<PAGE>
[LOGO OF FIRST CHOICE FUNDS]
U.S. TREASURY RESERVE FUND
CASH RESERVE FUND
EQUITY FUND
ANNUAL REPORT TO SHAREHOLDERS
September 30, 1999
Distributed through
First Data Distributors, Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
1-888-FIRST16
1-888-347-7816
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First Choice Funds Trust
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Table of Contents
Letter to Our Shareholders
PAGE 1
Schedules of Portfolio Investments
U.S. Treasury Reserve Fund:
PAGE 3
Cash Reserve Fund:
PAGE 4
Equity Fund:
PAGE 6
Statements of Assets and Liabilities
PAGE 8
Statements of Operations
PAGE 9
Statements of Changes in Net Assets
PAGE 10
Financial Highlights
PAGE 13
Notes to Financial Statements
PAGE 16
Shareholder Information
BACKCOVER
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First Choice Funds Trust
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1
Fellow Shareholders,
We are delighted to report that the First Choice Funds have continued their
pattern of success since our last Annual Report dated September 30, 1998. The
past twelve months included a turnaround in the U.S. economic outlook, large
cap stocks continuing to enjoy above average gains and the Federal Reserve
changing interest rates in reaction to domestic and international concerns.
Market Perspective
Over the past twelve months ending September 30, 1999, the domestic economy
continued growing, as it entered its eighth year of economic expansion in
early 1999. Bolstered by productivity gains through technological advances,
the economy grew 4.1% as measured by Gross Domestic Product. Inflation, howev-
er, remained at a low level with a 2.6% rate, even as oil prices rose dramati-
cally. The Federal Reserve lowered the Federal Funds rate late in twice 1998
(October and November) due to liquidity concerns caused by economic problems
overseas, but then raised it in June and again in August out of fear that the
continuing strength in the domestic economy could cause a rise in inflation.
Thus, the Fed Funds rate ended the year where it started at 5.25%.
Equity Fund
During the past year, the domestic equity market had a tremendous advance. Fu-
eled by continued strength in the domestic economy, prospects for low infla-
tion, and signs of recovery in the global economy, the stock market had a to-
tal return of 27.8% for the year ending September 30, 1999, as measured by the
Standard & Poor's 500 ("S&P 500"). Within this environment, the First Choice
Equity Fund performed well, earning a total return of 28.3% for the Institu-
tional Class and 27.6% for the Retail Class. Some of the strongest sectors in-
cluded electrical equipment, semi-conductors, communication equipment, and
brokerage firms. The Fund benefited from the appreciation of some of our larg-
est holdings that included General Electric, Oracle, Microsoft, Intel, and
Wal-Mart, yet it maintained a yield of 1.2% as compared to the 1.3% for the
S&P 500.
U.S. Treasury Reserve Fund and Cash Reserve Fund
U.S. Treasury Reserve and Cash Reserve Funds kept pace with the average trea-
sury and cash reserve funds, respectively during the past 12 months ending
September 30, 1999. Due to the cumulative effects of low interest rates over
much of these past 12 months, the dividend distributions and yield remained
low. As rates began to increase due to the Fed's actions, the distributions
and yields also increased.
U.S. Treasury Reserve
The Retail Class of the U.S. Treasury Reserve Fund total return for the six
and 12 months ending September 30, 1999 was 2.1% and 4.1% versus 2.0% and 4.1%
of the IBC peer group average. In the U.S. Treasury Reserve Fund throughout
most of the year we actively managed the average maturity against shifts in
the yield curve to take advantage of changing interest rates.
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First Choice Funds Trust
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2
Cash Reserve
The Retail Class of Cash Reserve Fund's total return for the six and 12 month
period ending September 30, 1999 was 2.3% and 4.6%, respectively versus 2.3%
and 4.6%, respectively of the IBC peer group average. In Cash Reserve, we were
able to take advantage of the higher interest rates of foreign banks, and by
varying the average maturity take advantage of shifts in the yield curves.
If you have any questions, please call us at 1-888-FIRST-16 (1-888-347-7816),
or visit our website at www.firstchoicefunds.com.
Best Regards,
William C. Conrad
President & CEO
First American Capital Management, Inc.
The S&P 500 Index is an unmanaged index of stocks chosen by Standard & Poor's
for their size and industry characteristics. It is widely recognized as repre-
sentative of the general market for stocks in the United States. Investment
returns assume the reinvestment of dividends paid on stocks comprising the In-
dex. Investors cannot invest directly in any index. The S&P 500 Index has no
commissions or management fee.
Past performance is no guarantee of future results. Investment return and
principal value of mutual funds will vary with market conditions, so that
shares, when redeemed, may be worth more or less than their original cost.
Certain expenses were subsidized. If this were not in effect, the returns
would have been lower. An investment in the Funds is neither insured nor guar-
anteed by the U.S. Government of the Federal Deposit Insurance Corporation.
Yields may fluctuate and although the U.S. Treasury Reserve Fund and Cash Re-
serve Fund seek to preserve the value of your investment at $1.00 per share,
it is possible to lose money by investing in the Funds.
This material must be accompanied or preceded by a current prospectus.
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First Choice Funds Trust
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3
U.S. Treasury Reserve Fund
Schedule of Portfolio Investments -- September 30, 1999
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
------------ ------------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS - 99.0%
U.S. Treasury Bills (A) - 26.5%
$ 5,647,000 4.64%, 10/14/1999................................... $ 5,637,830
157,000 4.57%, 11/12/1999................................... 156,179
12,725,000 4.71%, 12/02/1999................................... 12,624,165
319,000 4.79%, 01/27/2000................................... 314,138
------------
18,732,312
------------
U.S. Treasury Notes - 72.6%
4,090,000 5.63%, 11/01/1999................................... 4,091,751
10,232,000 7.50%, 11/01/1999................................... 10,252,723
8,007,000 7.88%, 11/15/1999................................... 8,034,816
5,950,000 7.75%, 11/30/1999................................... 5,976,240
4,500,000 5.38%, 01/31/2000................................... 4,501,865
5,000,000 7.75%, 01/31/2000................................... 5,042,232
7,700,000 5.88%, 02/15/2000................................... 7,721,176
5,720,000 6.88%, 03/31/2000................................... 5,767,504
------------
51,388,307
------------
Total U.S. Government Obligations................................. 70,120,619
------------
(Cost $70,120,619)
Total Investments - 99.0%......................................... 70,120,619
(Cost $70,120,619)*
Net Other Assets and Liabilities - 1.0%........................... 678,212
------------
Total Net Assets - 100.0%......................................... $ 70,798,831
============
</TABLE>
- -----------------
* Aggregate cost for Federal tax purposes.
(A) The rates shown represent annualized yield to maturity at time of purchase.
Please see the accompanying notes to financial statements.
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First Choice Funds Trust
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4
Cash Reserve Fund
Schedule of Portfolio Investments -- September 30, 1999
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
------------ ------------
<C> <S> <C>
COMMERCIAL PAPER (A) - 77.5%
Automobile Financing - 10.7%
$ 4,250,000 Ford Motor Credit Co.
5.41%, 10/08/1999................................... $ 4,245,628
4,100,000 General Motors Acceptance Corp.
5.44%, 11/08/1999................................... 4,076,976
------------
8,322,604
------------
Banking - 5.0%
4,000,000 Bank of New York Co., Inc.
5.98%, 02/24/2000................................... 3,906,722
------------
Business Finance and Leasing - 11.0%
4,400,000 CIT Group Holdings, Inc.
5.30%, 11/09/1999................................... 4,375,499
4,300,000 General Electric Capital Corp.
5.81%, 03/14/2000................................... 4,191,013
------------
8,566,512
------------
Foreign Banks - 5.8%
4,500,000 UBS, AG
4.97%, 10/12/1999................................... 4,493,400
------------
Letter of Credit - 8.1%
2,325,000 Bank of America LC (Hyundai Motor Fin.)
5.48%, 10/06/1999................................... 2,323,256
4,000,000 Barclays Bank (United Mexican States)
5.43%, 10/22/1999................................... 3,987,610
------------
6,310,866
------------
Personal Finance - 21.6%
4,300,000 American Express Credit Corp.
5.35%, 11/03/1999................................... 4,279,543
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
------------ ------------
<C> <S> <C>
Personal Finance (continued)
$ 4,100,000 American General Finance Corp.
5.44%, 10/29/1999.................................. $ 4,083,067
4,300,000 Household Finance Co.
5.34%, 10/05/1999.................................. 4,297,511
4,200,000 Norwest Financial, Inc.
5.70%, 03/06/2000.................................. 4,100,724
------------
16,760,845
------------
Petroleum - 5.9%
4,700,000 Texaco, Inc.
5.57%, 01/27/2000.................................. 4,617,888
------------
Security Brokers and Dealers - 9.4%
4,400,000 Bear Stearns Co., Inc.
5.60%, 02/04/2000.................................. 4,317,764
3,000,000 Salomon-Smith Barney
Holdings, Inc.
5.44%, 11/02/1999.................................. 2,985,813
------------
7,303,577
------------
Total Commercial Paper............................. 60,282,414
------------
(Cost $60,282,414)
VARIABLE RATE NOTES - 5.1%
4,000,000 First Union National Bank
5.60%, 09/27/2000
(3 Month LIBOR, Qtrly-Qtrly)....................... 4,000,000
------------
Total Variable Rate Notes.......................... 4,000,000
------------
(Cost $4,000,000)
</TABLE>
Please see the accompanying notes to financial statements.
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First Choice Funds Trust
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5
Cash Reserve Fund
Schedule of Portfolio Investments -- September 30, 1999
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
------------ ------------
<C> <S> <C>
U.S. AGENCY OBLIGATIONS (A) - 7.3%
Federal Home Loan Mortgage Corporation Discount
Notes
$ 900,000 5.32%, 10/07/1999................................ $ 899,216
2,700,000 5.29%, 10/15/1999................................ 2,694,540
184,000 5.32%, 10/18/1999................................ 183,547
Federal National Mortgage Association Discount
Notes
1,895,000 5.27%, 10/25/1999................................ 1,888,478
------------
Total U.S. Agency
Obligations...................................... 5,665,781
------------
(Cost $5,665,781)
YANKEE CERTIFICATES OF DEPOSITS
AND DEPOSIT NOTES - 10.3%
5,000,000 Canadian Imperial Bank of Commerce
5.01%, 02/07/2000................................ 4,999,489
3,000,000 Toronto-Dominion Bank
5.27%, 03/02/2000................................ 3,000,488
------------
Total Certificates of Deposits................... 7,999,977
------------
(Cost $7,999,977)
Total Investments - 100.2%..................................... 77,948,172
(Cost $77,948,172)*
Net Other Assets and Liabilities - (0.2%)...................... (115,786)
------------
Total Net Assets - 100.0%...................................... $ 77,832,386
============
</TABLE>
- -----------------
* Aggregate cost for Federal tax purposes.
(A) The rates shown represent annualized yield to maturity at time of purchase.
Please see the accompanying notes to financial statements.
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First Choice Funds Trust
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6
Equity Fund
Schedule of Portfolio Investments -- September 30, 1999 (continued)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------------ ------------
<C> <S> <C>
COMMON STOCKS - 98.3%
Aerospace & Defense - 0.5%
1,400 United Technologies Corp. .......................... $ 83,037
------------
Automotive - 2.2%
8,000 Ford Motor Corp. ................................... 401,500
------------
Chemicals - 1.3%
2,400 du Pont (E.I.) de Nemours and Co. .................. 146,100
2,500 Monsanto Co. ....................................... 89,218
------------
235,318
------------
Computer Hardware & Systems - 6.8%
4,400 Dell Computer Corp.*................................ 183,975
2,200 EMC Corp.*.......................................... 157,162
4,000 Hewlett Packard Co. ................................ 368,000
4,500 International Business Machines Corp. .............. 546,187
------------
1,255,324
------------
Computer Software & Services - 10.3%
1,500 BMC Software, Inc.*................................. 107,344
4,000 Cisco Systems, Inc.*................................ 274,250
5,700 Compuware Corp.*.................................... 148,556
7,500 Microsoft Corp.*.................................... 679,219
15,000 Oracle Corp.*....................................... 682,500
------------
1,891,869
------------
Electrical Equipment - 7.9%
4,400 Emerson Electric Co. ............................... 278,025
6,700 General Electric Co. ............................... 794,369
3,300 Raytheon Co., Class B............................... 163,763
3,000 Solectron Corp.*.................................... 215,438
------------
1,451,595
------------
Energy - 5.1%
7,100 Exxon Corp. ........................................ 539,156
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------------ ------------
<C> <S> <C>
Energy (continued)
2,500 Royal Dutch Petroleum Co.-NY Shs. ................. $ 147,656
4,000 Texaco, Inc. ...................................... 252,500
------------
939,312
------------
Entertainment - 3.5%
3,700 CBS Corp.*......................................... 171,125
10,000 The Walt Disney Co. ............................... 258,750
5,000 Viacom, Inc., Class B*............................. 211,250
------------
641,125
------------
Financial/Banking - 4.0%
1,800 BankBoston Corp. .................................. 78,075
6,000 Bank of America Corp. ............................. 334,125
1,458 Bank One Corp. .................................... 50,757
7,000 Wells Fargo Co. ................................... 277,375
------------
740,332
------------
Financial/Miscellaneous - 5.6%
1,900 American Express Co. .............................. 255,787
4,000 Fannie Mae......................................... 250,750
12,000 MBNA Corp. ........................................ 273,750
4,700 PNC Bank Corp. .................................... 247,631
------------
1,027,918
------------
Food/Beverages - 3.4%
4,000 Coca-Cola Co. ..................................... 192,250
5,500 PepsiCo, Inc. ..................................... 166,375
11,000 Sara Lee Corp. .................................... 257,813
------------
616,438
------------
Household/Personal Care - 2.2%
9,000 Colgate-Palmolive Co............................... 411,750
------------
Insurance - 2.4%
5,000 American International Group, Inc. ................ 434,687
------------
</TABLE>
Please see the accompanying notes to financial statements.
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First Choice Funds Trust
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7
Equity Fund
Schedule of Portfolio Investments -- September 30, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------------ ------------
<C> <S> <C>
Investment Bank/Brokerage - 3.4%
4,500 Merrill Lynch & Co. ............................... $ 302,344
3,500 Morgan Stanley Dean Witter & Co. .................. 312,156
------------
614,500
------------
Machinery - 1.0%
3,400 Caterpillar, Inc. ................................. 186,362
------------
Manufactured Goods - 2.8%
5,000 Tyco International, Ltd............................ 516,250
------------
Office Equipment - 0.5%
2,000 Xerox Corp. ....................................... 83,875
------------
Pharmaceuticals - 11.2%
5,600 Abbott Laboratories................................ 205,800
3,400 Bristol-Myers Squibb Co. .......................... 229,500
4,000 Johnson & Johnson.................................. 367,500
4,000 Lilly (Eli) & Co. ................................. 256,000
5,500 Merck & Co., Inc................................... 356,469
10,800 Pfizer, Inc. ...................................... 388,125
3,800 Warner-Lambert Co. ................................ 252,225
------------
2,055,619
------------
Restaurants - 0.7%
3,000 McDonald's Corp. .................................. 129,000
------------
Retail - 6.3%
3,900 Albertson's, Inc. ................................. 154,294
6,000 Home Depot, Inc. .................................. 411,750
7,400 Kroger Co.*........................................ 163,263
9,000 Wal-Mart Stores, Inc. ............................. 428,063
------------
1,157,370
------------
Semiconductors - 6.8%
9,000 Intel Corp. ....................................... 668,813
7,000 Texas Instruments, Inc. ........................... 575,750
------------
1,244,563
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------------ ------------
<C> <S> <C>
Telecommunications - 8.0%
7,000 A T & T Corp. ................................... $ 304,500
3,600 BellSouth Corp. ................................. 162,000
4,000 GTE Corp. ....................................... 307,500
5,200 MCI Worldcom, Inc. .............................. 373,750
6,200 SBC Communications, Inc. ........................ 316,587
------------
1,464,337
------------
Transportation - 0.6%
4,000 Burlington Northern Santa Fe Corp. .............. 110,000
------------
Utilities - 1.8%
4,000 Duke Energy Corp. ............................... 220,500
4,600 Southern Co. .................................... 118,450
------------
338,950
------------
Total Common Stocks.............................. 18,031,031
------------
(Cost $16,314,317)
<CAPTION>
Principal
Amount
------------
<C> <S> <C>
INVESTMENT COMPANY (A) - 1.9%
$ 341,212 State Street Global Advisers Money Market Fund,
5.08%............................................ 341,212
------------
Total Investment Company......................... 341,212
------------
(Cost $341,212)
Total Investments - 100.2%..................................... 18,372,243
(Cost $16,655,529)**
Net Other Assets and Liabilities - (0.2%)...................... (44,298)
------------
Total Net Assets - 100.0%...................................... $ 18,327,945
============
</TABLE>
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* Non-income producing security.
** Aggregate cost for Federal tax purposes.
(A) The rate shown represents the seven day yield at September 30, 1999.
Please see the accompanying notes to financial statements.
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First Choice Funds Trust
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8
Statement of Assets and Liabilities -- September 30, 1999
<TABLE>
<CAPTION>
U.S. Treasury Cash Equity
Reserve Fund Reserve Fund Fund
------------- ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments at value (Amortized cost
$70,120,619, $77,948,172 and cost
$16,655,529, respectively) (Note
2)................................. $ 70,120,619 $ 77,948,172 $ 18,372,243
Cash................................ 2,150 -- --
Dividends and interest receivable... 970,890 261,640 17,218
Unamortized organization costs (Note
2)................................. 25,553 29,189 10,326
------------ ------------ ------------
Total Assets........................ 71,119,212 78,239,001 18,399,787
------------ ------------ ------------
LIABILITIES:
Dividends payable................... 267,384 350,416 44,024
Investment advisory fee payable
(Note 4)........................... 5,845 6,891 --
Administration and accounting fee
payable (Note 4)................... 13,219 14,638 7,591
Transfer agent fee payable (Note
4)................................. 6,014 6,857 2,222
Trustee fee payable (Note 4)........ 2,867 1,914 499
Distribution fee payable (Note 4)... 1,236 36 16
Due to Custodian.................... -- 3,579 --
Accrued expenses and other
payables........................... 23,816 22,284 17,490
------------ ------------ ------------
Total Liabilities................... 320,381 406,615 71,842
------------ ------------ ------------
NET ASSETS........................... $ 70,798,831 $ 77,832,386 $ 18,327,945
============ ============ ============
NET ASSETS consist of:
Par Value (Note 3).................. $ 70,800 $ 77,836 $ 1,524
Paid-in Capital (Note 3)............ 70,730,103 77,758,202 15,245,466
Undistributed net investment income
(loss)............................. 2 -- (331)
Accumulated net realized gain (loss)
on investments sold................ (2,074) (3,652) 1,364,572
Unrealized appreciation on
investments........................ -- -- 1,716,714
------------ ------------ ------------
TOTAL NET ASSETS..................... $ 70,798,831 $ 77,832,386 $ 18,327,945
============ ============ ============
Net Assets
Service Class....................... $ 6,198,398 $ 172,270 N/A
Retail Class........................ N/A N/A 76,749
Institutional Class................. 64,600,423 77,660,106 18,251,196
Investment Class.................... 10 10 N/A
------------ ------------ ------------
Total............................... $ 70,798,831 $ 77,832,386 $ 18,327,945
============ ============ ============
Shares of Beneficial Interest
Outstanding
Service Class....................... 6,196,951 172,962 N/A
Retail Class........................ N/A N/A 6,385
Institutional Class................. 64,602,984 77,663,067 1,517,571
Investment Class.................... 10 10 N/A
------------ ------------ ------------
Total............................... 70,799,945 77,836,039 1,523,956
============ ============ ============
Net Asset Value, offering and
redemption price per share
Service Class....................... $ 1.00 $ 1.00 N/A
============ ============ ============
Retail Class(a)..................... N/A N/A $ 12.02
============ ============ ============
Institutional Class................. $ 1.00 $ 1.00 $ 12.03
============ ============ ============
Investment Class(b)................. $ 1.00 $ 1.00 N/A
============ ============ ============
</TABLE>
- -----------------------------------------------
(a) Maximum offering price per share ($12.02 / 0.955 = $12.59)
(b) The Investment Share Class was seeded on April 20, 1998. As of September
30, 1999, no investment activity had occurred.
Please see the accompanying notes to financial statements.
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First Choice Funds Trust
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9
Statements of Operations -- For the Year Ended September 30, 1999
<TABLE>
<CAPTION>
U. S. Treasury Cash Equity
Reserve Fund Reserve Fund Fund
-------------- ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income (Note 2)............... $ 2,976,027 $ 5,477,840 $ 10,546
Dividend income (Note 2)............... -- -- 286,496
----------- ----------- -----------
Total Investment Income................ 2,976,027 5,477,840 297,042
EXPENSES:
Investment advisory fees (Note 4)...... 189,751 316,988 177,160
Administration fees (Note 4)........... 95,134 158,494 26,574
Distribution fees (Note 4)............. 19,373 1,153 190
Accounting fees (Note 4)............... 35,456 35,399 38,384
Custodian fees......................... 20,546 29,635 6,016
Legal and Audit fees................... 27,852 55,175 24,284
Amortization of organization costs
(Note 2).............................. 12,760 12,760 2,639
Trustees' fees and expenses (Note 4)... 13,508 17,840 3,164
Transfer agent fees (Note 4)........... 32,465 55,030 15,358
Registration and filing fees........... 14,210 44,484 25,691
Other expenses......................... 14,522 25,853 7,018
----------- ----------- -----------
Total Gross Expenses................... 475,577 752,811 326,478
Less:Adviser fee waiver (Note 4)...... (146,768) (256,953) (177,160)
Administration fee waiver (Note 4).. (63,373) (62,770) (17,716)
----------- ----------- -----------
Total Expenses....................... 265,436 433,088 131,602
Less: Custody earnings credits (Note
2)................................... (78) (888) (32)
----------- ----------- -----------
Net Expenses......................... 265,358 432,200 131,570
----------- ----------- -----------
NET INVESTMENT INCOME................... 2,710,669 5,045,640 165,472
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS (Note 2):
Net realized gain (loss) on investments
sold.................................. 348 (2,091) 1,446,764
Net change in unrealized
appreciation/(depreciation) on
investments........................... -- -- 2,455,506
----------- ----------- -----------
Net gain (loss) on investments......... 348 (2,091) 3,902,270
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.............. $ 2,711,017 $ 5,043,549 $ 4,067,742
=========== =========== ===========
</TABLE>
Please see the accompanying notes to financial statements.
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First Choice Funds Trust
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10
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
U.S. Treasury Reserve Fund
-------------------------------------
Year Ended Year Ended
September 30, 1999 September 30, 1998
------------------ ------------------
<S> <C> <C>
NET ASSETS at beginning of year......... $ 56,945,311 $ 75,575,604
Increase in Net Assets
resulting from operations:
Net investment income.................. 2,710,669 3,672,165
Net realized gain (loss) on investments
sold.................................. 348 (2,422)
------------- -------------
Net increase in net assets
resulting from operations............. 2,711,017 3,669,743
------------- -------------
Distributions to shareholders from:
Net Investment Income:
Service Class.......................... (313,350) (2,845,671)
Institutional Class.................... (2,397,317) (826,494)
------------- -------------
Total distributions to shareholders... (2,710,667) (3,672,165)
------------- -------------
Net increase (decrease) from capital
share transactions..................... 13,853,170 (18,627,871)
------------- -------------
Net increase (decrease) in net assets.. 13,853,520 (18,630,293)
------------- -------------
NET ASSETS at end of year .............. $ 70,798,831 $ 56,945,311
============= =============
Undistributed Net Investment Income..... $ 2 --
============= =============
Capital Stock Dollar Amounts and Share
Activity:
Service Class
Net proceeds from sale of shares....... $ 57,754,721 $ 164,339,426
Issued to shareholders in reinvestment
of dividends.......................... 11,637 12,238
Cost of shares repurchased............. (62,764,097) (226,736,677)
------------- -------------
Net change resulting from share
transactions.......................... $ (4,997,739) $ (62,385,013)
============= =============
Institutional Class
Net proceeds from sale of shares....... $ 105,677,402 $ 78,846,714
Issued to shareholders in reinvestment
of dividends.......................... 100,182 103,772
Cost of shares repurchased............. (86,926,675) (35,193,354)
------------- -------------
Net change resulting from share
transactions.......................... $ 18,850,909 $ 43,757,132
============= =============
Investment Class*
Net proceeds from sale of shares....... -- $ 10
------------- -------------
Net change resulting from share
transactions.......................... -- $ 10
============= =============
</TABLE>
- -------------------------------------------------
* The Investment Share Class was seeded on April 20, 1998.
Please see the accompanying notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
- --------------------------------------------------------------------------------
11
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Cash Reserve Fund
-------------------------------------
Year Ended Year Ended
September 30, 1999 September 30, 1998
------------------ ------------------
<S> <C> <C>
NET ASSETS at beginning of year......... $ 146,121,473 $ 58,007,987
Increase in Net Assets
resulting from operations:
Net investment income.................. 5,045,640 4,638,264
Net realized loss on investments sold.. (2,091) (1,171)
-------------- --------------
Net increase in net assets
resulting from operations............. 5,043,549 4,637,093
-------------- --------------
Distributions to shareholders from:
Net Investment Income:
Service Class.......................... (20,653) (2,395,822)
Institutional Class.................... (5,024,987) (2,242,442)
-------------- --------------
Total distributions to shareholders... (5,045,640) (4,638,264)
-------------- --------------
Net increase (decrease) from capital
share transactions..................... (68,286,996) 88,114,657
-------------- --------------
Net increase (decrease) in net assets.. (68,289,087) 88,113,486
-------------- --------------
NET ASSETS at end of year .............. $ 77,832,386 $ 146,121,473
============== ==============
Capital Stock Dollar Amounts and Share
Activity:
Service Class
Net proceeds from sale of shares....... $ 56,203 $ 181,368,693
Issued to shareholders in reinvestment
of dividends.......................... 20,402 6,104
Cost of shares repurchased............. (391,697) (238,833,768)
-------------- --------------
Net change resulting from share
transactions.......................... $ (315,092) $ (57,458,971)
============== ==============
Institutional Class
Net proceeds from sale of shares....... $ 234,877,025 $ 268,373,189
Issued to shareholders in reinvestment
of dividends.......................... 60,493 27,028
Cost of shares repurchased............. (302,909,421) (122,826,599)
-------------- --------------
Net change resulting from share
transactions.......................... $ (67,971,903) $ 145,573,618
============== ==============
Investment Class*
Net proceeds from sale of shares....... -- $ 10
-------------- --------------
Net change resulting from share
transactions.......................... -- $ 10
============== ==============
</TABLE>
- -----------------------------------------------
* The Investment Share Class was seeded on April 20, 1998.
Please see the accompanying notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
- --------------------------------------------------------------------------------
12
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Equity Fund
--------------------------------------
Year Ended Period Ended
September 30, 1999 September 30, 1998*
------------------ -------------------
<S> <C> <C>
NET ASSETS at beginning of period........ $ 14,351,799 $ --
Increase (Decrease) in Net Assets
resulting from operations:
Net investment income................... 165,472 14,854
Net realized gain (loss) on investments
sold................................... 1,446,764 (82,192)
Net change in unrealized
appreciation/(depreciation) on
investments............................ 2,455,506 (738,792)
------------ ------------
Net increase (decrease) in net assets
resulting from operations.............. 4,067,742 (806,130)
------------ ------------
Distributions to shareholders from:
Net Investment Income:
Retail Class........................... (687) --
Institutional Class.................... (179,970) --
------------ ------------
Total distributions to shareholders.... (180,657) --
------------ ------------
Net increase from capital
share transactions...................... 89,061 15,157,929
------------ ------------
Net increase in net assets.............. 3,976,146 14,351,799
------------ ------------
NET ASSETS at end of period ............. $ 18,327,945 $ 14,351,799
============ ============
Undistributed Net Investment Income
(Loss).................................. $ (331) $ 14,854
============ ============
Capital Stock Dollar Activity:
Retail Class
Net proceeds from sale of shares....... $ 7,617 $ 132,919
Issued to shareholders in reinvestment
of dividends.......................... 238 --
Cost of shares repurchased............. (87,983) --
------------ ------------
Net change resulting from share
transactions.......................... $ (80,128) $ 132,919
============ ============
Institutional Class
Net proceeds from sale of shares....... $ 80,000 $ 15,025,010
Issued to shareholders in reinvestment
of dividends.......................... 1,055 --
Cost of shares repurchased............. 88,134 --
------------ ------------
Net change resulting from share
transactions.......................... $ 169,189 $ 15,025,010
============ ============
Capital Stock Share Activity:
Retail Class
Shares sold............................ 679 13,323
Shares issued in reinvestment of
dividends............................. 20 --
Shares repurchased..................... (7,637) --
------------ ------------
Net change resulting from share
transactions.......................... (6,938) 13,323
============ ============
Institutional Class
Shares sold............................ 7,316 1,502,536
Shares issued in reinvestment of
dividends............................. 87 --
Shares repurchased..................... 7,632 --
------------ ------------
Net change resulting from share
transactions.......................... 15,035 1,502,536
============ ============
</TABLE>
- -----------------------------------------------
* The Fund commenced operations on June 2, 1998.
Please see the accompanying notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
- --------------------------------------------------------------------------------
13
Financial Highlights -- For a share outstanding throughout the period
<TABLE>
<CAPTION>
U. S. Treasury Reserve Fund
-------------------------------------------------------------------------------
Year Ended Year Ended Year Ended
September 30, 1999 September 30, 1998 September 30, 1997(a)
------------------------ ------------------------- --------------------------
Service Institutional Service Institutional Service Institutional
Class Class Class Class Class Class
------- ------------- -------- ------------- -------- -------------
<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
------- -------- -------- -------- -------- -------
Income from Investment
Operations:
Net investment income.. 0.041 0.043 0.048 0.049 0.049 0.050
Net realized and
unrealized gain (loss)
on investments........ --(b) --(b) --(b) --(b) --(b) --(b)
------- -------- -------- -------- -------- -------
Total from Investment
Operations........... 0.041 0.043 0.048 0.049 0.049 0.050
Less Distributions:
Dividends from net
investment income..... (0.041) (0.043) (0.048) (0.049) (0.049) (0.050)
------- -------- -------- -------- -------- -------
Net Asset Value, end of
period................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======== ======== ======== ======== =======
Total Return............ 4.13% 4.38% 4.88% 4.97% 5.04% 5.08%
Ratios/Supplemental
Data:
Net Assets, end of
period (000s).......... $ 6,198 $ 64,600 $ 11,196 $ 45,750 $ 73,581 $ 1,995
Ratios to average net
assets:
Net investment
income*............... 4.06% 4.31% 4.87% 4.91% 4.93%(c) 4.93%(c)
Operating expenses*.... 0.64% 0.39% 0.47% 0.43% 0.35%(c) 0.35%(c)
Operating expenses
excluding
reimbursement, waiver
and custody earnings
credits............... 0.97% 0.72% 0.82% 0.78% 1.36%(c) 0.86%(c)
Net investment income
excluding
reimbursements, waiver
and custody earnings
credits............... 3.73% 3.98% 4.52% 4.56% 3.92%(c) 4.42%(c)
</TABLE>
- -----------------------------------------------
* During the periods certain expenses were reduced for credits earned at
Custodian bank. If such credits had not occurred, the ratios would have
been as indicated. Impact of Custody earnings credits was less than 0.01%
and $0.001 per share.
(a) The Fund commenced operations on October 1, 1996.
(b) Amounts were less than $0.001 per share.
(c) Annualized
Please see the accompanying notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
- --------------------------------------------------------------------------------
14
Financial Highlights -- For a share outstanding throughout the period
<TABLE>
<CAPTION>
Cash Reserve Fund
----------------------------------------------------------------------------
Year Ended Year Ended Period Ended
September 30, 1999 September 30, 1998 September 30, 1997(a)
------------------------ ------------------------ -------------------------
Service Institutional Service Institutional Service Institutional
Class Class Class Class Class Class
------- ------------- ------- ------------- ------- -------------
<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
------- ------- ------- -------- ------- -------
Income from Investment
Operations:
Net investment income.. 0.045 0.048 0.051 0.052 0.037 0.038
Net realized and
unrealized
gain (loss) on
investments........... --(b) --(b) --(b) --(b) --(b) --(b)
------- ------- ------- -------- ------- -------
Total from Investment
Operations........... 0.045 0.048 0.051 0.052 0.037 0.038
Less Distributions:
Dividends from net
investment income..... (0.045) (0.048) (0.051) (0.052) (0.037) (0.038)
------- ------- ------- -------- ------- -------
Net Asset Value, end of
period................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======== ======= =======
Total Return............ 4.59% 4.86% 5.19% 5.29% 3.78%(d) 3.82%(d)
Ratios/Supplemental
Data:
Net Assets, end of
period (000s).......... $ 172 $77,660 $ 487 $145,634 $57,947 $ 61
Ratios to average net
assets:
Net investment
income*............... 4.52% 4.77% 5.15% 5.20% 5.23%(c) 5.23%(c)
Operating expenses*.... 0.66% 0.41% 0.49% 0.44% 0.35%(c) 0.35%(c)
Operating expenses
excluding
reimbursement, waiver
and custody earnings
credits............... 0.96% 0.71% 0.78% 0.73% 1.43%(c) 0.93%(c)
Net investment income
excluding
reimbursements, waiver
and custody earnings
credits............... 4.22% 4.47% 4.86% 4.91% 4.15%(c) 4.65%(c)
</TABLE>
- -----------------------------------------------
* During the periods certain expenses were reduced for credits earned at
Custodian bank. If such credits had not occurred, the ratios would have
been as indicated. Impact of Custody earnings credits was less than 0.01%
and $0.001 per share.
(a) The Fund commenced operations on January 13, 1997.
(b) Amounts were less than $0.001 per share.
(c) Annualized
(d) Not annualized
Please see the accompanying notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
- --------------------------------------------------------------------------------
15
Financial Highlights -- For a share outstanding throughout the period
<TABLE>
<CAPTION>
Equity Fund
-----------------------------------------------------
Year Ended Period Ended
September 30, 1999 September 30, 1998(a)
---------------------- ------------------------------
Retail Institutional Retail Institutional
Class Class Class Class
------ ------------- ---------- --------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning
of period................ $ 9.46 $ 9.47 $ 10.00 $ 10.00
------ -------- ---------- -----------
Income from Investment
Operations:
Net investment income.... 0.08 0.10 -- 0.01
Net realized and
unrealized gain
(loss) on investments... 2.57 2.57 (0.54) (0.54)
------ -------- ---------- -----------
Total from Investment
Operations............. 2.65 2.67 (0.54) (0.53)
Less Distributions:
Dividends from net
investment income....... (0.09) (0.11) -- --
------ -------- ---------- -----------
Net Asset Value, end of
period................... $12.02 $ 12.03 $ 9.46 $ 9.47
====== ======== ========== ===========
Total Return.............. 27.98% 28.29% (5.40)%(c) (5.30)%(c)
Ratios/Supplemental Data:
Net Assets, end of period
(000s)................... $ 77 $ 18,251 $ 126 $ 14,226
Ratios to average net
assets:
Net investment income*... 0.75% 0.94% 0.05%(b) 0.30%(b)
Operating expenses*...... 0.93% 0.74% 1.50%(b) 1.25%(b)
Operating expenses
excluding reimbursement,
waiver, and custody
earnings credits........ 2.03% 1.84% 2.69%(b) 2.44%(b)
Net investment income
excluding
reimbursements, waiver
and custody earnings
credits................. (0.35)% (0.16)% (1.13)%(b) (0.88)%(b)
Portfolio Turnover Rate.. 110% 110% 47% 47%
</TABLE>
- -----------------------------------------------
* During the periods certain expenses were reduced for credits earned at
Custodian bank. If such credits had not occurred, the ratios would have
been as indicated. Impact of Custody earnings credits was less than 0.01%
and $0.001 per share.
(a) The Fund commenced operations on June 2, 1998.
(b) Annualized
(c) Not annualized
Please see the accompanying notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
- -------------------------------------------------------------------------------
16
Notes to Financial Statements -- September 30, 1999
1. ORGANIZATION
First Choice Funds Trust (the "Trust") is an open-end management investment
company established as a Delaware business trust under a Declaration of Trust
dated June 5, 1996, and is registered under the Investment Company Act of
1940, as amended, (the "1940 Act"). The Trust consists of the U.S. Treasury
Reserve Fund, the Cash Reserve Fund and the Equity Fund (individually a
"Fund", collectively the "Funds"). Between the date of organization and com-
mencement of operations, the U.S. Treasury Reserve and Cash Reserve Funds had
no operations other than the initial sale of $100,000 of shares to the dis-
tributor (original seed money for the U.S. Treasury Reserve Fund and the Cash
Reserve Fund).
The investment objective of the U.S. Treasury Reserve Fund is to provide in-
vestors with as high a level of current income as is consistent with liquidi-
ty, maximum safety of principal and the maintenance of a stable $1.00 net as-
set value per share by investing in U.S. Treasury securities. The investment
objective of the Cash Reserve Fund is to provide investors with current in-
come, liquidity and the maintenance of a stable $1.00 net asset value per
share by investing in high quality, U.S. dollar-denominated short-term obliga-
tions. The investment objective of the Equity Fund is to provide long-term
capital growth and income by investing primarily in common stocks.
From time to time, for temporary defensive or emergency purposes, the Equity
Fund may invest a portion of its assets in cash, cash equivalents and debt se-
curities when First American Capital Management, Inc., (the "Adviser" or
"First American") deems such a position advisable in light of economic or mar-
ket conditions. The Equity Fund may invest a portion of its assets in foreign
securities and in equity securities of smaller companies, engage in short
selling, invest in fututes and options and invest in convertible debt or pre-
ferred securities. In addition, the Equity Fund may invest to a limited extent
in illiquid or restricted securities.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements. These policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
Securities Valuation: Money market securities are valued utilizing the amor-
tized cost method permitted by Rule 2a-7 under the 1940 Act. Under the amor-
tized cost method, a security is initially valued at cost. Each day thereaf-
ter, the security value is adjusted on a constant basis for any discount or
premium until maturity. Investments in equity securities which are traded on a
recognized stock exchange or for which price quotations are available will
normally be valued on the basis of market quotations furnished by a pricing
service which has been approved by the Board of Trustees.
Securities Transactions and Related Income: Security transactions are ac-
counted for on a trade date basis, (the date the security is purchased or
sold) for the U.S. Treasury Reserve Fund, Cash Reserve Fund and Equity Fund.
Interest income is recorded on the accrual basis and includes, where applica-
ble, the amortization of premium or accretion of discount based on the
straight line method. Dividend income is recorded on ex-dividend date. Gains
or losses realized on the sale of securities are determined by using the spe-
cific identification cost method.
Distributions to Shareholders: Dividends from net investment income are de-
clared daily and paid monthly for the U.S. Treasury Reserve Fund and Cash Re-
serve Fund. The Equity Fund declares dividends from net investment income, if
any, quarterly and pays such amounts quarterly. Distributable net realized
capital gains for the Funds, if any, will be declared and distributed at least
annually.
Income distributions and capital gain distributions are determined in accor-
dance with income tax regulations which may differ from generally accepted ac-
counting principles. These differences are primarily due to differing treat-
ments of income and gains on various investment securities held by the Funds,
timing differences and differing characterization of distributions made by
each Fund as a whole.
Federal Income Taxes: It is the policy of each Fund to qualify as a regulated
investment company by complying with the applicable provisions of the Internal
Revenue
- -------------------------------------------------------------------------------
<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
- -------------------------------------------------------------------------------
17
Notes to Financial Statements -- September 30, 1999 (continued)
Code. It is also the policy of the Funds to make distributions of net invest-
ment income and net realized capital gains sufficient to relieve it from all,
or substantially all, Federal income and excise taxes.
Organization and Offering Costs: Costs incurred by the Trust in connection
with its organization and offering of shares have been deferred and are being
amortized using the straight-line method over a period of five years and one
year period, respectively, from the commencement of Fund operations. In the
event that any of the initial shares of the Funds are redeemed during the am-
ortization period by any holder thereof, the redemption proceeds will be re-
duced by any unamortized organizational costs of the Fund in the same propor-
tion as the number of said shares of the Fund being redeemed bears to the num-
ber of initial shares of that Fund that are outstanding at the time of redemp-
tion.
Expenses: The Trust accounts separately for the assets, liabilities and opera-
tions of each Fund. Expenses directly attributable to a Fund are charged to
the Fund, while the expenses which are attributable to more than one Fund of
the Trust are allocated among the respective Funds based on relative average
net assets.
In addition, expenses of a Fund not directly attributable to the operations of
a particular class of shares of the Fund are allocated to each class based on
relative average net assets. Operating expenses directly attributable to a
class of shares of a Fund are charged to the operations of that class.
Other: Each Fund maintains a cash balance with its custodian and receives a
reduction of its custody fees and expenses for the amounts earned on such
uninvested cash balances. For the year ended September 30, 1999, custodian
fees were reduced by $78, $888 and $32 for the U.S. Treasury Reserve Fund,
Cash Reserve Fund and Equity Fund, respectively.
3. SHARES OF BENEFICIAL INTEREST
The Trust's Declaration authorizes the Trustees to issue an unlimited number
of shares, each with a par value of $0.001. Shares of the Trust are currently
classified into four classes of shares - the Institutional Class, Service
Class, Retail Class and the Investment Class. Each share represents an equal
proportionate interest in the respective Fund, bears the same fees and ex-
penses (except the Service Class, Retail Class and Investment Class are sub-
ject to a Rule 12b-1 fee and a Shareholder Service fee), and are entitled to
such dividends and distributions of income earned as are declared at the dis-
cretion of the Trust's Board of Trustees.
As of September 30, 1999, First American Trust Company, an affiliate of First
American, held 88% of the U.S. Treasury Reserve Fund, 98% of the Cash Reserve
Fund and 98% of the Equity Fund. One shareholder held 8% of the U.S. Treasury
Reserve Fund.
If a large redemption occured, the Funds could be impacted because of the con-
centration of the Funds' outstanding shares amongst a limited number of share-
holders.
4. INVESTMENT ADVISORY, ADMINISTRATION, SHAREHOLDER SERVICES, DISTRIBUTION AND
OTHER FEES
Investment advisory services are provided to the Funds by First American. Un-
der the terms of the investment advisory agreement, First American is entitled
to receive fees, calculated daily and payable monthly at the annual rate of
0.30% of the average daily net assets of the U.S. Treasury Reserve Fund and
Cash Reserve Fund and 1.00% of the average daily net assets of the Equity
Fund. From June 2, 1998 through June 30, 1999, on behalf of the Equity Fund,
the Adviser utilized a quantitative model developed by Haugen Custom Financial
Systems ("Haugen"), a registered investment adviser. The Adviser paid Haugen a
monthly fee at an annual rate of 0.065% of the first $100 million of the Eq-
uity Fund's average daily net assets, 0.125% of the next $100 million of the
average daily net assets and 0.03% of the average daily net assets in excess
of $200 million.
The Trust and First Data Investor Services Group, Inc. ("Investor Services
Group"), a wholly-owned subsidiary of First Data Corporation, are parties to
an agreement under which Investor Services Group provides administration serv-
ices for a fee calculated daily and paid monthly at the annual rate of 0.15%
of the average daily net assets of each Fund. In addition, Investor Services
Group also provides certain fund accounting and transfer agency services.
First Data Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary
of Investor Services Group and an indirect wholly-owned subsidiary of First
Data Corporation, serves as distributor of the Funds. The Distributor receives
fees for
- -------------------------------------------------------------------------------
<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
- -------------------------------------------------------------------------------
18
Notes to Financial Statements -- September 30, 1999 (continued)
providing distribution services under the Distribution Service Plan (the
"Plan") pursuant to Rule 12b-1 of the 1940 Act with respect to the Service
Class and Investment Class of the U.S. Treasury Reserve Fund and Cash Reserve
Fund and the Retail Class of the Equity Fund. Under the Plan, each Fund pays
the Distributor a fee not to exceed 0.25%, on an annual basis, of its average
daily net assets for payments made to banks, broker/dealers and other institu-
tions, including affiliates of the Adviser, and for expenses the Distributor
and any of its affiliates or subsidiaries incur for providing distribution or
shareholder service assistance. The Plan may be terminated at any time without
the payment of any penalties, by the vote of the majority of the Trustees, or
the vote of the holders of a majority of the outstanding shares of the rele-
vant class.
The Trust may contract with various banks, trust companies, broker/dealers, or
other financial organizations (collectively, the "Service Organizations") to
provide certain administrative services for the Service Class and Investment
Class of the U.S. Treasury Reserve Fund and the Cash Reserve Fund, such as
maintaining shareholder accounts and records. The Service Class may pay share-
holder servicing fees to Service Organizations in amounts up to 0.25% of its
average daily net assets and the Investment Class may pay shareholder servic-
ing fees up to 0.75% of its average daily net assets. The Equity Fund may pay
shareholder servicing fees to Service Organizations in amounts up to 0.25% of
the average daily net assets of the Retail Class owned by shareholders serv-
iced by the Service Organizations. As of September 30, 1999, there were no ar-
rangements with Service Organizations in place.
Certain officers of the Trust are affiliated with Investor Services Group.
Such officers are not paid any fees directly by the Funds for serving as offi-
cers of the Trust. Trustees of the Trust receive an annual retainer of $1,000,
a fee of $1,000 for each Board of Trustees meeting attended, $1,000 for each
Board committee meeting of the Trust attended and are reimbursed for all out-
of-pocket expenses relating to attendance at such meetings.
Fees may be voluntarily waived or reimbursed to assist the Funds in maintain-
ing competitive expense or performance ratios. Information regarding these
transactions are as follows for the year ended September 30, 1999:
<TABLE>
<CAPTION>
U.S. Treasury Cash Reserve Equity
Reserve Fund Fund Fund
------------- ------------ ---------
<S> <C> <C> <C>
First American:
Advisory fees waived...................... $ 146,768 $ 256,953 $ 177,160
Investor Services Group:
Fees waived............................... $ 63,373 $ 62,770 $ 17,716
--------- --------- ---------
$ 210,141 $ 319,723 $ 194,876
========= ========= =========
</TABLE>
Pacific American Securities LLC, an affiliate to First American, provided bro-
kerage services to the Equity Fund. For the year ended September 30, 1999, the
Equity Fund incurred $25,005 in brokerage commissions with Pacific American
Securities LLC.
5. SECURITY TRANSACTIONS
For the year ended September 30, 1999, the aggregate cost of purchases and
proceeds from sales of securities, other than short-term investments for the
Equity Fund, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
U.S Government
Securities..... $ -- $ --
Other Investment
Securities..... $ 19,041,290 $ 19,062,136
</TABLE>
At September 30, 1999, the aggregate gross unrealized appreciation (deprecia-
tion) and net unrealized appreciation (depreciation) for all securities as
computed on a federal income tax basis for the Equity Fund were as follows:
<TABLE>
<S> <C>
Appreciation.... $ 2,355,691
Depreciation.... (638,977)
-----------
Net............. $ 1,716,714
===========
</TABLE>
6. CAPITAL LOSS CARRY FORWARD
As of September 30, 1999, the Cash Reserve Fund had capital loss carryforwards
which expire as follows: $286 in 2005 and $1,171 in 2006.
7. SUBSEQUENT EVENT
It is expected that on or about December 1, 1999, PNC Bank Corp., directly or
through a wholly-owned subsidiary,
- -------------------------------------------------------------------------------
<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
- -------------------------------------------------------------------------------
19
Notes to Financial Statements -- September 30, 1999 (continued)
will purchase all of the outstanding shares of First Data Investor Services
Group, Inc. ("Investor Services Group"). Due to regulatory constraints, upon
completion of the transaction, First Data Distributors, Inc., a wholly-owned
subsidiary of Investor Services Group and the Distributor of the Trust's
shares, will no longer engage in mutual fund underwriting activities. On Octo-
ber 29, 1999, the Trustees approved a new distribution agreement with Provi-
dent Distributors, Inc. which will take effect upon the completion of the
transaction.
- -------------------------------------------------------------------------------
<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
- -------------------------------------------------------------------------------
20
Report of Independent Accountants
To the Board of Trustees and Shareholders
of First Choice Funds Trust:
In our opinion, the accompanying statements of assets and liabilities, includ-
ing the schedules of portfolio investments, and the related statements of op-
erations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of U.S. Treasury Re-
serve Fund, the Cash Reserve Fund, and the Equity Fund (each a series of the
First Choice Funds Trust, the "Trust") at September 30, 1999, and the results
of each of their operations, the changes in their net assets and the financial
highlights for the period presented in conformity with generally accepted ac-
counting principles. These financial statements are the responsibility of the
Trust's management; our responsibility is to express an opinion on these fi-
nancial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards, which re-
quire that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and dis-
closures in the financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall fi-
nancial statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 1999 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
November 24, 1999
- -------------------------------------------------------------------------------
<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
First American Capital Management, Inc.
567 San Nicolas Drive
Suite 101
Newport Beach, California 92660
ADMINISTRATOR
First Data Investor Services Group, Inc.
3200 Horizon Drive
King of Prussia, Pennsylvania 19406
DISTRIBUTOR
First Data Distributors, Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
CUSTODIAN
Investors Fiduciary Trust Company
801 Pennsylvania Avenue
Kansas City, Missouri 64105
COUNSEL
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania 19103
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