<PAGE>
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U.S. TREASURY RESERVE FUND
CASH RESERVE FUND
EQUITY FUND
SEMI-ANNUAL REPORT TO SHAREHOLDERS
March 31, 2000
Distributed through
Provident Distributors, Inc.
3200 Horizon Drive
King of Prussia, Pennsylvania 19406
1-888-FIRST16 (Retail Investors)
1-888-347-7816
1-877-344-3060 (Institutional Investors)
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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
March 31, 2000
Fellow Shareholders,
We are delighted to report that the First Choice Funds have continued their
pattern of success since our Annual Report in September, 1999. The past six
months included a positive 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 six months ended March 31, 2000, the domestic economy continued
growing, as it entered its tenth year of economic expansion in early 2000.
Bolstered by productivity gains through technological advances, the economy
grew at a 6.3% annual rate as measured by Gross Domestic Product. Inflation
crept higher, rising at a 4.0% annual rate, even as oil prices declined. The
Federal Reserve increased the Federal Funds rate three times during the six
month period, raising the rate to 6.0% in hopes of slowing the economy and
controlling inflation.
Equity Fund
During this same period, the domestic equity market had a tremendous advance.
Fueled by continued strength in the domestic economy, prospects for low infla-
tion and signs of recovery in the global economy, large capitalized stocks as
a whole performed well.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, 2000 March 31, 2000
------------------ ----------------
<S> <C> <C>
First Choice Equity Fund--Retail
Class................................. 5.4% 22.1%
First Choice Equity Fund--Institutional
Class................................. 5.4% 22.1%
S&P 500................................ 2.3% 17.5%
</TABLE>
The strongest sectors were electrical equipment, semi-conductors, and soft-
ware. The Fund benefited from the appreciation of some of our largest holdings
which included Texas Instruments, Intel and Oracle. The Equity Fund was able
to maintain a yield of 1.0% compared to 1.1% for the S&P 500.
U.S. Treasury Fund and Cash Reserve Fund
U.S. Treasury and Cash Reserve Funds were comparable to the average Treasury
and First Tier Fund, respectively, during the past 6 months ended March 31,
2000. With the Federal Reserve multiple increases of the Fed Funds rate by a
total of 0.75 basis points (0.75%) and subsequent, short term rates increasing
due to these actions, the yields also increased for both funds.
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2
U.S. Treasury
In the U.S. Treasury Reserve Fund market throughout most of the year, we ac-
tively managed the average maturity against shifts in the yield curve taking
advantage of changing interest rates.
Total Returns:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, 2000 March 31, 2000
------------------ ----------------
<S> <C> <C>
U.S. Treasury Reserve--Retail Class.... 1.2% 2.3%
iMoneyNetU.S. Treasury Retail Peer
Group................................. 1.2% 2.3%
U.S. Treasury Reserve--Institutional
Class................................. 1.3% 2.4%
iMoneyNetU.S. Treasury Institutional
Peer Group............................ 1.3% 2.5%
</TABLE>
Cash Reserve
In the Cash Reserve Fund we were able to take advantage of foreign banks pay-
ing higher interest rates. By varying the average maturity of the investments
held by the Cash Reserve Fund, we were also able to take advantage of shifts
in the yield curves, especially with respect to the Year 2000 related influ-
ences.
Total Returns:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, 2000 March 31, 2000
------------------ ----------------
<S> <C> <C>
Cash Reserve--Retail Class............. 1.3% 2.6%
iMoneyNet Cash Reserve Retail Peer
Group................................. 1.3% 2.6%
Cash Reserve--Institutional Class...... 1.4% 2.7%
iMoneyNet Cash Reserve Institutional
Peer Group............................ 1.4% 2.7%
</TABLE>
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.
Past performance does not guarantee future results. Investment return and
principal value of mutual funds will vary with market conditions, so that
shares, when redeemed, shares may be worth more or less than their original
cost. Certain expenses were subsidized. If this were not in effect, the re-
turns would have been lower. An investment in the Funds is neither insured nor
guaranteed by the U.S. Government of the Federal Deposit Insurance Corpora-
tion. Yields may fluctuate and although the U.S. Treasury Reserve Fund and
Cash Reserve Fund seek to preserve the value of your investments at $1.00 per
share, it is possible to lose money by investing in the Funds.
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. This Index has no commis-
sions or management fees.
The iMoneyNet (formerly IBC Financial) Peer Groups are an average of various
money markets that comprise the iMoneyNet database in each of the respective
categories. The Peer Group for the Treasury Fund is comprised of some funds
that do not exclusively invest in 100% U.S. Treasuries as is the case for the
First Choice U.S. Treasury Reserve and thus their yields may be higher. In-
vestors cannot invest directly in either of these Peer Groups.
This material must be accompanied or preceded by a current prospectus.
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3
U.S. Treasury Reserve Fund
Schedule of Portfolio Investments -- March 31, 2000 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
----------- -----------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS - 99.8%
U.S. Treasury Bills (A) - 70.2%
$14,676,000 5.34%, 04/27/2000..................................... $14,620,776
2,275,000 5.53%, 05/11/2000..................................... 2,261,461
1,635,000 5.68%, 05/25/2000..................................... 1,621,505
4,799,000 5.69%, 06/01/2000..................................... 4,754,144
10,875,000 5.59%, 06/08/2000..................................... 10,763,723
2,031,000 5.72%, 06/22/2000..................................... 2,005,492
853,000 5.95%, 08/10/2000..................................... 835,270
2,000,000 6.08%, 08/24/2000..................................... 1,952,875
1,875,000 6.11%, 09/07/2000..................................... 1,826,430
-----------
40,641,676
-----------
U.S. Treasury Notes - 29.6%
8,457,000 6.75%, 04/30/2000..................................... 8,462,671
1,185,000 6.38%, 05/15/2000..................................... 1,185,927
4,917,000 6.25%, 05/31/2000..................................... 4,921,625
2,590,000 5.13%, 08/31/2000..................................... 2,579,720
-----------
17,149,943
-----------
Total U.S. Government Obligations.................................. 57,791,619
-----------
(Cost $57,791,619)
Total Investments - 99.8%.......................................... 57,791,619
(Cost $57,791,619*)
Net Other Assets and Liabilities - 0.2%............................ 115,536
-----------
Total Net Assets - 100.0%.......................................... $57,907,155
===========
</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 -- March 31, 2000 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
---------- ------------
<C> <S> <C>
COMMERCIAL PAPER (A) - 64.2%
Automobile Financing - 11.0%
$4,000,000 Ford Motor Credit Co. 6.01%, 06/07/2000............. $ 3,956,822
2,000,000 General Motors Acceptance Corp. 6.08%, 6/08/2000.... 1,977,825
2,973,000 General Motors Acceptance Corp. 6.22%, 06/27/2000... 2,930,035
2,375,000 Toyota Motor Credit Corp. 6.09%, 07/20/2000......... 2,332,765
------------
11,197,447
------------
Business Finance and Leasing - 4.4%
240,000 CIT Group Holdings, Inc. 5.93%, 04/03/2000.......... 239,923
4,200,000 General Electric Capital Corp. 6.00%, 04/18/2000.... 4,188,358
------------
4,428,281
------------
Foreign Banks - 8.9%
5,100,000 Deutsche Bank Financial 6.37%, 8/02/2000............ 4,992,836
4,000,000 Westpac Capital Corp. 6.09%, 04/07/2000............. 3,996,113
------------
8,988,949
------------
Letter of Credit - 3.4%
3,500,000 Barclays Bank (United Mexican States)
5.98%, 06/02/2000................................... 3,465,340
------------
Office Equipment - 4.9%
4,950,000 Xerox Corp. 6.07%, 05/01/2000....................... 4,925,663
------------
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
---------- ------------
<C> <S> <C>
Personal Finance - 9.1%
$4,700,000 American General Finance Corp. 6.07%, 05/04/2000.... $ 4,674,581
4,600,000 Household Finance Co. 6.06%, 05/09/2000............. 4,571,449
------------
9,246,030
------------
Recreation - 4.7%
4,800,000 The Walt Disney Co. 6.09%, 07/07/2000............... 4,724,469
------------
Security Brokers and Dealers - 17.8%
4,200,000 Bear Stearns Co., Inc. 6.00%, 04/11/2000............ 4,193,146
4,200,000 Merrill Lynch & Co. 5.99%, 04/14/2000............... 4,191,097
4,900,000 Morgan Stanley Dean Witter & Co. 5.97%, 04/25/2000.. 4,881,053
4,800,000 Salomon-Smith Barney Holdings, Inc.
5.98%, 04/13/2000................................... 4,790,688
------------
18,055,984
------------
Total Commercial Paper.............................. 65,032,163
------------
(Cost $65,032,163)
U.S. GOVERNMENT OBLIGATIONS (A) - 4.0%
U.S. Treasury Bills
4,050,000 6.07%, 04/18/2000................................... 4,038,582
------------
Total U.S. Government Obligations................... 4,038,582
------------
(Cost $4,038,582)
</TABLE>
Please see the accompanying notes to financial statements.
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Cash Reserve Fund
Schedule of Portfolio Investments -- March 31, 2000 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
---------- ------------
<C> <S> <C>
U.S. AGENCY OBLIGATIONS (A) - 11.6%
Federal Home Loan
Mortgage Corporation
Discount Notes
$4,000,000 6.14%, 04/03/2000....... $ 3,998,655
6,208,000 5.98%, 04/04/2000....... 6,204,947
Zero Coupon
1,522,000 6.00%, 04/11/2000....... 1,519,506
------------
Total U.S. Agency
Obligations............. 11,723,108
------------
(Cost $11,723,108)
CERTIFICATES OF DEPOSIT-DOMESTIC - 3.9%
4,000,000 Bank One NA, Illinois
5.95%, 04/19/2000....... 4,000,058
------------
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
---------- ------------
<C> <S> <C>
YANKEE CERTIFICATES OF DEPOSITS AND DEPOSIT NOTES - 16.3%
$4,500,000 Canadian Imperial Bank of Commerce
6.20%, 08/01/2000............................... $ 4,498,182
4,000,000 Rabobank Nederland NV 6.02%, 06/30/2000......... 4,000,165
4,000,000 Svenska Handelsbanken, Inc.
5.75%, 7/27/2000................................ 3,994,065
4,000,000 Union Bank of Switzerland (NY)
5.48%, 06/02/2000............................... 3,995,325
------------
16,487,737
------------
Total Certificates of Deposits.................. 20,487,797
------------
(Cost $20,487,795)
Total Investments - 100.0%.................................. 101,281,648
(Cost $101,281,648*)
Net Other Assets and Liabilities - (0.0%)................... (23,654)
------------
Total Net Assets - 100.0%................................... $101,257,994
============
</TABLE>
-----------------
* Aggregate cost for Federal tax purposes.
(A) The rates shown represent annualized yield to maturity at time of pur-
chase.
Please see the accompanying notes to financial statements.
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6
Equity Fund
Schedule of Portfolio Investments -- March 31, 2000 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------------ ------------
<C> <S> <C>
COMMON STOCKS - 98.7%
Aerospace & Defense - 0.8%
3,000 United Technologies Corp. ......................... $ 189,563
------------
Automotive - 1.6%
8,000 Ford Motor Co. .................................... 367,500
------------
Chemicals - 1.2%
5,000 du Pont (E.I.) de Nemours and Co. ................. 264,375
------------
Computer Hardware & Systems - 9.7%
9,300 Dell Computer Corp.*............................... 501,619
2,200 EMC Corp.*......................................... 275,000
5,500 Hewlett-Packard Co. ............................... 729,094
5,800 International Business Machines Corp. ............. 684,400
------------
2,190,113
------------
Computer Software & Services - 10.6%
6,500 BMC Software, Inc.*................................ 320,938
15,700 Compuware Corp.*................................... 330,681
7,500 Microsoft Corp.*................................... 796,875
12,100 Oracle Corp.*...................................... 944,556
------------
2,393,050
------------
Electrical Equipment - 9.1%
8,000 Cisco Systems, Inc.*............................... 618,500
6,700 General Electric Co. .............................. 1,039,756
10,200 Solectron Corp.*................................... 408,638
------------
2,066,894
------------
Energy - 4.4%
7,100 Exxon Mobile Corp. ................................ 552,469
3,800 Royal Dutch Petroleum Co.-NY Shs. ................. 218,738
4,000 Texaco, Inc. ...................................... 214,500
------------
985,707
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------------ ------------
<C> <S> <C>
Entertainment/Leisure - 4.4%
3,700 CBS Corp.*........................................ $ 209,512
3,000 McDonald's Corp................................... 112,687
Entertainment/Leisure (continued)
10,000 The Walt Disney Co. .............................. 413,750
5,000 Viacom, Inc., Class B*............................ 263,750
------------
999,699
------------
Financial/Banking - 3.0%
6,000 Bank of America Corp.............................. 314,625
2,131 FleetBoston Financial Corp. ...................... 77,781
7,000 Wells Fargo & Co. ................................ 286,562
------------
678,968
------------
Financial/Miscellaneous - 3.6%
1,900 American Express Co............................... 282,981
4,000 Fannie Mae........................................ 225,750
12,000 MBNA Corp. ....................................... 306,000
------------
814,731
------------
Food/Beverages - 2.7%
2,500 Bestfoods......................................... 117,031
4,000 Coca-Cola Co. .................................... 187,750
6,000 ConAgra, Inc. .................................... 108,750
5,500 PepsiCo, Inc...................................... 190,094
------------
603,625
------------
Health & Drug - 9.0%
5,600 Abbott Laboratories............................... 197,050
3,400 Bristol-Myers Squibb Co. ......................... 196,350
4,000 Johnson & Johnson................................. 280,250
4,000 Lilly (Eli) & Co. ................................ 252,000
5,500 Merck & Co., Inc. ................................ 341,688
10,800 Pfizer, Inc. ..................................... 394,875
3,800 Warner-Lambert Co. ............................... 370,500
------------
2,032,713
------------
</TABLE>
Please see the accompanying notes to financial statements.
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7
Equity Fund
Schedule of Portfolio Investments -- March 31, 2000 (unaudited)(continued)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------------ ------------
<C> <S> <C>
Household/Personal Care - 2.2%
9,000 Colgate-Palmolive Co. .............................. $ 507,375
------------
Insurance - 2.4%
5,000 American International Group, Inc. ................. 547,500
------------
Investment Bank/Brokerage - 4.6%
4,500 Merrill Lynch & Co., Inc............................ 472,500
7,000 Morgan Stanley Dean Witter & Co..................... 570,938
------------
1,043,438
------------
Manufactured Goods - 2.2%
10,000 Tyco International, Ltd............................. 498,750
------------
Office Equipment - 2.3%
20,000 Xerox Corp.......................................... 520,000
------------
Retail - 4.8%
9,000 Home Depot, Inc..................................... 580,500
9,000 Wal-Mart Stores, Inc. .............................. 499,500
------------
1,080,000
------------
Semiconductors - 9.8%
9,000 Intel Corp.......................................... 1,187,437
6,500 Texas Instruments, Inc.............................. 1,040,000
------------
2,227,437
------------
Telecommunications - 8.5%
7,000 AT&T Corp. ......................................... 393,750
3,600 BellSouth Corp. .................................... 169,200
4,000 GTE Corp............................................ 284,000
7,800 MCI WorldCom, Inc.*................................. 353,437
6,200 SBC Communications, Inc............................. 260,400
7,200 Tellabs, Inc.*...................................... 453,488
------------
1,914,275
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------------ ------------
<C> <S> <C>
Transportation - 0.4%
4,000 Burlington Northern Santa Fe Corp................ $ 88,500
------------
Utilities - 1.4%
4,000 Duke Energy Corp................................. 210,000
4,600 Southern Co. .................................... 100,050
------------
310,050
------------
Total Common Stocks.............................. 22,324,263
------------
(Cost $16,874,749)
<CAPTION>
Principal Value
Amount (Note 2)
------------ ------------
<C> <S> <C>
INVESTMENT COMPANY (A) - 1.4%
$ 319,424 State Street Global Advisers Money Market Fund,
5.70%............................................ 319,424
------------
Total Investment Company......................... 319,424
------------
(Cost $319,424)
Total Investments - 100.1%..................................... 22,643,687
(Cost $17,194,173**)
Net Other Assets and Liabilities - (0.1%)...................... (19,333)
------------
Total Net Assets - 100.0%...................................... $ 22,624,354
============
</TABLE>
-----------------
*Non-income producing security.
**Aggregate cost for Federal tax purposes.
(A) The rate shown represents the seven day yield at March 31, 2000.
Please see the accompanying notes to financial statements.
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8
Statements of Assets and Liabilities -- March 31, 2000 (unaudited)
<TABLE>
<CAPTION>
U.S. Treasury Cash Equity
Reserve Fund Reserve Fund Fund
------------- ------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments at value (Amortized
cost $57,791,619, $101,281,648 and
cost $17,194,173, respectively)
(Note 2).......................... $ 57,791,619 $ 101,281,648 $ 22,643,687
Cash............................... -- -- --
Dividends and interest receivable.. 381,943 559,323 18,173
Unamortized organization costs
(Note 2).......................... 9,761 22,791 8,917
Prepaid expenses and other assets.. 12,990 4,382 1,012
------------ ------------- ------------
Total Assets....................... 58,196,313 101,868,144 22,671,789
------------ ------------- ------------
LIABILITIES:
Dividends payable.................. 254,732 431,071 30,328
Investment advisory fee payable
(Note 4).......................... 5,133 7,749 --
Administration and accounting fee
payable (Note 4).................. 6,557 8,005 4,963
Transfer agent fee payable (Note
4)................................ 9,429 14,396 2,625
Trustee fee payable (Note 4)....... 604 1,501 514
Distribution fee payable (Note 4).. 1,225 13 24
Due to Custodian................... 223 138,808 --
Accrued expenses and other
payables.......................... 11,255 8,607 8,981
------------ ------------- ------------
Total Liabilities.................. 289,158 610,150 47,435
------------ ------------- ------------
NET ASSETS.......................... $ 57,907,155 $ 101,257,994 $ 22,624,354
============ ============= ============
NET ASSETS consist of:
Par Value (Note 3)................. $ 57,907 $ 101,262 $ 1,661
Paid-in Capital (Note 3)........... 57,849,593 101,160,471 16,883,595
Undistributed net investment income
(loss)............................ 2 1 (457)
Accumulated net realized gain
(loss) on investments sold........ (347) (3,740) 290,041
Unrealized appreciation on
investments....................... -- -- 5,449,514
------------ ------------- ------------
TOTAL NET ASSETS.................... $ 57,907,155 $ 101,257,994 $ 22,624,354
============ ============= ============
Net Assets
Service Class...................... $ 6,338,970 $ 62,510 $ N/A
Retail Class....................... N/A N/A 188,072
Institutional Class................ 51,568,175 101,195,474 22,436,282
Investment Class................... 10 10 N/A
------------ ------------- ------------
Total.............................. $ 57,907,155 $ 101,257,994 $ 22,624,354
============ ============= ============
Shares Outstanding
Service Class...................... 6,337,455 62,513 N/A
Retail Class....................... N/A N/A 13,807
Institutional Class................ 51,569,077 101,199,210 1,646,746
Investment Class................... 10 10 N/A
------------ ------------- ------------
Total.............................. 57,906,542 101,261,733 1,660,553
============ ============= ============
Net Asset Value, offering and
redemption price per share
Service Class...................... $ 1.00 $ 1.00 N/A
============ ============= ============
Retail Class(a).................... N/A N/A $ 13.62
============ ============= ============
Institutional Class................ $ 1.00 $ 1.00 $ 13.62
============ ============= ============
Investment Class(b)................ $ 1.00 $ 1.00 N/A
============ ============= ============
</TABLE>
-----------------------------------------------
(a) Maximum offering price per share ($13.62/0.955 = $14.26)
(b) The Investment Share Class was seeded on April 20, 1998. As of March 31,
2000, no investment activity had occurred.
Please see the accompanying notes to financial statements.
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9
Statements of Operations -- For the Six Months Ended March 31, 2000 (unaudited)
<TABLE>
<CAPTION>
U.S. Treasury Cash
Reserve Fund Reserve Fund Equity Fund
------------- ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income (Note 2)............... $ 1,761,451 $ 2,459,585 $ 7,517
Dividend income (Note 2)............... -- -- 111,911
----------- ----------- -----------
Total Investment Income................ 1,761,451 2,459,585 119,428
EXPENSES:
Investment advisory fees (Note 4)...... 101,124 127,468 102,112
Administration fees (Note 4)........... 50,562 63,734 15,317
Distribution fees (Note 4)............. 8,442 131 112
Accounting fees (Note 4)............... 17,700 17,797 19,297
Custodian fees......................... 10,161 12,350 4,756
Legal and Audit fees................... 20,160 22,243 12,044
Amortization of organization costs
(Note 2).............................. 6,398 6,398 1,409
Trustees' fees and expenses (Note 4)... 10,305 14,959 3,610
Transfer agent fees (Note 4)........... 12,469 17,780 5,589
Registration and filing fees........... 10,717 17,171 10,998
Other expenses......................... 4,655 3,939 1,941
----------- ----------- -----------
Total Gross Expenses................... 252,693 303,970 177,185
Less:Adviser fee waiver (Note 4)...... (67,416) (84,979) (102,112)
Administration fee waiver (Note
4)................................ (33,708) (42,489) (10,211)
----------- ----------- -----------
Total Expenses....................... 151,569 176,502 64,862
Less: Custody earnings credits (Note
2)................................... (241) (230) (29)
----------- ----------- -----------
Net Expenses......................... 151,328 176,272 64,833
----------- ----------- -----------
NET INVESTMENT INCOME .................. 1,610,123 2,283,313 54,595
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS (Note 2):
Net realized gain (loss) on investments
sold.................................. 1,727 (88) 290,175
Net change in unrealized appreciation
on investments........................ -- -- 3,732,800
----------- ----------- -----------
Net gain (loss) on investments......... 1,727 (88) 4,022,975
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.............. $ 1,611,850 $ 2,283,225 $ 4,077,570
=========== =========== ===========
</TABLE>
Please see the accompanying notes to financial statements.
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10
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
U.S. Treasury Reserve Fund
---------------------------------
Six Months
Ended
March 31, 2000 Year Ended
(unaudited) September 30, 1999
-------------- ------------------
<S> <C> <C>
NET ASSETS at beginning of period........... $ 70,798,831 $ 56,945,311
Increase in Net Assets
resulting from operations:
Net investment income...................... 1,610,123 2,710,669
Net realized gain on investments sold...... 1,727 348
------------ ------------
Net increase in net assets
resulting from operations................. 1,611,850 2,711,017
------------ ------------
Distributions to shareholders from:
Net Investment Income:
Service Class.............................. (153,731) (313,350)
Institutional Class........................ (1,456,392) (2,397,317)
------------ ------------
Total distributions to shareholders....... (1,610,123) (2,710,667)
------------ ------------
Net increase (decrease) from capital
share transactions......................... (12,893,403) 13,853,170
------------ ------------
Net increase (decrease) in net assets...... (12,891,676) 13,853,520
------------ ------------
NET ASSETS at end of period................. $ 57,907,155 $ 70,798,831
============ ============
Undistributed Net Investment Income......... $ 2 $ 2
============ ============
Capital Stock Dollar Amounts and Share
Activity:
Service Class
Net proceeds from sale of shares........... 35,480,156 57,754,721
Issued to shareholders in reinvestment of
dividends................................. 7,691 11,637
Cost of shares repurchased................. (35,347,343) (62,764,097)
------------ ------------
Net change resulting from share
transactions.............................. $ 140,504 $ (4,997,739)
============ ============
Institutional Class
$
Net proceeds from sale of shares........... $ 27,783,954 105,677,402
Issued to shareholders in reinvestment of
dividends................................. 47,484 100,182
Cost of shares repurchased................. (40,865,345) (86,926,675)
------------ ------------
Net change resulting from share $
transactions.............................. (13,033,907) $ 18,850,909
============ ============
Investment Class
Net proceeds from sale of shares........... -- --
------------ ------------
Net change resulting from share
transactions.............................. -- --
============ ============
</TABLE>
Please see the accompanying notes to financial statements.
--------------------------------------------------------------------------------
<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
--------------------------------------------------------------------------------
11
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Cash Reserve Fund
----------------------------------
Six Months
Ended
March 31, 2000 Year Ended
(unaudited) September 30, 1999
-------------- ------------------
<S> <C> <C>
NET ASSETS at beginning of period.......... $ 77,832,386 $ 146,121,473
Increase in Net Assets
resulting from operations:
Net investment income..................... 2,283,313 5,045,640
Net realized loss on investments sold..... (88) (2,091)
------------- -------------
Net increase in net assets
resulting from operations................ 2,283,225 5,043,549
------------- -------------
Distributions to shareholders from:
Net Investment Income:
Service Class............................. (2,665) (20,653)
Institutional Class....................... (2,280,647) (5,024,987)
------------- -------------
Total distributions to shareholders...... (2,283,312) (5,045,640)
------------- -------------
Net increase (decrease) from capital
share transactions: 23,425,695 (68,286,996)
------------- -------------
Net increase (decrease) in net assets..... 23,425,608 (68,289,087)
------------- -------------
NET ASSETS at end of period................ $ 101,257,994 $ 77,832,386
============= =============
Undistributed Net Investment Income........ $ 1 $ --
============= =============
Capital Stock Dollar Amounts and Share
Activity:
Service Class
Net proceeds from sale of shares.......... $ 141,800 $ 56,203
Issued to shareholders in reinvestment of
dividends................................ 2,146 20,402
Cost of shares repurchased................ (254,394) (391,697)
------------- -------------
Net change resulting from share
transactions............................. $ (110,448) $ (315,092)
============= =============
Institutional Class
Net proceeds from sale of shares.......... $ 168,284,503 $ 234,877,025
Issued to shareholders in reinvestment of
dividends................................ 40,039 60,493
Cost of shares repurchased................ (144,788,399) (302,909,421)
------------- -------------
Net change resulting from share
transactions............................. $ 23,536,143 $ (67,971,903)
============= =============
Investment Class
Net proceeds from sale of shares.......... -- --
------------- -------------
Net change resulting from share
transactions............................. -- --
============= =============
</TABLE>
Please see the accompanying notes to financial statements.
--------------------------------------------------------------------------------
<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
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12
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Equity Fund
---------------------------------
Six Months
Ended
March 31, 2000 Year Ended
(unaudited) September 30, 1999
-------------- ------------------
<S> <C> <C>
NET ASSETS at beginning of period........... $ 18,327,945 $ 14,351,799
Increase in Net Assets resulting from
operations:
Net investment income...................... 54,595 165,472
Net realized gain on investments sold...... 290,175 1,446,764
Net change in unrealized appreciation on
investments............................... 3,732,800 2,455,506
------------ ------------
Net increase in net assets resulting from
operations................................ 4,077,570 4,067,742
------------ ------------
Distributions to shareholders from:
Net Investment Income:
Retail Class............................... (242) (687)
Institutional Class........................ (54,479) (179,970)
Realized Gains on Investments:
Retail Class............................... (5,721) --
Institutional Class........................ (1,358,985) --
------------ ------------
Total distributions to shareholders....... (1,419,427) (180,657)
------------ ------------
Net increase from capital share
transactions............................... 1,638,266 89,061
------------ ------------
Net increase in net assets................. 4,296,409 3,976,146
------------ ------------
NET ASSETS at end of period................. $ 22,624,354 $ 18,327,945
============ ============
Undistributed Net Investment Loss........... $ (457) $ (331)
============ ============
Capital Stock Dollar Activity:
Retail Class
Net proceeds from sale of shares........... $ 95,810 $ 7,617
Issued to shareholders in reinvestment of
dividends................................. 6,074 238
Cost of shares repurchased................. -- (87,983)
------------ ------------
Net change resulting from share
transactions.............................. $ 101,884 $ (80,128)
============ ============
Institutional Class
Net proceeds from sale of shares........... $ 160,000 $ 80,000
Issued to shareholders in reinvestment of
dividends................................. 1,376,382 1,055
Cost of shares repurchased................. -- 88,134
------------ ------------
Net change resulting from share
transactions.............................. $ 1,536,382 $ 169,189
============ ============
Capital Stock Share Activity:
Retail Class
Shares sold................................ 6,910 679
Shares issued in reinvestment of
dividends................................. 512 20
Shares repurchased......................... -- (7,637)
------------ ------------
Net change resulting from share
transactions.............................. 7,422 (6,938)
============ ============
Institutional Class
Shares sold................................ 12,810 7,316
Shares issued in reinvestment of
dividends................................. 116,365 87
Shares repurchased......................... -- 7,632
------------ ------------
Net change resulting from share
transactions.............................. 129,175 15,035
============ ============
</TABLE>
Please see the accompanying notes to financial statements.
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<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
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13
Financial Highlights -- For a share outstanding throughout the period
<TABLE>
<CAPTION>
U.S. Treasury Reserve Fund
-------------------------------------------------------------------------------
Six Months Ended
March 31, 2000 Year Ended Year Ended
(unaudited) September 30, 1999 September 30, 1998
------------------------- ------------------------ -------------------------
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..... 0.023 0.024 0.041 0.043 0.048 0.049
Net realized and
unrealized gain (loss) on
investments.............. -- -- --(b) --(b) --(b) --(b)
------- -------- ------- -------- -------- --------
Total from Investment
Operations............... 0.023 0.024 0.041 0.043 0.048 0.049
Less Distributions:
Dividends from net
investment income........ (0.023) (0.024) (0.041) (0.043) (0.048) (0.049)
------- -------- ------- -------- -------- --------
Net Asset Value,
end of period............. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======== ======= ======== ======== ========
Total Return............... 2.31%(d) 2.43%(d) 4.13% 4.38% 4.88% 4.97%
Ratios/Supplemental Data:
Net Assets, end of period
(000s).................... $ 6,339 $ 51,568 $ 6,198 $ 64,600 $ 11,196 $ 45,750
Ratios to average
net assets:
Net investment income*.... 4.56%(c) 4.81%(c) 4.06% 4.31% 4.87% 4.91%
Operating expenses*....... 0.68%(c) 0.43%(c) 0.64% 0.39% 0.47% 0.43%
Operating expenses
excluding reimbursement,
waiver and custody
earnings credits......... 0.98%(c) 0.73%(c) 0.97% 0.72% 0.82% 0.78%
Net investment income
excluding reimbursements,
waiver and custody
earnings credits......... 4.26%(c) 4.51%(c) 3.73% 3.98% 4.52% 4.56%
<CAPTION>
Year Ended
September 30, 1997(a)
---------------------------
Service Institutional
Class Class
------------ --------------
<S> <C> <C>
Net Asset Value,
beginning of period....... $ 1.000 $ 1.000
------------ --------------
Income from
Investment Operations:
Net investment income..... 0.049 0.050
Net realized and
unrealized gain (loss) on
investments.............. --(b) --(b)
------------ --------------
Total from Investment
Operations............... 0.049 0.050
Less Distributions:
Dividends from net
investment income........ (0.049) (0.050)
------------ --------------
Net Asset Value,
end of period............. $ 1.000 $ 1.000
============ ==============
Total Return............... 5.04% 5.08%
Ratios/Supplemental Data:
Net Assets, end of period
(000s).................... $ 73,581 $ 1,995
Ratios to average
net assets:
Net investment income*.... 4.93%(c) 4.93%(c)
Operating expenses*....... 0.35%(c) 0.35%(c)
Operating expenses
excluding reimbursement,
waiver and custody
earnings credits......... 1.36%(c) 0.86%(c)
Net investment income
excluding reimbursements,
waiver and custody
earnings credits......... 3.92%(c) 4.42%(c)
</TABLE>
----------------------------------------------
* During the period certain expenses were reduced for credits earned at Cus-
todian 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.
(d) Not 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
-------------------------------------------------------------------------
Six Months Ended
March 31, 2000 Year Ended Year Ended
(unaudited) September 30, 1999 September 30, 1998
------------------------- ---------------------- ----------------------
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....... 0.026 0.027 0.045 0.048 0.051 0.052
Net realized and unrealized
gain (loss) on
investments................ --(b) --(b) --(b) --(b) --(b) --(b)
------ -------- ------ ------- ------ --------
Total from Investment
Operations................. 0.026 0.027 0.045 0.048 0.051 0.052
Less Distributions:
Dividends from net
investment income.......... (0.026) (0.027) (0.045) (0.048) (0.051) (0.052)
------ -------- ------ ------- ------ --------
Net Asset Value,
end of period............... $1.000 $ 1.000 $1.000 $ 1.000 $1.000 $ 1.000
====== ======== ====== ======= ====== ========
Total Return................. 2.59%(d) 2.72%(d) 4.59% 4.86% 5.19% 5.29%
Ratios/Supplemental Data:
Net Assets,
end of period (000s)........ $ 63 $101,195 $ 172 $77,660 $ 487 $145,634
Ratios to average net assets:
Net investment income*...... 5.13%(c) 5.38%(c) 4.52% 4.77% 5.15% 5.20%
Operating expenses*......... 0.67%(c) 0.42%(c) 0.66% 0.41% 0.49% 0.44%
Operating expenses
excluding reimbursement,
waiver and custody earnings
credits.................... 0.97%(c) 0.72%(c) 0.96% 0.71% 0.78% 0.73%
Net investment income
excluding reimbursements,
waiver and custody earnings
credits.................... 4.83%(c) 5.08%(c) 4.22% 4.47% 4.86% 4.91%
<CAPTION>
Period Ended
September 30, 1997(a)
--------------------------
Service Institutional
Class Class
----------- --------------
<S> <C> <C>
Net Asset Value, beginning of
period...................... $ 1.000 $1.000
----------- --------------
Income from
Investment Operations:
Net investment income....... 0.037 0.038
Net realized and unrealized
gain (loss) on
investments................ --(b) --(b)
----------- --------------
Total from Investment
Operations................. 0.037 0.038
Less Distributions:
Dividends from net
investment income.......... (0.037) (0.038)
----------- --------------
Net Asset Value,
end of period............... $ 1.000 $1.000
=========== ==============
Total Return................. 3.78%(d) 3.82%(d)
Ratios/Supplemental Data:
Net Assets,
end of period (000s)........ $57,947 $ 61
Ratios to average net assets:
Net investment income*...... 5.23%(c) 5.23%(c)
Operating expenses*......... 0.35%(c) 0.35%(c)
Operating expenses
excluding reimbursement,
waiver and custody earnings
credits.................... 1.43%(c) 0.93%(c)
Net investment income
excluding reimbursements,
waiver and custody earnings
credits.................... 4.15%(c) 4.65%(c)
</TABLE>
-----------------------------------------------
* During the period certain expenses were reduced for credits earned at Cus-
todian 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
----------------------------------------------------------------------------
Six Months Ended Period Ended
March 31, 2000 Year Ended September 30,
(unaudited) September 30, 1999 1998(a)
------------------------- ---------------------- -------------------------
Retail Institutional Retail Institutional Retail Institutional
Class Class Class Class Class Class
------ ------------- ------ ------------- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period.... $12.02 $ 12.03 $ 9.46 $ 9.47 $10.00 $ 10.00
------ ------- ------ ------- ------ -------
Income from Investment
Operations:
Net investment income.. 0.01 0.03 0.08 0.10 -- 0.01
Net realized and
unrealized gain (loss)
on investments........ 2.50 2.48 2.57 2.57 (0.54) (0.54)
------ ------- ------ ------- ------ -------
Total from Investment
Operations............ 2.51 2.51 2.65 2.67 (0.54) (0.53)
------ ------- ------ ------- ------ -------
Less Distributions:
Dividends from net
investment income..... (0.02) (0.03) (0.09) (0.11) -- --
Dividends from realized
gains on investments.. (0.89) (0.89) -- -- -- --
------ ------- ------ ------- ------ -------
Total distributions..... (0.91) (0.92) (0.09) (0.11) -- --
------ ------- ------ ------- ------ -------
Net Asset Value, end of
period................. $13.62 $ 13.62 $12.02 $ 12.03 $ 9.46 $ 9.47
====== ======= ====== ======= ====== =======
Total Return............ 22.10%(c) 22.10%(c) 27.98% 28.29% (5.40)%(c) (5.30)%(c)
Ratios/Supplemental
Data:
Net Assets, end of
period (000s).......... $ 188 $22,436 $ 77 $18,251 $ 126 $14,226
Ratios to average net
assets:
Net investment
income*............... 0.29%(b) 0.54%(b) 0.75% 0.94% 0.05%(b) 0.30%(b)
Operating expenses*.... 0.88%(b) 0.63%(b) 0.93% 0.74% 1.50%(b) 1.25%(b)
Operating expenses
excluding
reimbursement, waiver,
and custody earnings
credits............... 1.99%(b) 1.74%(b) 2.03% 1.84% 2.69%(b) 2.44%(b)
Net investment income
excluding
reimbursements, waiver
and custody earnings
credits............... (0.82)%(b) (0.57)%(b) (0.35)% (0.16)% (1.13)%(b) (0.88)%(b)
Portfolio Turnover
Rate.................. 11%(c) 11%(c) 110% 110% 47% 47%
</TABLE>
-----------------------------------------------
* During the period certain expenses were reduced for credits earned at Cus-
todian 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 -- March 31, 2000 (unaudited)
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 futures 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 Code. It is also the policy of the Funds to make distributions of net
investment income and net realized capital gains suf-
-------------------------------------------------------------------------------
<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
-------------------------------------------------------------------------------
17
Notes to Financial Statements -- March 31, 2000 (unaudited)(continued)
ficient to relieve it from all, or substantially all, Federal income and ex-
cise 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 six months ended March 31, 2000, custodian
fees were reduced by $241, $230 and $29 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 the Institutional Class, Retail Class, Service
Class and Investment Class are subject to a Shareholder Service fee) and are
entitled to such dividends and distributions of income earned as are declared
at the discretion of the Trust's Board of Trustees.
As of March 31, 2000, First American Trust Company, an affiliate of First
American, held 86% of the U.S. Treasury Reserve Fund, 98% of the Cash Reserve
Fund and 98% of the Equity Fund. One shareholder held 10% of the U.S. Treasury
Reserve Fund.
If a large redemption occurred, the Funds could be impacted because of the
concentration of the Funds' outstanding shares amongst a limited number of
shareholders.
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.
The Trust and PFPC Inc. ("PFPC"), an indirect, majority-owned subsidiary of
PNC Financial Services Group, Inc., are parties to an agreement under which
PFPC provides administration services 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, PFPC also provides certain fund accounting and transfer
agency services.
Provident Distributors, Inc., (the "Distributor"), serves as distributor of
the Funds. The Distributor receives fees for 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 institutions, including affiliates of the
Adviser, and for expenses the Distributor and any of its affiliates or subsid-
iaries 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 ma-
jority of the outstanding shares.
-------------------------------------------------------------------------------
<PAGE>
First Choice Funds Trust
-------------------------------------------------------------------------------
[LOGO OF FIRST CHOICE FUNDS]
18
Notes to Financial Statements -- March 31, 2000 (unaudited) (continued)
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, Institutional
Class and Investment Class of the U.S. Treasury Reserve Fund and the Cash Re-
serve Fund, such as maintaining shareholder accounts and records. The Service
Class and Institutional Class may pay shareholder servicing fees to Service
Organizations in amounts up to 0.25% of its average daily net assets and the
Investment Class may pay shareholder servicing fees up to 0.75% of its average
daily net assets. The Equity Fund may pay shareholder servicing fees to Serv-
ice Organizations in amounts up to 0.25% of the average daily net assets of
the Retail Class and Institutional Class owned by shareholders serviced by the
Service Organizations. As of March 31, 2000, there were no arrangements with
Service Organizations in place.
Certain officers of the Trust are affiliated with PFPC Inc. Such officers are
not paid any fees directly by the Funds for serving as officers 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 ex-
penses 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 is as follows for the six months ended March 31, 2000:
<TABLE>
<CAPTION>
U.S. Treasury Cash Reserve Equity
Reserve Fund Fund Fund
------------- ------------ --------
<S> <C> <C> <C>
First American:
Advisory fees waived........................ $ 67,416 $ 84,979 $102,112
PFPC Inc.:
Fees waived................................. $ 33,708 $ 42,489 $ 10,211
-------- -------- --------
$101,124 $127,468 $112,323
======== ======== ========
</TABLE>
Pacific American Securities LLC, an affiliate to First American, provided bro-
kerage services to the Equity Fund. For the six months ended March 31, 2000
the Equity Fund incurred $3,025 in brokerage commissions with Pacific American
Securities LLC.
5. SECURITIES TRANSACTIONS
For the six months ended March 31, 2000, the aggregate cost of purchases and
proceeds from sales of securities, other than short-term investments, for the
Equity Fund, was as follows:
<TABLE>
<CAPTION>
Purchases Sales
----------- -----------
<S> <C> <C>
U.S Government
Securities..... $ -- $ --
Other Investment
Securities..... $ 2,544,811 $ 2,274,555
</TABLE>
At March 31, 2000, the aggregate gross unrealized appreciation (depreciation)
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.... $6,232,297
Depreciation.... (782,783)
----------
Net............. $5,449,514
==========
</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.
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<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
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INVESTMENT ADVISER
First American Capital Management, Inc.
567 San Nicolas Drive
Suite 101
Newport Beach, California 92660
ADMINISTRATOR
PFPC Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
DISTRIBUTOR
Provident Distributors, Inc.
3200 Horizon Drive
King of Prussia, Pennsylvania 19406
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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