------------
MONEY MARKET
------------
INSTITUTIONAL MONEY MARKET FUND
ANNUAL REPORT
OCTOBER 31, 1998
(LOGO) FIRSTAR FUNDS
<PAGE>
-----------------------------------------
NOTICE TO INVESTORS
- Shares of Firstar Funds:
- ARE NOT INSURED BY THE
FDIC, the US Government or any
other governmental agency;
- are not bank deposits or
obligations of or guaranteed
by Firstar Bank, its parent
company or its affiliates;
- are subject to investment
risks, including possible
loss of principal; and
- are offered by B.C. Ziegler
and Company, member NASD,
SIPC, and an independent
third-party distributor.
- Firstar Bank affiliates serve as
investment adviser, custodian,
transfer agent, administrator,
and accounting services agent
and receive compensation for
such services as disclosed in
the current prospectus.
- There can be no assurance that
the money market fund will be
able to maintain a stable net
asset value of $1.00 per share.
-----------------------------------------
TABLE OF CONTENTS
Page(s)
SHAREOWNER LETTER.........................................................1
FIRSTAR INSTITUTIONAL MONEY MARKET FUND YIELD COMPARISONS.................2
LOOKING AHEAD - THE FORECAST..............................................2
STATEMENT OF ASSETS AND LIABILITIES.......................................3
STATEMENT OF OPERATIONS...................................................4
STATEMENT OF CHANGES IN NET ASSETS........................................4
FINANCIAL HIGHLIGHTS......................................................5
SCHEDULE OF INVESTMENTS.................................................6-8
NOTES TO THEFINANCIAL STATEMENTS..........................................9
REPORT OF INDEPENDENT ACCOUNTANTS........................................10
<PAGE>
(LOGO) FIRSTAR FUNDS
December 1998
DEAR SHAREOWNER:
INVESTMENT REVIEW
Money market funds generated strong total returns over the past 12 months and
continue to offer attractive inflation-adjusted yields. Short-term interest
rates were stable during much of the year but did succumb to volatility in the
financial markets over the past few months. Money market rates fell during
September and October as a large number of uneasy investors sought the safety of
money market funds. Additionally, the Federal Reserve lowered the Federal Funds
rate by 0.25% on September 29th and again on October 15th. Overall, short-term
yields fell from approximately 5.3% in October of 1997 to 4.5% in October of
1998. During this time period, Firstar Institutional Money Market Fund was
managed with a slightly longer average maturity versus its benchmark, while
offering principal stability and superior credit quality.
Firstar Institutional Money Market Fund is managed with quality and safety of
principal as our primary goals. All securities purchased by the Fund must meet
our own internal high standards for representing minimal credit risk as well as
the strict guidelines set by the Securities and Exchange Commission ("SEC"). Our
credit research team closely monitors all investments to ensure quality
standards are met.
- --------------------------------------------------------------------------------
7-DAY YIELD<F1>
- --------------------------------------------------------------------------------
PERIOD ENDED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
CURRENT EFFECTIVE
INSTITUTIONAL MONEY MARKET FUND 5.08% 5.21%
- --------------------------------------------------------------------------------
<F1>After fee waivers. Had fees not been waived, the current and effective
yields would have been 4.79% and 4.92%, respectively. Reflects past performance;
yields will vary. An investment in Firstar Institutional Money Market Fund is
neither insured nor guaranteed by the U.S. Government nor is there any assurance
the Fund will be able to maintain a stable net asset value of $1.00 per share.
Current yield refers to income earned by a fund's investments over a 7-day
period. It is then annualized and stated as a percentage of the investment.
Effective yield is the same as current yield except that it assumes the income
earned by an investment in a fund will be reinvested.
<PAGE>
(LOGO) FIRSTAR FUNDS
- --------------------------------------------------------------------------------
YIELD COMPARISONS<F1>
- --------------------------------------------------------------------------------
AVERAGE
MONTHLY FIRSTAR INSTITUTIONAL IBC'S INSTITUTIONAL
RATES MONEY MARKET FUND AVERAGE(TM) / ALL TAXABLE
1998
October 5.14% 4.88%
- -----------------------------------------------------------------------
September 5.26% 5.15%
- -----------------------------------------------------------------------
August 5.29% 5.18%
- -----------------------------------------------------------------------
July 5.30% 5.19%
- -----------------------------------------------------------------------
June 5.29% 5.18%
- -----------------------------------------------------------------------
May 5.27% 5.17%
- -----------------------------------------------------------------------
April 5.26% 5.19%
- -----------------------------------------------------------------------
March 5.28% 5.21%
- -----------------------------------------------------------------------
February 5.30% 5.22%
- -----------------------------------------------------------------------
January 5.40% 5.27%
- -----------------------------------------------------------------------
1997
December 5.46% 5.29%
- -----------------------------------------------------------------------
November 5.34% 5.24%
- -----------------------------------------------------------------------
We compare the Firstar Institutional Money Market Fund to the IBC's
Institutional Average/TM/All Taxable, which is a composite of professionally
managed money market investment funds with similar objectives.
<F1>After fee waivers. Had fees not been waived, performance would have been
reduced. Reflects past performance; yields will vary. An investment in Firstar
Institutional Money Market Fund is neither insured nor guaranteed by the U.S.
Government nor is there any assurance the Fund will be able to maintain a stable
net asset value of $1.00 per share.
LOOKING AHEAD - THE FORECAST
Looking ahead, we expect continued above-average market volatility in both the
stock and bond markets, slower economic growth, and continued low levels of
inflation for 1999. We expect short-term money market rates to continue to fall
and anticipate maintaining an average maturity in the Firstar Institutional
Money Market Fund comparable to, or slightly longer than, its benchmark. As
always, our goal is to maintain the high credit quality of the Fund while
closely monitoring corporate credit quality.
We continue to pride ourselves on meeting three important objectives for our
money market shareowners: PRESERVATION OF PRINCIPAL, LIQUIDITY AND COMPETITIVE
INVESTMENT INCOME. We believe these principles, combined with a disciplined
approach to quality, continue to be appropriate for our money market investors.
We appreciate your continued confidence in the Firstar Institutional Money
Market Fund and look forward to working with you in the future.
Jane T. Keelan
Carl J. Smith
Margaret Radske
Portfolio Managers
Firstar Investment Research & Management Company, LLC (FIRMCO)
<PAGE>
(LOGO) FIRSTAR FUNDS
INSTITUTIONAL MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
OCTOBER 31, 1998
ASSETS:
Investments, at amortized cost $1,628,569
Interest receivable 1,589
Other 18
----------
Total Assets 1,630,176
----------
LIABILITIES:
Dividends payable 5,678
Payable to affiliates 466
Accrued expenses and other liabilities 62
----------
Total Liabilities 6,206
----------
NET ASSETS $1,623,970
==========
CAPITAL STOCK, $.0001 par value
Authorized 5,000,000
Issued and outstanding 1,623,970
NET ASSET VALUE,
REDEMPTION PRICE AND
OFFERING PRICE PER SHARE $1.00
=====
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTAR FUNDS
INSTITUTIONAL MONEY MARKET FUND
STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS)
YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME:
Interest income $69,037
----------
EXPENSES:
Investment advisory fees 6,109
Administration fees 1,333
Custody fees 213
Federal and state registration fees 58
Shareowner servicing and accounting costs 88
Professional fees 31
Reports to shareowners 14
Directors' fees and expenses 7
Other 25
----------
Total expenses before waiver 7,878
Less: Waiver of expenses (3,602)
----------
Net Expenses 4,276
----------
NET INVESTMENT INCOME $64,761
==========
STATEMENT OF CHANGES IN NET ASSETS
(AMOUNTS IN THOUSANDS)
Year ended October 31,
1998 1997
----- -----
OPERATIONS:
Net investment income $64,761 $50,238
---------- ----------
Net increase in net assets resulting
from operations 64,761 50,238
---------- ----------
CAPITAL SHARE
TRANSACTIONS:
Shares sold 3,302,686 2,907,787
Shares issued to owners in
reinvestment of dividends 5,039 6,088
Shares redeemed (2,885,096) (2,462,585)
---------- ----------
Net increase 422,629 451,290
---------- ----------
DIVIDENDS PAID FROM:
Net investment income (64,761) (50,238)
---------- ----------
TOTAL INCREASE
IN NET ASSETS 422,629 451,290
NET ASSETS:
Beginning of year 1,201,341 750,051
---------- ----------
End of year $1,623,970 $1,201,341
========== ==========
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTAR FUNDS
INSTITUTIONAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year ended October 31,
-------------------------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<C> <C> <C> <C> <C>
Per Share Data:
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income 0.05 0.05 0.05 0.06 0.04
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.05 0.05 0.05 0.06 0.04
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income (0.05) (0.05) (0.05) (0.06) (0.04)
---------- ---------- ---------- ---------- ----------
Total distributions (0.05) (0.05) (0.05) (0.06) (0.04)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
========== ========== ========== ========== ==========
Total Return 5.41% 5.38% 5.32% 5.77% 3.65%
Supplemental data and ratios:
Net assets, in thousands,
end of period $1,623,970 $1,201,341 $750,051 $716,566 $754,636
Ratio of net expenses to average
net assets <F1> 0.35% 0.35% 0.35% 0.35% 0.37%
Ratio of net investment income
to average net assets <F2> 5.30% 5.23% 5.19% 5.63% 3.64%
</TABLE>
<F1> Without fees waived, ratios of net expenses to average net assets for the
fiscal years ended October 31, 1998, 1997, 1996, 1995 and 1994 would have
been 0.64%, 0.66%, 0.64%, 0.69% and 0.85%, respectively.
<F2> Without fees waived, ratios of net investment income to average net assets
for the fiscal years ended October 31, 1998, 1997, 1996, 1995 and 1994
would have been 5.01%, 4.92%, 4.90%, 5.29% and 3.16%, respectively.
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTAR FUNDS
INSTITUTIONAL MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
Principal Amortized
Amount Cost
(in thousands) (in thousands)
- --------------- --------------
COMMERCIAL PAPER 86.4%
AGRICULTURAL PRODUCTS 1.3%
Golden Peanut Company,
$ 21,000 4.93%, 2/23/99 $ 20,671
----------
ASSET BACKED 12.7%
Ciesco L.P.:
15,000 5.43%, 11/23/98 14,950
15,000 5.10%, 1/19/99 14,832
10,000 5.10%, 1/21/99 9,885
Corporate Asset Funding Co., Inc.:
13,000 5.50%, 11/04/98 12,994
15,000 5.50%, 11/09/98 14,982
15,000 5.45%, 11/17/98 14,964
15,000 5.35%, 12/16/98 14,900
9,000 5.18%, 1/07/99 8,913
CXC, Inc.:
15,000 5.51%, 11/20/98 14,956
14,000 5.45%, 12/03/98 13,932
15,000 5.27%, 1/11/99 14,844
7,500 5.20%, 1/13/99 7,421
15,000 5.15%, 1/25/99 14,818
New Center Asset Trust:
19,000 5.72%, 11/02/98 18,997
15,000 5.06%, 2/08/99 14,791
----------
206,179
----------
AUTO & TRUCKS 4.6%
Ford Credit Europe PLC:
15,000 5.12%, 1/08/99 14,855
15,000 5.10%, 1/20/99 14,830
15,000 5.05%, 1/21/99 14,830
15,000 5.03%, 2/02/99 14,805
General Motors Acceptance Corporation,
15,000 5.08%, 11/30/98 14,939
----------
74,259
----------
BANKING - DOMESTIC 4.0%
Barclays US Funding Corporation:
15,000 5.37%, 11/02/98 14,998
35,000 5.27%, 11/04/98 34,984
15,000 5.16%, 12/11/98 14,914
----------
64,896
----------
BANKING - FOREIGN 5.2%
Deutsche Bank Financial, Inc.,
15,000 5.25%, 11/06/98 14,989
Dresdner US Finance, Inc.:
15,000 5.21%, 1/11/99 14,846
15,000 5.23%, 2/19/99 14,760
Principal Amortized
Amount Cost
(in thousands) (in thousands)
- --------------- --------------
BANKING - FOREIGN 5.2% (CONT.)
UBS Finance (Delaware), Inc.:
$ 10,000 5.23%, 1/05/99 $ 9,906
15,000 5.10%, 2/10/99 14,785
15,000 5.01%, 3/22/99 14,706
----------
83,992
----------
BASIC INDUSTRY 3.6%
Monsanto Company:
10,000 5.46%, 12/02/98 9,953
15,000 5.30%, 12/22/98 14,887
14,645 5.38%, 12/28/98 14,520
18,800 5.37%, 12/30/98 18,635
----------
57,995
----------
BEVERAGES 3.5%
Bass Finance (C.I.) Ltd.:
15,000 5.51%, 11/03/98 14,995
15,000 5.33%, 11/06/98 14,989
Brown-Forman Corporation,
11,500 5.35%, 12/18/98 11,420
Pepsico, Inc.,
15,000 5.43%, 12/14/98 14,903
----------
56,307
----------
COMMUNICATION 2.6%
GTE Funding, Inc.:
10,000 5.32%, 11/03/98 9,997
13,000 5.12%, 11/17/98 12,970
20,000 5.22%, 11/24/98 19,934
----------
42,901
----------
CONSUMER CYCLICAL 0.9%
General Electric Company,
15,000 5.33%, 12/29/98 14,871
----------
DRUGS 0.9%
Colgate-Palmolive Company,
15,000 5.40%, 11/24/98 14,948
----------
FINANCE 11.6%
ABB Treasury Center, Inc.,
15,000 5.33%, 12/17/98 14,898
American Express Co.,
13,000 5.25%, 2/17/99 12,795
American General Finance Corporation,
15,000 5.50%, 11/02/98 14,998
Avco Financial Services, Inc.:
15,000 5.35%, 12/08/98 14,918
13,000 5.36%, 12/23/98 12,899
20,000 4.94%, 3/01/99 19,671
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTAR FUNDS
INSTITUTIONAL MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
Principal Amortized
Amount Cost
(in thousands) (in thousands)
- --------------- --------------
FINANCE 11.6% (CONT.)
General Electric Capital Corporation,
$ 15,000 5.55%, 11/18/98 $ 14,961
Household Finance Corporation:
15,000 5.42%, 12/18/98 14,894
15,000 5.16%, 1/27/99 14,813
15,000 5.15%, 2/03/99 14,798
15,000 5.12%, 2/04/99 14,797
National Rural Utilities CFC:
16,000 5.40%, 12/10/98 15,906
7,500 5.00%, 2/08/99 7,397
----------
187,745
----------
FINANCE - SERVICES 15.1%
Goldman Sachs Group, L.P.:
25,000 5.48%, 11/02/98 24,996
15,000 5.33%, 11/09/98 14,982
15,000 5.25%, 12/09/98 14,917
10,000 5.23%, 2/26/99 9,830
22,000 5.10%, 3/19/99 21,570
Merrill Lynch & Company, Inc.:
35,000 5.45%, 11/05/98 34,979
15,000 5.44%, 2/05/99 14,782
15,000 5.11%, 2/12/99 14,781
15,000 5.45%, 2/19/99 14,750
Morgan Stanley, Dean Witter, Discovery & Co.:
15,000 5.49%, 11/10/98 14,979
12,500 5.20%, 1/14/99 12,366
15,000 5.46%, 1/28/99 14,800
15,000 5.46%, 1/29/99 14,798
9,000 5.05%, 2/22/99 8,857
14,500 5.00%, 3/18/99 14,224
----------
245,611
----------
INSURANCE 8.6%
American Family Financial Services Inc.:
15,000 5.50%, 11/06/98 14,989
8,000 5.27%, 11/23/98 7,974
American General Corporation,
13,000 5.50%, 11/16/98 12,970
Hartford Financial Services, Inc.,
15,000 5.35%, 11/12/98 14,976
John Hancock Capital Corporation:
9,620 5.11%, 11/16/98 9,600
15,000 5.33%, 12/10/98 14,913
Prudential Funding Corporation:
15,000 5.51%, 11/20/98 14,956
15,000 5.29%, 1/15/99 14,839
20,000 5.16%, 1/20/99 19,771
Principal Amortized
Amount Cost
(in thousands) (in thousands)
- --------------- --------------
INSURANCE 8.6% (CONT.)
Prudential Funding Corporation (cont.),
$ 15,000 5.15%, 2/24/99 $ 14,753
----------
139,741
----------
MACHINERY - AGRICULTURE AND CONSTRUCTION 4.0%
Caterpillar Financial Services Corporation:
10,200 5.30%, 11/10/98 10,187
20,000 5.20%, 11/18/98 19,951
9,000 5.02%, 3/10/99 8,838
John Deere Capital Corporation:
12,000 5.22%, 2/11/99 11,823
15,000 5.43%, 2/16/99 14,758
----------
65,557
----------
PRINTING AND PUBLISHING 1.6%
McGraw-Hill Cos., Inc.:
11,600 5.43%, 12/01/98 11,548
15,000 5.45%, 12/04/98 14,925
----------
26,473
----------
RETAIL 4.4%
J.C. Penney Funding Corporation:
15,000 5.51%, 11/13/98 14,972
15,000 5.50%, 11/19/98 14,959
11,000 5.10%, 12/11/98 10,938
15,000 5.20%, 1/22/99 14,822
Toys 'R' Us, Inc.,
15,000 5.28%, 11/24/98 14,949
----------
70,640
----------
SOVEREIGN 1.8%
Quebec (Province of) Canada:
15,000 5.50%, 11/05/98 14,991
15,000 5.03%, 3/16/99 14,717
----------
29,708
----------
Total Commercial Paper 1,402,494
----------
CERTIFICATES OF DEPOSIT 0.9%
Deutsche Bank AG,
15,000 5.67%, 2/26/99 14,997
----------
FUNDING AGREEMENTS 3.6%
Travelers Insurance Company:
23,000 5.33%, 6/30/99<F1> 23,000
36,000 5.73%, 2/18/99<F1> 36,000
----------
Total Funding Agreements 59,000
----------
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTAR FUNDS
INSTITUTIONAL MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
Number Amortized
of Shares Cost
(in thousands) (in thousands)
- --------------- --------------
INVESTMENT COMPANIES 9.4%
71,068 Financial Square Prime Obligation Fund $ 71,068
81,010 Short-Term Investments Co.
Liquid Assets Portfolio 81,010
----------
Total Investment Companies 152,078
----------
Total Investments 100.3% 1,628,569
----------
Liabilities, less Other Assets (0.3)% (4,599)
----------
NET ASSETS 100.0% $1,623,970
==========
<F1>Variable rate security
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTAR FUNDS
INSTITUTIONAL MONEY MARKET FUND
NOTES TO THE FINANCIAL STATEMENTS
1. ORGANIZATION
Firstar Funds, Inc. (the "Company"), formerly Portico Funds, Inc., was
incorporated on February 15, 1988, as a Wisconsin Corporation and is registered
as an open-end management investment company under the Investment Company Act of
1940, as amended. The Institutional Money Market Fund (the "Fund"), which
commenced operations on April 26, 1991, is a separate, diversified investment
portfolio of the Company.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in preparation of its financial statements. These policies
are in conformity with generally accepted accounting principles.
a) Investment Valuation - The securities are valued on the basis of amortized
cost for financial reporting purposes and federal income tax purposes, which
approximates market value. Variable rate demand notes and funding agreements are
valued at cost which approximates market value. Investment companies are valued
at net asset value which approximates market value.
b) Federal Income Taxes - It is the Fund's policy to meet the requirements of
the Internal Revenue Code applicable to regulated investment companies and it
intends to distribute investment company net taxable income and net capital
gains to shareholders. Therefore, no federal income tax provision is required.
c) Expenses - The Fund is charged for those expenses that are directly
attributable to it, such as advisory, administration, service organization fees
and certain shareowner service fees. Expenses that are not directly attributable
to a portfolio are typically allocated among the Company's portfolios in
proportion to their respective net assets, number of shareowner accounts or net
sales, where applicable.
d) Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
e) Distributions to Shareowners - Dividends from net investment income are
declared daily and paid monthly. Distributions of net realized capital gains, if
any, will be declared at least annually.
f) Other - The Fund recognizes interest income on the accrual basis. Discounts
and premiums are amortized over the life of the respective security. Investment
and shareowner transactions are recorded on trade date. Realized gains and
losses from investment transactions are reported on an identified cost basis
which is the same basis the Fund uses for federal income tax purposes.
Transactions in capital shares at $1.00 per share are shown in the Statement of
Changes in Net Assets. Generally accepted accounting principles require that
permanent financial reporting and tax differences be reclassified in the capital
accounts.
3. INVESTMENT ADVISORY AND OTHER AGREEMENTS
The Fund has entered into an Investment Advisory Agreement with Firstar
Investment Research & Management Company, LLC ("FIRMCO"). FIRMCO is a subsidiary
of Firstar Corporation, a publicly held bank holding company. Pursuant to its
Advisory Agreement with the Fund, FIRMCO is entitled to receive a fee,
calculated daily and payable monthly, at the annual rate of 0.50% of the Fund's
first $2 billion of average daily net assets, and 0.40% of the Fund's average
daily net assets in excess of $2 billion. For the year ended October 31, 1998,
FIRMCO voluntarily waived $2,556 of its advisory fees, in thousands, for the
Fund.
Firstar Bank Milwaukee, N.A. serves as custodian and Firstar Mutual Fund
Services, LLC serves as transfer agent and accounting services agent for the
Fund. Both companies are affiliates of FIRMCO.
The Company has entered into a Co-Administration Agreement
with B.C. Ziegler and Company and Firstar Mutual Fund Services, LLC (the "Co-
Administrators") for certain administrative services. Pursuant to the Co-
Administration Agreement with the Company, the Co-Administrators are entitled to
receive a fee, computed daily and payable monthly, at the annual rate of 0.125%
of the Company's first $2 billion of average aggregate daily net assets, plus
0.10% of the Company's average aggregate daily net assets in excess of $2
billion. For the year ended October 31, 1998, $1,046 of administration fees, in
thousands, were voluntarily waived for the Fund.
Each Director of the Company who is not affiliated with FIRMCO receives an
annual fee from the Company for service as a Director and is eligible to
participate in a deferred compensation plan with respect to these fees.
Participants in the plan may designate their deferred Director's fees as if
invested in any one of the Firstar Funds (with the exception of the MicroCap
Fund) or in 90-day U.S. Treasury bills. The value of each Director's deferred
compensation account will increase or decrease as if it were invested in shares
of the selected Firstar Funds or 90-day U.S.Treasury bills. The Fund maintains
its proportionate share of the Company's liability for deferred fees.
<PAGE>
(LOGO) FIRSTAR FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF THE FIRSTAR INSTITUTIONAL MONEY
MARKET FUND
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Firstar Institutional Money
Market Fund (one of the portfolios of Firstar Funds, Inc. (the "Fund")) at
October 31, 1998, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for each of the five years in the period then ended,
all in conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards 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, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
December 8, 1998
<PAGE>
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<PAGE>
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<PAGE>
FIRSTAR FUNDS ARE AVAILABLE THROUGH:
- - THE FIRSTAR FUNDS CENTER,
- - INVESTMENT SPECIALISTS WHO ARE REGISTERED
REPRESENTATIVES OF FIRSTAR INVESTMENT SERVICES, INC.
A REGISTERED BROKER/DEALER, NASD AND SIPC MEMBER,
- - AND THROUGH SELECTED SHAREHOLDER ORGANIZATIONS.
This report is authorized for distribution only when preceded or
accompanied by a current prospectus.
FOR ACCOUNT BALANCES AND INVESTOR SERVICES INFORMATION
1-800-228-1024
1-414-287-3808
FIRSTAR FUNDS CENTER
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WI 53201-3011
WWW.FIRSTARFUNDS.COM
(LOGO) FIRSTAR FUNDS
FORM #40-0244 12/98
