<PAGE>
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FIRST CHOICE U.S. TREASURY RESERVE FUND
FIRST CHOICE CASH RESERVE FUND
FIRST CHOICE EQUITY FUND
ANNUAL REPORT TO SHAREHOLDERS
September 30, 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
First Choice U.S. Treasury Reserve Fund:
PAGE 4
First Choice Cash Reserve Fund:
PAGE 5
First Choice Equity Fund:
PAGE 7
Statements of Assets and Liabilities
PAGE 9
Statements of Operations
PAGE 10
Statements of Changes in Net Assets
PAGE 11
Financial Highlights
PAGE 14
Notes to Financial Statements
PAGE 17
Shareholder Information
BACK COVER
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1
Shareholder Letter for the First Choice Funds Trust -- September 30, 2000
First Choice Shareholders:
We are pleased to report that the First Choice Funds have continued their pat-
tern of success over the past fiscal year. Continued strength in the economic
environment and financial markets has supported our efforts to achieve favora-
ble returns in our three funds. Over the year, the domestic economy continued
growing in its tenth consecutive year of economic expansion. Bolstered by pro-
ductivity gains through use of technology, the economy grew 5.3% over the past
year as measured by Gross Domestic Product. Inflation remained under control,
rising 3.2% over the past year as measured by the Consumer Price Index. Howev-
er, inflation has been creeping higher in recent months largely due to rising
oil prices. The Federal Reserve Board ("the Fed") has continued to increase
the Federal Funds rate in an effort to slow economic growth and keep inflation
under control. Over the past year the Fed has increased the Federal Funds rate
four times to 6.5%, the highest rate in nine years.
First Choice Equity Fund ("Equity Fund")
Fueled by solid growth in corporate earnings and prospects for moderate infla-
tion the stock market performed well. The Equity Fund was well positioned to
benefit from strength in the technology sector, particularly in the first half
of 2000. As of September 30, the Equity Fund had a current yield of 1.1%,
which was equal to the yield of the S&P 500.
<TABLE>
<CAPTION>
Total Return
Total Return Annualized
Year Ended Since Inception
9/30/00 6/02/98-9/30/00
------------ ---------------
<S> <C> <C>
Equity Fund - Retail Class (does not include
sales load)..................................... 16.19% 15.76%
Equity Fund - Institutional Class................ 16.34% 16.00%
Standard & Poor's 500 Index...................... 13.28% 13.87%
</TABLE>
First Choice U.S. Treasury Reserve Fund ("U.S. Treasury Fund")
Short-term interest rates increased dramatically over the past year. Short-
term rates rose in response to tightening by the Federal Reserve. The U.S.
Treasury Reserve Fund was managed to take best advantage of the rising inter-
est rates.
<TABLE>
<CAPTION>
Seven Day Yield
as of 9/30/00
---------------
<S> <C>
U.S. Treasury Reserve Fund - Institutional Class................ 5.66%
U.S. Treasury Reserve Fund - Service Class...................... 5.41%
iMoneyNet 100% Treasury Fund Average............................ 5.53%
</TABLE>
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First Choice Funds Trust
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2
First Choice Cash Reserve Fund ("Cash Reserve Fund")
The Cash Reserve Fund also benefited from rising short-term interest rates.
The Cash Reserve Fund was managed to find attractive yields from a variety of
short-term securities.
<TABLE>
<CAPTION>
Seven Day Yield
as of 9/30/00
---------------
<S> <C>
Cash Reserve Fund - Institutional Class......................... 6.22%
iMoneyNet First Tier Institutional Average...................... 6.26%
Cash Reserve Fund - Service Class............................... 5.97%
iMoneyNet First Tier Retail Average............................. 5.90%
</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.
Daniel Ast, CFA
Senior Portfolio Manager
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 may be worth more or less than their original cost. Cer-
tain expenses were subsidized. If not subsidized the returns would have been
lower. An investment in the Funds is neither insured nor guaranteed by the
U.S. Government or the Federal Deposit Insurance Corporation. Yields may fluc-
tuate 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 this index. The S&P 500 Index has no
commissions 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. Investors cannot invest directly in the peer groups.
This material must be accompanied or preceded by a current prospectus.
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3
Note 1: These graphs compare the increase in value of a $10,000 investment in
the First Choice Equity Fund with the performance of the Standard & Poor's 500
Index. Unlike a mutual fund, an unmanaged index assumes no transaction costs,
taxes, management fees or other expenses.
Note 2: Retail Class shares reflect the impact of sales charges on purchases.
The maximum sales charge for the period indicated was 4.50%.
<TABLE>
<CAPTION>
Total Return
Annualized Total Return
Since Inception Year Ended
6/02/98-9/30/00 9/30/00
--------------- ------------
<S> <C> <C>
Retail Class.................................. 13.51%* 10.93%*
Retail Class.................................. 15.76% 16.19%
Institutional Class........................... 16.00% 16.34%
</TABLE>
-----------------
*includes sales load.
Past performance is not predictive of future performance.
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First Choice Funds Trust
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4
U.S. Treasury Reserve Fund
Schedule of Portfolio Investments -- September 30, 2000
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
----------- ------------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS - 99.8%
U.S. Treasury Bills (A) - 78.6%
$ 1,599,000 6.10%, 10/05/2000.................................... $ 1,597,946
2,000,000 6.22%, 10/12/2000.................................... 1,996,281
8,896,000 6.23%, 11/09/2000.................................... 8,838,326
6,345,000 6.21%, 11/24/2000.................................... 6,287,559
9,507,000 6.31%, 11/30/2000.................................... 9,409,949
4,930,000 6.14%, 12/14/2000.................................... 4,869,512
2,310,000 6.15%, 12/21/2000.................................... 2,278,954
2,650,000 6.20%, 12/28/2000.................................... 2,610,971
2,815,000 6.22%, 01/18/2001.................................... 2,763,690
------------
40,653,188
------------
U.S. Treasury Notes - 21.2%
5,000,000 4.50%, 01/31/2001.................................... 4,968,750
6,000,000 4.63%, 12/31/2000.................................... 5,972,759
------------
10,941,509
------------
Total U.S. Government Obligations................................. 51,594,697
------------
(Cost $51,594,697)
Total Investments - 99.8%......................................... 51,594,697
(Cost $51,594,697)*
Net Other Assets and Liabilities - 0.2%........................... 116,113
------------
Total Net Assets - 100.0%......................................... $ 51,710,810
============
</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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5
Cash Reserve Fund
Schedule of Portfolio Investments -- September 30, 2000
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
------------ ------------
<C> <S> <C>
COMMERCIAL PAPER (A) - 72.4%
Automobile Financing - 5.8%
$ 4,750,000 General Motors Acceptance Corp. 6.76%,
10/11/2000........................................ $ 4,741,358
------------
Banks - 18.1%
3,100,000 Bank of America Corp. 6.77%, 1/08/2001............ 3,044,417
3,160,000 Grand Funding Corp. 6.65%, 11/02/2000............. 3,141,742
4,413,000 Barton Capital Corp. 6.64%, 10/13/2000............ 4,403,409
4,147,000 Variable Funding (First Union National Bank)
6.64%, 11/02/2000................................. 4,123,076
------------
14,712,644
------------
Business Finance and Leasing - 16.9%
4,600,000 General Electric
Capital Corp.
6.77%, 02/07/2001................................. 4,493,023
4,850,000 IBM Credit Corp. 6.65%, 10/26/2000................ 4,828,175
4,600,000 CIT Group, Inc.
6.73%, 01/09/2001................................. 4,517,072
------------
13,838,270
------------
Foreign Banks - 10.3%
4,500,000 Svenska Handelsbanken, Inc.
6.63%, 10/10/2000................................. 4,492,688
4,000,000 UBS Finance (DE) 6.71%, 01/03/2001................ 3,932,320
------------
8,425,008
------------
</TABLE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
------------ ------------
<C> <S> <C>
Personal Finance - 5.8%
$ 4,750,000 American General Finance Corp.
6.75%, 10/12/2000................................... $ 4,740,508
------------
Security Brokers and Dealers - 9.6%
4,000,000 Bear Stearns Co., Inc. 6.80%, 01/10/2001............ 3,926,607
4,000,000 Merrill Lynch & Co. 6.74%, 01/10/2001............... 3,927,055
------------
7,853,662
------------
Telecommunications - 5.9%
4,850,000 Lucent Technologies, Inc.
6.63%, 10/25/2000................................... 4,829,080
------------
Total Commercial Paper.............................. 59,140,530
------------
(Cost $59,140,530)
BANKER'S ACCEPTANCE - 6.7%
5,500,000 Bank of New York 6.43%, 10/10/2000.................. 5,491,544
------------
Total Banker's Acceptance........................... 5,491,544
------------
(Cost $5,491,544)
VARIABLE RATE NOTES - 14.7%
4,000,000 Deutsche Bank
6.74%, 08/21/2001................................... 4,002,854
4,000,000 Bank One Corp.
6.83%, 01/26/2001................................... 4,000,666
4,000,000 First Union National Bank
6.72%, 05/04/2001................................... 4,001,459
------------
Total Variable Rate Notes........................... 12,004,979
------------
(Cost $12,004,979)
</TABLE>
Please see the accompanying notes to financial statements.
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First Choice Funds Trust
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6
Cash Reserve Fund
Schedule of Portfolio Investments -- September 30, 2000
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
------------ ------------
<C> <S> <C>
YANKEE CERTIFICATES OF DEPOSIT
AND EURO TIME DEPOSITS - 6.6%
$ 4,500,000 Societe Generale N.Y. Notes
6.75%, 01/16/2001.................................. $ 4,500,650
878,818 State Street Euro Time Deposit
6.30%, 10/02/2000.................................. 878,818
------------
Total of Deposits.................................. 5,379,468
------------
(Cost $5,379,468)
Total Investments - 100.4%....................................... 82,016,521
(Cost $82,016,521)*
Net Other Assets and Liabilities - (0.4%) ....................... (292,230)
------------
Total Net Assets - 100.0%........................................ $ 81,724,291
============
</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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7
Equity Fund
Schedule of Portfolio Investments -- September 30, 2000
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- ------------
<C> <S> <C> <C> <C>
Financial/Banking - 5.6%
8,500 Bank of America Corp. .. $ 445,187
8,700 FleetBoston Financial
Corp. .................. 339,300
9,500 Wells Fargo & Co. ...... 436,406
------------
1,220,893
------------
Financial/Miscellaneous - 3.7%
5,700 American Express Co. ... 346,275
12,000 MBNA Corp. ............. 462,000
------------
808,275
------------
Food - 1.4%
2,500 Bestfoods............... 181,875
6,000 ConAgra Foods, Inc. .... 120,375
------------
302,250
------------
Household/Personal Care - 2.0%
9,000 Colgate-Palmolive Co. .. 424,800
------------
Insurance - 3.3%
7,500 American International
Group, Inc. ............ 717,656
------------
Investment Bank/Brokerage - 5.7%
9,000 Merrill Lynch & Co.,
Inc. ................... 594,000
7,000 Morgan Stanley Dean
Witter & Co. ........... 640,063
------------
1,234,063
------------
Manufactured Goods - 3.3%
10,000 Tyco International,
Ltd. ................... 518,750
3,000 United Technologies
Corp. .................. 207,750
------------
726,500
------------
Office Equipment - 1.4%
20,000 Xerox Corp. ............ 301,250
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- ------------
<C> <S> <C> <C> <C>
COMMON STOCKS - 99.1%
Automotive - 1.6%
13,985 Ford Motor Co. ......... $ 353,995
------------
Beverage - Soft Drinks - 2.2%
4,000 Coca-Cola Co. .......... 220,500
5,500 PepsiCo, Inc. .......... 253,000
------------
473,500
------------
Chemicals - 1.0%
5,000 du Pont (E.I.) de
Nemours and Co. ........ 207,187
------------
Computer Hardware & Systems - 8.8%
9,300 Dell Computer Corp.*.... 286,556
4,400 EMC Corp.*.............. 436,150
5,500 Hewlett-Packard Co. .... 533,500
5,800 International Business
Machines Corp. ......... 652,500
------------
1,908,706
------------
Computer Software & Services - 7.7%
6,500 BMC Software, Inc.*..... 124,313
15,700 Compuware Corp.*........ 131,487
7,500 Microsoft Corp.*........ 452,344
12,100 Oracle Corp.*........... 952,875
------------
1,661,019
------------
Electrical Equipment - 10.0%
2,097 Agilent Technologies,
Inc.*................... 102,622
8,000 Cisco Systems, Inc.*.... 442,000
20,100 General Electric Co. ... 1,159,519
10,200 Solectron Corp.*........ 470,475
------------
2,174,616
------------
Entertainment/Leisure - 4.2%
10,000 The Walt Disney Co. .... 382,500
9,014 Viacom, Inc., Class B*.. 527,319
------------
909,819
------------
</TABLE>
Please see the accompanying notes to financial statements.
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8
Equity Fund
Schedule of Portfolio Investments -- September 30, 2000 (continued)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- ------------
<C> <S> <C>
Oil - 4.9%
7,100 Exxon Mobile Corp. .................................... $ 632,788
3,800 Royal Dutch Petroleum Co.-NY Shs. ..................... 227,763
4,000 Texaco, Inc. .......................................... 210,000
------------
1,070,551
------------
Pharmaceuticals - 12.0%
5,600 Abbott Laboratories.................................... 266,350
4,900 Bristol-Myers Squibb Co. .............................. 279,912
4,000 Johnson & Johnson...................................... 375,750
4,000 Lilly (Eli) & Co. ..................................... 324,500
5,500 Merck & Co., Inc. ..................................... 409,406
21,250 Pfizer, Inc. .......................................... 954,922
------------
2,610,840
------------
Restaurants - .4%
3,000 McDonald's Corp. ...................................... 90,562
------------
Retail Stores - 4.2%
9,000 Home Depot, Inc. ...................................... 477,563
9,000 Wal-Mart Stores, Inc. ................................. 433,125
------------
910,688
------------
Semiconductors - 6.3%
18,000 Intel Corp. ........................................... 748,125
13,000 Texas Instruments, Inc. ............................... 613,438
------------
1,361,563
------------
Telecommunications - 7.1%
7,000 AT&T Corp.............................................. 205,625
3,600 BellSouth Corp......................................... 144,900
6,200 SBC Communications, Inc................................ 310,000
7,200 Tellabs, Inc.*......................................... 343,800
4,880 Verizon Communications................................. 236,375
10,000 WorldCom, Inc.*........................................ 303,750
------------
1,544,450
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- ------------
<C> <S> <C>
Utilities-Electric - 2.3%
4,000 Duke Energy Corp..................................... $ 343,000
4,600 Southern Co.......................................... 149,213
------------
492,213
------------
Total Common Stocks.................................. 21,505,396
------------
(Cost $17,149,089)
<CAPTION>
Principal
Amount
---------
<C> <S> <C>
INVESTMENT COMPANY (A) - 0.8%
$175,099 State Street Global Advisers Money Market Fund,
6.29%................................................ 175,099
------------
Total Investment Company............................. 175,099
------------
(Cost $175,099)
Total Investments - 99.9%....................................... 21,680,495
(Cost $17,324,188)**
Net Other Assets and Liabilities - 0.1%......................... 12,213
------------
Total Net Assets - 100.0%....................................... $ 21,692,708
============
</TABLE>
-----------------
* Non-income producing security.
** Aggregate cost for Federal tax purposes.
(A) The rate shown represents the seven day yield at September 30, 2000.
Please see the accompanying notes to financial statements.
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9
Statements of Assets and Liabilities -- September 30, 2000
<TABLE>
<CAPTION>
U.S. Treasury Cash Equity
Reserve Fund Reserve Fund Fund
------------- ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments at value (Amortized cost
$51,594,697, $82,016,521 and cost
$17,324,188, respectively) (Note
2).................................. $ 51,594,697 $ 82,016,521 $ 21,680,495
Cash................................. 2,651 -- --
Receivable for investment securities
matured/sold........................ 5,135,000 -- 15,074
Dividends and interest receivable.... 185,667 155,032 17,507
Receivable from Advisor (Note 4) .... 23,204 35,534 1,208
Unamortized organization costs (Note
2).................................. 12,758 16,393 7,508
Prepaid expenses..................... 5,840 10,280 2,689
------------ ------------ ------------
Total Assets........................ 56,959,817 82,233,760 21,724,481
------------ ------------ ------------
LIABILITIES:
Payable for investment securities
purchased........................... 4,968,750 -- --
Dividends payable.................... 225,809 447,614 89
Investment advisory fee payable (Note
4) ................................. 4,223 7,505 --
Administration and accounting fee
payable (Note 4).................... 4,655 7,230 5,122
Transfer agent fee payable (Note 4).. 5,183 7,843 2,312
Trustee fee payable (Note 4)......... 138 -- --
Distribution fee payable (Note 4).... 945 14 38
Accrued expenses and other payables.. 39,304 39,263 24,212
------------ ------------ ------------
Total Liabilities................... 5,249,007 509,469 31,773
------------ ------------ ------------
NET ASSETS............................ $ 51,710,810 $ 81,724,291 $ 21,692,708
============ ============ ============
NET ASSETS consist of:
Par value (Note 3)................... $ 51,712 $ 81,731 $ 1,675
Additional paid-in capital (Note 3).. 51,661,419 81,649,448 17,081,062
Undistributed net investment income.. 2 -- 2,906
Accumulated net realized gain (loss)
on investments sold................. (2,323) (6,888) 250,758
Unrealized appreciation on
investments......................... -- -- 4,356,307
------------ ------------ ------------
TOTAL NET ASSETS...................... $ 51,710,810 $ 81,724,291 $ 21,692,708
============ ============ ============
Net Assets
Service Class........................ $ 5,912,480 $ 71,398 $ N/A
Retail Class......................... N/A N/A 179,351
Institutional Class.................. 45,798,320 81,652,883 21,513,357
Investment Class..................... 10 10 N/A
------------ ------------ ------------
Total............................... $ 51,710,810 $ 81,724,291 $ 21,692,708
============ ============ ============
Shares Outstanding
Service Class........................ 5,910,979 71,402 N/A
Retail Class......................... N/A N/A 13,854
Institutional Class.................. 45,801,184 81,659,766 1,661,451
Investment Class..................... 10 10 N/A
------------ ------------ ------------
Total............................... 51,712,173 81,731,178 1,675,305
============ ============ ============
Net Asset Value, offering and
redemption price per share
Service Class........................ $ 1.00 $ 1.00 N/A
============ ============ ============
Retail Class(a)...................... N/A N/A $ 12.95
============ ============ ============
Institutional Class.................. $ 1.00 $ 1.00 $ 12.95
============ ============ ============
Investment Class(b).................. $ 1.00 $ 1.00 N/A
============ ============ ============
</TABLE>
-----------------------------------------------
(a) Maximum offering price per share ($12.95 / 0.955 = $13.56).
(b) The initial shares of Investment Class were sold on April 20, 1998. As
of September 30, 2000, no additional shares have been issued and no in-
vestment activity had occurred.
Please see the accompanying notes to financial statements.
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10
Statements of Operations -- For the Year Ended September 30, 2000
<TABLE>
<CAPTION>
U. S. Treasury Cash
Reserve Fund Reserve Fund Equity Fund
-------------- ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income (Note 2).............. $ 3,294,768 $ 5,522,066 $ 15,190
Dividend income (Note 2).............. -- -- 227,189
----------- ----------- -----------
Total Investment Income............... 3,294,768 5,522,066 242,379
EXPENSES:
Investment advisory fees (Note 4)..... 179,305 271,411 214,770
Administration fees (Note 4).......... 89,652 135,706 32,713
Distribution fees (Note 4) (Service
and Retail Class).................... 15,180 207 345
Accounting fees (Note 4).............. 35,308 35,594 38,145
Custodian fees........................ 16,079 29,808 5,449
Legal and Audit fees.................. 70,098 98,195 29,723
Amortization of organization costs
(Note 2)............................. 12,795 12,795 2,818
Trustees' fees and expenses (Note 4).. 16,779 24,701 5,873
Transfer agent fees (Note 4).......... 24,372 35,428 13,263
Registration and filing fees.......... 14,865 15,021 23,298
Other expenses........................ 15,999 19,733 8,905
----------- ----------- -----------
Total Gross Expenses.................. 490,432 678,599 375,302
Less: Adviser fee waiver and expense
reimbursements (Note 4)............. (155,027) (213,450) (215,978)
Administration fee waiver (Note
4)................................ (59,768) (83,746) (21,475)
----------- ----------- -----------
Total Expenses...................... 275,637 381,403 137,849
Less: Custody earnings credits (Note
2).................................. (302) (819) (30)
----------- ----------- -----------
Net Expenses........................ 275,335 380,584 137,819
----------- ----------- -----------
NET INVESTMENT INCOME.................. 3,019,433 5,141,482 104,560
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS (Note 2):
Net realized gain (loss) on
investments sold..................... (249) (3,236) 250,892
Net change in unrealized appreciation
on investments....................... -- -- 2,639,593
----------- ----------- -----------
Net gain (loss) on investments........ (249) (3,236) 2,890,485
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS............. $ 3,019,184 $ 5,138,246 $ 2,995,045
=========== =========== ===========
</TABLE>
Please see the accompanying notes to financial statements.
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11
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
U.S. Treasury Reserve Fund
-------------------------------------
Year Ended Year Ended
September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
NET ASSETS at beginning of year......... $ 70,798,831 $ 56,945,311
Increase in Net Assets
resulting from operations:
Net investment income.................. 3,019,433 2,710,669
Net realized gain (loss) on investments
sold.................................. (249) 348
------------- -------------
Net increase in net assets
resulting from operations............. 3,019,184 2,711,017
------------- -------------
Distributions to shareholders from:
Net Investment Income:
Service Class.......................... (293,296) (313,350)
Institutional Class.................... (2,726,137) (2,397,317)
------------- -------------
Total distributions to shareholders... (3,019,433) (2,710,667)
------------- -------------
Net increase (decrease) from capital
share transactions..................... (19,087,772) 13,853,170
------------- -------------
Net increase (decrease) in net assets.. (19,088,021) 13,853,520
------------- -------------
NET ASSETS at end of year............... $ 51,710,810 $ 70,798,831
============= =============
Undistributed Net Investment Income..... $ 2 $ 2
============= =============
Capital Stock Dollar Amounts and
Share Activity (@ $1.00 per share):
Service Class
Net proceeds from sale of shares....... $ 68,905,209 $ 57,754,721
Issued to shareholders in reinvestment
of dividends.......................... 23,078 11,637
Cost of shares repurchased............. (69,214,259) (62,764,097)
------------- -------------
Net change resulting from share
transactions.......................... $ (285,972) $ (4,997,739)
============= =============
Institutional Class
Net proceeds from sale of shares....... $ 55,277,369 $ 105,677,402
Issued to shareholders in reinvestment
of dividends.......................... 112,411 100,182
Cost of shares repurchased............. (74,191,580) (86,926,675)
------------- -------------
Net change resulting from share
transactions.......................... $ (18,801,800) $ 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]
12
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Cash Reserve Fund
-------------------------------------
Year Ended Year Ended
September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
NET ASSETS at beginning of year......... $ 77,832,386 $ 146,121,473
Increase in Net Assets
resulting from operations:
Net investment income.................. 5,141,482 5,045,640
Net realized loss on investments sold.. (3,236) (2,091)
-------------- --------------
Net increase in net assets
resulting from operations............. 5,138,246 5,043,549
-------------- --------------
Distributions to shareholders from:
Net Investment Income:
Service Class.......................... (4,399) (20,653)
Institutional Class.................... (5,137,083) (5,024,987)
-------------- --------------
Total distributions to shareholders... (5,141,482) (5,045,640)
-------------- --------------
Net increase (decrease) from capital
share transactions: 3,895,141 (68,286,996)
-------------- --------------
Net increase (decrease) in net assets.. 3,891,905 (68,289,087)
-------------- --------------
NET ASSETS at end of year............... $ 81,724,291 $ 77,832,386
============== ==============
Undistributed Net Investment Income..... $ -- $ --
============== ==============
Capital Stock Dollar Amounts and
Share Activity (@ $1.00 per share):
Service Class..........................
Net proceeds from sale of shares....... $ 161,800 $ 56,203
Issued to shareholders in reinvestment
of dividends.......................... 4,194 20,402
Cost of shares repurchased............. (267,554) (391,697)
-------------- --------------
Net change resulting from share
transactions.......................... $ (101,560) $ (315,092)
============== ==============
Institutional Class....................
Net proceeds from sale of shares....... $ 306,161,948 $ 234,877,025
Issued to shareholders in reinvestment
of dividends.......................... 205,851 60,493
Cost of shares repurchased............. (302,371,100) (302,909,421)
-------------- --------------
Net change resulting from share
transactions.......................... $ 3,996,699 $ (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.
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<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
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13
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Equity Fund
-------------------------------------
Year Ended Year Ended
September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
NET ASSETS at beginning of year......... $ 18,327,945 $ 14,351,799
Increase in Net Assets resulting from
operations:
Net investment income.................. 104,560 165,472
Net realized gain on investments sold.. 250,892 1,446,764
Net change in unrealized appreciation
on investments........................ 2,639,593 2,455,506
------------ ------------
Net increase in net assets resulting
from operations....................... 2,995,045 4,067,742
------------ ------------
Distributions to shareholders from:
Net Investment Income:
Retail Class........................... (397) (687)
Institutional Class.................... (100,926) (179,970)
Realized Gains on Investments
Retail Class........................... (5,721) --
Institutional Class.................... (1,358,985) --
------------ ------------
Total distributions to shareholders... (1,466,029) (180,657)
------------ ------------
Net increase from capital share
transactions........................... 1,835,747 89,061
------------ ------------
Net increase in net assets............. 3,364,763 3,976,146
------------ ------------
NET ASSETS at end of year............... $ 21,692,708 $ 18,327,945
============ ============
Undistributed Net Investment Income
(Loss)................................. $ 2,906 $ (331)
============ ============
Capital Stock Dollar Activity:
Retail Class
Net proceeds from sale of shares....... $ 96,096 $ 7,617
Issued to shareholders in reinvestment
of dividends.......................... 6,421 238
Cost of shares repurchased............. -- (87,983)
------------ ------------
Net change resulting from share
transactions.......................... $ 102,517 $ (80,128)
============ ============
Institutional Class
Net proceeds from sale of shares....... $ 330,619 $ 80,000
Issued to shareholders in reinvestment
of dividends.......................... 1,452,611 1,055
Cost of shares repurchased............. (50,000) 88,134
------------ ------------
Net change resulting from share
transactions.......................... $ 1,733,230 $ 169,189
============ ============
Capital Stock Share Activity:
Retail Class
Shares sold............................ 6,931 679
Shares issued in reinvestment of
dividends............................. 538 20
Shares repurchased..................... -- (7,637)
------------ ------------
Net change resulting from share
transactions.......................... 7,469 (6,938)
============ ============
Institutional Class
Shares sold............................ 25,599 7,316
Shares issued in reinvestment of
dividends............................. 122,030 87
Shares repurchased..................... (3,749) 7,632
------------ ------------
Net change resulting from share
transactions.......................... 143,880 15,035
============ ============
</TABLE>
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>
U. S. Treasury Reserve Fund
-----------------------------------------------------------------------------------------------------
Year Ended September Year Ended September Year Ended Year Ended
30, 2000 30, 1999 September 30, 1998 September 30, 1997(a)
---------------------- ------------------------ ------------------------- -------------------------
Service Institutional Service Institutional Service Institutional Service Institutional
Class Class Class Class Class Class Class Class
------- ------------- ------- ------------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period.... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- -------- ------- -------- -------- -------- -------- -------
Income from Investment
Operations:
Net investment income.. 0.049 0.051 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........... 0.049 0.051 0.041 0.043 0.048 0.049 0.049 0.050
Less Distributions:
Dividends from net
investment income..... (0.049) (0.051) (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 $ 1.000 $ 1.000
======= ======== ======= ======== ======== ======== ======== =======
Total Return............ 4.99% 5.25% 4.13% 4.38% 4.88% 4.97% 5.04% 5.08%
Ratios/Supplemental
Data:
Net Assets, end of
period (000s).......... $ 5,913 $ 45,798 $ 6,198 $ 64,600 $ 11,196 $ 45,750 $ 73,581 $ 1,995
Ratios to average net
assets:
Net investment
income*............... 4.83% 5.08% 4.06% 4.31% 4.87% 4.91% 4.93%(c) 4.93%(c)
Operating expenses*.... 0.69% 0.44% 0.64% 0.39% 0.47% 0.43% 0.35%(c) 0.35%(c)
Operating expenses
excluding
reimbursement, waiver
and custody earnings
credits............... 1.05% 0.80% 0.97% 0.72% 0.82% 0.78% 1.36%(c) 0.86%(c)
Net investment income
excluding
reimbursements, waiver
and custody earnings
credits............... 5.19% 5.44% 3.73% 3.98% 4.52% 4.56% 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.
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>
Cash Reserve Fund
-----------------------------------------------------------------------------
Year Ended September Year Ended September Year Ended September
30, 2000 30, 1999 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.... 0.054 0.057 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............. 0.054 0.057 0.045 0.048 0.051 0.052
Less Distributions:
Dividends from net
investment income....... (0.054) (0.057) (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.............. 5.55% 5.82% 4.59% 4.86% 5.19% 5.29%
Ratios/Supplemental Data:
Net Assets, end of period
(000s)................... $ 71 $ 81,653 $ 172 $ 77,660 $ 487 $ 145,634
Ratios to average net
assets:
Net investment income*... 5.44% 5.69% 4.52% 4.77% 5.15% 5.20%
Operating expense(c)..... 0.67% 0.42% 0.66% 0.41% 0.49% 0.44%
Operating expenses
excluding reimbursement,
waiver and custody
earnings credits........ 1.00% 0.75% 0.96% 0.71% 0.78% 0.73%
Net investment income
excluding
reimbursements, waiver
and custody earnings
credits................. 5.77% 6.02% 4.22% 4.47% 4.86% 4.91%
<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.... 0.037 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 expense(c)..... 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]
16
Financial Highlights -- For a share outstanding throughout the period
<TABLE>
<CAPTION>
Equity Fund
--------------------------------------------------------------------------
Year Ended Year Ended Period Ended
September 30, 2000 September 30, 1999 September 30, 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.. 0.03 0.06 0.08 0.10 -- 0.01
Net realized and
unrealized gain (loss)
on investments........ 1.83 1.82 2.57 2.57 (0.54) (0.54)
------- -------- ------- -------- ------- --------
Total from Investment
Operations........... 1.86 1.88 2.65 2.67 (0.54) (0.53)
Less Distributions:
Dividends from net
investment income..... (0.03) (0.06) (0.09) (0.11) -- --
Dividends from realized
gains on investments.. (0.90) (0.90) -- -- -- --
------- -------- ------- -------- ------- --------
Total distributions... (0.93) (0.96) (0.09) (0.11) -- --
Net Asset Value, end of
period................. $ 12.95 $ 12.95 $ 12.02 $ 12.03 $ 9.46 $ 9.47
======= ======== ======= ======== ======= ========
Total Return............ 16.19% 16.34% 27.98% 28.29% (5.40)%(c) (5.30)%(c)
Ratios/Supplemental
Data:
Net Assets, end of
period (000s).......... $ 179 $ 21,514 $ 77 $ 18,251 $ 126 $ 14,226
Ratios to average net
assets:
Net investment
income*............... 0.24% 0.49% 0.75% 0.94% 0.05%(b) 0.30%(b)
Operating expenses*.... 0.89% 0.64% 0.93% 0.74% 1.50%(b) 1.25%(b)
Operating expenses
excluding
reimbursement, waiver,
and custody earnings
credits............... 2.00% 1.75% 2.03% 1.84% 2.69%(b) 2.44%(b)
Net investment income
excluding
reimbursements, waiver
and custody earnings
credits............... (0.87)% (0.62)% (0.35)% (0.16)% (1.13)%(b) (0.88)%(b)
Portfolio Turnover
Rate.................. 12% 12% 110% 110% 47% 47%
</TABLE>
-----------------------------------------------
* During the period 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 ernings 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]
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17
Notes to Financial Statements -- September 30, 2000
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").
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, in accordance with generally accepted accounting princi-
ples, requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial state-
ments and the reported amounts of income and expenses for the period. Actual
results could differ from those estimates.
Securities Valuation: U.S. Treasury Reserve Fund and Cash Reserve Fund: Money
market securities are valued utilizing the amortized cost method permitted by
Rule 2a-7 under the 1940 Act. Under the amortized cost method, a security is
initially valued at cost. Each day thereafter, the security value is adjusted
on a constant basis for any discount or premium until maturity. Equity Fund:
Short-term debt instruments with less than 60 days to maturity are valued at
amortized cost. Investments in equity securities that are traded on a recog-
nized 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 trade date, (the date the security is purchased or sold). In-
terest income is recorded on the accrual basis and includes, where applicable,
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 specific iden-
tification 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 and pays dividends from net investment
income, if any, quarterly. Distributions of 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 sufficient to relieve it from
all, or substantially all, Federal income and excise taxes.
-------------------------------------------------------------------------------
<PAGE>
First Choice Funds Trust
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[LOGO OF FIRST CHOICE FUNDS]
18
Notes to Financial Statements -- September 30, 2000 (continued)
Organization Costs: Costs incurred by the Trust in connection with its organi-
zation have been deferred and are being amortized using the straight-line
method over a period of five years from the commencement of Fund operations.
In the event that any of the initial shares of the Funds are redeemed during
the amortization period by any holder thereof, the redemption proceeds will be
reduced by any unamortized organizational costs of the Fund in the same pro-
portion as the number of said shares of the Fund being redeemed bears to the
number of initial shares of that Fund that are outstanding at the time of re-
demption.
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, income and expenses are allocated to their respective classes
based on relative daily 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, 2000, custodian
fees were reduced by $302, $819 and $30 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 September 30, 2000, First American Trust Company, an affiliate of First
American, was the record owner of 85% of the U.S. Treasury Reserve Fund, 96%
of the Cash Reserve Fund and 97% 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. For the year ended September 30, 2000, PFPC waived fees of 0.10% of
average daily net assets. 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. Trea-
sury 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.
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<PAGE>
First Choice Funds Trust
[LOGO OF FIRST CHOICE FUNDS]
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19
Notes to Financial Statements -- September 30, 2000 (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 September 30, 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 and expenses reimbursed to assist the Funds in
maintaining competitive expense or performance ratios. As of September 30,
2000, the following Expense Caps were in place: U.S. Treasury Reserve Fund and
Cash Reserve Fund-Service Class 0.70%, Institutional Class 0.45%; Equity Fund-
Retail Class 1.50%, Institutional Class 1.25%. Information regarding these
transactions is as follows for the year ended September 30, 2000:
<TABLE>
<CAPTION>
U.S. Treasury Cash Reserve Equity
Reserve Fund Fund Fund
------------- ------------ ---------
<S> <C> <C> <C>
First American:
Advisory fees waived and expenses
reimbursed.............................. $ 155,027 $ 213,450 $ 215,978
PFPC Inc.:
Administrative fees waived............... 59,768 83,746 21,475
--------- --------- ---------
$ 214,795 $ 297,196 $ 237,453
========= ========= =========
</TABLE>
Pacific American Securities LLC, an affiliate to First American, provided bro-
kerage services to the Equity Fund. For the year ended September 30, 2000, the
Equity Fund incurred $3,998 in brokerage commissions with Pacific American Se-
curities LLC.
5. SECURITY TRANSACTIONS
For the year ended September 30, 2000, 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..... 3,194,516 2,610,637
</TABLE>
At September 30, 2000, 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.... $ 5,852,639
Depreciation.... (1,496,332)
------------
Net............. $ 4,356,307
============
</TABLE>
6. CAPITAL LOSS CARRY FORWARD
As of September 30, 2000, The Cash Reserve Portfolio had capital loss
carryforwards which expire as follows: $286 in 2005, $1,171 in 2006 and $2,129
in 2007.
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<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, 2000, the results of
each of their operations for the year then ended, and the changes in each of
their net assets and the financial highlights for each of the periods present-
ed, in conformity with accounting principles generally accepted in the United
States of America. These financial statements and financial highlights (here-
after referred to as "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 fi-
nancial statements in accordance with auditing standards generally accepted in
the United States of America, which require 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, evi-
dence supporting the amounts and disclosures in the financial statements, as-
sessing the accounting principles used and significant estimates made by man-
agement, and evaluating the overall financial statement presentation. We be-
lieve that our audits, which included confirmation of securities at
September 30, 2000 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion expressed above.
PricewaterhouseCoopers LLP
Philadelphia, PA
November 20, 2000
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First Choice Funds Trust
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21
FIRST CHOICE EQUITY FUND--TAX INFORMATION (unaudited)
Pursuant to Section 852 of the Internal Revenue Code, the Fund designated
$67,054 as capital gain dividends paid during its year ended September 30,
2000.
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First Choice Funds Trust
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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
State Street Bank and 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
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, Pennsylvania 19103
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