------------------
FIXED-INCOME FUNDS
------------------
SHORT-TERM BOND MARKET FUND
INTERMEDIATE BOND MARKET FUND
TAX-EXEMPT INTERMEDIATE BOND FUND
BOND IMMDEX/TM 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.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page(s)
SHAREOWNER LETTER........................................................1-3
THE REINTRODUCTION TO RISK...............................................4-8
LOOKING AHEAD.............................................................8
SHORT-TERM BOND MARKET FUND REVIEW......................................10-11
INTERMEDIATE BOND MARKET FUND REVIEW....................................12-13
TAX-EXEMPT INTERMEDIATE BOND FUND REVIEW................................14-15
BOND IMMDEX/TM FUND REVIEW..............................................16-17
STATEMENT OF ASSETS AND LIABILITIES.......................................18
STATEMENT OF OPERATIONS...................................................19
STATEMENT OF CHANGES IN NET ASSETS........................................20
FINANCIAL HIGHLIGHTS....................................................21-24
SCHEDULE OF INVESTMENTS.................................................25-34
NOTES TO THE FINANCIAL STATEMENTS.......................................35-38
REPORT OF INDEPENDENT ACCOUNTANTS.........................................39
<PAGE>
(LOGO) FIRSTAR FUNDS
DEAR SHAREOWNER: December 1998
INVESTMENT REVIEW
U.S. financial markets gave investors a roller coaster ride in the second half
of Firstar Funds' October fiscal year. Russia's devaluation of the ruble and
subsequent default on its debt set off a wave of selling in August that
culminated in a stunning 513 point decline in the Dow Jones Industrial Average
on August 31st. After rebounding somewhat in September, major market indexes
like the Dow and the Standard & Poor's 500 again flirted with bear market
territory in early October, declining nearly 20% from their July peak. Hardest
hit was the small company sector of the market, which as of the October 8th low,
was off nearly 38% from its April high as measured by the Russell 2000 Index.
Since that time, U.S. stock markets have staged a breathtaking rally, aided in
large part by the Federal Reserve's three successive quarter point interest rate
cuts on September 29th, October 15th and November 17th.
The shift in Federal Reserve policy to a lower interest rate, rapid money growth
posture is aimed at improving market liquidity and heading off a "credit
crunch." Following the near collapse of hedge fund company Long-Term Capital
Management, Inc., credit spreads (the difference in yield between a corporate
bond and a U.S. Treasury bond of equal maturity) widened dramatically and the
corporate bond market seized-up. Since the Fed began lowering interest rates,
credit spreads have narrowed and the market has absorbed new corporate bond
offerings from issuers who would have met a very chilly reception several weeks
ago. The direction of short-term interest rates reflects the Fed's actions,
with three-month Treasury bill yields declining from 5.0% to 4.3% between April
30th and October 31st. Long-term interest rates also declined during this
period, but were much more volatile than short-term rates. The yield on the
thirty-year U.S. Treasury bond declined from 6.0% to a low of 4.7% in September
before settling back at 5.2% at the end of October.
During volatile times like these, a consistent investment approach is the key to
success. Instead of trying to time the market and running the risk of zigging
when you should zag, we believe investors should stick to their long-term asset
allocation strategy. A consistent approach to asset allocation improves the
chances of turning investment returns into investor returns. Equally important
to long-term success, we believe, is following a consistent investment
philosophy or style. Although Firstar Funds offers actively managed stock
portfolios across the market capitalization spectrum and bond portfolios across
the maturity range, our investment philosophy is focused. We follow a high-
quality, structured approach in the management of our fixed-income portfolios
and a growth-at-a-reasonable-price approach in the management of our equity
portfolios. By staying focused on these twin investment disciplines, we believe
we increase our chances of winning the investment "marathon." We are pleased
with the long-term investment results our approach has achieved and remain
confident in our ability to deliver competitive returns in the future.
On the technology front, we continue to enhance our web site at
www.firstarfunds.com. Most recently, we added transactional capabilities. Now
you can purchase and redeem shares on-line, as well as exchange or transfer
assets between your existing Firstar Fund accounts. You now have the freedom to
access your accounts when it best suits your schedule - seven days a week, 24
hours a day.
In other news, we reopened Firstar MicroCap Fund for new investments on November
2nd. Once the Fund receives an additional $50 million in contributions, it will
once again close. We reopen the Fund when we feel there is sufficient capacity
to absorb new assets. We are enthusiastic about the outlook for microcap
investing given the tremendous relative values we believe are available among
the market's smallest company stocks.
For more information about on-line transactions or if you have questions
regarding the reopening of Firstar MicroCap Fund, please call the Firstar Funds
Center at 1-800-982-8909.
Finally, we're very pleased at the appointment of Marian Zentmyer, CFA, as chief
equity investment officer. She replaced Scott Harkness, who left the firm in
November. Marian has 17 years of investment management experience with Firstar
and has received national publicity for her outstanding portfolio management
skills.
<PAGE>
(LOGO) FIRSTAR FUNDS
MARKET OUTLOOK
Looking ahead, our market forecast is predicated on the following trends:
- -Representing 45% of global economic activity, the U.S. and Europe will combine
to offset the collapse suffered by many emerging economies, producing a net
gain in worldwide economic growth.
- -Despite Japan's efforts to reform its banking industry and implement new
measures to stimulate demand, such as lower tax rates and deficit spending by
the government, the Japanese economy remains mired in recession.
- -Economic policies prescribed by the International Monetary Fund (IMF), which
include tax increases, government spending cuts and devalued currencies, will
delay economic recovery in those countries infected by the "Asian Contagion."
- -Deterioration in foreign trade will continue to have a negative impact on U.S.
economic growth due to weakened international demand for U.S. exports and
higher imports from countries with devalued currencies.
- -The lowest mortgage rates in a generation, moderate job creation and the best
inflation-adjusted personal income growth in twenty-five years will sustain
today's high level of consumer spending gains and extend America's consumer-
led economic expansion.
- -Unable to raise prices due to fierce global competition, companies will
continue to "buy" revenue growth by acquiring their competitors (the urge to
merge).
- -Under pressure from rising wages and slowing sales growth, companies will
continue to restructure, improve productivity through technology and pare
payrolls (the urge to purge) to maintain profits.
- -Global overcapacity in manufacturing and commodity production (e.g. autos and
oil) should continue to exert downward pressure on commodity prices.
- -Inflation rates should continue to decline with a period of mild deflation in
1999 a strong possibility.
- -The yield curve, which plots interest rates from short-term to long-term, will
become more positively sloped (via lower short-term rates), prompting a swift
reduction in money market yields.
- -With earnings growth more difficult to achieve, the key to future stock market
returns will continue to be expanding price-to-earnings ratios (P/E's).
- -P/E's should expand in a disinflationary/deflationary environment because
stock prices are expressed in current dollars while earnings are expressed in
future dollars that are appreciating in terms of purchasing power.
<PAGE>
(LOGO) FIRSTAR FUNDS
IN SUMMARY
We believe the global economy will muddle through this turbulent period with the
U.S. functioning as the "importer of last resort" and U.S. consumers providing
the engine for continued economic growth. A withering corporate profit outlook
makes stock selection critical and favors our active, growth-at-a-reasonable
price equity management strategy. Lower levels of inflation or modest deflation
increase the likelihood of further interest rate declines, creating a favorable
environment for fixed income investing. We remain optimistic for continued
positive returns for both our equity and fixed-income funds going into 1999.
Although volatility will remain high, we appreciate your confidence in the
Firstar Funds and encourage you to read the portfolio reviews that follow.
(PHOTO) (PHOTO)
MARY ELLEN STANEK, CFA MARIAN ZENTMYER, CFA
President and Chief Equity Investment Officer
Chief Executive Officer
Firstar Investment Research & Management Company, LLC (FIRMCO)
<PAGE>
(LOGO) FIRSTARFUNDS
- -------------------------------------------------------------------------------
THE REINTRODUCTION TO RISK
- -------------------------------------------------------------------------------
The bond market, led by U.S. Treasuries, generated strong total returns over the
last twelve months. Mild inflation, stalling Asian economies and hints of slower
domestic growth provided good support for bonds throughout the year. In
particular, during the last three months, a flight to quality from other panic-
stricken markets, the near collapse of some prominent hedge funds and two Fed
easings, combined to send U.S. Treasury yields tumbling 1 to 11/2 %. This
significant drop in interest rates (and the corresponding rise in prices)
propelled total returns of long U.S. Treasury issues to over 16% over the past
twelve months (see chart below).
MATURITY 10/31/98 10/31/98
YEARS YIELD (%) YIELD (%)
- ---------- ---------- ----------
1 5.35 4.18
2 5.61 4.11
3 5.68 4.35
5 5.72 4.23
7 5.84 4.51
10 5.83 4.60
30 6.15 5.15
Behind the strong returns in Treasuries, however, the bond market as a whole was
violently shaken by the most difficult calendar quarter of the decade. The
extreme volatility in the third quarter heightened investors' sensitivity to
nearly every dimension of risk in the bond market. Investors were RE-INTRODUCED
to risk. The swift rise in risk premiums brought illiquidity to the market in
general. Bond market sectors with higher levels of intrinsic risk were punished
most severely. In just a matter of weeks, risk that had been benign for years
suddenly hit home and caught many investors by surprise. FIRSTAR BOND FUND'S
HIGH QUALITY, RISK CONTROLLED APPROACH ENABLED THE FUNDS TO WEATHER THE
VOLATILITY STORM.
RISK PREMIUMS RISE
The real story in the bond market this year has been the dramatic rise in risk
premiums, or yield spreads. U.S. Treasury issues, which are considered to
represent minimal credit risk, serve as a baseline for bond yields. All other
bonds trade in the market at some yield spread to U.S. Treasury yields. As
yields in general declined this year, one would have expected bond prices to
rise (bond prices move inversely to yields). Indeed, Treasury prices did rise
across the board, but the widening of yield spreads caused the prices of bonds
in some non-Treasury sectors to actually fall. This divergence of price action
led to a pronounced divergence in total returns (i.e. interest income plus
change in price) in various sectors of the market. Let's look at two sectors in
particular: corporate bonds and mortgage-backed securities.
<PAGE>
(LOGO) FIRSTARFUNDS
CORPORATE SPREADS WIDEN
For corporate bonds, CREDIT RISK, or the assessment of an issuer's willingness
and ability to pay interest and principal on a timely basis, IS A KEY
DETERMINANT OF YIELD SPREADS. As preoccupation over corporate earnings
intensified in the third quarter, and many hedge funds sold the majority of
their corporate bond holdings, investors became more sensitive to credit risk
and demanded larger yield spreads. The chart below shows how dramatically
corporate spreads widened from a year ago and for comparative purposes where
they had been after the last recession (12/31/91).
CREDIT SPREADS 12/31/91
AAA AA A BBB
-------- -------- -------- --------
1 0.25% 0.10% 0.20% 0.55%
2 0.30% 0.10% 0.20% 0.55%
3 0.33% 0.10% 0.20% 0.57%
5 0.36% 0.11% 0.19% 0.59%
10 0.40% 0.14% 0.15% 0.58%
30 0.69% 0.03% 0.13% 0.72%
CREDIT SPREADS 10/31/97
AAA AA A BBB
-------- -------- -------- --------
1 0.38% 0.02% 0.12% 0.11%
2 0.29% 0.04% 0.04% 0.09%
3 0.32% 0.04% 0.07% 0.05%
5 0.36% 0.04% 0.07% 0.16%
10 0.40% 0.03% 0.12% 0.20%
30 0.44% 0.11% 0.09% 0.31%
CREDIT SPREADS 10/31/98
AAA AA A BBB
-------- -------- -------- --------
1 0.64% 0.02% 0.25% 0.46%
2 0.65% 0.02% 0.24% 0.52%
3 0.52% 0.02% 0.24% 0.47%
5 0.72% 0.02% 0.33% 0.53%
10 0.71% 0.03% 0.22% 0.62%
30 1.10 % 0.06% 0.29% 0.64%
Much of this spread widening occurred over the past few months. The yield
spread on a typical 10-year BBB-rated (investment-grade) corporate bond soared
from 86 basis points on June 30th of this year to 158 basis points by the end of
October. Spread widening in non investment-grade bonds, commonly referred to as
"high yield" or "junk bonds," was even more dramatic over this time period. The
spread on a typical 10-year junk bond went from 293 basis points on June 30th
to 440 basis points by the end of October. (source: Bloomberg)
In last year's annual report we expressed our concern about investors and
managers of investment-grade bond funds that had been reaching for yield by
adding non investment-grade bonds to their holdings. We wrote: "we believe
there is considerable risk of spread widening, which could cause junk bonds to
underperform dramatically." The table below shows the total returns of the
Lehman Brothers Treasury Index, Corporate Bond Index and High Yield Index for
the last three months, year-to-date 1998 and last 12 months through October 31,
1998.
- -------------------------------------------------------------------------------
LAST 3 LAST 12
MONTHS 1998 YTD MONTHS
- -------------------------------------------------------------------------------
Lehman Brothers U.S. Treasury
Index Total Return 5.24% 9.84% 11.57%
- -------------------------------------------------------------------------------
Lehman Brothers Investment-Grade
Corporate Index Total Return 2.12% 6.26% 7.99%
- -------------------------------------------------------------------------------
Lehman Brothers High Yield Index
Total Return (7.04)% (2.30)% (0.50)%
- -------------------------------------------------------------------------------
While the widening of investment-grade corporate bonds has dampened bond fund
returns this year, the table shows how devastating the exposure to high yield
bonds has been. In our 1996 annual report, we cautioned investors of
"masquerading" funds, or funds that claim to be investment-grade quality, yet
use non investment-grade bonds to augment performance. In the third quarter of
1998, the mask was removed from such funds, leaving many investors astonished to
find their bond fund losing value when interest rates overall had fallen. AT
FIRSTAR FUNDS, WE PURCHASE ONLY INVESTMENT-GRADE SECURITIES, STRIVING TO CONTROL
RISK RATHER THAN HIDE IT.
<PAGE>
(LOGO) FIRSTARFUNDS
MORTGAGE SPREADS WIDEN
Another sector of the bond market that has been rocked with volatility this year
is mortgage-backed securities. Mortgage-backed securities consist of pools of
home mortgages that have been bundled together and then sold to investors in the
form of securities. For mortgage-backed securities, CASH FLOW RISK, or the
uncertainty of when principal will be returned, IS A KEY DETERMINANT OF YIELD
SPREADS. As Treasury yields have declined in 1998, home mortgage rates have
followed, creating an opportunity for the vast majority of all mortgage
borrowers to refinance and significantly lower their home mortgage rates - good
news for homeowners, bad news for investors in mortgage-backed securities. When
homeowners refinance, they prepay their outstanding mortgage loan balances. As
a result of these prepayments, investors in mortgage-backed securities have
their principal returned to them sooner than expected and are left to reinvest
it at the resulting lower yields. The chart below shows the correlation between
the 10-year U.S. Treasury yield and the mortgage bankers refinance index, which
tracks the number of refinancing applications.
- -------------------------------------------------------------------------------
CORRELATION OF "REFI" INDEX TO 10 YEAR T-NOTE YIELD
(through 10/31/98)
Date Refi Index 10 yr T-note
- -------- ------------ -------------
4-Jan-91 233.8 0.08014
11-Jan-91 244.8 0.08171
18-Jan-91 192.6 0.08017
25-Jan-91 171.1 0.08037
1-Feb-91 168.9 0.07909
8-Feb-91 208.9 0.07772
15-Feb-91 230.5 0.07784
22-Feb-91 401.9 0.07898
1-Mar-91 363.7 0.0812
8-Mar-91 407.3 0.08129
15-Mar-91 403.3 0.08094
22-Mar-91 322 0.08123
29-Mar-91 270 0.08061
5-Apr-91 290.2 0.07982
12-Apr-91 272.8 0.07968
19-Apr-91 194.7 0.08102
26-Apr-91 187.4 0.08046
3-May-91 175 0.08041
10-May-91 207.3 0.08101
17-May-91 202.5 0.08083
24-May-91 173.4 0.08085
31-May-91 211.8 0.08059
7-Jun-91 186.8 0.08279
14-Jun-91 177.1 0.08269
21-Jun-91 163 0.08317
28-Jun-91 146.8 0.08227
5-Jul-91 148.6 0.08334
12-Jul-91 141.8 0.08258
19-Jul-91 188.3 0.0828
26-Jul-91 137.1 0.08197
2-Aug-91 147 0.08053
9-Aug-91 189.8 0.07973
16-Aug-91 232.1 0.07824
23-Aug-91 335.1 0.0787
30-Aug-91 289.2 0.07816
6-Sep-91 272.9 0.07755
13-Sep-91 321.1 0.07641
20-Sep-91 400.6 0.07571
27-Sep-91 439.4 0.07481
4-Oct-91 511.8 0.07385
11-Oct-91 506.3 0.0745
18-Oct-91 601.3 0.07506
25-Oct-91 618.7 0.07672
1-Nov-91 551.8 0.07473
8-Nov-91 567.1 0.07417
15-Nov-91 808.7 0.07306
22-Nov-91 924.9 0.07445
29-Nov-91 725 0.07376
6-Dec-91 676.6 0.07231
13-Dec-91 761.6 0.07206
20-Dec-91 632.6 0.06963
27-Dec-91 881.2 0.06823
3-Jan-92 1381.3 0.06837
10-Jan-92 1494.4 0.06852
17-Jan-92 1752 0.07086
24-Jan-92 1373 0.07238
31-Jan-92 1045.5 0.07274
7-Feb-92 900.9 0.07177
14-Feb-92 685.9 0.07386
21-Feb-92 826.8 0.07445
28-Feb-92 710.3 0.0725
6-Mar-92 627 0.07474
13-Mar-92 491.4 0.07699
20-Mar-92 402.7 0.0763
27-Mar-92 370.3 0.07521
3-Apr-92 398.4 0.07397
10-Apr-92 357.2 0.07356
17-Apr-92 353.9 0.07452
24-Apr-92 308.2 0.0752
1-May-92 285.7 0.0755
8-May-92 283.3 0.07408
15-May-92 351.4 0.0729
22-May-92 372.4 0.07345
29-May-92 339.1 0.07318
5-Jun-92 343.4 0.07304
12-Jun-92 364.4 0.07278
19-Jun-92 410.9 0.07234
26-Jun-92 361.6 0.07145
3-Jul-92 501.1 0.06923
10-Jul-92 1017.8 0.06917
17-Jul-92 1254.7 0.06897
24-Jul-92 1313.2 0.06735
31-Jul-92 1149.6 0.06709
7-Aug-92 941.1 0.06555
14-Aug-92 1053.7 0.06517
21-Aug-92 1037.8 0.06519
28-Aug-92 1086 0.0663
4-Sep-92 1003.5 0.06398
11-Sep-92 1148.4 0.06359
18-Sep-92 1091.9 0.06406
25-Sep-92 1062.8 0.06406
2-Oct-92 972.3 0.06245
9-Oct-92 945.9 0.06513
16-Oct-92 802.2 0.06587
23-Oct-92 787.1 0.06811
30-Oct-92 793 0.06789
6-Nov-92 642.3 0.06967
13-Nov-92 449.2 0.06817
20-Nov-92 404.3 0.06831
27-Nov-92 340.2 0.06914
4-Dec-92 356.2 0.06819
11-Dec-92 338.5 0.06792
18-Dec-92 281.8 0.06741
25-Dec-92 397.5 0.06676
1-Jan-93 788 #N/A
8-Jan-93 378.9 0.06731
15-Jan-93 422.9 0.06585
22-Jan-93 470.2 0.06539
29-Jan-93 566.6 0.06359
5-Feb-93 583 0.06306
12-Feb-93 830.4 0.06331
19-Feb-93 1060.1 0.06152
26-Feb-93 1215.2 0.0602
5-Mar-93 1348 0.05862
12-Mar-93 1604.2 0.06113
19-Mar-93 1385.4 0.05962
26-Mar-93 1291 0.06091
2-Apr-93 1164.2 0.06155
9-Apr-93 1270.3 0.05964
16-Apr-93 1161 0.05884
23-Apr-93 1134.5 0.05888
30-Apr-93 1107.5 0.06009
7-May-93 973.4 0.05897
14-May-93 994 0.06015
21-May-93 895.7 0.06138
28-May-93 775.7 0.06149
4-Jun-93 791.9 0.06089
11-Jun-93 782 0.05963
18-Jun-93 835.3 0.05937
25-Jun-93 776.6 0.0581
2-Jul-93 922.8 0.05744
9-Jul-93 1147.9 0.05737
16-Jul-93 1141 0.05687
23-Jul-93 1370.5 0.05931
30-Jul-93 1200.5 0.05807
6-Aug-93 1151.8 0.05834
13-Aug-93 1142.6 0.05713
20-Aug-93 1174.2 0.05617
27-Aug-93 1369.2 0.0549
3-Sep-93 1574.4 0.05296
10-Sep-93 1837.9 0.05281
17-Sep-93 1795.8 0.05375
24-Sep-93 1657.1 0.05391
1-Oct-93 1641.6 0.05339
8-Oct-93 1489.1 0.05256
15-Oct-93 1545.3 0.05165
22-Oct-93 1408.8 0.05398
29-Oct-93 1344.2 0.05426
5-Nov-93 1246 0.05727
12-Nov-93 1174 0.0565
19-Nov-93 1058.5 0.05834
26-Nov-93 807.5 0.0574
3-Dec-93 745 0.05753
10-Dec-93 719.9 0.05736
17-Dec-93 570.3 0.05764
24-Dec-93 518.9 0.05691
31-Dec-93 744 0.05794
7-Jan-94 675.8 0.05651
14-Jan-94 738.2 0.05726
21-Jan-94 638.2 0.05681
28-Jan-94 746.7 0.05634
4-Feb-94 1138.5 0.05871
11-Feb-94 928.1 0.05879
18-Feb-94 734.5 0.06086
25-Feb-94 834.1 0.06195
4-Mar-94 655.5 0.06365
11-Mar-94 544.1 0.06452
18-Mar-94 446.7 0.06497
25-Mar-94 481.2 0.06634
1-Apr-94 429.8 0.0694
8-Apr-94 263.6 0.06923
15-Apr-94 234.2 0.06957
22-Apr-94 257.6 0.06933
29-Apr-94 207.8 0.07042
6-May-94 177.7 0.07348
13-May-94 176.4 0.07279
20-May-94 175.5 0.0702
27-May-94 153.9 0.07114
3-Jun-94 134.4 0.06988
10-Jun-94 139.8 0.07016
17-Jun-94 153.3 0.07124
24-Jun-94 133.6 0.07206
1-Jul-94 137.2 0.07322
8-Jul-94 112.5 0.07415
15-Jul-94 112.6 0.07248
22-Jul-94 116.8 0.07277
29-Jul-94 120 0.07111
5-Aug-94 135 0.07272
12-Aug-94 130.9 0.0729
19-Aug-94 134.4 0.07256
26-Aug-94 114.7 0.07227
2-Sep-94 118.5 0.07198
9-Sep-94 110.5 0.07431
16-Sep-94 108.3 0.07499
23-Sep-94 105.9 0.07562
30-Sep-94 113.2 0.07603
7-Oct-94 118.6 0.0769
14-Oct-94 105.6 0.07597
21-Oct-94 117.4 0.07785
28-Oct-94 104.5 0.07793
4-Nov-94 109.5 0.08023
11-Nov-94 106.3 0.0799
18-Nov-94 124.4 0.08008
25-Nov-94 69.9 0.07792
2-Dec-94 81.2 0.07803
9-Dec-94 77.9 0.07789
16-Dec-94 72.5 0.07802
23-Dec-94 59 0.07829
30-Dec-94 80.3 0.07822
6-Jan-94 81 0.07858
13-Jan-95 74.4 0.07675
20-Jan-95 83.3 0.07807
27-Jan-95 82.4 0.07613
3-Feb-95 111.6 0.07497
10-Feb-95 93.6 0.0761
17-Feb-95 88.8 0.07421
24-Feb-95 103.1 0.07307
3-Mar-95 95.6 0.07342
10-Mar-95 94.4 0.0722
17-Mar-95 106 0.07107
24-Mar-95 109.8 0.07078
31-Mar-95 113 0.07196
7-Apr-95 105 0.07103
14-Apr-95 131.4 0.07017
21-Apr-95 120.5 0.06999
28-Apr-95 120.9 0.07055
5-May-95 132.2 0.06681
12-May-95 239.1 0.06664
19-May-95 243.4 0.06627
26-May-95 239.9 0.06394
2-Jun-95 331.1 0.06097
9-Jun-95 481.6 0.06394
16-Jun-95 418.9 0.06196
23-Jun-95 381.3 0.06049
30-Jun-95 404.3 0.06203
7-Jul-95 305.9 0.06045
14-Jul-95 524.3 0.06158
21-Jul-95 504 0.06529
28-Jul-95 390.6 0.06472
4-Aug-95 346.3 0.06489
11-Aug-95 328.7 0.06612
18-Aug-95 283 0.06556
25-Aug-95 295.9 0.06352
1-Sep-95 387 0.06231
8-Sep-95 444.2 0.06222
15-Sep-95 445.4 0.06129
22-Sep-95 468.9 0.0624
29-Sep-95 392.8 0.06182
6-Oct-95 458.2 0.06064
13-Oct-95 482.7 0.05959
20-Oct-95 549 0.0604
27-Oct-95 547.5 0.06041
3-Nov-95 553 0.05934
10-Nov-95 697.4 0.05996
17-Nov-95 604.9 0.05905
24-Nov-95 571.6 0.05908
1-Dec-95 522.3 0.05706
8-Dec-95 667 0.05722
15-Dec-95 642.5 0.05759
22-Dec-95 758.6 0.05709
29-Dec-95 711.7 0.05572
5-Jan-96 748.2 0.05673
12-Jan-96 816.1 0.05737
19-Jan-96 886.6 0.05528
26-Jan-96 1102.4 0.05634
2-Feb-96 1028.4 0.05667
9-Feb-96 1071.4 0.0566
16-Feb-96 1192.4 0.05779
23-Feb-96 1129 0.05959
1-Mar-96 1029 0.05959
8-Mar-96 712.4 0.06407
15-Mar-96 564.7 0.06453
22-Mar-96 462.9 0.06329
29-Mar-96 586.6 0.06327
5-Apr-96 456.6 0.06551
12-Apr-96 336.9 0.065
19-Apr-96 317.6 0.06517
26-Apr-96 311.1 0.06525
3-May-96 348.2 0.06895
10-May-96 241 0.06747
17-May-96 225.2 0.06652
24-May-96 243.9 0.06651
31-May-96 302.6 0.06852
7-Jun-96 226.1 0.069
14-Jun-96 192.5 0.06931
21-Jun-96 220 0.06946
28-Jun-96 221.7 0.06711
5-Jul-96 215.2 0.07015
12-Jul-96 186.1 0.06856
19-Jul-96 224.3 0.06794
26-Jul-96 222.3 0.0685
2-Aug-96 237.5 0.06509
9-Aug-96 287.8 0.06481
16-Aug-96 279.9 0.06554
23-Aug-96 262.9 0.06751
30-Aug-96 283.6 0.06943
6-Sep-96 226.8 0.06923
13-Sep-96 250.8 0.06723
20-Sep-96 263.3 0.06839
27-Sep-96 271.4 0.06677
4-Oct-96 272.3 0.06478
11-Oct-96 324.8 0.06554
18-Oct-96 316.4 0.06504
25-Oct-96 309.4 0.06536
1-Nov-96 372.9 0.06377
8-Nov-96 417.9 0.06249
6-Dec-96 445.7 0.06243
13-Dec-96 459.5 0.06313
20-Dec-96 513.7 0.06236
27-Dec-96 610.7 0.06291
13-Dec-96 475.4 0.06313
20-Dec-96 360.4 0.0636
27-Dec-96 272.8 0.06291
3-Jan-97 375.5 0.06498
10-Jan-97 323.6 0.06608
17-Jan-97 305.8 0.06542
24-Jan-97 341.6 0.06622
31-Jan-97 338.4 0.06494
7-Feb-97 379.2 0.06398
14-Feb-97 401.5 0.06265
21-Feb-97 556 0.06367
28-Feb-97 460.9 0.06552
7-Mar-97 398.7 0.06539
14-Mar-97 416.2 0.06692
21-Mar-97 396.7 0.0675
28-Mar-97 538.4 0.06907
4-Apr-97 292.3 0.06906
11-Apr-97 285.1 0.06968
18-Apr-97 282.3 0.06824
25-Apr-97 273.2 0.06938
2-May-97 289.8 0.06644
9-May-97 303.4 0.06668
16-May-97 332.5 0.06718
23-May-97 325.1 0.0674
30-May-97 295.6 0.06659
6-Jun-97 322.4 0.06486
13-Jun-97 375.7 0.06426
20-Jun-97 396.5 0.06374
27-Jun-97 422.4 0.0645
4-Jul-97 414.6 0.06307
11-Jul-97 497.3 0.0622
18-Jul-97 542.8 0.0624
25-Jul-97 595.9 0.0618
1-Aug-97 689.3 0.0618
8-Aug-97 718.8 0.0637
15-Aug-97 577.2 0.0624
22-Aug-97 552.9 0.0636
29-Aug-97 477.8 0.0634
5-Sep-97 516.3 0.0635
12-Sep-97 498.5 0.0628
19-Sep-97 699.6 0.0609
26-Sep-97 691.5 0.0608
3-Oct-97 728.2 0.0599
10-Oct-97 845.5 0.0614
17-Oct-97 703 0.0616
24-Oct-97 683 0.0598
31-Oct-97 1013.4 0.0583
5-Dec-97 805 0.059
14-Nov-97 842.4 0.0588
21-Nov-97 779.4 0.0581
28-Nov-97 828.7 0.0587
5-Dec-97 785.1 0.0591
12-Dec-97 827.3 0.0573
19-Dec-97 850 0.0574
26-Dec-97 745 0.0574
2-Jan-98 972.7 0.0565
9-Jan-98 1842.5 0.0541
16-Jan-98 3115.8 0.0553
23-Jan-98 3093.3 0.0569
30-Jan-98 2038.6 0.055
6-Feb-98 2028.7 0.0562
13-Feb-98 1685.4 0.0548
20-Feb-98 2005.6 0.0554
27-Feb-98 1526.1 0.0562
6-Mar-98 1363.1 0.0571
13-Mar-98 1337.9 0.0558
20-Mar-98 1421.4 0.0556
27-Mar-98 1297.1 0.0568
3-Apr-98 1206.3 0.0548
10-Apr-98 1684.2 0.0558
17-Apr-98 1087 0.0559
24-Apr-98 1157 0.0566
1-May-98 1326.5 0.0566
8-May-98 1297 0.0571
15-May-98 1138 0.0568
22-May-98 1049 0.0563
29-May-98 1174.3 0.0555
5-Jun-98 1120.7 0.0558
12-Jun-98 1209.6 0.0543
19-Jun-98 1406.2 0.0546
26-Jun-98 1202 0.0545
3-Jul-98 1470.6 0.0541
10-Jul-98 1305.5 0.0541
17-Jul-98 1292.2 0.0551
24-Jul-98 1320.2 0.0546
31-Jul-98 1278.8 0.0549
7-Aug-98 1291.9 0.054
14-Aug-98 1310.5 0.0539
21-Aug-98 1211.9 0.0529
28-Aug-98 1331.5 0.0507
4-Sep-98 1924 0.0501
11-Sep-98 2141.9 0.0483
18-Sep-98 2269.9 0.047
25-Sep-98 2682.7 0.0456
2-Oct-98 3253.1 0.0428
9-Oct-98 4839.1 0.0478
16-Oct-98 2507 0.0444
23-Oct-98 2774.3 0.047
30-Oct-98 2495.7 0.0461
Source: Bloomberg
- ------------------------------------------------------------------------------
As seen in the chart, when the 10-year U.S. Treasury note yield bottomed near
4.1% in October, the Applications for Mortgage Refinancing Index soared to a
record high. Bracing for a major refinancing wave, investors became more
sensitive to cash flow risk and demanded larger yield spreads on mortgage-backed
securities. The yield spread between the Lehman Brothers Fixed Rate Mortgage-
Backed Security Index and the Lehman Brothers Treasury Index widened from 93
basis points on October 31, 1997 to 171 basis points on October 31, 1998. As
seen in the next table, this spread widening caused total returns in the
mortgage sector to lag considerably behind Treasuries.
- -------------------------------------------------------------------------------
LAST 3 LAST 12
MONTHS 1998 YTD MONTHS
- -------------------------------------------------------------------------------
Lehman Brothers U.S. Treasury
Index Total Return 5.24% 9.84% 11.57%
- -------------------------------------------------------------------------------
Lehman Brothers Fixed Rate
Mortgage-Backed Index Total Return 1.99% 5.98% 7.30%
- -------------------------------------------------------------------------------
At Firstar Funds, we use mortgage-backed securities very selectively and control
cash flow risk by purchasing securities which are structured to withstand heavy
prepayments and still retain their cash flow integrity. We typically purchase
only the highest quality securities and utilize mortgages with shorter
maturities and more predictable "cash flow" characteristics. Finally, our
approach to mortgages is longer term in nature and we attempt to maintain our
positions through cyclical changes in the economy.
<PAGE>
(LOGO) FIRSTARFUNDS
Firstar Funds' fixed-income management approach is specifically designed to
define, measure and control bond fund risks. While expected returns are often
what attract an investor to an investment, full awareness of the types and
magnitude of risk taken in order to generate those returns is critical in
determining if the investment is truly suitable. Many investors have been
painfully surprised by how their bond funds have performed this year when they
were reintroduced to risk. Our "what you see is what you get" philosophy guides
us in seeking to provide bond funds that will perform as expected, even during
the most volatile of times. Firstar Funds' controlled risk approach has shone
brightly through volatile times as demonstrated by the Funds' ranking relative
to their peers. The table below shows the total returns of each of the Firstar
bond funds relative to the average of the universe of similar funds as
determined by Lipper Analytical Services for the ten months of 1998, and over
the last one-year, three-year and five-year time periods.
TOTAL RETURN ANALYSIS
INSTITUTIONAL SHAREOWNERS
PERIODS ENDED 10/31/98
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Since
YTD 1 Year 3 Years 5 Years Inception
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
FIRSTAR SHORT-TERM BOND MARKET FUND RETURN 6.04% 6.84% 6.36% 5.87% 7.14%
Fund's % Ranking in Lipper Universe 12% 18% 15% 12% N/A
Fund's Rank in Lipper Universe 12 of 102 18 of 100 11 of 78 6 of 51 N/A
Lipper Short Investment -
Grade Debt Category Average Return 5.02% 5.91% 6.01% 5.44% N/A
- ----------------------------------------------------------------------------------------------------------------------------------
FIRSTAR INTERMEDIATE BOND MARKET FUND RETURN 7.05% 7.83% 6.97% 6.19% 6.80%
Fund's % Ranking inLipper Universe 18% 23% 11% 7% N/A
Fund's Rank in Lipper Universe 17 of 95 21 of 94 7 of 69 3 of 46 N/A
Lipper Short-Intermediate Investment -
Grade Debt Category Average Return 6.45% 7.37% 6.60% 5.88% N/A
- ----------------------------------------------------------------------------------------------------------------------------------
FIRSTAR TAX-EXEMPT INTERMEDIATE BOND
FUND RETURN 4.80% 5.88% 5.28% 4.85% 5.17%
Fund's % Ranking inLipper Universe 4% 7% 13% 8% N/A
Fund's Rank in Lipper Universe 1 of 30 2 of 30 3 of 24 1 of 14 N/A
Lipper Short-Intermediate Municipal
Debt Category Average Return 4.33% 5.38% 4.80% 4.27% N/A
- ----------------------------------------------------------------------------------------------------------------------------------
FIRSTAR BOND IMMDEX FUND RETURN 7.95% 9.41% 7.87% 7.00% 8.90%
Fund's % Ranking inLipper Universe 15% 16% 14% 11% N/A
Fund's Rank in Lipper Universe 33 of 227 33 of 218 21 of 158 11 of 100 N/A
Lipper Intermediate Investment -
Grade Debt Category Average Return 6.88% 8.17% 7.34% 6.33% N/A
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The returns above include the reinvestment of all dividends and distributions.
Past performance is not indicative of future results. Performance reflects fee
waivers in effect. Without fee waivers, performance would be reduced. See the
following individual Fund reviews for additional performance information.
<PAGE>
(LOGO) FIRSTARFUNDS
The previous table strongly demonstrates the value of our disciplined, risk-
controlled investment approach. As you can see, each and every one of the
Firstar Fund's returns, in each and every time period, is in the first quartile
as measured by Lipper Analytical Services, Inc. We are committed to helping you
achieve your long-term investment goals even through the most volatile of times
by producing competitive and predictable total returns.
LOOKING AHEAD
Although volatility in the markets is here to stay, we remain committed to
achieving attractive inflation-adjusted returns by remaining duration-neutral to
our benchmarks and adding value through issue selection, sector allocation and
yield curve positioning. As such, we are optimistic our structured fixed-
income investment strategy will reward long-term investors by providing
consistent and predictable returns.
MARY ELLEN STANEK, CFA
TERESA R. WESTMAN, CFA
DANIEL A.TRANCHITA, CFA
WARREN D. PIERSON, CFA
Portfolio Managers
Firstar Investment Research & Management Company, LLC (FIRMCO)
<PAGE>
(LOGO) FIRSTARFUNDS
This page intentionally left blank.
<PAGE>
(LOGO) FIRSTARFUNDS
- --------------------------------------------------------------------------------
SHORT-TERM BOND MARKET FUND
- --------------------------------------------------------------------------------
FIRSTAR SHORT-TERM BOND MARKET FUND seeks to provide an annual rate of total
return comparable to that of the Lehman Brothers 1-3 Year Government/Corporate
Bond Index, before Fund expenses. In order to achieve its objective, the Fund
may invest in securities with short to intermediate remaining maturities.
INTEREST RATE RISK
This Fund's maturity mix gives the portfolio an overall AVERAGE MATURITY OF 2.6
YEARS, and a DURATION OF 1.7 YEARS. Since the Firstar Short-Term Bond Market
Fund's duration is just under 2 years, the Fund is the shortest of all the
Firstar taxable bond funds and is expected to display the least downward price
movement when interest rates increase, but is expected to exhibit the least
upward price movement when interest rates decrease. The significant decline in
interest rates (two year U.S. Treasury rates fell from 5.6% to 4.3%) had a
positive impact on the Fund's performance for the fiscal year ended October 31,
1998. While the Fund's duration is the single most significant determinant of
its return, the Fund's allocation to the following sectors is also important.
U.S. TREASURY NOTES AND BONDS
U.S. Treasuries represented the strongest performing sector of the bond market
over the last twelve months. The Fund's moderate allocation to the Treasury
sector (23%) helped it generate a solid total return for the fiscal year ended
October 31, 1998.
CORPORATE BONDS
The Fund's careful, research-intensive process of selecting investment-grade
corporate issues and asset-backed securities gives the Fund a high-quality
focus. Although corporate bonds lagged the performance of Treasuries this past
year, the Fund's high-quality bias mitigated the effect of widening yield
spreads on corporate bonds. Sectors we currently favor include finance, banking
and brokerage, dollar-denominated international and asset-backed securities.
Asset-backed securities in the Fund are all rated Aaa/AAA by Moody's or Standard
& Poor's. They represent the highest credit quality of non-U.S. government
investments available. WELL OVER HALF OF THE FUND (71%) IS INVESTED IN
OBLIGATIONS RATED AAA/AAA OR HIGHER.
MORTGAGE-BACKED SECURITIES
Because of the intrinsic uncertainty in the cash flow of mortgage-backed
securities, most are not suitable for the Fund's duration-neutral strategy.
Firstar Short-Term Bond Market Fund purchases only mortgage securities with more
predictable cash flows which comprise just 17% of the Fund as of October 31,
1998. Although mortgage-backed securities also lagged the performance of
Treasuries this past year, the careful selection of securities with stable
structures and an overall modest allocation to this sector minimized the effect
of widening yield spreads in the mortgage sector.
FOREIGN EXPOSURE RISK
DURING THIS PERIOD, THE FUND DID NOT INVEST IN SECURITIES DENOMINATED IN FOREIGN
CURRENCIES. AS SUCH, IT HAS NO DIRECT EXPOSURE TO FOREIGN CURRENCY FLUCTUATIONS.
The Fund does, however, invest in Yankee securities. Yankees are obligations of
foreign entities denominated in U.S. dollars. Yankee investments total 7% of the
Fund and are the fastest growing sector of the U.S. domestic corporate bond
market. Investing in Yankee issues has enabled us to capitalize on opportunities
in foreign bonds without exposing our investors to currency risk. With recent
market turmoil originating in the Pacific Rim countries, yield spreads on some
of the Fund's Yankee issues have widened. This has resulted in negative relative
performance on these securities. AT CURRENT YIELD LEVELS, WE FEEL THE FUND'S
YANKEE BONDS REPRESENT EXCEPTIONAL VALUE. We anticipate that they will
outperform similarly rated investments in the coming year.
CONSISTENCY IS THE HALLMARK OF OUR APPROACH
Since Firstar Short-Term Bond Market Fund's inception on 12/29/89, we have
adhered to the same disciplined management approach. The past eight+ years have
brought us more volatility in the fixed-income markets than many would have
expected. THE HALLMARK OF OUR APPROACH HAS BEEN THE FUND'S CONSITENT
PERFORMANCE IN ALL MARKET CLIMATES TO DATE. Firstar Short-Term Bond Market
Fund's returns have been comparable to the benchmark in periods of rising
interest rates and falling interest rates. Our goal is to continue to deliver
this same consistent performance in the future. We look forward to continuing to
serve you as Firstar Fund shareowners.
PORTFOLIO MANAGER PROFILE
- --------------------------------------------------------------------------------
(PHOTO) (PHOTO)
MARY ELLEN STANEK, CFA DANIEL A. TRANCHITA, CFA
MARY ELLEN STANEK, CFA, President and Chief Executive Officer of Firstar
Investment Research & Management Company, LLC (FIRMCO) and DANIEL A. TRANCHITA,
CFA, Vice President and Senior Portfolio Manager, co-manage the Fund - Mary
Ellen since its inception on December 29, 1989 and Dan since January 1, 1993.
Mary Ellen has 19 years of investment management experience and was named a
Director of FIRMCO in 1992. Prior to joining FIRMCO, she headed the Fixed Income
and Quantitative Investment Management Department at Firstar Trust Company.
Mary Ellen received her BAfrom Marquette University in 1978 and her MBA from the
University of Wisconsin-Milwaukee in 1984. Dan has been with Firstar since 1989
and has nine years of investment management experience. He received his BA in
1987 and his MBA in 1989 from Marquette University. Mary Ellen and Dan are both
Chartered Financial Analysts.
<PAGE>
(LOGO) FIRSTARFUNDS
<TABLE>
<CAPTION>
12/19/89 10/90 10/91 10/92 10/93 10/94 10/95 10/96 10/97 10/98
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FIRSTAR SHORT-TERM BOND
MARKET FUND -
INSTITUTIONAL $10,000 $10,464 $11,865 $12,966 $13,833 $14,035 $15,290 $16,177 $17,223 $18,402
FIRSTAR SHORT-TERM BOND
MARKET FUND - A - NO LOAD $10,000 $10,464 $11,865 $12,966 $13,835 $14,037 $15,264 $16,109 $17,109 $18,234
FIRSTAR SHORT-TERM BOND
MARKET FUND - A - LOAD <F1> $9,800 $10,259 $11,632 $12,713 $13,567 $13,769 $14,972 $15,801 $16,782 $17,869
LEHMAN 1-3 YEAR GOVT./
CORP. INDEX <F2> $10,000 $10,738 $11,964 $12,943 $13,712 $13,879 $15,118 $16,030 $17,073 $18,364
</TABLE>
This chart assumes an initial investment of $10,000 made on 12/29/89
(inception). Per form ance reflects fee waivers in effect. In the absence of fee
waivers, total return would be reduced. Returns shown include the reinvest ment
of all dividends and other distributions. Past performance is not predictive of
future performance. Investment return and principal value will fluctuate, so
that your shares, when redeemed, may be worth more or less than their original
cost.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
Since
Inception
1 Year 3 Years 5 Years 12/29/89
- --------------------------------------------------------------------------------
FIRSTAR SHORT-TERM BOND
MARKET FUND - INSTITUTIONAL 6.8 6.4 5.9 7.1
FIRSTAR SHORT-TERM BOND
MARKET FUND - A - NO LOAD 6.6 6.1 5.7 7.0
FIRSTAR SHORT-TERM BOND
MARKET FUND - A - LOAD<F1> 4.4 5.4 5.2 6.8
LEHMAN BROTHERS 1-3 YEAR
GOV'T./CORP. BOND INDEX<F2> 7.6 6.7 6.0 7.1
- --------------------------------------------------------------------------------
A = Series A (retail class)
<F1> Reflects maximum sales charge of 2.0%. Effective January 1, 1999 the
maximum sales charge will be 3.75%.
<F2> The Lehman Brothers 1-3 Year Gov't./Corp. Bond Index is an unmanaged market
value weighted index measuring both principal price changes of, and income
provided by, the underlying universe of securities that comprise the
index. Securities included in the index must meet the following criteria:
fixed as opposed to variable rate; not less than one year to maturity; not
more than three years remaining to maturity; and minimum outstanding par
value of $100 million. An investment cannot be made directly in an index.
Effective at the close of business on January 9, 1995, Firstar Funds began to
offer Series A (retail) shares and Series Institutional shares. Series A shares,
unlike the Series Institutional shares, have a 2% maximum sales load and are
subject to an annual 0.25% service organization fee. The load performance for
the Series A shares has been restated to reflect the impact of the sales charge.
Prior to January 10, 1995, Series A performance does not reflect the service
organization fees. If service organization fees had been reflected, performance
would be reduced. In addition, the purchase price adjustment on the Fund no
longer applies to either the Series A or Series Institutional shares. The
performance for the Series Institutional and Series A shares has been restated
to reflect the elimination of the purchase price adjustment. Performance
reflects fee waivers in effect. In the absence of fee waivers, total return
would be reduced.
SECTOR DISTRIBUTION
10/31/98
- ----------------------------------------------
U.S. TREASURY 23%
- ----------------------------------------------
U.S. GOVERNMENT AGENCY 0%
- ----------------------------------------------
MORTGAGE-BACKED<F1> 17%
- ----------------------------------------------
FINANCE, BANKING, BROKERAGE 15%
- ----------------------------------------------
INDUSTRIAL 3%
- ----------------------------------------------
UTILITY 1%
- ----------------------------------------------
INTERNATIONAL/YANKEE 7%
- ----------------------------------------------
ASSET-BACKED 29%
- ----------------------------------------------
CASH AND OTHER 4%
- ----------------------------------------------
TAXABLE MUNICIPAL 1%
- ----------------------------------------------
TOTAL 100%
- ----------------------------------------------
PORTFOLIO COMPOSITION
10/31/98
- ----------------------------------------------
AVERAGE MATURITY 2.6 YEARS
- ----------------------------------------------
AVERAGE DURATION 1.7 YEARS
- ----------------------------------------------
<F1> incl. U.S. Govt. Agency-Backed
QUALITY DISTRIBUTION
10/31/98
- ----------------------------------------------
U.S. TREASURY 23%
- ----------------------------------------------
U.S. GOVERNMENT AGENCY 8%
- ----------------------------------------------
Aaa 40%
- ----------------------------------------------
Aa 1%
- ----------------------------------------------
A 23%
- ----------------------------------------------
Baa 4%
- ----------------------------------------------
Ba 1%
- ----------------------------------------------
TOTAL 100%
- ----------------------------------------------
SEC 30-DAY YIELD
INSTITUTIONAL 5.28%
- ----------------------------------------------
A - NO LOAD 5.02%
- ----------------------------------------------
A - LOAD 4.92%
- ----------------------------------------------
TOTAL FUND NET ASSETS
10/31/98
- ----------------------------------------------
$196,103,222
- ----------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
(LOGO) FIRSTARFUNDS
- --------------------------------------------------------------------------------
INTERMEDIATE BOND MARKET FUND
- --------------------------------------------------------------------------------
FIRSTAR INTERMEDIATE BOND MARKET FUND seeks to provide an annual rate of total
return comparable to that of the Lehman Brothers Intermediate
Government/Corporate Bond Index, before Fund expenses. In order to achieve its
objective, the Fund may invest in securities with long remaining maturities (10
years or longer) in addition to shorter bonds and notes.
INTEREST RATE RISK
This Fund's maturity mix gives the portfolio an overall AVERAGE MATURITY OF 5.4
YEARS, and A DURATION OF 3.3 YEARS. Firstar Intermediate Bond Fund's duration is
just over three years and is between the durations of the other Firstar taxable
bond funds. If interest rates rise, this Fund is expected to display more
downward price movement than the Short-Term Bond Market Fund and less than the
Bond IMMDEX/TM Fund. But, when interest rates fall, this Fund is expected to
exhibit more upward price movement than Short-Term Bond Market Fund and less
than the Bond IMMDEX/TM Fund. The significant decline in interest rates (five-
year U.S. Treasury rates fell from 5.7% to 4.2%) combined with the intermediate
average maturity and duration of this Fund, all had a positive impact on its
performance for the fiscal year ended October 31, 1998. While the Fund's
duration is the single most significant determinant of its return, the Fund's
allocation to the following sectors is also important.
U.S. TREASURY NOTES AND BONDS
U.S. Treasuries represented the strongest performing sector of the bond market
over the last twelve months. The Fund's significant allocation to the Treasury
sector (35%) helped it generate a solid total return for the fiscal year ended
October 31, 1998.
CORPORATE BONDS
The Fund's careful, research-intensive process of selecting investment-grade
corporate issues and asset-backed securities gives the Fund a high-quality
focus. Although corporate bonds lagged the performance of Treasuries this past
year, the Fund's high-quality bias mitigated the effect of widening yield
spreads on corporate bonds. Sectors we currently favor include finance, banking
and brokerage, dollar-denominated international and asset-backed securities.
Asset-backed securities in the Fund are all rated Aaa/AAA by Moody's or Standard
& Poor's. They represent the highest credit quality of non-U.S. government
investments available. OVER HALF OF THE FUND (63%) IS INVESTED IN OBLIGATIONS
RATED AAA/AAA OR HIGHER.
MORTGAGE-BACKED SECURITIES
Because of the intrinsic uncertainty in the cash flow of mortgage-backed
securities, most are not suitable for the Fund's duration-neutral strategy.
Firstar Intermediate Bond Market Fund purchases only mortgage securities with
more predictable cash flows which comprised just 9% of the Fund as of October
31, 1998. Although mortgage-backed securities also lagged the performance of
Treasuries this past year, the careful selection of securities with stable
structures and an overall modest allocation to this sector minimized the effect
of widening yield spreads.
FOREIGN EXPOSURE RISK
DURING THIS PERIOD, THE FUND DID NOT INVEST IN SECURITIES DENOMINATED IN FOREIGN
CURRENCIES. AS SUCH, IT HAS NO DIRECT EXPOSURE TO FOREIGN CURRENCY FLUCTUATIONS.
The Fund does, however, invest in Yankee securities. Yankees are obligations of
foreign entities denominated in U.S. dollars. Yankee investments total 7% of the
Fund and are the fastest growing sector of the U.S. domestic corporate bond
market. Investing in Yankee issues has enabled us to capitalize on opportunities
in foreign bonds without exposing our investors to currency risk. With recent
market turmoil originating in the Pacific Rim countries, yield spreads on some
of the Fund's Yankee issues have widened. This has resulted in negative relative
performance on these securities. AT CURRENT YIELD LEVELS, WE FEEL THE FUND'S
YANKEE BONDS REPRESENT EXCEPTIONAL VALUE. We anticipate that they will
outperform similarly rated investments in the coming year.
CONSISTENCY IS THE HALLMARK OF OUR APPROACH
Since Firstar Intermediate Bond Market Fund's inception on 1/5/93, we have
adhered to the same disciplined management approach. The past five+ years have
brought us more volatility in the fixed-income markets than many would have
expected. THE HALLMARK OF OUR APPROACH HAS BEEN THE FUND'S CONSISTENT
PERFORMANCE IN ALL MARKET CLIMATES. Firstar Intermediate Bond Market Fund's
returns have been comparable to the benchmark in periods of rising interest
rates and falling interest rates. Our goal is to continue to deliver this same
consistent performance in the future. We look forward to continuing to serve you
as Firstar Fund shareowners.
PORTFOLIO MANAGER PROFILE
- --------------------------------------------------------------------------------
(PHOTO) (PHOTO)
MARY ELLEN STANEK, CFA TERESA R. WESTMAN, CFA
MARY ELLEN STANEK, CFA, President and Chief Executive Officer of Firstar
Investment Research & Management Company, LLC (FIRMCO) and TERESA R. WESTMAN,
CFA, Senior Vice President and Senior Portfolio Manager have co-managed the Fund
since its inception on January 5, 1993. Mary Ellen has 19 years of investment
management experience and was named a Director of FIRMCO in 1992. Prior to
joining FIRMCO, she headed the Fixed Income and Quantitative Investment
Management Department at Firstar Trust Company. Mary Ellen received her BA from
Marquette University in 1978 and her MBA from the University of Wisconsin-
Milwaukee in 1984. Teresa has been with Firstar since 1987 and has 11 years of
investment management experience. Teresa received her BA from Augustana College
in 1985 and her MBA from the University of Chicago in 1991. Mary Ellen and
Teresa are both Chartered Financial Analysts.
<PAGE>
(LOGO) FIRSTARFUNDS
<TABLE>
<CAPTION>
1/5/93 10/93 10/94 10/95 10/96 10/97 10/98
-------- -------- -------- -------- -------- -------- --------
<C> <C> <C> <C> <C> <C> <C>
FIRSTAR INTERMEDIATE BOND
MARKET FUND -
INSTITUTIONAL $10,000 $10,858 $10,670 $11,978 $12,669 $13,602 $14,665
FIRSTAR INTERMEDIATE BOND
MARKET FUND - A - NO LOAD $10,000 $10,858 $10,671 $11,956 $12,614 $13,508 $14,529
FIRSTAR INTERMEDIATE BOND
MARKET FUND - A - LOAD <F1> $9,800 $10,646 $10,463 $11,723 $12,369 $13,246 $14,238
LEHMAN INTERMEDIATE GOVT./
CORP. BOND INDEX <F2> $10,000 $10,844 $10,635 $11,968 $12,663 $13,612 $14,853
</TABLE>
This chart assumes an initial investment of $10,000 made on 1/5/93 (inception).
Performance reflects fee waivers in effect. In the absence of fee waivers,
total return would be reduced. Returns shown include the reinvestment of all
dividends and other distributions. Past performance is not predictive of future
performance. Investment return and principal value will fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
Since
Inception
1 Year 3 Years 5 Years 1/5/93
- --------------------------------------------------------------------------------
FIRSTAR INTERMEDIATE BOND
MARKET FUND - INSTITUTIONAL 7.8 7.0 6.2 6.8
FIRSTAR INTERMEDIATE BOND
MARKET FUND - A - NO LOAD 7.6 6.7 6.0 6.6
FIRSTAR INTERMEDIATE BOND
MARKET FUND - A - LOAD<F1> 5.4 6.0 5.6 6.3
LEHMAN BROTHERS INTERMEDIATE
GOV'T./CORP. BOND INDEX<F2> 9.1 7.5 6.5 7.0
- --------------------------------------------------------------------------------
A = Series A (retail class)
<F1> Reflects maximum sales charge of 2.0%. Effective January 1, 1999 the
maximum sales charge will be 3.75%.
<F2> The Lehman Brothers Intermediate Gov't./Corp. Bond Index is an unmanaged
market value weighted index measuring both principal price changes of, and
income provided by, the underlying universe of securities that comprise
the index. Securities included in the index must meet the following
critieria: fixed as opposed to variable rate; remaining maturity of one to
ten years; minimum outstanding par value of $100 million; and rated
investment grade or higher by Moody's, Standard & Poor's, or Fitch, in that
order. An investment cannot be made directly in an index.
Effective at the close of business on January 9, 1995, Firstar Funds began to
offer Series A (retail) shares and Series Institutional shares. Series A shares,
unlike the Series Institutional shares, have a 2% maximum sales load and are
subject to an annual 0.25% service organization fee. The load performance for
the Series A shares has been restated to reflect the impact of the sales charge.
Prior to January 10, 1995, Series A performance does not reflect the service
organization fees. If service organization fees had been reflected, performance
would be reduced. In addition, the purchase price adjustment on the Fund no
longer applies to either the Series A or Series Institutional shares. The
performance for the Series Institutional and Series A shares has been restated
to reflect the elimination of the purchase price adjustment. Performance
reflects fee waivers in effect. In the absence of fee waivers, total return
would be reduced.
SECTOR DISTRIBUTION
10/31/98
- ----------------------------------------------
U.S. TREASURY 35%
- ----------------------------------------------
U.S. GOVERNMENT AGENCY 0%
- ----------------------------------------------
MORTGAGE-BACKED<F1> 9%
- ----------------------------------------------
FINANCE, BANKING, BROKERAGE 21%
- ----------------------------------------------
INDUSTRIAL 7%
- ----------------------------------------------
UTILITY 1%
- ----------------------------------------------
INTERNATIONAL/YANKEE 7%
- ----------------------------------------------
ASSET-BACKED 17%
- ----------------------------------------------
CASH 3%
- ----------------------------------------------
TOTAL 100%
- ----------------------------------------------
PORTFOLIO COMPOSITION 10/31/98
- ----------------------------------------------
AVERAGE MATURITY 5.4 YEARS
- ----------------------------------------------
AVERAGE DURATION 3.3 YEARS
- ----------------------------------------------
<F1> incl. U.S. Gov't. Agency-Backed
QUALITY DISTRIBUTION
10/31/98
- ----------------------------------------------
U.S. TREASURY 35%
- ----------------------------------------------
U.S. GOVERNMENT AGENCY 5%
- ----------------------------------------------
Aaa 23%
- ----------------------------------------------
Aa 4%
- ----------------------------------------------
A 25%
- ----------------------------------------------
Baa 7%
- ----------------------------------------------
Ba 1%
- ----------------------------------------------
TOTAL 100%
- ----------------------------------------------
SEC30-DAY YIELD
- ----------------------------------------------
INSTITUTIONAL 5.05%
- ----------------------------------------------
A - NO LOAD 4.79%
- ----------------------------------------------
A - LOAD 4.70%
- ----------------------------------------------
TOTAL FUND NET ASSETS
10/31/98
- ----------------------------------------------
$320,839,182
- ----------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
(LOGO) FIRSTARFUNDS
- --------------------------------------------------------------------------------
TAX-EXEMPT INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
FIRSTAR TAX-EXEMPT INTERMEDIATE BOND FUND seeks to provide current income exempt
from federal taxes and emphasizes total return with relatively low volatility of
principal. In order to achieve its objective, the Fund may invest in securities
with long remaining maturities (10 years or longer) in addition to shorter bonds
and notes. Currently the Fund does not purchase any issues which are subject to
the alternative minimum tax.
INTEREST RATE RISK
This Fund's maturity mix gives the portfolio an overall AVERAGE MATURITY OF 4.9
YEARS, and A DURATION OF 4.0 YEARS. Since the Tax-Exempt Intermediate Bond
Fund's duration is four years, its NAV will be less price sensitive to changes
in interest rates than the typical municipal debt fund which, according to
Lipper Analytical Services, has an average duration of 7.7 years. The moderate
decline in interest rates (five-year municipal bond rates fell from
approximately 4.25% to 3.80%), combined with the intermediate average maturity
and duration of this Fund all had a positive impact on its performance for the
fiscal year ended October 31, 1998. While the Fund's duration is the single most
significant determinant of its return, the Fund's sector allocation is also
important.
PREREFUNDED MUNICIPAL FUNDS
Prerefunded municipal bonds are municipal bonds that hold U.S. Treasury issues
in an escrow account, assuring the timely repayment of interest and principal.
As of October 31, 1998, 66% OF THE FUND'S HOLDINGS WERE INVESTED IN PREREFUNDED
MUNICIPAL BONDS, RESULTING IN AN AVERAGE CREDIT QUALITY RATING OF AAA FOR THE
FUND. With credit spreads in the municipal bond market remaining relatively
tight, the Fund's focus on high quality issues will help minimize the effects of
any widening of credit spreads.
CONSISTENCY IS THE HALLMARK OF OUR APPROACH
Since Firstar Tax-Exempt Intermediate Bond Fund's inception on 2/8/93, we have
adhered to the same disciplined management approach. The past five+ years have
brought us more volatility in the fixed-income markets than many would have
expected. THE HALLMARK OF OUR APPROACH HAS BEEN THE FUND'S CONSISTENT
PERFORMANCE IN ALL MARKET CLIMATES TO DATE. Our goal is to continue to deliver
this same consistent performance in the future. We look forward to continuing to
serve you as Firstar Fund shareowners.
(PHOTO)
WARREN D. PIERSON, CFA
PORTFOLIO MANAGER PROFILE
- --------------------------------------------------------------------------------
WARREN D. PIERSON, CFA, Vice President and Senior Portfolio Manager of Firstar
Investment Research & Management Company, LLC (FIRMCO) has managed the Fund
since June 22, 1993. Since joining Firstar in 1985, his responsibilities have
included trading government and government agency issues, as well as money
market instruments. His current portfolio management responsibilities focus on
the tax-exempt bond market. Warren received his BA from Lawrence University in
1984, and has 13 years of investment management experience. He is a Chartered
Financial Analyst, as well as a member of the Association for Investment
Management and Research and the Milwaukee Investment Analysts Society.
<PAGE>
(LOGO) FIRSTARFUNDS
<TABLE>
<CAPTION>
2/8/93 10/93 10/94 10/95 10/96 10/97 10/98
-------- -------- -------- -------- -------- -------- --------
<C> <C> <C> <C> <C> <C> <C>
FIRSTAR TAX-EXEMPT
INTERMEDIATE BOND MARKET
FUND - INSTITUTIONAL $10,000 $10,536 $10,459 $11,440 $11,900 $12,609 $13,351
FIRSTAR TAX-EXEMPT
INTERMEDIATE BOND MARKET
FUND - A - NO LOAD $10,000 $10,536 $10,459 $11,408 $11,849 $12,513 $13,229
FIRSTAR TAX-EXEMPT
INTERMEDIATE BOND MARKET
FUND - A - LOAD <F1> $9,800 $10,329 $10,254 $11,184 $11,616 $12,266 $12,694
LEHMAN 5-YR. G.O. BOND
INDEX <F2> $10,000 $10,557 $10,499 $11,586 $12,143 $12,934 $13,777
</TABLE>
This chart assumes an initial investment of $10,000 made on 2/8/93 (inception).
Performance reflects fee waivers in effect. In the absence of fee waivers,
total return would be reduced. Returns shown include the reinvestment of all
dividends and other distributions. Past performance is not predictive of future
performance. Investment return and principal value will fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
Since
Inception
1 Year 3 Years 5 Years 2/8/93
- --------------------------------------------------------------------------------
FIRSTAR TAX-EXEMPT INTERMEDIATE
BOND FUND - INSTITUTIONAL 5.9 5.3 4.9 5.2
FIRSTAR TAX-EXEMPT INTERMEDIATE
BOND FUND - A - NO LOAD 5.7 5.1 4.7 5.0
FIRSTAR TAX-EXEMPT INTERMEDIATE
BOND FUND - A - LOAD<F1> 3.6 4.4 4.2 4.6
LEHMAN BROTHERS 5 YEAR GENERAL
OBLIGATION BOND INDEX<F2> 6.5 5.9 5.5 5.8
- --------------------------------------------------------------------------------
A = Series A (retail class)
<F1> Reflects maximum sales charge of 2.0%. Effective January 1, 1999 the
maximum sales charge will be 3.75%.
<F2> The Lehman Brothers 5 Year General Obligation Bond Index, an unmanaged
index, is a total return performance benchmark for the investment-grade
tax-exempt bond market. To be included in this index, a municipal bond must
be a state or local General Obligation bond; have a minimum credit rating
of at least Baa; have been issued as part of an offering of at least $50
million; have a maturity amount outstanding of at least $3 million; have
been issued within the last five years; and have a maturity of 4 to 6
years. An investment cannot be made directly in an index.
Effective at the close of business on January 9, 1995, Firstar Funds began to
offer Series A (retail) shares and Series Institutional shares. Series A shares,
unlike the Series Institutional shares, have a 2% maximum sales load and are
subject to an annual 0.25% service organization fee. The load performance for
the Series A shares has been restated to reflect the impact of the sales charge.
Prior to January 10, 1995, Series A performance does not reflect the service
organization fees. If service organization fees had been reflected, performance
would be reduced. In addition, the purchase price adjustment on the Fund no
longer applies to either the Series A or Series Institutional shares. The
performance for the Series Institutional and Series A shares has been restated
to reflect the elimination of the purchase price adjustment. Performance
reflects fee waivers in effect. In the absence of fee waivers, total return
would be reduced.
SECTOR DISTRIBUTION
10/31/98
- ----------------------------------------------
GENERAL OBLIGATIONS 7%
- ----------------------------------------------
ESCROWED/PREREFUNDED 66%
- ----------------------------------------------
INSURED 18%
- ----------------------------------------------
REVENUE 2%
- ----------------------------------------------
CASH AND OTHER 7%
- ----------------------------------------------
TOTAL 100%
- ----------------------------------------------
QUALITY DISTRIBUTION
10/31/98
- ----------------------------------------------
Aaa 91%
- ----------------------------------------------
Aa 9%
- ----------------------------------------------
TOTAL 100%
- ----------------------------------------------
PORTFOLIO COMPOSITION
10/31/98
- ----------------------------------------------
AVERAGE MATURITY 4.9 YEARS
- ----------------------------------------------
AVERAGE DURATION 4.0 YEARS
- ----------------------------------------------
SEC 30-DAY YIELD
- ----------------------------------------------
INSTITUTIONAL 3.69%
- ----------------------------------------------
A - NO LOAD 3.44%
- ----------------------------------------------
A - LOAD 3.37%
- ----------------------------------------------
TOTAL FUND NET ASSETS
10/31/98
- ----------------------------------------------
$98,893,112
- ----------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
(LOGO) FIRSTARFUNDS
- --------------------------------------------------------------------------------
BOND IMMDEX/TM FUND
- --------------------------------------------------------------------------------
FIRSTAR BOND IMMDEX/TM FUND seeks to provide an annual rate of total return
comparable to that of the Lehman Brothers Government/Corporate Bond Index,
before Fund expenses. In order to achieve its objective, the Fund may invest in
securities with very long remaining maturities (30 years or longer) in addition
to shorter bonds and notes.
INTEREST RATE RISK
This Fund's maturity mix gives the portfolio an OVERALL AVERAGE MATURITY OF 10.9
YEARS, and A DURATION OF 5.5 YEARS. Since the Bond IMMDEX/TM Fund's duration is
just over five years, it is the longest of all the Firstar taxable bond funds
and is expected to display the greatest downward price movement when interest
rates increase, but is expected to exhibit the greatest upward price movement
when interest rates decrease. The significant decline in interest rates (10-year
U.S. Treasury rates fell from 5.8% to 4.6%) combined with a longer average
maturity and duration of this Fund, all had a significant positive impact on the
performance for the fiscal year ended October 31, 1998. While the Fund's
duration is the single most significant determinant of its return, the Fund's
allocation to the following sectors is also important.
U.S. TREASURY NOTES AND BONDS
U.S. Treasuries represented the strongest performing sector of the bond market
over the last twelve months. The Fund's significant allocation to the Treasury
sector (41%) helped it generate a solid total return for the fiscal year ended
October 31, 1998.
CORPORATE BONDS
The Fund's careful, research-intensive process of selecting investment-grade
corporate issues and asset-backed securities gives the Fund a high-quality
focus. Although corporate bonds lagged the performance of Treasuries this past
year, the Fund's high-quality bias mitigated the effect of widening yield
spreads on corporate bonds. Sectors we currently favor include finance, banking
and brokerage, dollar-denominated international and asset-backed securities. We
are currently underweighted in the utility sector. Asset-backed securities in
the Fund are all rated Aaa/AAA by Moody's or Standard & Poor's. They represent
the highest credit quality of non-U.S. government investments available. OVER
HALF OF THE FUND (58%) IS INVESTED IN OBLIGATIONS RATED AAA/AAA OR HIGHER.
MORTGAGE-BACKED SECURITIES
Because of the intrinsic uncertainty in the cash flow of mortgage-backed
securities, most are not suitable for the Fund's duration-neutral strategy.
Firstar Bond IMMDEX/TM Fund purchases only mortgage securities with more
predictable cash flows which comprised just 7% of the Fund as of October 31,
1998. Although mortgage-backed securities also lagged the performance of
Treasuries this past year, the careful selection of securities with stable
structures and an overall modest allocation to this sector minimized the effect
of widening yield spreads.
FOREIGN EXPOSURE RISK
DURING THIS PERIOD, THE FUND DID NOT INVEST IN SECURITIES DENOMINATED IN FOREIGN
CURRENCIES. AS SUCH, IT HAS NO DIRECT EXPOSURE TO FOREIGN CURRENCY FLUCTUATIONS.
The Fund does, however, invest in Yankee securities. Yankees are obligations of
foreign entities denominated in U.S. dollars. Yankee investments total 9% of the
Fund and are the fastest growing sector of the U.S. domestic corporate bond
market. Investing in Yankee issues has enabled us to capitalize on opportunities
in foreign bonds without exposing our investors to currency risk. With recent
market turmoil originating in the Pacific Rim countries, yield spreads on some
of the Fund's Yankee issues have widened. This has resulted in negative relative
performance on these securities. AT CURRENT YIELD LEVELS, WE FEEL THE FUND'S
YANKEE BONDS REPRESENT EXCEPTIONAL VALUE. We anticipate that they will
outperform similarly rated investments in the coming year.
CONSISTENCY IS THE HALLMARK OF OUR APPROACH
Since Firstar Bond IMMDEX/TM Fund's inception on 12/29/89, we have adhered to
the same disciplined management approach. The past eight+ years have brought us
more volatility in the fixed-income markets than many would have expected. The
hallmark of our approach has been the Fund's consistent performance in all
market climates. Firstar Bond IMMDEX/TM Fund's returns have been comparable to
the benchmark in periods of rising interest rates and falling interest rates.
Our goal is to continue to deliver this same consistent performance in the
future. We look forward to continuing to serve you as Firstar Fund shareowners.
PORTFOLIO MANAGER PROFILE
- --------------------------------------------------------------------------------
(PHOTO) (PHOTO)
MARY ELLEN STANEK, CFA TERESA R. WESTMAN, CFA
MARY ELLEN STANEK, CFA, President and Chief Executive Officer of Firstar
Investment Research & Management Company, LLC (FIRMCO) and TERESA R. WESTMAN,
CFA, Senior Vice President and Senior Portfolio Manager co-manage the Fund -
Mary Ellen since its inception on December 29, 1989 and Teresa since January 1,
1992. Mary Ellen has 19 years of investment management experience and was named
a Director of FIRMCO in 1992. Prior to joining FIRMCO, she headed the Fixed
Income and Quantitative Investment Management Department at Firstar Trust
Company. Mary Ellen received her BA from Marquette University in 1978 and her
MBA from the University of Wisconsin-Milwaukee in 1984. Teresa has been with
Firstar since 1987 and has 11 years of investment management experience.
Teresa received her BA from Augustana College in 1985 and her MBA from the
University of Chicago in 1991. Mary Ellen and Teresa are both Chartered
Financial Analysts.
<PAGE>
(LOGO) FIRSTARFUNDS
<TABLE>
<CAPTION>
12/29/89 10/90 10/91 10/92 10/93 10/94 10/95 10/96 10/97 10/98
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FIRSTAR BOND IMMDEX/TM FUND -
INSTITUTIONAL $10,000 $10,421 $12,105 $13,376 $15,154 $14,565 $16,934 $17,840 $19,428 $21,256
FIRSTAR BOND IMMDEX/TM FUND -
A - NO LOAD $10,000 $10,421 $12,105 $13,375 $15,154 $14,565 $16,903 $17,758 $19,300 $21,057
FIRSTAR BOND IMMDEX/TM FUND -
A - LOAD <F1> $9,800 $10,213 $11,863 $13,108 $14,851 $14,274 $16,565 $17,403 $18,914 $20,636
LEHMAN GOVT/CORP BOND INDEX <F2> $10,000 $10,440 $12,045 $13,312 $15,126 $14,424 $16,755 $17,658 $19,214 $21,189
</TABLE>
This chart assumes an initial investment of $10,000 made on 12/29/89
(inception). Performance reflects fee waivers in effect. In the absence of fee
waivers, total return would be reduced. Returns shown include the reinvestment
of all dividends and other distributions. Past performance is not predictive of
future performance. Investment return and principal value will fluctuate, so
that your shares, when redeemed, may be worth more or less than their original
cost.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
Since
Inception
1 Year 3 Years 5 Years 12/29/89
- --------------------------------------------------------------------------------
FIRSTAR BOND IMMDEX/TM FUND -
INSTITUTIONAL 9.4 7.9 7.0 8.9
FIRSTAR BOND IMMDEX/TM FUND -
A - NO LOAD 9.1 7.6 6.8 8.8
FIRSTAR BOND IMMDEX/TM FUND -
A - LOAD<F1> 7.0 6.9 6.4 8.5
LEHMAN BROTHERS GOV'T/CORP.
BOND INDEX<F2> 10.3 8.1 7.0 8.9
- --------------------------------------------------------------------------------
A = Series A (retail class)
<F1> Reflects maximum sales charge of 2.0%. Effective January 1, 1999 the
maximum sales charge will be 3.75%.
<F2> The Lehman Brothers Gov't/Corp. Bond Index is an unmanaged market value
weighted index measuring both principal price changes of, and income
provided by, the underlying universe of securities that comprise the index.
Securities included in the index must meet the following criteria: fixed as
opposed to variable rate; not less than one year to maturity; minimum
outstanding par value of $100 million; and rated investment grade or higher
by Moody's, Standard & Poor's, or Fitch, in that order. An investment
cannot be made directly in an index.
Effective at the close of business on January 9, 1995, Firstar Funds began to
offer Series A (retail) shares and Series Institutional shares. Series A shares,
unlike the Series Institutional shares, have a 2% maximum sales load and are
subject to an annual 0.25% service organization fee. The load performance for
the Series A shares has been restated to reflect the impact of the sales charge.
Prior to January 10, 1995, Series A performance does not reflect the service
organization fees. If service organization fees had been reflected, performance
would be reduced. In addition, the purchase price adjustment on the Fund no
longer applies to either the Series A or Series Institutional shares. The
performance for the Series A and Series Institutional shares has been restated
to reflect the elimination of the purchase price adjustment. Performance
reflects fee waivers in effect. In the absence of fee waivers, total return
would be reduced.
SECTOR DISTRIBUTION
10/31/98
- ----------------------------------------------
U.S. TREASURY 41%
- ----------------------------------------------
U.S. GOVERNMENT AGENCY 0%
- ----------------------------------------------
MORTGAGE-BACKED<F1> 7%
- ----------------------------------------------
FINANCE, BANKING, BROKERAGE 19%
- ----------------------------------------------
INDUSTRIAL 9%
- ----------------------------------------------
UTILITY 3%
- ----------------------------------------------
INTERNATIONAL/YANKEE 9%
- ----------------------------------------------
ASSET-BACKED 10%
- ----------------------------------------------
CASH 2%
- ----------------------------------------------
TOTAL 100%
- ----------------------------------------------
PORTFOLIO DISTRIBUTION
10/31/98
- ----------------------------------------------
AVERAGE MATURITY 10.9 YEARS
- ----------------------------------------------
AVERAGE DURATION 5.5 YEARS
- ----------------------------------------------
<F1> incl. U.S. Gov't. Agency-Backed
QUALITY DISTRIBUTION
10/31/98
- ----------------------------------------------
U.S. TREASURY 41%
- ----------------------------------------------
U.S. GOVERNMENT AGENCY 6%
- ----------------------------------------------
Aaa 11%
- ----------------------------------------------
Aa 5%
- ----------------------------------------------
A 24%
- ----------------------------------------------
Baa 12%
- ----------------------------------------------
Ba 1%
- ----------------------------------------------
TOTAL 100%
- ----------------------------------------------
SEC 30-DAY YIELD
- ----------------------------------------------
INSTITUTIONAL 5.35%
- ----------------------------------------------
A - NO LOAD 5.10%
- ----------------------------------------------
A - LOAD 5.00%
- ----------------------------------------------
TOTAL FUND NET ASSETS
10/31/98
- ----------------------------------------------
$566,725,700
- ----------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
(LOGO) FIRSTARFUNDS
STATEMENT OF ASSETS AND LIABILITIES
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
OCTOBER 31, 1998
<TABLE>
<CAPTION>
SHORT-TERM INTERMEDIATE TAX-EXEMPT BOND
(Unaudited) BOND MARKET BOND MARKET INTERMEDIATE IMMDEX/TM
FUND FUND BOND FUND FUND
------------ ------------ ------------ ------------
<C> <C> <C> <C>
ASSETS:
Investments, at value (cost $196,022, $310,209,
$92,357 and $532,830, respectively) $198,077 $319,501 $ 94,848 $568,708
Interest receivable 2,166 4,527 1,747 8,956
Capital shares sold 664 650 2,362 1,590
Receivable for securities sold - 4,134 - -
Other Assets 12 13 19 19
---------- ---------- ---------- ----------
Total Assets 200,919 328,825 98,976 579,273
---------- ---------- ---------- ----------
LIABILITIES:
Payable for securities purchased 4,303 7,197 - 11,772
Capital shares redeemed 321 590 12 490
Payable to affiliates 139 171 53 261
Accrued expenses and other liabilities 53 28 18 24
---------- ---------- ---------- ----------
Total Liabilities 4,816 7,986 83 12,547
---------- ---------- ---------- ----------
NET ASSETS $196,103 $320,839 $ 98,893 $566,726
========== ========== ========== ==========
NET ASSETS CONSIST OF:
Capital stock $196,294 $311,041 $ 96,298 $530,760
Undistributed net investment income 85 156 26 292
Undistributed accumulated net realized gains (losses) (2,331) 350 78 (204)
Unrealized net appreciation on investments 2,055 9,292 2,491 35,878
---------- ---------- ---------- ----------
Total Net Assets $196,103 $320,839 $ 98,893 $566,726
========== ========== ========== ==========
SERIES A:
Net assets $ 75,410 $ 29,550 $ 32,466 $ 95,301
Shares authorized ($.0001 par value) 500,000 500,000 500,000 500,000
Shares issued and outstanding 7,291 2,813 3,087 3,285
Net asset value and redemption price per share <F1> $10.34 $10.50 $10.52 $29.01
========== ========== ========== ==========
Maximum offering price per share <F1> $10.55 $10.71 $10.73 $29.60
========== ========== ========== ==========
SERIES INSTITUTIONAL:
Net assets $120,693 $291,289 $ 66,427 $471,425
Shares authorized ($.0001 par value) 500,000 500,000 500,000 500,000
Shares issued and outstanding 11,668 27,732 6,315 16,243
Net asset value, redemption price and offering
price per share <F1> $10.34 $10.50 $10.52 $29.02
========== ========== ========== ==========
<F1> Amounts may not recalculate due to rounding.
</TABLE>
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTARFUNDS
STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS)
YEAR ENDED OCTOBER 31, 1998
<TABLE>
<CAPTION>
SHORT-TERM INTERMEDIATE TAX-EXEMPT BOND
BOND MARKET BOND MARKET INTERMEDIATE IMMDEX/TM
FUND FUND BOND FUND FUND
------------ ------------ ------------ ------------
<C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $11,549 $18,647 $4,038 $33,382
---------- ---------- ---------- ----------
EXPENSES:
Investment advisory fees 1,080 1,491 425 1,551
Administration fees 196 326 93 565
Shareowner servicing and accounting costs 128 146 89 177
Service organization fees - Series A 170 62 61 195
Custody fees 38 52 20 95
Federal and state registration fees 30 40 27 50
Professional fees 34 32 27 34
Reports to shareowners 36 10 2 38
Directors' fees and expenses 7 8 7 8
Other 7 7 2 15
---------- ---------- ---------- ----------
Total expenses before waiver 1,726 2,174 753 2,728
Less: Waiver of expenses (656) (621) (267) (365)
---------- ---------- ---------- ----------
Net expenses 1,070 1,553 486 2,363
---------- ---------- ---------- ----------
NET INVESTMENT INCOME 10,479 17,094 3,552 31,019
---------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investment transactions 309 1,171 130 512
Net change in unrealized appreciation on investments 920 4,459 1,175 15,260
---------- ---------- ---------- ----------
Net gain on investments 1,229 5,630 1,305 15,772
---------- ---------- ---------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $11,708 $22,724 $4,857 $46,791
========== ========== ========== ==========
</TABLE>
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTARFUNDS
STATEMENT OF CHANGES IN NET ASSETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
SHORT-TERM INTERMEDIATE TAX-EXEMPT BOND
BOND MARKET BOND MARKET INTERMEDIATE BOND IMMDEX/TM
FUND FUND FUND FUND
------------------ ------------------ ------------------ ------------------
Year Year Year Year Year Year Year Year
ended ended ended ended ended ended ended ended
Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31,
1998 1997 1998 1997 1998 1997 1998 1997
-------- -------- -------- -------- -------- -------- -------- --------
<C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 10,479 $ 12,672 $ 17,094 $ 13,379 $ 3,552 $ 2,460 $ 31,019 $ 27,218
Net realized gain (loss) on investments 309 (1,101) 1,171 242 130 48 512 447
Net change in unrealized appreciation
on investments 920 1,426 4,459 3,016 1,175 805 15,260 9,973
-------- -------- -------- -------- -------- -------- -------- --------
Net increase in net assets
resulting from operations 11,708 12,997 22,724 16,637 4,857 3,313 46,791 37,638
-------- -------- -------- -------- -------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Shares sold 77,282 71,621 93,944 116,096 58,804 35,199 188,904 130,202
Shares issued to owners in
reinvestment of dividends 8,368 10,918 9,710 8,255 1,623 993 25,524 23,217
Shares redeemed (92,444) (87,494) (63,716) (43,261) (34,259) (12,976) (135,752) (104,870)
-------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets resulting
from capital share transactions (6,794) (4,955) 39,938 81,090 26,168 23,216 78,676 48,549
-------- -------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS TO SERIES A
SHAREOWNERS:
From net investment income <F1> (3,882) (3,625) (1,379) (1,090) (991) (589) (4,535) (3,214)
-------- -------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS TO SERIES
INSTITUTIONAL SHAREOWNERS:
From net investment income <F1> (6,580) (9,075) (15,656) (12,285) (2,548) (1,875) (26,368) (24,038)
-------- -------- -------- -------- -------- -------- -------- --------
TOTAL INCREASE (DECREASE)IN NET ASSETS (5,548) (4,658) 45,627 84,352 27,486 24,065 94,564 58,935
NET ASSETS:
Beginning of year 201,651 206,309 275,212 190,860 71,407 47,342 472,162 413,227
-------- -------- -------- -------- -------- -------- -------- --------
End of year (including undistributed
net investment income of $85, $62, $156,
$96, $26, $13, $292 and $158, respectively) $196,103 $201,651 $320,839 $275,212 $98,893 $71,407 $566,726 $472,162
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
<F1> For the Tax-Exempt Intermediate Bond Fund, substantially all distributions
from net investment income are exempt from federal income tax. See notes to
the financial statements.
<PAGE>
(LOGO) FIRSTARFUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SHORT-TERM BOND MARKET FUND
-----------------------------------------------------------------------------------------
Year ended Year ended
Year ended Year ended Year ended October 31, October 31,
October 31, 1998 October 31, 1997 October 31, 1996 1995<F1> 1994
----------------- ----------------- ----------------- ----------------- -----------
Per Share Data: Series Series Series Series Series Series Series Series
A Inst'l. A Inst'l. A Inst'l. A Inst'l.
------ ------ ------ ------ ------ ------ ------ ------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $10.27 $10.27 $10.25 $10.25 $10.28 $10.28 $10.03 $10.03 $10.56
Income from investment operations:
Net investment income <F2> 0.58 0.61 0.60 0.62 0.58<F5> 0.61<F5> 0.61 0.63 0.56
Net realized and unrealized
gains (losses) on securities 0.07 0.07 0.02 0.02 (0.03) (0.03) 0.24 0.24 (0.41)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations 0.65 0.68 0.62 0.64 0.55 0.58 0.85 0.87 0.15
------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income (0.58) (0.61) (0.60) (0.62) (0.58) (0.61) (0.60) (0.62) (0.56)
Distributions from capital gains - - - - - - - - (0.12)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions (0.58) (0.61) (0.60) (0.62) (0.58) (0.61) (0.60) (0.62) (0.68)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of year $10.34 $10.34 $10.27 $10.27 $10.25 $10.25 $10.28 $10.28 $10.03
======= ======= ======= ======= ======= ======= ======= ======= =======
Total return <F3> 6.58% 6.84% 6.21% 6.47% 5.54% 5.80% 8.74% 8.95% 1.46%
Supplemental data and ratios:
Net assets, in thousands,
end of period $75,410 $120,693 $65,567 $136,084 $58,843 $147,466 $47,730 $94,959 $122,368
Ratio of net expenses
to average net assets <F6> 0.75% 0.50% 0.75% 0.50% 0.75% 0.50% 0.69% 0.50% 0.50%
Ratio of net investment income
to average net assets <F7> 5.67% 5.92% 5.79% 6.04% 5.67% 5.92% 6.04% 6.23% 5.43%
Portfolio turnover rate <F4> 78.20% 78.20% 77.12% 77.12% 59.62% 59.62% 100.58% 100.58% 76.13%
</TABLE>
<F1> On January 9, 1995, all previously existing series of shares of each Fund
were reclassified as Series A shares. Effective on January 9, 1995,
Institutional shareowners exchanged their Series A shares for the Funds'
Institutional Series shares. For the year ended October 31, 1995, the
Financial Highlights ratios of net expenses to average net assets, ratios
of net investment income to average net assets, total return and the per
share income from investment operations and distributions are presented on
a basis whereby the Fund's net investment income, net expenses, net
realized and unrealized gains (losses) and distributions for the period
November 1, 1994 through January 9, 1995, were allocated to each class of
shares based upon the relative net assets of each class of shares as of the
close of business on January 9, 1995, and the results thereof combined with
the results of operations and distributions for each applicable class for
the period January 10, 1995 through October 31, 1995.
<F2> For the Tax-Exempt Intermediate Bond Fund, substantially all investment
income is exempt from Federal income tax.
<F3> The total return calculation does not reflect the 2% front end sales charge
for Series A.
<F4> Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
<F5> Net investment income per share is calculated using ending balances prior
to consideration of adjustments for permanent book and tax differences.
<F6> 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 1.11%, 0.86%, 1.11%, 0.86%, 1.12%, 0.87%, 1.10%, 0.91% and 0.90%,
respectively.
<F7> 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 5.31%, 5.56%, 5.43%, 5.68%, 5.30%, 5.55%, 5.63%, 5.82% and
5.03%, respectively.
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTARFUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE BOND MARKET FUND
-----------------------------------------------------------------------------------------
Year ended Year ended
Year ended Year ended Year ended October 31, October 31,
October 31, 1998 October 31, 1997 October 31, 1996 1995<F1> 1994
----------------- ----------------- ----------------- ----------------- -----------
Per Share Data: Series Series Series Series Series Series Series Series
A Inst'l. A Inst'l. A Inst'l. A Inst'l.
------ ------ ------ ------ ------ ------ ------ ------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $10.31 $10.31 $10.19 $10.19 $10.21 $10.21 $9.67 $9.67 $10.45
Income from investment operations:
Net investment income <F2> 0.57 0.59 0.58 0.60 0.56<F5> 0.59<F5> 0.60 0.62 0.51
Net realized and unrealized
gains (losses) on securities 0.19 0.19 0.12 0.12 (0.02) (0.02) 0.53 0.53 (0.69)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations 0.76 0.78 0.70 0.72 0.54 0.57 1.13 1.15 (0.18)
------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income (0.57) (0.59) (0.58) (0.60) (0.56) (0.59) (0.59) (0.61) (0.51)
Distributions from capital gains - - - - - - - - (0.09)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions (0.57) (0.59) (0.58) (0.60) (0.56) (0.59) (0.59) (0.61) (0.60)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $10.50 $10.50 $10.31 $10.31 $10.19 $10.19 $10.21 $10.21 $9.67
======= ======= ======= ======= ======= ======= ======= ======= =======
Total return <F3> 7.57% 7.83% 7.09% 7.36% 5.51% 5.77% 12.04% 12.25% (1.73)%
Supplemental data and ratios:
Net assets, in thousands,
end of period $29,550 $291,289 $20,691 $254,521 $17,392 $173,468 $11,576 $128,941 $88,306
Ratio of net expenses
to average net assets <F6> 0.75% 0.50% 0.75% 0.50% 0.75% 0.50% 0.69% 0.50% 0.50%
Ratio of net investment income
to average net assets <F7> 5.50% 5.75% 5.71% 5.96% 5.59% 5.84% 6.07% 6.26% 5.19%
Portfolio turnover rate <F4> 27.29% 27.29% 40.61% 40.61% 59.29% 59.29% 66.69% 66.69% 56.25%
</TABLE>
<F1> On January 9, 1995, all previously existing series of shares of each Fund
were reclassified as Series A shares. Effective on January 9, 1995,
Institutional shareowners exchanged their Series A shares for the Funds'
Institutional Series shares. For the year ended October 31, 1995, the
Financial Highlights ratios of net expenses to average net assets, ratios
of net investment income to average net assets, total return and the per
share income from investment operations and distributions are presented on
a basis whereby the Fund's net investment income, net expenses, net
realized and unrealized gains (losses) and distributions for the period
November 1, 1994 through January 9, 1995, were allocated to each class of
shares based upon the relative net assets of each class of shares as of the
close of business on January 9, 1995, and the results thereof combined with
the results of operations and distributions for each applicable class for
the period January 10, 1995 through October 31, 1995.
<F2> For the Tax-Exempt Intermediate Bond Fund, substantially all investment
income is exempt from Federal income tax.
<F3> The total return calculation does not reflect the 2% front end sales charge
for Series A.
<F4> Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
<F5> Net investment income per share is calculated using ending balances prior
to consideration of adjustments for permanent book and tax differences.
<F6> 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 0.96%, 0.71%, 0.98%, 0.73%, 0.99%, 0.74%, 0.98%, 0.79% and 0.78%,
respectively, for the Intermediate Bond Fund and 1.06%, 0.81%, 1.13%,
0.88%, 1.22%, 0.97%, 1.20%, 1.00% and 0.98%, respectively, for the Tax-
Exempt Intermediate Bond Fund.
<F7> 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 5.29%, 5.54%, 5.49%, 5.74%, 5.35%, 5.60%, 5.78%, 5.97% and
4.91%, respectively, for the Intermediate Bond Fund and 3.69%, 3.94%,
3.73%, 3.98%, 3.52%, 3.77%, 3.76%, 3.96% and 3.67%, respectively, for the
Tax-Exempt Intermediate Bond Fund.
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTARFUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TAX-EXEMPT INTERMEDIATE BOND MARKET FUND
-----------------------------------------------------------------------------------------
Year ended Year ended
Year ended Year ended Year ended October 31, October 31,
October 31, 1998 October 31, 1997 October 31, 1996 1995<F1> 1994
----------------- ----------------- ----------------- ----------------- -----------
Per Share Data: Series Series Series Series Series Series Series Series
A Inst'l. A Inst'l. A Inst'l. A Inst'l.
------ ------ ------ ------ ------ ------ ------ ------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $10.35 $10.36 $10.21 $10.21 $10.23 $10.24 $9.78 $9.78 $10.26
Income from investment operations:
Net investment income <F2> 0.41 0.44 0.42 0.44 0.40<F5> 0.43<F5> 0.42 0.44 0.41
Net realized and unrealized
gains (losses) on securities 0.17 0.16 0.14 0.15 (0.01) (0.03) 0.45 0.46 (0.48)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations 0.58 0.60 0.56 0.59 0.39 0.40 0.87 0.90 (0.07)
------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income (0.41) (0.44) (0.42) (0.44) (0.41) (0.43) (0.42) (0.44) (0.41)
Distributions from capital gains - - - - - - - - -
------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions (0.41) (0.44) (0.42) (0.44) (0.41) (0.43) (0.42) (0.44) (0.41)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $10.52 $10.52 $10.35 $10.36 $10.21 $10.21 $10.23 $10.24 $9.78
======= ======= ======= ======= ======= ======= ======= ======= =======
Total return <F3> 5.73% 5.88% 5.60% 5.96% 3.87% 4.02% 9.07% 9.38% (0.73)%
Supplemental data and ratios:
Net assets, in thousands,
end of period $32,466 $66,427 $19,199 $52,208 $10,690 $36,652 $7,711 $27,595 $26,167
Ratio of net expenses
to average net assets <F6> 0.75% 0.50% 0.75% 0.50% 0.75% 0.50% 0.71% 0.51% 0.60%
Ratio of net investment income
to average net assets <F7> 4.00% 4.25% 4.11% 4.36% 3.99% 4.24% 4.25% 4.45% 4.04%
Portfolio turnover rate <F4> 14.38% 14.38% 11.22% 11.22% 30.46% 30.46% 44.13% 44.13% 58.54%
</TABLE>
<F1> On January 9, 1995, all previously existing series of shares of each Fund
were reclassified as Series A shares. Effective on January 9, 1995,
Institutional shareowners exchanged their Series A shares for the Funds'
Institutional Series shares. For the year ended October 31, 1995, the
Financial Highlights ratios of net expenses to average net assets, ratios
of net investment income to average net assets, total return and the per
share income from investment operations and distributions are presented on
a basis whereby the Fund's net investment income, net expenses, net
realized and unrealized gains (losses) and distributions for the period
November 1, 1994 through January 9, 1995, were allocated to each class of
shares based upon the relative net assets of each class of shares as of the
close of business on January 9, 1995, and the results thereof combined with
the results of operations and distributions for each applicable class for
the period January 10, 1995 through October 31, 1995.
<F2> For the Tax-Exempt Intermediate Bond Fund, substantially all investment
income is exempt from Federal income tax.
<F3> The total return calculation does not reflect the 2% front end sales charge
for Series A.
<F4> Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
<F5> Net investment income per share is calculated using ending balances prior
to consideration of adjustments for permanent book and tax differences.
<F6> 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 0.96%, 0.71%, 0.98%, 0.73%, 0.99%, 0.74%, 0.98%, 0.79% and 0.78%,
respectively, for the Intermediate Bond Fund and 1.06%, 0.81%, 1.13%,
0.88%, 1.22%, 0.97%, 1.20%, 1.00% and 0.98%, respectively, for the Tax-
Exempt Intermediate Bond Fund.
<F7> 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 5.29%, 5.54%, 5.49%, 5.74%, 5.35%, 5.60%, 5.78%, 5.97% and
4.91%, respectively, for the Intermediate Bond Fund and 3.69%, 3.94%,
3.73%, 3.98%, 3.52%, 3.77%, 3.76%, 3.96% and 3.67%, respectively, for the
Tax-Exempt Intermediate Bond Fund.
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTARFUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
BOND IMMDEX/TM FUND
-----------------------------------------------------------------------------------------
Year ended Year ended
Year ended Year ended Year ended October 31, October 31,
October 31, 1998 October 31, 1997 October 31, 1996 1995<F1> 1994
----------------- ----------------- ----------------- ----------------- -----------
Per Share Data: Series Series Series Series Series Series Series Series
A Inst'l. A Inst'l. A Inst'l. A Inst'l.
------ ------ ------ ------ ------ ------ ------ ------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $28.16 $28.16 $27.54 $27.55 $27.82 $27.82 $25.67 $25.67 $28.91
Income from investment operations:
Net investment income <F2> 1.64 1.72 1.66 1.75 1.61<F5> 1.70<F5> 1.68 1.74 1.65
Net realized and unrealized
gains (losses) on securities 0.85 0.85 0.64 0.61 (0.26) (0.27) 2.30 2.29 (2.74)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations 2.49 2.57 2.30 2.36 1.35 1.43 3.98 4.03 (1.09)
------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income (1.64) (1.71) (1.68) (1.75) (1.63) (1.70) (1.79) (1.84) (1.65)
Distributions from capital gains - - - - - - (0.04) (0.04) (0.50)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions (1.64) (1.71) (1.68) (1.75) (1.63) (1.70) (1.83) (1.88) (2.15)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $29.01 $29.02 $28.16 $28.16 $27.54 $27.55 $27.82 $27.82 $25.67
======= ======= ======= ======= ======= ======= ======= ======= =======
Total return <F3> 9.11% 9.41% 8.68% 8.90% 5.06% 5.35% 16.05% 16.26% (3.89)%
Supplemental data and ratios:
Net assets, in thousands,
end of period $95,301 $471,425 $64,144 $408,018 $42,671 $370,556 $21,875 $290,274 $256,778
Ratio of net expenses
to average net assets <F6> 0.67% 0.42% 0.67% 0.42% 0.68% 0.43% 0.64% 0.44% 0.48%
Ratio of net investment income
to average net assets <F7> 5.77% 6.02% 6.08% 6.33% 5.98% 6.23% 6.31% 6.51% 6.14%
Portfolio turnover rate <F4> 20.07% 20.07% 35.12% 35.12% 33.38% 33.38% 41.67% 41.67% 49.70%
</TABLE>
<F1> On January 9, 1995, all previously existing series of shares of each Fund
were reclassified as Series A shares. Effective on January 9, 1995,
Institutional shareowners exchanged their Series A shares for the Funds'
Institutional Series shares. For the year ended October 31, 1995, the
Financial Highlights ratios of net expenses to average net assets, ratios
of net investment income to average net assets, total return and the per
share income from investment operations and distributions are presented on
a basis whereby the Fund's net investment income, net expenses, net
realized and unrealized gains (losses) and distributions for the period
November 1, 1994 through January 9, 1995, were allocated to each class of
shares based upon the relative net assets of each class of shares as of the
close of business on January 9, 1995, and the results thereof combined with
the results of operations and distributions for each applicable class for
the period January 10, 1995 through October 31, 1995.
<F2> For the Tax-Exempt Intermediate Bond Fund, substantially all investment
income is exempt from Federal income tax.
<F3> The total return calculation does not reflect the 2% front end sales charge
for Series A.
<F4> Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
<F5> Net investment income per share is calculated using ending balances prior
to consideration of adjustments for permanent book and tax differences.
<F6> 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 0.74%, 0.49%, 0.74%, 0.49%, 0.75%, 0.50%, 0.71%, 0.51% and 0.51%,
respectively.
<F7> 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 5.70%, 5.95%, 6.01%, 6.26%, 5.91%, 6.16%, 6.24%, 6.44% and
6.10%, respectively.
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTARFUNDS
SHORT-TERM BOND MARKET FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
LONG-TERM INVESTMENTS 95.9%
ASSET-BACKED SECURITIES 28.6%
AUTO LOAN RECEIVABLES 0.3%
General Motors Acceptance Corp. Grantor
$ 679 Series 1991-A1, Class A, 8.17%, 1/02/00 $ 687
------------
CREDIT CARD RECEIVABLES 12.3%
Banc One Credit Card Master Trust:
1,500 Series 1995-B, Class A, 6.30%, 9/15/00 1,538
1,325 Series 1995-A, Class A, 6.15%, 7/15/02 1,351
Chase Manhattan Grantor Trust,
349 Series 1995-B, Class A, 5.90%, 9/15/99 350
Chemical Master Credit Card Trust I,
3,060 Series 1995-2, Class A, 6.23%, 6/15/03 3,138
Citibank Credit Card Master Trust I, Principal Only:
5,220 Series 1996-1, Class A, 0.00%, 2/07/01 4,671
1,500 Series 1997-6, Class A, 0.00%, 8/15/06 1,077
Household Affinity Credit Card Master Trust I,
1,650 Series 1993-2, Class A, 5.60%, 11/15/00 1,667
MBNA Master Credit Card Trust,
550 Series 1995-F, Class A, 6.60%, 1/15/03 566
NationsBank Credit Card Master Trust,
3,995 Series 1995-1, Class A, 6.45%, 8/15/00 4,102
Sears Credit Account Master Trust,
1,125 Series 1995-2, Class A, 8.10%, 6/15/04 1,164
Spiegel Credit Card Master Trust:
2,000 Series 1994-B, Class A, 8.15%, 6/15/04 2,066
2,325 Series 1995-A, Class A, 7.50%, 9/15/04 2,400
------------
24,090
------------
HOME EQUITY LOAN RECEIVABLES 16.0%
AFC Home Equity Loan Trust:
1,754 Series 1993-4, Class 1A, 5.80%, 2/26/24 1,747
1,772 Series 1994-1, Class 1A, 6.40%, 5/25/25 1,792
Advanta Home Equity Loan Trust,
1,898 Series 1993-2, Class A2, 6.15%, 10/25/09 1,909
2,447 Series 1993-3, Class A1, 4.90%, 1/25/10 2,416
Corestates Home Equity Trust,
3,000 Series 1996-1, Class A3, 7.00%, 12/15/09 3,082
EQCC Home Equity Loan Trust:
2,225 Series 1993-3, Class A, 5.15%, 9/15/08 2,196
1,906 Series 1993-4, Class A, 5.725%, 12/15/08 1,907
417 Series 1996-1, Class A2, 5.82%, 9/15/09 419
2,500 Series 1996-2, Class A2, 7.125%, 12/15/10 2,579
Federal National Mortgage Association (FNMA)
Real Estate Mortgage Investment Conduit (REMIC),
3,600 Series 1996-W4, Class A4, 6.743%, 12/25/11 3,697
GE Home Equity Loan Asset-Backed Certificates:
90 Series 1991-1, Class A, 7.20%, 8/30/11 90
2,500 Series 1991-1, Class B, 8.70%, 9/15/11 2,521
The Money Store Home Equity Trust:
819 Series 1992-A, Class A, 6.95%, 1/15/07 817
705 Series 1995-C, Class A3, 6.55%, 9/15/21 717
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
HOME EQUITY LOAN RECEIVABLES 16.0% (CONT.)
The Money Store Home Equity Trust (cont.)
$ 2,381 Series 1993-B, Class A3, 6.10%, 5/15/22 $ 2,397
UCFC Home Equity Loan:
848 Series 1993-B2, Class A2, 6.20%, 7/25/14 851
1,000 Series 1996-C1, Class A4, 7.475%, 3/15/20 1,052
1,088 Series 1995-A2, Class A7, 8.30%, 2/10/26 1,134
------------
31,323
------------
CORPORATE BONDS 20.5%
Bear Stearns Company Senior Notes:
3,000 6.75%, 8/15/00 3,048
800 9.375%, 6/01/01 865
Beneficial Corp. Notes,
800 8.20%, 3/15/02 866
Chase Manhattan Corp. Subordinated Notes,
1,381 10.00%, 6/15/99 1,419
Federal Express Corporation Debentures,
2,000 9.625%, 10/15/19 2,127
First Chicago Corporation Subordinated Notes,
1,800 11.25%, 2/20/01 2,032
Ford Holdings, Inc. Debentures,
1,262 9.25 %, 3/01/00 1,326
Jack Eckerd Corporation Senior Subordinated Notes,
1,454 9.25%, 02/15/04 1,521
Heller Financial, Inc. Notes,
2,790 8.00%, 12/15/98 2,796
Lehman Brothers Holdings, Inc. Debentures,
1,000 9.875%, 10/15/00 1,030
Lehman Brothers Holdings, Inc. Notes:
3,000 8.875%, 2/15/00 3,108
2,386 7.625%, 7/15/99 2,405
1,100 6.65%, 11/08/99 1,113
Lehman Brothers, Inc. Senior Subordinated Notes,
2,739 10.00%, 5/15/99 2,795
Paine Webber Group, Inc. Medium Term Notes:
1,000 5.83%, 2/02/99 1,001
1,000 6.31%, 7/22/99 1,003
Salomon, Inc. Medium Term Notes,
1,500 10.125%, 6/01/99 1,537
Salomon, Inc. Senior Notes:
206 7.25%, 1/15/00 211
800 7.75%, 5/15/00 824
Security Pacific Corporation Subordinate Notes,
1,458 11.50%, 11/15/00 1,630
The Money Store Company Guarantee,
1,500 8.05%, 4/15/02 1,620
Transamerica Financial Corp. Subordinated Notes,
2,500 6.75%, 6/01/00 2,555
USF&G Corporation Senior Notes,
1,080 8.375%, 6/15/01 1,162
Worldcom, Inc. Senior Notes,
2,000 8.875%, 1/15/06 2,187
------------
40,181
------------
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTARFUNDS
SHORT-TERM BOND MARKET FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
MORTGAGE-BACKED SECURITIES 9.2%
Collateralized Mortgage Obligation Trust,
$ 1,283 Series 15, Class E, 5.00%, 3/20/18 $ 1,288
Collateralized Mortgage Securities Corp.,
189 Series 1991-6, Class PH, 7.00%, 5/20/20 189
Green Tree Financial Corp. Pass-Thru Certificates:
1,001 Series 1992-2, Class A4, 8.15%, 1/15/18 1,049
34 Series 1993-3, Class A4, 5.45%, 10/15/18 34
1,330 Series 1993-3, Class A5, 5.75%, 10/15/18 1,331
586 Series 1994-4, Class A3, 7.70%, 7/15/19 592
2,250 Series 1994-8, Class A4, 8.50%, 4/15/25 2,296
4,000 Series 1995-9, Class A4, 6.45%, 1/15/27 4,047
Merrill Lynch Mortgage Investors, Inc.,
1,442 Series 1992-B, Class A, 7.85%, 4/15/12 1,443
Morgan Stanley Mortgage Trust,
466 Series 40, Class 6, 7.00%, 2/20/20 467
Prudential Home Mortgage Securities,
1,437 Series 1993-24, Class A2, 5.50%, 7/25/00 1,431
Prudential Securities Financial Asset Funding Corp.,
799 Series 1993-4, Class A3, 6.83%, 9/25/09 804
Prudential Securities Secured Financing Corp.,
1,964 Series 1994-5, Class A1, 5.66%, 5/25/24 1,949
Security Pacific Acceptance Corp.,
1,175 Series 1992-2, Class A3, 7.50%, 6/15/12 1,179
------------
18,099
------------
INTERNATIONAL/YANKEE (U.S. $ DENOMINATED) 6.6%
Ford Capital BV Debentures,
1,450 9.875%, 5/15/02 1,656
Ford Capital BV Notes,
2,935 10.125%, 11/15/00 3,215
Korea Development Bank Bonds,
2,000 7.125%, 9/17/01 1,777
Quebec Province CDA Debentures,
1,125 13.25%, 9/15/14 1,247
Sumitomo Bank International Notes,
5,000 9.55%, 7/15/00 5,107
------------
13,002
------------
OTHER 0.6%
Florida Housing Finance Agency:
310 Antigua Club-A-2, 8.625%, 8/01/01 328
335 Brittany Apartments-C-2, 8.625%, 8/01/02 359
400 Maitland Club-B-2, 8.625%, 8/01/01 423
------------
1,110
------------
U.S. GOVERNMENT AGENCY-BACKED
MORTGAGE ISSUES 7.8%
Federal Home Loan Mortgage Corporation (FHLMC)
Participation Certificates:
14 7.00%, 12/01/01 15
117 7.75%, 7/01/09 121
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
U.S. GOVERNMENT AGENCY-BACKED
MORTGAGE ISSUES 7.8% (CONT.)
Federal Home Loan Mortgage Corporation (FHLMC)
Real Estate Mortgage Investment Conduit (REMIC):
$ 676 Series 1243, Class K, 7.50%, 8/15/01 $ 683
381 Series 1149, Class K, 7.50%, 7/15/20 382
1,674 Series 1101, Class L, 6.95%, 9/15/20 1,681
51 Series 1169, Class D, 7.00%, 5/15/21 51
598 Series 1286, Class E, 7.00%, 10/15/21 603
Federal National Mortgage Association (FNMA)
Real Estate Mortgage Investment Conduit (REMIC):
1,316 Series X-19A, Class A, 6.50%, 10/25/00 1,330
2,000 Series 1993-G06, Class K, 7.00%, 11/25/01 2,014
960 Series 1991-63, Class G, 6.95%, 5/25/06 974
759 Series 1993-86, Class E, 6.00%, 1/25/07 763
632 Series 1992-93, Class G, 7.50%, 6/25/07 633
92 Series 1992-138, Class C, 6.00%, 12/25/18 92
176 Series G92-11, Class HB, 7.00%, 11/25/19 175
389 Series G92-35, Class C, 7.50%, 7/25/20 391
379 Series 1991-154, Class PH, 7.50%, 9/25/20 380
2,001 Series 1991-82, Class PL, 7.00%, 12/15/20 2,010
1,939 Series G92-53, Class H, 7.00%, 7/25/21 1,944
U.S. Department of Veterans Affairs Mortgage Trust,
1,000 (REMIC), Series 1992-1, Class J, 7.75%, 2/15/01 1,026
------------
15,268
------------
U.S. TREASURY OBLIGATIONS 22.6%
U.S. Treasury Bonds,
11,575 10.75%, 2/15/03 14,393
U.S. Treasury Notes,
28,050 6.625%, 3/31/02 30,013
------------
44,406
------------
Total Long-Term Investments (Cost $186,111) 188,166
------------
Number
of Shares
(in thousands)
- ---------------
SHORT-TERM INVESTMENTS 5.1%
INVESTMENT COMPANIES 5.1%
972 Financial Square Prime Obligation Fund 972
8,939 Short-Term Investments Co. Liquid Assets Portfolio 8,939
------------
Total Short-Term Investments (Cost $9,911) 9,911
------------
Total Investments (Cost $196,022) 101.0% 198,077
------------
Liabilities, less Other Assets (1.0)% (1,974)
------------
TOTAL NET ASSETS 100.0% $196,103
============
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTARFUNDS
INTERMEDIATE BOND MARKET FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
LONG-TERM INVESTMENTS 96.5%
ASSET-BACKED SECURITIES 17.3%
AUTO LOAN RECEIVABLES 0.1%
General Motors Acceptance Corp. Grantor,
$ 181 Series 1995-A, Class A, 7.15%, 3/15/00 $ 181
Keycorp Auto Grantor Trust,
260 Series 1995-A, Class A, 5.80%, 7/15/00 260
------------
441
------------
CREDIT CARD RECEIVABLES 12.7%
Advanta Credit Card Master Trust,
1,000 Series 1995-F, Class A1, 6.05%, 8/01/03 1,023
American Express Master Trust,
2,000 Series 1994-2, Class A, 7.60%, 8/15/02 2,123
Banc One Credit Card Master Trust:
7,375 Series 1995-B, Class A, 6.30%, 9/15/00 7,564
1,000 Series 1995-A, Class A, 6.15%, 7/15/02 1,019
Chemical Master Credit Card Trust I,
633 Series 1995-3, Class A, 6.23%, 8/15/02 656
Citibank Credit Card Master Trust, Principal Only:
11,900 Series 1996-1, Class A, 0.00%, 2/07/01 10,648
1,875 Series 1997-6, Class A, 0.00%, 8/15/06 1,347
Discover Card Master Trust I,
500 Series 1993-3, Class A, 6.20%, 5/16/06 532
HFC Private Label Credit Card Master Trust II,
1,000 Series 1994-2, Class A, 7.80%, 9/20/03 1,011
Household Affinity Credit Card Master Trust I,
3,300 Series 1993-2, Class A, 5.60%, 11/15/00 3,334
NationsBank Credit Card Master Trust,
2,500 Series 1995-1, Class A, 6.45%, 8/15/00 2,567
Sears Credit Account Master Trust:
5,408 Series 1994-1, Class A, 7.00%, 8/15/00 5,504
2,400 Series 1995-3, Class A, 7.00%, 10/15/04 2,474
Spiegel Credit Card Master Trust,
950 Series 1994-B, Class A, 8.15%, 6/15/04 982
------------
40,784
------------
HOME EQUITY LOAN RECEIVABLES 4.5%
Advanta Home Equity Loan Trust:
412 Series 1993-1, Class A1, 5.95%, 3/25/09 412
1,479 Series 1993-1, Class A2, 5.95%, 5/25/09 1,479
AFC Home Equity Loan Trust,
2,551 Series 1993-4, Class 1A, 5.80%, 2/26/24 2,541
Corestates Home Equity Trust,
1,375 Series 1996-1, Class A3, 7.00%, 12/15/09 1,413
EQCC Home Equity Loan Trust:
1,407 Series 1994-4, Class A3, 8.68%, 10/15/08 1,447
1,258 Series 1993-4, Class A, 5.725%, 12/15/08 1,259
1,645 Series 1994-1, Class A, 5.80%, 3/15/09 1,647
2,000 Series 1996-1, Class A4, 6.56%, 3/15/23 2,024
Security Pacific Acceptance Corp.,
425 Series 1991-2, Class B, 8.55%, 9/15/11 426
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
HOME EQUITY LOAN RECEIVABLES 4.5% (CONT.)
UCFC Home Equity Loan,
$ 1,694 Series 1995-C2, Class A6, 6.825%, 10/10/26 $ 1,735
------------
14,383
------------
CORPORATE BONDS 28.6%
Aetna Services, Inc. Company Guarantee,
3,000 6.75%, 8/15/01 3,116
Aetna Services, Inc. Debentures,
1,375 6.75%, 9/15/13 1,304
American General Finance Corp. Debentures,
650 9.625%, 7/15/00 695
American General Finance Corp. Notes,
1,000 8.00%, 2/15/00 1,034
BankAmerica Corporation Subordinated Notes:
465 9.75%, 7/01/00 497
2,000 10.00%, 2/01/03 2,324
Bankers Trust - NY, Subordinated Debentures,
1,000 9.50%, 6/14/00 1,052
Bear Stearns Company Senior Notes:
1,312 6.75%, 8/15/00 1,333
2,000 9.375%, 6/01/01 2,164
Caterpillar, Inc. Sinking Fund Debentures,
2,112 9.75%, 6/01/19 2,252
Chase Manhattan Corp. Debentures,
1,015 10.00%, 6/15/99 1,043
Chase Manhattan Corp. Subordinated Notes,
2,300 9.375%, 7/01/01 2,530
Chrysler Financial Corp. Debentures,
700 12.75%, 11/01/99 749
Commonwealth Edison First Mortgage,
850 9.75%, 2/15/20 928
Consolidated Edison Co. Debentures,
100 7.60%, 1/15/00 103
Continental Bank N.A. Subordinated Notes,
2,875 12.50%, 4/01/01 3,305
Continental Cablevision, Inc. Debentures,
4,525 9.50%, 8/01/13 5,385
Deseret Generation & Transmission Co-op Debentures,
726 9.375%, 1/02/11 755
Jack Eckerd Corporation Senior Subordinated Notes,
2,449 9.25%, 2/15/04 2,562
Federal Express Corporation Notes,
1,500 9.65%, 6/15/12 2,001
Federal Express Sinking Fund Pass-Thru Certificates,
950 7.89%, 9/23/08 1,034
First Chicago Corp. Subordinated Notes,
236 11.25%, 2/20/01 266
First Interstate Bancorp Subordinated Notes,
500 9.90%, 11/15/01 565
First National Bank of Omaha Subordinated Notes,
1,600 7.32%, 12/01/10 1,724
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTARFUNDS
INTERMEDIATE BOND MARKET FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
CORPORATE BONDS 28.6% (CONT.)
First USA Bank Senior Notes,
$1,000 5.85%, 2/22/01 $1,015
Fleet Mortgage Group Notes,
2,405 6.50%, 6/15/00 2,447
Ford Motor Credit Co. Debentures,
1,097 9.50%, 4/15/00 1,158
Ford Motor Credit Co. Medium Term Notes,
1,000 9.03%, 12/30/09 1,169
Ford Motor Credit Co. Notes,
2,575 8.20%, 2/15/02 2,764
General Motors Acceptance Corp. Debentures,
1,988 8.625%, 6/15/99 2,027
General Motors Acceptance Corp. Notes:
1,050 8.00%, 10/01/99 1,076
2,217 9.375%, 4/01/00 2,338
1,000 9.625%, 12/15/01 1,122
Georgia Pacific Corp. Debentures:
1,150 9.50%, 12/01/11 1,421
775 9.50%, 5/15/22 886
Goldman Sachs Group Notes,
5,000 6.25%, 2/01/03 (Acquired 2/01/96; Cost $4,988)<F1> 5,064
Lehman Brothers Holdings, Inc. Medium Term Notes,
1,750 8.875%, 2/15/00 1,813
Lehman Brothers Holdings, Inc. Notes:
2,000 6.90%, 7/15/99 2,014
1,500 6.65%, 11/08/99 1,518
1,212 8.875%, 3/01/02 1,285
Lehman Brothers, Inc. Senior Subordinated Notes:
1,450 11.625%, 5/15/05 1,772
1,000 6.125%, 2/01/01 990
National Westminster Bank Debentures,
700 9.375%, 11/15/03 808
National Westminster Bank Subordinated Notes,
700 9.45%, 5/01/01 763
NCNB Corp. Subordinated Notes,
2,380 10.20%, 7/15/15 3,197
News America Holdings Debentures,
750 10.125%, 10/15/12 880
Paine Webber Group, Inc. Notes,
500 8.875%, 3/15/05 558
Paine Webber Group, Inc. Medium Term Notes,
2,080 7.70%, 2/11/00 2,125
J.C. Penney Company, Inc. Debentures,
1,950 9.75%, 6/15/21 2,195
Salomon, Inc. Medium Term Notes,
1,300 10.125%, 6/01/99 1,332
Salomon, Inc. Senior Notes:
1,450 7.75%, 5/15/00 1,493
1,100 6.75%, 2/15/03 1,130
Salomon Smith Barney Holdings, Inc. Notes,
1,400 6.625%, 6/01/00 1,421
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
CORPORATE BONDS 28.6% (CONT.)
The Charles Schwab Corp. Medium Term Notes,
$ 650 6.06%, 10/02/00 $ 657
Transamerica Financial Corporation Senior Notes,
3,225 6.125%, 11/01/01 3,219
Security Pacific Corp. Subordinated Notes,
1,158 11.00%, 3/01/01 1,299
------------
91,677
------------
MORTGAGE-BACKED SECURITIES 3.7%
Green Tree Financial Corp. Pass-Thru Certificates,
303 Series 1993-4, Class A3, 6.25%, 1/15/19 305
MDC Asset Investors Trust,
Real Estate Mortgage Investment Conduit (REMIC),
737 Series VIII, Class 8, 7.75%, 9/25/17 771
Merrill Lynch Mortgage Investors, Inc. Notes,
124 8.375%, 2/09/00 129
Prudential Securities Financial Asset Funding Corp.,
2,014 Series 1993-8, Class A, 5.775%, 11/15/14 2,013
Prudential Securities Secured Financing Corp.:
2,053 Series 1993-1, Class A, 6.44%, 2/16/21 2,053
2,401 Series 1994-5, Class A1, 5.66%, 5/25/24 2,382
Salomon Brothers Mortgage Securities,
1,206 Series 1986-1, Class A, 6.00%, 12/25/11 1,218
Westam Mortgage Financial Corporation,
3,037 Series 11, Class A, 6.36%, 8/26/20 3,145
------------
12,016
------------
INTERNATIONAL/YANKEE (U.S. $ DENOMINATED) 7.3%
Dresdner Bank of New York Subordinated Debentures,
650 7.25%, 9/15/15 651
Ford Capital BV Debentures:
175 9.875%, 5/15/02 200
600 9.50%, 6/01/10 755
Ford Capital BV Notes,
4,153 10.125%, 11/15/00 4,549
Hydro-Quebec Corporation Debentures,
2,250 11.75%, 2/01/12 3,331
Korea Development Bank Bonds,
1,075 7.125%, 9/17/01 955
Korea Electric Power Debentures:
820 7.75%, 4/01/13 553
750 6.75%, 8/01/27 582
Midland Bank PLC Subordinated Notes,
4,225 6.95%, 3/15/11 4,010
National Bank of Hungary Debentures,
1,350 8.875%, 11/01/13 1,468
Norsk Hydro A/S Debentures,
1,350 9.00%, 4/15/12 1,730
Pohang Iron & Steel Notes,
875 7.125%, 7/15/04 677
Quebec Province Local Government Guarantee,
400 13.25%, 9/15/14 443
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTARFUNDS
INTERMEDIATE BOND MARKET FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
INTERNATIONAL/YANKEE (U.S. $ DENOMINATED)
7.3% (CONT.)
Sumitomo Bank International Notes,
$ 1,600 9.55%, 7/15/00 $ 1,634
Wharf Capital International Ltd. Notes:
800 8.875%, 11/01/04 641
1,725 7.625%, 3/13/07 1,216
------------
23,395
------------
U.S. GOVERNMENT AGENCY-BACKED
MORTGAGE ISSUES 4.9%
Federal Home Loan Mortgage Corporation (FHLMC)
Real Estate Mortgage Investment Conduit (REMIC):
169 Series 1624, Class KE, 6.00%, 10/15/02 171
794 Series 1289, Class PR, 7.50%, 2/15/03 814
697 Series 1456, Class LA, 7.50%, 5/15/03 726
535 Series 1496, Class KA, 6.00%, 12/15/03 539
866 Series 8, Class VB, 7.00%, 4/25/03 889
300 Series 1551, Class E, 6.50%, 9/15/07 308
799 Series 1101, Class L, 6.95%, 9/15/20 802
642 Series 1167, Class E, 7.50%, 11/15/21 659
1,972 Series 1286, Class A, 6.00%, 5/15/22 1,974
Federal National Mortgage Association (FNMA)
Real Estate Mortgage Investment Conduit (REMIC):
474 Series 1993-23, Class PU, 7.50%, 1/25/00 479
500 Series 1992-73, Class L, 7.50%, 1/25/01 508
1,110 Series 1992-18, Class HB, 7.20%, 3/25/02 1,128
3,500 Series 1993-37, Class B, 7.00%, 7/25/02 3,579
783 Series 1992-103, Class L, 7.50%, 11/25/02 801
465 Series 1990-89, Class K, 6.50%, 7/25/20 469
1,054 Series 1991-77, Class PH, 7.00%, 11/25/20 1,058
203 Series 1991-82, Class PL, 7.00%, 12/15/20 204
U.S. Department of Veterans Affairs Mortgage
Trust (REMIC),
500 Series 1992-2, Class J, 7.00%, 3/15/01 512
------------
15,620
------------
U.S. TREASURY OBLIGATIONS 34.7%
U.S. Treasury Bonds:
25,750 10.75%, 2/15/03 32,019
10,000 13.75%, 8/15/04 14,625
34,650 10.75%, 8/15/05 46,832
U.S. Treasury Strips, Principal Only,
23,425 0.00%, 11/15/04 17,774
------------
111,250
------------
Total Long-Term Investments (Cost $300,274) 309,566
------------
Number Market
of Shares Value
(in thousands) (in thousands)
- --------------- ---------------
SHORT-TERM INVESTMENTS 3.1%
INVESTMENT COMPANIES 3.1%
10 Financial Square Prime Obligation Fund $ 10
9,925 Short-Term Investments Co. Liquid Assets Portfolio 9,925
------------
Total Short-Term Investments (Cost $9,935) 9,935
Total Investments (Cost $310,209) 99.6% 319,501
------------
Other Assets, less Liabilities 0.4% 1,338
------------
TOTAL NET ASSETS 100.0% $320,839
============
<F1>Unregistered security
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTARFUNDS
TAX-EXEMPT INTERMEDIATE BOND FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
GENERAL OBLIGATION 7.1%
Elgin Illinois,
$ 2,990 7.25%, 1/01/04 $ 3,446
Lake County, Illinois, School District 112,
1,415 9.00%, 12/01/05 1,840
Washington State:
100 6.75%, 10/01/01 103
1,500 6.30%, 9/01/02 1,619
------------
Total General Obligation (Cost $6,861) 7,008
------------
REVENUE BONDS 1.5%
HOUSING 1.1%
South Dakota Housing Development Authority -
Homeownership Mortgage,
1,105 4.85%, 5/01/01 1,116
------------
UNIVERSITY 0.4%
New England Education Student Loan
Marketing Corporation,
360 5.80%, 3/01/02 381
------------
Total Revenue Bonds (Cost $1,470) 1,497
------------
PREREFUNDED AND ESCROWED
TO MATURITY 65.7%
Adams County, Mississippi Hospital Revenue,
1,000 8.00%, 10/01/16, Prerefunded 10/01/01 1,137
Alaska State Housing Finance Corporation,
1,465 6.375%, 12/01/12, Prerefunded 12/01/02 1,620
Anniston, Alabama Regional Medical Center Board Project,
1,350 8.00%, 7/01/11, Escrowed to Maturity 1,718
Arizona State Municipal Funding Program,
1,500 8.75%, 8/01/07, Escrowed to Maturity 2,008
Arizona Health Facilities Hospital Revenue,
2,000 7.25%, 11/01/14, Prerefunded 11/01/03 2,269
Central Arizona Water Conservation District,
2,000 6.50%, 11/01/11, Prerefunded 5/01/01 2,172
Cherokee County, Oklahoma,
1,340 0.00%, 11/01/11, Escrowed to Maturity 719
Chicago, Illinois Motor Fuel Tax Revenue,
1,000 7.05%, 1/01/07, Prerefunded 1/01/01 1,089
Clark County, Nevada School District,
370 7.00%, 6/01/09, Prerefunded 6/01/01 404
Cleveland, Ohio Parking Facilities Revenue,
1,125 8.10%, 9/15/22, Prerefunded 9/15/02 1,315
Convention Center Authority - Rhode Island Revenue,
1,000 6.65%, 5/15/12, Prerefunded 5/15/01 1,090
Danville, Indiana Community Elementary School
Building Corp., First Mortgage,
1,000 6.90%, 1/15/10, Prerefunded 1/15/02 1,112
Delaware County, Pennsylvania - Elwyn Inc. Project,
1,000 8.35%, 6/01/15, Prerefunded 6/01/00 1,093
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
PREREFUNDED AND ESCROWED
TO MATURITY 65.7% (cont.)
Delaware State Health Facilities Authority Revenue,
$ 1,265 7.00%, 10/01/15, Prerefunded to Various Dates $ 1,467
Des Plaines, Illinois Hospital Facilities -
Holy Family Hospital Project,
620 10.75%, 1/01/14, Prerefunded 7/01/02 767
Detroit, Michigan Water Supply System,
1,000 6.25%, 7/01/12, Prerefunded 7/01/02 1,078
Douglas County, Nebraska Hospital Authority Revenue,
1,000 7.25%, 11/01/21, Prerefunded 11/01/01 1,119
Farmington, New Mexico Power Revenue Bonds,
1,890 9.875%, 1/01/13, Prerefunded 7/01/05 2,491
Fruita, Colorado, Escrowed to Maturity:
370 9.25%, 10/01/01 404
495 9.25%, 4/01/03 596
Fulco, Georgia Hospital Authority Anticipation Certificates,
1,090 6.25%, 9/01/13, Prerefunded 9/01/02 1,207
Granite, Illinois Single Family Mortgage Revenue,
1,000 7.75%, 10/01/11, Escrowed to Maturity 1,209
Hodgkins, Illinois,
1,300 9.50%, 12/01/09, Prerefunded 12/01/01 1,535
Houston, Texas Airport Systems Revenue,
950 8.20%, 7/01/05, Escrowed to Maturity 1,144
Illinois Educational Facilities Authority -
Chicago College Of Osteopathic Medicine,
160 8.75%, 7/01/99, Escrowed to Maturity 166
Illinois Educational Facilities Authority - Loyola University,
3,355 7.125%, 7/01/21, Prerefunded 7/01/01 3,709
Illinois Health Facilities Authority Revenue,
Memorial Hospital,
1,000 7.25%, 5/01/22, Prerefunded 5/01/02 1,131
Intermountain Power Agency, Utah Supply Revenue,
2,500 0.00%, 7/01/21, Prerefunded 7/01/00 261
Louisiana Public Facilities Authority Hospital Revenue,
1,915 7.25%, 10/01/22, Prerefunded 10/01/02 2,190
Louisville, Kentucky Water & Sewer Revenue,
1,000 6.00%, 11/15/07, Escrowed to Maturity 1,131
Loveland, Colorado, Water Utility Improvements,
1,365 8.875%, 11/01/05, Escrowed to Maturity 1,700
Maricopa County, Arizona School District No. 1, Phoenix
1,000 Elementary, 6.60%, 7/01/03, Prerefunded 7/01/01 1,083
Metropolitan Government Nashville & Davidson
County, Tennessee Water & Sewer,
9,010 0.00%, 12/01/13, Prerefunded 12/01/02 2,463
Michigan State Hospital Financial Authority,
Sisters of Mercy Health Corp.,
900 7.50%, 2/15/18, Prerefunded 2/15/01 992
New Jersey State Turnpike Authority Revenue,
395 6.75%, 1/01/09, Escrowed to Maturity 444
Oklahoma State Industrial Authority Revenue,
St. Anthony Hospital,
1,020 6.125%, 6/01/03, Escrowed to Maturity 1,104
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTARFUNDS
TAX-EXEMPT INTERMEDIATE BOND FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
PREREFUNDED AND ESCROWED
TO MATURITY 65.7% (cont.)
Peninsula Ports Authority Virginia Health Care Facilities -
Mary Immaculate Project,
$ 2,000 7.00%, 8/01/17, Prerefunded to 8/01/04 & 8/01/06 $ 2,275
Pennsylvania State Industrial Development Authority -
Series A,
1,000 7.00%, 1/01/11, Prerefunded 7/01/01 1,103
Phoenix, Arizona Street & Highway Users, Partially
Prerefunded 7/01/02, Remainder Escrowed to Maturity:
1,000 6.50%, 7/01/09 1,102
4,700 6.25%, 7/01/11 5,181
Richland County, South Carolina
Certificates of Participation,
1,060 7.00%, 2/01/02, Prerefunded 2/01/01 1,157
San Marcos, California Certificates of Participation,
1,085 0.00%, 2/15/06, Escrowed to Maturity 811
Tucson, Arizona Street & Highway User Revenue Bonds,
1,000 9.25%, 7/01/02, Escrowed to Maturity 1,176
Tulsa County, Oklahoma Home Finance Authority Single
Family Mortgage Revenue,
1,710 6.90%, 8/01/10, Escrowed to Maturity 2,055
Tulsa County, Oklahoma Industrial Authority
Health Care Revenue,
740 6.75%, 12/15/18, Prerefunded 6/15/01 810
University of Illinois,
1,005 6.10%, 10/01/03, Escrowed to Maturity 1,104
Wausau, Wisconsin School District,
1,000 6.50%, 4/01/10, Prerefunded 4/01/02 1,087
------------
Total Prerefunded and Escrowed to Maturity
(Cost $63,447) 64,998
------------
INSURED BONDS 18.3%
EDUCATION 2.6%
Cook County, Illinois Niles Twp. School District,
1,560 0.00%, 12/01/07 1,050
Cook County, Illinois Cicero School District,
1,000 8.50%, 12/01/04 1,243
Merrillville, Indiana Multi-School Building Corporation,
200 6.375%, 7/01/03 221
------------
2,514
------------
ELECTRIC 2.3%
Springfield, Illinois Electric Revenue:
1,000 6.00%, 3/01/04 1,101
1,050 6.00%, 3/01/06 1,177
------------
2,278
------------
GENERAL OBLIGATION 10.0%
Amarillo, Texas Independent School District,
1,035 7.00%, 2/01/06 1,223
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
GENERAL OBLIGATION 10.0% (CONT.)
Bolingbrook, Illinois,
$ 1,080 0.00%, 1/01/05 $ 838
Chicago, Illinois,
675 11.60%, 1/01/01 788
Chicago, Illinois Park District,
2,770 6.00%, 1/01/07 3,140
Maricopa County, Arizona Elementary School District
No. 068, Alhambra,
1,000 5.625%, 7/01/13, Partially Prerefunded 1,065
Palatine, Illinois,
1,405 9.90%, 1/01/16, Crossover Refunded 1/01/00 1,534
Rocklin, California Unified School District,
1,235 6.70%, 9/01/04 1,322
------------
9,910
------------
PUBLIC FACILITIES & IMPROVEMENTS 3.4%
Illinois State Certificates of Participation,
1,000 6.00%, 7/01/06 1,122
Mun-Del Building Corp., Indiana,
1,000 7.00%, 1/05/05 1,055
Texas State Turnpike Authority, Dallas,
1,000 6.50%, 1/01/08 1,177
------------
3,354
------------
Total Insured Municipal Bonds (Cost $17,290) 18,056
------------
Number
of Shares
(in thousands)
- ---------------
INVESTMENT COMPANIES 3.3%
1,375 Financial Square Tax-Exempt Money Market 1,375
1,914 Tax Free Investment Trust 1,914
------------
Total Investment Companies (Cost $3,289) 3,289
------------
Total Investments (Cost $92,357) 95.9% 94,848
------------
Other Assets, less Liabilities 4.1% 4,045
------------
TOTAL NET ASSETS 100.0% $98,893
============
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTARFUNDS
BOND IMMDEX/TM FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
LONG-TERM INVESTMENTS 98.1%
ASSET-BACKED SECURITIES 10.2%
AUTO LOAN RECEIVABLES 0.1%
General Motors Acceptance Corp. Grantor Trust,
$ 346 Series 1995-A, Class A, 7.15%, 3/15/00 $ 346
------------
CREDIT CARD RECEIVABLES 10.1%
Advanta Credit Card Master Trust,
4,200 Series 1995-F, Class A1, 6.05%, 8/01/03 4,296
Banc One Credit Card Master Trust,
8,000 Series 1995-B, Class A, 6.30%, 9/15/00 8,204
Chemical Master Credit Card Trust,
1,520 Series 1995-3, Class A, 6.23%, 8/15/02 1,575
Citibank Credit Card Master Trust, Principal Only:
6,465 Series 1996-1, Class A, 0.00%, 2/07/01 5,785
5,000 Series 1997-6, Class A, 0.00%, 8/15/06 3,591
First Chicago Master Trust II,
1,800 Series 1994-L, Class A, 7.15%, 2/15/00 1,831
HFC Private Label Credit Card Master Trust II,
99 Series 1993-2, Class A3, 4.65%, 12/20/08 99
Household Affinity Credit Card Master Trust I,
3,750 Series 1993-2, Class A, 5.60%, 11/15/00 3,789
NationsBank Credit Card Master Trust,
9,839 Series 1995-1, Class A, 6.45%, 8/15/00 10,103
Sears Credit Account Master Trust:
10,771 Series 1994-1, Class A, 7.00%, 8/15/00 10,961
1,700 Series 1995-2, Class A, 8.10%, 1/15/01 1,760
5,300 Series 1995-3, Class A, 7.00%, 10/15/04 5,463
------------
57,457
------------
CORPORATE BONDS 31.1%
Aetna Services, Inc. Debentures,
1,800 6.75%, 9/15/13 1,707
Alabama Power Company First Mortgage Bond,
1,000 9.00%, 12/01/24 1,095
American Airline Equipment Pass-Thru Certificates,
1,500 10.21%, 1/01/10 1,885
BankAmerica Corporation Subordinated Notes,
3,539 10.00%, 2/01/03 4,112
Barclays North American Capital Corp. Debentures,
925 9.75%, 5/15/21 1,058
Bear Stearns Company Notes,
63 6.50%, 6/15/00 64
Bear Stearns Company Senior Notes,
500 6.75%, 8/15/00 508
Boston Edison Company Debentures,
4,900 9.375%, 8/15/21 5,516
Burlington Northern Railroad Company
Equipment Trust Certificates,
500 11.85%, 1/15/99 506
Chase Manhattan Corp. Notes,
7,802 10.00%, 6/15/99 8,014
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
Corporate Bonds 31.1% (cont.)
Chrysler Financial Corp. Debentures,
$ 2,327 12.75%, 11/01/99 $ 2,491
Commonwealth Edison Co. First Mortgage,
6,050 9.75%, 2/15/20 6,604
Continental Bank Subordinated Notes,
1,963 12.50%, 4/01/01 2,257
Continental Cablevision, Inc. Debentures,
8,125 9.50%, 8/01/13 9,669
Deseret Generation & Transmission Co-op Debentures,
2,321 9.375%, 1/02/11 2,413
Federal Express Corporation Debentures,
2,163 9.625%, 10/15/19 2,301
Federal Express Corporation Notes,
4,400 9.65%, 6/15/12 5,870
First Chicago Corp. Subordinated Notes:
3,844 9.00%, 6/15/99 3,929
1,270 9.875%, 8/15/00 1,370
First National Bank Chicago Debentures,
1,100 8.08%, 1/05/18 1,245
First National Bank Omaha Subordinated Notes,
3,100 7.32%, 12/01/10 3,341
First Union Corporation Subordinated Notes,
3,000 8.125%, 6/24/02 3,265
First USA Bank Notes,
1,125 5.85%, 2/22/01 1,142
Ford Motor Company Debentures,
2,650 9.215%, 9/15/21 3,395
GTE Corporation Debentures,
500 10.25%, 11/01/20 571
GTE North, Inc. Debentures,
1,100 9.60%, 1/01/21 1,234
Geico Corporation Debentures,
2,000 9.15%, 9/15/21 2,283
General Motors Acceptance Corp. Medium Term Notes,
1,000 7.50%, 7/22/99 1,015
General Motors Acceptance Corp. Notes:
1,375 8.00%, 10/01/99 1,410
2,694 9.625%, 12/15/01 3,024
Georgia Pacific Corp. Debentures:
1,511 9.50%, 12/01/11 1,867
4,605 9.875%, 11/01/21 5,147
975 9.50%, 5/15/22 1,114
Goldman Sachs Group Notes,
10,000 6.25%, 2/01/03 (Acquired 2/01/96; Cost $9,974) <F1> 10,129
Harris Bankcorp Subordinated Notes,
1,065 9.375%, 6/01/01 1,171
Lehman Brothers Holdings, Inc. Debentures,
2,365 9.875%, 10/15/00 2,436
Lehman Brothers Holdings, Inc. Medium Term Notes:
3,825 6.65%, 11/08/99 3,871
1,805 8.875%, 2/15/00 1,870
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTARFUNDS
BOND IMMDEX/TM FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
CORPORATE BONDS 31.1% (CONT.)
Lehman Brothers Holdings, Inc. Notes,
$1,700 6.90%, 7/15/99 $ 1,712
Lehman Brothers, Inc. Senior Subordinated Notes:
7,232 10.00%, 5/15/99 7,379
2,600 11.625%, 5/15/05 3,177
Lehman Brothers Holdings, Inc. Senior Notes,
500 8.75%, 5/15/02 529
The May Department Stores Company Debentures,
1,725 9.875%, 6/15/21 1,981
Mobile Energy Services LLC Debentures,
688 8.665%, 1/01/17 213
National Westminster Bancorp. Inc., Debentures,
1,000 9.375%, 11/15/03 1,154
NCNB Corp. Subordinated Notes,
5,155 10.20%, 7/15/15 6,925
News America Holdings Debentures,
2,200 10.125%, 10/15/12 2,581
Paine Webber Group, Inc. Notes,
1,540 8.875%, 3/15/05 1,719
Paine Webber Group Medium Term Notes,
2,450 6.73%, 1/20/04 2,500
Parker Hannifin Debentures,
400 9.75%, 2/15/21 445
J.C. Penney Company, Inc. Debentures,
4,000 9.75%, 6/15/21 4,503
Salomon, Inc. Notes,
3,450 7.00%, 6/15/03 3,605
Salomon, Inc. Senior Notes:
2,850 7.75%, 5/15/00 2,934
2,100 6.75%, 2/15/03 2,157
The Charles Schwab Corp. Medium Term Notes:
2,000 5.84%, 9/30/99 2,004
2,250 5.90%, 10/01/99 2,256
Security Pacific Corp. Subordinated Notes,
742 11.50%, 11/15/00 830
Tenneco, Inc. Debentures,
3,150 7.45%, 12/15/25 3,346
Time Warner, Inc. Debentures,
2,200 9.125%, 1/15/13 2,743
Transamerica Finance Corporation Senior Notes,
5,675 6.125%, 11/01/01 5,665
Union Camp Corp. Debentures,
850 10.00%, 5/01/19 898
U.S. West Communications Debentures,
1,000 8.875%, 6/01/31 1,133
Western National Corporation Senior Notes,
1,456 7.125%, 2/15/04 1,558
Westvaco Corp. Debentures,
1,200 10.125%, 6/01/19 1,291
------------
176,137
------------
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
MORTGAGE-BACKED SECURITIES 0.4%
Prudential Securities Secured Financing Corp.,
$ 2,026 Series 1993-1, Class A, 6.44%, 2/16/21 $ 2,026
INTERNATIONAL/YANKEE (U.S. $ DENOMINATED) 9.3%
Banco Sant-Chile Notes,
2,025 6.50%, 11/01/05 2,135
British Telecommunications Finance Debentures,
2,761 9.625%, 2/15/19 2,922
Dresdner Bank Subordinated Debentures,
3,500 7.25%, 9/15/15 3,508
Ford Capital BV Debentures,
425 9.875%, 5/15/02 485
Ford Capital BV Notes:
4,072 10.125%, 11/15/00 4,460
4,025 9.375%, 5/15/01 4,417
1,400 9.50%, 6/01/10 1,762
Hydro-Quebec Debentures:
3,500 11.75%, 2/01/12 5,181
750 9.75%, 1/15/18 864
Korea Development Bank Bond,
1,800 7.125%, 9/17/01 1,600
Korea Electric Power Debentures:
2,020 7.75%, 4/01/13 1,363
1,400 6.75%, 8/01/27 1,087
Midland Bank PLC Subordinated Notes,
5,000 6.95%, 3/15/11 4,746
National Bank of Hungary Debentures,
2,415 8.875%, 11/01/13 2,626
Newfoundland (Province of) Canada,
1,975 10.00%, 12/01/20 2,707
Norsk Hydro A/S Debentures,
2,900 9.00%, 4/15/12 3,717
Pohang Iron & Steel Notes,
1,575 7.125%, 7/15/04 1,218
Quebec Province Debentures,
2,000 11.00%, 6/15/15 2,232
Sweden (Kingdom of) Debentures,
1,100 11.125%, 6/01/15 1,677
Wharf Capital International Ltd. Notes:
2,700 8.875%, 11/01/04 2,162
2,675 7.625%, 3/13/07 1,885
------------
52,754
------------
U.S. GOVERNMENT AGENCY-BACKED
MORTGAGE ISSUES 6.2%
Federal Home Loan Mortgage Corporation (FHLMC),
99 Participation Certificates, 7.50%, 4/01/07 101
Federal Home Loan Mortgage Corporation (FHLMC)
Real Estate Mortgage Investment Conduit (REMIC):
531 Series 6, Class C, 9.05%, 6/15/19 553
939 Series 1022, Class J, 6.00%, 12/15/20 938
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTARFUNDS
BOND IMMDEX/TM FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- ---------------
U.S. GOVERNMENT AGENCY-BACKED
MORTGAGE ISSUES 6.2% (CONT.)
$ 231 Series 1169, Class D, 7.00%, 5/15/21 $ 233
2,628 Series 162, Class F, 7.00%, 5/15/21 2,672
2,267 Series 1118, Class Z, 8.25%, 7/15/21 2,350
1,987 Series 188, Class H, 7.00%, 9/15/21 2,020
1,411 Series 1201, Class E, 7.40%, 12/15/21 1,439
2,024 Series 1790-A, Class A, 7.00%, 4/15/22 2,074
Federal National Mortgage Association (FNMA),
Participation Certificates:
379 Series 317, 7.50%, 8/01/07 388
112 Series 1464, 7.75%, 6/01/08 116
Federal National Mortgage Association (FNMA)
Real Estate Mortgage Investment Conduit (REMIC):
4 Series 1992-29, Class K, 977.92%, 11/25/00 21
612 Series 1993-87, Class KD, 6.00%, 6/25/03 624
17 Series 1992-145, Class N, 1010.06%, 1/25/06 190
4,962 Series 1998-59, Class VA, 6.50%, 3/25/07 5,083
950 Series X-225C, Class TE, 5.45%, 10/25/18 949
1,069 Series 1988-24, Class G, 7.00%, 10/25/18 1,100
1,033 Series 1989-44, Class H, 9.00%, 7/25/19 1,082
244 Series 1989-90, Class E, 8.70%, 12/25/19 257
1,098 Series 1990-30, Class E, 6.50%, 3/25/20 1,108
1,000 Series 1990-61, Class H, 7.00%, 6/25/20 1,018
35 Series 1990-72, Class A, 9.00%, 7/25/20 35
538 Series 1990-72, Class B, 9.00%, 7/25/20 568
821 Series 1990-102, Class J, 6.50%, 8/25/20 831
3,941 Series 1990-105, Class J, 6.50%, 9/25/20 3,979
724 Series 1990-106, Class J, 8.50%, 9/25/20 752
3,395 Series 1991-56, Class M, 6.75%, 6/25/21 3,452
1,325 Series 1992-120, Class C, 6.50%, 7/25/22 1,341
------------
35,274
------------
U.S. TREASURY OBLIGATIONS 40.9%
U.S. Treasury Bonds:
34,900 10.75%, 8/15/05 47,170
115,780 9.25%, 2/15/16 167,117
U.S. Treasury Strips, Principal Only,
23,400 0.00%, 11/15/04 17,762
------------
232,049
------------
Total Long-Term Investments (Cost $520,165) 556,043
------------
Number Market
of Shares Value
(in thousands) (in thousands)
- --------------- ---------------
SHORT-TERM INVESTMENTS 2.2%
INVESTMENT COMPANIES 2.2%
10 Financial Square Prime Obligation Fund $ 10
12,655 Short-Term Investments Co. Liquid Assets Portfolio 12,655
------------
12,665
------------
Total Short-Term Investments (Cost $12,665) 12,665
------------
Total Investments (Cost $532,830) 100.3% 568,708
------------
Liabilities, less Other Assets (0.3)% (1,982)
------------
TOTAL NET ASSETS 100.0% $ 566,726
------------
<F1> Unregistered security
See notes to the financial statements.
<PAGE>
(LOGO) FIRSTARFUNDS
SHORT-TERM BOND MARKET FUND
INTERMEDIATE BOND MARKET FUND
TAX-EXEMPT INTERMEDIATE BOND FUND
BOND IMMDEX/TM FUND
NOTES TO THE FINANCIAL STATEMENTS
1.ORGANIZATION
Firstar Funds, Inc. (the "Company") 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. The Short-Term Bond Market,
Inter me di ate Bond Market, Tax-Exempt Intermediate Bond and Bond
IMMDEX/TM Funds (the "Funds") are separate, diversified invest ment portfolios
of the Company. The Short-Term Bond Market Fund and Bond IMMDEX/TM Fund
commenced operations on Dec ember 29, 1989; the Intermediate Bond Market Fund
commenced operations on January 5, 1993; and the Tax-Exempt Inter mediate Bond
Fund commenced operations on February 8, 1993. The objective of the Short-Term
Bond Market Fund is to seek to provide an annual rate of total return, before
Fund expenses, comparable to the annual rate of total return of the Lehman
Brothers 1-3 year Government/Corporate Bond Index. The objective of the
Intermediate Bond Market Fund is to seek to provide an annual rate of total
return, before Fund expenses, comparable to the annual rate of total return
of the Lehman Brothers Intermediate Government/Corporate Bond Index. The
objective of the Tax-Exempt Intermediate Bond Fund is to seek to provide
current income that is substantially exempt from federal income tax and
emphasize total return with relatively low volatility of principal. The
objective of the Bond IMMDEX/TM Fund is to seek to provide an annual rate
of total return, before Fund expenses, comparable to the annual rate of
total return of the Lehman Brothers Government/Corporate Bond Index.
The Company has issued two classes of Fund shares in each of the Funds:Series
A and Series Institutional. The Series A shares are subject to a 0.25% service
organization fee and to an initial sales charge imposed at the time of purchase,
in accordance with the Funds' prospectus. The maximum sales charge is 2% of the
offering price or 2.04% of the net asset value. Effective January 1, 1999, the
maximum sales charge will be 3.75% of the offering price or 3.90% of the net
asset value. Each class of shares for each Fund has identical rights and
privileges except with respect to shareowner organization fees paid by Series A
shares, voting rights on matters affecting a single class of shares and the
exchange privileges of each class of shares.
2.SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
a)Investment Valuation - Securities which are traded on a recognized exchange
are valued at the last sale price on the securities exchange on which such
securities are primarily traded or at the last sale price on the national
securities market. Exchange-traded securities for which there were no
transactions are valued at the current bid prices. Securities traded on only
over-the-counter markets are valued on the basis of closing over-the-counter bid
prices. Instruments with a remaining maturity of 60 days or less are valued on
an amortized cost basis which approx i mates market value. Investment companies
are valued at net asset value, which approximates market value. Securities for
which quotations are not readily available and other assets are valued at fair
value as deter mined by the investment adviser under the supervision of the
Board of Directors.
b)Federal Income Taxes - It is each Fund's policy to meet the requirements of
the Internal Revenue Code applicable to regulated investment companies and each
Fund intends to distribute investment company net taxable income and net capital
gains to shareholders. Therefore, no federal income tax provision is required.
c)Income and Expenses - The Funds are charged for those expenses that are
directly attributable to each portfolio, such as advisory, admini stra tion 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. Net investment income other than class specific expenses, and
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative net asset value of outstanding shares (or the
value of dividend-eligible shares, as appropriate) of each class of shares at
the beginning of the day (after adjusting for the current day's capital share
activity of the respective class).
d)Distributions to Shareowners - Dividends from net investment income of the
Short-Term Bond Market, Intermediate Bond Market, Tax-Exempt Inter mediate Bond
and Bond IMMDEX/TM Funds are declared and paid monthly. Distributions of net
realized capital gains, if any, will be declared at least annually.
e)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.
f)Unregistered Security - The Intermediate Bond Market and
Bond IMMDEX/TM Funds own a certain investment security which is unregistered and
thus restricted to resale. This security is valued by the Funds after giving due
consideration to pertinent factors including recent private sales, market
conditions and the issuer's financial performance. Where future disposition of
this security requires registration under the Securities Act of 1933, the Funds
have the right to include their security in such registration, generally without
cost to the Funds. The Funds have no right to require registration of
unregistered securities.
<PAGE>
(LOGO) FIRSTARFUNDS
g)Other - Investment and shareowner transactions are recorded on trade date.
The Funds determine the gain or loss realized from investment transactions by
comparing the original cost of the security lot sold with the net sale proceeds.
Interest income is recognized on an accrual basis. Discounts and premiums on
bonds are amortized over the life of the respective bond. Generally accepted
accounting principles require that permanent financial reporting and tax
differences be reclassified in the capital accounts.
3.INVESTMENT TRANSACTIONS
The aggregate purchases and sales, in thousands, of securities, excluding
short-term investments, for the Funds for the year ended October 31, 1998, were
as follows:
SHORT-TERM INTERMEDIATE TAX-EXEMPT BOND
BOND MARKET BOND MARKET INTERMEDIATE IMMDEX/TM
FUND FUND BONDFUND FUND
------------ ------------ ------------ ------------
Purchases:
U.S. Government $56,837 $67,974 -00 $118,992
Other 76,392 57,380 $33,106 67,555
Sales:
U.S. Government 47,149 40,031 -00 37,170
Other 96,646 37,413 11,590 62,189
At October 31, 1998, gross unrealized appreciation and depreciation of
investments for federal income tax purposes, in thousands, were as follows:
SHORT-TERM INTERMEDIATE TAX-EXEMPT BOND
BOND MARKET BOND MARKET INTERMEDIATE IMMDEX/TM
FUND FUND BONDFUND FUND
------------ ------------ ------------ ------------
Appreciation $2,667 $11,276 $2,584 $40,397
(Depreciation) (612) (1,984) (95) (4,696)
-------- -------- -------- --------
Net unrealized
appreciation
on investments $2,055 $9,292 $2,489 $35,701
======== ======== ======== ========
At October 31, 1998, the cost of investments, in thousands, for federal income
tax purposes was $196,022, $310,209, $92,359 and $533,007 for the Short-Term
Bond Market, Intermediate Bond Market, Tax-Exempt Intermediate Bond and Bond
IMMDEX/TM Funds, respectively. At October 31, 1998, the Short-Term Bond Market
Fund had accumulated net realized capital loss carryovers, in thousands, of
$980, expiring in 2002. The Short-Term Bond Market and Bond IMMDEX/TM Funds had
accumulated net realized capital loss carryovers, in thousands, of $189 and $3,
respectively, expiring in 2003. The Short-Term Bond Market and Bond IMMDEX/TM
Funds had accumulated net realized capital loss carryovers, in thousands, of $79
and $24, respectively, expiring in 2004. The Short-Term Bond Market Fund had
accumulated net realized capital loss carryovers, in thousands, of $1,083,
expiring in 2005. To the extent each Fund realizes future net capital gains,
taxable distributions to its respective shareowners will be offset by any unused
capital loss carryover.
<PAGE>
(LOGO) FIRSTARFUNDS
4.CAPITAL SHARE TRANSACTIONS
Transactions, in thousands, of shares of the Funds were as follows:
<TABLE>
<CAPTION>
SHORT-TERM INTERMEDIATE TAX-EXEMPT BOND
BOND MARKET BOND MARKET INTERMEDIATE BOND IMMDEX/TM
FUND FUND FUND FUND
------------------ ------------------ ------------------ ------------------
Amount Shares Amount Shares Amount Shares Amount Shares
------- ------- ------- ------- ------- ------- ------- -------
<C> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31, 1998:
Series A shares:
Shares sold $31,426 3,052 $11,695 1,126 $24,340 2,333 $40,062 1,403
Shares issued to owners in reinvestment
of dividends 3,639 355 939 91 945 91 3,926 138
Shares redeemed (25,689) (2,499) (4,255) (411) (12,427) (1,191) (15,244) (534)
--------- --------- --------- --------- --------- --------- --------- ---------
Net increase $9,376 908 $8,379 806 $12,858 1,233 $28,744 1,007
========= ========= ========= ========= ========= ========= ========= =========
Series Institutional shares:
Shares sold $45,856 4,455 $82,249 7,928 $34,464 3,306 $148,842 5,214
Shares issued to owners in reinvestment
of dividends 4,729 440 8,771 792 678 65 21,598 759
Shares redeemed (66,755) (6,475) (59,461) (5,674) (21,832) (2,098) (120,508) (4,217)
--------- --------- --------- --------- --------- --------- --------- ---------
Net increase (decrease) $(16,170) (1,580) $31,559 3,046 $13,310 1,273 $49,932 1,756
========= ========= ========= ========= ========= ========= ========= =========
YEAR ENDED OCTOBER 31, 1997:
Series A shares:
Shares sold $30,209 2,949 $7,985 784 $13,524 1,317 $30,638 1,111
Shares issued to owners in reinvestment
of dividends 3,315 325 739 73 561 55 2,728 99
Shares redeemed (26,932) (2,629) (5,689) (557) (5,799) (564) (13,274) (482)
--------- --------- --------- --------- --------- --------- --------- ---------
Net increase $6,592 645 $3,035 300 $8,286 808 $20,092 728
========= ========= ========= ========= ========= ========= ========= =========
Series Institutional shares:
Shares sold $41,412 4,034 $108,111 10,593 $21,675 2,110 $99,564 3,611
Shares issued to owners in reinvestment
of dividends 7,603 744 7,516 740 432 42 20,489 746
Shares redeemed (60,562) (5,912) (37,572) (3,678) (7,177) (699) (91,596) (3,322)
--------- --------- --------- --------- --------- --------- --------- ---------
Net increase (decrease) $(11,547) (1,134) $78,055 7,655 $14,930 1,453 $28,457 1,035
========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
<PAGE>
(LOGO) FIRSTARFUNDS
5.INVESTMENT ADVISORY AND OTHER AGREEMENTS
The Funds have 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 Funds, FIRMCO is entitled to receive
a fee, calculated daily and payable monthly, at the annual rates presented below
as applied to each Fund's daily net assets. For the year ended October 31, 1998,
FIRMCO voluntarily waived the following fees, in thousands, by Fund:
SHORT-TERM INTERMEDIATE TAX-EXEMPT BOND
BOND MARKET BOND MARKET INTERMEDIATE IMMDEX/TM
FUND FUND BOND FUND FUND
------------ ------------ ------------ ------------
Annual rate 0.60% 0.50% 0.50% 0.30%
Fees waived $529 $411 $207 -
Firstar Bank Milwaukee, N.A. serves as custodian and Firstar Mutual Fund
Services, LLC serves as transfer agent and accounting services agent for the
Funds. 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,
calculated 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, $127, $210, $60 and $365 of administration
fees, in thousands, were voluntarily waived for the Short Term Bond Market,
Intermediate Bond Market, Tax-Exempt Intermediate Bond and Bond IMMDEX/TM Funds,
respectively.
The Company entered into Servicing Agreements with certain Service
Organizations, including FIRMCO affiliates, for the Series A class of shares.
The Service Organizations are entitled to receive fees from the Funds up to the
annual rate of 0.25% of the average daily net asset value of the Series A shares
for certain support and/or distribution services to customers of the Service
Organizations who are beneficial owners of Series A shares. These services may
include assisting customers in processing purchase, exchange and redemption
requests; processing dividend and distribution payments from the Funds; and
providing information periodically to customers showing their positions in
Series A shares. Service Organization fees, in thousands, incurred by the Short-
Term Bond Market, Intermediate Bond Market, Tax-Exempt Intermediate Bond and
Bond IMMDEX/TM Funds aggregated $170, $62, $61 and $195, respectively, for the
year ended October 31, 1998.
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 Funds maintain
their proportionate share of the Company's liability for deferred fees.
<PAGE>
(LOGO) FIRSTARFUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF THE FIRSTAR
SHORT-TERM BOND MARKET FUND, THE FIRSTAR INTERMEDIATE BOND MARKET FUND, THE
FIRSTAR TAX-EXEMPT INTERMEDIATE BOND FUND AND THE FIRSTAR BOND IMMDEX/TM FUND
In our opinion, the accompanying statements of assets and liabilities, including
the schedules 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 Short-Term Bond Market
Fund, the Firstar Intermediate Bond Market Fund, the Firstar Tax-Exempt
Intermediate Bond Fund and the Firstar IMMDEX/TM Fund (four of the portfolios of
Firstar Funds, Inc. (the "Funds")) at October 31, 1998, the results of each of
their operations for the year then ended, the changes in each of their net
assets for each of the two years in the period then ended and each of their
financial highlights for the year ended October 31, 1998, and for each of the
other periods indicated, 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 Funds'
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>
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 #40-0246 12/98
