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Riverfront Income Equity Fund
The Riverfront Balanced Fund
The Riverfront Large Company Select Fund
The Riverfront Stock Appreciation Fund
The Riverfront U.S. Government Income Fund
The Riverfront U.S. Government Securities Money Market Fund
LOGO
RIVERFRONT
FUNDS
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Table of Contents The Riverfront Funds, Inc.
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<TABLE>
<S> <C>
Message From Your Chairman.................................................. 2
Message From Your Investment Adviser........................................ 3
Performance Reviews......................................................... 4
Statements of Assets and Liabilities........................................ 17
Statements of Operations.................................................... 19
Statements of Changes in Net Assets......................................... 21
Schedules of Portfolio Investments.......................................... 23
Notes to Financial Statements............................................... 36
Financial Highlights........................................................ 47
</TABLE>
1
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Message From The Chairman The Riverfront Funds, Inc.
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Dear Shareholders:
We are pleased to report that the six-month period ended June 30, 1998 was a
very successful one for mutual funds in general and for the Riverfront Funds
in particular. A significant part of that success stemmed from our investors'
continued confidence in the Funds, with a high level of reinvestment in
Riverfront. Market conditions in the first two quarters of 1998 continued to
exceed our expectations and many investors reaped the benefits.
Many expected the impact of the Asian recession to be negative toward S&P
earnings, but second quarter earnings surprised on the upside. In our opinion,
the largest of the large-capitalization stocks continued to drive the market
to new highs. The Riverfront Funds are pleased to have participated in the
prosperity experienced in the market over the last six months.
LARGE COMPANY SELECT FUND SOARS
The above-referenced market dominance of the largest large-cap stocks proved
beneficial to the Riverfront Large Company Select Fund. The first half of 1998
saw this fund experience strong and steady growth. A detailed summary of the
Fund's activities over this period is included in this report. For a
prospectus, which includes information on charges and expenses, on this Fund
or any of the Riverfront Funds, please call us at 1-800-424-2295. Please read
the prospectus carefully before investing.
STOCK APPRECIATION REPOSITIONING BEARS FRUIT
At the close of 1997, efforts were initiated to reposition the portfolio of
the Stock Appreciation Fund so that it would focus on small-capitalization
stocks. This repositioning was completed in the period ended June 30, 1998 and
the Fund now concentrates on stocks of companies with small market
capitalizations. In many cases these stocks are undervalued by the market and
where appropriate, we have seized these good buying opportunities. The summary
of the Stock Appreciation Fund contained in this report gives further detail
of this Fund's performance. As with any investment in a mutual fund, we
recommend a careful reading of the prospectus before investing.
A WORD OF WELCOME
We are also pleased to report that during the first half of 1998 the staff of
Riverfront's investment advisor, Provident Investment Advisors, was enhanced
by the addition of C. Edwin Riley, Jr. Ed accepted the position of Managing
Director of PIA and brings to that role his considerable investment management
experience and expertise. We are very enthusiastic to have a managing director
of his caliber on board. Ed's comments on the first two quarters of 1998
follow in this report.
We ask that you closely read the following report. The performance of each of
the Riverfront Funds are discussed herein for the period ended June 30, 1998.
We thank you for your ongoing support of Riverfront and look forward to
continuing to provide you with both sound investment management and quality
shareholder servicing. As always, if you would like a prospectus or require
any assistance, please do not hesitate to call us at 1-800-424-2295.
Sincerely,
/s/ Walter B. Grimm
Walter B. Grimm
President
The Riverfront Funds
THE RIVERFRONT FUNDS ARE NOT FDIC INSURED AND ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, THE
PROVIDENT BANK OR ITS AFFILIATES OR BY ANY GOVERNMENTAL
AGENCY. INVESTMENT PRODUCTS INVOLVE INVESTMENT RISK,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
2
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Message From The Investment Adviser The Riverfront Funds, Inc.
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For the six-month period ended June 30, 1998, the U.S. economy continued to
experience near-perfect conditions. The combination of even lower inflation
than 1997 and full employment resulted in a very robust consumer-spending
pattern.
The financial markets focused on the "Balancing Act" between economic strength
domestically and the offsetting Asian collapse. In the first quarter, domestic
spending was well ahead of expectations as a very mild winter allowed for
unusually high levels of economic activity. As the second quarter unfolded,
the Asian collapse became more of a headline. Japan and Korea fell into
recession while Malaysia experienced depressionary collapses in GDP. The
effects on the U.S. came through deflation imported from abroad. Most
commodity prices fell, hurting the industrial side of the economy and the
stocks represented therein. Energy prices continued to fall along with
technology components, lumber, paper, and chemicals. In addition, the sluggish
demand for U.S. products overseas caused exports to fall 15% from year-ago
levels.
The combination of the influences listed above resulted in a sizable decline
in interest rates as well as any inflation expectations. As a result, the
market averages, particularly the S&P 500, provided above average results for
the first half of 1998. The S&P 500's total return was 17.71%. The returns
from smaller companies' indices were more modest, as the S&P 600 returned
6.11% and the Russell 2000 gained 5.18%. Of course, past performance is no
guarantee of future results.
The best performers were companies with large capitalizations and above
average earnings growth. The best performing areas included retailing,
technology and health care.
The results of the S&P 500 do not reflect the disappointments in many stocks
over the past year. Actually, as of June 30, 1998, over 44% of the stocks
listed on NASDAQ have seen 30% or greater declines from their 52-week highs.
This reflects the narrow focus within the market that has not been seen since
the 1960's when the "nifty fifty" phase was coined.
OUTLOOK
If the recent past is any guide, we believe the financial markets will prefer
to focus on the positives; low interest rates, a dynamic consumer, as well as
substantial cash flows into the U.S. stock market. We forecast solid but
tempered economic growth in the second half of 1998 as the reduction in
exports continues and the first half inventory build is worked off. As the
profit cycle continues to decelerate the market may become more narrow in
leadership, presenting an even tougher challenge for money managers to
identify the ever-shrinking number of companies that can continue to grow
earnings at double digit rates. The large fastest growing stocks have
performed by far the best over the past several years. We believe better value
can be found in smaller companies that possess solid growth potential. In our
view, the U.S. equity markets are discounting an exceptional environment for
stocks. The valuation levels are quite high as the market's discount
mechanism, inflation, continues to decline. While we do not forecast a rise in
inflation, any event which would spark inflation concerns would likely result
in more than a mild correction.
Interest rates on bonds of longer maturities have continued to decline while
short-term interest rates remain quite high resulting in a relatively flat
yield curve. We believe, the Federal Reserve Board is unlikely to move to
reduce these short rates until they are convinced that the domestic economy is
experiencing a noticeable slowdown. We do not expect any such action in 1998
or early 1999. However, the rate structure is providing historically high real
rates of returns for fixed income investors. Therefore, we recommend investors
purchase high quality intermediate to long-term bonds.
Sincerely
/s/ C. Edwin Riley, Jr.
C. Edwin Riley, Jr.
Managing Director
Provident Investment Advisors
The Standard & Poor's 500 Stock Index is an unmanaged index considered to be
representative of the stock market as a whole. The Standard & Poor's 600 Index
is an unmanaged index considered to be representative of the top 600 stocks
listed on the New York Stock Exchange. The Russell 2000 Index is an unmanaged
index generally representative of small cap stocks.
3
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Performance Reviews The Riverfront Funds, Inc.
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THE RIVERFRONT INCOME EQUITY FUND
During the second quarter of 1998 and year-to-date, the Riverfront Income
Equity Fund generated a return of -6.01% and 5.18%, respectively for (Investor
A Shares*).
We have been challenged by the market during the last few years with its
unprecedented narrowness, valuation levels, and its distinct preference for
growth stocks, while shunning value stocks, particularly yield names. Our
commitment to our discipline is steadfast as we continue to buy stocks that we
believe have an above average yield, low long-term relative valuation, and a
fundamental catalyst. We have not deviated from our methodology, which has a
strong long-term track record of 13 years, and believe that when the market
broadens, our stocks will significantly benefit.
Our security analysis shows the large market capitalization stocks to be
overvalued, which has pushed us toward the more mid-cap names, a sector of the
market that has not been recently rewarded. Presently, mid-cap stocks are
trading at valuations that haven't been seen since the 1990 recession. You may
remember that in 1991, mid-cap stocks surged to levels twice that of large-cap
stocks as a result of the valuation disparity caused in 1990. In our view, the
current valuation disparity is approaching an extreme that should signal
buying opportunities to investors.
As shown below, a portfolio of stocks with yields in the top quarter, produced
a return of -1.7% while a portfolio of stocks whose yield was in the bottom
quartile produced +14.2. Likewise, a portfolio of the top quartile
capitalization stocks produced a return of +7.7% while the smallest stocks
(bottom quartile) returned a -7.8%. We continue to find excellent value and
believe that, in the not-so-distant future, the market will correct itself and
reward the smaller big cap stocks.
S&P 500
<TABLE>
<CAPTION>
MARKET CAP YIELD
---------- ------
<S> <C> <C>
Top Quartile.................................................. +7.7% - 1.7%
Bottom Quartile............................................... -7.8% +14.2%
</TABLE>
While we recognize some of the challenges that apply to our investment
process, we also acknowledge our poor stock selection has exacerbated the poor
performance of our portfolios. Names like Wallace, Armstrong and Flowserve
contributed significantly to our under performance. Additionally, some of our
holdings like Brunswick and BetzDearborn have experienced deteriorating
fundamentals as a result of the Asian problem. Your portfolio has also been
psychologically hurt by Asia where stock's fundamentals are intact, but are
not being rewarded for their strong stories. Companies who fall into this
category are Hubbell, Reynolds, Thomas & Betts and others. We continue to have
significant weighting in papers, and it remains our belief that the
fundamentals of this industry group are compelling. We continue to see big
positive secular change, no capacity growth and ongoing consolidation in the
papers, and we fully expect to see our weightings in this industry group
perform handsomely in the future. However, Asian concerns may push this
particular story out perhaps several months.
Notable winners, held during the period, in the portfolio included American
Home Products, Cooper Industries, Whirlpool, and AG Edwards. The market has
begun to acknowledge the tremendous value opportunities in our universe as
takeovers continue to dominate the portfolio. Echlin, Crestar, General Signal,
Southern New England, Magna Group, Illinois Central, Giant Foods and
Mercantile Stores were all acquired at significant premiums.
Please be assured that we continue to execute our equity income investment
discipline as we have in the past, and we have every confidence that it will
ultimately reward us to stay the course.
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The Fund's composition is subject to change.
* The return, with the maximum sales charge of 4.50%, was -10.21% for the
second quarter and 0.45% for the first half of 1998.
4
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Performance Reviews, continued The Riverfront Funds, Inc.
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Income Equity Fund
Value of a $10,000 Investment
Investor A Shares S&P Lipper Equity
(No Load) 500 Index Income Average
10/8/92 10000 10000 10000
12/31/92 10875 10503 10469
12/31/93 12192 11545 11950
12/31/94 12568 11713 11750
12/31/95 16521 16137 15304
12/31/96 19805 19842 18136
12/31/97 25389 26459 23037
6/30/98 26704 31142 25353
Average Annual Total Return
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Since
Inception
1 Year 5 Year (10/8/92)
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Investor A Shares (No Load) 16.24% 4.79% 18.69%
Income Equity Fund
Value of a $10,000 Investment
S&P Lipper Equity
Investor A Shares* 500 Index Income Average
10/8/92 9551 10000 10000
12/31/92 10387 10503 10469
12/31/93 11645 11545 11950
12/31/94 12004 11713 11750
12/31/95 15779 16137 15304
12/31/96 18916 19842 18136
12/31/97 24250 26459 23037
6/30/98 25507 31142 25353
Average Annual Total Return
Since
Inception
1 Year 5 Year (10/8/92)
- ----------------------------------------------------------------
Investor A Shares* 11.02% 17.64% 17.75%
*Reflects 4.50% sales charge.
Continued on next page
5
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Performance Reviews, continued The Riverfront Funds, Inc.
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Income Equity Fund
Value of a $10,000 Investment
S&P Lipper Equity
Investor B Shares** 500 Index Income Average
10/8/92 10000 10000 10000
12/31/92 10875 10503 10469
12/31/93 12192 11545 11950
12/31/94 12568 11713 11750
12/31/95 16247 16137 15304
12/31/96 19442 19842 18136
12/31/97 24725 26459 23037
6/30/98 25794 31142 25353
Average Annual Total Return
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Since
Inception
1 Year 5 Year (10/8/92)
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Investor B Shares** 11.79% 17.77% 17.98%
**Reflects applicable contingent deferred sales charge.
It is our intention to formally change benchmarks from the S&P 500 to the
Lipper Equity Income Average as of 12/31/98. We believe this index is a more
appropriate benchmark with an average market capitalization closer to the way
the fund is invested than the S&P 500, which has an average market
capitalization of 3 to 4 times that of the Income Equity Fund.
Past performance is not predictive of future results. Investment return and
principal value of the Riverfront variable net asset funds will fluctuate, so
that the shares, when redeemed, may be worth more or less than their original
cost. Performance of Investor B shares for periods prior to the initial
offering, January 1995, presents performance for Investor A shares and is
restated to reflect applicable contingent deferred sales charges. Investor B
Shares are subject to distribution and service fees, which would have reduced
performance. The maximum Contingent Deferred Sales Charge for the Investor B
Shares is 4.00%. The returns set forth reflect the waiver of certain advisory
or administrative fees. Without the waiver of fees, total return may have been
lower.
The Standard & Poor's 500 Stock Index is an unmanaged index considered to be
representative of the stock market as a whole. The Lipper Equity Income
Average is representative of an average of all funds in the Lipper category of
equity income. These indices do not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund
accounting fees. The performance of The Riverfront Income Equity Fund reflects
the deduction of fees for these value-added services.
6
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[This Page Intentionally Left Blank]
7
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Performance Reviews, continued The Riverfront Funds, Inc.
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THE RIVERFRONT BALANCED FUND
The Riverfront Balanced Fund provides shareholders with a combination of
strategies within one product. The application of Provident Investment
Advisors strategic asset allocation approach, combined with a large company
growth-oriented equity process and a sector rotation fixed income discipline
helps to provide our clients with above average return potential.
This Fund generated excellent results in the first half of 1998 as the 12.73%
(Investor A Shares*) total return outpaced over 90% of all other Balanced
Funds according to Lipper Analytical Services. For the one-year period ended
6/30/98, The Balanced Fund (Investor A Shares*) was ranked 75 out of 313 funds
in the Balanced category by Lipper./1/ For the twelve months ended June 30,
1998, this Fund's return of 21.09% (Investor A Shares*) ranks in the 21st
percentile. The Fund's focus on owning successful growth stocks and taking
advantage of the continuing decline in interest rates, in our view, are the
keys to the success of our results.
The largest equity holdings in the Fund as of June 30, 1998 included: Merck,
2.37% of net assets of the the Fund; BankBoston, 2.27%; Pfizer, 2.22%;
SunAmerica, 2.05%; Bristol-Myers, 2.04%; Procter & Gamble, 2.02%; Coca-Cola,
1.74%; General Electric, 1.61%; Exxon, 1.46%; Microsoft, 1.44%.
The asset allocation of the Riverfront Balanced Fund as of June 30, 1998 was:
Stocks, 51%, Bonds, 44%, and Cash, 5%.
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The Fund's composition is subject to change.
*The return, with the maximum sales charge of 4.50%, was 7.66% for the first
half of 1998 and 15.67% for the one-year ended 6/30/98.
/1/The Lipper ranking is based on total return and does not reflect a sales
charge.
Balanced Fund
Value of a $10,000 Investment
<TABLE>
<CAPTION>
Investor A Lehman Brothers Intermediate
Shares S&P Government/Corporate Lipper Balanced Blended 50% S&P
(No Load) 500 Index Bond Index Average 50% LB Int. Govt./Corp.
<S> <C> <C> <C> <C> <C>
9/1/94 10000 10000 10000 10000 10000
12/31/94 9981 9800 9896 9739 9737
12/31/95 11984 13475 11413 12161 12143
12/31/96 12674 16569 11875 13744 14146
12/31/97 14800 22095 12792 16355 17063
6/30/98 16685 26006 13235 17819 18868
</TABLE>
Average Annual Total Return
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Since
Inception
1 Year (9/1/94)
- -----------------------------------------------------------------
Investor A Shares (No Load) 21.09% 14.29%
8
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Performance Reviews, continued The Riverfront Funds, Inc.
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Balanced Fund
Value of a $10,000 Investment
<TABLE>
<CAPTION>
Lehman Brothers Intermediate
Investor A S&P Government/Corporate Lipper Balanced Blended 50% S&P
Shares* 500 Index Bond Index Average 50% LB Int. Govt./Corp.
<S> <C> <C> <C> <C> <C>
9/1/94 9551 10000 10000 10000 10000
12/31/94 9473 9800 9896 9739 9737
12/31/95 11446 13475 11413 12161 12143
12/31/96 12105 16569 11875 13744 14146
12/31/97 14135 22095 12792 16355 17063
6/30/98 15935 26006 13235 17819 18868
</TABLE>
Average Annual Total Return
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Since
Inception
1 Year (9/1/94)
- -----------------------------------------------------------------
Investor A Shares* 15.67% 12.93%
*Reflects 4.50% sales charge.
Balanced Fund
Value of a $10,000 Investment
<TABLE>
<CAPTION>
Lehman Brothers Intermediate
Investor B S&P Government/Corporate Lipper Balanced Blended 50% S&P
Shares** 500 Index Bond Index Average 50% LB Int. Govt./Corp.
<S> <C> <C> <C> <C> <C>
9/1/94 9600 10000 10000 10000 10000
12/31/94 9526 9800 9896 9739 9737
12/31/95 11554 13475 11413 12161 12143
12/31/96 12184 16569 11875 13744 14146
12/31/97 14574 22095 12792 16355 17063
6/30/98 16061 26006 13235 17819 18868
</TABLE>
Average Annual Total Return
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Since
Inception
1 Year (9/1/94)
- -----------------------------------------------------------------
Investor B Shares** 16.10% 13.16%
**Reflects applicable contingent deferred sales charge.
It is our intention to formally change benchmarks by eliminating both the S&P
500 and the Lehman Brothers Government/Corporate Bond Index. Our benchmarks
going forward will continue to be the Blended S&P500 and Lehman Brothers
Government/Corporate Bond Index and the Lipper Balanced Average. We believe
these indices are more appropriate benchmarks because they more closely mirror
the investment style of the Balanced Fund.
Past performance is not predictive of future results. Investment return and
principal value of the Riverfront variable net asset funds will fluctuate, so
that the shares, when redeemed, may be worth more or less than their original
cost. Performance of Investor B shares for periods prior to the initial
offering, January 1995, represents performance for Investor A shares and is
restated to reflect applicable contingent deferred sales charges. Investor B
Shares are subject to distribution and service fees, which would have reduced
performance. The maximum Contingent Deferred Sales Charge for the Investor B
Shares is 4.00%. The returns set forth reflect the waiver of certain advisory
or administrative fees. Without the waiver of fees, total return may have been
lower.
The Standard & Poor's 500 Stock Index and the Lehman Brothers Intermediate
Government/Corporate Bond Index are considered to be representative of the
stock and bond markets, respectively. They are unmanaged and do not reflect
the deduction of expenses associated with a mutual fund, such as investment
management and fund accounting fees. The Lipper Balanced Average is a
composite of 522 funds in the Lipper Balanced category. The performance of The
Riverfront Balanced Fund reflects the deduction of fees for these value-added
services.
The Riverfront Balanced Fund is also being measured against a benchmark of
blended indices which represent 50% of the S&P 500 Index and 50% of the Lehman
Brothers Intermediate Government/Corporate Bond Index.
9
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Performance Reviews, continued The Riverfront Funds, Inc.
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THE RIVERFRONT LARGE COMPANY SELECT FUND
The first half of 1998 has been an ideal period for large growth-oriented
stocks. The Riverfront Large Company Select Fund performed very well in this
period, gaining 18.02%, (Investor A Shares*). This result was ahead of the
Fund's benchmarks, the S&P 500 and the Lipper Growth & Income Average. The S&P
500 Index posted a total return of 17.71%, while the average Growth and Income
Fund Average tracked by Lipper rose 12.11%. Our results place the fund in the
top 10% of all Growth and Income Funds tracked by Lipper. For the one year
period ended June 30, 1998, the Fund (Investor A Shares*) ranked 190 out of
667 in the Growth and Income fund category by Lipper.
We believe the key to this success was the fund's positioning. Large
investments were made in companies that represented the strongest aspects of
the U.S. economy, in sectors that included consumer cyclicals, heathcare,
financials, and technology. The companies in these sectors were the drivers of
the U.S. economy, the stock market, and the performance of the Fund.
The domestic economy, characterized by low unemployment, strong gains in real
income, and low interest rates, is being fueled by robust consumer spending.
The strength in consumer spending is partly offset by weakness in
manufacturing and commodity based industries, primarily from the effects of
the Asian economic collapse. This economic distinction was evident within the
market as consumer stocks, particularly retailers, generated sizable gains on
average while basic materials, energy, utilities, and capital good producing
stocks lagged.
The ten largest holdings in the Fund as of June 30, 1998, include General
Electric, 4.27% of net assets of the Fund; Cisco Systems, 3.49%; Pfizer,
3.17%; Microsoft, 3.07%; Wal-Mart, 2.98%; Home Depot, 2.48%; Coca-Cola, 2.39%;
Merck & Co., 2.37%; Procter & Gamble, 2.25%; and Gillette, 2.22%.
Heading into the third quarter of 1998, we are significantly under-emphasizing
the industrial sectors given the deflationary pricing in commodity related
companies. We continue to focus on the consumer side of the economy. Stocks
such as Home Depot, Wal-Mart, The Gap and Staples are leading the way. We are
also focused on Health Care with sizable holdings in the pharmaceutical
industry. Finally, we continue to be impressed with the fundamentals of many
financial companies as demographics favor continued savings and investment,
particularly in stocks.
- -------
The Fund's composition subject to change.
*The return, with maximum sales charge of 4.50%, was 12.75% for the period.
Large Company Select Fund
Value of a $10,000 Investment
Investor A Shares Lipper G&I S&P
(No Load) Average 500 Index
8/30/86 10000 10000 10000
12/31/86 9570 9533 9674
12/31/87 9960 9732 10180
12/31/88 11050 11318 11891
12/31/89 14280 13993 15636
12/31/90 13390 13338 15140
12/31/91 16510 17181 19765
12/31/92 17670 18794 21281
12/31/93 19010 21237 23407
12/31/94 19150 21074 23713
12/31/95 25910 27484 32588
12/31/96 32220 33123 40108
12/31/97 41219 42106 53489
6/30/98 48645 47205 62965
Average Annual Total Return
- --------------------------------------------------------------------------------
Since
Inception
1 Year 5 Year 10 Year (8/30/86)
- --------------------------------------------------------------------------------
Investor A Shares (No Load) 26.97% 21.69% 16.42% 14.29%
10
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Performance Reviews, continued The Riverfront Funds, Inc.
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Large Company Select Fund
Value of a $10,000 Investment
Lipper G&I S&P
Investor A Shares* Average 500 Index
8/30/86 9600 10000 10000
12/31/86 9187 9533 9674
12/31/87 9562 9732 10180
12/31/88 10608 11318 11891
12/31/89 13632 13993 15636
12/31/90 12854 13338 15140
12/31/91 15849 17181 19765
12/31/92 16963 18794 21281
12/31/93 18250 21237 23407
12/31/94 18384 21074 23713
12/31/95 24874 27484 32588
12/31/96 30931 33123 40108
12/31/97 39364 42106 53489
6/30/98 46456 47205 62965
Average Annual Total Return
- -------------------------------------------------------------------------------
Since
Inception
1 Year 5 Year 10 Year (8/30/86)
- -------------------------------------------------------------------------------
Investor A Shares* 21.24% 20.59% 15.87% 13.85%
*Reflects 4.50% sales charge.
Large Company Select Fund
Value of a $10,000 Investment
Lipper G&I S&P
Investor B Shares** Average 500 Index
8/30/86 10000 10000 10000
12/31/86 9542 9533 9674
12/31/87 9859 9732 10180
12/31/88 10859 11318 11891
12/31/89 13853 13993 15636
12/31/90 12963 13338 15140
12/31/91 15870 17181 19765
12/31/92 16858 18794 21281
12/31/93 17994 21237 23407
12/31/94 17996 21074 23713
12/31/95 24170 27484 32588
12/31/96 29832 33123 40108
12/31/97 37879 42106 53489
6/30/98 44538 47205 62965
Average Annual Total Return
- -------------------------------------------------------------------------------
Since
Inception
1 Year 5 Year 10 Year (8/30/86)
- -------------------------------------------------------------------------------
Investor B Shares** 22.00% 20.60% 15.55% 13.44%
**Reflects applicable contingent deferred sales charge.
The quoted performance of this Fund ("Mutual Fund") includes performance of
certain collective trust funds ("Commingled") accounts advised by Provident
Bank, for periods dating back to 8/30/86 and prior to the Mutual Fund's
commencement of operations on 1/2/97, as adjusted to reflect the expenses
associated with the Mutual Fund. The Commingled accounts were not registered
with the Securities and Exchange Commission and, therefore, were not subject
to the investment restrictions imposed by law on registered mutual funds. If
the accounts had been registered, the account's performance may have been
adversely affected. The Fund does not have a five and ten year Lipper ranking
because the inception date of the Mutual Fund was 1/2/97.
It is our intention to formally change benchmarks from just the Lipper G&I
Average to both the Lipper G&I Average and the S&P 500 as of 12/31/98. We
believe this index is a more appropriate benchmark with an average market
capitalization closer to the way the fund is investing and similar average
market capitalization to the Large Company Select Fund.
Past performance is not predictive of future results. Investment return and
principal value of the Riverfront variable net asset funds will fluctuate, so
that the shares, when redeemed, may be worth more or less than their original
cost. Performance of Investor B Shares for periods prior to the initial
offering, January 1997, represents performance for Investor A Shares and is
restated to reflect applicable contingent deferred sales charges. Investor B
Shares are subject to distribution and service fees, which would have reduced
performance. The maximum Contingent Deferred Sales Charge for the Investor B
Shares is 4.00%. The returns set forth reflect the waiver of certain advisory
or administrative fees. Without the waiver of fees total return may have been
lower.
The Standard & Poor's 500 Stock Index is an unmanaged index considered to be
representative of the stock market as a whole. This index does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management and fund accounting fees. The Lipper Growth & Income Average is an
unmanaged index considered to be representative of the average of the Growth &
Income category of funds. The performance of The Riverfront Large Company
Select Fund reflects the deduction of fees for value-added services associated
with a mutual fund, such as investment management and fund accounting fees.
11
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Performance Reviews, continued The Riverfront Funds, Inc.
- -------------------------------------------------------------------------------
THE RIVERFRONT STOCK APPRECIATION FUND
The Stock Appreciation Fund ended the first half of 1998 up 7.41%, (Investor A
Shares*). This compares favorably to our benchmarks: the S&P 600, which
returned 6.11%, and the Russell 2000, which returned 5.27%. Our peers, the
average of other small-capitalized funds, as measured by Lipper returned 6.46%
for the first half of 1998.
We believe, our efforts to transition the Fund into a high quality small-
capitalized stock fund are complete. We now hold 46 stocks, which we believe
represent a select group of small companies with strong potential for
consistent earnings growth. We believe the Fund is well positioned to continue
to provide strong returns. The ten largest holdings in the Fund at June 30,
1998 include: Jones Apparel, 6.20% of net assets of the Fund; NBTY, 4.02%; JLG
Industries, 3.98%; Colonial Bancgroup, 3.68%; Kendle International, 3.56%;
Steris, 3.19%; Medusa, 3.15%; Tech Data, 3.13%; First Health Group, 3.12%; and
Jacor Communications, 3.09%.
The Fund is currently overweighted in Financials, Consumer Staples, and Health
Care. We believe these areas all offer outstanding growth prospects as mergers
continue, consumer confidence remains strong, and baby boomers age. We are
underweighted in Basic Materials, due to concerns of price declines coming out
of Asia, and in Utilities, due to below average prospects for earnings growth.
Looking forward we expect to see value in the smaller companies and believe
that most portfolios should include some small-capitalized exposure.
Historically, small companies with growing earnings and revenue streams can be
purchased at lower price to earnings (P/E), price to sales, and P/E to growth
rate, than many of the larger companies. We will continue to search for those
smaller companies, which we believe possess the management expertise and
financial resources to outperform the benchmark.
- -------
The Fund's composition subject to change.
*The return, with maximum sales charge of 4.50%, was 2.60% for the period.
Small capitalization funds typically carry additional risks since smaller
companies generally have a higher risk of failure.
Stock Appreciation Fund
Value of a $10,000 Investment
Investor A Shares Russell S&P Lipper Small
(No Load) 2000 Index 600 Index Cap Average
7/23/87 10000 10000 10000 10000
12/31/87 7886 7391 7685 7744
12/31/88 7718 9231 8587 9253
12/31/89 8977 10730 9780 11483
12/31/90 9442 8637 7463 10231
12/31/91 16710 12615 11082 15602
12/31/92 17682 14939 13414 17598
12/31/93 19525 17776 15934 20741
12/31/94 17487 17439 15173 20734
12/31/95 22365 22399 19720 27816
12/31/96 24461 26092 23924 32198
12/31/97 29272 31929 30045 38006
6/30/98 31440 33494 32724 40685
Average Annual Total Return
- -----------------------------------------------------------------------------
Since
Inception
1 Year 5 Year 10 Year (7/23/87)
- -----------------------------------------------------------------------------
Investor A Shares (No Load) 20.80% 10.29% 14.08% 11.03%
12
<PAGE>
- -------------------------------------------------------------------------------
Performance Reviews, continued The Riverfront Funds, Inc.
- -------------------------------------------------------------------------------
Stock Appreciation Fund
Value of a $10,000 Investment
Investor A Russell Lipper
Shares* 2000 Index S&P 600 Small Cap
7/23/87 9548 10000 10000 10000
12/31/87 7530 7391 7184 7744
12/31/88 7369 9231 8587 9253
12/31/89 8572 10730 9780 11483
12/31/90 9015 8637 7463 10231
12/31/91 15955 12615 11082 15602
12/31/92 16883 14939 13414 17598
12/31/93 18642 17776 15934 20741
12/31/94 16697 17439 15173 20734
12/31/95 21354 22399 19720 27816
12/31/96 23527 26092 23924 32198
12/31/97 27948 31929 30045 38006
6/30/98 30018 33494 32724 40685
Average Annual Total Return
- -------------------------------------------------------------------------------
Since
Inception
1 Year 5 Year 10 Year (7/23/87)
- -------------------------------------------------------------------------------
Investor A Shares* 15.36% 9.29% 13.56% 10.56%
*Reflects 4.50% sales charge.
Stock Appreciation Fund
Value of a $10,000 Investment
Investor B Russell Lipper
Shares** 2000 Index S&P 600 Small Cap
7/23/87 10000 10000 10000 10000
12/31/87 7886 7391 7184 7744
12/31/88 7718 9231 8587 9253
12/31/89 8977 10730 9780 11483
12/31/90 9442 8637 7463 10231
12/31/91 16710 12615 11082 15602
12/31/92 17682 14939 13414 17598
12/31/93 19525 17776 15934 20741
12/31/94 17487 17439 15173 20734
12/31/95 22436 22399 19720 27816
12/31/96 24465 26092 23924 32198
12/31/97 28835 31929 30045 38006
6/30/98 30868 33494 32724 40685
Average Annual Total Return
- -------------------------------------------------------------------------------
Since
Inception
1 Year 5 Year 10 Year (7/23/87)
- -------------------------------------------------------------------------------
Investor B Shares** 16.19% 9.62% 13.88% 10.84%
**Reflects applicable contingent deferred sales charge.
It is our intention to formally change benchmarks from just the Russell 2000
to the Russell 2000, the S&P 600 and the Lipper Small Cap Fund Average as of
12/31/98. We believe the combination of these indices allow the shareholder
more appropriate benchmarks to compare to the Stock Appreciation Fund.
Past performance is not predictive of future results. Investment return and
principal value of the Riverfront variable net asset funds will fluctuate, so
that the shares, when redeemed, may be worth more or less than their original
cost. Performance of Investor B shares for periods prior to the initial
offering, October 1995, presents performance for Investor A shares and is
restated to reflect applicable contingent deferred sales charges. Investor B
Shares are subject to distribution and service fees, which would have reduced
performance. The return includes the performance history of the MIM Stock
Appreciation Fund and excludes that of the MIM Stock Growth Fund prior to
acquisition. The maximum Contingent Deferred Sales Charge for the Investor B
Shares is 4.00%. The returns set forth reflect the waiver of certain advisory
or administrative fees. Without the waiver of fees, total return may have been
lower.
The Russell 2000 is an unmanaged index considered to be representative of the
small- to mid-sized stock market. The S&P 600 is an unmanaged index
representative of the top 600 large capitalization companies in the United
States. These indices do not reflect the deduction of expenses associated with
a mutual fund, such as investment management and fund accounting fees. The
performance of The Riverfront Stock Appreciation Fund reflects the deduction
of fees for these value-added services. The Lipper Small Cap Fund Average is
representative of all the funds in the Lipper category of small cap.
13
<PAGE>
- -------------------------------------------------------------------------------
Performance Reviews, continued The Riverfront Funds, Inc.
- -------------------------------------------------------------------------------
THE RIVERFRONT U.S. GOVERNMENT INCOME FUND
Bond prices rose and interest rates fell in the second quarter as
international worries drove foreign investors, seeking safety, into the
domestic market. The yield on a three year Treasury dropped from 5.59% to
5.49% (March 31 and June 30, respectively). The interest rate on the thirty-
year bond has hit record low levels below 5.75%. We believe rates can fall
further if the economy in general, and consumer spending in particular, slows
down in the second half of the year. A slow down in the economic growth could
alleviate investors concern about inflation, and allow for further
appreciation of bond prices.
The Fund provided a competitive market return of 3.06%, Investor A Shares*,
year to date through June 30, 1998 versus 2.47% for the Lehman Intermediate
Government Corporate Index.
- -------
The Fund's composition subject to change.
*The return, with maximum sales charge of 4.50%, was -1.61% for the period.
U.S. Government Income Fund
Value of a $10,000 Investment
<TABLE>
<CAPTION>
Lehman
Brothers
Lehman Intermediate Lipper Lehman
Brothers Government/ Intermediate Brothers Lipper
Investor A Shares Government/ Corporate Government Intermediate Intermediate
(No Load) Mortgage Index Bond Index Average Govt Index U.S. Govt Index
<S> <C> <C> <C> <C> <C> <C>
10/1/92 10000 10000 10000 10000 10000 10000
12/31/92 9869 10028 9964 10090 9966 9964
12/31/93 10587 10958 10840 10966 10782 10829
12/31/94 10106 10656 10631 10560 10594 10427
12/31/95 11644 12554 12261 12204 12122 12051
12/31/96 11937 13226 12758 12559 12613 12415
12/31/97 12765 14488 13743 13574 13587 13474
6/30/98 13156 14930 14219 14040 14047 13958
</TABLE>
Average Annual Total Return
- -------------------------------------------------------------------------------
Since
Inception
1 Year 5 Year (10/1/92)
- -------------------------------------------------------------------------------
Investor A Shares (No Load) 7.48% 4.79% 4.90%
14
<PAGE>
- -------------------------------------------------------------------------------
Performance Reviews, continued The Riverfront Funds, Inc.
- -------------------------------------------------------------------------------
U.S. Government Income Fund
Value of a $10,000 Investment
<TABLE>
<CAPTION>
Lehman
Brothers
Lehman Intermediate Lipper Lehman
Brothers Government/ Intermediate Brothers Lipper
Investor A Government/ Corporate Government Intermediate Intermediate
Shares* Mortgage Index Bond Index Average Govt. U.S. Govt
<S> <C> <C> <C> <C> <C> <C>
10/1/92 9551 10000 10000 10000 10000 10000
12/31/92 9426 10028 9964 10090 9966 9964
12/31/93 10122 10958 10840 10966 10782 10829
12/31/94 9653 10656 10631 10560 10594 10427
12/31/95 11121 12554 12261 12204 12122 12051
12/31/96 11401 13226 12758 12559 12613 12415
12/31/97 12192 14488 13743 13574 13587 13474
6/30/98 12565 14930 14219 14040 14047 13958
</TABLE>
Average Annual Total Return
- ----------------------------------------------------------------
Since
Inception
1 Year 5 Year (10/1/92)
- ----------------------------------------------------------------
Investor A Shares* 2.66% 3.84% 4.06%
*Reflects 4.50% sales charge.
U.S. Government Income Fund
Value of a $10,000 Investment
<TABLE>
<CAPTION>
Lehman
Brothers Lehman
Lehman Intermediate Lipper Brothers Lipper
Brothers Government/ Intermediate Intermediate Intermediate
Investor B Government/ Corporate Government Government U.S. Government
Shares** Mortgage Index Bond Index Average Index Index
<S> <C> <C> <C> <C> <C> <C>
10/1/92 10000 10000 10000 10000 10000 10000
12/31/92 9869 10028 9964 10090 9966 9964
12/31/93 10060 10958 10840 10966 10782 10829
12/31/94 10106 10656 10631 10560 10594 10427
12/31/95 11152 12554 12261 12204 12122 12051
12/31/96 11171 13226 12758 12559 12613 12415
12/31/97 12425 14488 13743 13574 13587 13474
6/30/98 12645 14930 14219 14040 14047 13958
</TABLE>
Average Annual Total Return
- ----------------------------------------------------------------
Since
Inception
1 Year 5 Year (10/1/92)
- ----------------------------------------------------------------
Investor B Shares** 2.58% 3.79% 4.18%
**Reflects applicable contingent deferred sales charge.
It is our intention to formally change benchmarks from the Lehman Brothers
Government/Mortgage Index, the Lipper Government Corporate Bond Index and the
Lipper Intermediate Government Average to the Lipper Intermediate U.S.
Government Index and the Lehman Brothers U.S. Government Index as of 12/31/98.
We believe these indices is a more appropriate benchmark because they more
closely mirror the investment style and average duration of the U.S.
Government Income Fund.
Past performance is not predictive of future results. Investment return and
principal value of the Riverfront variable net asset funds will fluctuate, so
that the shares, when redeemed, may be worth more or less than their original
cost. Performance of Investor B shares for periods prior to the initial
offering, January 1995, presents performance for Investor A shares and is
restated to reflect applicable contingent deferred sales charges. Investor B
Shares are subject to distribution and service fees, which would have reduced
performance. The maximum Contingent Deferred Sales Charge for the Investor B
Shares is 4.00%. The returns set forth reflect the waiver of certain advisory
or administrative fees. Without the waiver of fees, total return may have been
lower.
The Fund's performance has been measured indices considered to be
representative of mortgage-backed government bonds and intermediate-term
bonds, the Lehman Brothers Government/Mortgage Bond Index and the Lehman
Brothers Intermediate Government/Corporate Bond Index, respectively. The Fund
is also measured against the Lipper Intermediate U.S. Government Index and the
Lehman Brothers Intermediate U.S. Government Index both representative of the
intermediate term bond market. These indices do not reflect the deduction of
expenses associated with a mutual fund, such as investment management fees.
The Fund's performance reflects the deduction of these value-added services.
15
<PAGE>
- -------------------------------------------------------------------------------
Performance Reviews, continued The Riverfront Funds, Inc.
- -------------------------------------------------------------------------------
THE RIVERFRONT U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
The six months ended June 30, 1998, were relatively tranquil for money market
investors. The economy expanded at a robust rate but inflation continued to be
subdued leaving money market rates relatively unchanged. The economy grew at
an estimated 3.5% in the first half of the year, higher than the Federal
Reserve Board is comfortable with, but as an offset, inflation remained low at
around 2% as measured by the CPI. An additional concern for the Federal
Reserve Board is the continuing demise of the Asian and Russian economies
creating a flight to the dollar and thus the short-term treasuries. Over the
course of the first six months, these concerns kept rates in a narrow trading
range.
With an extremely flat yield curve maturities were lengthened slightly to
enhance yield going from 34 days at year-end to 45 at the end of June. The
portfolio was widely diversified, and a laddered maturity structure was
maintained throughout the period to reduce exposure to any sudden shifts in
interest rates, inflation or investor sentiment. As a result, the Fund
performed in line with other funds of this type throughtout the period.
Given the Fund's overriding objective, preservation of capital, we expect to
maintain our laddered approach to the markets in the months ahead, in an
effort to reduce exposure to sudden shifts in interest rates. We do not expect
to make any significant changes in allocation.
- -------
The Fund's composition subject to change.
U.S. Government Securities Money Market Fund
Value of a $10,000 Investment
U.S. Government
Securities Money
U.S. 30-Day T-bill Market Fund
10/1/92 10000 10000
12/31/92 10052 10081
12/31/93 10343 10374
12/31/94 10747 10766
12/31/95 11348 11361
12/31/96 11939 11916
12/31/97 12566 12514
6/30/98 12878 12820
Average Annual Total Return
- --------------------------------------------------------------------------------
Since
Inception
1 Year 5 Year (10/8/92)
U.S. Government Securities
Money Market Fund 5.05% 4.62% 4.42%
Although The Riverfront U.S. Government Securities Money Market Fund seeks to
maintain a stable net asset value of $1.00, there is no assurance that it will
be able to do so. An investment in the Fund is neither insured nor guaranteed
by the U.S. Government. The returns set forth reflect the waiver of certain
advisory or administrative fees. Without the waiver of fees, total returns
would have been lower. The 7-day yield for the Fund as of 6/30/98 was 4.96%.
The U.S. Treasury Bill Index is considered to be representative of the T-bill
market. The index is unmanaged and does not reflect the deduction of expenses
associated with a mutual fund, such as investment-management and fund-
accounting fees. The performance of The Riverfront U.S. Government Securities
Money Market Fund reflects the deduction of fees for these value-added
services.
16
<PAGE>
- --------------------------------------------------------------------------------
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.
17
<PAGE>
- --------------------------------------------------------------------------------
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.
18
<PAGE>
- --------------------------------------------------------------------------------
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.
19
<PAGE>
- --------------------------------------------------------------------------------
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.
20
<PAGE>
- --------------------------------------------------------------------------------
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.
21
<PAGE>
- --------------------------------------------------------------------------------
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.
22
<PAGE>
- --------------------------------------------------------------------------------
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
23
<PAGE>
- --------------------------------------------------------------------------------
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.
24
<PAGE>
- --------------------------------------------------------------------------------
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
25
<PAGE>
- --------------------------------------------------------------------------------
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.
26
<PAGE>
- --------------------------------------------------------------------------------
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
27
<PAGE>
- --------------------------------------------------------------------------------
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
28
<PAGE>
- --------------------------------------------------------------------------------
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.
29
<PAGE>
- --------------------------------------------------------------------------------
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
30
<PAGE>
- --------------------------------------------------------------------------------
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.
31
<PAGE>
- --------------------------------------------------------------------------------
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
32
<PAGE>
- --------------------------------------------------------------------------------
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.
33
<PAGE>
- --------------------------------------------------------------------------------
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
34
<PAGE>
- --------------------------------------------------------------------------------
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.
35
<PAGE>
- --------------------------------------------------------------------------------
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
36
<PAGE>
- --------------------------------------------------------------------------------
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
37
<PAGE>
- --------------------------------------------------------------------------------
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
38
<PAGE>
- --------------------------------------------------------------------------------
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
39
<PAGE>
- --------------------------------------------------------------------------------
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
40
<PAGE>
- --------------------------------------------------------------------------------
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
41
<PAGE>
- --------------------------------------------------------------------------------
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
42
<PAGE>
- --------------------------------------------------------------------------------
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
43
<PAGE>
- --------------------------------------------------------------------------------
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
44
<PAGE>
- --------------------------------------------------------------------------------
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.
45
<PAGE>
- --------------------------------------------------------------------------------
[This Page Intentionally Left Blank]
46
<PAGE>
- --------------------------------------------------------------------------------
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.
47
<PAGE>
- --------------------------------------------------------------------------------
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.
48
<PAGE>
- --------------------------------------------------------------------------------
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.
49
<PAGE>
- --------------------------------------------------------------------------------
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.
50
<PAGE>
- --------------------------------------------------------------------------------
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.
51
<PAGE>
- --------------------------------------------------------------------------------
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.
52
<PAGE>
- --------------------------------------------------------------------------------
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.
53
<PAGE>
- --------------------------------------------------------------------------------
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.
54
<PAGE>
- --------------------------------------------------------------------------------
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.
55
<PAGE>
- --------------------------------------------------------------------------------
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.
56
<PAGE>
The Riverfront Funds, Inc.
INVESTMENT ADVISER
The Provident Bank
One East Fourth Street
Cincinnati, Ohio 45202
DISTRIBUTOR
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
FOR ADDITIONAL INFORMATION CALL:
The Provident Bank
Mutual Fund Services
1-800-424-2295
8/98
