adviser or of their respective parents,
subsidiaries or affiliates. In dealing with such customers, the
Investment Adviser or Sub-Adviser and their respective parents,
subsidiaries, and affiliates will not inquire or take into
consideration whether securities of those customers are held by the
Trust.
4. SERVICES NOT EXCLUSIVE. The services furnished by the Investment
Adviser and any Sub-Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser and any Sub-Adviser shall be free to furnish similar services
to others so long as its services under this Agreement or any sub-advisory
agreement are not impaired thereby. It is understood that the action taken by
the Investment Adviser under this Agreement may differ from the advice given or
the timing or nature of action taken with respect to other clients of the
Investment Adviser, and that a transaction in a specific security may not be
accomplished for all clients of the Investment Adviser at the same time or at
the same price.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Investment Adviser hereby agrees that all records, if
any, which it maintains for the Trust are the property of the Trust and further
agrees to surrender promptly, and to require each of the Sub-Advisers to
surrender promptly, to the Trust any of such records upon the Trust's request.
The Investment Adviser further agrees to preserve, and to require each of the
Sub-Advisers to preserve, for the periods prescribed by Rule 31a-2 under the
1940 Act, the records required to be maintained by Rule 31a-1 under the 1940
Act.
6. EXPENSES. During the term of this Agreement, the Investment Adviser
will pay all expenses, including, as applicable, the compensation of any
Sub-Advisers directly appointed by it, incurred by it in connection with its
activities under this Agreement other than the cost of securities (including
brokerage commissions, if any) purchased for the Trust.
7. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, each of the Portfolios will pay the Investment
Adviser and the Investment Adviser will accept as full compensation therefor a
fee set forth on Schedule A hereto. Each of the Portfolios' obligations to pay
the above-described fee to the Investment Adviser will begin as of the date of
the initial public sale of shares in that Portfolio. Except as permitted by
applicable law, the Investment Adviser shall not be compensated on the basis of
a share of capital gains upon or capital appreciation of any of the Portfolios
or any portion thereof.
If in any fiscal year the aggregate expenses of any of the Portfolios
(as defined under the securities regulations of any state having jurisdiction
over the Trust) exceed the expense limitations of any such state, the Investment
Adviser will
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<PAGE> 6
reimburse the Portfolio for a portion of such excess expenses equal to such
excess times the ratio of the fees otherwise payable by the Portfolio to the
Investment Adviser hereunder to the aggregate fees otherwise payable by the
Portfolio to the Investment Adviser hereunder and to BISYS Fund Services Limited
Partnership under the Administration Agreement between BISYS Fund Services
Limited Partnership and the Trust. The obligation of the Investment Adviser to
reimburse the Portfolios hereunder is limited in any fiscal year to the amount
of its fee hereunder for such fiscal year, PROVIDED, HOWEVER, that
notwithstanding the foregoing, the Investment Adviser shall reimburse the
Portfolios for such proportion of such excess expenses regardless of the amount
of fees paid to it during such fiscal year to the extent that the securities
regulations of any state having jurisdiction over the Trust so require. Such
expense reimbursement, if any, will be estimated daily and reconciled and paid
on a monthly basis.
8. LIMITATION OF LIABILITY. The Investment Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Portfolios in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Investment Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement. Any person, even though also an officer,
Director, partner, employee, or agent of the Investment Adviser, who may be or
become an officer, Trustee, employee or agent of the Trust, shall be deemed,
when rendering services to the Trust or acting on any business of the Trust
(other than services or business in connection with the Investment Adviser's
duties hereunder or under any other agreements between the Investment Adviser
and the Trust), to be rendering such services to or acting solely for the Trust
and not as an officer, Director, partner, employee, or agent or one under the
control or direction of the Investment Adviser even though paid by it. The Trust
agrees to indemnify and hold the Investment Adviser harmless from all taxes,
charges, expenses, assessments, claims and liabilities (including, without
limitation, liabilities arising under the Securities Act of 1933, the 1934 Act,
the 1940 Act and any state and foreign securities and blue sky laws, as amended
from time to time) and expenses, including (without limitation) attorneys' fees
and disbursements, arising directly or indirectly from any action or thing which
the Investment Adviser takes or does or omits to take or do hereunder; provided
that the Investment Adviser shall not be indemnified against any liability to
the Trust or to its shareholders (or any expenses incident to such liability)
arising out of a breach of fiduciary duty with respect to the receipt of
compensation for services, willful misfeasance, bad faith, or gross negligence
on the part of the Investment Adviser in the performance of its
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<PAGE> 7
duties, or from reckless disregard by it of its obligations and
duties under this Agreement.
9. COMPLIANCE WITH ORDER. The Investment Adviser agrees that it will
comply with and be bound by the terms of the Order under Section 6(c) of the
1940 Act, Release No. 19949, December 13, 1993 (the "Order"), insofar as the
Order imposes obligations upon an investment adviser to a fund offering class
shares under the authority of the Order and for so long as compliance with the
Order is required by the 1940 Act.
10. DURATION AND TERMINATION. This Agreement will become effective as
to a particular Portfolio as of the date first written above (or, if a
particular Portfolio is not in existence on that date, on the date a
registration statement relative to that Portfolio becomes effective with the
Securities and Exchange Commission and Schedule A hereto is amended to add such
Portfolio thereto), provided that it shall have been approved by a vote of a
majority of the votes attributable to the outstanding voting securities of such
Portfolio, in accordance with the requirements under the 1940 Act, and, unless
sooner terminated as provided herein, shall continue in effect until December
29, 2000.
Thereafter, if not terminated, this Agreement shall continue in effect
as to a particular Portfolio for successive periods of one year each ending on
December 31 of each year, PROVIDED such continuance is specifically approved at
least annually (a) by the vote of a majority of those members of the Trust's
Board of Trustees who are not parties to this Agreement or interested persons of
any party to this Agreement, cast in person at a meeting called for the purpose
of voting on such approval, and (b) by the vote of a majority of the Trust's
Board of Trustees or by the vote of a majority of all votes attributable to the
outstanding Shares of such Portfolio. Notwithstanding the foregoing, this
Agreement may be terminated as to a particular Portfolio at any time on sixty
days' written notice, without the payment of any penalty, by the Trust (by vote
of the Trust's Board of Trustees or by vote of a majority of the votes
attributable to the outstanding voting securities of such Portfolio) or by the
Investment Adviser. This Agreement will immediately terminate in the event of
its assignment. No assignment of this Agreement shall be made by the Investment
Adviser without the consent of the Board of Trustees of the Trust. (As used in
this Agreement, the terms "majority of the outstanding voting securities,
"interested persons" and "assignment" shall have the same meaning of such terms
in the 1940 Act.)
11. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
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<PAGE> 8
12. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by the law of the State of Ohio.
The Riverfront Funds is a business trust organized under Chapter 1746,
Ohio Revised Code and under a Declaration of Trust, to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
Ohio as required by law, and to any and all amendments thereto so filed or
hereafter filed. The obligations of "The Riverfront Funds" entered into in the
name or on behalf thereof by any of the Trustees, officers, employees or agents
are made not individually, but in such capacities, and are not binding upon any
of the Trustees, officers, employees, agents or shareholders of the Trust
personally, but bind only the assets of the Trust, as set forth in Section
1746.13(A), Ohio Revised Code, and all persons dealing with any of the
Portfolios of the Trust must look solely to the assets of the Trust belonging to
such Portfolio for the enforcement of any claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE RIVERFRONT FUNDS
By
-----------------------------
Title
---------------------------
THE PROVIDENT BANK
By
-----------------------------
Title
--------------------------
-8-
<PAGE> 9
Dated: December 29, 1998
<TABLE>
<CAPTION>
SCHEDULE A
to the Investment Advisory Agreement
between The Riverfront Funds and
The Provident Bank
Name Of Portfolio Compensation Date
- ----------------- ------------ ----
<S> <C> <C>
The Riverfront U.S. Annual rate of 0.15% December 29, 1998
Government Securities of the average daily
Money Market Fund net assets of such Portfolio
The Riverfront U.S. Annual rate of 0.40% of December 29, 1998
Government Income the average daily net
Fund assets of such Portfolio
The Riverfront Income Annual rate of 0.95% of December 29, 1998
Equity Fund the average daily net
assets of such Portfolio
The Riverfront Annual rate of 0.90% of December 29, 1998
Balanced Fund the average daily net
assets of such Portfolio
The Riverfront Small Annual rate of 0.80% of December 29, 1998
Company Select Fund the average daily net
assets of such Portfolio
The Riverfront Large Annual rate of 0.80% of December 29, 1998
Company Select Fund the average daily net
assets of such Portfolio
THE RIVERFRONT FUNDS
By
--------------------------
Title
-----------------------
THE PROVIDENT BANK
By
---------------------------
Title
------------------------
- --------------------------
All fees are computed daily and paid monthly.
</TABLE>
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<PAGE> 1
Exhibit (5)(b)
SUB-INVESTMENT ADVISORY AGREEMENT
---------------------------------
This Sub-Investment Advisory Agreement is made as of the 29th day of
December, 1998, by and between The Provident Bank, an Ohio banking corporation
(the "Adviser"), and DePrince, Race & Zollo, Inc., a Florida corporation (the
"Sub-Adviser").
WHEREAS, the Adviser serves as investment adviser of The Riverfront
Funds, an Ohio business trust, and an open-end management investment company
(the "Trust"), which has filed a registration statement (the "Registration
Statement") under the Investment Company Act of 1940, as amended (the "1940
Act") and the Securities Act of 1933.
WHEREAS, the Trust is comprised of several separate investment
portfolios, one of which is The Riverfront Income Equity Fund (the "Portfolio");
and
WHEREAS, the Adviser desires to avail itself of the services,
information, advice, assistance and facilities of an investment adviser
experienced in the management of a portfolio of income producing securities to
assist the Adviser in performing services for the Portfolio; and
WHEREAS, the Sub-Adviser represents that it has the legal power and
authority to perform the services contemplated hereunder without violation of
applicable law (including the Investment Advisers Act of 1940), and is engaged
in the business of rendering investment advisory services to investment
companies and desires to provide such services to the Trust and the Adviser; and
WHEREAS, the Sub-Adviser is familiar with the investment objectives,
policies and restrictions of the Portfolio and has reviewed the Investment
Advisory Agreement dated as of December 29, 1998, between the Adviser and the
Trust (the "Adviser Agreement").
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
1. APPOINTMENT OF THE SUB-ADVISER. The Adviser hereby appoints the
Sub-Adviser to provide a continuous investment program for that portion of the
Portfolio allocated to it from time to time by the Trust's Board of Trustees
(the "DRZ Portfolio"), subject to such instructions and supervision as the
Adviser may from time to time furnish and further subject to the control and
direction of the Trust's Board of Trustees, for the period and on the terms
hereinafter set forth. The Board of Trustees may, from time to time, make
additions to and withdrawals from the assets of the DRZ Portfolio allocated to
the Sub-Adviser. The Sub-Adviser hereby accepts such appointment and agrees
during such period to render the services and to assume the obligations herein
set forth for the compensation herein provided. The Sub-Adviser will provide the
services under this Agreement in accordance with the Portfolio's
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investment objectives, policies and restrictions as stated in the Portfolio's
most recent Prospectus and Statement of Additional Information and as the same
may, from time to time, be supplemented or amended and in resolutions of the
Trust's Board of Trustees. The Adviser agrees to furnish the Sub-Adviser from
time to time copies of all amendments of or supplements to such Prospectus and
Statement of Additional Information. The Sub-Adviser shall for all purpose
herein be deemed to be an independent contractor and shall, except as expressly
provided or authorized (whether herein or otherwise), have no authority to act
for or represent the Adviser, the Portfolio or the Trust in any way.
2. SUB-ADVISORY SERVICES. Subject to such instructions and supervision
as the Adviser may from time to time furnish, the continuous investment program
of the DRZ Portfolio provided by the Sub-Adviser shall include, among other
things, investment research and management with respect to all securities,
investments and cash equivalents in the DRZ Portfolio. The Sub-Adviser will
determine from time to time what securities and other investments will be
purchased, retained or sold by the DRZ Portfolio, the appropriate portion of the
DRZ Portfolio's assets to be invested in particular countries or geographic
regions, the use of foreign exchange contracts and other foreign currency
matters, and the manner in which voting rights, rights to consent to corporate
action and other rights pertaining to the DRZ Portfolio's investments should be
exercised. The Sub-Adviser will implement such determinations through the
placement, in the name of the Portfolio, of orders for the execution of
portfolio transactions with it through such brokers or dealers as it may select.
In fulfilling its responsibilities hereunder, the Sub-Adviser agrees
that it will:
(a) use the same skill and care in providing such services as
it uses in providing services to other fiduciary accounts
for which it has investment responsibilities;
(b) conform with all applicable Rules and Regulations of the
United States Securities and Exchange Commission ("SEC")
and in addition will conduct its activities under this
Agreement in accordance with any applicable regulations
of any government authority pertaining to the investment
advisory activities of the Sub-Adviser and shall furnish
such written reports or other documents substantiating
such compliance as the Adviser reasonably may from time
to time request;
(c) not make loans to any person to purchase or carry shares
of beneficial interest in the Trust or make loans to the
Trust;
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(d) place orders pursuant to investment determinations for
the DRZ Portfolio either directly with the issuer or with
an underwriter, market maker or broker or dealer. In
placing orders with brokers and dealers, the Sub-Adviser
will use its reasonable best efforts to obtain prompt
execution of orders in an effective manner at the most
favorable price. Consistent with this obligation, the
Sub-Adviser may, to the extent permitted by law, purchase
and sell portfolio securities to and from brokers and
dealers who provide brokerage and research services
(within the meaning of Section 28(e) of the Securities
Exchange Act of 1934) to or for the benefit of the DRZ
Portfolio and/or other accounts over which the Sub-
Adviser exercises investment discretion. Subject to the
review of the Trust's Board of Trustees from time to time
with respect to the extent and continuation of the
policy, the Sub-Adviser is authorized to pay a broker or
dealer who provides such brokerage and research services
a commission for effecting a securities transaction for
the DRZ Portfolio which is in excess of the amount of
commission another broker or dealer would have charged
for effecting that transaction if the Sub-Adviser
determines in good faith that such commission was
reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer,
viewed in terms of either that particular transaction or
the overall responsibilities of the Sub-Adviser with
respect to the accounts as to which it exercises
investment discretion. In no instance will portfolio
securities be purchased from or sold to the Trust, BISYS
Fund Services Limited Partnership, the Adviser or Sub-
Adviser or any affiliate of the foregoing except as may
be permitted by the 1940 Act;
(e) maintain all necessary or appropriate books and records with
respect to the DRZ Portfolio's securities transactions in
accordance with all applicable laws, rules and regulations,
including but not limited to Section 31(a) of the 1940 Act and
will furnish the Trust's Board of Trustees such periodic and
special reports as the Board reasonably may request;
(f) treat confidentially and as proprietary information of
the Adviser and the Trust all records and other
information relative to the Adviser and the Trust and
prior, present, or potential shareholders, and will not
use such records and information for any purpose other
than performance of its responsibilities and duties
hereunder, except that subject to prompt notification to
the Trust and the Adviser, the Sub-Adviser may divulge
such information to duly constituted authorities, or when
so requested by the Adviser and the Trust, PROVIDED,
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HOWEVER, that nothing contained herein shall prohibit the
Sub-Adviser from advertising or soliciting the public
generally with respect to other products or services,
regardless of whether such advertisement or solicitation may
include prior, present or potential shareholders of the
Portfolio;
(g) maintain its policy and practice of conducting its
fiduciary functions independently. In making investment
recommendations for the Trust, the Sub-Adviser's
personnel will not inquire or take into consideration
whether the issuers of securities proposed for purchase
or sale for the Trust's account are customers of the
Adviser, the Sub-Adviser or of their respective parents,
subsidiaries or affiliates. In dealing with such
customers, the Sub-Adviser and its parent, subsidiaries,
and affiliates will not inquire or take into
consideration whether securities of those customers are
held by the Trust; and
(h) render, upon request of the Adviser or the Trust's Board
of Trustees, written reports concerning the investment
activities of the DRZ Portfolio.
3. EXPENSES. During the term of this Agreement, the Sub-
Adviser will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities
(including brokerage commissions, if any) purchased for the DRZ
Portfolio.
4. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records, if any,
which it maintains for the Portfolio are the property of the Portfolio and
further agrees to surrender promptly to the Adviser or the Trust any such
records upon the Adviser's or the Trust's request and that such records shall be
available for inspection by the SEC. The Sub-Adviser further agrees to preserve
for the periods and at the places prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940 Act.
5. COMPENSATION OF THE SUB-ADVISER. In consideration of services
rendered pursuant to this Agreement, the Adviser will pay the Sub-Adviser a fee
at the annual rate of the value of the DRZ Portfolio's average daily net assets
set forth in Schedule A hereto. Such fee shall be accrued daily and paid monthly
as soon as practicable after the end of each month. If the Sub-Adviser shall
serve for less than the whole of any month, the foregoing compensation shall be
prorated. For the purpose of determining fees payable to the Sub-Adviser, the
value of the DRZ Portfolio's net assets shall be computed at the times and in
the manner specified in the Trust's Registration Statement. If the Adviser is
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required to reduce its fee or to reimburse the Trust because the expenses of the
Fund exceed applicable state securities regulations or are in excess of any
voluntary expense limitations set forth in the Trust's current Registration
Statement, the Sub-Adviser's fee hereunder shall be reduced by an amount equal
to such excess expense multiplied by the ratio that the Sub-Adviser's fee
hereunder bears to the sum of the fees paid to the Adviser and to BISYS Fund
Services Limited Partnership (under the Trust's Administration Agreement with
BISYS Fund Services Limited Partnership) by the Trust with respect to the
Portfolio. Notwithstanding anything contained herein to the contrary, the Sub-
Adviser shall not be compensated on the basis of a share of capital gains or
upon capital appreciation of the Portfolio or any portion thereof except as may
be authorized by applicable law.
6. SERVICES NOT EXCLUSIVE. The services of the Sub-Adviser hereunder
are not to be deemed exclusive, and the Sub-Adviser shall be free to render
similar services to others and to engage in other activities, so long as the
services rendered hereunder are not impaired. It is understood that the action
taken by the Sub-Adviser under this Agreement may differ from the advice given
or the timing or nature of action taken with respect to other clients of the
Sub-Adviser, and that a transaction in a specific security may not be
accomplished for all clients of the Sub-Adviser at the same time or at the same
price.
7. USE OF NAMES. The Adviser shall not use the name of the Sub-Adviser
in any prospectus, sales literature or other material relating to the Trust in
any manner not approved prior thereto by the Sub-Adviser; provided, however,
that the Sub-Adviser shall approve all uses of its name which merely refer in
accurate terms to its appointment hereunder or which are required by the SEC or
a state securities commission; and, provided further, that in no event shall
such approval be unreasonably withheld. The Sub-Adviser shall not use the name
of the Trust or the Adviser in any material relating to the Sub-Adviser in any
manner not approved prior thereto by the Adviser; provided, however, that the
Adviser shall approve all uses of its or the Trust's name which merely refer in
accurate terms to the appointment of the Sub-Adviser hereunder or which are
required by the SEC or a state securities commission; and, provided further,
that in no event shall such approval be unreasonably withheld.
8. LIABILITY OF THE SUB-ADVISER. Absent willful misfeasance, bad faith,
gross negligence, or reckless disregard of obligations or duties hereunder on
the part of the Sub-Adviser, or loss resulting from breach of fiduciary duty
with respect to the receipt of compensation for services, the Sub-Adviser shall
not be liable for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security.
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9. LIMITATION OF TRUST'S LIABILITY. The Sub-Adviser acknowledges that
it has received notice of and accepts the limitations upon the Trust's liability
set forth in its Declaration of Trust and under Ohio law. The Sub-Adviser agrees
that any of the Trust's obligations shall be limited to the assets of the
Portfolio and that the Sub-Adviser shall not seek satisfaction of any such
obligation from the shareholders of the Trust nor from any trustee, officer,
employee or agent of the Trust.
10. DURATION, RENEWAL, TERMINATION AND AMENDMENT. This Agreement will
become effective as of the date first written above, provided that it shall have
been approved by vote of a majority of the votes attributable to the outstanding
voting securities of the Portfolio, in accordance with the requirements under
the 1940 Act, and, unless sooner terminated as provided herein, shall continue
in effect until December 28, 2000.
Thereafter, if not terminated, this Agreement shall continue in effect
with respect to the Portfolio for successive periods of one year each ending on
December 31 of each year, provided such continuance is specifically approved at
least annually (a) by the vote of a majority of those members of the Trust's
Board of Trustees who are not parties to this Agreement or interested persons of
any party to this Agreement, cast in person at a meeting called for the purpose
of voting on such approval, and (b) by the vote of a majority of the Trust's
Board of Trustees or by the vote of a majority of all votes attributable to the
outstanding Shares of the Portfolio. This Agreement may be terminated as to the
Portfolio at any time, without payment of any penalty, by the Trust's Board of
Trustees, by the Adviser, or by a vote of the majority of the votes attributable
to the outstanding voting securities of the Portfolio upon, 60 days' prior
written notice to the Sub-Adviser, or by the Sub-Adviser upon 60 days' prior
written notice to the Adviser and the Trust's Board of Trustees, or upon such
shorter notice as may be mutually agreed upon. This Agreement shall terminate
automatically and immediately upon termination of the Adviser Agreement. This
Agreement shall terminate automatically and immediately in the event of its
assignment. No assignment of this Agreement shall be made by the Sub-Adviser
without the consent of the Adviser and the Board of Trustees of the Trust. The
terms "assignment" and "vote of a majority of the outstanding voting securities"
shall have the meaning set forth for such terms in the 1940 Act. This Agreement
may be amended at any time by the Adviser and the Sub-Adviser, subject to
approval by the Trust's Board of Trustees and, if required by the 1940 Act and
applicable SEC rules and regulations, a vote of a majority of the votes
attributable to the Portfolio's outstanding voting securities.
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<PAGE> 7
11. CONFIDENTIAL RELATIONSHIP. Any information and advice
furnished by either party to this Agreement to the other shall be
treated as confidential and shall not be disclosed to third parties
except as required by law.
12. SEVERABILITY. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected
thereby.
13. MISCELLANEOUS. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Ohio. The captions in this Agreement are included for convenience only and in
no way define or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed in several counterparts,
all of which together shall for all purposes constitute one Agreement, binding
on all parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
THE PROVIDENT BANK
By
-----------------------------
Title
--------------------------
DePRINCE, RACE & ZOLLO, INC.
By
-----------------------------
Title
--------------------------
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Dated: December 29, 1998
SCHEDULE A
To the Sub-Investment Advisory Agreement
between The Provident Bank and
DePrince, Race & Zollo, Inc.
<TABLE>
<CAPTION>
NAME OF FUND COMPENSATION DATE
- ------------ ------------ ----
<S> <C> <C>
The Riverfront Income Annual Rate of .50% of the December 29, 1998
Equity Fund average daily net assets of
the DRZ Portfolio up to $55
million and .55% of the
average daily net assets
of the DRZ Portfolio of $55
million and above.
THE PROVIDENT BANK
By
----------------------------------
Title
-------------------------------
DePRINCE, RACE & ZOLLO, INC.
By
----------------------------------
Title
-------------------------------
- ------------------------
All fees are computed daily and paid monthly.
</TABLE>
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<PAGE> 1
EXHIBIT (6)(A)
DISTRIBUTION AGREEMENT
This Agreement is made as of the 29th day of December, 1998, between
The Riverfront Funds (the "Fund"), an Ohio business trust having its principal
place of business at 3435 Stelzer Road, Columbus, Ohio 43219, and BISYS Fund
Services Limited Partnership d/b/a BISYS Fund Services ("Distributor"), an Ohio
limited partnership having its principal place of business at 3435 Stelzer Road,
Columbus, Ohio 43219.
WHEREAS, the Fund is an open-end management investment company,
organized as an Ohio business trust and registered with the Securities and
Exchange Commission (the "Commission") under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, it is intended that Distributor act as the distributor of the
shares of beneficial interest ("Shares") of each of the investment portfolios of
the Fund identified on Schedule A hereto as such Schedule may be amended from
time to time (such current portfolios and any additional portfolios being
referred to individually as a "Portfolio" and collectively as the "Portfolios").
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Distributor.
1.1 Distributor will act as agent for the distribution of the Shares
covered by the registration statement and prospectuses of the Fund then in
effect under the Securities Act of 1933, as amended (the "Securities Act"). As
used in this Agreement, the term "registration statement" shall mean Parts A
(the prospectus), B (the Statement of Additional Information) and C of each
registration statement that is filed on Form N-1A, or any successor thereto,
with the Commission, together with any amendments thereto. The term "prospectus"
shall mean each form of Prospectus and Statement of Additional Information used
by the Portfolios for delivery to shareholders and prospective shareholders
after the effective dates of the above referenced registration statements,
together with any amendments and supplements thereto.
1.2 Distributor agrees to use appropriate efforts to solicit orders for
the sale of the Shares and will undertake such advertising and promotion as it
believes reasonable in connection with such solicitation. The Fund understands
that Distributor is now and may in the future be the distributor of the shares
of several investment companies or series (together, "Companies") including
Companies having investment objectives similar to those of the Portfolios of the
Fund. The Fund further understands that investors and potential investors in the
Fund may invest in shares of such other Companies. The Fund agrees that
Distributor's duties to such Companies shall not be deemed in conflict with its
duties to the Fund under this paragraph 1.2.
Except as provided in Section 2 hereof, Distributor shall, at its own
expense, finance appropriate activities which it deems reasonable which are
primarily intended to result in the sale of the Shares, including, but not
limited to, advertising, compensation of underwriters, dealers and sales
personnel, the printing and mailing of prospectuses to other than current
Shareholders, and the printing and mailing of sales literature.
1.3 In its capacity as distributor of the Shares, all activities of
Distributor and its partners, agents, and employees shall comply with all
applicable laws, rules and regulations, including, without limitation, the 1940
Act, the Securities Act, all rules and regulations
<PAGE> 2
promulgated by the Commission thereunder and all rules and regulations adopted
by any securities association registered under the Securities Exchange Act of
1934.
1.4 Distributor will provide one or more persons, during normal
business hours, to respond to telephone questions with respect to the Fund.
1.5 Distributor will transmit any orders received by it for purchase or
redemption of the Shares to the transfer agent and custodian for the Portfolios.
1.6 Whenever in their judgment such action is warranted by unusual
market, economic or political conditions, or by abnormal circumstances of any
kind, the Fund's officers may decline to accept any orders for, or make any
sales of, the Shares until such time as those officers deem it advisable to
accept such orders and to make such sales.
1.7 Distributor will act only on its own behalf as principal if it
chooses to enter into selling agreements with selected dealers or others.
1.8 Distributor shall adopt and maintain compliance standards as to
when each class of Shares may be sold to particular investors in accordance with
the Order of Exemption granted by the Commission in connection with the Fund's
offering of multiple classes of Shares. Distributor further agrees to conform to
such standards and shall require all other persons selling Shares of the Fund to
conform to such standards.
1.9 The Fund agrees at its own expense to execute any and all documents
and to furnish any and all information and otherwise to take all actions that
may be reasonably necessary in connection with the qualification of the Shares
for sale in such states as Distributor may designate.
1.10 The Fund shall furnish from time to time, for use in connection
with the sale of the Shares, such information with respect to the Portfolios and
the Shares as Distributor may reasonable request; and the Fund warrants that the
statements contained in any such information shall fairly show or represent what
they purport to show or represent. The Fund shall also furnish Distributor upon
request with: (a) unaudited semi-annual statements of the Portfolios' books and
accounts prepared by the Fund, (b) a monthly itemized list of the securities in
the Portfolios, (c) monthly balance sheets as soon as practicable after the end
of each month, and (d) from time to time such additional information regarding
the financial condition of the Portfolios as Distributor may reasonably request.
1.11 The Fund represents to Distributor that, with respect to the
Shares, all registration statements and prospectuses filed by the Fund with the
Commission under the Securities Act have been carefully prepared in conformity
with requirements of said Act and the rules and regulations of the Commission
thereunder. The registration statement and prospectus, when such registration
statement becomes effective, will contain all statements required to be stated
therein in conformity with said Act and the rules and regulations of the
Commission and all statements of fact contained in any such registration
statement and prospectus will be true and correct when such registration
statement becomes effective. Furthermore, neither any registration statement nor
any prospectus when such registration statement becomes effective will include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
to a purchaser of the Shares. The Fund may, but shall not be obligated to,
propose from time to time such amendment or amendments to any registration
statement and such supplement or supplements to any prospectus as, in the light
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<PAGE> 3
of future developments, may, in the opinion of the Fund's counsel, be necessary
or advisable. If the Fund shall not propose such amendment or amendments and/or
supplement or supplements within fifteen days after receipt by the Fund of a
written request from Distributor to do so, Distributor may, at its option,
terminate this Agreement. The Fund shall not file any amendment to any
registration statement or supplement to any prospectus without giving
Distributor reasonable notice thereof in advance; provided, however, that
nothing contained in this Agreement shall in any way limit the Fund's right to
file at any time such amendments to any registration statement and/or
supplements to any prospectus, of whatever character, as the Fund may deem
advisable, such right being in all respects absolute and unconditional.
1.12 The Fund authorizes Distributor and dealers to use any prospectus
in the form furnished from time to time in connection with the sale of the
Shares. The Fund agrees to indemnify, defend and hold Distributor, its several
partners and employees, and any person who controls Distributor within the
meaning of Section 15 of the Securities Act free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which Distributor, its partners and
employees, or any such controlling person, may incur under the Securities Act or
under common law or otherwise, arising out of or based upon any untrue
statement, or alleged untrue statement, of a material fact contained in any
registration statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated in
either any registration statement or any prospectus or necessary to make the
statements in either thereof not misleading. Provided, however, that the Fund's
agreement to indemnify Distributor, its partners or employees, and any such
controlling person shall not be deemed to cover any claims, demands, liabilities
or expenses arising out of any statements or representations as are contained in
any prospectus and in such financial and other statements as are furnished in
writing to the Fund by Distributor and used in the answers to the registration
statement or in the corresponding statements made in the prospectus, or arising
out of or based upon any omission or alleged omission to state a material fact
in connection with the giving of such information required to be stated in such
answers or necessary to make the answers not misleading; and further provided
that the Fund's agreement to indemnify Distributor and the Fund's
representations and warranties hereinbefore set forth in paragraph 1.11 shall
not be deemed to cover any liability to the Fund or its Shareholders to which
Distributor would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of
Distributor's reckless disregard of its obligations and duties under this
Agreement. The Fund's agreement to indemnify Distributor, its partners and
employees and any such controlling person, as aforesaid, is expressly
conditioned upon the Fund's being notified of any action brought against
Distributor, its partners or employees, or any such controlling person, such
notification to be given by letter or by telegram addressed to the Fund at its
principal office in Columbus, Ohio and sent to the Fund by the person against
whom such action is brought, within 10 days after the summons or other first
legal process shall have been served. The failure to so notify the Fund of any
such action shall not relieve the Fund from any liability which the Fund may
have to the person against whom such action is brought by reason of any such
untrue, or allegedly untrue, statement or omission, or alleged omission,
otherwise than on account of the Fund's indemnity agreement contained in this
paragraph 1.12. The Fund will be entitled to assume the defense of any suit
brought to enforce any such claim, demand or liability, but, in such case, such
defense shall be conducted by counsel of good standing chosen by the Fund and
approved by Distributor, which approval shall not be unreasonably withheld. In
the event the Fund elects to assume the defense of any such suit and retain
counsel of good standing approved by Distributor, the defendant or defendants in
such suit shall bear the fees and expenses of any additional counsel retained by
any of them; but in case the Fund does not elect to assume the defense of any
such suit, or in case
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<PAGE> 4
Distributor reasonably does not approve of counsel chosen by the Fund, the Fund
will reimburse Distributor, its partners and employees, or the controlling
person or persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by Distributor or them. The Fund's
indemnification agreement contained in this paragraph 1.12 and the Fund's
representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
Distributor, its partners and employees, or any controlling person, and shall
survive the delivery of any Shares.
This agreement of indemnity will inure exclusively to Distributor's
benefit, to the benefit of its several partners and employees, and their
respective estates, and to the benefit of the controlling persons and their
successors. The Fund agrees promptly to notify Distributor of the commencement
of any litigation or proceedings against the Fund or any of its officers or
Directors in connection with the issue and sale of any Shares.
1.13 Distributor agrees to indemnify, defend and hold the Fund, its
several officers and Trustees and any person who controls the Fund within the
meaning of Section 15 of the Securities Act free and harmless from and against
any and all claims, demands, liabilities and expenses (including the costs of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the Fund, its officers or Trustees
or any such controlling person, may incur under the Securities Act or under
common law or otherwise, but only to the extent that such liability or expense
incurred by the Fund, its officers or Trustees or such controlling person
resulting from such claims or demands, shall arise out of or be based upon any
untrue, or alleged untrue, statement of a material fact contained in information
furnished in writing by Distributor to the Fund and used in the answers to any
of the items of the registration statement or in the corresponding statements
made in the prospectus, or shall arise out of or be based upon any omission, or
alleged omission, to state a material fact in connection with such information
furnished in writing by Distributor to the Fund required to be stated in such
answers or necessary to make such information not misleading. Distributor's
agreement to indemnify the Fund, its officers and Trustees, and any such
controlling person, as aforesaid, is expressly conditioned upon Distributor
being notified of any action brought against the Fund, its officers or Trustees,
or any such controlling person, such notification to be given by letter or
telegram addressed to Distributor at its principal office in Columbus, Ohio and
sent to Distributor by the person against whom such action is brought, within 10
days after the summons or other first legal process shall have been served.
Distributor shall have the right of first control of the defense of such action,
with counsel of its own choosing, satisfactory to the Fund, if such action is
based solely upon such alleged misstatement or omission on Distributor's part,
and in any other event the Fund, its officers or Trustees or such controlling
person shall each have the right to participate in the defense or preparation of
the defense of any such action. The failure to so notify Distributor of any such
action shall not relieve Distributor from any liability which Distributor may
have to the Fund, its officers or Trustees, or to such controlling person by
reason of any such untrue or alleged untrue statement, or omission or alleged
omission, otherwise than on account of Distributor's indemnity agreement
contained in this paragraph 1.13.
1.14 No Shares shall be offered by either Distributor or the Fund under
any of the provisions of this Agreement and no orders for the purchase or sale
of Shares hereunder shall be accepted by the Fund if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act or if and so long as a current prospectus as required by Section
10(a) of said Act is not on file with the Commission; provided, however, that
nothing contained in this paragraph 1.14 shall in any way restrict or have an
application to or bearing upon the Fund's
4
<PAGE> 5
obligation to repurchase Shares from any Shareholder in accordance with the
provisions of the Fund's prospectus, Declaration of Trust or Bylaws.
1.15 The Fund agrees to advise Distributor as soon as reasonably
practical by a notice in writing delivered to Distributor or its counsel:
(a) of any request by the Commission for amendments to the registration
statement or prospectus then in effect or for additional information:
(b) in the event of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or
prospectus then in effect or the initiation by service of process on
the Fund of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any statement of a
material fact made in the registration statement or prospectus then in
effect or which requires the making of a change in such registration
statement or prospectus in order to make the statements therein not
misleading; and
(d) of all action of the Commission with respect to any amendments to
any registration statement or prospectus which may from time to time be
filed with the Commission.
For purposes of this section, informal requests by or acts of the Staff
of the Commission shall not be deemed actions of or requests by the Commission.
1.16 Distributor agrees on behalf of itself and its partners and
employees to treat confidentiality and as proprietary information of the Fund
all records and other information relative to the Fund and its prior, present or
potential Shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except, after prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be withheld where
Distributor may be exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Fund.
1.17 This Agreement shall be governed by the laws of the State of Ohio.
2. Fee.
Distributor may receive from the Portfolios identified on
Schedule B hereto with respect to such Portfolio's Investor A Shares a
distribution fee at the rate and upon the terms and conditions set forth in the
Investor A Distribution Plan, attached as Schedule C hereto and, as amended from
time to time. Distributor shall receive from the Portfolios identified on
Schedule D hereto with respect to such Portfolios' Investor B Shares a
distribution fee and a service fee at the rate and upon the terms and conditions
set forth in the Investor B Distribution and Shareholder Service Plan attached
as Schedule E hereto, and as amended from time to time. The distribution fees
described above shall be accrued daily and shall be paid on the first business
day of each month, or at such time(s) as the Distributor shall reasonably
request.
5
<PAGE> 6
3. Sale and Payment.
Pursuant to the Declaration of Trust dated October 11, 1996,
each Portfolio may be divided into separate classes of Shares in which case the
Shares of one or more classes may be subject to a sales load and may be subject
to the imposition of a distribution fee pursuant to the Distribution Plans
referred to above. To the extent that all Shares of a Portfolio are sold at an
offering price which includes a sales load or that Shares of one or more classes
of a Portfolio are sold at such an offering price, such Shares shall hereinafter
be referred to collectively as "Load Shares" and individually as a "Load Share."
A Portfolio that contains Load Shares shall hereinafter be referred to
collectively as "Load Portfolios" and individually as a "Load Portfolio." Under
this Agreement, the following provisions shall apply with respect to the sale
of, and payment for, Load Shares of the Load Portfolios identified on Schedule F
hereto.
3.1 The Distributor shall have the right, as principal, to purchase
Load Shares from the Load Portfolios at their net asset value and to sell such
Load Shares to the public against orders therefor at the applicable public
offering price, as defined in Section 4 hereof. The Distributor shall also have
the right, as principal, to sell Load Shares to dealers against orders therefor
at the public offering price less a concession determined by the Distributor,
which concession shall not exceed the amount of the sales charge or underwriting
discount, if any, referred to in Section 4 below.
3.2 Prior to the time of delivery of any Load Shares by a Load
Portfolio to, or on the order of, the Distributor, the Distributor shall pay or
cause to be paid to the Load Portfolio or to its order an amount in federal
funds equal to the applicable net asset value of such Load Shares. The
Distributor may retain so much of any sales charge or underwriting discount as
is not allowed by the Distributor as a concession to dealers.
4. Public Offering Price.
The public offering price of a Load Share shall be the net asset value
of such Load Share, plus any applicable sales charge, all as set forth in the
current prospectus of the Load Portfolio. The net asset value of Shares shall be
determined in accordance with the provisions of the Declaration of Trust and
Bylaws of the Fund and the then current prospectus of the Load Portfolio.
5. Issuance of Shares.
The Fund reserves the right to issue, transfer, or sell Load Shares at
net asset value (a) in connection with the merger or consolidation of the Fund
or the Load Portfolio(s) with any other investment company or the acquisition by
the Fund or the Load Portfolio(s) of all or substantially all of the assets or
of the outstanding Shares of any other investment company; (b) in connection
with a pro rata distribution directly to the holders of Shares in the nature of
a stock dividend or split; (c) upon the exercise of subscription rights granted
to the holders of Shares on a pro rata basis; (d) in connection with the
issuance of Load Shares pursuant to any exchange and reinvestment privileges
described in any then current prospectus of the Load Portfolio; and (e)
otherwise in accordance with any then current prospectus of the Load Portfolio.
6
<PAGE> 7
6. Redemption and Payment.
Under this Agreement, the following provisions shall apply with respect
to the redemption of and payment for Shares of any class redeemed at net asset
value less a contingent deferred sales charge (collectively "CDSC Shares") as
described in the prospectuses of any Portfolios identified on Schedule G hereto
(collectively, the "CDSC Portfolios" and individually, a "CDSC Portfolio"):
(a) Distributor shall have the right to redeem CDSC Shares from the
public on behalf of the CDSC Portfolios at net asset value less the
applicable contingent deferred sales charge.
(b) Distributor may retain so much of any contingent deferred sales
charge as is not allowed by Distributor to dealers as a concession.
7. Term, Duration, Termination and Matters Relating to the Trust
as an Ohio Business Trust.
This Agreement shall become effective with respect to each Portfolio
listed on Schedule A hereof as of the date first written above (or, if a
particular Portfolio is not in existence on that date, on the date an
amendment to Schedule A to this Agreement relating to that Portfolio is
executed) and, unless sooner terminated as provided herein, shall continue
through January 31, 1999. Thereafter, if not terminated, this Agreement shall
continue with respect to a particular Portfolio automatically for successive
one-year terms, provided that such continuance is specifically approved at least
annually by (a) by the vote of a majority of those members of the Fund's Board
of Trustees who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting for the purpose of voting on such
approval and (b) by the vote of the Fund's Board of Trustees or the vote of a
majority of the outstanding voting securities of such a Portfolio. This
Agreement is terminable without penalty, on not less than sixty-days prior
written notice by the Fund's Board of Trustees, by vote of a majority of the
outstanding voting securities of the Fund or by the Distributor. This Agreement
will also terminate automatically in the event of this assignment. (As used in
this Agreement, the terms "majority of the outstanding voting securities",
"interested persons" and "assignment" shall have the meanings as ascribed to
such terms in the 1940 Act.)
The Riverfront Funds is a business trust organized under Chapter 1746,
Ohio Revised Code, and under a Declaration of Trust, to which reference is
hereby made and a copy of which is on file at the office of the Secretary of
State of Ohio as required by law, and to any and all amendments thereto so filed
or hereafter filed. The obligations of "The Riverfront Funds" entered into in
the name or on behalf thereof by any of the Trustees, officers, employees or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, officers, employees, agents or shareholders of the
Fund personally, but bind only the assets of the Fund, as set forth in Section
1746.13(A), Ohio Revised Code, and all persons dealing with any of the
Portfolios of the Fund must look solely to the assets of the Fund belonging to
such Portfolio for the enforcement of any claims against the Fund.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the date and year first
written above.
THE RIVERFRONT FUNDS BISYS FUND SERVICES LIMITED
PARTNERSHIP
By By BISYS Fund Services, Inc.,
----------------------------- General Partner
Title
--------------------------
Date By
--------------------------- -----------------------------
Title
-------------------------
Date
---------------------------
8
<PAGE> 9
Dated: December 29, 1998
Schedule A
to the
Distribution Agreement
between The Riverfront Funds and
BISYS Fund Services Limited Partnership
Name of Portfolio Date
----------------- ----
The Riverfront U.S. Government Income Fund December 29, 1998
The Riverfront Income Equity Fund December 29, 1998
The Riverfront U.S. Government Securities December 29, 1998
Money Market Fund
The Riverfront Balanced Fund December 29, 1998
The Riverfront Small Company Select Fund December 29, 1998
The Riverfront Large Company Select Fund December 29, 1998
THE RIVERFRONT FUNDS
By
--------------------------
Name
------------------------
Title
-----------------------
BISYS FUND SERVICES LIMITED
PARTNERSHIP
By BISYS Fund Services, Inc.
General Partner
By
--------------------------
Name
------------------------
Title
-----------------------
A-1
<PAGE> 10
Dated: December 29, 1998
Schedule B
to the
Distribution Agreement
between The Riverfront Funds and
BISYS Fund Services Limited Partnership
Name of Investor A Plan Portfolio Date
--------------------------------- ----
The Riverfront U.S. Government December 29, 1998
Income Fund
The Riverfront Income Equity Fund December 29, 1998
The Riverfront U.S. Government December 29, 1998
Securities Money Market Fund
The Riverfront Balanced Fund December 29, 1998
The Riverfront Small Company Select Fund December 29, 1998
The Riverfront Large Company Select Fund December 29, 1998
THE RIVERFRONT FUNDS
By
--------------------------
Name
------------------------
Title
-----------------------
BISYS FUND SERVICES LIMITED
PARTNERSHIP
By BISYS Fund Services, Inc.
General Partner
By
--------------------------
Name
------------------------
Title
-----------------------
B-1
<PAGE> 11
Schedule E
to the
Distribution Agreement
between The Riverfront Funds and
BISYS Fund Services Limited Partnership
dated as of December 29, 1998
INVESTOR B DISTRIBUTION AND SHAREHOLDER SERVICE PLAN
This Plan (the "Investor B Plan") constitutes a distribution and
shareholder service plan of The Riverfront Funds, an Ohio business trust (the
"Fund"), adopted pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "1940 Act"). The Investor B Plan relates to the Investor B
Shares of those investment portfolios identified on Schedule D to the Fund's
Distribution Agreement and as amended from time to time (the "Investor B Plan
Portfolios").
Section 1. Each Investor B Plan Portfolio is authorized to pay to BISYS
Fund Services Limited Partnership, an Ohio limited partnership and the
distributor (the "Distributor") of the Fund's shares of beneficial interest,
without par value, of its Investor B class (the "Investor B Shares"):
(a) a distribution fee in an amount not to exceed on an annual
basis .75% of the average daily net asset value of the
Investor B Shares of such Investor B Plan Portfolio (the
"Distribution Fee") for: (i) (a) efforts of the Distributor
expended in respect of or in furtherance of sales of Investor
B Shares, and (b) to enable the Distributor to make payments
to banks and other institutions and broker/dealers (a
"Participating Organization") for distribution assistance
pursuant to an agreement with the Participating Organization;
and (ii) reimbursement of expenses (a) incurred by the
Distributor, and (b) incurred by a Participating Organization
pursuant to an agreement in connection with distribution
assistance including, but not limited to, the reimbursement of
expenses relating to printing and distributing prospectuses to
persons other than Shareholders of an Investor B Plan
Portfolio, printing and distributing advertising and sales
literature and reports to Shareholders for use in connection
with the sales of Investor B Shares, processing purchase,
exchange and redemption requests from customers and placing
orders with the Distributor or the Fund's transfer agent, and
personnel and communication equipment used in servicing
Shareholder accounts and prospective shareholder inquiries;
and
(b) a service fee in an amount not to exceed on an annual
basis .25% of the average daily net asset value of the
Investor B Shares of such Investor B Plan Portfolio (the
"Service Fee") for: (i) (a) efforts of the Distributor
expended in servicing shareholders holding Investor B Shares,
and (b) to enable the Distributor to make payments to a
Participating Organization for shareholder services pursuant
to an agreement with the Participating Organization; and (ii)
reimbursement of expenses (a) incurred by the Distributor, and
(b) incurred by a Participating Organization pursuant to an
agreement in connection with
E-1
<PAGE> 12
shareholder service including, but not limited to personal,
continuing services to investors in the Investor B Shares of
an Investor B Plan Portfolio, providing sub-accounting with
respect to Investor B Shares beneficially owned by customers
or the information necessary for sub-accounting, arranging for
bank wires, and providing office space, equipment, telephone
facilities and various personnel including clerical,
supervisory and computer, as is necessary or beneficial in
connection therewith.
For purposes of the Investor B Plan, a Participating Organization may include
any of the Distributor's affiliates or subsidiaries.
Section 2. The Distribution Fee and the Service Fee shall be paid by
the Investor B Plan Portfolios to the Distributor only to compensate or to
reimburse the Distributor for payments or expenses incurred pursuant to Section
1.
Section 3. The Investor B Plan shall not take effect with respect to
the Investor B Shares of an Investor B Plan Portfolio until it has been approved
by a vote of the initial Shareholder of the Investor B Shares of such Investor B
Plan Portfolio.
Section 4. The Investor B Plan shall not take effect until it has been
approved, together with any related agreements, by votes of the majority (or
whatever greater percentage may, from time to time, be required by Section 12(b)
of the 1940 Act or the rules and regulations thereunder) of both (a) the
Trustees of the Fund, and (b) the Independent Trustees of the Fund cast in
person at a meeting called for the purpose of voting on the Investor B Plan or
such agreement.
Section 5. The Investor B Plan shall continue in effect for a period of
more than one year after it takes effect only so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Investor B Plan in Section 4.
Section 6. Any person authorized to direct the disposition of monies
paid or payable by the Investor B Plan Portfolios pursuant to the Investor B
Plan or any related agreement shall provide to the Trustees of the Fund, and the
Trustees shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
Section 7. The Investor B Plan may be terminated at any time by vote of
a majority of the Independent Trustees, or, with respect to an Investor B Plan
Portfolio, by vote of a majority of the outstanding Investor B Shares of the
Investor B Plan Portfolio.
Section 8. All agreements with any person relating to implementation of
the Investor B Plan shall be in writing, and any agreements related to the
Investor B Plan shall provide:
(a) That such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the
Independent Trustees or, with respect to an Investor B Plan
Portfolio, by vote of a majority of the outstanding Investor B
Shares of the Investor B Plan Portfolio, on not more than 60
days' written notice to any other party to the agreement; and
(b) That such agreement shall terminate automatically in the
event of its assignment.
E-2
<PAGE> 13
Section 9. The Investor B Plan may not be amended to increase
materially the amount of the Distribution Fee and Service Fee permitted pursuant
to Section 1 hereof without approval in the manner provided in Section 3 hereof,
and all material amendments to the Investor B Plan shall be approved in the
manner provided for approval of the Investor B Plan in Section 4.
Section 10. As used in the Investor B Plan, (a) the term "Independent
Trustees" shall mean those Trustees of the Fund who are not interested persons
of the Fund, and have no direct or indirect financial interest in the operation
of the Investor B Plan or any agreements related to it, and (b) the terms
"assignment," "interested person" and "majority of the outstanding voting
securities" shall have the respective meanings specified in the 1940 Act and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission.
Adopted by the Trustees of the Fund on November 20, 1998.
E-3
<PAGE> 14
Schedule C
to the
Distribution Agreement
between The Riverfront Funds and
BISYS Fund Services Limited Partnership
dated as of December 29, 1998
INVESTOR A DISTRIBUTION AND SHAREHOLDER SERVICE PLAN
This Plan (the "Investor A Plan") constitutes a distribution and
shareholder service plan of The Riverfront Funds, an Ohio business trust (the
"Fund"), adopted pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "1940 Act"). The Investor A Plan relates to the Investor A
Shares of those investment portfolios identified on Schedule B to the Fund's
Distribution Agreement and as amended from time to time (the "Investor A Plan
Portfolios").
Section 1. Each Investor A Plan Portfolio shall pay to BISYS Fund
Services Limited Partnership, an Ohio limited partnership and the distributor
(the "Distributor") of the Fund's shares of beneficial interest, without par
value, of its Investor A class (the "Investor A Shares"), a fee in an amount not
to exceed on an annual basis .25% of the average daily net asset value of the
Investor A Shares of such Investor A Plan Portfolio (the "Investor A Plan Fee")
for: (a) (i) efforts of the Distributor expended in respect of or in furtherance
of sales of Investor A shares, and (ii) to enable the Distributor to make
payments to banks and other institutions and broker/dealers (a "Participating
Organization") for distribution assistance and/or shareholder service pursuant
to an agreement with the Participating Organization; and (b) reimbursement of
expenses (i) incurred by the Distributor, and (ii) incurred by a Participating
Organization pursuant to an agreement in connection with distribution assistance
and/or shareholder service including, but not limited to, the reimbursement of
expenses relating to printing and distributing prospectuses to persons other
than Shareholders of an Investor A Plan Portfolio, printing and distributing
advertising and sales literature and reports to Shareholders used in connection
with the sale of Investor A Shares, and personnel and communication equipment
used in servicing Shareholder accounts and prospective shareholder inquiries.
For purposes of the Investor A Plan, a Participating Organization may include
any of the Distributor's affiliates or subsidiaries.
Section 2. The Investor A Plan Fee shall be paid by the Investor A Plan
Portfolio to the Distributor only to compensate or to reimburse the Distributor
for payments or expenses incurred pursuant to Section 1.
Section 3. The Investor A Plan shall not take effect with respect to
the Investor A Shares of any subsequently created Investor A Plan Portfolio
until it has been approved by a vote of at least a majority of the outstanding
Investor A Shares of such Investor A Plan Portfolio.
Section 4. The Investor A Plan shall not take effect until it has been
approved, together with any related agreements, by votes of the majority (or
whatever greater percentage may, from time to time, be required by Section 12(b)
of the 1940 Act or the rules and regulations thereunder) of both (a) the
Trustees of the Fund, and (b) the Independent Trustees of the Fund cast in
person at a meeting called for the purpose of voting on the Investor A Plan or
such agreement.
C-1
<PAGE> 15
Section 5. The Investor A Plan shall continue in effect for a period of
more than one year after it takes effect only so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Investor A Plan in Section 4.
Section 6. Any person authorized to direct the disposition of monies
paid or payable by the Investor A Plan Funds pursuant to the Investor A Plan or
any related agreement shall provide to the Trustees of the Fund, and the
Trustees shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
Section 7. The Investor A Plan may be terminated at any time by vote of
a majority of the Independent Trustees, or, with respect to an Investor A Plan
Portfolio, by vote of a majority of the outstanding Investor A Shares of the
Investor A Plan Portfolio.
Section 8. All agreements with any person relating to implementation of
the Investor A Plan shall be in writing, and any agreement related to the
Investor A Plan shall provide:
(a) That such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the
Independent Trustees or, with respect to an Investor A Plan
Portfolio, by vote of a majority of the outstanding Investor A
Shares of the Investor A Plan Portfolio, on not more than 60
days' written notice to any other party to the agreement; and
(b) That such agreement shall terminate automatically in the
event of its assignment.
Section 9. The Investor A Plan may not be amended to increase
materially the amount of distribution expenses permitted pursuant to Section 1
hereof without approval in the manner provided in Section 3 hereof, and all
material amendments to the Investor A Plan shall be approved in the manner
provided for approval of the Investor A Plan in Section 4.
Section 10. As used in the Investor A Plan, (a) the term "Independent
Trustees" shall mean those Trustees of the Fund who are not interested persons
of the Fund, and have no direct or indirect financial interest in the operation
of the Investor A Plan or any agreements related to it, and (b) the terms
"assignment", "interested person" and "majority of the outstanding voting
securities" shall have the respective meanings specified in the 1940 Act and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission.
Adopted by the Trustees of the Fund on November 20, 1998
C-2
<PAGE> 16
Dated: December 29, 1998
Schedule D
to the
Distribution Agreement
between The Riverfront Funds and
BISYS Fund Services Limited Partnership
dated as of December 29, 1998
Name of Investor B Plan Portfolio Date
--------------------------------- ----
The Riverfront U.S. Government December 29, 1998
Income Fund
The Riverfront Income Equity Fund December 29, 1998
The Riverfront Balanced Fund December 29, 1998
The Riverfront Small Company Select Fund December 29, 1998
The Riverfront Large Company Select Fund December 29, 1998
THE RIVERFRONT FUNDS
By
--------------------------
Name
------------------------
Title
-----------------------
BISYS FUND SERVICES LIMITED
PARTNERSHIP
By BISYS Fund Services, Inc.
General Partner
By
--------------------------
Name
------------------------
Title
-----------------------
D-1
<PAGE> 17
Dated: December 29, 1998
Schedule F
to the
Distribution Agreement
between The Riverfront Funds and
BISYS Fund Services Limited Partnership
dated as of December 29, 1998
Name of Load Portfolio Date
---------------------- ----
The Riverfront U.S. Government December 29, 1998
Income Fund-Investor A Shares
The Riverfront Income Equity Fund- December 29, 1998
Investor A Shares
The Riverfront Balanced Fund- December 29, 1998
Investor A Shares
The Riverfront Small Company Select Fund- December 29, 1998
Investor A Shares
The Riverfront Large Company Select Fund- December 29, 1998
Investor A Shares
THE RIVERFRONT FUNDS
By
--------------------------
Name
------------------------
Title
-----------------------
BISYS FUND SERVICES LIMITED
PARTNERSHIP
By BISYS Fund Services, Inc.
General Partner
By
--------------------------
Name
------------------------
Title
-----------------------
F-1
<PAGE> 18
Dated: December 29, 1998
Schedule G
to the
Distribution Agreement
between The Riverfront Funds and
BISYS Fund Services Limited Partnership
dated as of December 29, 1998
Name of CDSC Portfolio Date
---------------------- ----
The Riverfront U.S. Government December 29, 1998
Income Fund-Investor B Shares
The Riverfront Income Equity Fund- December 29, 1998
Investor B Shares
The Riverfront Balanced Fund- December 29, 1998
Investor B Shares
The Riverfront Small Company Select Fund- December 29, 1998
Investor B Shares
The Riverfront Large Company Select Fund- December 29, 1998
Investor B Shares
THE RIVERFRONT FUNDS
By
--------------------------
Name
------------------------
Title
-----------------------
BISYS FUND SERVICES LIMITED
PARTNERSHIP
By BISYS Fund Services, Inc.
General Partner
By
--------------------------
Name
------------------------
Title
-----------------------
G-1
<PAGE> 1
EXHIBIT (6)(b)
<PAGE> 2
DEALER AGREEMENT
DEALER AGREEMENT made as of the 29th day of December, 1998, by and
between BISYS Fund Services Limited Partnership d/b/a/ BISYS Fund Services, an
Ohio limited partnership (the "Distributor"), and Provident Securities &
Investment Company, an Ohio corporation, (the "Broker-Dealer").
WHEREAS, the Distributor serves as the Distributor of The Riverfront
Funds (the "Trust"), an Ohio business trust which has filed a Registration
Statement under the Investment Company Act of 1940, as amended (the "1940 Act")
and the Securities Act of 1933 (the "Securities Act", and, together with the
1940 Act, the "Acts");
WHEREAS, the Trust is comprised of several separate investment
portfolios (individually, a "Fund"; collectively, the "Funds"), each of which is
segregated by class;
WHEREAS, the holders of Investor A shares ("Investor A Shares") of each
Fund that is identified in Exhibit A attached hereto, which Exhibit may be
amended by the parties hereto from time to time, have adopted an Investor A
Distribution and Shareholder Services Plan (the "Investor A Plan") pursuant to
Rule 12b-1 under the 1940 Act, attached hereto as Exhibit B;
WHEREAS, the holders of Investor B shares ("Investor B Shares" and,
together with Investor A Shares, "Shares") of each Fund that is identified in
Exhibit C attached hereto, which Exhibit may be amended by the parties hereto
from time to time, have adopted an Investor B Distribution and Shareholder
Services Plan (the "Investor B Plan" and, together with the Investor A Plan, the
"Plans") pursuant to Rule 12b-1 under the 1940 Act, attached hereto as Exhibit
D;
WHEREAS, the Plans authorize the Distributor to enter into agreements
with third parties to implement the Plans;
WHEREAS, it is intended that the Broker-Dealer act as agent for its
customers in connection with purchase and sale transactions involving the Funds;
and
WHEREAS, it is intended that the Broker-Dealer provide distribution and
shareholder support services to customers who may, from time to time,
beneficially own a Fund's shares pursuant to the Plans.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. REFERENCE TO PROSPECTUS; DETERMINATION OF NET ASSET VALUE
1.1 Reference is hereby made to the prospectuses (individually a
"Prospectus," collectively the "Prospectuses") for Investor A and
Investor B Shares of each Fund as from time to time are effective under
the Securities Act. Terms defined therein and not otherwise defined
herein are used herein with the meaning so defined.
1.2 For purposes of determining the compensation and fees payable under
Sections 3 and 4, the average daily net asset value of a Fund's Shares
will be computed in the manner specified in the Trust's registration
statement filed under the Acts (as the same is in
2
<PAGE> 3
effect from time to time) in connection with the computation of the net
asset value of such Fund's Shares for purposes of purchases and
redemptions.
2. GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1 The Distributor represents, warrants and covenants that it is and will
be at all times relevant to this Agreement a member in good standing of
the National Association of Securities Dealers, Inc. (the "NASD"), and
the Broker-Dealer represents, warrants and covenants that it is and
will be at all times relevant to this Agreement a broker-dealer
properly registered and qualified under the all applicable federal,
state and local laws to engage in the business and transactions
described in this Agreement. Each party agrees to comply with the
requirements of all applicable laws, including federal and state
securities laws, the rules and regulations of the SEC, the Rules of
Fair Practice of the NASD, and the rules and regulations issued by
applicable federal bank regulatory agencies. The Broker-Dealer agrees
that it will not make Shares available for purchase to persons in any
jurisdiction in which such Shares may not be lawfully sold. The
Broker-Dealer further agrees that it will maintain all records required
by applicable law or otherwise reasonably requested by the Distributor
in relation to Fund transactions that it has executed.
2.2 By written acceptance of this Agreement, the Broker-Dealer further
represents, warrants and agrees that it possesses the legal authority
to perform the services contemplated by this Agreement without
violation of applicable Federal banking laws (including the
GlassSteagall Act) and regulations.
3. PURCHASE AUTHORIZATION; ORDER EXECUTION; OFFERING PRICE; BROKER-DEALER
COMMISSIONS
3.1 In all sales of Shares to customers ("Customers"), the Broker-Dealer
shall act as agent for its Customers or as principal for its own bona
fide investment. In no transaction shall the Broker-Dealer act as the
Distributor's agent or as agent for any Fund or the Funds' transfer
agent. As agent for its Customers, the Broker-Dealer is hereby
authorized to: (i) place orders directly with the Trust for the
purchase of Shares and (ii) tender Shares to the Trust for redemption,
in each case subject to the terms and conditions set forth in the
Prospectus and the operating procedures and policies established by the
Distributor. The minimum and maximum dollar purchase of Shares shall be
the applicable minimum and maximum amounts set forth in the Prospectus,
and no order for less than such minimum amount or more than such
maximum amount shall be accepted by the Broker-Dealer. The procedures
relating to the handling of orders will be subject to instructions
which the Distributor shall forward to the Broker-Dealer from time to
time.
3.2 All orders are subject to acceptance by the Distributor in its sole
discretion. No person is authorized to make any representations
concerning the Distributor, the Trust, or a Fund's Shares except such
representations contained in the relevant then-current Prospectuses and
Statement of Additional Information and in such printed information as
the Trust or the Distributor may subsequently prepare. The
Broker-Dealer is specifically authorized to distribute the Prospectuses
and Statement of Additional Information and sales material received by
it from the Distributor. No person is authorized to distribute any
other sales material relating to a Fund without prior approval of the
Distributor. The
3
<PAGE> 4
Broker-Dealer agrees to deliver, upon the request of the Distributor,
copies of any relevant amended Prospectus and Statement of Additional
Information to Shareholders of a Fund to whom Shares have been sold.
3.3 The Broker-Dealer shall not withhold placing Customers' orders for any
Shares so as to profit itself as a result of such withholding. The
Distributor shall not purchase any Shares from the Funds except for the
purpose of covering purchase orders already received, and the
Broker-Dealer shall not purchase any Shares from the Distributor except
for the purpose of covering purchase orders already received.
3.4 If any Shares purchased by the Broker-Dealer are repurchased by the
Funds or by the Distributor for the account of the Funds, or are
tendered for redemption within three (3) business days after
confirmation by the Distributor of the original purchase order for such
Shares, the Broker-Dealer agrees forthwith to refund to the
Distributor, or its financing agent, the full commission paid to the
Broker-Dealer, if any, on the original sale. Notice will be given to
the Broker-Dealer of any such repurchase or redemption within ten (10)
days of the date upon which the repurchase or redemption is requested.
3.5 Neither party of this Agreement shall, as agent, purchase any Shares
from a Customer at a price lower than the net asset value next computed
by or for the issuer thereof.
3.6 The Distributor will furnish the Broker-Dealer, upon request, with
offering prices for Investor A Shares and Investor B Shares in
accordance with the then-current Prospectuses of the Funds, and the
Broker-Dealer agrees to quote such prices subject to the confirmation
by the Distributor on any Shares offered to the Broker-Dealer for sale.
In the case of Investor A Shares, the public offering price equals the
net asset value per Share plus a sales charge, if applicable. For those
Investor A Shares that are sold subject to such a sales charge, the
Broker-Dealer shall receive a discount from the public offering price
as outlined in the current Prospectuses. The Distributor reserves the
right to waive such sales charges. In the case of Investor B Shares,
the public offering price equals the net asset value per Share;
provided, however that purchases of Investor B Shares may be subject to
a contingent deferred sales charge ("CDSC") as outlined in the current
Prospectuses. The Broker-Dealer shall be entitled to receive from the
Distributor all CDSC payments that are payable in accordance with the
terms and conditions of the then-current Prospectus for Investor B
Shares of each Fund. Such CDSC shall be calculated in the manner
disclosed in each Prospectus for the Investor B Shares so redeemed. The
Distributor reserves the right to waive CDSCs. The Broker-Dealer
acknowledges the fact that each price is always subject to
confirmation, and will be the price next computed after receipt of an
order that is in good form. The Broker-Dealer acknowledges that it is
the Broker-Dealer's responsibility to transmit purchase orders promptly
to the Trust. The Broker-Dealer further acknowledges that any failure
to properly transmit such orders to the Trust that causes a Customer to
be disadvantaged, based upon the pricing requirements of Rule 22c-1
under the 1940 Act, shall be the responsibility of the Broker-Dealer
and shall not be the responsibility of the Distributor. The Distributor
reserves the right to cancel this Agreement at any time without notice
if any Shares shall be offered for sale by the Broker-Dealer at less
than the then-current offering price determined by or for any Fund.
3.7 The Broker-Dealer and its employees will, upon request, be available
during normal business hours to consult with the Distributor or its
designees concerning the performance
4
<PAGE> 5
of the Broker-Dealer's responsibilities under this Agreement. Any
person authorized to direct the disposition of monies paid or payable
by the Distributor pursuant to this Agreement will provide to the
Distributor a quarterly written report of the amounts so expended and
the purposes for which such expenditures were made. In addition, the
Broker-Dealer will furnish to the Distributor, the Trust or their
designees such information as the Distributor, the Trust or their
designees may reasonably request (including, without limitation,
periodic certifications confirming the provision to Customers of the
services described herein), and will otherwise cooperate with the
Distributor, the Trust and their designees (including, without
limitation, any auditors designated by the Trust), in the preparation
of reports to the Trust's Board of Trustees concerning this Agreement
and the monies paid or payable by the Distributor pursuant hereto, as
well as any other reports or filings that may be required by law.
4. SHAREHOLDER SUPPORT SERVICES; DISTRIBUTION ASSISTANCE; FEE
4.1 The Broker-Dealer shall provide such shareholder support services that
the Distributor may reasonably request to the extent the Broker-Dealer
is permitted to do so under applicable statutes, rules and regulations.
Such shareholder support services shall include, but not be limited to,
the following: (i) providing information to Customers about their
investment; (ii) processing dividend and distribution payments from a
Fund on behalf of Customers; (iii) providing information periodically
to Customers showing their positions in a Fund's Shares; (iv) arranging
for bank wire transfers of funds to or from a Customer's account; (v)
responding to inquiries from Customers relating to the services
performed by the Broker-Dealer under this Agreement; (vi) providing
subaccounting with respect to a Fund's Shares beneficially owned by
Customers or the information to the Trust necessary for subaccounting;
(vii) if required by law, forwarding shareholder communications from
the Trust (such as proxies, Shareholder reports, annual and semi-annual
financial statements, and dividend, distribution, and tax notices) to
Customers; and (viii) forwarding to Customers proxy statements and
proxies containing any proposals regarding this Agreement or a Fund's
Plan.
4.2 With respect to Investor B Shares, the Broker-Dealer shall also provide
such distribution services that the Distributor may reasonably request
to the extent the Broker-Dealer is permitted to do so under applicable
statutes, rules and regulations. Such distribution services shall
include, but not be limited to, the following: (i) promoting the
purchase of Shares by Customers; (ii) processing purchase, exchange and
redemption requests from Customers and placing orders with the Trust,
(iii) responding to inquiries from Customers concerning their
investment in Fund Shares; (iv) engaging in advertising with respect to
a Fund's Shares; (v) distributing Prospectuses for the Funds; and (vi)
distributing Fund reports and sales literature.
4.3 In consideration of the services and facilities provided by the
Broker-Dealer hereunder, the Distributor will pay to the Broker-Dealer
a fee calculated at the applicable annual rate set forth in Exhibit E
attached hereto with respect to the average daily net asset value of
each Fund's Investor A Shares and Investor B Shares which are owned of
record by the Broker-Dealer as nominee for Customers or which are owned
by Customers whose records, as maintained by such Fund or its agent,
designate the Broker-Dealer as the Customer's dealer of record, which
fee will be computed daily and paid monthly. The fee will not be paid
to the Broker-Dealer with respect to (i) Shares of a Fund sold by it
and redeemed or repurchased by the Trust or the Distributor within
seven business days
5
<PAGE> 6
of receipt of confirmation of such sale, or (ii) a Customer if the
amount of such fee on an annual basis with respect to such Customer
shall be less than $1.00.
5. EXCULPATION; INDEMNIFICATION
5.1 The Distributor shall not be liable to the Broker-Dealer and the
Broker-Dealer shall not be liable to the Distributor except for acts
or failures to act which constitute lack of good faith or gross
negligence and for obligations expressly assumed by either party
hereunder. Nothing contained in this Agreement is intended to operate
as a waiver by the Distributor or by the Broker-Dealer of compliance
with any provisions of the Securities Act, the Securities Exchange Act
of 1934, the 1940 Act, the rules and regulations promulgated by the
SEC, the NASD or any state securities administrator, or the applicable
rules and regulations promulgated by federal banking agencies.
5.2 The Broker-Dealer will indemnify the Distributor and hold it harmless
from any claims or assertions relating to the lawfulness of the
Broker-Dealer's participation in this Agreement and the transactions
contemplated hereby or relating to any activities of any persons or
entities affiliated with the Broker-Dealer which are performed in
connection with the discharge of the Broker-Dealer's responsibilities
under this Agreement. If such claims are asserted, the Distributor
shall have the right to manage its own defense, including the selection
and engagement of legal counsel and all costs of such defense shall be
born by the Broker-Dealer. In addition, the Broker-Dealer agrees to
indemnify and hold the Distributor harmless from any claims or
assertions relating to the lawfulness of the Broker-Dealer's
participation in this Agreement under the Glass-Steagall Act. At this
time, the Broker-Dealer and the Distributor are not otherwise aware of
any violations under the Glass-Steagall Act pursuant to this Agreement.
5.3 The Distributor will indemnify the Broker-Dealer and will hold the
Broker-Dealer harmless from any claims or assertions relating to the
lawfulness of the Distributor's participation in this Agreement and the
transactions contemplated hereby or relating to any activities or any
persons or entities affiliated with the Distributor which are performed
in connection with the discharge of the Distributor's responsibilities
under this Agreement. If any such claims are asserted, the
Broker-Dealer shall have the right to manage its own defense, including
the selection and engagement of legal counsel, and all costs of such
defense shall be born by the Distributor.
6. GENERAL
6.1 This Agreement will become effective with respect to each Fund on the
date indicated on the first page of this Agreement. Unless sooner
terminated with respect to any Fund, this Agreement may also be
terminated at any time without penalty by the vote of a majority of the
members of the Board of Trustees of the Trust who are not "interested
persons" (as such term is defined in the 1940 Act) and who have no
direct or indirect interest in the Plans relating to such Fund or any
agreement relating to such Plans, including this Agreement, or (with
respect to a Fund) by a vote of the majority of the outstanding voting
securities of the Fund (as such term is defined in the Statement of
Additional Information), cast in person at a meeting called for the
purpose of voting on such approval, on sixty (60) days' written notice.
6
<PAGE> 7
6.2 This Agreement will automatically terminate in the event of its
assignment. This Agreement may also be terminated by the Distributor or
by the Broker-Dealer, without penalty, upon sixty (60) days' prior
written notice to the other party.
6.3 All communications to the Distributor and the Broker-Dealer shall be
sent to the addresses set forth in this Agreement or to such other
addresses that may be designated in writing.
6.4 This Agreement supersedes any other Agreement between the Distributor
and the BrokerDealer with respect to the offer and sale of Investor A
Shares and Investor B Shares of the Trust and relating to any other
matters discussed herein. All covenants, agreements, representations
and warranties made herein shall be deemed to have been material and
relied on by each party, notwithstanding any investigation by either
party, and shall survive the execution and delivery of this Agreement.
The invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of any other term or
provision hereof. The headings in this Agreement are for convenience of
reference only and shall not alter or otherwise affect the meaning
hereof. This Agreement may be executed in any number of counterparts
which together shall constitute one instrument and shall be governed by
and construed in accordance with the laws (other than the conflict of
laws rules) of the State of Ohio and shall bind and inure to the
benefit of the parties hereto and their respective successors and
assigns.
6.5 This Agreement is a Related Agreement under the Plans.
6.6 All communications to the Distributor and the Broker-Dealer shall be
sent to the following addresses:
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
Provident Securities & Investment Company
One East Fourth Street
Cincinnati, Ohio 45262
Attn: President
BISYS FUND SERVICES LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc., General Partner
----------------------------------------------
By: Stephen G. Mintos
Title: Executive Vice President
PROVIDENT SECURITIES & INVESTMENT COMPANY
----------------------------------------------
By:
Title
7
<PAGE> 8
Dated: December 29, 1998
-----------------
EXHIBIT A
---------
THE RIVERFRONT FUNDS
Investor A Shares
1. The Riverfront U.S. Government Securities Money Market Fund
2. The Riverfront U.S. Government Income Fund
3. The Riverfront Balanced Fund
4. The Riverfront Income Equity Fund
5. The Riverfront Large Company Select Fund
6. The Riverfront Small Company Select Fund
BISYS FUND SERVICES LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc., General Partner
----------------------------------------------
By: Stephen G. Mintos
Title: Executive Vice President
PROVIDENT SECURITIES & INVESTMENT COMPANY
----------------------------------------------
By:
Title
8
<PAGE> 9
EXHIBIT B
Investor A Distribution
-----------------------
and Shareholder Services Plan
-----------------------------
9
<PAGE> 10
Dated: December 29, 1998
-----------------
EXHIBIT C
---------
THE RIVERFRONT FUNDS
Investor B Shares
1. The Riverfront U.S. Government Income Fund
2. The Riverfront Balanced Fund
3. The Riverfront Income Equity Fund
4. The Riverfront Large Company Select Fund
5. The Riverfront Small Company Select Fund
BISYS FUND SERVICES LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc., General Partner
----------------------------------------------
By: Stephen G. Mintos
Title: Executive Vice President
PROVIDENT SECURITIES & INVESTMENT COMPANY
----------------------------------------------
By:
Title
10
<PAGE> 11
EXHIBIT D
---------
Investor B Distribution
-----------------------
and Shareholder Services Plan
-----------------------------
11
<PAGE> 12
Dated: December 29, 1998
-----------------
EXHIBIT E
---------
Compensation for Distribution
-----------------------------
and Shareholder Support Services
--------------------------------
Investor A Shares Annual rate of up to twenty five
one-hundredths of one percent (.25%) of the
average daily net assets of each Fund's
Shares held of record by the Broker-Dealer
on behalf of Customers.
Investor B Shares Annual rate of up to one percent (1.00%) of
the average daily net assets of each Fund's
Shares held of record by the Broker-Dealer
on behalf of Customers. Such compensation
shall not exceed seventy five one-hundredths
of one percent (.75%) of such average daily
net assets in the case of distribution fees,
and shall not exceed twenty five
one-hundredths of one percent (.25%) of such
average daily net assets, in the case of
shareholder support service fees.
12
<PAGE> 1
Exhibit (8)
CUSTODIAN, FUND ACCOUNTING AND RECORDKEEPING AGREEMENT
BY AND BETWEEN
THE RIVERFRONT FUNDS
AND
THE PROVIDENT BANK
This Custodian, Fund Accounting and Recordkeeping Agreement is entered
into as of December 29, 1998, by and between The Riverfront Funds, an Ohio
business trust (the "Fund"), having its principal place of business at 3435
Stelzer Road, Columbus, Ohio 43219, and The Provident Bank, an Ohio banking
corporation ("Provident"), having its principal place of business at One East
Fourth Street, Cincinnati, Ohio 45202.
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets;
WHEREAS, the Fund offers from time to time shares in one or more
series, and desires to retain Provident to provide the services described herein
to those series, as are now or hereafter may be identified in Schedule A hereto,
as may be amended from time to time and made subject to this Agreement in
accordance with paragraph 13. Each such series is herein referred to singly as a
"Portfolio" and collectively, as the "Portfolios"; and
NOW THEREFORE, in consideration of the mutual agreements herein
contained, the Fund and Provident agree as follows:
1. The Fund appoints Provident as the Custodian of the assets of the
Portfolios, subject to the provisions hereof. Provident hereby accepts such
appointment as Custodian. As such Custodian, Provident shall retain all
securities, commodities, cash and other assets now owned or hereafter acquired
by each Portfolio, and the Portfolio shall deliver and pay or cause to be
delivered and paid to Provident, as Custodian, all securities, cash and other
assets now owned or hereafter acquired by the Portfolio during the period of
this Agreement.
2. All securities delivered to Provident (other than in bearer form)
shall be properly endorsed and in proper form for transfer into or in the name
of the appropriate Portfolio, or a nominee of Provident for the exclusive use of
the Portfolio or of such other nominee as may be mutually agreed upon by
Provident and the Fund.
<PAGE> 2
3. The Fund shall deliver to Provident certified or authenticated
copies of its Declaration of Trust and By-Laws, all amendments thereto, a
certified copy of the resolution of the Fund's Board of Trustees appointing
Provident to act in the capacities covered by this Agreement and authorizing the
signing of this Agreement and copies of such resolutions of its Board of
Trustees, contracts and other documents as may be reasonably required by
Provident in the performance of its duties hereunder.
4. As Custodian, Provident shall promptly:
A. SAFEKEEPING. Keep safely in a separate account the
securities and other assets of each Portfolio of the Fund, including,
without limitation, all securities in bearer form, other than
securities which are maintained pursuant to paragraph 4B in a
Securities System (as defined in paragraph 4B) and, on behalf of the
Portfolio, receive delivery of certificates, including without
limitation all securities in bearer form, for safekeeping and keep such
certificates physically segregated at all times from those of any other
person. Provident shall maintain records of all receipts, deliveries
and locations of such securities, together with a current inventory
thereof, and shall conduct periodic physical inspections of
certificates representing bonds and other securities held by it under
this Agreement at least annually in such manner as Provident shall
determine from time to time to be advisable in order to verify the
accuracy of such inventory. Provident shall provide the Fund with
copies of any reports of its internal count or other verification of
the securities of the Portfolio held in its custody, including reports
on its own system of internal accounting control. In addition, if and
when independent certified public accountants retained by Provident
shall count or otherwise verify the securities of the Portfolio held in
Provident's custody, Provident shall provide the Fund with a copy of
the report of such accountants. With respect to securities held by any
agent or Subcustodian appointed pursuant to paragraph 7C hereof,
Provident may rely upon certificates from such agent or Subcustodian as
to the holdings of such agent or Subcustodian, it being understood that
such reliance in no way releases Provident of its responsibilities or
liabilities under this Agreement. Provident shall promptly report to
the Fund the results of such inspections, indicating any shortages or
discrepancies uncovered thereby, and take appropriate action to remedy
any such shortages or discrepancies.
B. DEPOSIT OF PORTFOLIO ASSETS IN SECURITIES SYSTEMS.
Notwithstanding any other provision of this Agreement,
Provident may deposit and/or maintain securities owned by each
Portfolio in Depository Trust Company, a clearing agency
registered with the Securities and Exchange Commission (the
"Commission") under Section 17A of the Securities Exchange Act
- 2 -
<PAGE> 3
of 1934 (the "Exchange Act"), which acts as a securities depository, in
any other clearing agency registered under Section 17A of the Exchange
Act and which has been authorized by the Fund's Board of Trustees, in
the book-entry system authorized by the U.S. Department of the Treasury
and certain federal agencies or in any other book-entry system which
the Commission has authorized for use by investment companies as a
securities depository by order or interpretive of no-action letter and
which has been authorized by the Fund's Board of Trustees,
collectively referred to herein as "Securities System(s)," in
accordance with applicable Federal Reserve Board and Commission rules
and regulations, if any, and subject to the following provisions:
1) Provident may keep securities of a Portfolio in a
Securities System provided that such securities are deposited in an
account ("Account") of Provident in the Securities System which shall
not include any assets of Provident other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of Provident with respect to securities of
the Portfolios which are maintained in a Securities System
shall identify by book-entry those securities belonging to
such Portfolio;
3) Provident shall pay for securities purchased for the
account of each Portfolio upon (i) receipt of advice from the
Securities System that such securities have been transferred to the
account, and (ii) the making of an entry on the records of Provident to
reflect such payment and transfer for the account of the Portfolio.
Provident shall transfer securities sold for the account of each
Portfolio upon (i) receipt of advice from the Securities System that
payment for such securities has been transferred to the account, and
(ii) the making of an entry on the records of Provident to reflect such
transfer and payment for the account of that Portfolio. Copies of all
advices from the Securities System of transfers of securities for the
account of each Portfolio shall identify the Portfolio, be maintained
for such Portfolio by Provident and be provided to the Fund at its
request. Provident shall furnish the Fund confirmation of each transfer
to or from the account of the Portfolios in the form of a written
advice or notice and shall furnish to the Fund copies of daily
transaction sheets reflecting each day's transactions in the Securities
System for the account of the Portfolios on the next business day;
4) Provident shall promptly provide the Fund with any report
obtained by Provident on the Securities System's accounting system,
internal accounting control and procedures for safeguarding securities
deposited in the Securities
- 3 -
<PAGE> 4
System. Provident shall promptly provide the Fund any report on
Provident's accounting system, internal accounting control and
procedures for safeguarding securities deposited with Provident which
is reasonably requested by the Fund;
5) Anything to the contrary in this Agreement notwithstanding,
Provident shall be liable to the Fund for any claim, loss, liability,
damage or expense to the Fund or its Portfolios, including attorneys'
fees, resulting from use of a Securities System by reason of any
negligence, misfeasance or misconduct of Provident, its agents or any
of its or their employees or from failure of Provident or any such
agent to enforce effectively such rights as it may have against a
Securities System. At the election of the Fund, it shall be entitled to
be subrogated to the rights of Provident or its agents with respect to
any claim against the Securities System or any other person which
Provident or its agents may have as a consequence of any such claim,
loss, liability, damage or expense if and to the extent that the Fund
has not been made whole for any such loss or damage.
C. PROVIDENT'S RECORDS. The records of Provident (and its
agents and Subcustodians) with respect to its services for the Fund
shall at all reasonable times and upon reasonable notice (unless
otherwise required by law) during the regular business hours of
Provident (or its agents or Subcustodians) be open for inspection by
duly authorized officers, employees or agents of the Fund and
employees and agents of the Commission.
D. DELIVERY OF SECURITIES. Release and deliver securities
owned by a Portfolio held by Provident or in a Securities System
account of Provident only upon receipt of proper instructions (as
defined in paragraph 6A hereof; hereafter "Proper Instructions"), which
may be continuing instructions when deemed appropriate by the parties,
and only in the cases specified in paragraphs 4E, 4F, 4G, 4H, 4I, 4J,
4K, 4L, 4M and 4N hereof.
E. REGISTERED NAME, NOMINEE. Register securities of each
Portfolio held by Provident in the name of the Portfolio, of a nominee
of Provident for the exclusive use of such Portfolio, or of such other
nominee as may be mutually agreed upon, or of any mutually acceptable
nominee of any agent or Subcustodian appointed pursuant to paragraph
7C hereof.
F. PURCHASES. Upon receipt of Proper Instructions, and
insofar as cash is available for the purpose, pay for and receive all
securities purchased for the account of a Portfolio, payment being
made only upon receipt of the securities by Provident (or any bank,
banking firm, responsible commercial agent or trust company doing
business
- 4 -
<PAGE> 5
in the United States and appointed pursuant to paragraph 7C hereof as
Provident's agent or Subcustodian for this purpose) registered as
provided in paragraph 4E heretofore in form for transfer satisfactory
to Provident, or, in the case of repurchase agreements entered into
between a Portfolio and a bank or a dealer, delivery of the securities
either in certificate form or through an entry crediting Provident's
account at the Federal Reserve Bank with such securities, or, upon
receipt by Provident of a facsimile copy of a letter of understanding
with respect to a time deposit account of a Portfolio signed by any
bank, whether domestic or foreign, and pursuant to Proper Instructions
from the Fund, for transfer to the time deposit account of the
Portfolio in such bank; such transfer may be effected prior to receipt
of a confirmation from a broker and/or the applicable bank. All
securities accepted by Provident shall be accompanied by payment of, or
a "due bill" for, any dividends, interest or other distributions of the
issuer due the purchaser. In any and every case of a purchase of
securities for the account of a Portfolio where payment is made by
Provident in advance of receipt of the securities purchased, Provident
shall be absolutely liable to the Fund and its Portfolios for such
securities to the same extent as if the securities had been received by
Provident, except that in the case of repurchase agreements entered
into by a Portfolio with a bank which is a member of the Federal
Reserve System, Provident may transfer funds to the account of such
bank prior to the receipt of written evidence that the securities
subject to such repurchase agreement have been transferred by
book-entry into a segregated nonproprietary account of Provident
maintained with the Federal Reserve Bank of Cincinnati, provided that
such securities have in fact been so transferred by book-entry;
provided, further, however, that Provident and the Fund agree to use
their best efforts to ensure receipt by Provident of copies of
documentation for each such transaction as promptly as possible.
G. EXCHANGES. Upon receipt of Proper Instructions,
exchange securities, interim receipts or temporary securities held by
it or by any agent or Subcustodian appointed by it pursuant to
paragraph 7C hereof for the account of each Portfolio, for other
securities alone or for other securities and cash, and expend cash
insofar as cash is available in connection with any merger,
consolidation, reorganization, recapitalization, split-up of shares,
changes of par value, conversion or in connection with the exercise of
warrants, subscription or purchase rights, or otherwise, and deliver
securities to the designated depository or other receiving agent or
Subcustodian in response to tender offers or similar offers to
purchase received in writing; provided that in any such case the
securities and/or cash to be received as a result of any such
exchange, expenditure or delivery are to be
- 5 -
<PAGE> 6
delivered to Provident (or its agents or Subcustodians). Provident
shall give notice as provided under paragraph 15 hereof to the Fund in
connection with any transaction specified in this paragraph and at the
same time shall specify to the Fund whether such notice relates to
securities held by an agent or Subcustodian appointed pursuant to
paragraph 7C hereof, so that the Fund may issue to Provident Proper
Instructions for Provident to act thereon prior to any expiration date
(which shall be presumed to be two business days prior to such date
unless Provident has previously advised the Fund of a different
period). The Fund shall give to Provident full details of the time and
method of submitting securities in response to any tender or similar
offer, exercising any subscription or purchase right or making any
exchange pursuant to this paragraph. When such securities are in the
possession of an agent or Subcustodian appointed by Provident pursuant
to paragraph 7C hereof, the Proper Instructions referred to in the
preceding sentence must be received by Provident in timely enough
fashion (which shall be presumed to be three business days unless
Provident has advised the Fund in writing of a different period) for
Provident to notify the agent or Subcustodian in sufficient time to
permit such agent to act prior to any expiration date.
H. SALES. Upon receipt of Proper Instructions and upon receipt
of full payment therefor, release and deliver securities which have
been sold for the account of a Portfolio. At the time of delivery all
such payments are to be made in cash, by a certified check upon or a
treasurer's or cashier's check of a bank, by effective bank wire
transfer through the Federal Reserve Wire System or, if appropriate,
outside of the Federal Reserve Wire System and subsequent credit to
such Portfolio's custodian account, or, in case of delivery through a
stock clearing company, by book-entry credit by the stock clearing
company in accordance with the then current "street" custom.
I. PURCHASES BY ISSUER. Upon receipt of Proper Instructions,
release and deliver securities owned by a Portfolio to the issuer
thereof or its agent when such securities are called, redeemed, retired
or otherwise become payable; provided that in any such case, the cash
or other consideration is to be delivered to Provident.
J. CHANGES OF NAME AND DENOMINATION. Upon receipt of Proper
Instructions, release and deliver securities owned by a Portfolio to
the issuer thereof or its agent for transfer into the name of the
Portfolio or of a nominee of Provident or of the Portfolio for the
exclusive use of the Portfolio or for exchange for a different number
of bonds, certificates or other evidence representing the same
aggregate face amount or number of units bearing the same interest
rate, maturity date
- 6 -
<PAGE> 7
and call provisions if any; provided that in any such case, the new
securities are to be delivered to Provident.
K. STREET DELIVERY. In connection with delivery in New York
City and upon receipt of Proper Instructions, which in the case of
registered securities may be standing instructions, release securities
owned by a Portfolio upon receipt of a written receipt for such
securities to the broker selling the same for examination in accordance
with the existing "street delivery" custom. In such case, Provident
shall have no responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities, except as may arise from Provident's own negligence or
willful misconduct. In every instance, either payment in full for such
securities shall be made or such securities shall be returned to
Provident that same day. In the event existing "street delivery" custom
is modified, Provident shall obtain authorization from the Board of
Trustees of the Fund prior to any use of such modified "street
delivery" custom.
L. RELEASE OF SECURITIES FOR USE AS COLLATERAL. Upon receipt
of Proper Instructions and subject to the Declaration of Trust and
By-Laws of the Fund, release securities belonging to the Portfolio to
any bank or trust company for the purpose of pledge, mortgage or
hypothecation to secure any loan incurred by a Portfolio; provided,
however, that securities shall be released only upon payment to
Provident of the monies borrowed, except that in cases where
additional collateral is required to secure a borrowing already made,
subject to proper prior authorization from the Fund, further
securities may be released for that purpose. Upon receipt of Proper
Instructions, Provident shall pay such loan upon redelivery to it of
the securities pledged or hypothecated therefor and upon
surrender of the note or notes evidencing the loan.
M. COMPLIANCE WITH APPLICABLE RULES AND REGULATIONS OF THE
OPTIONS CLEARING CORPORATION AND NATIONAL SECURITIES OR COMMODITIES
EXCHANGES OR COMMISSIONS. Upon receipt of Proper Instructions, deliver
securities of a Portfolio in accordance with the provisions of any
agreement among the Fund, Provident and a broker-dealer registered
under the Exchange Act and a member of the National Association of
Securities Dealers, Inc. ("NASD") relating to compliance with the rules
of The Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions
by a Portfolio; or, upon receipt of Proper Instructions, Provident
shall deliver securities in accordance with the provisions of any
agreement among the Fund, Provident and a Futures Commission Merchant
registered under the Commodity Exchange Act relating to compliance with
the rules
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<PAGE> 8
of the Commodity Futures Trading Commission and/or any contract market,
or any similar organization or organizations, regarding account
deposits in connection with transactions by a Portfolio.
N. RELEASE OR DELIVERY OF SECURITIES FOR OTHER PURPOSES. Upon
receipt of Proper Instructions, release or deliver any securities held
by it for the account of a Portfolio for any other purpose (in addition
to those specified in paragraphs 4D, 4E, 4F, 4G, 4H, 4I, 4J, 4K, 4L and
4M hereof) which the Fund declares is a proper corporate purpose
pursuant to Proper Instructions.
0. PROXIES, NOTICES, ETC. Promptly forward upon receipt to the
Fund all forms of proxies and all notices of meetings and any other
notices or announcements affecting or relating to the securities,
including, without limitation, notices relating to class action claims
and bankruptcy claims, and upon receipt of Proper Instructions execute
and deliver or cause its nominee to execute and deliver such proxies or
other authorizations as may be required. Provident, its nominee or its
agents or Subcustodian shall not vote any of the securities or execute
any proxy to vote thereon or give any consent or take any other action
with respect thereto (except as otherwise herein provided) unless
ordered to do so by Proper Instructions. Provident shall require its
agents and Subcustodians appointed pursuant to paragraph 7C hereof to
forward any such announcements and notices to Provident upon receipt.
P. SEGREGATED ACCOUNT. Upon receipt of Proper Instructions,
establish and maintain a segregated account or accounts for and on
behalf of each Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by Provident pursuant to paragraph 4B hereof, (i) in
accordance with the provisions of any agreement among the Fund,
Provident and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements
in connection with transactions by a Portfolio, (ii) for purposes of
segregating cash or government securities in connection with options
purchased, sold or written by a Portfolio or commodity futures
contracts or options thereon purchased or sold by such Portfolio,
(iii) for the purposes of compliance by the Fund with the procedures
required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Commission relating to
- 8 -
<PAGE> 9
the maintenance of segregated accounts by registered investment
companies and (iv), for other proper corporate purposes, but only, in
the case of clause (iv) , upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board of Trustees
signed by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper corporate
purposes.
Q. MISCELLANEOUS. In general, attend to all nondiscretionary
details in connection with the sale, exchange, substitution, purchase,
transfer or other dealing with such securities or property of each
Portfolio, except as otherwise directed by the Fund pursuant to Proper
Instructions. Provident shall render to the Fund daily a report of all
monies received or paid on behalf of the Portfolio, an itemized
statement of the securities and cash for which it is accountable to the
Fund under this Agreement and an itemized statement of security
transactions which settled the day before and shall render to the Fund
weekly an itemized statement of security transactions which failed to
settle as scheduled. At the end of each week Provident shall provide a
list of all security transactions that remain unsettled at such time.
5. Additionally, as Custodian, Provident shall promptly:
A. BANK ACCOUNT. Retain safely all cash of each Portfolio,
other than cash maintained by a Portfolio in a bank account established
and used in accordance with Rule 17f-3 under the 1940 Act, in the
banking department of Provident in a separate account or accounts in
the name of such Portfolio, subject only to draft or order by Provident
acting pursuant to the terms of this Agreement. If and when authorized
by Proper Instructions in accordance with a vote of the Board of
Trustees of the Fund, Provident may open and maintain an additional
account or accounts in such other bank or trust companies as may be
designated by such instructions, such account or accounts, however, to
be solely in the name of Provident in its capacity as Custodian and
subject only to its draft or order in accordance with the terms of this
Agreement. Provident shall furnish the Fund, not later than thirty (30)
calendar days after the last business day of each month, a statement
reflecting the current status of its internal reconciliation of the
closing balance as of that day in all accounts described in this
paragraph to the balance shown on the daily cash report for that day
rendered to the Fund.
B. COLLECTIONS. Unless otherwise instructed by receipt of
Proper Instructions, collect, receive and deposit in the bank
account or accounts maintained pursuant to paragraph 5A
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<PAGE> 10
hereof all income and other payments with respect to the securities
held hereunder, execute ownership and other certificates and affidavits
for all federal and state tax purposes in connection with the
collection of bond and note coupons, do all other things necessary or
proper in connection with the collection of such income, and without
waiving the generality of the foregoing:
1) present for payment on the date of payment all coupons
and other income items requiring presentation;
2) present for payment all securities which may mature or
be called, redeemed, retired or otherwise become payable on
the date such securities become payable;
3) endorse and deposit for collection, in the name of the
Portfolio, checks, drafts or other negotiable instruments on
the same day as received.
In any case in which Provident does not receive any such due and unpaid
income within a reasonable time after it has made proper demands for the same
(which shall be presumed to consist of at least three demand letters and at
least one telephonic demand), it shall so notify the Fund in writing, including
copies of all demand letters, any written responses thereto, and memoranda of
all oral responses thereto and to telephonic demands, and await Proper
Instructions; Provident shall not be obliged to take legal action for collection
unless and until reasonably indemnified to its satisfaction for the reasonable
costs of such legal action for collection. It shall also notify the Fund as soon
as reasonably practicable whenever income due on securities is not collected in
due course.
C. SALE OF SHARES OF THE PORTFOLIO OF THE FUND. Make
such arrangements with the Transfer Agent of the Fund as will
enable Provident to make certain it receives the cash
consideration due each Portfolio for shares of beneficial
interest without par value ("shares"), of such Portfolio as
may be issued or sold from time to time by the Fund, all in
accordance with the Fund's Declaration of Trust and By-Laws,
as amended.
D. DIVIDENDS AND DISTRIBUTIONS. Upon receipt of Proper
Instructions, release or otherwise apply cash insofar as cash
is available for the purpose of the payment of dividends or
other distributions to shareholders of each Portfolio.
E. REDEMPTION OF SHARES OF THE PORTFOLIOS OF THE FUND.
From such funds as may be available for the purpose, but
subject to the limitation of the Fund's Declaration of Trust
and By-Laws, as amended, and applicable resolutions of the
Board of Trustees of the Fund pursuant thereto, make funds
- 10 -
<PAGE> 11
available for payment to shareholders who have delivered to the
Transfer Agent a request for redemption of their shares by the Fund
pursuant to such Declaration of Trust. In connection with the
redemption of shares of a Portfolio pursuant to the Fund's Declaration
of Trust and By-Laws, as amended, Provident is authorized and directed
upon receipt of Proper Instructions from the Transfer Agent for the
Fund to make funds available for transfer through the Federal Reserve
Wire System or by other bank wire to a commercial bank account
designated by the redeeming shareholder.
F. STOCK DIVIDENDS, RIGHTS, ETC. Receive and collect
all stock dividends, rights and other items of like nature;
and deal with the same pursuant to Proper Instructions
relative thereto.
G. DISBURSEMENTS. Upon receipt of Proper Instructions,
make or cause to be made, insofar as cash is available for the
purpose, disbursements for the payment on behalf of a
Portfolio of its expenses, including without limitation,
interest, taxes and fees or reimbursement to Provident or to
the Portfolio's investment adviser for its payment of any such
expenses.
H. OTHER PROPER CORPORATE PURPOSES. Upon receipt of
Proper Instructions, make or cause to be made, insofar as cash
is available for the purpose, disbursements for any other
purpose (in addition to the purposes specified in paragraphs
4F, 4G, 5D, 5E and 5G of this Agreement) which the Fund
declares is a proper corporate purpose.
I. RECORDS. Create, maintain and retain all records a)
relating to its activities and obligations under this Agreement in such
manner as shall meet the obligations of the Fund under the 1940 Act,
particularly Section 31 thereof and Rules 31a-1 and 31a-2 thereunder or
b) as reasonably requested from time to time by the Fund. All records
maintained by Provident in connection with the performance of its
duties under this Agreement shall remain the property of the Fund and
in the event of termination of this Agreement shall be delivered in
accordance with the terms of paragraph 10 below.
J. MISCELLANEOUS. Assist generally in the preparation
of routine reports to holders of shares of the Fund, to the
Commission, including form N-SAR, to state "Blue Sky"
authorities, to others in the auditing of accounts and in
other matters of like nature.
K. PORTFOLIO ACCOUNTING AND NET ASSET VALUE
COMPUTATION. Maintain the general ledger and all other books
of account of each Portfolio. In addition, upon receipt of
Proper Instructions, which may be deemed to be continuing
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<PAGE> 12
instructions, Provident shall daily compute the net asset value of the
shares of each Portfolio and the total net asset value of each
Portfolio. Provident shall, in addition, perform such other services
incidental to its duties hereunder as may be reasonably requested from
time to time by the Fund.
6. Provident and the Fund further agree as follows:
A. PROPER INSTRUCTIONS. Provident shall be deemed to have
received Proper Instructions upon receipt of written instructions
signed by the Fund's Trustees or by one or more person or persons as
the Fund's Board of Trustees shall have from time to time authorized to
give the particular class of instructions for different purposes.
Different persons may be authorized to give instructions for different
purposes. A copy of a resolution or action of the Trustees certified by
the secretary or an assistant secretary of the Fund may be received and
accepted by Provident as conclusive evidence of the instruction of the
Fund's Board of Trustees and/or the authority of any person or persons
to act on behalf of the Fund and may be considered as in full force and
effect until receipt of written notice to the contrary. Such
instruction may be general or specific in terms. Oral instructions will
be considered Proper Instructions if Provident reasonably believes them
to have been given by a person authorized by the Board of Trustees to
give such oral instructions with respect to the class of instruction
involved. The Fund shall cause all oral instructions to be confirmed in
writing. Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that
the Fund and Provident are satisfied that such procedures afford
adequate safeguards for the assets of the Portfolios. Use by the Fund
of such communication systems shall constitute approval by the Fund of
the safeguards available therewith.
B. INVESTMENTS, LIMITATIONS. In performing its duties
generally, and more particularly in connection with the
purchase, sale and exchange of securities made by or for the
Portfolios, Provident may take cognizance of the provisions of
the Declaration of Trust of the Fund, as amended; provided,
however, that except as otherwise expressly provided herein,
Provident may assume unless and until notified in writing to
the contrary that instructions purporting to be Proper
Instructions received by it are not in conflict with or in any
way contrary to any provision of the Declaration of Trust of
the Fund, as amended, or resolutions or proceedings of the
Board of Trustees of the Fund.
7. Provident and the Fund further agree as follows:
A. INDEMNIFICATION. Provident, as Custodian, shall be
entitled to receive and act upon advice of counsel (who may be
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<PAGE> 13
counsel for the Fund) and shall be without liability for any action
reasonably taken or thing reasonably done pursuant to such advice;
provided that such action is not in violation of applicable federal or
state laws or regulations or contrary to written instructions received
from the Fund, and shall be indemnified by the Fund and without
liability for any action taken or thing done by it in carrying out the
terms and provisions of this Agreement in good faith and without
negligence, misfeasance or misconduct. In order that the
indemnification provision contained in this paragraph shall apply,
however, if the Fund is asked to indemnify or save Provident harmless,
the Fund shall be fully and promptly advised of all pertinent facts
concerning the situation in question, and Provident shall use all
reasonable care to identify and notify the Fund fully and promptly
concerning any situation which presents or appears likely to present
the probability of such a claim for indemnification against the Fund.
The Fund shall have the option to defend Provident against any claim
which may be the subject of this indemnification and in the event that
the Fund so elects it will so notify Provident, and thereupon the Fund
shall take over complete defense of the claim, and Provident shall
initiate no further legal or other expenses for which it shall seek
indemnification under this paragraph. Provident shall in no case
confess any claim or make any compromise in any case in which the Fund
will be asked to indemnify Provident except with the Fund's prior
written consent.
B. EXPENSES REIMBURSEMENT. Provident shall be entitled
to receive from each Portfolio on demand reimbursement for its
cash disbursements, expenses and charges, excluding salaries
and usual overhead expenses with respect to such Portfolio, as
set forth in Schedule A.
C. APPOINTMENT OF AGENTS AND SUBCUSTODIANS. Provident, as
Custodian, may appoint (and may remove), only in compliance with the
terms and conditions of the Fund's Declaration of Trust and ByLaws, as
amended, any other bank, trust company or responsible commercial agent
as its agent or Subcustodian to carry out such of the provisions of
this Agreement as Provident may from time to time direct; provided,
however, that the appointment of any such agent or Subcustodian shall
not relieve Provident of any of its responsibilities under this
Agreement.
D. RELIANCE ON DOCUMENTS. So long as and to the extent
that it is in good faith and in the exercise of reasonable
care, Provident, as Custodian, shall not be responsible for
the title, validity or genuineness of any property or evidence
of title thereto received by it or delivered by it pursuant to
this Agreement, shall be protected in acting upon any
instructions, notice, request, consent, certificate or other
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<PAGE> 14
instrument or paper reasonably believed by it to be genuine and to
constitute Proper Instructions under this Agreement and shall, except
as otherwise specifically provided in this Agreement, be entitled to
receive as conclusive proof of any fact or matter required to be
ascertained by it hereunder a certificate signed by the Fund's
Trustees, the secretary or an assistant secretary of the Fund or any
other person expressly authorized by the Board of Trustees of the Fund.
E. ACCESS TO RECORDS. Subject to security requirements of
Provident applicable to its own employees having access to similar
records within Provident and such regulations as to the conduct of such
monitors as may be reasonably imposed by Provident after prior
consultation with an authorized officer of the Fund, books and records
of Provident pertaining to its actions under this Agreement shall be
open to inspection and audit at reasonable times by the Directors of,
attorneys for, auditors employed by the Fund or any other person as the
Fund's Board of Trustees shall direct.
F. RECORDKEEPING. Provident shall maintain such
records as shall enable the Fund to comply with the
requirements of all federal and state laws and regulations
applicable to the Fund and its Portfolios with respect to the
matters covered by this Agreement.
8. LIEN ON ASSETS. If a Portfolio requires Provident to advance cash
or securities for any purpose or in the event that Provident or its nominee
shall incur or be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Agreement, except such as
may arise from its or its nominee's own negligent action, negligent failure to
act or willful misconduct, any property at any time held for the account of a
Portfolio shall be security therefor and should the Portfolio fail to repay
Provident promptly, Provident shall be entitled to utilize available cash and to
dispose of the Portfolio's assets to the extent necessary to obtain
reimbursement; provided, however, that the total value of any property of the
Portfolio which at any time is security for any payment by Provident hereunder
shall not exceed 15% of the Portfolio's total net asset value.
9. The Fund shall pay Provident for its services as
Custodian such compensation as shall be specified on the attached
Schedule A.
10. Provident and the Fund further agree as follows:
A. EFFECTIVE PERIOD, TERMINATION, AMENDMENT AND
INTERPRETIVE AND ADDITIONAL PROVISIONS. This Agreement shall
become effective as of the date of its execution, shall
continue in full force and effect until terminated as
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<PAGE> 15
hereinafter provided, may be amended at any time by mutual agreement of
the parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid, to the
other party, such termination to take effect sixty (60) days after the
date of such delivery or mailing; and further provided, that the Fund
may by action of the Fund's Board of Trustees substitute another bank
or trust company for Provident by giving notice as provided above to
Provident, provided, however that Provident shall not act under
paragraph 4B hereof in the absence of receipt of an initial certificate
of the secretary or an assistant secretary that the Board of Trustees
of the Fund has approved the initial use of a particular Securities
System and the receipt of an annual certificate of the secretary or an
assistant secretary that the Board of Trustees has reviewed the use by
the Fund of such Securities System, as required in each case by Rule
17f-4 under the 1940 Act. The Fund or Provident shall not amend or
terminate this Agreement in contravention of any applicable federal or
state laws or regulations, or any provision of the Declaration of Trust
of the Fund, as amended; provided, however, that in the event of such
termination Provident shall remain as Custodian hereunder for a
reasonable period thereafter if the Fund after using its best efforts
is unable to find a Successor Custodian.
In connection with the operation of this Agreement, Provident and the
Fund may agree from time to time on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement, any such interpretive or
additional provision to be signed by both parties and annexed hereto, provided
that no such interpretive or additional provisions shall contravene any
applicable federal or state laws or regulations, or any provision of the Fund's
Declaration of Trust and By-Laws, as amended. No interpretive provisions made as
provided in the preceding sentence shall be deemed to be an amendment of this
Agreement.
B. SUCCESSOR CUSTODIAN. Upon termination hereof or the
inability of Provident to continue to serve hereunder, the
Fund shall pay to Provident such compensation as may be due
for services through the date of such termination and shall
likewise reimburse Provident for its costs, expenses and
disbursements incurred prior to such termination in accordance
with paragraph 7B hereof and such reasonable costs, expenses
and disbursements as may be incurred by Provident in
connection with such termination.
If a Successor Custodian is appointed by the Board of Trustees of the
Fund in accordance with the Fund's Declaration of Trust, Provident shall, upon
termination, deliver to such Successor Custodian at the office of Provident,
properly endorsed and in proper form for transfer, all securities then held
hereunder, all
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<PAGE> 16
cash and other assets of the Fund deposited with or held by it
hereunder.
If no such Successor Custodian is appointed, Provident shall, in like
manner at its office, upon receipt of a certified copy of a resolution of the
shareholders pursuant to the Fund's Declaration of Trust and By-Laws, as
amended, deliver such securities, cash and other properties in accordance with
such resolutions.
In the event that no written order designating a Successor Custodian or
certified copy of a resolution of the shareholders shall have been delivered to
Provident on or before the date when such termination shall become effective,
then Provident shall have the right to deliver to a bank or trust company doing
business in Cincinnati, Ohio of its own selection, having an aggregate capital,
surplus and undivided profits, as shown by its last published report, of not
less than $5,000,000, all securities, cash and other properties held by
Provident and all instruments held by it relative thereto and all other property
held by it under this Agreement. Thereafter, such bank or trust company shall be
the Successor of Provident under this Agreement and subject to the restrictions,
limitations and other requirements of the Fund's Declaration of Trust and
By-Laws.
In the event that securities, funds, and other properties remain in the
possession of Provident after the date of termination hereof owing to failure of
the Fund to procure the certified copy above referred to, or of the Fund's Board
of Trustees to appoint a successor Custodian, Provident shall be entitled to
fair compensation for its services during such period and the provisions of this
Agreement relating to the duties and obligations of Provident shall remain in
full force and effect.
C. DUPLICATE RECORDS AND BACKUP FACILITIES. Provident shall
not be liable for loss of data occurring by reason of circumstances
beyond its control, including, but not limited to, acts of civil or
military authority, national emergencies, fire, flood or catastrophe,
acts of God, insurrection, war, riots or failure of transportation,
communication or power supply. However, Provident shall keep in a
separate and safe place additional copies of all records required to be
maintained pursuant to this Agreement or additional tapes, disks or
other sources of information necessary to reproduce all such records.
Furthermore, at all times during this Agreement, Provident shall
maintain a contractual arrangement whereby Provident will have a
back-up computer facility available for its use in providing the
services required hereunder in the event circumstances beyond
Provident's control result in Provident not being able to process the
necessary work at its principal computer facility. Provident shall,
from time to time, upon request from the Fund provide written evidence
and details of its arrangement for obtaining
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<PAGE> 17
the use of such a back-up computer facility. Provident shall use its
best efforts to minimize the likelihood of all damage, loss of data,
delays and errors resulting from an uncontrollable event, and should
such damage, loss of data, delays or errors occur, Provident shall use
its best efforts to mitigate the effects of such occurrence.
Representatives of the Fund shall be entitled to inspect Provident's
premises and operating capabilities within reasonable business hours
upon reasonable notice to Provident, and, upon request of such
representative or representatives, Provident shall from time to time,
as appropriate, furnish to the Fund a letter setting forth the
insurance coverage thereon, any changes in such coverage which may
occur and any claim relating to the Fund which Provident may have made
under such insurance.
D. CONFIDENTIALITY. Provident agrees to treat all
records and other information relative to the Fund and the
Portfolio confidentially and Provident, on behalf of itself
and its officers, employees and agents, agrees to keep
confidential all such information, except after prior
notification to and approval by the Fund (which approval shall
not be unreasonably withheld and may not be withheld where
Provident may be exposed to civil or criminal contempt
proceedings), when requested to divulge such information by
duly constituted authorities or when so requested by a
properly authorized person.
Provident and the Fund agree that they, their officers, employees and
agents shall maintain all information disclosed to them by the other in
connection with this Agreement in confidence and will not disclose any such
information to any other person, nor use such information for their own benefit
or for the benefit of third parties without the consent in writing of the other;
provided, however, that each party shall have the right to use any such
information for its own necessary internal purposes while this Agreement is in
effect. The provisions of the paragraph shall not apply to information which (i)
is in or becomes part of the public domain, or (ii) is demonstrably known
previously to the party to whom it is disclosed, or (iii) is independently
developed outside this Agreement by the party to whom it is disclosed or (iv) is
rightfully obtained from third parties by the party to whom it is disclosed.
11. The Fund shall not circulate any printed matter which contains any
reference to Provident without the prior written approval of Provident,
excepting solely such printed matter as merely identifies Provident as
Custodian. The Fund will submit printed matter requiring approval to Provident
in draft form, allowing sufficient time for review by Provident and its counsel
prior to any deadline for printing.
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<PAGE> 18
12. In the event of a reorganization of the Portfolio through a merger,
consolidation, sale of assets or other reorganization, Provident, at the request
of the Fund, shall act as Custodian for shares of any investment company or
other company obtained in any such reorganization by the Portfolio for
distribution to those Portfolio shareholders whose shares are represented by
certificates. The Fund shall give notice to each such shareholder of his or her
right to exchange his or her Portfolio shares represented by certificates for
shares held by Provident upon surrender to Provident of his or her certificates
representing such Portfolio shares properly endorsed and in proper form for
transfer. Upon the surrender of such Portfolio certificates Provident will issue
a certificate or certificates to the surrendering shareholder for an approximate
number of shares held by Provident, unless such shareholder establishes an Open
Account Plan or other similar account at that time in which case such shares
will be credited to his or her account. Provident shall not be required to issue
certificates for any fractional shares held by it. Instead, fractional interests
in such shares shall be distributed to the shareholder in cash at their then
current market value or, if the fractional share represents an interest in an
investment company, it shall be redeemed by Provident at the then current
redemption price for such shares and the proceeds of such redemption shall be
distributed to such shareholder in cash.
13. In the event that the Fund establishes one or more series of shares
which it desires to have the Custodian render services as custodian under the
terms hereof or otherwise desires to have the Custodian render services as
custodian hereunder with respect to any other series, it shall so notify the
custodian in writing, and if the Custodian agrees in writing to provide such
services, such series of shares shall become a Portfolio hereunder.
14. This Agreement is executed and delivered in the State of Ohio and
shall be subject to and be construed in accordance with the laws of Ohio.
15. Notices and other writings delivered or mailed postage prepaid to
The Riverfront Funds, 3435 Stelzer Road, Columbus, Ohio 43219, or to The
Provident Bank at One East Fourth Street, Cincinnati, Ohio 45202, or to such
other address as the Fund or Provident may hereafter specify, shall be deemed to
have been properly delivered or given hereunder to the respective address.
16. This Agreement shall be binding upon and shall inure to the benefit
of the Fund and its Portfolio and Provident and their respective successors or
assigns.
17. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original.
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<PAGE> 19
18. The Fund is a business trust organized under the laws of the State
of Ohio and under a Declaration of Trust, to which reference is hereby made and
a copy of which is on file at the office of the Secretary of State of Ohio as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of the Fund entered into in the name of the Fund or on
behalf thereof by any of the Trustees, officers, employees or agents are made
not individually, but in such capacities, and are not binding upon any of the
Trustees, officers, employees, agents or shareholders of the Fund or the
Portfolios personally, but bind only the assets of the Fund, and all persons
dealing with any of the Portfolios of the Fund must look solely to the assets of
the Fund belonging to such Portfolio for the enforcement of any claims against
the Fund.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by a duly authorized
officer as of the day and year first above written.
ATTEST: THE RIVERFRONT FUNDS
By
- ------------------------ ------------------------------
Name:
Title:
ATTEST: THE PROVIDENT BANK
By
- ------------------------ ------------------------------
Name:
Title:
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<PAGE> 20
Schedule A
Dated: As of December 29, 1998
-----------
THE PROVIDENT BANK
Custodian Fee Schedule
THE RIVERFRONT FUNDS
--------------------
I. ADMINISTRATION
--------------
CUSTODIAN, PORTFOLIO AND FUND ACCOUNTING SERVICE - Maintain custody of Portfolio
assets. Settle portfolio purchases and sales. Report buy and sell fails.
Determine and collect portfolio income. Make cash disbursements and report cash
transactions. Maintain investment ledgers, provide selected portfolio
transactions, position and income reports. Maintain general ledger and capital
stock accounts. Prepare daily trial balance. Calculate net asset value daily.
Provide from Fund approved pricing sources or vendors daily pricing for
Portfolio securities. Provide selected general ledger reports. Securities yield
or market value quotations for short term Portfolio securities will be provided
to Provident from a source designated by the Fund.
The administration fee shown below is an annual charge, billed and payable
monthly, based on average net assets and calculated in the same manner as the
Fund's management fee.
<TABLE>
<CAPTION>
ANNUAL FEES PER PORTFOLIO
-------------------------
Portfolio Annual Fee
- --------- ----------
<S> <C>
The Riverfront U.S. Five one-hundredths of one
Government Securities percent (.05%) of such
Money Market Fund Portfolio's average net assets
The Riverfront Income Fifteen one-hundredths of one
Equity Fund percent (.15%) of such
Portfolio's average net assets
The Riverfront U.S. Ten one-hundredths of one
Government Income Fund percent (.10%) of such
Portfolio's average net assets
</TABLE>
- 20 -
<PAGE> 21
The Riverfront Balanced Fifteen one-hundredths of one
Fund percent (.15%) of such
Portfolio's average net assets
The Riverfront Small Fifteen one-hundredths of one
Company Select Fund percent (.15%) of such
Portfolio's average net assets
The Riverfront Large Fifteen one-hundredths of one
Company Select Fund percent (.15%) of such
Portfolio's average net assets
II. OUT OF POCKET EXPENSES
----------------------
A billing for the recovery of applicable out-of-pocket expenses as incurred by
the Portfolio will be made as of the end of each month.
The Riverfront Funds
By
--------------------------------
--------------------------------
(Name)
-------------------------------
(Title)
THE PROVIDENT BANK
By
--------------------------------
Gary W. Queen
--------------------------------
(Name)
Senior Managing Director
--------------------------------
(title)
- 21 -
<PAGE> 1
EXHIBIT (9)(a)
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 29th day of December, 1998, by and
between THE RIVERFRONT FUNDS, an Ohio business trust (the "Trust"), and BISYS
FUND SERVICES LIMITED PARTNERSHIP, d/b/a BISYS FUND SERVICES (the
"Administrator"), an Ohio limited partnership.
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of beneficial interest, without
par value ("Shares"); and
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
such series of the Trust as the Trust and the Administrator may agree on
("Portfolios"), which are referred to in Schedule A attached hereto and made a
part of this Agreement, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Administrator hereby agree as follows:
ARTICLE 1. Retention of the Administrator. The Trust hereby retains the
Administrator to act as the administrator of the Portfolios and to furnish the
Portfolios with the management and administrative services as set forth in
Article 2 below. The Administrator hereby accepts such employment to perform the
duties set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way and shall
not be deemed an agent of the Trust.
ARTICLE 2. Administrative Services. The Administrator shall perform or
supervise the performance by others of other administrative services in
connection with the operations of the Portfolios, and, on behalf of the Trust,
will investigate, assist in the selection of and conduct relations with
custodians, depositories, accountants, legal counsel, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations. The
Administrator shall provide the Trustees of the Trust with such reports
regarding investment performance as they may reasonably request but shall have
no responsibility for supervising the performance by any investment adviser or
sub-adviser of its responsibilities.
The Administrator shall provide the Trust with regulatory reporting,
all necessary office space, equipment, personnel, compensation and facilities
(including facilities for Shareholders' and Trustees' meetings) for handling the
affairs of the Portfolios and such other services as the Administrator shall,
from time to time, determine to be necessary to perform its obligations under
this Agreement. In addition, at the request of the Board of Trustees, the
Administrator shall make reports to the Trust's Trustees concerning the
performance of its obligations hereunder.
<PAGE> 2
Without limiting the generality of the foregoing, the Administrator
shall:
(a) calculate contractual Trust expenses and control all
disbursements for the Trust, and as appropriate compute the
Trust's yields, total return, expense ratios, portfolio,
turnover rate and, if required, portfolio average
dollar-weighted maturity;
(b) assist Trust counsel with the preparation of prospectuses,
statements of additional information, registration statements
and proxy materials;
(c) prepare such reports, applications and documents (including
reports regarding the sale and redemption of Shares as may be
required in order to comply with Federal and state securities
law) as may be necessary or desirable to register the Trust's
Shares with state securities authorities, monitor the sale of
Trust Shares for compliance with state securities laws, and
file with the appropriate state securities authorities the
registration statements and reports for the Trust and the
Trust's Shares and all amendments thereto, as may be necessary
or convenient to register and keep effective the Trust and the
Trust's Shares with state securities authorities to enable the
Trust to make a continuous offering of its Shares;
(d) develop and prepare, with the assistance of the Trust's
investment adviser, communications to Shareholders, including
the annual report to Shareholders, coordinate the mailing of
prospectuses, notices, proxy statements, proxies and other
reports to Trust Shareholders, and supervise and facilitate
the proxy solicitation process for all shareholder meetings,
including the tabulation of shareholder votes;
(e) administer contracts on behalf of the Trust with, among
others, the Trust's investment adviser, distributor,
custodian, transfer agent and fund accountant;
(f) supervise the Trust's transfer agent with respect to the
payment of dividends and other distributions to Shareholders;
(g) calculate performance data of the Portfolios for dissemination
to information services covering the investment company
industry;
(h) coordinate and supervise the preparation and filing of the
Trust's tax returns;
(i) examine and review the operations and performance of the
various organizations providing services to the Trust or any
Portfolio of the Trust, including, without limitation, the
Trust's investment adviser, distributor, custodian, fund
accountant, transfer agent, outside legal counsel and
independent public accountants, and at the request of the
Board of Trustees, report to the Board on the performance of
organizations;
2
<PAGE> 3
(j) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and
printing of the Trust's semi-annual and annual reports to
Shareholders;
(k) assist with the design, development, and operation of the
Portfolios, including new classes, investment objectives,
policies and structure;
(l) provide individuals reasonably acceptable to the Trust's Board
of Trustees to serve as officers of the Trust, who will be
responsible for the management of certain of the Trust's
affairs as determined by the Trust's Board of Trustees;
(m) advise the Trust and its Board of Trustees on matters
concerning the Trust and its affairs;
(n) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Trust
in accordance with the requirements of Rules 17g-1 and
17d-1(7) under the 1940 Act as such bonds and policies are
approved by the Trust's Board of Trustees;
(o) monitor and advise the Trust and its Portfolios on their
registered investment company status under the Internal
Revenue Code of 1986, as amended;
(p) perform all administrative services and functions of the Trust
and each Portfolio to the extent administrative services and
functions are not provided to the Trust or such Portfolio
pursuant to the Trust's or such Portfolio's investment
advisory agreement, distribution agreement, custodian
agreement, transfer agent agreement and fund accounting
agreement;
(q) furnish advice and recommendations with respect to other
aspects of the business and affairs of the Portfolios as the
Trust and the Administrator shall determine desirable; and
(r) prepare and file with the SEC the semi-annual report for the
Trust on Form N-SAR and all required notices pursuant to Rule
24f-2.
The Administrator shall perform such other services for the Trust that
are mutually agreed upon by the parties from time to time. Such services may
include performing internal audit examinations; mailing the annual reports of
the Portfolios; preparing an annual list of Shareholders; and mailing notices of
Shareholders' meetings, proxies and proxy statements, for all of which the Trust
will pay the Administrator's out-of-pocket expenses.
ARTICLE 3. Allocation of Charges and Expenses.
(A) The Administrator. The Administrator shall furnish at its own
expense the executive, supervisory and clerical personnel necessary to perform
its obligations under this Agreement. The Administrator shall also provide the
items which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Trust as well as
3
<PAGE> 4
all Trustees of the Trust who are affiliated persons of the Administrator or any
affiliated corporation of the Administrator; provided, however, that unless
otherwise specifically provided, the Administrator shall not be obligated to pay
the compensation of any employee of the Trust retained by the Trustees of the
Trust to perform services on behalf of the Trust.
(B) The Trust. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust not otherwise allocated herein, including, without
limitation, organization costs, taxes, expenses for legal and auditing services,
the expenses of preparing (including typesetting), printing and mailing reports,
prospectuses, statements of additional information, proxy solicitation material
and notices to existing Shareholders, all expenses incurred in connection with
issuing and redeeming Shares, the costs of custodial services, the cost of
initial and ongoing registration of the Shares under Federal and state
securities laws, fees and out-of-pocket expenses of Directors, insurance,
interest, brokerage costs, litigation and other extraordinary or nonrecurring
expenses, and all fees and charges of investment advisers to the Trust.
ARTICLE 4. Compensation of the Administrator.
(A) Administration Fee. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Trust shall pay to the Administrator compensation at an annual
rate specified in Schedule A attached hereto. Such compensation shall be
calculated and accrued daily, and paid to the Administrator monthly. The Trust
shall also reimburse the Administrator for its reasonable out-of-pocket
expenses, including the travel and lodging expenses incurred by officers and
employees of the Administrator in connection with attendance at Board meetings.
If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, the Administrator's
compensation for that part of the month in which this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fees as set
forth above. Payment of the Administrator's compensation for the preceding month
shall be made promptly.
(B) Survival of Compensation Rights. All rights of compensation under
this Agreement for services performed as of the termination date shall survive
the termination of this Agreement.
ARTICLE 5. Limitation of Liability of the Administrator. The duties of
the Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any act or omission in carrying
out its duties hereunder, except a loss resulting from willful misfeasance, bad
faith or negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable law which cannot be waived or modified
hereby. (As used in this Article 5, the term "Administrator" shall include
partners, officers, employees and other agents of the Administrator as well as
the Administrator itself.)
4
<PAGE> 5
So long as the Administrator acts in good faith and with due diligence
and without negligence, the Trust assumes full responsibility and, except for
direct, non-derivative actions by the Trust, shall indemnify the Administrator
and hold it harmless from and against any and all actions, suits and claims,
whether groundless or otherwise, and from and against any and all losses,
damages, costs, charges, reasonable counsel fees and disbursements, payments,
expenses and liabilities (including reasonable investigation expenses) arising
directly or indirectly out of Administrator's actions taken or nonactions with
respect to the performance of services hereunder. The indemnity and defense
provisions set forth herein shall indefinitely survive the termination of this
Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Trust may be asked to indemnify or hold the
Administrator harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Trust promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Trust, but failure to do so in good faith shall not affect the rights
hereunder.
The Trust shall be entitled to participate at its own expense or, if it
so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Trust elects to assume the defense
of any such claim, the defense shall be conducted by counsel chosen by the Trust
and satisfactory to the Administrator, whose approval shall not be unreasonably
withheld. In the event that the Trust elects to assume the defense of any suit
and retain counsel, the Administrator shall bear the fees and expenses of any
additional counsel retained by it. If the Trust does not elect to assume the
defense of a suit, it will reimburse the Administrator for the reasonable fees
and expenses of any counsel retained by the Administrator.
The Administrator may apply to the Trust at any time for instructions
and may consult counsel for the Trust or its own counsel and with accountants
and other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. The Administrator will not be held to have
notice of any change of authority of any officers, employee or agent of the
Trust until receipt of written notice thereof from the Trust.
ARTICLE 6. Activities of the Administrator. The services of the
Administrator rendered to the Trust are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that trustees, officers, employees
and Shareholders of the Trust are or may be or become interested in the
Administrator, as officers, employees or otherwise and that partners, officers
and employees of
5
<PAGE> 6
the Administrator and its counsel are or may be or become similarly interested
in the Trust, and that the Administrator may be or become interested in the
Trust as a Shareholder or otherwise.
ARTICLE 7. Duration of this Agreement. The Term of this Agreement shall
be as specified in Schedule A hereto.
ARTICLE 8. Assignment. This Agreement shall not be assignable by either
party without the written consent of the other party; provided, however, that
the Administrator may, at its expense, subcontract with any entity or person
concerning the provision of the services contemplated hereunder. The
Administrator shall not, however, be relieved of any of its obligations under
this Agreement by the appointment of such subcontractor and provided further,
that the Administrator shall be responsible, to the extent provided in Article 5
hereof, for all acts of such subcontractor as if such acts were its own. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns.
ARTICLE 9. Amendments. This Agreement may be amended by the parties
hereto only if such amendment is specifically approved (i) by the vote of a
majority of the Trustees of the Trust, and (ii) by the vote of a majority of the
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a Board of Trustees meeting called
for the purpose of voting on such approval.
For special cases, the parties hereto may amend such procedures set
forth herein as may be appropriate or practical under the circumstances, and the
Administrator may conclusively assume that any special procedure which has been
approved by the Trust does not conflict with or violate any requirements of its
Declaration of Trust or then current prospectuses, or any rule, regulation or
requirement of any regulatory body.
ARTICLE 10. Certain Records. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Trust shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Trust and will be made available
to or surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection; provided that the
Administrator may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do so, unless
(in cases involving potential exposure only to civil liability) the Trust has
agreed to indemnify the Administrator against such liability.
ARTICLE 11. Definitions of Certain Terms. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
6
<PAGE> 7
ARTICLE 12. Notice. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Trust, at 3435 Stelzer Road, Columbus, Ohio 45219; and if to
the Administrator at 3435 Stelzer Road, Columbus, Ohio 43219.
ARTICLE 13. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Ohio and the applicable provisions of
the 1940 Act. To the extent that the applicable laws of the State of Ohio, or
any of the provisions herein, conflict with the applicable provisions of the
1940 Act, the latter shall control.
The Riverfront Funds is a business trust organized under Chapter 1746,
Ohio Revised Code and under a Declaration of Trust, to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
Ohio as required by law, and to any and all amendments thereto so filed or
hereafter filed. The obligations of "The Riverfront Funds" entered into in the
name or on behalf thereof by any of the Trustees, officers, employees or agents
are made not individually, but in such capacities, and are not binding upon any
of the Trustees, officers, employees, agents or shareholders of the Trust
personally, but bind only the assets of the Trust, as set forth in Section
1746.13(A), Ohio Revised Code, and all persons dealing with any of the
Portfolios of the Trust must look solely to the assets of the Trust belonging to
such Portfolio for the enforcement of any claims against the Trust.
ARTICLE 14. Multiple Originals. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
THE RIVERFRONT FUNDS
By:
--------------------------
Walter B. Grimm, President
BISYS FUND SERVICES LIMITED
PARTNERSHIP
By: BISYS Fund Services, Inc.,
General Partner
By:
--------------------------
Executive Vice President
7
<PAGE> 8
Dated: December 29, 1998
SCHEDULE A, AS AMENDED,
TO THE ADMINISTRATION AGREEMENT
DATED AS OF DECEMBER 29, 1998
BETWEEN THE RIVERFRONT FUNDS
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
Portfolios: This Agreement shall apply to all series of The Riverfront
Funds, either now or hereafter created (collectively, the
"Portfolios"). The current Portfolios of The Riverfront Funds,
are set forth below: Riverfront Small Company Select Fund,
Riverfront Balanced Fund, Riverfront U.S. Government
Securities Money Market Fund, Riverfront U.S. Government
Income Fund, Riverfront Income Equity Fund, and Riverfront
Large Company Select Fund.
Fees: Pursuant to Article 4, in consideration of services rendered
and expenses assumed pursuant to this Agreement, the Trust
will pay the Administrator on the first business day of each
month, or at such time(s) as the Administrator shall request
and the parties hereto shall agree, a fee computed daily and
paid as specified below at the annual rate equal to .20% of
each Portfolio's average daily net assets. The fee for the
period from the day of the month this Agreement is entered
into until the end of that month shall be prorated according
to the proportion which such period bears to the full monthly
period. Upon any termination of this Agreement before the end
of any month, the fee for such part of a month shall be
prorated according to the proportion which such period bears
to the full monthly period and shall be payable upon the date
of termination of this Agreement.
For purposes of determining the fees payable to the
Administrator, the value of the net assets of a particular
Portfolio shall be computed in the manner described in the
Trust's Declaration of Trust or in the Prospectus or Statement
of Additional Information respecting that Portfolio as from
time to time is in effect for the computation of the value of
such net assets in connection with the determination of the
liquidating value of the shares of such Portfolio.
The parties hereby confirm that the fees payable
hereunder shall be applied to each Portfolio as a whole, and
not to separate classes of shares within the portfolios.
Term: Pursuant to Article 7, the term of this Agreement shall
commence on December 29, 1998 and shall remain in effect
through January 31, 1999 ("Initial Term"). This Agreement
shall be renewed automatically for successive periods of three
years after the Initial Term, unless terminated by either
party on not less than 90 days prior written notice to the
other party. In the event of a material breach of this
Agreement by either party, the non-breaching party shall
notify the
A-1
<PAGE> 9
breaching party in writing of such breach and upon receipt of
such notice, the breaching party shall have 45 days to remedy
the breach or the nonbreaching party may immediately terminate
this Agreement.
Notwithstanding the foregoing, after such termination
for so long as the Administrator, with the written consent of
the Trust, in fact continues to perform any one or more of the
services contemplated by this Agreement or any schedule or
exhibit hereto, the provisions of this Agreement, including
without limitation the provisions dealing with
indemnification, shall continue in full force and effect.
Compensation due the Administrator and unpaid by the Trust
upon such termination shall be immediately due and payable
upon and notwithstanding such termination. The Administrator
shall be entitled to collect from the Trust, in addition to
the compensation described in this Schedule A, the amount of
all of the Administrator's cash disbursements for services in
connection with the Administrator's activities in effecting
such termination, including, without limitation, the delivery
to the Trust and/or its designees of the Trust's property,
records, instruments and documents, or any copies thereof.
Subsequent to such termination, for a reasonable fee, the
Administrator will provide the Trust with reasonable access to
any Trust documents or records remaining in its possession.
If, for any reason, the Administrator is replaced as
fund manager and administrator, or if a third party is added
to perform all or a part of the services provided by the
Administrator under this Agreement (excluding any
subadministrator appointed by the Administrator as provided in
Article 7 hereof), then the Trust shall make a one-time cash
payment, as liquidated damages, to the Administrator equal to
the balance due the Administrator for the remainder of the
term of this Agreement, assuming for purposes of calculation
of the payment that the asset level of the Trust on the date
the Administrator is replaced, or a third party is added, will
remain constant for the balance of the contract term.
THE RIVERFRONT FUNDS
By:
--------------------------
Walter B. Grimm, President
BISYS FUND SERVICES LIMITED
PARTNERSHIP
By: BISYS Fund Services, Inc.,
General Partner
By:
--------------------------
Stephen G. Mintos,
Executive Vice President
A-2
<PAGE> 1
Exhibit (9)(b)
MASTER TRANSFER AND RECORDKEEPING AGREEMENT
AGREEMENT made as of the 29th day of December, 1998, by and between THE
RIVERFRONT FUNDS (the "Fund"), having its principal place of business at 3435
Stelzer Road, Columbus, Ohio 43219, and THE PROVIDENT BANK ("Provident") having
its principal place of business at One East Fourth Street, Cincinnati, Ohio
45202.
WITNESSETH THAT
WHEREAS, the Fund desires Provident to perform certain services for the
Fund and each of its Portfolios and Provident is willing to perform such
services.
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, each party agrees as follows:
1. SERVICES - Provident shall perform for the Fund and each Portfolio
of the Fund the services set forth on Exhibit A which is attached hereto and
made a part hereof. Provident shall also perform for each Portfolio of the Fund,
without additional charge, any services which it customarily performs in the
ordinary course of business without additional charge for any investment
companies for which Provident acts as transfer agent, divided disbursing agent
or shareholder servicing and recordkeeping agent.
Provident shall perform such other services in addition to those set
forth in Exhibit A hereto as the Fund shall request in writing. Any of the
services to be performed hereunder, and the manner in which such services are to
be performed, shall be changed only pursuant to a written agreement signed by
the parties hereto.
Provident will undertake no activity which, in its judgment, will
adversely affect the performance of its obligations to the Fund under this
Agreement.
2. FEES - The Fund shall pay Provident for the services set forth in
Section 1 of this Agreement in accordance with and in the manner set forth in
Exhibit B which is attached hereto and made a part hereof.
3. EFFECTIVE DATE - This Agreement shall become effective as
of the date set forth above.
4. TERM - This Agreement shall be in effect until terminated
in accordance with Section 16 hereof.
5. USE OF PROVIDENT'S NAME - The Fund will not use Provident's name in
any sales literature or other material in a manner not approved by Provident in
writing before such use, unless a similar such use was previously approved.
Notwithstanding the foregoing, Provident hereby consents to all uses of
Provident's name which merely refer in accurate terms to Provident's
<PAGE> 2
name which merely refer in accurate terms to Provident's appointments hereunder
or which are required by the Securities and Exchange Commission or a state
securities commission, and, provided further, that in no case will such
approval be unreasonably withheld or delayed.
6. STANDARD OF CARE - Provident shall at all times use its best efforts
and act in good faith and in a non-negligent manner in performing all services
pursuant to this Agreement.
7. UNCONTROLLABLE EVENTS - Provident shall not be liable for damage,
loss of data, delays or errors occurring by reason of circumstances beyond its
control including, but not limited to, acts of civil or military authority,
national emergencies, fire, flood or catastrophe, acts of God, insurrection,
war, riots or failure of transportation, communication or power supply. However,
Provident shall keep in a separate and safe place additional copies of all
records required to be maintained pursuant to this Agreement or additional tapes
or discs necessary to reproduce all such records. Furthermore, at all times
during this Agreement, Provident shall maintain an arrangement whereby Provident
will have a backup computer facility available for its use in providing the
services required hereunder in the event circumstances beyond Provident's
control result in Provident not being able to process the necessary work at its
principal computer facility. Provident shall, from time to time, upon request
from the Fund provide written evidence and details of its arrangement for
obtaining the use of such a backup computer facility. Provident shall use
reasonable care to minimize the likelihood of all damage, loss of data, delays
and errors resulting from an uncontrollable event, and should such damage, loss
of data, delays or errors occur, Provident shall use its best efforts to
mitigate the effects of such occurrence. Representatives of the Fund shall be
entitled to inspect Provident's premises and operating capabilities within
reasonable business hours and upon reasonable notice to Provident.
8. INDEMNIFICATION - The Fund shall indemnify and hold Provident, its
employees and agents harmless against any losses, claims, damages, judgments,
liabilities or expenses (including reasonable counsel fees and expenses)
resulting from (1) transactions which occurred prior to the date Provident began
serving as Transfer Agent to the Fund; (2) action taken or permitted by
Provident in good faith with due care and without negligence in reliance upon
instructions received from the Fund in accordance with Section 9 hereof or with
respect to the Fund, upon the opinion of counsel for the Fund, as to anything
arising in connection with its performance under this Agreement or which arises
out of the Fund's lack of good faith or willful misconduct; (4) the sale of
shares in violation of any requirement of federal or state securities laws; or
(5) any act done or suffered by Provident with respect to the Fund in good faith
with due care and without negligence in connection with its performance under
this
-2-
<PAGE> 3
Agreement in reliance upon any instruction, order, stock certificate or other
instrument reasonably believed by it to be genuine and to bear the genuine
signature of any person or persons authorized to sign, countersign or execute
same, and which complies with all applicable requirements of the Fund's current
prospectus and statement of additional information, this Agreement and
instructions (it being specifically agreed that, for the purpose of this
indemnification, if any instruction received by Provident in accordance with
Section 9 hereof differs from the requirements set forth in the current
prospectus or statement of additional information then, with regard to that
difference, Provident need only comply with such instruction and not the current
prospectus or statement of additional information) and other governing documents
provided to Provident by the Fund. In the event Provident requests the Fund to
indemnify or hold it harmless hereunder, Provident shall use its best efforts to
inform the Fund of the relevant facts concerning the matter in question.
Provident shall use reasonable care to identify and promptly notify the Fund
concerning any matter which Provident believes may result in a claim for
indemnification against the Fund, and shall notify the Fund within seven days of
notice to Provident of the filing of any suit or other legal action or the
institution by a government agency of any administrative action or investigation
against Provident which involves its duties under this Agreement. The Fund shall
have the election of defending Provident against any claim with respect to the
Fund which may be the subject of indemnification or holding harmless hereunder.
In the event the Fund so elects, it will so notify Provident and thereupon the
Fund shall take over defense of the claim and, if so requested by the Fund,
Provident shall incur no further legal or other expenses related thereto for
which it shall be entitled to indemnity or holding harmless hereunder; provided,
however, that nothing herein contained shall prevent Provident from retaining
counsel to defend any claim at Provident's own expense. Except with the prior
written consent of the Fund, Provident shall in no event confess any claim or
make any compromise in any matter in which the Fund will be asked to indemnify
or hold Provident harmless hereunder. Provident shall be without liability to
the Fund with respect to anything done or omitted to be done, in accordance with
the terms of this Agreement or instructions properly received pursuant hereto,
if done in good faith and without negligence or willful or wanton misconduct,
and in no event shall Provident be liable for consequential damages, lost
profits, or other special damages, even if Provident has been informed of the
possibility of such damage or loss by the Fund or by third parties.
Notwithstanding the forgoing, Provident shall be liable to the Fund for any
damage or losses suffered by the Fund as a result of a delay or negligence on
the part of Provident in processing a purchase or liquidation transaction or in
making payment to a shareholder of the Fund; it being agreed that, without in
any way limiting Provident's liability for other transactions hereunder, such
damages shall not be deemed to be consequential or special.
-3-
<PAGE> 4
9. INSTRUCTIONS - Provident shall comply with all instructions issued
by the Fund in the form prescribed below which are permitted or required under
Exhibit A attached hereto. Wherever Provident takes action hereunder pursuant to
instructions from the Fund, Provident shall be entitled to rely upon such
instructions only when such instructions are signed by the President or
Treasurer of the Fund or by an individual designated in writing by the President
or Treasurer as a person authorized to give instructions hereunder. The Fund may
waive the requirement that all instructions be in writing, if such waiver
defines the occurrences not requiring written instruction, indicates the persons
authorized to give such non-written instructions, and is signed by one of the
persons pursuant to the immediately preceding sentence of this Section 9. In the
event Provident obtains the Fund's written waiver, it may rely on non-written
instructions received pursuant thereto.
10. CONFIDENTIALITY - Provident agrees to treat all records and other
information relative to the Fund and the Fund's shareholders confidentially, and
Provident on behalf of itself and its employees agrees to keep confidential all
such information, except, after prior notification to and approval by the Fund,
which approval shall not be unreasonably withheld and may not be withheld where
Provident may be exposed to civil or criminal contempt proceedings, when
requested to divulge such information by duly constituted authorities or when so
requested by a shareholder of the Fund seeking information about his own or an
appropriately related account.
11. REPORTS - Provident will furnish to the Fund and to properly
authorized auditors, examiners, investment companies, dealers, salesmen,
insurance companies, transfer agents, registrars, investors and others
designated by the Fund in writing, such reports at such times as are prescribed
for each service on Exhibit A attached hereto.
12. RIGHT OF OWNERSHIP - Provident agrees that all records and other
data received, computed, developed, used and/or stored pursuant to this
Agreement are the exclusive property of the Fund and that all such records and
other data will be furnished without additional charge to the Fund in available
machine readable data form immediately upon termination of this Agreement with
respect to the Fund for any reason whatsoever. Furthermore, upon the Fund's
request at any time or times while this Agreement is in effect, Provident shall
deliver to the Fund at the Fund's expense any or all of the data and records
held by Provident pursuant to this Agreement in the form as requested by the
Fund. On the effective date of termination of this Agreement or, if later, on
the date the Fund ceases to use Provident's services, Provident will promptly
return to the Fund any and all records and other data belong to the Fund free of
any claim or retention of rights by Provident.
-4-
<PAGE> 5
13. REDEMPTION OF SHARES - The parties hereto agree that Provident
shall process liquidations, redemptions or repurchases of shares of the Fund, as
the agent for the Fund, in the manner described in the then current prospectus
and statement of additional information for the Fund. Notwithstanding the
foregoing, Provident shall be liable for any losses, damages, claims or expenses
resulting from Provident's failure to obtain the appropriate signature guarantee
with regard to any redemption or transfer processed by Provident unless
Provident is authorized in writing by the Fund to waive such a requirement.
14. SUBCONTRACTING - The Fund may require that Provident or Provident
may, with the prior written consent of the Fund, subcontract with one or more of
its affiliates or other persons to perform all or part of its obligations
hereunder, provided, however, that, notwithstanding any such subcontract,
Provident shall be fully responsible to the Fund hereunder.
15. ASSIGNMENT - This Agreement and the rights and duties hereunder
shall not be assignable by Provident or the Fund except by the specific written
consent of the other party.
16. TERMINATION - This Agreement may be terminated by Provident or not
less than 180 days prior written notice to the Fund on by the Fund on not less
than 90 days prior written notice to Provident. Upon such termination, Provident
will use its best efforts to cooperate and assist in accomplishing a timely,
efficient and accurate conversion to the person or firm which will provide the
services described hereunder. This Agreement may be terminated by the Fund
without the payment of any penalty, forfeiture, compulsory buyout amount or
performance of any other obligation which could deter termination, provided,
however, that for the purpose of this Section any amount due under Section 2 of
this Agreement which is undisputed is not considered a penalty, forfeiture,
compulsory buyout amount or performance of any other obligation which could
deter termination.
This Agreement may be terminated by the Fund after written notice to
Provident by the Fund if there is a material breach or violation of this
Agreement or if Provident fails to perform any of its obligations under this
Agreement and the failure continues for more than thirty (30) days after the
Fund gives notice of the failure to Provident or bankruptcy or insolvency
proceedings of any nature are instituted by or against Provident.
17. INSURANCE - Provident shall maintain throughout the term of this
Agreement a fidelity bond(s) in an amount in excess of the minimum amount
required to be obtained by the Fund pursuant to Rule 17g-1 under the Investment
Company Act of 1940 (the "1940 Act") covering the acts of its officers,
employees or agents in performing any and all of the services required to be
performed hereunder. Provident agrees to promptly notify the Fund in writing
-5-
<PAGE> 6
of any material amendment or cancellation of such bond(s) and Provident shall at
such times as the Fund may request, but at least once each year, notify the Fund
of any claims made pursuant to such bond(s).
18. AMENDMENT - This Agreement may be amended at any time by an
instrument in writing executed by both Provident and the Fund, or each of their
respective successors, provided that any such amendment will conform to the
requirements set forth in the 1940 Act and the rules and regulations thereunder.
19. NOTICE - Any notice shall be sufficiently given when sent by
registered or certified mail to a party at the address of such party set forth
above or at such other address as such party may from time to time specify in
writing to the other party.
20. SECTION HEADINGS - Section headings are included for con-
venience only and are not to be used to construe or interpret this
Agreement.
21. INTERPRETIVE PROVISIONS - In connection with the operation of this
Agreement, Provident and the Fund may agree from time to time on such provisions
interpretive of or in addition to the provisions of this Agreement as may in
their combined opinions be consistent with the general tenor of this Agreement.
Furthermore, Provident and the Fund may agree to add to, delete from or change
the services set forth on Exhibit A to this Agreement. Each such interpretive or
additional provision, and each addition, deletion or change is to be signed by
the parties and annexed hereto, and no such provision, addition, deletion or
change shall contravene any applicable federal or state law or regulation and no
such provision, addition, deletion or change shall be deemed to be an amendment
of any provision of this Agreement with the exception of Exhibit A hereto.
22. GOVERNING LAW - This Agreement shall be governed by and
its provisions shall be construed in accordance with the Laws of
the State of Ohio.
23. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS - The
Riverfront Funds is a business trust organized under Chapter 1746, Ohio Revised
Code and under a Declaration of Trust, to which reference is hereby made and a
copy of which is on file at the Office of the Secretary of State of Ohio as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of "The Riverfront Funds" entered into in the name or on
behalf thereof by any of the Trustees, officers, employees or agents are made
not individually, but in such capacities, and are not binding upon any of the
Trustees, officers, employees, agents or shareholders of the Fund personally,
but bind only the assets of the Fund, as set forth in Section 1746.13(A), Ohio
Revised Code, and all persons dealing with any of the Portfolios of the Fund
must
-6-
<PAGE> 7
look solely to the assets of the Fund belonging to such Portfolio for the
enforcement of any claims against the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE PROVIDENT BANK
By:
------------------------------------------
(name) (title)
THE RIVERFRONT FUNDS
By:
------------------------------------------
(name) (title)
-7-
<PAGE> 8
EXHIBIT A - SERVICES
The services provided for in this Agreement shall be performed by
Provident or any agent appointed by Provident pursuant to Section 14 of this
Agreement under the name of The Provident Bank (Provident) and this name or any
similar name or logo will not be used by Provident or its agents for any
purposes other than those related to this Agreement or to any other agreement
which Provident may enter into with the Fund or with companies affiliated with
the Fund.
The offices of Provident shall be open to perform the services pursuant
to this Agreement on all days when the Fund is open to transact business.
Provident will perform all services normally provided to investment
companies such as the Fund and the quality of such services shall be equal to or
better than that provided to the other investment companies serviced by
Provident. With respect to the Fund, by way of illustration, but not limitation,
these services will include:
1. Establishing, maintaining, safeguarding and reporting on
shareholder account information and account histories,
(including registration, name and address recorded in
generally accepted form, dealer, representative, branch,
and territory information, mailing address, distribution
address, various codes and specific information relating
to (if applicable); level payments, letters of intent,
insured redemption plans, account groupings for rights of
accumulation discount processing, and for account group
reporting for plan accounts and other accounts grouped
for master sub-account reporting).
2. Recording and controlling shares outstanding in
certificate ("issued") and non certificate ("unissued")
form.
3. Maintaining a record for each certificate issued to include
certificate number, account number, issued date, number of
shares, cancelled date or stop date, where appropriate.
4. Reconciling the number of outstanding shares of the Fund
on a daily basis with the Fund and the Fund's custodian,
promptly correcting any differences noted.
5. Establishing and maintaining a trade file on behalf of
the Fund based on trade information furnished to the
transfer agent by the Fund or its distributors.
-1-
<PAGE> 9
6. Accepting and processing direct cash investments however
received and investing such investments promptly in
shareholder accounts.
7. Passing upon the adequacy of documents properly endorsed
and guaranteed submitted by or on behalf of a shareholder
to transfer ownership or redeem shares.
8. Transferring ownership of shares upon the books of each
Fund.
9. Redeeming shares and preparing and mailing redemption
checks or wire proceeds as instructed.
10. Preparing and promptly mailing account statements to the
shareholder or such other authorized address and, when
appropriate, as instructed by the Fund, to the dealer or
dealer branch, whenever transaction activity effecting share
balances are posted to the Fund's accounting that is of the
type that should receive such statement.
11. Checking surrendered certificates for stop transfer
instructions.
12. Cancelling certificates surrendered.
13. Issuing certificates as replacements for those cancelled,
or as an original issue of additional shares or upon the
reduction of an equal number of unissued shares.
14. Maintaining and updating a stop transfer file, promptly
placing stop transfer codes upon notification of possible
loss, destruction or disappearance of a certificate. Upon
receipt of proper documentation obtaining necessary insurance
forms and issuing replacement certificates.
15. Balancing outstanding shares of record with the custodian
prior to each distribution and calculating and paying or
reinvesting distributions to shareholders of record and to
open trade receivables and free stock.
16. Processing exchanges of shares of the Fund or Portfolio
for another, calculating proper sales charges and
collecting fees as required.
17. Processing level payment liquidations according to plan
instructions.
18. Reporting to the Fund and its custodian daily the capital
stock activities and dollar amount of transactions.
-2-
<PAGE> 10
19. Promptly answering inquiring from shareholders, dealers, Fund
personnel, and others as requested in accordance with the
terms of this Agreement as to account matters, referring
policy or investment matters to the Fund.
20. Mailing reports and special mailings, as directed by the
Fund to all shareholders or selected holders or dealers.
21. Providing services with regard to the annual or special
meetings of the Fund, including preparation and timely mailing
of proxy material to shareholders of record and others as
directed by the Fund, and receiving, examining and recording
all properly executed proxies and performing such follow-up as
required by the Fund.
22. Providing periodic listings and tallies of shareholder
votes and certifying the final tally.
23. Providing an inspector of elections at the annual or any
special meeting of the Fund.
24. Maintaining tax information for each account, deducting
amounts where required and furnishing to the Fund, its
shareholders, dealers and, when appropriate, regulatory
bodies, the necessary tax information all in compliance with
the various applicable laws.
25. Maintaining records of account and distribution
information for checks and confirmations returned as
undeliverable by the Post Office.
26. Maintaining records and reporting sales information for
Blue Sky reporting purposes.
27. Calculating and processing Fund mergers or stock
dividends, as directed by the Fund.
28. Maintaining all Fund records as outlined in the record
and tape retention schedule delivered by the Fund.
29. Reconciling all investment, distribution and redemption
accounts.
30. Providing for the replacement of uncashed distribution or
redemption checks.
31. Maintaining and safeguarding an inventory of unissued
blank stock certificates, checks and other Fund records.
32. Making available to the Fund and its distributors at
their locations, CRTS which will provide immediate
-3-
<PAGE> 11
electronic access to computerized records maintained for
the Fund.
33. Providing space and such technical expertise as may be
required to enable the Fund and its properly authorized
auditors, examiners and others designated by the Fund in
writing to properly understand and examine all books, records,
computer files, microfilm and other items maintained pursuant
to this Agreement, and to assist as required in such
examination.
34. Mailing prospectuses to existing accounts on receipt of
the first direct investment transaction after a new
prospectus has been issued by the Fund.
35. Mailing cash election notices when required prior to
capital gains distributions.
36. Maintaining information, performing the necessary research and
producing reports required to comply with all applicable state
escheat or abandoned property laws.
With respect to each Portfolio of the Fund, the Transfer Agent will
produce reports as requested by the Fund including but not limited to the
following:
<TABLE>
<CAPTION>
<S> <C> <C>
Shareholder Account Confirmation As required
Redemption Checks When redemption
is made
Certificates When requested
Level payment checks On payment cycle
Distribution checks As required
Name and address labels (per As requested
account registration)
Proxy When required
1099 Annually
1042-S Annually
Transaction journals Daily
Record date position control Daily
Daily and (monthly) cash proof Daily
</TABLE>
-4-
<PAGE> 12
<TABLE>
<CAPTION>
<S> <C> <C>
Daily (monthly) share proof Daily
Daily master control Daily
Blue Sky exception Daily
Blue Sky master list Monthly and whenever
a new permit is issued
by a state
Blue Sky sales reports Cycle as designated
in advance by
distributor
Check register Daily
Account information reports When requested
(Monthly) Cumulative Transaction Monthly
New account list Monthly
Shareholder master list When requested
Sales by State Monthly
Activities statistics Monthly
Distribution journals As required
Proxy tallies and vote listings When requested
Level payment account check Monthly
reconciliation
Dividend account check As required
reconciliation
</TABLE>
-5-
<PAGE> 13
EXHIBIT B
Dated: December 29, 1998
THE PROVIDENT BANK
Transfer and Recordkeeping Fee Schedule
ANNUAL ACCOUNT SERVICE FEE - PER FUND TYPE
- ------------------------------------------
MONEY MARKET - $24,000 annual minimum, includes the first 500 accounts.
Open accounts over 500, $24.00 per year per account.
*Closed accounts $12.00 per year.
MONTHLY DIVIDEND - $20,000 annual minimum, includes the first 500
accounts.
Open accounts over 500, $20.00 per year per account.
*Closed accounts $10.00 per year.
ALL OTHERS - $18,000 annual minimum, includes the first 500 accounts.
Open accounts over 500, $18.00 per year per account.
*Closed accounts $9.00 per year.
Fees are billed on a monthly basis at the rate of 1/12 of the annual fee. A
charge is made for an account in the month that an account opens.
MULTIPLE CLASSES OF SHARES
- --------------------------
Classes of shares which have a different net asset value or pay different daily
dividends will be treated as separate classes, and the fee schedule above,
including the appropriate minimums, will be charged for each separate class.
RETIREMENT PLAN ACCOUNTS
- ------------------------
Retirement fees will be charged as follows:
If Paid If Paid by
by Advisor Account
Setup/Termination $ 5.00 $10.00
Transfer Out $15.00 $30.00
Annual Fee $10.00 $20.00
FUND SERV/NSCC PROCESSING
- -------------------------
Mutual Fund Transaction - Monthly Charge .70/Item
(Minimum $250 and a Fund Family Maximum of $750)
B-6
<PAGE> 14
*CLOSED ACCOUNTS
- ----------------
Accounts are considered closed accounts the month after closing through June of
the following year.
ADDITIONAL SERVICES
- -------------------
Extraordinary services, special reports or customized processing may be subject
to additional fees, which will be quoted upon request.
OUT-OF-POCKET EXPENSES
- ----------------------
The Provident Bank shall be entitled to be reimbursed for all reasonable
out-of-pocket expenses including, but not limited to, the expenses set forth.
REIMBURSABLE EXPENSES
The Provident Bank shall be entitled to be reimbursed for all reasonable
out-of-pocket expenses including, but not limited to the following:
- - Postage and insurance
- - Overnight delivery service
- - Duplicating charges
- - Fax charges
- - Out of country or excessive telephone calls
- - Hardware, software, telephone charges if inquiry access is
requested
- - Supplies
- - Special 800 number
- - Checks or share drafts if a fund has check writing privileges
- - Cash Management Service Charges
-Checks Deposited
-Checks Returned
-Incoming Wire Transfers
-Outgoing Wire Transfers
-ACH Items Received
-ACH Items Originated
-Checks Paid
-Stop Payments
- - Any expense The Provident Bank shall incur at the written
direction of an officer of the Fund
THE PROVIDENT BANK THE RIVERFRONT FUNDS
By By
-------------------------------- --------------------------
(name) (title) (name) (title)
B-7
<PAGE> 1
Exhibit (9)(c)
THE RIVERFRONT FUNDS
SHAREHOLDER SERVICES PLAN
-------------------------
SECTION 1. Upon the recommendation of the administrator to The
Riverfront Funds (the "Fund"), any officer of the Fund is authorized to execute
and deliver, in the name and on behalf of the Fund, written agreements in
substantially the form duly approved by the Board of Trustees ("Servicing
Agreements") with financial institutions which are shareholders of record or
which have a servicing relationship ("Service Organizations") with the
beneficial owners of a class of the Fund's shares of beneficial interest
("Shares") of one or more of the Fund's investment portfolios (such portfolios
hereinafter individually called a "Portfolio" and collectively the
"Portfolios"). Such Servicing Agreements shall require the Service Organizations
to provide support services as set forth therein and as described in the Fund's
applicable Prospectus to their customers who own of record or beneficially
Shares in consideration for a fee, computed daily and paid monthly in the manner
set forth in the Servicing Agreements, at the annual rate of up to .25% of the
average daily net asset value of Shares owned of record or beneficially by such
customers. Any bank, trust company, thrift institution, broker-dealer (including
BISYS Fund Services Limited Partnership), investment adviser, or other financial
institution is eligible to become a Service Organization and to receive fees
under this Plan. All expenses incurred by the Fund with respect to Shares of a
particular Portfolio in connection with this Servicing Agreements and the
implementation of this Plan shall be borne entirely by the holders of Shares of
the Portfolio.
SECTION 2. So long as this Plan is in effect, the administrator shall
provide to the Fund's Board of Trustees, and the Trustees shall review, at least
quarterly or more frequently if requested by the Trustees, a written report of
the amounts expended pursuant to this Plan and the purposes for which such
expenditures were made.
SECTION 3. The Plan shall not take effect with respect to the Shares of
a Portfolio until it has been approved, together with the form of the Servicing
Agreement, by a vote of a majority of the Trustees who are not "interested
persons" of the Fund (as defined in the Investment Company Act of 1940) and who
have no direct or indirect financial interest in the operation of this Plan or
in any agreements related to this Plan (the "Disinterested Trustees"), cast in
person at a meeting called for the purpose of voting on the Plan or such
Servicing Agreement; PROVIDED, however that the Plan shall not be implemented
for a particular Portfolio prior to the effective date of the post-effective
amendment to the Fund's registration statement describing the Plan and its
implementation with respect to that Portfolio.
<PAGE> 2
SECTION 4. Unless sooner terminated, the Plan shall continue until ,
199 , and thereafter, shall continue automatically for successive annual periods
provided such continuance is approved at least annually by a majority of the
Board of Trustees, including a majority of the Disinterested Trustees.
SECTION 5. This Plan may be amended at any time with respect to any
Portfolio by the Board of Trustees, provided that any material amendments of the
terms of this Plan shall become effective only upon the approvals set forth in
Section 4.
SECTION 6. This Plan is terminable at any time with respect to any
Portfolio by vote of a majority of the Disinterested Trustees.
SECTION 7. While this Plan is in effect, the selection and nomination
of those Disinterested Trustees shall be committed to the discretion of the
Fund's Disinterested Trustees.
SECTION 8. This Plan has been adopted as of ,
1997.
SECTION 9. The names "The Riverfront Funds" and "Trustees of The
Riverfront Funds" refer respectively to the Funds created and the Trustees, as
trustees but not individually or personally, acting from time under the
Declaration of Trust, to which reference is hereby made and a copy of which is
on file at the office of the Secretary of State of Ohio and elsewhere as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligation of "The Riverfront Funds" entered into in the name or on
behalf thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, Shareholders or representatives of the Fund personally, but bind only
the assets of the Fund, and all persons dealing with any series and/or class of
Shares of the Fund must look solely to the assets of the Fund belonging to such
series and/or class for the enforcement of any claims against the Fund.
2
<PAGE> 1
Exhibit (9)(d)
THE RIVERFRONT FUNDS
(the "Fund")
3435 Stelzer Road
Columbus, Ohio 43219
SERVICING AGREEMENT
to
SHAREHOLDER SERVICES PLAN
Ladies and Gentlemen:
The Riverfront Funds (the "Fund") wishes to enter into this Servicing
Agreement with you concerning the provisions of administrative support services
to your customers who may from time to time be the record or beneficial owners
of shares (such shares referred to herein as the "Shares") of one or more of the
Fund's investment portfolios (individually, a "Portfolio" and collectively, the
"Portfolios"), which are listed on Appendix A.
The terms and conditions of this Servicing Agreement are as follows:
Section 1. You agree to provide administrative support services to your
customers who may from time to time own of record or beneficially a Portfolio's
Shares. Services provided may include some or all of the following:
(a) sending periodic information to service organizations that
track investment company information;
(b) answering shareholder inquiries regarding account status and
history;
(c) collecting information from shareholders regarding changes in
option and account designation and addresses and transmitting
the same to the Portfolio's transfer agent;
(d) collecting the same type of information as referred to in sub-
paragraph (c) from independent account executives and brokers
and transmitting it to the Portfolio's transfer agent;
(e) supplying other information to the Portfolio's transfer agent
so that the transfer agent can properly maintain account
records; and
(f) providing facilities, equipment and personnel in connection
with the provision of other services described herein; and
(g) performing such additional shareholder services as may be agreed upon
by the Fund and the Shareholder Servicing Agent, which shall be
approved in accordance with the 1940 Act.
<PAGE> 2
Section 2. You will provide such office space and equipment, telephone
facilities and personnel (which may be any part of the space, equipment and
facilities currently used in your business, or any personnel employed by you) as
may be reasonably necessary or beneficial in order to provide the aforementioned
services to customers.
Section 3. Neither you nor any of your officers, employees or agents
are authorized to make any representations concerning the Fund, a Portfolio or
its Shares except those contained in our then current prospectus for such
Shares, copies of which will be supplied by BISYS Fund Services Limited
Partnership ("BISYS"), the Fund's distributor and administrator, to you, or in
such supplemental literature or advertising as may be authorized by the Fund in
writing.
Section 4. For all purposes of this Agreement you will be deemed to be
an independent contractor, and will have no authority to act as agent for the
Fund in any matter or in any respect. By your written acceptance of this
Agreement, you agree to and do release, indemnify and hold us harmless from and
against any and all direct or indirect liabilities or losses resulting from
requests, directions, actions or inactions of or by you or your officers,
employees or agents regarding your responsibilities hereunder or the purchase,
redemption, transfer or registration of the Shares by or on behalf of customers.
You and your employees will, upon request, be available during normal business
hours to consult with the Fund or its designees concerning the performance of
your responsibilities under this Agreement.
Section 5. In consideration for the services and facilities provided by
you hereunder, the Fund will pay to you, and you will accept as full payment
therefore, a fee at the annual rate of up to .25% (25 basis points) of the
average daily net assets of a Portfolio's Shares owned of record or beneficially
by your customers from time to time for which you provide services hereunder,
which fee will be computed daily and payable monthly. The fee rate stated above
may be prospectively increased or decreased by the Fund, in its sole discretion,
as any time upon notice to you. Further, the Fund may, in its discretion and
without notice, suspend or withdraw the sale of such Shares, including the sale
of such Shares to you for the account of any customer(s).
Section 6. Any person authorized to direct the disposition of monies
paid or payable by the Fund pursuant to this Agreement will provide to the
Fund's Board of Trustees, and the Trustees will review, at least quarterly, a
written report of the amounts so expended and the entities to whom such
expenditures were made. In addition, you will furnish the Fund or its designees
with such information at the Fund or its designees may reasonably request
(including, without limitation, periodic certifications confirming
- 2 -
<PAGE> 3
the provision to customers of some or all of the services described herein), and
will otherwise cooperate with the Fund and its designees (including, without
limitation any auditors designated by the Fund), in connection with the
preparation of reports to the Fund's Board of Trustees concerning this Agreement
and the monies paid or payable by the Fund pursuant hereto, as well as any other
reports or filings that may be required by law.
Section 7. We may enter into other similar Servicing Agreements with
any other person or persons without your consent.
Section 8. By your written acceptance of this Agreement, you represent,
warrant and agree that: (i) in no event will any of the services provided by you
hereunder be primarily intended to result in the sale of any Shares issued by
the Fund; (ii) the compensation payable to you hereunder, together with any
other compensation you receive from customers for services contemplated by this
Agreement, will be fully disclosed to your customers, and will not be excessive
or unreasonable under the laws and instruments governing your relationships with
your customers; and (iii) if you are subject to the provisions of the
Glass-Steagall Act and other laws governing, among other things, the conduct of
activities by federally charted and supervised banks and other affiliated
banking organizations, you will perform only those activities which are
consistent with your statutory and regulatory obligations and will act solely as
agent for, upon the order of, and for the account of, your customers.
Section 9. This Agreement will become effective on the date a fully
executed copy of this Agreement is received by the Fund or its designee. This
Agreement may be terminated at any time, without the payment of any penalty by
the vote of a majority of the members of the Board of Trustees of the Fund and
who have no direct or indirect financial interest in the operation of the
Shareholder Servicing Plan or in any related agreements to the Shareholder
Servicing Plan ("Disinterested Trustees") or by a majority of the votes
attributable to the outstanding voting securities of the Fund on not more than
sixty (60) days written notice to the paries to this Agreement.
Section 10. All notices and other communications to either you or the
Fund will be duly given if mailed, telegraphed, telexed or transmitted by
similar telecommunications device to the appropriate address shown given in this
Agreement.
Section 11. This Agreement will be construed in accordance with the
laws of the State of Ohio and is non-assignable by the parties hereto.
Section 12. This Agreement has been approved by vote of a
majority of (i) the Fund's Board of Trustees and (ii) the
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<PAGE> 4
Disinterested Trustees, cast in person at a meeting called for the purpose of
voting on such approval.
If you agree to be legally bound by the provisions of this Agreement,
please sign two copies of this letter where indicated below and promptly return
one copy to us, and one to the Fund's designee, BISYS, c/o Walter B. Grimm at
3435 Stelzer Road, Columbus, Ohio 43219.
Very truly yours,
THE RIVERFRONT FUNDS
BY
------------------------------------
Authorized Officer
DATE
------------------------
Accepted and Agreed to:
- -------------------------------------------------------------------------------
BY:
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ITS:
---------------------------------------------------------------------------
DATE:
------------------------
- -------------------------------------------------------------------------------
Taxpayer Identification Number
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<PAGE> 5
APPENDIX A
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Please provide administrative support services for the following funds:
Fund
- --------------------------------------------------
Fund
- --------------------------------------------------
Fund
- --------------------------------------------------
Dated:
--------------------------------------------
Approval:
-----------------------------------------
Company
-----------------------------------------
Authorized Signer
The Riverfront Funds
By
--------------------------------------
Authorized Signer (Name) (Title)
<PAGE> 1
Exhibit 9(e)
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
----------------------------------------------------
Agreement and Plan of Reorganization and Liquidation ("Agreement")
dated as of May 29, 1998, by and between The Riverfront Funds, Inc., a Maryland
corporation ("Company") and The Riverfront Funds, an Ohio business trust
("Trust").
WHEREAS, Company is registered under the Investment Company Act of
1940, as amended ("1940 Act") as an open-end investment company of the
management type and has issued and outstanding shares of capital stock, par
value $.001, of the following six series: The Riverfront U.S. Government
Securities Money Market Fund ("Company Money Market Fund"), The Riverfront U.S.
Government Income Fund ("Company Government Income Fund"), The Riverfront Income
Equity Fund ("Company Income Equity Fund"), The Riverfront Balanced Fund
("Company Balanced Fund"), The Riverfront Stock Appreciation Fund ("Company
Stock Appreciation Fund") and The Riverfront Large Company Select Fund ("Company
Large Company Select Fund," and, together with each of the Company's other five
series described above, the "Acquired Series"); and
WHEREAS, On or before the Exchange Date (as defined below) Trust is
expected to become registered under the 1940 Act as an open-end investment
company of the management type, and is expected to have issued and outstanding a
nominal number of shares of beneficial interest, without par value, of the
following six series: The Riverfront U.S. Government Securities Money Market
Fund ("Trust Money Market Fund"), The Riverfront U.S. Government Income Fund
("Trust Government Income Fund"), The Riverfront Income Equity Fund ("Trust
Income Equity Fund"), The Riverfront Balanced Fund ("Trust Balanced Fund"), The
Riverfront Small Company Select Fund ("Trust Small Company Select Fund") and The
Riverfront Large Company Select Fund ("Trust Large Company Select Fund," and,
together with each of the Trust's other five series described above, the
"Acquiring Series"); and
WHEREAS, Each of the Company and the Trust has authorized the issuance
of two classes of shares, Investor A Shares and Investor B Shares, each series
of Company other than Company Money Market Fund has issued and outstanding both
Investor A Shares and Investor B Shares, each series of Trust other than Trust
Money Market Fund, on or before the Valuation Time (as defined below), is
expected to have issued and outstanding a nominal number of both Investor A
Shares and Investor B Shares, Company Money Market Fund has issued and
outstanding Investor A Shares only, and Trust Money Market Fund, on or before
the Valuation Time (as defined below), is expected to have issued and
outstanding a nominal number of Investor A Shares only; and
WHEREAS, Each of the Acquired Series plans to transfer all assets
belonging to such series, and to assign all of the liabilities belonging to such
series, to the corresponding Acquiring Series, in exchange for Investor A Shares
and Investor B Shares (Investor A Shares only in the case of Trust Money Market
Fund) of the corresponding Acquiring Series ("Acquiring Series Shares"),
followed by the constructive distribution of the Acquiring Series Shares by each
<PAGE> 2
Acquired Series to the shareholders of the Acquired Series in connection with
the dissolution of the Company and the Acquired Series, all upon the terms and
provisions of this Agreement (individually and together, the "Reorganization");
and
WHEREAS, The Acquired Series and the Acquiring Series correspond to one
another as follows: Company Money Market Fund corresponds to Trust Money Market
Fund, Company Government Income Fund corresponds to Trust Government Income
Fund, Company Income Equity Fund corresponds to Trust Income Equity Fund,
Company Balanced Fund corresponds to Trust Balanced Fund, Company Stock
Appreciation Fund corresponds to Trust Small Company Select Fund and Company
Large Company Select Fund corresponds to Trust Large Company Select Fund; and
WHEREAS, This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1) of the
United States Internal Revenue Code of 1986, as amended (the "Code") for each
Acquired Series and its corresponding Acquiring Series; and
WHEREAS, The Board of Directors of the Company has determined that the
Reorganization is in the best interests of Company, and that the interests of
its shareholders will not be diluted as a result thereof; and
WHEREAS, The Trustee of the Trust has determined that the
Reorganization is in the best interests of the Trust and that the interests of
its shareholders will not be diluted as a result thereof;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto covenant and agree as follows:
1. Plan of Reorganization and Liquidation
(a) Sale of Assets, Assumption of Liabilities. Subject to the
prior approval of shareholders of Company and to the other terms and
conditions contained herein (including the condition that each Acquired
Series shall distribute to its shareholders all of its investment
company taxable income and net capital gain as described in Section
9(h) herein), Company agrees to assign, convey, transfer and deliver to
the Acquiring Series, and the Acquiring Series agree to acquire from
Company on the Exchange Date (as defined below), all of the Investments
(as defined below), cash and other assets of Company in exchange for
that number of full and fractional Acquiring Series Shares of the
Acquiring Series having an aggregate net asset value equal to the value
of all assets of Company transferred to the Acquiring Series, as
provided in Section 4, less the liabilities of Company assumed by the
Acquiring Series.
(b) Assets Acquired. The assets to be acquired by the
Acquiring Series from Company shall consist of all of Company's
property, including, without limitation, all Investments (as defined
below), cash and dividends or interest receivables which are owned by
Company and any deferred or prepaid expenses shown as an asset on the
books of Company as of the Valuation Time described in Section 4.
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<PAGE> 3
(c) Liabilities Assumed. Prior to the Exchange Date Company
will endeavor to discharge or cause to be discharged, or make provision
for the payment of, all of its known liabilities and obligations. The
Acquiring Series shall assume all liabilities, expenses, costs, charges
and reserves of Company, contingent or otherwise, including liabilities
reflected in the unaudited statement of assets and liabilities of
Company as of the Valuation Time, prepared by or on behalf of Company
in accordance with generally accepted accounting principles
consistently applied from and after December 31, 1997, and including
all liabilities of the Company under its registration statement on Form
N-1A filed with the Securities and Exchange Commission ("Commission")
under the Securities Act of 1933, as amended ("1933 Act").
(d) Matters Regarding Trust. To the extent deemed necessary
and appropriate, immediately upon delivery to the Company of the
Acquiring Series Shares, the Company, as the then sole shareholder of
the Trust, shall (l) elect as trustees of the Trust the persons then
serving as directors of the Company, and (2) approve or disapprove (i)
a separate Investment Advisory Agreement between the Trust and The
Provident Bank ("Provident") with respect to each of the Acquiring
Series, (ii) a separate Sub-Investment Advisory Agreement between
Provident and DePrince, Race & Zollo, Inc. with respect to the Trust
Income Equity Fund, (iii) the independent accountants who currently
serve in that capacity for the Company, and (iv) such other matters as
deemed necessary and appropriate, voting in the same manner as the
shareholders of the Acquired Series have voted in connection with the
Agreement.
(e) Liquidation and Dissolution. Upon consummation of the
transactions described in Section 1(a), 1(b), 1(c) and 1(d) above,
Company shall constructively distribute in complete liquidation to its
shareholders of record as of the Exchange Date the Acquiring Series
Shares received by it, each Company shareholder of record being
entitled constructively to receive that number and class of Acquiring
Series Shares equal to the proportion which the number and class of
shares of capital stock, par value $.001, of Company held by such
shareholder bears to the total number and class of such shares of
Company outstanding on such date, and shall take such further action as
may be required, necessary or appropriate under Company's Articles of
Incorporation, Maryland law and the Code to effect the complete
liquidation and dissolution of Company. Company will fulfill all
reporting requirements under the 1940 Act, both before and after the
Reorganization.
2. Representations, Warranties and Agreements of Company. Company
represents and warrants to and agrees with Trust and the Acquiring
Series that:
(a) Company is a corporation validly existing under the laws
of the State of Maryland and has power to own all of its properties and
assets and to carry out its obligations under this Agreement.
(b) Company is registered under the 1940 Act as an open-end
investment company of the management type, and such registration has
not been revoked or rescinded and is in full force and effect. Company
has elected to qualify and has qualified, or intends to elect and
qualify, each of the Acquired Series as a regulated
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<PAGE> 4
investment company under Part I of Subchapter M of the Code as of and
since its first taxable year, and each such Acquired Series qualifies,
or intends to elect and qualify, and intends to continue to qualify as
a regulated investment company for its taxable year ending upon its
liquidation. Each Acquired Series has been a regulated investment
company under such sections of the Code, or intends to elect and
qualify, at all times since its inception.
(c) The statements of assets and liabilities, including the
schedules of portfolio investments as of December 31, 1997, and the
related statements of operations for the year then ended, and
statements of changes in net assets for each of the two years in the
period then ended, for Company, such statements (for periods after
December 31, 1995) having been audited by Ernst & Young LLP,
independent auditors of Company, have been furnished to Trust. Such
statements of assets and liabilities fairly present the financial
position of Company as of such date and such statements of operations
and changes in net assets fairly reflect the results of operations and
changes in net assets for the periods covered thereby in conformity
with generally accepted accounting principles, and there are no known
material liabilities of Company as of such dates which are not
disclosed therein.
(d) The Prospectus of Company dated April 30, 1998 (the
"Company Prospectus") and its related Statement of Additional
Information dated April 30, 1998, in the forms filed under the 1933 Act
with the Commission and previously furnished to Trust, did not as of
their date and do not as of the date hereof contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading.
(e) Except as may have been previously disclosed to Trust,
there are no material legal, administrative or other proceedings
pending or, to the knowledge of Company, threatened against Company.
(f) There are no material contracts outstanding to which
Company is a party, other than as disclosed in the Company Prospectus
and the corresponding Statement of Additional Information, and there
are no such contracts or commitments (other than this Agreement) which
will be terminated with liability to Company on or prior to the
Exchange Date.
(g) Company has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on
its statements of assets and liabilities at December 31, 1997 and those
incurred in the ordinary course of Company's business as an investment
company since that date.
(h) As used in this Agreement, the term "Investments" shall
mean Company's investments shown on the statements of assets and
liabilities at December 31, 1997 referred to in Section 2(g) hereof, as
supplemented with such changes as Company shall make after December 31,
1997 in the ordinary course of its business.
-4-
<PAGE> 5
(i) Company has filed or will file all federal and state tax
returns which, to the knowledge of Company's officers, are required to
be filed by Company and has paid or will pay all federal and state
taxes shown to be due on said returns or on any assessments received by
Company. All tax liabilities of Company have been adequately provided
for on its books, and no tax deficiency or liability of Company has
been asserted, and no question with respect thereto has been raised, by
the Internal Revenue Service or by any state or local tax authority for
taxes in excess of those already paid.
(j) As of both the Valuation Time and the Exchange Date and
except for shareholder approval and otherwise as described in Section
2(1), Company will have full right, power and authority to assign,
transfer and deliver the Investments and any other of its assets and
liabilities to be transferred to Trust and the Acquiring Series
pursuant to this Agreement. On the Exchange Date, subject only to the
delivery of the Investments and any such other assets and liabilities
as contemplated by this Agreement, Trust and the Acquiring Series will
acquire the Investments and any such other assets subject to no
encumbrances, liens or security interests in favor of any third party
creditor of Company and, except as described in Section 2(k), without
any restrictions upon the transfer thereof.
(k) No registration under the 1933 Act of any of the
Investments would be required if they were, as of the time of such
transfer, the subject of a public distribution by either of Company or
Trust, except as previously disclosed to Trust by Company prior to the
date hereof.
(l) No consent, approval, authorization or order of any court
or governmental authority is required for the consummation by Company
of the transactions contemplated by this Agreement, except such as may
be required under the 1933 Act, Securities Exchange Act of 1934, as
amended (the "1934 Act"), or 1940 Act, state securities or blue sky
laws (which term as used herein shall include the laws of the District
of Columbia and of Puerto Rico) or state corporation laws.
(m) The Company will call a Special Meeting of Shareholders
("Special Meeting") to consider and act upon this Agreement, the
Reorganization and related matters. In connection with such meeting,
the Company will solicit proxies from its shareholders pursuant to
proxy solicitation materials complying in all material respects with
the 1934 Act and the Rules and Regulations of the Commission thereunder
("1934 Act Regulations") and the 1940 Act and the Rules and Regulations
of the Commission thereunder ("1940 Act Regulations").
(n) The Company will notify the Commission that the Trust will
adopt and succeed to the Company's existing registration statement on
Form N-1A (the "Registration Statement") under the 1933 Act with
respect to the shares of the Acquired Series. At the time the adoption
of such Registration Statement becomes effective, the Registration
Statement (i) will comply in all material respects with the provisions
of the 1933 Act and the Rules and Regulations of the Commission
thereunder (the "Regulations") and (ii) will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
-5-
<PAGE> 6
therein not misleading; and at the time Registration Statement becomes
effective, at the time of the Special Meeting and on the Exchange Date
(as defined below) the Company Prospectus and Statement of Additional
Information, as amended or supplemented by any amendments or
supplements filed by the Company, will not contain an untrue statement
of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading.
3. Representations, Warranties and Agreements of Trust. Trust represents
and warrants to and agrees with Company that:
(a) Trust is a business trust validly existing under the laws
of the State of Ohio and has power to carry on its business as it is
now being conducted and to carry out its obligations under this
Agreement.
(b) On the Exchange Date and upon adopting and succeeding to
the Registration Statement the Trust will be registered under the 1940
Act as an open-end investment company of the management type. The
Acquiring Series expect to qualify as regulated investment companies
under Part I of Subchapter M of the Code.
(c) The Acquiring Series will have no assets or liabilities as
of the Valuation Time.
(d) There are no material legal, administrative or other
proceedings pending or, to the knowledge of Trust or its Acquiring
Series, threatened against Trust or the Acquiring Series, which assert
liability on the part of Trust or the Acquiring Series.
(e) There are no material contracts outstanding to which Trust
or the Acquiring Series is a party, other than this Agreement and
material contracts disclosed in the Registration Statement.
(f) The Trust and the Acquiring Series will file all federal
and state tax returns which, to the knowledge of Trust's officers, are
required to be filed by Trust and the Acquiring Series and will pay all
federal and state taxes shown to be due on such returns or on any
assessments received by Trust of the Acquiring Series.
(g) No consent, approval, authorization or order of any
governmental authority is required for the consummation by Trust or the
Acquiring Series of the transactions contemplated by this Agreement,
except such as may be required under the 1933 Act, 1934 Act, 1940 Act,
state securities or blue sky laws or state business trust laws.
(h) As of both the Valuation Time and the Exchange Date and
otherwise as described in Section 3(g), Trust and the Acquiring Series
will have full right, power and authority to acquire the Investments
and any other assets and assume the liabilities of Company to be
transferred to the Acquiring Series pursuant to this Agreement.
(i) In connection with the Reorganization, the Trust will
adopt and succeed to the Registration Statement. At the time the
Registration Statement becomes effective, the Registration Statement
(i) will comply in all material respects with the provisions of the
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<PAGE> 7
1933 Act and the Regulations and (ii) will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and at the time the Registration Statement becomes
effective, at the time of the Special Meeting and on the Exchange Date
(as defined below) the Company Prospectus and Statement of Additional
Information, as amended or supplemented by any amendments or
supplements filed by the Company, will not contain an untrue statement
of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading.
(j) The Trust has no plan or intention to issue additional
Trust shares following the Reorganization except for shares issued in
the ordinary course of the Trust's business as an open-end investment
company; nor does the Trust have any plan or intention to redeem or
otherwise reacquire any Trust shares issued to Company shareholders
pursuant to the Reorganization, other than through redemptions arising
in the ordinary course of that business. The Trust will actively
continue the Company's business in the same manner that the Company
conducted it immediately before the Reorganization and has no plan or
intention to sell or otherwise dispose of any of the assets to be
acquired by the Trust in the Reorganization, except for dispositions
made in the ordinary course of its business and dispositions necessary
to maintain the status of each Acquiring Series as a regulated
investment company under Subchapter M of the Code.
(k) The Acquiring Series Shares to be issued by Trust have
been duly authorized and when issued and delivered by Trust to Company
pursuant to this Agreement will be legally and validly issued by Trust
and will be fully paid and nonassessable, and no shareholder of Trust
will have any preemptive right of subscription or purchase in respect
thereof.
(l) The issuance of Acquiring Series Shares pursuant to this
Agreement will be in compliance with all applicable federal and state
securities laws.
(m) Each Acquiring Series, upon filing of its first income
tax return at the completion of its first taxable year, will elect to
be a regulated investment company and until such time will take all
steps necessary to ensure its qualification as a regulated investment
company.
4. Exchange Date; Valuation Time. On the Exchange Date, Trust will deliver
to Company a number of Acquiring Series Shares having an aggregate net
asset value equal to the value of the assets of Company acquired by the
Acquiring Series, less the value of the liabilities of Company assumed,
determined as hereafter provided in this Section 4.
(a) The net assets of Company and each Acquired Series will be
computed as of the Valuation Time, using the valuation procedures set
forth in the Company Prospectus.
(b) The net asset value of each of the Acquiring Series Shares
will be determined to the nearest full cent as of the Valuation Time,
and shall be set at the net asset value per share of the corresponding
Acquired Series as of the Valuation Time.
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<PAGE> 8
(c) The Valuation Time shall be 4:00 P.M., Eastern Standard
Time, on October 30, 1998, or such earlier or later day as may be
mutually agreed upon in writing by the parties hereto (the "Valuation
Time").
(d) The Acquiring Series shall issue its Acquiring Series
Shares to Company on one share deposit receipt registered in the name
of Company. Company shall constructively distribute in liquidation the
Acquiring Series Shares received by it hereunder pro rata to its
shareholders by redelivering such share deposit receipt to Trust's
transfer agent, which will as soon as practicable make such
modifications to the accounts for each Trust shareholder as may be
necessary and appropriate.
(e) The Acquiring Series shall assume all liabilities of
Company, whether accrued or contingent, described in subsection 1(c)
hereof in connection with the acquisition of assets and subsequent
dissolution of Company or otherwise, except that recourse for assumed
liabilities relating to an Acquired Series shall be limited to the
corresponding Acquiring Series.
5. Expenses, Fees, etc. Each of Company and Trust shall be responsible for
its respective fees and expenses of the Reorganization. The Trust will
be responsible for its organization costs. Company will be responsible
for proxy solicitation and other costs associated with the Special
Meeting.
6. Exchange Date. Delivery of the assets of Company to be transferred,
assumption of the liabilities of Company to be assumed, and the
delivery of Acquiring Series Shares to be issued shall be made at the
offices of the Company, 309 Vine Street, Cincinnati, Ohio at 9:00 A.M.
on October 31, 1998, or at such other time, date, and location agreed
to by Company and Trust, the date and time upon which such delivery is
to take place being referred to herein as the "Exchange Date."
7. Special Meeting of Shareholders; Dissolution.
(a) Company agrees to call a Special Meeting of its
shareholders as soon as is practicable for the purpose of considering
the transfer of all of the assets of Company to, and the assumption of
all of the liabilities of Company by,the Acquiring Series as herein
provided, authorizing and approving this Agreement, and authorizing and
approving the liquidation and dissolution of Company, and it shall be a
condition to the obligations of each of the parties hereto that the
holders of capital stock, par value $.001, of Company shall have
approved this Agreement, and the transactions contemplated herein,
including the liquidation and dissolution of Company, in the manner
required by law and Company's Articles of Incorporation at such a
meeting on or before the Valuation Time.
(b) Company agrees that the liquidation and dissolution of
Company will be effected in the manner provided in Company's Articles
of Incorporation and in accordance with applicable law, and that it
will not make any constructive distribution of any Acquiring Series
Shares to the shareholders of Company without first paying or
adequately providing for the payment of all of Company's known debts,
obligations and liabilities.
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<PAGE> 9
(c) Each of Company and Trust will cooperate with the other,
and each will furnish to the other the information relating to itself
required by the 1934 Act and 1940 Act and the rules and regulations
thereunder to be set forth in the proxy solicitation materials to be
prepared by Company and utilized in connection with the Special
Meeting.
8. Conditions of Company's Obligations. The obligations of Company
hereunder shall be subject to the following conditions:
(a) This Agreement shall have been authorized and the
transactions contemplated hereby, including the liquidation and
dissolution of Company, shall have been approved by the directors and
shareholders of Company in the manner required by law.
(b) Trust shall have executed and delivered to Company an
Assumption of Liabilities dated as of the Exchange Date pursuant to
which the Acquiring Series will assume all of the liabilities,
expenses, costs, charges and reserves of Company, contingent or
otherwise, including liabilities existing at the Valuation Time and
described in Section 1(c) hereof in connection with the transactions
contemplated by this Agreement; provided that recourse for assumed
liabilities relating to an Acquired Series shall be limited to the
corresponding Acquiring Series.
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of Trust made in this Agreement are true
and correct in all material respects as if made at and as of such
dates, Trust and the Acquiring Series have complied with all of the
agreements and satisfied all of the conditions on their part to be
performed or satisfied at or prior to each of such dates, and Trust
shall have furnished to Company a statement, dated the Exchange Date,
signed by Trust's President (or any Vice President) and Treasurer (or
other financial officer) certifying those facts as of such dates.
(d) There shall not be any material litigation pending or
overtly threatened with respect to the matters contemplated by this
Agreement.
(e) Company shall have received an opinion of Baker &
Hostetler LLP, in form reasonably satisfactory to Company and dated the
Exchange Date, to the effect that (i) Trust is a business trust validly
existing under the laws of the State of Ohio, (ii) the Acquiring Series
Shares to be delivered to Company as provided for by this Agreement are
duly authorized and upon such delivery will be validly issued and will
be fully paid and nonassessable by Trust and no shareholder of Trust
has any preemptive right to subscription or purchase in respect
thereof, (iii) this Agreement has been duly authorized, executed and
delivered by Trust, and assuming due authorization, execution and
delivery of this Agreement by Company, is a valid and binding
obligation of Trust enforceable in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights
generally and other equitable principles, (iv) the execution and
delivery of this Agreement did not, and the consummation of the
transactions contemplated hereby will not, violate Trust's Declaration
of Trust or its By-Laws or any provision of any agreement known to such
counsel to which Trust or the Acquiring Series is a party or by
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<PAGE> 10
which it is bound, (v) to the knowledge of such counsel no consent,
approval, authorization or order of any court or governmental authority
is required for the consummation by Trust or the Acquiring Series of
the transactions contemplated herein, except such as have been obtained
under the 1933 Act, 1934 Act and 1940 Act and such as may be required
under state securities or blue sky laws or as may be required under
state business trust laws. In rendering such opinion Baker & Hostetler
LLP may rely on certain reasonable assumptions and certifications of
fact received from Company, Trust and certain of its shareholders.
(f) Company shall have received an opinion of Baker &
Hostetler LLP addressed to Company, Trust and each Acquiring Series and
in a form reasonably satisfactory to Company dated the Exchange Date,
with respect to the matters specified in Section 9(e) of this
Agreement. In rendering such opinion Baker & Hostetler LLP may rely on
certain reasonable assumptions and certifications of fact received from
Company, Trust and certain of its shareholders.
(g) All necessary proceedings taken by Trust in connection
with the transactions contemplated by this Agreement and all documents
incidental thereto reasonably shall be satisfactory in form and
substance to Company and Baker & Hostetler LLP.
(h) The Registration Statement shall have become effective
under the 1933 Act and applicable Blue Sky provisions, and no stop
order suspending such effectiveness shall have been instituted or, to
the knowledge of Company, contemplated by the Commission or any state
regulatory authority.
(i) Trust and Company shall have received from the Commission,
if necessary, a written order of exemption, satisfactory in form and
substance to Trust and Company, exempting the Reorganization from the
provisions of Section 17(a) of the 1940 Act.
(j) Trust shall have authorized and entered into service
provider agreements, including an Investment Advisory Agreement and
Distribution Agreement, and adopted Distribution and Shareholder
Service Plans and Agreements, identical in all material respects to
those entered into and adopted by the Company.
(k) Trust shall have taken all necessary action so that it
shall be a registered open-end management investment company under the
1940 Act.
9. Conditions of Trust's Obligations. The obligations of Trust and the
Acquiring Series hereunder shall be subject to the following
conditions:
(a) This Agreement shall have been authorized and the
transactions contemplated hereby, including the liquidation and
dissolution of Company, shall have been approved by the directors and
shareholders of Company in the manner required by law.
(b) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of Company made in this Agreement are
true and correct in all material respects as if made at and as of such
dates, Company has complied with all the
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<PAGE> 11
agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to each of such dates, and Company shall have
furnished to Trust a statement, dated the Exchange Date, signed by
Company's President (or any Vice President) and Treasurer (or other
financial officer) certifying those facts as of such dates.
(c) There shall not be any material litigation pending or
overtly threatened with respect to the matters contemplated by this
Agreement.
(d) Trust shall have received an opinion of Baker & Hostetler
LLP, in form reasonably satisfactory to Trust and dated the Exchange
Date, to the effect that (i) Company is a corporation validly existing
under the laws of the State of Maryland, (ii) this Agreement has been
duly authorized, executed and delivered by Company and, assuming due
authorization, execution and delivery of this Agreement by Trust, is a
valid and binding obligation of Company, enforceable in accordance with
its terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and other equitable principles, (iii)
Company has power to assign, convey, transfer and deliver the
Investments and other assets contemplated hereby and, upon consummation
of the transactions contemplated hereby in accordance with the terms of
this Agreement, Company will have duly assigned, conveyed, transferred
and delivered such Investments and other assets to Trust, (iv) the
execution and delivery of this Agreement did not and the consummation
of the transactions contemplated hereby will not, violate Company's
Articles of Incorporation or its By-Laws, as amended, or any provision
of any agreement known to such counsel to which Company is a party or
by which it is bound, and (v) to the knowledge of such counsel no
consent, approval, authorization or order of any court or governmental
authority is required for the consummation by Company of the
transactions contemplated herein, except such as have been obtained
under the 1933 Act, 1934 Act and 1940 Act and such as may be required
under state securities or blue sky laws or state corporation laws. In
rendering such opinion, Baker & Hostetler LLP may rely upon certain
reasonable and customary assumptions and certifications of fact
received from Trust, Company and certain of its shareholders.
(e) Trust shall have received an opinion of Baker & Hostetler
LLP, addressed to Trust, each Acquiring Series and Company, in form
reasonably satisfactory to Trust and dated the Exchange Date, to the
effect that for Federal income tax purposes (i) the transfer of all or
substantially all of Acquired Series' assets in exchange for the
Acquiring Series Shares and the assumption by the Acquiring Series of
liabilities of Acquired Series will constitute a "reorganization"
within the meaning of Section 368(a) of the Code, and each of the
Acquiring Series and Acquired Series is a "party to a reorganization"
within the meaning of Section 368(b) of the Code; (ii) no gain or loss
will be recognized by Acquired Series upon the transfer of the assets
of the Acquiring Series in exchange for Acquiring Series Shares and the
assumption by the Acquiring Series of the liabilities of Acquired
Series or upon the constructive distribution of Acquiring Series Shares
by Acquired Series to its shareholders in liquidation; (iii) no gain or
loss will be recognized by the shareholders of Acquired Series upon the
exchange of their shares for Acquiring Series Shares, (iv) the basis of
the Acquiring Series Shares an Acquired Series shareholder receives in
connection with the Reorganization will be the same as the basis
-11-
<PAGE> 12
of his or her shares exchanged therefor; (v) an Acquired Series
shareholder's holding period for his or her Acquiring Series Shares
will be determined by including the period for which he or she held
Acquired Series shares exchanged therefor, provided that he or she held
such shares as capital assets; (vi) no gain or loss will be recognized
by the Acquiring Series upon the receipt of the assets of the
corresponding Acquired Series in exchange for Acquiring Series Shares
and the assumption by the Acquiring Series of the liabilities of the
corresponding Acquired Series (vii) the basis in the hands of the
Acquiring Series the assets of the corresponding Acquired Series
transferred to the Acquiring Series will be the same as the basis of
the assets in the hands of the corresponding Acquired Series
immediately prior to the transfer and (viii) the Acquiring Series'
holding periods of the assets of the corresponding Acquired Series will
include the period for which such assets of the corresponding Acquired
Series were held by the corresponding Acquired Series. In rendering
such opinion, Baker & Hostetler LLP may rely upon certain reasonable
and customary assumptions and certifications of fact received from
Trust, Company, and certain of its shareholders.
(f) The Registration Statement shall have become effective
under the 1933 Act and applicable Blue Sky provisions, and no stop
order suspending such effectiveness shall have been instituted or, to
the knowledge of Trust, contemplated by the Commission or any state
regulatory authority.
(g) All necessary proceedings taken by Company in connection
with the transactions contemplated by this Agreement and all documents
incidental thereto reasonably shall be satisfactory in form and
substance to Trust and Baker & Hostetler LLP.
(h) Prior to the Exchange Date, each Acquired Series shall
have declared a dividend or dividends which, together with all previous
such dividends, shall have the effect of distributing to its
shareholders all of its investment company taxable income for its
taxable year ended December 31, 1997 and the short taxable year
beginning on January 1, 1998 and ending on the Valuation Time (computed
without regard to any deduction for dividends paid), and all of its net
capital gain realized in its taxable year ended December 31, 1997 and
the short taxable year beginning January 1, 1998 and ending on the
Valuation Time (after reduction for any capital loss carryover).
(i) Company shall have duly executed and delivered to Trust a
bill of sale, assignment, certificate and other instruments of transfer
("Transfer Documents") as Trust may deem necessary or desirable to
transfer all of Company's entire right, title and interest in and to
the Investments and all other assets of Company to the Acquiring
Series.
(j) Trust and Company shall have received from the Commission,
if necessary, a written order of exemption, satisfactory in form and
substance to Trust and Company, exempting the Reorganization from the
provisions of Section 17(a) of the 1940 Act.
(k) The Trust shall have taken all necessary action so that it
shall be a registered open-end management investment company under the
1940 Act.
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<PAGE> 13
10. Termination. Trust and Company may, by mutual consent of their
respective trustees or directors, terminate this Agreement, and Trust
or Company, after consultation with counsel and by consent of their
respective trustees or directors or an officer authorized by such
trustees or directors, may, subject to Section 11 of this Agreement,
waive any condition to their respective obligations hereunder.
11. Sole Agreement; Governing Law; Amendments. This Agreement supersedes
all previous correspondence and oral communications between the parties
regarding the subject matter hereof, constitutes the only understanding
with respect to such subject matter and shall be construed in
accordance with and governed by the laws of the State of Ohio.
This Agreement may be amended, modified or supplemented in
such manner as may be mutually agreed upon in writing by the authorized
officer of Trust and Company; provided, however, that following the
Special Meeting of Company's shareholders called by Company pursuant to
Section 7 of this Agreement, no such amendment may have the effect of
altering or changing the amount or kind of shares received by Company,
or altering or changing to any material extent the amount or kind of
liabilities assumed by Trust and the Acquiring Series, or altering or
changing any other terms and conditions of the Reorganization if any of
the alterations or changes, alone or in the aggregate, would materially
adversely affect Company's shareholders without their further approval.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
THE RIVERFRONT FUNDS, INC.
By /s/ WALTER B. GRIMM
---------------------------
Walter B. Grimm, President
THE RIVERFRONT FUNDS
By /s/ WALTER B. GRIMM
---------------------------
Walter B. Grimm, President
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<PAGE> 1
EXHIBIT 10
BAKER
&
HOSTETLER LLP
COUNSELLORS AT LAW
Capitol Square, Suite 2100 - 65 East State Street - Columbus,
Ohio 43215-4260 - (614) 228-1541
October 28, 1998
The Riverfront Funds
3435 Stelzer Road
Columbus, Ohio 43219
Subject: The Riverfront Funds -- Post-Effective Amendment
No. 26 to Registration Statement on Form N-1A, File
No. 33-34154, filed under the Securities Act of
1933, as amended, and Amendment No. 27 to
Registration Statement on Form N-1A, File No. 811-
6082, filed under the Investment Company Act of
1940, as amended (the "Amendment")
Ladies and Gentlemen:
In connection with the filing of the Amendment, it is our opinion that,
upon the effectiveness of the Amendment, the indefinite number of units of
beneficial interest of The Riverfront Funds, when issued for the consideration
described in the Amendment, will be legally issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Amendment.
Very truly yours,
BAKER & HOSTETLER LLP
<PAGE> 1
Exhibit 11
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" in the Prospectus dated April 30, 1998 and "Auditors" in the
Statement of Additional Information, and to the use of our report dated February
13, 1998, with respect to the financial statements of The Riverfront Funds, Inc.
included in Post-Effective Amendment No. 26 to the Registration Statement (Form
N-1A, No. 33-34154).
ERNST & YOUNG LLP
Cincinnati, Ohio
October 26, 1998
<PAGE> 1
Exhibit (15)(a)
Schedule C
to the
Distribution Agreement
between The Riverfront Funds and
BISYS Fund Services Limited Partnership
dated as of December 29, 1998
INVESTOR A DISTRIBUTION AND SHAREHOLDER SERVICE PLAN
This Plan (the "Investor A Plan") constitutes a distribution and
shareholder service plan of The Riverfront Funds, an Ohio business trust (the
"Fund"), adopted pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "1940 Act"). The Investor A Plan relates to the Investor A
Shares of those investment portfolios identified on Schedule B to the Fund's
Distribution Agreement and as amended from time to time (the "Investor A Plan
Portfolios").
Section 1. Each Investor A Plan Portfolio shall pay to BISYS Fund
Services Limited Partnership, an Ohio limited partnership and the distributor
(the "Distributor") of the Fund's shares of beneficial interest, without par
value, of its Investor A class (the "Investor A Shares"), a fee in an amount not
to exceed on an annual basis .25% of the average daily net asset value of the
Investor A Shares of such Investor A Plan Portfolio (the "Investor A Plan Fee")
for: (a) (i) efforts of the Distributor expended in respect of or in furtherance
of sales of Investor A shares, and (ii) to enable the Distributor to make
payments to banks and other institutions and broker/dealers (a "Participating
Organization") for distribution assistance and/or shareholder service pursuant
to an agreement with the Participating Organization; and (b) reimbursement of
expenses (i) incurred by the Distributor, and (ii) incurred by a Participating
Organization pursuant to an agreement in connection with distribution assistance
and/or shareholder service including, but not limited to, the reimbursement of
expenses relating to printing and distributing prospectuses to persons other
than Shareholders of an Investor A Plan Portfolio, printing and distributing
advertising and sales literature and reports to Shareholders used in connection
with the sale of Investor A Shares, and personnel and communication equipment
used in servicing Shareholder accounts and prospective shareholder inquiries.
For purposes of the Investor A Plan, a Participating Organization may include
any of the Distributor's affiliates or subsidiaries.
Section 2. The Investor A Plan Fee shall be paid by the Investor A Plan
Portfolio to the Distributor only to compensate or to reimburse the Distributor
for payments or expenses incurred pursuant to Section 1.
Section 3. The Investor A Plan shall not take effect with respect to
the Investor A Shares of any subsequently created Investor A Plan Portfolio
until it has been approved by a vote of at least a majority of the outstanding
Investor A Shares of such Investor A Plan Portfolio.
Section 4. The Investor A Plan shall not take effect until it has been
approved, together with any related agreements, by votes of the majority (or
whatever greater percentage may, from time to time, be required by Section 12(b)
of the 1940 Act or the rules and regulations thereunder) of both (a) the
Trustees of the Fund, and (b) the Independent Trustees of the Fund cast in
person at a meeting called for the purpose of voting on the Investor A Plan or
such agreement.
C-1
<PAGE> 2
Section 5. The Investor A Plan shall continue in effect for a period of
more than one year after it takes effect only so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Investor A Plan in Section 4.
Section 6. Any person authorized to direct the disposition of monies
paid or payable by the Investor A Plan Funds pursuant to the Investor A Plan or
any related agreement shall provide to the Trustees of the Fund, and the
Trustees shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
Section 7. The Investor A Plan may be terminated at any time by vote of
a majority of the Independent Trustees, or, with respect to an Investor A Plan
Portfolio, by vote of a majority of the outstanding Investor A Shares of the
Investor A Plan Portfolio.
Section 8. All agreements with any person relating to implementation of
the Investor A Plan shall be in writing, and any agreement related to the
Investor A Plan shall provide:
(a) That such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the
Independent Trustees or, with respect to an Investor A Plan
Portfolio, by vote of a majority of the outstanding Investor A
Shares of the Investor A Plan Portfolio, on not more than 60
days' written notice to any other party to the agreement; and
(b) That such agreement shall terminate automatically in the
event of its assignment.
Section 9. The Investor A Plan may not be amended to increase
materially the amount of distribution expenses permitted pursuant to Section 1
hereof without approval in the manner provided in Section 3 hereof, and all
material amendments to the Investor A Plan shall be approved in the manner
provided for approval of the Investor A Plan in Section 4.
Section 10. As used in the Investor A Plan, (a) the term "Independent
Trustees" shall mean those Trustees of the Fund who are not interested persons
of the Fund, and have no direct or indirect financial interest in the operation
of the Investor A Plan or any agreements related to it, and (b) the terms
"assignment", "interested person" and "majority of the outstanding voting
securities" shall have the respective meanings specified in the 1940 Act and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission.
Adopted by the Trustees of the Fund on November 20, 1998
C-2
<PAGE> 1
Exhibit (15)(b)
Schedule E
to the
Distribution Agreement
between The Riverfront Funds and
BISYS Fund Services Limited Partnership
dated as of December 29, 1998
INVESTOR B DISTRIBUTION AND SHAREHOLDER SERVICE PLAN
This Plan (the "Investor B Plan") constitutes a distribution and
shareholder service plan of The Riverfront Funds, an Ohio business trust (the
"Fund"), adopted pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "1940 Act"). The Investor B Plan relates to the Investor B
Shares of those investment portfolios identified on Schedule D to the Fund's
Distribution Agreement and as amended from time to time (the "Investor B Plan
Portfolios").
Section 1. Each Investor B Plan Portfolio is authorized to pay to BISYS
Fund Services Limited Partnership, an Ohio limited partnership and the
distributor (the "Distributor") of the Fund's shares of beneficial interest,
without par value, of its Investor B class (the "Investor B Shares"):
(a) a distribution fee in an amount not to exceed on an annual
basis .75% of the average daily net asset value of the
Investor B Shares of such Investor B Plan Portfolio (the
"Distribution Fee") for: (i) (a) efforts of the Distributor
expended in respect of or in furtherance of sales of Investor
B Shares, and (b) to enable the Distributor to make payments
to banks and other institutions and broker/dealers (a
"Participating Organization") for distribution assistance
pursuant to an agreement with the Participating Organization;
and (ii) reimbursement of expenses (a) incurred by the
Distributor, and (b) incurred by a Participating Organization
pursuant to an agreement in connection with distribution
assistance including, but not limited to, the reimbursement of
expenses relating to printing and distributing prospectuses to
persons other than Shareholders of an Investor B Plan
Portfolio, printing and distributing advertising and sales
literature and reports to Shareholders for use in connection
with the sales of Investor B Shares, processing purchase,
exchange and redemption requests from customers and placing
orders with the Distributor or the Fund's transfer agent, and
personnel and communication equipment used in servicing
Shareholder accounts and prospective shareholder inquiries;
and
(b) a service fee in an amount not to exceed on an annual
basis .25% of the average daily net asset value of the
Investor B Shares of such Investor B Plan Portfolio (the
"Service Fee") for: (i) (a) efforts of the Distributor
expended in servicing shareholders holding Investor B Shares,
and (b) to enable the Distributor to make payments to a
Participating Organization for shareholder services pursuant
to an agreement with the Participating Organization; and (ii)
reimbursement of expenses (a) incurred by the Distributor, and
(b) incurred by a Participating Organization pursuant to an
agreement in connection with
E-1
<PAGE> 2
shareholder service including, but not limited to personal,
continuing services to investors in the Investor B Shares of
an Investor B Plan Portfolio, providing sub-accounting with
respect to Investor B Shares beneficially owned by customers
or the information necessary for sub-accounting, arranging for
bank wires, and providing office space, equipment, telephone
facilities and various personnel including clerical,
supervisory and computer, as is necessary or beneficial in
connection therewith.
For purposes of the Investor B Plan, a Participating Organization may include
any of the Distributor's affiliates or subsidiaries.
Section 2. The Distribution Fee and the Service Fee shall be paid by
the Investor B Plan Portfolios to the Distributor only to compensate or to
reimburse the Distributor for payments or expenses incurred pursuant to Section
1.
Section 3. The Investor B Plan shall not take effect with respect to
the Investor B Shares of an Investor B Plan Portfolio until it has been approved
by a vote of the initial Shareholder of the Investor B Shares of such Investor B
Plan Portfolio.
Section 4. The Investor B Plan shall not take effect until it has been
approved, together with any related agreements, by votes of the majority (or
whatever greater percentage may, from time to time, be required by Section 12(b)
of the 1940 Act or the rules and regulations thereunder) of both (a) the
Trustees of the Fund, and (b) the Independent Trustees of the Fund cast in
person at a meeting called for the purpose of voting on the Investor B Plan or
such agreement.
Section 5. The Investor B Plan shall continue in effect for a period of
more than one year after it takes effect only so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Investor B Plan in Section 4.
Section 6. Any person authorized to direct the disposition of monies
paid or payable by the Investor B Plan Portfolios pursuant to the Investor B
Plan or any related agreement shall provide to the Trustees of the Fund, and the
Trustees shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
Section 7. The Investor B Plan may be terminated at any time by vote of
a majority of the Independent Trustees, or, with respect to an Investor B Plan
Portfolio, by vote of a majority of the outstanding Investor B Shares of the
Investor B Plan Portfolio.
Section 8. All agreements with any person relating to implementation of
the Investor B Plan shall be in writing, and any agreements related to the
Investor B Plan shall provide:
(a) That such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the
Independent Trustees or, with respect to an Investor B Plan
Portfolio, by vote of a majority of the outstanding Investor B
Shares of the Investor B Plan Portfolio, on not more than 60
days' written notice to any other party to the agreement; and
(b) That such agreement shall terminate automatically in the
event of its assignment.
E-2
<PAGE> 3
Section 9. The Investor B Plan may not be amended to increase
materially the amount of the Distribution Fee and Service Fee permitted pursuant
to Section 1 hereof without approval in the manner provided in Section 3 hereof,
and all material amendments to the Investor B Plan shall be approved in the
manner provided for approval of the Investor B Plan in Section 4.
Section 10. As used in the Investor B Plan, (a) the term "Independent
Trustees" shall mean those Trustees of the Fund who are not interested persons
of the Fund, and have no direct or indirect financial interest in the operation
of the Investor B Plan or any agreements related to it, and (b) the terms
"assignment," "interested person" and "majority of the outstanding voting
securities" shall have the respective meanings specified in the 1940 Act and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission.
Adopted by the Trustees of the Fund on November 20, 1998.
E-3
<PAGE> 1
EXHIBIT (15)(c)
<PAGE> 2
DEALER AGREEMENT
DEALER AGREEMENT made as of the 29th day of December, 1998, by and
between BISYS Fund Services Limited Partnership d/b/a/ BISYS Fund Services, an
Ohio limited partnership (the "Distributor"), and Provident Securities &
Investment Company, an Ohio corporation, (the "Broker-Dealer").
WHEREAS, the Distributor serves as the Distributor of The Riverfront
Funds (the "Trust"), an Ohio business trust which has filed a Registration
Statement under the Investment Company Act of 1940, as amended (the "1940 Act")
and the Securities Act of 1933 (the "Securities Act", and, together with the
1940 Act, the "Acts");
WHEREAS, the Trust is comprised of several separate investment
portfolios (individually, a "Fund"; collectively, the "Funds"), each of which is
segregated by class;
WHEREAS, the holders of Investor A shares ("Investor A Shares") of each
Fund that is identified in Exhibit A attached hereto, which Exhibit may be
amended by the parties hereto from time to time, have adopted an Investor A
Distribution and Shareholder Services Plan (the "Investor A Plan") pursuant to
Rule 12b-1 under the 1940 Act, attached hereto as Exhibit B;
WHEREAS, the holders of Investor B shares ("Investor B Shares" and,
together with Investor A Shares, "Shares") of each Fund that is identified in
Exhibit C attached hereto, which Exhibit may be amended by the parties hereto
from time to time, have adopted an Investor B Distribution and Shareholder
Services Plan (the "Investor B Plan" and, together with the Investor A Plan, the
"Plans") pursuant to Rule 12b-1 under the 1940 Act, attached hereto as Exhibit
D;
WHEREAS, the Plans authorize the Distributor to enter into agreements
with third parties to implement the Plans;
WHEREAS, it is intended that the Broker-Dealer act as agent for its
customers in connection with purchase and sale transactions involving the Funds;
and
WHEREAS, it is intended that the Broker-Dealer provide distribution and
shareholder support services to customers who may, from time to time,
beneficially own a Fund's shares pursuant to the Plans.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. REFERENCE TO PROSPECTUS; DETERMINATION OF NET ASSET VALUE
1.1 Reference is hereby made to the prospectuses (individually a
"Prospectus," collectively the "Prospectuses") for Investor A and
Investor B Shares of each Fund as from time to time are effective under
the Securities Act. Terms defined therein and not otherwise defined
herein are used herein with the meaning so defined.
1.2 For purposes of determining the compensation and fees payable under
Sections 3 and 4, the average daily net asset value of a Fund's Shares
will be computed in the manner specified in the Trust's registration
statement filed under the Acts (as the same is in
2
<PAGE> 3
effect from time to time) in connection with the computation of the net
asset value of such Fund's Shares for purposes of purchases and
redemptions.
2. GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1 The Distributor represents, warrants and covenants that it is and will
be at all times relevant to this Agreement a member in good standing of
the National Association of Securities Dealers, Inc. (the "NASD"), and
the Broker-Dealer represents, warrants and covenants that it is and
will be at all times relevant to this Agreement a broker-dealer
properly registered and qualified under the all applicable federal,
state and local laws to engage in the business and transactions
described in this Agreement. Each party agrees to comply with the
requirements of all applicable laws, including federal and state
securities laws, the rules and regulations of the SEC, the Rules of
Fair Practice of the NASD, and the rules and regulations issued by
applicable federal bank regulatory agencies. The Broker-Dealer agrees
that it will not make Shares available for purchase to persons in any
jurisdiction in which such Shares may not be lawfully sold. The
Broker-Dealer further agrees that it will maintain all records required
by applicable law or otherwise reasonably requested by the Distributor
in relation to Fund transactions that it has executed.
2.2 By written acceptance of this Agreement, the Broker-Dealer further
represents, warrants and agrees that it possesses the legal authority
to perform the services contemplated by this Agreement without
violation of applicable Federal banking laws (including the
GlassSteagall Act) and regulations.
3. PURCHASE AUTHORIZATION; ORDER EXECUTION; OFFERING PRICE; BROKER-DEALER
COMMISSIONS
3.1 In all sales of Shares to customers ("Customers"), the Broker-Dealer
shall act as agent for its Customers or as principal for its own bona
fide investment. In no transaction shall the Broker-Dealer act as the
Distributor's agent or as agent for any Fund or the Funds' transfer
agent. As agent for its Customers, the Broker-Dealer is hereby
authorized to: (i) place orders directly with the Trust for the
purchase of Shares and (ii) tender Shares to the Trust for redemption,
in each case subject to the terms and conditions set forth in the
Prospectus and the operating procedures and policies established by the
Distributor. The minimum and maximum dollar purchase of Shares shall be
the applicable minimum and maximum amounts set forth in the Prospectus,
and no order for less than such minimum amount or more than such
maximum amount shall be accepted by the Broker-Dealer. The procedures
relating to the handling of orders will be subject to instructions
which the Distributor shall forward to the Broker-Dealer from time to
time.
3.2 All orders are subject to acceptance by the Distributor in its sole
discretion. No person is authorized to make any representations
concerning the Distributor, the Trust, or a Fund's Shares except such
representations contained in the relevant then-current Prospectuses and
Statement of Additional Information and in such printed information as
the Trust or the Distributor may subsequently prepare. The
Broker-Dealer is specifically authorized to distribute the Prospectuses
and Statement of Additional Information and sales material received by
it from the Distributor. No person is authorized to distribute any
other sales material relating to a Fund without prior approval of the
Distributor. The
3
<PAGE> 4
Broker-Dealer agrees to deliver, upon the request of the Distributor,
copies of any relevant amended Prospectus and Statement of Additional
Information to Shareholders of a Fund to whom Shares have been sold.
3.3 The Broker-Dealer shall not withhold placing Customers' orders for any
Shares so as to profit itself as a result of such withholding. The
Distributor shall not purchase any Shares from the Funds except for the
purpose of covering purchase orders already received, and the
Broker-Dealer shall not purchase any Shares from the Distributor except
for the purpose of covering purchase orders already received.
3.4 If any Shares purchased by the Broker-Dealer are repurchased by the
Funds or by the Distributor for the account of the Funds, or are
tendered for redemption within three (3) business days after
confirmation by the Distributor of the original purchase order for such
Shares, the Broker-Dealer agrees forthwith to refund to the
Distributor, or its financing agent, the full commission paid to the
Broker-Dealer, if any, on the original sale. Notice will be given to
the Broker-Dealer of any such repurchase or redemption within ten (10)
days of the date upon which the repurchase or redemption is requested.
3.5 Neither party of this Agreement shall, as agent, purchase any Shares
from a Customer at a price lower than the net asset value next computed
by or for the issuer thereof.
3.6 The Distributor will furnish the Broker-Dealer, upon request, with
offering prices for Investor A Shares and Investor B Shares in
accordance with the then-current Prospectuses of the Funds, and the
Broker-Dealer agrees to quote such prices subject to the confirmation
by the Distributor on any Shares offered to the Broker-Dealer for sale.
In the case of Investor A Shares, the public offering price equals the
net asset value per Share plus a sales charge, if applicable. For those
Investor A Shares that are sold subject to such a sales charge, the
Broker-Dealer shall receive a discount from the public offering price
as outlined in the current Prospectuses. The Distributor reserves the
right to waive such sales charges. In the case of Investor B Shares,
the public offering price equals the net asset value per Share;
provided, however that purchases of Investor B Shares may be subject to
a contingent deferred sales charge ("CDSC") as outlined in the current
Prospectuses. The Broker-Dealer shall be entitled to receive from the
Distributor all CDSC payments that are payable in accordance with the
terms and conditions of the then-current Prospectus for Investor B
Shares of each Fund. Such CDSC shall be calculated in the manner
disclosed in each Prospectus for the Investor B Shares so redeemed. The
Distributor reserves the right to waive CDSCs. The Broker-Dealer
acknowledges the fact that each price is always subject to
confirmation, and will be the price next computed after receipt of an
order that is in good form. The Broker-Dealer acknowledges that it is
the Broker-Dealer's responsibility to transmit purchase orders promptly
to the Trust. The Broker-Dealer further acknowledges that any failure
to properly transmit such orders to the Trust that causes a Customer to
be disadvantaged, based upon the pricing requirements of Rule 22c-1
under the 1940 Act, shall be the responsibility of the Broker-Dealer
and shall not be the responsibility of the Distributor. The Distributor
reserves the right to cancel this Agreement at any time without notice
if any Shares shall be offered for sale by the Broker-Dealer at less
than the then-current offering price determined by or for any Fund.
3.7 The Broker-Dealer and its employees will, upon request, be available
during normal business hours to consult with the Distributor or its
designees concerning the performance
4
<PAGE> 5
of the Broker-Dealer's responsibilities under this Agreement. Any
person authorized to direct the disposition of monies paid or payable
by the Distributor pursuant to this Agreement will provide to the
Distributor a quarterly written report of the amounts so expended and
the purposes for which such expenditures were made. In addition, the
Broker-Dealer will furnish to the Distributor, the Trust or their
designees such information as the Distributor, the Trust or their
designees may reasonably request (including, without limitation,
periodic certifications confirming the provision to Customers of the
services described herein), and will otherwise cooperate with the
Distributor, the Trust and their designees (including, without
limitation, any auditors designated by the Trust), in the preparation
of reports to the Trust's Board of Trustees concerning this Agreement
and the monies paid or payable by the Distributor pursuant hereto, as
well as any other reports or filings that may be required by law.
4. SHAREHOLDER SUPPORT SERVICES; DISTRIBUTION ASSISTANCE; FEE
4.1 The Broker-Dealer shall provide such shareholder support services that
the Distributor may reasonably request to the extent the Broker-Dealer
is permitted to do so under applicable statutes, rules and regulations.
Such shareholder support services shall include, but not be limited to,
the following: (i) providing information to Customers about their
investment; (ii) processing dividend and distribution payments from a
Fund on behalf of Customers; (iii) providing information periodically
to Customers showing their positions in a Fund's Shares; (iv) arranging
for bank wire transfers of funds to or from a Customer's account; (v)
responding to inquiries from Customers relating to the services
performed by the Broker-Dealer under this Agreement; (vi) providing
subaccounting with respect to a Fund's Shares beneficially owned by
Customers or the information to the Trust necessary for subaccounting;
(vii) if required by law, forwarding shareholder communications from
the Trust (such as proxies, Shareholder reports, annual and semi-annual
financial statements, and dividend, distribution, and tax notices) to
Customers; and (viii) forwarding to Customers proxy statements and
proxies containing any proposals regarding this Agreement or a Fund's
Plan.
4.2 With respect to Investor B Shares, the Broker-Dealer shall also provide
such distribution services that the Distributor may reasonably request
to the extent the Broker-Dealer is permitted to do so under applicable
statutes, rules and regulations. Such distribution services shall
include, but not be limited to, the following: (i) promoting the
purchase of Shares by Customers; (ii) processing purchase, exchange and
redemption requests from Customers and placing orders with the Trust,
(iii) responding to inquiries from Customers concerning their
investment in Fund Shares; (iv) engaging in advertising with respect to
a Fund's Shares; (v) distributing Prospectuses for the Funds; and (vi)
distributing Fund reports and sales literature.
4.3 In consideration of the services and facilities provided by the
Broker-Dealer hereunder, the Distributor will pay to the Broker-Dealer
a fee calculated at the applicable annual rate set forth in Exhibit E
attached hereto with respect to the average daily net asset value of
each Fund's Investor A Shares and Investor B Shares which are owned of
record by the Broker-Dealer as nominee for Customers or which are owned
by Customers whose records, as maintained by such Fund or its agent,
designate the Broker-Dealer as the Customer's dealer of record, which
fee will be computed daily and paid monthly. The fee will not be paid
to the Broker-Dealer with respect to (i) Shares of a Fund sold by it
and redeemed or repurchased by the Trust or the Distributor within
seven business days
5
<PAGE> 6
of receipt of confirmation of such sale, or (ii) a Customer if the
amount of such fee on an annual basis with respect to such Customer
shall be less than $1.00.
5. EXCULPATION; INDEMNIFICATION
5.1 The Distributor shall not be liable to the Broker-Dealer and the
Broker-Dealer shall not be liable to the Distributor except for acts
or failures to act which constitute lack of good faith or gross
negligence and for obligations expressly assumed by either party
hereunder. Nothing contained in this Agreement is intended to operate
as a waiver by the Distributor or by the Broker-Dealer of compliance
with any provisions of the Securities Act, the Securities Exchange Act
of 1934, the 1940 Act, the rules and regulations promulgated by the
SEC, the NASD or any state securities administrator, or the applicable
rules and regulations promulgated by federal banking agencies.
5.2 The Broker-Dealer will indemnify the Distributor and hold it harmless
from any claims or assertions relating to the lawfulness of the
Broker-Dealer's participation in this Agreement and the transactions
contemplated hereby or relating to any activities of any persons or
entities affiliated with the Broker-Dealer which are performed in
connection with the discharge of the Broker-Dealer's responsibilities
under this Agreement. If such claims are asserted, the Distributor
shall have the right to manage its own defense, including the selection
and engagement of legal counsel and all costs of such defense shall be
born by the Broker-Dealer. In addition, the Broker-Dealer agrees to
indemnify and hold the Distributor harmless from any claims or
assertions relating to the lawfulness of the Broker-Dealer's
participation in this Agreement under the Glass-Steagall Act. At this
time, the Broker-Dealer and the Distributor are not otherwise aware of
any violations under the Glass-Steagall Act pursuant to this Agreement.
5.3 The Distributor will indemnify the Broker-Dealer and will hold the
Broker-Dealer harmless from any claims or assertions relating to the
lawfulness of the Distributor's participation in this Agreement and the
transactions contemplated hereby or relating to any activities or any
persons or entities affiliated with the Distributor which are performed
in connection with the discharge of the Distributor's responsibilities
under this Agreement. If any such claims are asserted, the
Broker-Dealer shall have the right to manage its own defense, including
the selection and engagement of legal counsel, and all costs of such
defense shall be born by the Distributor.
6. GENERAL
6.1 This Agreement will become effective with respect to each Fund on the
date indicated on the first page of this Agreement. Unless sooner
terminated with respect to any Fund, this Agreement may also be
terminated at any time without penalty by the vote of a majority of the
members of the Board of Trustees of the Trust who are not "interested
persons" (as such term is defined in the 1940 Act) and who have no
direct or indirect interest in the Plans relating to such Fund or any
agreement relating to such Plans, including this Agreement, or (with
respect to a Fund) by a vote of the majority of the outstanding voting
securities of the Fund (as such term is defined in the Statement of
Additional Information), cast in person at a meeting called for the
purpose of voting on such approval, on sixty (60) days' written notice.
6
<PAGE> 7
6.2 This Agreement will automatically terminate in the event of its
assignment. This Agreement may also be terminated by the Distributor or
by the Broker-Dealer, without penalty, upon sixty (60) days' prior
written notice to the other party.
6.3 All communications to the Distributor and the Broker-Dealer shall be
sent to the addresses set forth in this Agreement or to such other
addresses that may be designated in writing.
6.4 This Agreement supersedes any other Agreement between the Distributor
and the BrokerDealer with respect to the offer and sale of Investor A
Shares and Investor B Shares of the Trust and relating to any other
matters discussed herein. All covenants, agreements, representations
and warranties made herein shall be deemed to have been material and
relied on by each party, notwithstanding any investigation by either
party, and shall survive the execution and delivery of this Agreement.
The invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of any other term or
provision hereof. The headings in this Agreement are for convenience of
reference only and shall not alter or otherwise affect the meaning
hereof. This Agreement may be executed in any number of counterparts
which together shall constitute one instrument and shall be governed by
and construed in accordance with the laws (other than the conflict of
laws rules) of the State of Ohio and shall bind and inure to the
benefit of the parties hereto and their respective successors and
assigns.
6.5 This Agreement is a Related Agreement under the Plans.
6.6 All communications to the Distributor and the Broker-Dealer shall be
sent to the following addresses:
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
Provident Securities & Investment Company
One East Fourth Street
Cincinnati, Ohio 45262
Attn: President
BISYS FUND SERVICES LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc., General Partner
----------------------------------------------
By: Stephen G. Mintos
Title: Executive Vice President
PROVIDENT SECURITIES & INVESTMENT COMPANY
----------------------------------------------
By:
Title
7
<PAGE> 8
Dated: December 29, 1998
-----------------
EXHIBIT A
---------
THE RIVERFRONT FUNDS
Investor A Shares
1. The Riverfront U.S. Government Securities Money Market Fund
2. The Riverfront U.S. Government Income Fund
3. The Riverfront Balanced Fund
4. The Riverfront Income Equity Fund
5. The Riverfront Large Company Select Fund
6. The Riverfront Small Company Select Fund
BISYS FUND SERVICES LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc., General Partner
----------------------------------------------
By: Stephen G. Mintos
Title: Executive Vice President
PROVIDENT SECURITIES & INVESTMENT COMPANY
----------------------------------------------
By:
Title
8
<PAGE> 9
EXHIBIT B
Investor A Distribution
-----------------------
and Shareholder Services Plan
-----------------------------
9
<PAGE> 10
Dated: December 29, 1998
-----------------
EXHIBIT C
---------
THE RIVERFRONT FUNDS
Investor B Shares
1. The Riverfront U.S. Government Income Fund
2. The Riverfront Balanced Fund
3. The Riverfront Income Equity Fund
4. The Riverfront Large Company Select Fund
5. The Riverfront Small Company Select Fund
BISYS FUND SERVICES LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc., General Partner
----------------------------------------------
By: Stephen G. Mintos
Title: Executive Vice President
PROVIDENT SECURITIES & INVESTMENT COMPANY
----------------------------------------------
By:
Title
10
<PAGE> 11
EXHIBIT D
---------
Investor B Distribution
-----------------------
and Shareholder Services Plan
-----------------------------
11
<PAGE> 12
Dated: December 29, 1998
-----------------
EXHIBIT E
---------
Compensation for Distribution
-----------------------------
and Shareholder Support Services
--------------------------------
Investor A Shares Annual rate of up to twenty five
one-hundredths of one percent (.25%) of the
average daily net assets of each Fund's
Shares held of record by the Broker-Dealer
on behalf of Customers.
Investor B Shares Annual rate of up to one percent (1.00%) of
the average daily net assets of each Fund's
Shares held of record by the Broker-Dealer
on behalf of Customers. Such compensation
shall not exceed seventy five one-hundredths
of one percent (.75%) of such average daily
net assets in the case of distribution fees,
and shall not exceed twenty five
one-hundredths of one percent (.25%) of such
average daily net assets, in the case of
shareholder support service fees.
12
<PAGE> 1
Exhibit 18
THE RIVERFRONT FUNDS, INC.
RULE 18f-3 PLAN
OCTOBER 28, 1998
The Investment Company Act of 1940, as amended (the "1940 Act"),
permits open-end management investment companies ("mutual funds") which have
received exemptive orders permitting them to issue multiple classes of voting
stock representing interests in the same portfolios to choose to operate the
multiple classes under Rule 18f-3 of the 1940 Act instead of the exemptive
orders. Mutual funds that choose to operate under Rule 18f-3 must prepare a
written plan meeting the requirements of paragraph (d) of the Rule and file a
copy of such plan with the Securities and Exchange Commission ("SEC") as an
exhibit to the Corporation's Registration Statement. Provided that no changes
are made to arrangements and expense allocations under an existing order,
paragraph (d) of Rule 18f-3 does not require a mutual fund board's approval of
such plan.
Under the authority of Rule 18f-3, The Riverfront Funds, Inc. (the
"Corporation") hereby adopts the following plan under which the Corporation, on
behalf of the following series of the Corporation, The Riverfront U.S.
Government Securities Money Market Fund, The Riverfront U.S. Government Income
Fund, The Riverfront Income Equity Fund, The Riverfront Stock Appreciation Fund
(to be renamed The Riverfront Small Company Fund), The Riverfront Large Company
Select Fund and The Riverfront Balanced Fund (singly, a "Fund", and
collectively, the "Funds"), may issue multiple classes of shares:
1. Class Designation
-----------------
The Corporation is authorized to issue shares of two classes, Investor
A Shares and Investor B Shares for each of its Funds, except that The Riverfront
U.S. Government Securities Money Market Fund shall only issue Investor A Shares.
2. Class Characteristics
---------------------
Investor A Shares and Investor B Shares of a Fund represent interests
in the same investment portfolio of such Fund, shall be subject to all
provisions of the Articles of Incorporation of the Corporation generally
applicable to capital stock, and shall have the same preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption, except as follows:
Investor A Shares and Investor B Shares may be subject to the following
differences: (a) differences related to the method of financing certain expenses
("Class Expenses"), which are limited to: (i) transfer agent fees as identified
by the Corporation's transfer agent as being attributable to a specific class;
(ii) printing and postage expenses related to preparing and distributing
materials such as shareholder reports, prospectuses, and proxies to current
shareholders; (iii) Blue Sky registration fees incurred by a class of shares;
(iv) SEC registration
<PAGE> 2
fees incurred by a class of shares; (v) the expense of administrative personnel
and services as required to support the shareholders of a specific class; (vi)
litigation or other legal expenses relating solely to one class of shares; and
(vii) directors' fees incurred as a result of issues relating to one class of
shares; (b) differences related to expenses assessed to a class pursuant to a
Rule 12b-1 plan; (c) differences related to the voting rights as to matters
exclusively affecting one class of shares; (d) differences related to exchange
privileges; (e) differences related to a shareholder services plan and (f) such
differences, characteristics, rights and restrictions, including those described
above, as are described from time to time in the Corporation's Registration
Statement.
In addition, Investor A Shares and Investor B Shares shall be subject
to the following:
a. The dividends and distributions of investment income and
capital gains with respect to the Investor A Shares and
Investor B Shares shall be in such amount as may be declared
from time to time by the Board of Directors, and such
dividends and distributions may vary between the classes to
reflect differing allocations of the expenses of the
Corporation between the classes of stock to such extent and
for such purposes as the Board of Directors may deem
appropriate.
b. The proceeds of the redemption of an Investor B Share
(including a fractional share), except those purchased through
reinvestment of a dividend or a distribution, shall be reduced
by the amount of any applicable contingent deferred sales
charge payable on such redemption to the distributor of the
Investor B Shares pursuant to the terms of the issuance of the
shares (to the extent consistent with the 1940 Act, or
regulations or exemptions thereunder) and the Corporation
shall promptly pay to such distributor the amount of any such
contingent deferred sales charge.
c. (1) Each Investor B Share, other than a share purchased
through the reinvestment of a dividend or a
distribution with respect to the Investor B Share,
shall be converted automatically, and without any
action or choice on the part of the holder thereof,
into Investor A Shares at the relative net asset
value of each class, at the time of the calculation
of the net asset value of such class of shares on the
date that is the first business day of the month in
which the eight anniversary of the issuance of such
Investor B Shares occurs (which, for the purpose of
calculating the holding period required for
conversion, shall mean (i) the date on which the
issuance of such Investor B Shares occurred or for
Investor B Shares obtained through an exchange, the
date on which the issuance of the Investor B Shares
of an eligible Fund occurred, if such shares were
exchanged directly, or through a series of exchanges,
for the Corporation's Investor B Shares (the
"Conversion Date")). The Board of Directors shall
adopt a resolution setting forth a list of eligible
Funds for purposes of this paragraph.
-2-
<PAGE> 3
(2) Each Investor B Share purchased through the
reinvestment of a dividend or a distribution with
respect to the Investor B Shares and the dividends
and distributions on such shares shall be segregated
in a separate sub-account on the stock records of the
Corporation for each of the holders of record
thereof. On any Conversion Date, a number of the
shares held in the sub-account of the holder of
record of the share or shares being converted,
calculated in accordance with the next following
sentence, shall be converted automatically, and
without any action or choice on the part of the
holder thereof, into Investor A Shares of the same
Fund. The number of shares in the holder's
sub-account so converted shall bear the same relation
to the total number of shares maintained in the
sub-account on the Conversion Date as the number of
shares of the holder converted on the Conversion Date
pursuant to paragraph c(1) hereof bears to the total
number of Investor B Shares of the holder on the
Conversion Date not purchased through the automatic
reinvestment of dividends or distributions with
respect to the Investor B Shares.
(3) The number of Investor A Shares into which an
Investor B Share is converted pursuant to paragraphs
c(1) and c(2) hereof shall equal the number
(including for this purpose fractions of a share)
obtained by dividing the net asset value per share of
the Investor B Shares for purposes of sales and
redemptions thereof at the time of the calculation of
the net asset value on the Conversion Date by the net
asset value per share of the Investor A Shares for
purposes of sales and redemptions thereof at the time
of the calculation of the net asset value on the
Conversion Date.
(4) On the Conversion Date, the Investor B Shares
converted into Investor A Shares will cease to accrue
dividends and will no longer be outstanding and the
rights of the holders thereof will cease (except the
right to receive declared but unpaid dividends to the
Conversion Date).
3. Differences in Distribution Arrangements
----------------------------------------
Investor A Shares will be subject to a 4.5% sales charge (except for
shares of The Riverfront U.S. Government Securities Money Market Fund, which
will have no sales charge), which sales charge may decrease for larger purchases
and for concurrent purchases and similar plans and which may be eliminated for
certain classes of purchasers, as described in the Corporation's Registration
Statement, and a .25% 12b-1 fee, will have exclusive voting rights with respect
to the 12b-1 plan applicable to such shares, and will be exchangeable only for
Investor A Shares of another Fund. Investor B Shares will be subject to a
contingent deferred sales charge ranging from 4% to 1% on shares redeemed within
the first six years after purchase and will convert automatically to Investor A
Shares eight years after purchase, will be subject to a 1.00% 12b-1 fee, will
have exclusive voting rights with respect to the 12b-1 plan applicable to such
shares, and will be exchangeable only for Investor B Shares of another Fund.
-3-
<PAGE> 4
4. Expense Allocation
------------------
The following expenses shall be allocated to the extent practicable on
a class-by-class basis:
a. Differences related to the method of financing Class Expenses,
which are limited to: transfer agent fees as identified by the
Corporation's transfer agent as being attributable to a
specific class; (ii) printing and postage expenses related to
preparing and distributing materials such as shareholder
reports, prospectuses, and proxies to current shareholders;
(iii) Blue Sky registration fees incurred by a class of
shares; (iv) SEC registration fees incurred by a class of
shares; (v) the expense of administrative personnel and
services as required to support the shareholders of a specific
class (limited to shareholder services mentioned in this
paragraph); (vi) litigation or other legal expenses relating
solely to one class of shares; and (vii) directors' fees
incurred as a result of issues relating to one class of
shares; provided, however, that the foregoing Class Expenses
allocated to each share of a class during a year will differ
from the Class Expenses allocated to each share of the other
class by less than 50 basis points of the average daily net
asset value per share of the other class of shares;
b. Differences related to expenses assessed to a class pursuant
to a Rule 12b-1 plan; and
c. Such differences, characteristics, rights and restrictions,
including those described above, as are described from time to
time in the Corporation's Registration Statement.
Expenses equally attributable to all Funds shall be apportioned to each
Fund share, regardless of class, in proportion to its net asset value. All
expenses attributable only to one or more, but not to all Funds, shall be
apportioned to the shares of such Fund or Funds, regardless of class, in
proportion to their net asset value.
5. Reorganization of Corporation
-----------------------------
Upon reorganization of the Corporation with and into The Riverfront
Funds, an Ohio business trust ("Trust"), this Rule 18f-3 Plan shall be deemed to
apply to the Trust and its corresponding series and classes of shares. At such
time, defined terms herein shall change as follows: "Corporation" shall become
"Trust," "Articles of Incorporation" shall become "Declaration of Trust," and
"Board of Directors" shall become "Board of Trustees."
-4-
<PAGE> 1
Exhibit (19)(e)
POWER OF ATTORNEY
William N. Stratman, whose signature appears below, does hereby
constitute and appoint Walter B. Grimm, Stephen G. Mintos and Charles L. Booth,
each individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable The Riverfront
Funds (the "Trust"), to comply with the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended (the "Acts"), and any rules,
regulations or requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of the Trust's
Registration Statement on Form N-1A pursuant to said Acts and any and all
amendments thereto (including post-effective amendments), including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as trustee
and/or officer of the Trust such Registration Statement and any and all such
amendments filed with the Securities and Exchange Commission under any Acts and
any other instruments or documents related thereto, and the undersigned does
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue thereof.
Dated: May 29, 1998 /s/ William N. Stratman
-----------------------
William N. Stratman
<PAGE> 1
EXHIBIT (19)(F)
POWER OF ATTORNEY
Walter B. Grimm, whose signature appears below, does hereby constitute
and appoint Stephen G. Mintos and George O. Martinez, each individually, his
true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, each individually, may deem
necessary or advisable or which may be required to enable The Riverfront Funds
(the "Trust"), to comply with the Investment Company Act of 1940, as amended,
and the Securities Act of 1933, as amended (the "Acts"), and any rules,
regulations or requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of the Trust's
Registration Statement on Form N-1A pursuant to said Acts and any and all
amendments thereto (including post-effective amendments), including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as trustee
and/or officer of the Trust such Registration Statement and any and all such
amendments filed with the Securities and Exchange Commission under any Acts and
any other instruments or documents related thereto, and the undersigned does
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue thereof.
Dated: May 23, 1997 /s/ Walter B. Grimm
-------------------
Walter B. Grimm
<PAGE> 2
POWER OF ATTORNEY
J. Virgil Early, whose signature appears below, does hereby constitute
and appoint Walter B. Grimm, Stephen G. Mintos and George O. Martinez, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable The Riverfront
Funds (the "Trust"), to comply with the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended (the "Acts"), and any rules,
regulations or requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of the Trust's
Registration Statement on Form N-1A pursuant to said Acts and any and all
amendments thereto (including post-effective amendments), including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as trustee
and/or officer of the Trust such Registration Statement and any and all such
amendments filed with the Securities and Exchange Commission under any Acts and
any other instruments or documents related thereto, and the undersigned does
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue thereof.
Dated: May 23, 1997 /s/ J. Virgil Early
-------------------
J. Virgil Early
<PAGE> 3
POWER OF ATTORNEY
William M. Higgins, whose signature appears below, does hereby
constitute and appoint Walter B. Grimm, Stephen G. Mintos and George O.
Martinez, each individually, his true and lawful attorneys and agents, with
power of substitution or resubstitution, to do any and all acts and things and
to execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
The Riverfront Funds (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended (the "Acts"), and
any rules, regulations or requirements of the Securities and Exchange Commission
in respect thereof, in connection with the filing and effectiveness of the
Trust's Registration Statement on Form N-1A pursuant to said Acts and any and
all amendments thereto (including post-effective amendments), including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as trustee
and/or officer of the Trust such Registration Statement and any and all such
amendments filed with the Securities and Exchange Commission under any Acts and
any other instruments or documents related thereto, and the undersigned does
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue thereof.
Dated: May 23, 1997 /s/ William M. Higgins
----------------------
William M. Higgins
<PAGE> 4
POWER OF ATTORNEY
Harvey M. Salkin, whose signature appears below, does hereby constitute
and appoint Walter B. Grimm, Stephen G. Mintos and George O. Martinez, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable The Riverfront
Funds (the "Trust"), to comply with the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended (the "Acts"), and any rules,
regulations or requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of the Trust's
Registration Statement on Form N-1A pursuant to said Acts and any and all
amendments thereto (including post-effective amendments), including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as trustee
and/or officer of the Trust such Registration Statement and any and all such
amendments filed with the Securities and Exchange Commission under any Acts and
any other instruments or documents related thereto, and the undersigned does
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue thereof.
Dated: May 23, 1997 /s/ Harvey M. Salkin
--------------------
Harvey M. Salkin
<PAGE> 5
POWER OF ATTORNEY
William N. Stratman, whose signature appears below, does hereby
constitute and appoint Walter B. Grimm, Stephen G. Mintos and Charles L. Booth,
each individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable The Riverfront
Funds, Inc. (the "Fund"), to comply with the Investment Company Act of 1940,
as amended, and the Securities Act of 1933, as amended (the "Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of the Fund's
Registration Statement on Form N-1A pursuant to said Acts and any and all
amendments thereto (including post-effective amendments), including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as director
and/or officer of the Fund such Registration Statement and any and all such
amendments filed with the Securities and Exchange Commission under any Acts and
any other instruments or documents related thereto, and the undersigned does
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue thereof.
Dated: May 29, 1998 /s/ William N. Stratman
-----------------------
William N. Stratman
<PAGE> 6
POWER OF ATTORNEY
Donald C. Siekmann, whose signature appears below, does hereby
constitute and appoint Walter B. Grimm, Stephen G. Mintos and Charles L. Booth,
each individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable The Riverfront
Funds (the "Trust"), to comply with the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended (the "Acts"), and any rules,
regulations or requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of the Trust's
Registration Statement on Form N-1A pursuant to said Acts and any and all
amendments thereto (including post-effective amendments), including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as trustee
and/or officer of the Trust such Registration Statement and any and all such
amendments filed with the Securities and Exchange Commission under any Acts and
any other instruments or documents related thereto, and the undersigned does
hereby ratify and confirm all that said attorneys and agents, or any of them,
shall do or cause to be done by virtue thereof.
Dated: May 29, 1998 /s/ Donald C. Siekmann
----------------------
Donald C. Siekmann
<PAGE> 1
Exhibit (19)(g)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the references to our
firm under the caption "Legal Counsel" included in or made a part of the
Registration Statement on Form N-1A, File No. 33-34154, filed under the
Securities Act of 1933, as amended, of The Riverfront Funds.
BAKER & HOSTETLER LLP
Columbus, Ohio
October 28, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC.
<SERIES>
<NUMBER> 011
<NAME> THE U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 142,766,087
<INVESTMENTS-AT-VALUE> 142,766,087
<RECEIVABLES> 484,466
<ASSETS-OTHER> 11,081
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 143,261,634
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 692,877
<TOTAL-LIABILITIES> 692,877
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<OVERDISTRIBUTION-GAINS> 3,753
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 142,568,757
<DIVIDEND-INCOME> 0
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<EXPENSES-NET> 1,034,549
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<NUMBER-OF-SHARES-SOLD> 374,303,813
<NUMBER-OF-SHARES-REDEEMED> 415,078,263
<SHARES-REINVESTED> 2,327,411
<NET-CHANGE-IN-ASSETS> (38,448,502)
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<OVERDIST-NET-GAINS-PRIOR> 2,290
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<PER-SHARE-NAV-END> 1.000
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC.
<SERIES>
<NUMBER> 021
<NAME> THE RIVERFRONT U.S. GOVERNMENT INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 49,153,218
<INVESTMENTS-AT-VALUE> 49,741,917
<RECEIVABLES> 632,073
<ASSETS-OTHER> 5,482
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<SHARES-COMMON-PRIOR> 3,571,637<F1>
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<OVERDISTRIBUTION-GAINS> (1,068,616)
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<PER-SHARE-NII> 0.49<F1>
<PER-SHARE-GAIN-APPREC> 0.14<F1>
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<PER-SHARE-NAV-END> 9.48<F1>
<EXPENSE-RATIO> 1.14<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS A SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC.
<SERIES>
<NUMBER> 022
<NAME> THE RIVERFRONT U.S. GOVERNMENT INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 49,153,218
<INVESTMENTS-AT-VALUE> 49,741,917
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<PER-SHARE-NAV-BEGIN> 10.64<F1>
<PER-SHARE-NII> 0.48<F1>
<PER-SHARE-GAIN-APPREC> 0.14<F1>
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<PER-SHARE-NAV-END> 10.68<F1>
<EXPENSE-RATIO> 1.95<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS B SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC.
<SERIES>
<NUMBER> 031
<NAME> THE RIVERFRONT INCOME EQUITY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 96,679,453
<INVESTMENTS-AT-VALUE> 101,416,249
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<PER-SHARE-NII> 0.16<F1>
<PER-SHARE-GAIN-APPREC> 3.11<F1>
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<PER-SHARE-NAV-END> 11.68<F1>
<EXPENSE-RATIO> 1.75<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS A SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC.
<SERIES>
<NUMBER> 032
<NAME> THE RIVERFRONT INCOME EQUITY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
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<TOTAL-LIABILITIES> 889,923
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS B SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS
<SERIES>
<NUMBER> 041
<NAME> THE RIVERFRONT OHIO TAX-FREE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
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<NET-CHANGE-IN-ASSETS> (8,130,849)
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<PER-SHARE-NII> 0.42<F1>
<PER-SHARE-GAIN-APPREC> 0.00<F1>
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS A SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS
<SERIES>
<NUMBER> 042
<NAME> THE RIVERFRONT OHIO TAX-FREE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
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<PER-SHARE-GAIN-APPREC> (0.02)<F1>
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<EXPENSE-RATIO> 2.14<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS B SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC.
<SERIES>
<NUMBER> 051
<NAME> THE RIVERFRONT BALANCED FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
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<PER-SHARE-NII> 0.23<F1>
<PER-SHARE-GAIN-APPREC> 1.71<F1>
<PER-SHARE-DIVIDEND> 0.23<F1>
<PER-SHARE-DISTRIBUTIONS> 1.10<F1>
<RETURNS-OF-CAPITAL> 0.00<F1>
<PER-SHARE-NAV-END> 12.30<F1>
<EXPENSE-RATIO> 1.86<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS A SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC.
<SERIES>
<NUMBER> 052
<NAME> THE RIVERFRONT BALANCED FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 18,057,693
<INVESTMENTS-AT-VALUE> 20,982,175
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<TOTAL-LIABILITIES> 49,539
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<SHARES-COMMON-STOCK> 903,237<F1>
<SHARES-COMMON-PRIOR> 831,165<F1>
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<ACCUM-APPREC-OR-DEPREC> 2,924,482
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<DIVIDEND-INCOME> 233,985
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<OTHER-INCOME> 0
<EXPENSES-NET> 477,019
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<REALIZED-GAINS-CURRENT> 1,983,851
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<DISTRIBUTIONS-OF-GAINS> 913,202<F1>
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<NUMBER-OF-SHARES-REDEEMED> 437,775
<SHARES-REINVESTED> 156,705
<NET-CHANGE-IN-ASSETS> 251,370
<ACCUMULATED-NII-PRIOR> 2,553
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<OVERDIST-NET-GAINS-PRIOR> (153,662)
<GROSS-ADVISORY-FEES> 185,950
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<AVERAGE-NET-ASSETS> 10,755,901<F1>
<PER-SHARE-NAV-BEGIN> 12.04<F1>
<PER-SHARE-NII> 0.12<F1>
<PER-SHARE-GAIN-APPREC> 1.77<F1>
<PER-SHARE-DIVIDEND> 0.12<F1>
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<PER-SHARE-NAV-END> 12.71<F1>
<EXPENSE-RATIO> 2.72<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS B SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC.
<SERIES>
<NUMBER> 061
<NAME> THE RIVERFRONT STOCK APPRECIATION FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 18,089,347
<INVESTMENTS-AT-VALUE> 22,127,696
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<SHARES-COMMON-STOCK> 2,651,012<F1>
<SHARES-COMMON-PRIOR> 3,312,660<F1>
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<OVERDISTRIBUTION-NII> (2,194)
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<DIVIDEND-INCOME> 365,157
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<EXPENSES-NET> 572,801
<NET-INVESTMENT-INCOME> (123,137)
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<SHARES-REINVESTED> 490,460
<NET-CHANGE-IN-ASSETS> (6,336,758)
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 29,793
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<GROSS-EXPENSE> 572,801
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<PER-SHARE-NAV-BEGIN> 9.43<F1>
<PER-SHARE-NII> (0.04)<F1>
<PER-SHARE-GAIN-APPREC> 1.75<F1>
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<EXPENSE-RATIO> 2.11<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS A SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC.
<SERIES>
<NUMBER> 062
<NAME> THE RIVERFRONT STOCK APPRECIATION FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
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<INVESTMENTS-AT-VALUE> 22,127,696
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<SHARES-COMMON-PRIOR> 70,378<F1>
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<PER-SHARE-NII> (0.08)<F1>
<PER-SHARE-GAIN-APPREC> 1.77<F1>
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<AVG-DEBT-OUTSTANDING> 0
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<FN>
<F1>CLASS B SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC.
<SERIES>
<NUMBER> 071
<NAME> THE RIVERFRONT LARGE COMPANY SELECT FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-02-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 20,020,952
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<AVG-DEBT-OUTSTANDING> 0
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<FN>
<F1>CLASS A SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC.
<SERIES>
<NUMBER> 072
<NAME> THE RIVERFRONT LARGE COMPANY SELECT FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
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<PER-SHARE-NII> (0.04)<F1>
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<AVG-DEBT-OUTSTANDING> 0
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<FN>
<F1>CLASS B SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC
<SERIES>
<NUMBER> 011
<NAME> THE US GOVERNMENT SECURITIES MONEY MARKET FUND
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1998
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC
<SERIES>
<NUMBER> 021
<NAME> THE RIVERFRONT US GOVERNMENT INCOME FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
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<PER-SHARE-NII> 0.24<F1>
<PER-SHARE-GAIN-APPREC> 0.05<F1>
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<EXPENSE-RATIO> 1.14<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS A SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC
<SERIES>
<NUMBER> 022
<NAME> THE RIVERFRONT US GOVERNMENT INCOME FUND
<S> <C>
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<NUMBER-OF-SHARES-REDEEMED> 8,403<F1>
<SHARES-REINVESTED> 1,394<F1>
<NET-CHANGE-IN-ASSETS> (3,211,786)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 1,068,616
<GROSS-ADVISORY-FEES> 97,286
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 295,623
<AVERAGE-NET-ASSETS> 1,295,371<F1>
<PER-SHARE-NAV-BEGIN> 10.68<F1>
<PER-SHARE-NII> 0.21<F1>
<PER-SHARE-GAIN-APPREC> 0.05<F1>
<PER-SHARE-DIVIDEND> 0.18<F1>
<PER-SHARE-DISTRIBUTIONS> 0.00<F1>
<RETURNS-OF-CAPITAL> 0.00<F1>
<PER-SHARE-NAV-END> 10.76<F1>
<EXPENSE-RATIO> 1.95<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS B SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC
<SERIES>
<NUMBER> 031
<NAME> THE RIVERFRONT INCOME EQUITY FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 104,811,106
<INVESTMENTS-AT-VALUE> 104,165,056
<RECEIVABLES> 1,239,378
<ASSETS-OTHER> 14,171
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 105,418,605
<PAYABLE-FOR-SECURITIES> 63,677
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,499,879
<TOTAL-LIABILITIES> 1,563,556
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 94,684,973
<SHARES-COMMON-STOCK> 6,974,638<F1>
<SHARES-COMMON-PRIOR> 7,175,136<F1>
<ACCUMULATED-NII-CURRENT> 528
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9,815,598
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (646,050)
<NET-ASSETS> 103,855,049
<DIVIDEND-INCOME> 1,327,668
<INTEREST-INCOME> 36,837
<OTHER-INCOME> 0
<EXPENSES-NET> 1,016,622
<NET-INVESTMENT-INCOME> 347,883
<REALIZED-GAINS-CURRENT> 10,149,818
<APPREC-INCREASE-CURRENT> (5,382,846)
<NET-CHANGE-FROM-OPS> 5,114,855
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 335,755<F1>
<DISTRIBUTIONS-OF-GAINS> 967,780<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 287,981<F1>
<NUMBER-OF-SHARES-REDEEMED> 506,172<F1>
<SHARES-REINVESTED> 17,693<F1>
<NET-CHANGE-IN-ASSETS> 2,451,259
<ACCUMULATED-NII-PRIOR> 534
<ACCUMULATED-GAINS-PRIOR> 851,257
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 509,287
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,030,085
<AVERAGE-NET-ASSETS> 88,580,205<F1>
<PER-SHARE-NAV-BEGIN> 11.68<F1>
<PER-SHARE-NII> 0.05<F1>
<PER-SHARE-GAIN-APPREC> 0.56<F1>
<PER-SHARE-DIVIDEND> 0.05<F1>
<PER-SHARE-DISTRIBUTIONS> 0.14<F1>
<RETURNS-OF-CAPITAL> 0.00<F1>
<PER-SHARE-NAV-END> 12.10<F1>
<EXPENSE-RATIO> 1.76<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS A SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC
<SERIES>
<NUMBER> 032
<NAME> THE RIVERFRONT INCOME EQUITY FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 104,811,106
<INVESTMENTS-AT-VALUE> 104,165,056
<RECEIVABLES> 1,239,378
<ASSETS-OTHER> 14,171
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 105,418,605
<PAYABLE-FOR-SECURITIES> 63,677
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,499,879
<TOTAL-LIABILITIES> 1,563,556
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 94,684,973
<SHARES-COMMON-STOCK> 1,568,909<F1>
<SHARES-COMMON-PRIOR> 1,466,214<F1>
<ACCUMULATED-NII-CURRENT> 528
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9,815,598
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (646,050)
<NET-ASSETS> 103,855,049
<DIVIDEND-INCOME> 1,327,668
<INTEREST-INCOME> 36,837
<OTHER-INCOME> 0
<EXPENSES-NET> 1,016,622
<NET-INVESTMENT-INCOME> 347,883
<REALIZED-GAINS-CURRENT> 10,149,818
<APPREC-INCREASE-CURRENT> (5,382,846)
<NET-CHANGE-FROM-OPS> 5,114,855
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12,134<F1>
<DISTRIBUTIONS-OF-GAINS> 217,697<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 231,567<F1>
<NUMBER-OF-SHARES-REDEEMED> 129,036<F1>
<SHARES-REINVESTED> 164<F1>
<NET-CHANGE-IN-ASSETS> 2,451,259
<ACCUMULATED-NII-PRIOR> 534
<ACCUMULATED-GAINS-PRIOR> 851,257
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 509,287
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,030,085
<AVERAGE-NET-ASSETS> 19,526,663<F1>
<PER-SHARE-NAV-BEGIN> 11.98<F1>
<PER-SHARE-NII> 0<F1>
<PER-SHARE-GAIN-APPREC> 0.57<F1>
<PER-SHARE-DIVIDEND> 0.01<F1>
<PER-SHARE-DISTRIBUTIONS> 0.14<F1>
<RETURNS-OF-CAPITAL> 0.00<F1>
<PER-SHARE-NAV-END> 12.40<F1>
<EXPENSE-RATIO> 2.54<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS B SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC.
<SERIES>
<NUMBER> 051
<NAME> THE RIVERFRONT BALANCED FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 19,161,077
<INVESTMENTS-AT-VALUE> 22,592,517
<RECEIVABLES> 201,008
<ASSETS-OTHER> 4,222
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 22,797,747
<PAYABLE-FOR-SECURITIES> 44,373
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 214,233
<TOTAL-LIABILITIES> 258,606
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17,170,391
<SHARES-COMMON-STOCK> 745,474<F1>
<SHARES-COMMON-PRIOR> 777,175<F1>
<ACCUMULATED-NII-CURRENT> 3,949
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,933,361
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,431,440
<NET-ASSETS> 22,539,141
<DIVIDEND-INCOME> 123,193
<INTEREST-INCOME> 231,960
<OTHER-INCOME> 0
<EXPENSES-NET> 235,054
<NET-INVESTMENT-INCOME> 120,099
<REALIZED-GAINS-CURRENT> 1,933,362
<APPREC-INCREASE-CURRENT> 506,958
<NET-CHANGE-FROM-OPS> 2,560,410
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 77,604<F1>
<DISTRIBUTIONS-OF-GAINS> 58,612<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 56,456<F1>
<NUMBER-OF-SHARES-REDEEMED> 92,668<F1>
<SHARES-REINVESTED> 4,511<F1>
<NET-CHANGE-IN-ASSETS> 1,493,293
<ACCUMULATED-NII-PRIOR> 3,979
<ACCUMULATED-GAINS-PRIOR> 127,213
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 97,807
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 248,944
<AVERAGE-NET-ASSETS> 9,904,901<F1>
<PER-SHARE-NAV-BEGIN> 12.30<F1>
<PER-SHARE-NII> 0.10<F1>
<PER-SHARE-GAIN-APPREC> 1.46<F1>
<PER-SHARE-DIVIDEND> 0.10<F1>
<PER-SHARE-DISTRIBUTIONS> 0.08<F1>
<RETURNS-OF-CAPITAL> 0.00<F1>
<PER-SHARE-NAV-END> 13.68<F1>
<EXPENSE-RATIO> 1.72<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS A SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC.
<SERIES>
<NUMBER> 052
<NAME> THE RIVERFRONT BALANCED FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 19,161,077
<INVESTMENTS-AT-VALUE> 22,592,517
<RECEIVABLES> 201,008
<ASSETS-OTHER> 4,222
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 22,797,747
<PAYABLE-FOR-SECURITIES> 44,373
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 214,233
<TOTAL-LIABILITIES> 258,606
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17,170,391
<SHARES-COMMON-STOCK> 872,536<F1>
<SHARES-COMMON-PRIOR> 777,175<F1>
<ACCUMULATED-NII-CURRENT> 3,949
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,933,361
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,431,440
<NET-ASSETS> 22,539,141
<DIVIDEND-INCOME> 123,193
<INTEREST-INCOME> 231,960
<OTHER-INCOME> 0
<EXPENSES-NET> 235,054
<NET-INVESTMENT-INCOME> 120,099
<REALIZED-GAINS-CURRENT> 1,933,362
<APPREC-INCREASE-CURRENT> 506,958
<NET-CHANGE-FROM-OPS> 2,560,419
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 42,525<F1>
<DISTRIBUTIONS-OF-GAINS> 68,602<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 41,321<F1>
<NUMBER-OF-SHARES-REDEEMED> 74,155<F1>
<SHARES-REINVESTED> 2,133<F1>
<NET-CHANGE-IN-ASSETS> 1,493,293
<ACCUMULATED-NII-PRIOR> 3,979
<ACCUMULATED-GAINS-PRIOR> 127,213
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 97,807
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 248,944
<AVERAGE-NET-ASSETS> 12,010,358<F1>
<PER-SHARE-NAV-BEGIN> 12.71<F1>
<PER-SHARE-NII> 0.05<F1>
<PER-SHARE-GAIN-APPREC> 1.51<F1>
<PER-SHARE-DIVIDEND> 0.05<F1>
<PER-SHARE-DISTRIBUTIONS> 0.08<F1>
<RETURNS-OF-CAPITAL> 0.00<F1>
<PER-SHARE-NAV-END> 14.14<F1>
<EXPENSE-RATIO> 2.53<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS B SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC.
<SERIES>
<NUMBER> 061
<NAME> THE RIVERFRONT STOCK APPRECIATION FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 19,644,619
<INVESTMENTS-AT-VALUE> 24,464,735
<RECEIVABLES> 488,630
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 4,098
<TOTAL-ASSETS> 24,957,463
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,033,775
<TOTAL-LIABILITIES> 3,033,775
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16,066,652
<SHARES-COMMON-STOCK> 2,357,230<F1>
<SHARES-COMMON-PRIOR> 2,651,012<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (105,757)
<ACCUMULATED-NET-GAINS> 1,142,677
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,820,116
<NET-ASSETS> 21,923,688
<DIVIDEND-INCOME> 131,491
<INTEREST-INCOME> 20,127
<OTHER-INCOME> 0
<EXPENSES-NET> 255,181
<NET-INVESTMENT-INCOME> (103,563)
<REALIZED-GAINS-CURRENT> 1,144,439
<APPREC-INCREASE-CURRENT> 781,767
<NET-CHANGE-FROM-OPS> 1,822,643
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0<F1>
<DISTRIBUTIONS-OF-GAINS> 2,779,610<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 80,520<F1>
<NUMBER-OF-SHARES-REDEEMED> 374,315<F1>
<SHARES-REINVESTED> 13<F1>
<NET-CHANGE-IN-ASSETS> (3,653,891)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,973,133
<OVERDISTRIB-NII-PRIOR> 2,194
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 101,183
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 255,181
<AVERAGE-NET-ASSETS> 24,063,685<F1>
<PER-SHARE-NAV-BEGIN> 9.17<F1>
<PER-SHARE-NII> (0.04)<F1>
<PER-SHARE-GAIN-APPREC> 0.72<F1>
<PER-SHARE-DIVIDEND> 0.00<F1>
<PER-SHARE-DISTRIBUTIONS> 1.18<F1>
<RETURNS-OF-CAPITAL> 0.00<F1>
<PER-SHARE-NAV-END> 8.67<F1>
<EXPENSE-RATIO> 1.98<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS A SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC.
<SERIES>
<NUMBER> 062
<NAME> THE RIVERFRONT STOCK APPRECIATION FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 19,644,619
<INVESTMENTS-AT-VALUE> 24,464,735
<RECEIVABLES> 488,630
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 4,098
<TOTAL-ASSETS> 24,957,463
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,033,775
<TOTAL-LIABILITIES> 3,033,775
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16,066,652
<SHARES-COMMON-STOCK> 165,610<F1>
<SHARES-COMMON-PRIOR> 133,340<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (105,757)
<ACCUMULATED-NET-GAINS> 1,142,677
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<ACCUM-APPREC-OR-DEPREC> 4,820,116
<NET-ASSETS> 21,923,688
<DIVIDEND-INCOME> 131,491
<INTEREST-INCOME> 20,127
<OTHER-INCOME> 0
<EXPENSES-NET> 255,181
<NET-INVESTMENT-INCOME> (103,563)
<REALIZED-GAINS-CURRENT> 1,144,439
<APPREC-INCREASE-CURRENT> 781,767
<NET-CHANGE-FROM-OPS> 1,822,643
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0<F1>
<DISTRIBUTIONS-OF-GAINS> 195,285<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 39,923<F1>
<NUMBER-OF-SHARES-REDEEMED> 7,653<F1>
<SHARES-REINVESTED> 0<F1>
<NET-CHANGE-IN-ASSETS> (3,653,891)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,973,133
<OVERDISTRIB-NII-PRIOR> 2,194
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 101,183
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 255,181
<AVERAGE-NET-ASSETS> 1,441,712<F1>
<PER-SHARE-NAV-BEGIN> 9.49<F1>
<PER-SHARE-NII> (0.07)<F1>
<PER-SHARE-GAIN-APPREC> 0.74<F1>
<PER-SHARE-DIVIDEND> 0.00<F1>
<PER-SHARE-DISTRIBUTIONS> 1.18<F1>
<RETURNS-OF-CAPITAL> 0.00<F1>
<PER-SHARE-NAV-END> 8.98<F1>
<EXPENSE-RATIO> 2.73<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS B SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC.
<SERIES>
<NUMBER> 071
<NAME> THE RIVERFRONT LARGE COMPANY SELECT FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 28,598,922
<INVESTMENTS-AT-VALUE> 47,111,075
<RECEIVABLES> 182,880
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<TOTAL-ASSETS> 47,304,581
<PAYABLE-FOR-SECURITIES> 311,490
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 73,415
<TOTAL-LIABILITIES> 384,905
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24,169,454
<SHARES-COMMON-STOCK> 3,098,555<F1>
<SHARES-COMMON-PRIOR> 2,964,154<F1>
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<ACCUMULATED-NET-GAINS> 4,312,705
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<ACCUM-APPREC-OR-DEPREC> 18,512,153
<NET-ASSETS> 46,919,676
<DIVIDEND-INCOME> 275,275
<INTEREST-INCOME> 2,225
<OTHER-INCOME> 0
<EXPENSES-NET> 352,136
<NET-INVESTMENT-INCOME> (74,636)
<REALIZED-GAINS-CURRENT> 4,312,705
<APPREC-INCREASE-CURRENT> 2,505,192
<NET-CHANGE-FROM-OPS> 6,743,261
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0<F1>
<DISTRIBUTIONS-OF-GAINS> 9,556<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 266,592<F1>
<NUMBER-OF-SHARES-REDEEMED> 132,191<F1>
<SHARES-REINVESTED> 0<F1>
<NET-CHANGE-IN-ASSETS> 10,842,087
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 10,823
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 161,987
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 352,136
<AVERAGE-NET-ASSETS> 36,969,399<F1>
<PER-SHARE-NAV-BEGIN> 11.34<F1>
<PER-SHARE-NII> (0.02)<F1>
<PER-SHARE-GAIN-APPREC> 2.06<F1>
<PER-SHARE-DIVIDEND> 0.00<F1>
<PER-SHARE-DISTRIBUTIONS> 0.00<F1>
<RETURNS-OF-CAPITAL> 0.00<F1>
<PER-SHARE-NAV-END> 13.38<F1>
<EXPENSE-RATIO> 1.67<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS A SHARES
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000862342
<NAME> THE RIVERFRONT FUNDS INC.
<SERIES>
<NUMBER> 072
<NAME> THE RIVERFRONT LARGE COMPANY SELECT FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 28,598,922
<INVESTMENTS-AT-VALUE> 47,111,075
<RECEIVABLES> 182,880
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 47,304,581
<PAYABLE-FOR-SECURITIES> 311,490
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 73,415
<TOTAL-LIABILITIES> 384,905
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24,169,454
<SHARES-COMMON-STOCK> 410,819<F1>
<SHARES-COMMON-PRIOR> 218,535<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 74,636
<ACCUMULATED-NET-GAINS> 4,312,705
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 18,512,153
<NET-ASSETS> 46,919,676
<DIVIDEND-INCOME> 275,275
<INTEREST-INCOME> 2,225
<OTHER-INCOME> 0
<EXPENSES-NET> 352,136
<NET-INVESTMENT-INCOME> (74,636)
<REALIZED-GAINS-CURRENT> 4,312,705
<APPREC-INCREASE-CURRENT> 2,505,192
<NET-CHANGE-FROM-OPS> 6,743,261
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0<F1>
<DISTRIBUTIONS-OF-GAINS> 1,267<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 219,652<F1>
<NUMBER-OF-SHARES-REDEEMED> 27,567<F1>
<SHARES-REINVESTED> 199<F1>
<NET-CHANGE-IN-ASSETS> 10,842,087
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 10,823
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 161,987
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 352,136
<AVERAGE-NET-ASSETS> 3,862,958<F1>
<PER-SHARE-NAV-BEGIN> 11.28<F1>
<PER-SHARE-NII> (0.05)<F1>
<PER-SHARE-GAIN-APPREC> 2.03<F1>
<PER-SHARE-DIVIDEND> 0.00<F1>
<PER-SHARE-DISTRIBUTIONS> 0.00<F1>
<RETURNS-OF-CAPITAL> 0.00<F1>
<PER-SHARE-NAV-END> 13.26<F1>
<EXPENSE-RATIO> 2.42<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>CLASS B SHARES
</FN>
</TABLE>
