TABLE OF CONTENTS
- ------------------------------------------------------------------------------
Learn about each Fund's Objective, Principal Investment Strategies, Principal
Risks, Performance and Expenses.
- ------------------------------------------------------------------------------
MONEY MARKET FUND 1
INSTITUTIONAL MONEY MARKET FUND 1
U.S. TREASURY MONEY MARKET FUND 3
U.S. GOVERNMENT MONEY MARKET FUND 3
TAX-EXEMPT MONEY MARKET FUND 6
SHORT-TERM BOND MARKET FUND 9
INTERMEDIATE BOND MARKET FUND 9
BOND IMMDEX/TM FUND 9
TAX-EXEMPT INTERMEDIATE BOND FUND 16
BALANCED INCOME FUND 21
BALANCED GROWTH FUND 26
GROWTH AND INCOME FUND 31
EQUITY INDEX FUND 35
GROWTH FUND 39
SPECIAL GROWTH FUND 43
EMERGING GROWTH FUND 47
MICROCAP FUND 51
INTERNATIONAL EQUITY FUND 55
TYPES OF INVESTMENT RISK 60
INVESTING WITH FIRSTAR FUNDS 68
SHARE CLASSES AVAILABLE 68
SALES CHARGES AND WAIVERS 69
PURCHASE OF SHARES 73
BUYING SHARES 73
REDEMPTION OF SHARES 76
EXCHANGES OF SHARES 78
ADDITIONAL SHAREOWNER SERVICES 79
ADDITIONAL INFORMATION 80
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES 80
MANAGEMENT OF THE FUNDS 81
NET ASSET VALUE AND DAYS OF OPERATION 85
APPENDIX 87
FINANCIAL HIGHLIGHTS 87
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN A FUND INVOLVES INVESTMENT RISKS, INCLUDING THE RISK THAT YOU
MAY LOSE MONEY.
MONEY MARKET FUND AND INSTITUTIONAL MONEY MARKET FUND
OBJECTIVE
The investment objective of the Money Market Fund and the Institutional Money
Market Fund is to provide a high level of taxable current income consistent with
liquidity, the preservation of capital and a stable net asset value. This
investment objective may be changed by the Board of Directors without approval
of Shareowners, although no change is currently anticipated.
PRINCIPAL INVESTMENT STRATEGIES
Each Fund invests principally in short-term, high quality, dollar-denominated
money market debt obligations generally maturing in 397 days or less. These
obligations may be issued by entities including domestic and foreign
corporations, banks and other financial institutions and other types of entities
or by investment companies, or they may be issued or guaranteed by a U.S. or
foreign government, agency, instrumentality or political subdivision.
Each Fund will acquire only securities which are rated in the highest short-term
rating category by at least two rating agencies (or by the only rating agency
providing a rating), or are issued or guaranteed by, or otherwise provide the
right to demand payment from, entities with those ratings. If the securities are
unrated, they must be of comparable quality, as determined at the time of
acquisition.
Each Fund maintains an average maturity of 90 days or less.
PRINCIPAL RISKS
The following principal investment risks are described in more detail under the
heading "Types of Investment Risk." Some additional risks which apply to the
Funds are also described under that heading.
The rate of income on Fund shares will vary from day to day so that dividends on
your investment will vary. The Funds are subject to credit risk and interest
rate risk. Credit risk is the risk that an issuer of fixed income securities may
default on its obligation to pay interest and repay principal. Interest rate
risk is the risk that, when interest rates increase, fixed income securities
will decline in value.
An investment in the Funds is not a deposit of Firstar Bank and is not insured
by the Federal Deposit Insurance Corporation, or any other government agency.
Although each Fund seeks to preserve the value
of your investment at $1.00 per share, it is possible to lose money by investing
in the Funds.
BAR CHART AND PERFORMANCE TABLE
The following bar chart and table provide an indication of the risks of
investing in a Fund by showing changes in the performance of a Fund's shares
from year to year. The bar charts and performance tables assume reinvestment of
dividends and distributions. Remember, past performance is not indicative of
future results. Performance reflects fee waivers in effect. If fee waivers were
not in place, a Fund's performance would be reduced.
Year-by-year total return as of 12/31 each year (%)
Money Market Institutional Money Market
1998 5.14 5.38
1997 5.14 5.39
1996 5.00 5.26
1995 5.54 5.81
1994 3.84 4.08
1993 2.67 2.90
1992 3.42 3.58
1991 5.87
1990 8.05
1989 8.98
INSTITUTIONAL
MONEY MARKET MONEY MARKET
FUND FUND
BEST QUARTER: Q 2 '95 1.46% Q 2 '89 2.33%
WORST QUARTER: Q 2 '93 0.70% Q 2 '93 0.64%
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (INCEPTION DATE)
Institutional Money
Market Fund 5.38% 5.18% - 4.70%
(Apr. 26, 1991)
Money Market Fund 5.14% 4.93% 5.35%
The 7-day yield for the period ended on 12/31/98 for the Money
Market Fund and the Institutional Money Market Fund was 4.76% and 4.84%,
respectively, and without giving effect to fee waivers was 4.53% and 4.58%,
respectively. Figures reflect past performance. Yields will vary. You may call
1-800-228-1024 to obtain the current 7-day yield of the Money Market Fund and
the Institutional Money Market Fund.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Money Market Fund and Institutional Money Market Fund.
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEES<F1> (12B-1)FEES<F2> EXPENSES<F3> EXPENSES<F4>
Money Market Fund 0.50% 0.03% 0.35% 0.88
Institutional Money
Market Fund 0.50% 0.00% 0.14% 0.64%
<F1> The Adviser has voluntarily agreed that a portion of its management fee
will not be imposed on the Money Market and Institutional Money Market Funds
during the current fiscal year. As a result of the fee waiver, current
management fees of the Money Market and Institutional Money Market Fund, are
0.37% and 0.29%, respectively, of such Fund's average daily net assets. These
waivers are expected to remain in effect for the current fiscal year. However,
they are voluntary and can be modified or terminated at any time without the
Funds' consent.
<F2> The total of all 12b-1 fees and shareowner servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of a Fund's average daily net assets
for the shares. The Money Market Fund (but not the Institutional Money Market
Fund) intends to pay 12b-1 fees with respect to the Retail shares for the
current fiscal year.
<F3> "Other Expenses" includes administration fees, transfer agency fees and all
other ordinary operating expenses of the Fund not listed above. The Money Market
Fund has a Shareowner Service Plan permitting it to pay Shareowner Servicing
fees to institutions (described below under the heading "Management of the Funds
- - Shareowner Organizations") equal to up to 0.25% of the Fund's average daily
net assets. The Fund does not intend to pay Shareowner Servicing fees for the
current fiscal year, and "Other Expenses" does not reflect such fees. The
administrator of the Funds has voluntarily agreed that a portion of the
administration fee will not be imposed on the Institutional Money Market Fund
during the current fiscal year. As a result of the fee waiver, "Other Expenses"
of the Institutional Money Market Fund are estimated to be 0.10%. This waiver is
expected to remain in effect for the current fiscal year. However, it is
voluntary and can be modified or terminated at any time without the Fund's
consent.
<F4> As a result of the fee waivers set forth in notes 1 and 3, the Total Annual
Fund Operating Expenses of the Money Market Fund and Institutional Money Market
Fund are estimated to be 0.75% and 0.39%, respectively, for the current fiscal
year. Although the fee waivers are expected to remain in effect for the current
fiscal year, these waivers are voluntary and may be terminated at any time at
the option of the Adviser or administrator.
A contingent deferred sales charge may be payable upon redemption of the Money
Market Fund shares which were acquired upon exchange for Retail B Shares. The
contingent deferred sales charge is described under the heading of "Investing
with Firstar Funds - Contingent Deferred Sales Charge - Retail B Shares."
A fee of $12.00 is charged for each wire redemption (Money Market Fund only) and
$15.00 for each non-systematic withdrawal from a retirement account for which
Firstar Bank, Milwaukee, N.A. is custodian.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund (without the fee waivers) with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Money Market Fund $90 $281 $488 $1,084
Institutional Money Market Fund $65 $205 $357 $1,798
In addition to the compensation itemized above, shareowner organizations may
charge fees for providing
services in connection with their clients' investments in a Fund's shares.
U.S. TREASURY MONEY MARKET FUND AND U.S. GOVERNMENT MONEY MARKET FUND
OBJECTIVES
The investment objective of the U.S. Treasury Money Market Fund is to provide a
high level of current income exempt from state income taxes consistent with
liquidity, the preservation of capital and a stable net asset value.
The investment objective of the U.S. Government Money Market Fund is to provide
a high level of taxable current income consistent with liquidity, the
preservation of capital and a stable net asset value (irrespective of state
income tax considerations).
Each of these investment objectives may be changed by the Board of Directors
without approval of Shareowners, although no change is currently anticipated.
PRINCIPAL INVESTMENT STRATEGIES
The U.S. Treasury Money Market Fund invests in short term, dollar-denominated
debt obligations generally maturing in 397 days or less, issued or guaranteed as
to principal and interest by the U.S. Treasury. During normal market conditions,
the Fund intends to invest at least 65% of its total assets in these
obligations.
The U.S. Government Money Market Fund invests in short term debt obligations
generally maturing in 397 days or less, issued or guaranteed as to principal and
interest by the U.S. government, its agencies or instrumentalities. Under normal
market conditions, the Fund intends to invest at least 65% of its total
assets in these obligations. The Fund also invests in variable and floating rate
instruments and repurchase agreements.
Each Fund maintains an average maturity of 90 days or less.
PRINCIPAL RISKS
The following principal investment risks are described in more detail under the
heading "Types of Investment Risk." Some additional risks which apply to the
Funds are also described under that heading.
- --------------------------------------------------------------------------------
Even though the U.S. Treasury Money Market Fund and U.S. Government Money Market
Fund purchase mostly U.S. government obligations, shares of the Funds are not
themselves issued or guaranteed by any government agency.
- --------------------------------------------------------------------------------
The rate of income on Fund shares will vary from day to day so that dividends on
your investment will vary. The Funds are subject to credit risk and interest
rate risk. Credit risk is the risk that an issuer of fixed income securities may
default on its obligation to pay interest and repay principal. Interest rate
risk is the risk that, when interest rates increase, fixed income securities
will decline in value.
For the U.S. Government Money Market Fund, there can be no assurance
that the U.S. government will provide financial support to U.S. government-
sponsored agencies or instrumentalities where it is not obligated to do so by
law.
An investment in the Funds is not a deposit of Firstar Bank and is not insured
by the Federal Deposit Insurance Corporation, or any other government agency.
Although each Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Funds.
BAR CHART AND PERFORMANCE TABLE
The following bar chart and table provide an indication of the risks of
investing in a Fund by showing changes in the performance of a Fund's shares
from year to year. The bar charts and performance tables assume reinvestment of
dividends and distributions. Remember, past performance is not indicative of
future results. Performance reflects fee waivers in effect. If fee waivers were
not in place, a Fund's performance would be reduced.
Year-by-year total return as of 12/31 each year (%)
U.S. Government Money Market U.S. Treasury Money Market
1998 4.95 4.65
1997 4.97 4.78
1996 4.92 4.76
1995 5.39 5.21
1994 3.76 3.57
1993 2.61 2.57
1992 3.30 3.19
1991 5.56
1990 7.71
1989 8.70
U.S. TREASURY U.S. GOVERNMENT
MONEY MARKET FUND MONEY MARKET FUND
BEST QUARTER: Q 2 '95 1.34% Q 2 '89 2.24%
WORST QUARTER: Q 2 '93 0.62% Q 2 '93 0.63%
AVERAGE ANNUAL TOTAL
RETURN AS OF 12/31/98
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
(INCEPTION DATE)
U.S. TREASURY MONEY MARKET FUND 4.65% 4.59% - 4.19%
(Apr. 29, 1991)
U.S. GOVERNMENT 4.95% 4.79% 5.17%
MONEY MARKET FUND
The 7-day yield for the period ended on 12/31/98 for the U.S. Treasury Money
Market Fund and the U.S. Government Money Market Fund was 4.09% and 4.44%,
respectively, and without giving effect to fee waivers was 3.95% and 4.36%,
respectively. Figures reflect past performance. Yields will vary. You may call
1-800-228-1024 to obtain the current 7-day yield of the U.S. Treasury Money
Market Fund and the U.S. Government Money Market Fund.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the U.S. Treasury Money Market Fund and U.S. Government Money Market
Fund.
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEES<F1> (12B-1)FEES<F2> EXPENSES<F3> EXPENSES<F4>
U.S. Treasury
Money Market Fund 0.50% 0.00% 0.26% 0.76%
U.S. Government
Money Market Fund 0.50% 0.00% 0.22% 0.72%
<F1> The Adviser has voluntarily agreed that a portion of its management fee
will not be imposed on the U.S. Treasury Money Market Fund during the current
fiscal year. As a result of the fee waiver, current management fees of the U.S.
Treasury Money Market Fund are 0.49% of the Fund's average daily net assets.
This waiver is expected to remain in effect for the current fiscal year.
However, it is voluntary and can be modified or terminated at any time without
the Fund's consent.
<F2> The total of all 12b-1 fees and shareowner servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of a Fund's average daily net assets
for the shares. The Funds do not intend to pay 12b-1 fees with respect to the
shares for the current fiscal year.
<F3> "Other Expenses" includes administration fees, transfer agency fees and all
other ordinary operating expenses of the Funds not listed above. Each fund has
in place a Shareowner Service Plan permitting the payment of a Shareowner
Servicing fee to institutions (described below under "Management of the Funds -
Shareowner Organizations") equal to up to 0.25% of each Fund's average daily net
assets. The Funds do not intend to pay Shareowner Servicing fees during the
current fiscal year, and "Other Expenses" does not reflect such fees.
<F4> As a result of the fee waivers set forth in note 1, the Total Annual Fund
Operating Expenses of the U.S. Treasury Money Market Fund are estimated to be
0.75% for the current fiscal year. Although the fee waiver is expected to remain
in effect for the current fiscal year, the waiver is voluntary and may be
terminated at any time at the option of the Adviser.
A contingent deferred sales charge may be payable upon redemption of U.S.
Treasury Money Market Fund or U.S. Government Money Market Fund shares which
were acquired upon exchange for Retail B Shares. The contingent deferred sales
charge is described under the heading "Investing with Firstar Funds - Contingent
Deferred Sales Charge - Retail B Shares."
A fee of $12.00 is charged for each wire redemption and $15.00 for each non-
systematic withdrawal from a retirement account for which Firstar Bank,
Milwaukee, N.A. is custodian.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund (without the fee waivers) with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
U.S. Treasury Money Market Fund $78 $243 $422 $942
U.S. Government Money Market Fund $74 $230 $401 $894
In addition to the compensation itemized above, shareowner organizations may
charge fees for providing services in connection with their clients' investments
in a Fund's shares.
TAX-EXEMPT MONEY MARKET FUND
OBJECTIVE
The investment objective of the Tax-Exempt Money Market Fund is to provide a
high level of current income exempt from federal income taxes consistent with
liquidity, the preservation of capital and a stable net asset value. This
investment objective may be changed by the Board of Directors without approval
of Shareowners, although no change is currently anticipated.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests principally in a diversified portfolio of dollar-denominated
debt obligations ("municipal obligations") issued by or on behalf of states,
territories and possessions of the United States, the District of Columbia and
their authorities, agencies, instrumentalities and political sub divisions. The
Fund will acquire only securities which are rated in the highest short-term
rating category by at least two rating agencies (or by the only rating agency
providing a rating), or are issued or guaranteed by, or otherwise provide the
right to demand payment from, entities with those ratings. If the security is
unrated, it must be of comparable quality to securities with those ratings, as
determined at the time of acquisition. During normal market conditions, the Fund
will invest at least 80% of its net assets in municipal obligations which are
exempt from federal income taxes with remaining maturities of 13 months or less.
(Securities which are subject to demand features and certain U.S. government
obligations may have longer maturities.) The Fund maintains an average portfolio
maturity of 90 days or less.
The two principal classifications of municipal obligations which the Tax-Exempt
Money Market Fund invests in are:
GENERAL OBLIGATION SECURITIES REVENUE SECURITIES
General obligation securities are secured by the Revenue securities are
issuer's pledge of its full faith, credit and taxing payable only from the
power for the payment of principal and interest. revenues derived from a
particular facility or
class of facilities or, in
some cases, from the
proceeds of a special
excise tax or other
specific revenue source
such as the issuer of the
facility being financed.
Municipal obligations purchased by the Fund may include variable and floating
rate instruments which are instruments with interest rates that are adjusted
either on a schedule or when an index or benchmark changes. While there may be
no active secondary market with respect to a particular variable or floating
rate demand instrument, the Fund may demand payment in full of the principal and
interest.
PRINCIPAL RISKS
The following principal investment risks are described in more detail under the
heading "Types of Investment Risk." Some additional risks which apply to the
Fund are also described under that heading.
The rate of income on Fund shares will vary from day to day so that dividends on
your investment will vary. The Fund is subject to credit risk and interest rate
risk. Credit risk is the risk that an issuer of fixed income securities may
default on its obligation to pay interest and repay principal. Interest rate
risk is the risk that, when interest rates increase, fixed income securities
will decline in value.
Municipal obligations which the Fund purchases may be backed by letters of
credit issued by banks and other financial institutions. Adverse developments
affecting banks could have a negative effect on the Fund's portfolio securities.
The Fund may invest more than 25% of its total assets in municipal obligations
issued by entities located in the same state and the interest on which is paid
solely from revenues of similar projects. As a result, changes in economic,
business or political conditions relating to a particular state or types of
projects may have a disproportionate impact on the Fund's share price.
Municipal obligations which the Fund may acquire include municipal lease
obligations which are issued by a state or local government or authority to
acquire land and a wide variety of equipment and facilities. If the funds are
not appropriated for the following year's lease payments, the lease may
terminate, with the possibility of default on the lease obligation and
significant loss to the Fund.
An investment in the Fund is not a deposit of Firstar Bank and is not insured by
the Federal Deposit Insurance Corporation, or any other government agency.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
BAR CHART AND PERFORMANCE TABLE
The following bar chart and table provide an indication of the risks of
investing in a Fund by showing changes in the performance of a Fund's shares
from year to year. The bar charts and performance tables assume reinvestment of
dividends and distributions. Remember, past performance is not indicative of
future results. Performance reflects fee waivers in effect. If fee waivers were
not in place, a Fund's performance would be reduced.
Year-by-year total return as of 12/31 each year (%)
Tax-Exempt Money Market Fund
1998 2.97
1997 3.13
1996 3.06
1995 3.44
1994 2.49
1993 2.06
1992 2.64
1991 4.24
1990 5.48
1989 6.00
BEST QUARTER: Q 2 '89 1.58%
WORST QUARTER: Q 1 '94 0.50%
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
1 YEAR 5 YEARS 10 YEARS
TAX-EXEMPT MONEY MARKET FUND 2.97% 3.02% 3.54%
The 7-day yield for the period ended on 12/31/98 for the Tax-Exempt Money Market
Fund was 3.08% and without giving effect to fee waivers was 2.96%. Figures
reflect past performance. Yields will vary. You may call 1-800-228-1024 to
obtain the current 7-day yield of the Tax-Exempt Money Market Fund.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Tax-Exempt Money Market Fund.
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEES<F1> (12B-1)FEES<F2> EXPENSES<F3> EXPENSES<F4>
Tax-Exempt Money
Market Fund 0.50% 0.00% 0.27% 0.77%
<F1> The Adviser has voluntarily agreed that a portion of its management fee
will not be imposed on the Tax-Exempt Money Market Fund during the current
fiscal year. As a result of the fee waiver, current management fees of the Fund
are 0.48% of the Fund's average daily net assets. This waiver is expected to
remain in effect for the current fiscal year. However, it is voluntary and can
be modified or terminated at any time without the Fund's consent.
<F2> The total of all 12b-1 fees and shareowner servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the shares. The Fund does not intend to pay 12b-1 fees with respect
to the shares for the current fiscal year.
<F3> "Other Expenses" includes administration fees, transfer agency fees and all
other ordinary operating expenses of the Fund not listed above. The Fund has in
place a Shareowner Service Plan permitting the payment of a Shareowner Servicing
fee to institutions (described below under "Management of the Funds - Shareowner
Organizations") equal to up to 0.25% of the Fund's average daily net assets. The
Fund does not intend to pay Shareowner Servicing fees during the current fiscal
year, and "Other Expenses" does not reflect such fees.
<F4> As a result of the fee waiver set forth in note 1, the Total Annual Fund
Operating Expenses of the Fund are estimated to be 0.75% for the current fiscal
year. Although the fee waiver is expected to remain in effect for the current
fiscal year, this waiver is voluntary and may be terminated at any time at the
option of the Adviser.
A contingent deferred sales charge may be payable upon redemption of Tax-Exempt
Money Market Fund Shares which were acquired
upon exchange for Retail B Shares. The contingent deferred sales charge is
described under the heading "Investing with Firstar Funds - Contingent Deferred
Sales Charge - Retail B Shares."
A fee of $12.00 is charged for each wire redemption and $15.00 for each non-
systematic withdrawal from a retirement account for which Firstar Bank,
Milwaukee, N.A. is custodian.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund (without the fee waivers) with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Tax-Exempt Money Market Fund $79 $246 $428 $954
In addition to the compensation itemized above, shareowner organizations may
charge fees for providing services in connection with their clients' investments
in the Fund's shares.
SHORT-TERM BOND MARKET FUND, INTERMEDIATE BOND MARKET FUND
AND BOND IMMDEX/TM FUND
OBJECTIVES
The investment objective of the Short-Term Bond Market Fund is 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 "Lehman 1-3 Index").
The investment objective of the Intermediate Bond Market Fund is 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 "Lehman Intermediate Index").
The investment objective of the Bond IMMDEX/TM Fund is 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 "Lehman
Index").
Each of these investment objectives may be changed by the Board of Directors
without approval of Shareowners, although no change is currently anticipated.
Principal Investment Strategies
- --------------------------------------------------------------------------------
DURATION DEFINED:
"Duration" is the average time it takes to receive expected cash flows
(discounted to their present value) on a particular fixed-income instrument or a
portfolio of instruments. Duration usually defines the effect of interest rate
changes on bond prices. However, for large interest rate changes (generally
changes of 1% or more) this measure does not completely explain the interest
rate sensitivity of a bond.
FOR EXAMPLE
The duration of a 5-year zero coupon bond which pays no interest or principal
until the maturity of the bond is 5 years. This is because a zero coupon bond
produces no cash flow until the maturity date.
On the other hand, a coupon bond that pays interest semiannually and matures in
5 years will have a duration of less than 5 years reflecting the semiannual cash
flows resulting from coupon payments.
- --------------------------------------------------------------------------------
The Adviser attempts to make each Fund's duration and return comparable to those
of its respective bond index, and to maintain an overall interest rate
sensitivity for each Fund equivalent to its respective bond index.
The Adviser generally will sell a security when it, on a relative basis and in
the Adviser's opinion, will no longer help a Fund to maintain overall interest
sensitivity and return objectives.
The effective dollar-weighted average portfolio maturity of each Fund will be
more than one year but less than three years for the Short-Term Bond Market
Fund; more than three years but less than ten for the Intermediate Bond Market
Fund; and more than five years for the Bond IMMDEX/TM Fund during normal market
conditions.
Each Fund typically holds less than 200 securities.
The Adviser will attempt to keep each Fund fully invested. Each Fund's policy is
to invest at least 65% of total assets in the following types of debt
securities:
- U.S. government - U.S. government agencies
- Stripped U.S. government - Corporate
- Collateralized mortgage obligations - Medium-term notes
- Asset-backed and mortgage-backed obligations - Eurobonds
Debt obligations acquired by each Fund will be "investment grade," as rated by
at least one rating agency. The Adviser may purchase unrated obligations that
are determined by the Adviser to be comparable in quality to the rated
obligations. Average quality for each Fund is expected to be at least the second
highest rating category of S&P or Moody's. After purchase, a security may cease
to be rated or may have its rating reduced below the minimum rating required by
the Fund for purchase. The Adviser will consider whether to continue to hold the
security. If over 5% of the Fund's net assets consist of obligations which have
fallen below the minimum rating, the Adviser will immediately sell the
securities.
- --------------------------------------------------------------------------------
INVESTMENT GRADE SECURITIES ARE:
securities rated in the highest 4 categories
by S&P, Moody's or another nationally
recognized rating agency.
- --------------------------------------------------------------------------------
Although these Funds attempt to achieve returns comparable to those of their
respective benchmark indices by maintaining a comparable duration (see
"Strategies" for definition), these Funds are NOT index funds. Each Fund may
invest more than 50% of their assets in securities not included in the index.
DESCRIPTION OF BOND INDICES
The bond indices measure the price changes of securities and the income provided
by the securities. The bond indices are intended to measure performance of
fixed-rate debt markets over given time intervals. The difference between the
indices is the maturity range of the securities included. Each index is
comprised of:
- - U.S. Treasury securities - U.S. government agency
securities
- - dollar-denominated debt of certain foreign - investment-grade corporate
sovereign or supranational entities debt obligations
The indices require that investment-grade corporate debt obligations must:
- - be fixed-rate debt (as opposed to variable-rate debt)
- - have at least one year until maturity
- - have a minimum outstanding par value of $100 million
- - have a minimum quality rating of Baa by Moody's, BBB by S&P, or BBB by Fitch
IBCA
The indices also require the following maturities for each debt obligation:
INDEX LENGTH OF MATURITY
Lehman 1-3 Index From one to three years remaining until maturity
Lehman Intermediate Index From one to 10 years remaining until maturity
Lehman Index From one to 30 years or more remaining until
maturity
The following chart depicts the number of bond issues and their aggregate dollar
values as represented by the indices on October 31, 1998.
BOND ISSUES DOLLAR VALUE
Lehman 1-3 Index 1,235 $1.0 trillion
Lehman Intermediate Index 4,512 $2.5 trillion
Lehman Index 6,441 $3.6 trillion
PRINCIPAL RISKS
The following principal investment risks are described in more detail under the
heading "Types of Investment Risk." Some additional risks which apply to the
Funds are also described under that heading.
The rate of income on Fund shares will vary from day to day so that dividends on
your investment will vary. The Funds are subject to credit risk and interest
rate risk. Credit risk is the risk that an issuer of fixed income securities may
default on its obligation to pay interest and repay principal. Interest rate
risk is the risk that, when interest rates increase, fixed income securities
will decline in value. Obligations rated in the lowest of the top four rating
categories are considered to have speculative characteristics and are subject to
greater credit and interest rate risk than higher rated securities.
Because of the smaller number of issues held by a Fund than its respective bond
index, material events affecting a Fund's portfolio (for example, an issuer's
decline in credit quality) may influence the performance of the Fund to a
greater degree than such events will influence its respective bond index and may
prevent the Fund from attaining its investment objective for particular periods.
While the Adviser believes purchasing securities which are not in each Fund's
respective index or not consistent with the "mix" of the index provides the
opportunity to achieve an enhanced gross return compared to the index, the
Adviser may err in its choices of securities or portfolio mixes. Further, the
Adviser calculates the Funds' duration and average maturity based on certain
estimates relating to the duration and maturity of the securities held by the
Fund. The estimates used may not always be accurate, so the Adviser's
calculations may be incorrect. Such errors could result in a negative return and
a loss to you. In the event the performance of a Fund is not comparable to the
performance of its respective index, the Board of Directors will examine the
reasons for the deviation and the availability of corrective measures.
BAR CHART AND PERFORMANCE TABLE
Each Fund offers three types of shares, as described under "Investing with
Firstar Funds" - Institutional, Retail A and Retail B. These types of shares
bear differing levels of expenses, as described under "Investing with Firstar
Funds." The following bar chart and table provide an indication of the risks of
investing in a Fund by showing: (a) changes in the performance of a Fund's
Institutional Shares from year to year; and (b) how the average annual returns
of a Fund's Retail A and Institutional Shares compare to those of a broad-based
securities market index. The bar charts and performance tables assume
reinvestment of dividends and distributions. Remember, past performance is not
indicative of future results. Prior to January 10, 1995, each Fund offered to
investors one series of shares with neither a sales charge nor a service fee.
The average annual total return calculation reflects a maximum initial sales
charge of 3.75% for the Retail A Shares, but for periods prior to January 10,
1995, performance does not reflect service organization fees. If service
organization fees had been reflected, performance would be reduced. Performance
reflects fee waivers in effect. If fee waivers were not in place, a Fund's
performance would be reduced. Because the bar chart reflects Institutional share
performance, it does not reflect the sales load applicable to Retail A and B
shares. If the sales loads were reflected, performance would be reduced. The
Retail B Shares commenced operations on March 1, 1999. Because those shares have
less than one year's performance, no average annual returns
are shown for that class in this section.
Year-by-year total return as of 12/31 each year (%)(Institutional Shares)
Bond Intermediate Short Term
IMMDEX Bond Market Bond Market
---------------- ---------------- -------------
1998 9.20 7.91 6.57
1997 9.43 7.34 6.39
1996 3.08 4.06 4.99
1995 19.55 15.25 10.73
1994 -3.06 -2.09 0.93
1993 10.96 -- 6.46
1992 7.56 -- 6.85
1991 16.58 -- 13.50
1990 8.22 -- 7.62
1989
SHORT-TERM INTERMEDIATE BOND
BOND MARKET BOND MARKET IMMDEX
FUND FUND FUND
BEST QUARTER: Q 4 '91 4.18% Q 2 '955.02% Q2 '95 6.65%
WORST QUARTER: Q 4 '92(0.21)% Q 1 '94(2.04)% Q1 '94(2.90)%
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
(Retail A Shares and Institutional Shares)
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (INCEPTION DATE)
SHORT-TERM BOND MARKET FUND -
Retail A Shares 2.31% 4.85% 6.95% -
Institutional Shares 6.57% 5.87% 7.47% -
LEHMAN BROTHERS 1-3 YEAR
GOVERNMENT/CORPORATE BOND INDEX 6.98% 6.00% 7.42% -
INTERMEDIATE BOND MARKET FUND -
Retail A Shares 3.61% 5.33% - 5.89%
(Jan. 5, 1993)
Institutional Shares 7.91% 6.34% - 6.74%
(Jan. 5, 1993)
LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE BOND INDEX 8.44% 6.60% - 6.90%
BOND IMMDEX/TM FUND -
Retail A Shares 4.85% 6.35% 8.89% -
Institutional Shares 9.20% 7.37% 9.41% -
LEHMAN BROTHERS GOVERNMENT/
CORPORATE BOND INDEX 9.47% 7.30% 9.33% -
Each of the Lehman Brothers 1-3 Year Government/Corporate Bond Index,
Intermediate Government/Corporate Bond Index and Government/Corporate Bond Index
is a widely-recognized unmanaged index of bond prices compiled by Lehman
Brothers. The Index figures do not reflect any fees or expenses. Investors
cannot invest directly in the Index.
Securities included in the Lehman Brothers 1-3 Year Gov't./Corp. Bond Index must
meet the following criteria: not less than one year to maturity; not more than
three years remaining to maturity.
Securities included in the Lehman Brothers Intermediate Gov't./Corp. Bond Index
must meet the following criteria: remaining maturity of one to ten years; and
rated investment grade or higher by Moody's, Standard & Poor's, or Fitch, in
that order.
Securities included in the Lehman Brothers Gov't./Corp. Bond Index must meet the
following criteria: not less than one year to maturity; and rated investment
grade or higher by Moody's, Standard & Poor's, or Fitch, in that order.
The performance of the Short-Term Bond Market and Bond IMMDEX/TM Fund for the
period prior to December 29, 1989 is represented by the performance of
collective investment funds ("collective investment funds") which operated prior
to the effectiveness of the registration statement of the Firstar Short-Term
Bond Market and Bond IMMDEX/TM Funds. At the time of the Firstar Short-Term Bond
Market and Bond IMMDEX/TM Funds' inception, each collective investment fund was
operated using materially equivalent investment objectives, policies, guidelines
and restrictions as its corresponding Firstar Fund. In connection with the
Firstar Short-Term Bond Market and Bond IMMDEX/TM Funds' commencement of
operations, on December 29, 1989, each collective investment fund transferred
its assets to its Firstar Fund equivalent. At the time of the transfer, the
Adviser did not manage any other collective investment or common trust funds
using materially equivalent investment objectives, policies, guidelines and
restrictions to those of the Short-Term Bond Market and Bond IMMDEX/TM Funds.
The collective investment funds were not open to the public generally, nor
registered under the Investment Company Act of 1940 (the "1940 Act") or subject
to certain restrictions that are imposed by the 1940 Act and the Internal
Revenue Code. If the collective investment funds had been registered under the
1940 Act, performance may have been adversely affected. Performance of the
collective investment funds has been restated to reflect the Firstar Short-Term
Bond Market and Bond IMMDEX/TM Funds' respective actual expenses during each
such Fund's first fiscal year. Performance quotations of each collective
investment fund represent past performance of the FIRMCO managed collective
funds, which are separate and distinct from Firstar Short-Term Bond Market Fund
and Bond IMMDEX/TM Fund; do not represent past performance of those Funds; and
should not be considered as representative of future results of the Funds.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Short-Term Bond Market Fund, Intermediate Bond Market Fund and
Bond IMMDEX/TM Fund.
INSTITUTIONAL RETAIL A RETAIL B
SHAREOWNER FEES (fees paid directly SHARES SHARES SHARES
from your investment)
Maximum Sales Charge (Load) Imposed
on Purchases (as a percentage
of offering price) None 3.75% None
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price) None None 5.00%<F1>
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends None None None
Redemption Fees None<F2> None<F2> None<F2>
Exchange Fees None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEES<F4> (12B-1)FEES<F5> EXPENSES<F6> EXPENSES<F7>
Short-Term Bond
Market Fund - Retail A 0.60% 0.00% 0.52% 1.12%
Retail B<F3> 0.60% 0.75% 0.52% 1.87%
Institutional 0.60% 0.00% 0.27% 0.87%
Intermediate Bond
Market Fund - Retail A 0.50% 0.00% 0.46% 0.96%
Retail B<F3> 0.50% 0.75% 0.46% 1.71%
Institutional 0.50% 0.00% 0.21% 0.71%
Bond IMMDEX/TM Fund -
Retail A 0.30% 0.00% 0.44% 0.74%
Retail B<F3> 0.30% 0.75% 0.44% 1.49%
Institutional 0.30% 0.00% 0.19% 0.49%
<F1> A contingent deferred sales charge is imposed on Retail B Shares redeemed
within six years of purchase at a rate of 5% in the first year, 4% in the second
year, 3% in the third and fourth year, 2% in the fifth year, declining to 1% in
the sixth year. Thereafter Retail B Shares convert to Retail A Shares, which do
not bear a contingent deferred sales charge.
<F2> A fee of $12.00 is charged for each wire redemption (Retail Shares) and
$15.00 for each non-systematic withdrawal from a Retirement Account for which
Firstar Bank, Milwaukee, N.A. is custodian.
<F3> The Annual Operating Expenses for the Retail B Shares are based on Fund
expenses for the prior fiscal year, but "Other Expenses" is restated to reflect
estimated expenses for Retail B Shares.
<F4> The Adviser has voluntarily agreed that a portion of its management fee
will not be imposed on the Short-Term Bond Market Fund and Intermediate Bond
Market Fund during the current fiscal year. As a result of the fee waiver,
current management fees of the Short-Term Bond Market and Intermediate Bond
Market Funds, are 0.30% and 0.36%, respectively, of such Fund's average daily
net assets. These waivers are expected to remain in effect for the current
fiscal year. However, they are voluntary and can be modified or terminated at
any time without the Funds' consent.
<F5> The total of all 12b-1 fees and shareowner servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of a Fund's average daily net assets
for the Retail A Shares. The Funds do not intend to pay 12b-1 fees with respect
to the Retail A Shares for the current fiscal year. The funds do not intend to
pay more than 0.75% in 12b-1 fees with respect to the Retail B Shares for the
current fiscal year.
<F6> "Other Expenses" includes (1) administration fees, transfer agency fees and
all other ordinary operating expenses of the Funds not listed above and (2) for
the Retail A and Retail B Shares, the payment of a Shareowner Servicing fee to
institutions (described below under the heading "Management of the Funds -
Shareowner Organizations") equal to 0.25% of the average daily net assets of
each Fund's Retail A Shares and Retail B Shares.
<F7> As a result of the fee waivers set forth in note 4, the Total Annual Fund
Operating Expenses of the Short-Term Bond Market Fund and Intermediate Bond
Market Fund are estimated to be 0.82% and 0.82% for the Retail A Shares of each
Fund, 1.57% and 1.57% for the Retail B Shares of each Fund and .57% and .57% for
the Institutional Shares of each Fund, respectively, for the current fiscal
year. Although the fee waivers are expected to remain in effect for the current
fiscal year, these waivers are voluntary and may be terminated at any time at
the option of the Adviser.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund (without the fee waivers) with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Short-Term Bond Market Fund - Retail A Shares $485 $718 $969 $1,687
Short-Term Bond Market Fund - Retail B Shares
Assuming complete redemption at end of period 690 888 1,211 1,815
Assuming no redemption 190 588 1,011 1,815
Short-Term Bond Market Fund - Institutional 89 278 482 1,073
Intermediate Bond Market Fund -
Retail A Shares 469 669 886 1,509
Intermediate Bond Market Fund -
Retail B Shares
Assuming complete redemption
at end of period 674 839 1,128 1,638
Assuming no redemption 174 539 928 1,638
Intermediate Bond Market Fund - Institutional 73 227 395 883
Bond IMMDEX/TM - Retail A Shares 448 603 771 1,259
Bond IMMDEX/TM - Retail B Shares
Assuming complete redemption at
end of period 652 771 1,013 1,390
Assuming no redemption 152 471 813 1,390
Bond IMMDEX/TM - Institutional 50 157 274 616
Retail B Shares convert to Retail A Shares six years after purchase; therefore,
Retail A Shares expenses are used in the hypothetical example after year six.
In addition to the compensation itemized above, shareowner organizations may
charge fees for providing services in connection with their clients' investments
in a Fund's shares.
TAX-EXEMPT INTERMEDIATE BOND FUND
OBJECTIVE
The investment objective of the Tax-Exempt Intermediate Bond Fund is to provide
current income that is substantially exempt from federal income tax and
emphasize total return with relatively low volatility of principal. This
investment objective may be changed by the Board of Directors without approval
of Shareowners, although no change is currently anticipated.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests principally in investment-grade intermediate-term municipal
obligations issued by state and local governments exempt from federal income
tax. Except during temporary defensive periods, the Fund will invest at least
80% of its net assets in securities, the interest on which is exempt from
regular federal income and alternative minimum taxes and will invest at least
65% of its total assets in bonds and debentures. The Fund intends to maintain an
average weighted maturity between three and ten years. There is no limit on the
maturity of any individual security in the Fund, and the Fund may invest in
short-term municipal obligations and tax-exempt commercial paper.
The Adviser generally will sell a security when it, on a relative basis and in
the Adviser's opinion, will no longer help a Fund to maintain overall interest
rate sensitivity and return objectives.
In pursuing its investment objective, the Fund invests in a diversified
portfolio of municipal obligations (as defined above under "Tax-Exempt Money
Market Fund"). Municipal obligations purchased by the
Fund will be:
- - investment grade at the time of purchase (i.e., BBB by S&P or Fitch IBCA or
Baa by Moody's, or in the highest 4 categories by another nationally recognized
rating agency)
- - unrated at the time of purchase but determined to be of comparable quality by
the Adviser
- - municipal notes and other short-term obligations rated SP-1 by S&P or MIG-1 by
Moody's
- - tax-exempt commercial paper rated A-1 or higher by S&P or VMIG-1 by Moody's
After purchase, a security may cease to be rated or may have its rating reduced
below the minimum rating required for purchase by the Fund. At the time, the
Adviser will consider whether to continue to hold the security. The Adviser will
sell promptly any securities that are not rated investment grade by at least one
nationally recognized rating agency if the securities exceed 5% of the Fund's
net assets.
PRINCIPAL RISKS
The following principal investment risks are described in more detail under the
heading "Types of Investment Risk." Some additional risks, which apply to the
Fund, are also described under that heading.
The rate of income on Fund shares will vary from day to day so that dividends on
your investment will vary. The Fund is subject to credit risk, interest rate
risk and tax risk. Credit risk is the risk that an issuer of fixed income
securities may default on its obligation to pay interest and repay principal.
Interest rate risk is the risk that, when interest rates increase, fixed income
securities will decline in value. Tax risk is the risk that the Fund may be more
adversely impacted by changes in tax rates and policies than other funds.
Obligations rated in the lowest of the top four rating categories are considered
to have speculative characteristics and are subject to greater credit and
interest rate risk than higher rated securities.
The Fund may invest more than 25% of its total assets in municipal obligations
issued by persons located in the same state and the interest on which is paid
solely from revenues of similar projects. As a result, changes in economic,
business or political conditions relating to a particular state or types of
projects may have a disproportionate impact on the Fund's share price.
Municipal obligations which the Fund may acquire include municipal lease
obligations, which are issued by a state or local government or authority to
acquire land and a wide variety of equipment and facilities. If the funds are
not appropriated for the following year's lease payments, the lease may
terminate, with the possibility of default on the lease obligation and
significant loss to the Fund.
BAR CHART AND PERFORMANCE TABLE
The Fund offers three types of shares, as described under "Investing with
Firstar Funds" - Institutional, Retail A and Retail B. These types of shares
bear differing levels of expenses, as described under "Investing with Firstar
Funds." The following bar chart and table provide an indication of the risks of
investing in a Fund by showing: (a) changes in the performance of a Fund's
Institutional Shares from year to year; and (b) how the average annual returns
of a Fund's Retail A and Institutional shares compare to those of a broad-based
securities market index. The bar charts and performance tables assume
reinvestment of dividends and distributions. Remember, past performance is not
indicative of future results. Prior to January 10, 1995, each Fund offered to
investors one series of shares with neither a sales charge nor a service fee.
The average annual total return calculation reflects a maximum initial sales
charge of 3.75% for the Retail A Shares, but for periods prior to January 10,
1995, performance does not reflect service organization fees. If service
organization fees had been reflected, performance would be reduced. Performance
reflects fee waivers in effect. If fee waivers were not in place, a Fund's
performance would be reduced. Because the bar chart reflects Institutional share
performance, the bar chart does not reflect the sales load applicable to Retail
A and B Shares. If the sales loads were reflected, performance would be reduced.
The Retail B Shares commenced operations on March 1, 1999. Because those shares
have less than one year's performance, no average annual returns are shown for
that class in this section.
Year-by-year total return as of 12/31 each year (%)(Institutional Shares
1998 5.36
1997 6.05
1996 3.78
1995 10.51
1994 -1.73
1993
1992
1991
1990
1989
BEST QUARTER: Q 1 '95 3.93%
WORST QUARTER: Q 1 '94 (2.75)%
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98 (Retail A Shares and Institutional
Shares)
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (Feb. 8, 1993)
TAX-EXEMPT INTERMEDIATE BOND
FUND - Retail A Shares 1.11% 3.71% - 4.25%
Institutional Shares 5.36% 4.72% - 5.12%
LEHMAN BROTHERS 5-YEAR
GENERAL OBLIGATION BOND INDEX 5.84% 5.36% - 5.78%
The Lehman Brothers 5-Year General Obligation Bond Index is a widely recognized
unmanaged index of bond prices compiled by Lehman Brothers. The Index figures do
not reflect any fees or expenses. Investors cannot invest directly in the Index.
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 minimum amount
outstanding of at least $3 million; have been issued within the last five years;
and have a maturity of four to six years.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Tax-Exempt Intermediate Bond Fund.
INSTITUTIONAL RETAIL A RETAIL B
SHAREOWNER FEES (fees paid directly SHARES SHARES SHARES
from your investment)
Maximum Sales Charge (Load) Imposed
on Purchases (as a percentage
of offering price) None 3.75% None
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price) None None 5.00%<F1>
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends None None None
Redemption Fees None<F2> None<F2> None<F2>
Exchange Fees None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEES<F4> (12B-1)FEES<F5> EXPENSES<F6> EXPENSES<F7>
Tax-Exempt Intermediate
Bond Fund - Retail A 0.50% 0.00% 0.56% 1.06%
Tax-Exempt Intermediate
Bond Fund - Retail B<F3> 0.50% 0.75% 0.56% 1.81%
Tax-Exempt Intermediate
Bond Fund - Institutional 0.50% 0.00% 0.31% 0.81%
<F1> A contingent deferred sales charge is imposed on Retail B Shares redeemed
within six years of purchase at a rate of 5% in the first year, 4% in the second
year, 3% in the third and fourth year, 2% in the fifth year, declining to 1% in
the sixth year. Thereafter Retail B Shares convert to Retail A Shares, which do
not bear a contingent deferred sales charge.
<F2> A fee of $12.00 is charged for each wire redemption (Retail Shares) and
$15.00 for each non-systematic withdrawal from a Retirement Account for which
Firstar Bank, Milwaukee, N.A. is custodian.
<F3> The Annual Operating Expenses for the Retail B Shares are based on Fund
expenses for the prior fiscal year, but "Other Expenses" is restated to reflect
estimated expenses for Retail B Shares.
<F4> The Adviser has voluntarily agreed that a portion of its management fee
will not be imposed on the Fund during the current fiscal year. As a result of
the fee waiver, current management fees for the Fund are 0.36% of the Fund's
average daily net assets. This waiver is expected to remain in effect for the
current fiscal year. However, it is voluntary and can be modified or terminated
at any time without the Fund's consent.
<F5> The total of all 12b-1 fees and shareowner servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not intend to pay 12b-1 fees with
respect to the Retail A Shares for the current fiscal year. The Fund does not
intend to pay more than 0.75% in 12b-1 fees with respect to the Retail B Shares
for the current fiscal year.
<F6> "Other Expenses" includes (1) administration fees, transfer agency fees and
all other ordinary operating expenses of the Fund not listed above and (2) for
the Retail A and Retail B Shares, the payment of a Shareowner Servicing fee to
institutions (described below under the heading "Management of the Funds -
Shareowner Organizations") equal to 0.25% of the average daily net assets of the
Fund's Retail A Shares and Retail B Shares.
<F7> As a result of the fee waiver set forth in note 4, the Total Annual Fund
Operating Expenses of the Retail A, Retail B and Institutional Shares of the
Fund are estimated to be 0.92%, 1.67% and 0.67%, respectively, for the current
fiscal year. Although the fee waiver is expected to remain in effect for the
current fiscal year, this waiver is voluntary and may be terminated at any time
at the option of the Adviser.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund (without the fee waivers) with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Tax-Exempt Intermediate Bond Fund -
Retail A Shares $479 $700 $938 $1,621
Tax-Exempt Intermediate Bond Fund -
Retail B Shares
Assuming complete redemption at
end of period 684 869 1,180 1,749
Assuming no redemption 184 569 980 1,749
Tax-Exempt Intermediate Bond
Fund - Institutional 183 259 450 1,002
Retail B Shares convert to Retail A Shares six years after purchase; therefore,
Retail A Shares expenses are used in the hypothetical example after year six.
In addition to the compensation itemized above, shareowner organizations may
charge fees for providing services in connection with their clients' investments
in the Fund's shares.
BALANCED INCOME FUND
OBJECTIVE
The investment objective of the Balanced Income Fund is to provide current
income and the preservation of capital by investing in a balanced portfolio of
dividend-paying equity and fixed-income securities. This investment objective
may be changed by the Board of Directors without approval of Shareowners,
although no change is currently anticipated.
PRINCIPAL INVESTMENT STRATEGIES
The Fund selects and purchases common stocks of domestic companies that have a
history of paying dividends. The Fund selects fixed-income securities, which the
Adviser believes will provide an annual rate of total return similar to that of
the Lehman Intermediate Index. That Index is described under "Bond Funds -
Description of Bond Indices."
The Adviser may sell a security for reasons including those relating to
fundamental deterioration or valuation. Fundamental deterioration occurs when a
company is no longer able to achieve the results generally expected by the
investment community due to a specific issue, such as a loss of a customer or
pricing pressure in the industry. The Adviser may sell for reasons relating to
valuation when for example a security's price has reached a target specified by
the Adviser, and the Adviser, believes potential increases in price are limited.
The Fund plans to use a 50/50 method to invest its total assets - that means 50%
in equity securities and 50% in fixed-income securities.
EQUITY SECURITIES 50% (no less than 20%, no more than 60%)
FIXED-INCOME SECURITIES 50% (no less than 40%)
- -----------------------------------------------------------------------------
NOTE: The actual percentage of assets invested in fixed-income and equity
securities will vary from time to time, depending on the judgment of the
Adviser as to the general market and economic conditions, trends and yields,
interest rates and fiscal and monetary developments.
- -----------------------------------------------------------------------------
EQUITY SECURITIES
The Fund primarily invests in common stock of domestic companies the Adviser
considers to be well managed and to have "attractive fundamental financial
characteristics." The Adviser also generally looks for companies with stock
market capitalizations over $750 million. Stock market capitalizations are
calculated by multiplying the total number of common shares outstanding by the
market price per share.
- --------------------------------------------------------------------------------
The Adviser looks for companies with ATTRACTIVE FUNDAMENTAL FINANCIAL
CHARACTERISTICS such as:
1. low debt
2. high return on equity
3. consistent revenue and earnings per share growth over the prior three to five
years
- --------------------------------------------------------------------------------
The Fund may also acquire bonds, notes, debentures and preferred stocks
convertible into common stocks if they provide a current interest or dividend
stream, and may invest up to 5% of its net assets in other types of domestic
securities having common stock characteristics, such as rights and warrants to
purchase equity securities.
FIXED INCOME
The Fund may purchase the following types of fixed-income securities. There are
no maturity limitations.
- - Corporate - U.S. Treasury
- - U.S. government agency - stripped U.S. government
- - asset-backed and mortgage-backed obligations - money market instruments
- - U.S. government
Except for convertible securities, the Fund will purchase only debt obligations
rated investment grade by at least one rating agency or unrated obligations
deemed by the Adviser to be comparable in quality. See "Taxable Bond Funds" for
a description of investment-grade securities. After purchase, a security may
cease to be rated or may have its rating reduced below the minimum rating
required for purchase by the Fund. The Adviser will consider whether to continue
to hold the security.
PRINCIPAL RISKS
The following principal investment risks are described in more detail under the
heading "Types of Investment Risk." Some additional risks, which apply to the
Fund, are also described under that heading.
The rate of income on Fund shares will vary from day to day so that dividends on
your investment will vary. The Fund is subject to market risk. Market risk is
the risk that the value of the securities in which a Fund invests may go up or
down in response to the prospects of individual companies and/or general
economic conditions. Fixed-income securities in which the Fund invests are
subject to credit risk and interest rate risk. Credit risk is the risk that an
issuer of fixed-income securities may default on its obligation to pay interest
and repay principal. Interest rate risk is the risk that, when interest rates
increase, fixed-income securities will decline in value. In particular,
convertible securities frequently have speculative characteristics and may be
acquired without regard to minimum quality ratings. The Fund intends to invest
no more than 5% of net assets in securities rated non-investment grade by at
least one rating agency at the time of purchase or unrated securities of
comparable quality. Convertible securities and obligations rated in the lowest
of the top four rating categories are subject to greater credit and interest
rate risk than higher rated securities. Stripped securities are subject to
greater interest rate risk than other more typical fixed-income securities.
Certain securities in which the Fund invests pose additional risks. The
Additional Statement describes risks of collateralized mortgage obligations and
mortgage- and asset-backed securities, which are subject to derivatives risk,
extension risk and prepayment risk. Extension risk is the risk that an issuer
will exercise its right to pay principal on an obligation held by a Fund (such
as a mortgage- or asset-backed security) later than expected. This may happen
when there is a rise in interest rates. Under such circumstances, the value of
the obligation will decrease and a Fund will also suffer from the inability to
invest in higher yielding securities. Prepayment risk is the risk that an issuer
will exercise its right to pay principal on an obligation held by a Fund (such
as a mortgage- or asset-backed security) earlier than expected. This may happen
when there is a decline in interest rates. These events may make a Fund unable
to recoup its initial investment and may result in reduced yields.
BAR CHART AND PERFORMANCE TABLE
The Fund offers three types of shares, as described under "Investing with
Firstar Funds" - Institutional, Retail A and Retail B. These types of shares
bear differing levels of expenses, as described under "Investing with Firstar
Funds." The following bar chart and table provide an indication of the risks of
investing in a Fund by showing: (a) changes in the performance of a Fund's
Institutional Shares from year to year; and (b) how the average annual returns
of a Fund's Retail A and Institutional Shares compare to those of a broad-based
securities market index. The bar charts and performance tables assume
reinvestment of dividends and distributions. Remember, past performance is not
indicative of future results. Prior to January 10, 1995, each Fund offered to
investors one series of shares with neither a sales charge nor a service fee.
The average annual total return calculation reflects a maximum initial sales
charge of 4.50% for the Retail A Shares, but for periods prior to January 10,
1995, performance does not reflect service organization fees. If service
organization fees had been reflected, performance would be reduced. Performance
reflects fee waivers in effect. If fee waivers were not in place, a Fund's
performance would be reduced. Because the bar chart reflects Institutional Share
performance, it does not reflect the sales load applicable to Retail A and B
Shares. If the sales loads were reflected, performance would be reduced. The
Retail B Shares commenced operations on March 1, 1999. Because those shares have
less than one year's performance, no average annual returns are shown for that
class in this section.
Year-by-year total return as of 12/31 each year (%)(Institutional Shares)
1998 15.58
1997 23.47
1996 17.83
1995 25.48
1994 -1.74
1993 8.79
1992 8.92
1991 31.95
1990 4.75
1989
BEST QUARTER: Q 2 '97 10.40%
WORST QUARTER: Q 3 '90 (5.43)%
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98 (Retail A Shares and Institutional
Shares)
1 YEAR 5 YEARS 10 YEARS
BALANCED INCOME FUND - Retail A Shares 11.86% 14.80% 14.94%
Institutional Shares 16.79% 15.93% 15.58%
S&P 500 INDEX 28.58% 24.06% 19.21%
LIPPER BALANCED FUND INDEX 15.09% 13.87% 12.97%
The S&P 500 Index is an unmanaged index of 500 common stocks that is generally
considered representative of the U.S. stock market. The Index is heavily
weighted towards stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks. The Lipper Balanced Fund Index is composed of the 30 largest mutual
funds whose primary objective is to conserve principal by maintaining a balanced
portfolio of stocks and bonds. The S&P 500 Index figures do not reflect any
fees or expenses. Investors cannot invest directly in the Index.
The performance of Firstar Balanced Income Fund for the period prior to December
1, 1997 is the performance of a common trust fund managed by FIRMCO which
operated during the periods prior to commencement of operations of the Firstar
Balanced Income Fund using materially equivalent investment objectives,
policies, guidelines and restrictions as Firstar Balanced Income Fund. The
common trust fund transferred its assets to the Balanced Income Fund at the
commencement of operations. At the time of the transfer, the Adviser did not
manage any other collective investment or common trust funds using materially
equivalent investment objectives, policies, guidelines and restrictions to those
of the Balanced Income Fund. The common trust fund was not registered under the
Investment Company Act of 1940 (the "1940 Act"), and was not subject to certain
restrictions that are imposed by the 1940 Act and the Internal Revenue Code. If
the common trust fund had been registered under the 1940 Act, performance may
have been adversely affected. The performance of the common trust fund has been
restated to reflect Firstar Balanced Income Fund's expenses for its first year
of operations.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Balanced Income Fund.
INSTITUTIONAL RETAIL A RETAIL B
SHAREOWNER FEES (fees paid directly SHARES SHARES SHARES
from your investment)
Maximum Sales Charge (Load) Imposed
on Purchases (as a percentage
of offering price) None 4.50% None
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price) None None 5.00%<F1>
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends None None None
Redemption Fees None<F2> None<F2> None<F2>
Exchange Fees None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEES<F4> (12B-1)FEES<F5> EXPENSES<F6> EXPENSES<F7>
Balanced Income Fund -
Retail A 0.75% 0.00% 0.89% 1.64%
Balanced Income Fund -
Retail B<F3> 0.75% 0.75% 0.89% 2.39%
Balanced Income Fund -
Institutional 0.75% 0.00% 0.64% 1.39%
<F1> A contingent deferred sales charge is imposed on Retail B Shares redeemed
within six years of purchase at a rate of 5% in the first year, 4% in the second
year, 3% in the third and fourth year, 2% in the fifth year, declining to 1% in
the sixth year. Thereafter Retail B Shares convert to Retail A Shares, which do
not bear a contingent deferred sales charge.
<F2> A fee of $12.00 is charged for each wire redemption (Retail Shares) and
$15.00 for each non-systematic withdrawal from a Retirement Account for which
Firstar Bank, Milwaukee, N.A. is custodian.
<F3> The Annual Operating Expenses for the Retail B Shares are based on Fund
expenses for the prior fiscal year, but "Other Expenses" is restated to reflect
estimated expenses for Retail B Shares.
<F4> The Adviser has voluntarily agreed that a portion of its management fee
will not be imposed on the Fund during the current fiscal year. As a result of
the fee waiver, current management fees for the Fund are 0.33% of the Fund's
average daily net assets. This waiver is expected to remain in effect for the
current fiscal year. However, it is voluntary and can be modified or terminated
at any time without the Fund's consent.
<F5> The total of all 12b-1 fees and shareowner servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not intend to pay 12b-1 fees with
respect to the Retail A Shares for the current fiscal year. The Fund does not
intend to pay more than 0.75% in 12b-1 fees with respect to the Retail B Shares
for the current fiscal year.
<F6> "Other Expenses" includes (1) administration fees, transfer agency fees and
all other ordinary operating expenses of the Fund not listed above and (2) for
the Retail A and Retail B Shares, the payment of a Shareowner Servicing fee to
institutions under a Service Plan (described below under "Management of the
Funds - Shareowner Organizations") equal to 0.25% of the average daily net
assets of the Fund's Retail A Shares and Retail B Shares.
<F7> As a result of the fee waiver set forth in note 4, the Total Annual Fund
Operating Expenses of the Retail A, Retail B and Institutional Shares are
estimated to be 1.22%, 1.97% and 0.97%, respectively, for the current fiscal
year. Although the fee waiver is expected to remain in effect for the current
fiscal year, this waiver is voluntary and may be terminated at any time at the
option of the Adviser.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund (without the fee waivers) with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Balanced Income Fund - Retail A Shares $609 $1,944 $1,302 $2,306
Balanced Income Fund - Retail B Shares
Assuming complete redemption at end
of period 742 1,045 1,475 2,370
Assuming no redemption 242 745 1,275 2,370
Balanced Income Fund - Institutional 142 440 761 1,669
Retail B Shares convert to Retail A Shares six years after purchase; therefore,
Retail A Shares expenses are used in the hypothetical example after year six.
In addition to the compensation itemized above, shareowner organizations may
charge fees for providing services in connection with their clients' investments
in the Fund's shares.
BALANCED GROWTH FUND
OBJECTIVE
The investment objective of the Balanced Growth Fund is to achieve a balance of
capital appreciation and current income with relatively low volatility of
capital. This investment objective may be changed by the Board of Directors
without approval of Shareowners, although no change is anticipated.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests principally in a diversified portfolio of fixed-income and
equity securities. Equity securities are selected on the basis of their
potential for capital appreciation. The Fund selects fixed-income securities,
which the Adviser believes will provide an annual rate of total return similar
to that of the Lehman Brothers Government/Corporate Bond Index. That Index is
described under "Bond Fund - Description of Bond Indices."
The Adviser may sell a security for reasons including those relating to
fundamental deterioration or valuation. Fundamental deterioration occurs when a
company is no longer able to achieve the results generally expected by the
investment community due to a specific issue, such as a loss of a customer or
pricing pressure in the industry. The Adviser may sell for reasons relating to
valuation when for example a security's price has reached a target specified by
the Adviser, and the Adviser believes potential increases in price are limited.
The Fund's policy is to invest at least 25% of the value of its total assets in
fixed-income senior securities and at least 50% and no more than 65% in equity
securities at all times.
INVESTMENT POLICY
FIXED INCOME at least 25%
EQUITY SECURITIES at least 50% (no more than 65%)
NOTE: The actual percentage of assets invested in fixed-income and equity
securities will vary from time to time, depending on the judgment of the Adviser
as to the general market and economic conditions, trends and yields, interest
rates and fiscal and monetary developments.
EQUITY SECURITIES
The Fund primarily invests in common stock of domestic and foreign companies
that the Adviser considers to be well managed and to have attractive fundamental
financial characteristics (see box on page 21 for examples of these
characteristics). The Adviser also generally looks for companies with stock
market capitalizations between $100 million and $50 billion. The Fund may also
invest from time to time a portion of its assets in companies with larger or
smaller market capitalizations.
The Fund may also acquire preferred stocks. In addition, the Fund may invest in
domestic securities convertible into common stock, such as certain bonds and
preferred stocks, and may invest up to 5% of its net assets in other types of
domestic securities having common stock characteristics, such as rights and
warrants to purchase equity securities.
FIXED INCOME
The Fund may purchase the following types of fixed-income securities. There are
no maturity limitations.
- Corporate - U.S. Treasury
- U.S. government agency - stripped U.S. government
- asset-backed and mortgage-backed obligations - money market instruments
- U.S. government
Except for convertible securities the Fund will only acquire debt obligations
that are rated "investment- grade" by at least one rating agency or unrated
obligations deemed by the Adviser to be comparable in quality. See "Taxable Bond
Funds" for a description of investment-grade securities. After purchase, a
security may cease to be rated or may have its rating reduced below the minimum
rating required for purchase by the Fund. The Adviser will consider whether to
continue to hold the security.
PRINCIPAL RISKS
The following principal investment risks are described in more detail under the
heading "Types of Investment Risk." Some additional risks, which apply to the
Fund, are also described under that heading.
The rate of income on Fund shares will vary from day to day so that dividends on
your investment will vary. The Fund is subject to market risk. Market risk is
the risk that the value of the securities in which a Fund invests may go up or
down in response to the prospects of individual companies and/or general
economic conditions. Fixed-income securities in which the Fund invests are
subject to credit risk and interest rate risk. Credit risk is the risk that an
issuer of fixed-income securities may default on its obligation to pay interest
and repay principal. Interest rate risk is the risk that, when interest rates
increase, fixed-income securities will decline in value. In particular,
convertible securities frequently have speculative characteristics and may be
acquired without regard to minimum quality ratings. The Fund intends to invest
no more than 5% of net assets in securities rated non-investment grade by at
least one rating agency at the time of purchase or unrated securities of
comparable quality. Convertible securities and obligations rated in the lowest
of the top four rating categories are subject to greater credit and interest
rate risk than higher rated securities. Stripped securities are subject to
greater interest rate risk than other more typical fixed-income securities.
Certain securities in which the Fund invests pose additional risks. The
Additional Statement describes risks of collateralized mortgage obligations and
mortgage- and asset-backed securities, which are subject to derivatives risk,
extension risk and prepayment risk. Derivatives risk is the risk of loss from
transactions which may be more sensitive to or otherwise react in tandem with
interest rate changes or market moves and may be leveraged. Extension risk is
the risk that an issuer will exercise its right to pay principal on an
obligation held by a Fund (such as a mortgage- or asset-backed security) later
than expected. This may happen when there is a rise in interest rates. Under
such circumstances, the value of the obligation will decrease and a Fund will
also suffer from the inability to invest in higher yielding securities.
Prepayment risk is the risk that an issuer will exercise its right to pay
principal on an obligation held by a Fund (such as a mortgage- or asset-backed
security) earlier than expected. This may happen when there is a decline in
interest rates. These events may make a Fund unable to recoup its initial
investment and may result in reduced yields.
BAR CHART AND PERFORMANCE TABLE
The Fund offers three types of shares, as described under "Investing with
Firstar Funds" - Institutional, Retail A and Retail B. These types of shares
bear differing levels of expenses, as described under "Investing with Firstar
Funds." The following bar chart and table provide an indication of the risks of
investing in the Fund by showing: (a) changes in the performance of a Fund's
Institutional Shares from year to year, and (b) how the average annual returns
of the Fund's Retail A and Institutional Shares compare to those of a broad-
based securities market index. The bar chart and performance table assume
reinvestment of dividends and distributions. Remember, past performance is not
indicative of future results. Prior to January 10, 1995, the Fund offered to
investors one series of shares with neither a sales charge nor a service fee.
The average annual total return calculation reflects a maximum initial sales
charge of 4.50% for the Retail A Shares, but for periods prior to January 10,
1995, performance does not reflect service organization fees. If service
organization fees had been reflected, performance would be reduced. Because the
bar chart reflects Institutional Share performance, the bar chart does not
reflect the sales load applicable to Retail A and B Shares. If the sales loads
were reflected, performance would be reduced. Performance reflects fee waivers
in effect. If fee waivers were not in place, a Fund's performance would have
been reduced. The Retail B Shares commenced operations on March 1, 1999. Because
those shares have less than one year's performance, no average annual returns
are shown for that class in this section.
YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%) (INSTITUTIONAL SHARES)
1998 16.51
1997 17.47
1996 12.63
1995 26.52
1994 -4.27
1993 8.24
1992
1991
1990
1989
BEST QUARTER: Q 3 '98 (7.98)%
WORST QUARTER: Q 4 '98 14.09%
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98 (Retail A Shares and Institutional
Shares)
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (Mar. 30, 1992)
BALANCED GROWTH FUND -
Retail A Shares 10.97% 12.04% - 11.69%
Institutional Shares 16.51% 13.29% - 12.62%
S&P 500 INDEX 28.58% 24.06% - 20.75%
LIPPER BALANCED FUND INDEX 15.09% 13.87% - 13.01%
The S&P 500 Index is an unmanaged index of 500 common stocks that is generally
considered representative of the U.S. stock market. The Index is heavily
weighted towards stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks. The Lipper Balanced Fund Index is composed of the 30 largest mutual
funds whose primary objective is to conserve principal by maintaining a balanced
portfolio of stocks and bonds. The S&P 500 Index figures do not reflect any
fees or expenses. Investors cannot invest directly in the Index.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Balanced Growth Fund.
INSTITUTIONAL RETAIL A RETAIL B
SHAREOWNER FEES (fees paid SHARES SHARES SHARES
directly from your investment)
Maximum Sales Charge (Load) Imposed
on Purchases as a percentage
of offering price) None 4.50% None
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price) None None 5.00%<F1>
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends None None None
Redemption Fees None<F2> None<F2> None<F2>
Exchange Fees None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEES<F4> (12B-1)FEES<F5> EXPENSES<F6> EXPENSES<F7>
Balanced Growth Fund -
Retail A 0.75% 0.00% 0.49% 1.24%
Balanced Growth Fund -
Retail B<F3> 0.75% 0.75% 0.49% 1.99%
Balanced Growth Fund -
Institutional 0.75% 0.00% 0.24% 0.99%
<F1> A contingent deferred sales charge is imposed on Retail B Shares redeemed
within six years of purchase at a rate of 5% in the first year,
4% in the second year, 3% in the third and fourth year, 2% in the fifth year,
declining to 1% in the sixth year. Thereafter Retail B Shares convert to Retail
A Shares, which do not bear a contingent deferred sales charge.
<F2> A fee of $12.00 is charged for each wire redemption (Retail Shares) and
$15.00 for each non-systematic withdrawal from a Retirement Account for which
Firstar Bank, Milwaukee, N.A. is custodian.
<F3> The Annual Operating Expenses for the Retail B Shares are based on Fund
expenses for the prior fiscal year, but "Other Expenses" is restated to reflect
estimated expenses for Retail B Shares.
<F4> The Adviser has voluntarily agreed that a portion of its management fee
will not be imposed on the Fund during the current fiscal year. As a result of
the fee waiver, current management fees for the Fund are 0.73% of the Fund's
average daily net assets. This waiver is expected to remain in effect for the
current fiscal year. However, it is voluntary and can be modified or terminated
at any time without the Fund's consent.
<F3> The total of all 12b-1 fees and shareowner servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not intend to pay 12b-1 fees with
respect to the Retail A Shares for the current fiscal year. The Fund does not
intend to pay more than 0.75% in 12b-1 fees with respect to the Retail B Shares
for the current fiscal year.
<F6> "Other Expenses" includes (1) administration fees, transfer agency fees and
all other ordinary operating expenses of the Fund not listed above and (2) for
the Retail A and Retail B Shares, the payment of a Shareowner Servicing fee to
institutions under a Service Plan (described below under "Management of the
Funds - Shareowner Organizations") equal to 0.25% of the average daily net
assets of the Fund's Retail A Shares and Retail B Shares.
<F7> As a result of the fee waiver set forth in note 4, the Total Annual Fund
Operating Expenses of the Retail A, Retail B and Institutional Shares of the
Fund are estimated to be 1.22%, 1.97% and 0.97%, respectively, for the current
fiscal year. Although the fee waiver is expected to remain in effect for the
current fiscal year, this waiver is voluntary and may be terminated at any time
at the option of the Adviser.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund (without the fee waivers) with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Balanced Growth Fund - Retail A Shares $571 $826 $1,100 $1,882
Balanced Growth Fund - Retail B Shares
Assuming complete redemption at
end of period 702 924 1,273 1,946
Assuming no redemption 202 624 1,073 1,946
Balanced Growth Fund - Institutional 101 315 547 1,213
Retail B Shares convert to Retail A Shares six years after purchase; therefore,
Retail A Shares expenses are used in the hypothetical example after year six.
In addition to the compensation itemized above, shareowner organizations may
charge fees for providing services in connection with their clients' investments
in the Fund's shares.
GROWTH AND INCOME FUND
OBJECTIVE
The investment objective of the Growth and Income Fund is to seek both
reasonable income and long-term capital appreciation. This investment objective
may be changed by the Board of Directors without approval of Shareowners,
although no change is currently anticipated.
PRINCIPAL INVESTMENT STRATEGIES
COMMON STOCKS
The Fund selects common stocks primarily from a universe of domestic
companies that have established dividend-paying histories. During normal
market conditions, at least 50% of net assets are invested in income-producing
equity securities. Each company initially selected must pay a current dividend.
The Adviser may sell a security for reasons including those relating to
fundamental deterioration or valuation. Fundamental deterioration occurs when a
company is no longer able to achieve the results generally expected by the
investment community due to a specific issue, such as a loss of a customer or
pricing pressure in the industry. The Adviser may sell for reasons relating to
valuation when for example a security's price has reached a target specified by
the Adviser, and the Adviser believes potential increases in price are limited.
MEDIUM- TO LARGE-SIZED COMPANIES
The Fund generally invests in medium- to large-sized companies with stock market
capitalizations over $1 billion that the Adviser considers to be well managed
and to have attractive fundamental financial characteristics (see box on page 21
for examples of these characteristics). The Fund may also invest a
portion of its assets in companies with smaller market capitalizations.
OTHER
The Fund also invests in bonds, notes, debentures and preferred stocks
convertible into common stocks, if they provide a current interest or dividend
payment.
To an extent consistent with its objective, the Fund may purchase non-
convertible debt and preferred stocks that in the opinion of the Adviser present
opportunities for capital appreciation. These obligations must be investment
grade at time of purchase or unrated but deemed comparable by the Adviser. See
"Taxable Bond Funds" for a description of investment-grade securities. After
purchase, a security may cease to be rated or may have its rating reduced below
the minimum rating required by the Fund for purchase. The Adviser will consider
whether to continue to hold the security.
PRINCIPAL RISKS
The following principal investment risks are described in more detail under the
heading "Types of Investment Risk." Some additional risks which apply to the
Fund are also described under that heading.
The Fund is subject to market risk. Market risk is the risk that the value of
the securities in which a Fund invests may go up or down in response to the
prospects of individual companies and/or general economic conditions. The Fund's
investments in debt securities are subject to credit risk and interest rate
risk. Credit risk is the risk that an issuer of fixed-income securities may
default on its obligation to pay interest and repay principal. Interest rate
risk is the risk that, when interest rates increase, fixed-income securities
will decline in value. In particular, convertible securities frequently have
speculative characteristics and may be acquired without regard to minimum
quality ratings. The Fund intends to invest no more than 5% of net assets in
securities rated non-investment grade at the time of purchase or unrated
securities of comparable quality. Convertible securities and obligations rated
in the lowest of the top four rating categories have speculative characteristics
and are subject to greater credit and interest rate risk than higher rated
securities. The Fund's options and futures transactions involve derivatives
risk. Derivatives risk is the risk of loss from transactions which may be more
sensitive to or otherwise not react in tandem with interest rate changes or
market moves and may be leveraged.
BAR CHART AND PERFORMANCE TABLE
The Fund offers three types of shares, as described under "Investing with
Firstar Funds" - Institutional, Retail A and Retail B. These types of shares
bear differing levels of expenses, as described under "Investing with Firstar
Funds." The following bar chart and table provide an indication of the risks of
investing in the Fund by showing: (a) changes in the performance of the Fund's
Institutional Shares from year to year, and (b) how the average annual returns
of the Fund's Retail A and Institutional Shares compare to those of a broad-
based securities market index. The bar chart and performance table assume
reinvestment of dividends and distributions. Remember, past performance is not
indicative of future results. Prior to January 10, 1995, the Fund offered to
investors one series of shares with neither a sales charge nor a service fee.
The average annual total return calculation reflects a maximum initial sales
charge of 4.50% for the Retail A Shares, but for periods prior to January 10,
1995, performance does not reflect service organization fees. If service
organization fees had been reflected, performance would be reduced. Because the
bar chart reflects Institutional Share performance, it does not reflect the
sales load applicable to Retail A and B Shares. If the sales loads were
reflected, returns would be reduced. Performance reflects fee waivers in effect.
If fee waivers were not in place, a Fund's performance would be reduced. The
Retail B Shares commenced operations on March 1, 1999. Because those shares have
less than one year's performance, no average annual returns are shown for that
class in this section.
YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%) (INSTITUTIONAL SHARES)
1998 22.77
1997 33.54
1996 25.03
1995 34.83
1994 0.14
1993 6.64
1992 5.48
1991 22.22
1990 -0.28
1989
BEST QUARTER: Q 4 '98 17.77%
WORST QUARTER: Q 3 '98 (9.72)%
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98 (Detail A Shares and Institutional
Shares)
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (Dec. 29, 1989)
GROWTH AND INCOME FUND -
Retail A Shares 16.93% 21.22% - 15.23%
Institutional Shares 22.77% 22.57% - 15.95%
S&P 500 INDEX 28.58% 24.06% - 17.89%
The S&P 500 Index is an unmanaged index of 500 common stocks that is generally
considered representative of the U.S. stock market. The Index is heavily
weighted towards stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks. The Index figures do not reflect any fees or expenses. Investors cannot
invest directly in the Index.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Growth and Income Fund.
INSTITUTIONAL RETAIL A RETAIL B
SHAREOWNER FEES (fees paid SHARES SHARES SHARES
directly from your investment)
Maximum Sales Charge (Load) Imposed
on Purchases (as a percentage
of offering price) None 4.50% None
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price) None None 5.00%<F1>
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends None None None
Redemption Fees None<F2> None<F2> None<F2>
Exchange Fees None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEES (12B-1)FEES<F4> EXPENSES<F5> EXPENSES
Growth and Income Fund -
Retail A 0.75% 0.00% 0.44% 1.19%
Growth and Income Fund -
Retail B<F3> 0.75% 0.75% 0.44% 1.94%
Growth and Income Fund -
Institutional 0.75% 0.00% 0.19% 0.94%
<F1> A contingent deferred sales charge is imposed on Retail B Shares redeemed
within six years of purchase at a rate of 5% in the first year,
4% in the second year, 3% in the third and fourth year, 2% in the fifth year,
declining to 1% in the sixth year. Thereafter Retail B Shares convert to Retail
A Shares, which do not bear a contingent deferred sales charge.
<F2> A fee of $12.00 is charged for each wire redemption (Retail Shares) and
$15.00 for each non-systematic withdrawal from a Retirement Account for which
Firstar Bank, Milwaukee, N.A. is custodian.
<F3> The Annual Operating Expenses for the Retail B Shares are based on Fund
expenses for the prior fiscal year, but "Other Expenses" is restated to reflect
estimated expenses for Retail B Shares.
<F4> The total of all 12b-1 fees and shareowner servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not intend to pay 12b-1 fees with
respect to the Retail A Shares for the current fiscal year. The Fund does not
intend to pay more than 0.75% in 12b-1 fees with respect to the Retail B Shares
for the current fiscal year.
<F5> "Other Expenses" includes (1) administration fees, transfer agency fees and
all other ordinary operating expenses of the Fund not listed above and (2) for
the Retail A and Retail B Shares, the payment of a Shareowner Servicing fee to
institutions under a Service Plan (described below under "Management of the
Funds - Shareowner Organizations") equal to 0.25% of the average daily net
assets of the Fund's Retail A Shares and Retail B Shares.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. The example also assumes
that your investment has a 5% return each year and that the Fund's operating
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Growth and Income Fund -
Retail A Shares $566 $811 $1,075 $1,828
Growth and Income Fund -
Retail B Shares
Assuming complete redemption
at end of period 697 909 $1,247 $1,891
Assuming no redemption 197 609 1,047 1,891
Growth and Income Fund -
Institutional 96 300 520 1,155
Retail B Shares convert to Retail A Shares six years after purchase; therefore,
Retail A Shares expenses are used in the hypothetical example after year six.
In addition to the compensation itemized above, shareowner organizations may
charge fees for providing services in connection with their clients' investments
in the Fund's shares.
EQUITY INDEX FUND
OBJECTIVE
The investment objective of the Equity Index Fund is to seek returns, before
Fund expenses, comparable to the price and yield performance of publicly traded
common stocks in the aggregate, as represented by the S&P 500 Index. The
investment objective may be changed by the Board of Directors without approval
of Shareowners, although no change is currently anticipated.
PRINCIPAL INVESTMENT STRATEGIES
Under normal market conditions, the Fund intends to invest substantially all of
its total assets in securities included in the S&P 500 Index, and in any event
the Fund will invest at least 80% of its net assets in securities included in
that index. The Fund uses the S&P 500 Index as the standard performance
comparison because it represents approximately two-thirds of the total market
value of all domestic common stocks and is well known to investors.
- --------------------------------------------------------------------------------
THE FUND WILL HOLD STOCK OF APPROXIMATELY 400 TO 475 ISSUERS INCLUDED IN THE S&P
500 INDEX.
- --------------------------------------------------------------------------------
The S&P 500 Index consists of 500 selected common stocks, most of which are
listed on the New York Stock Exchange. Standard & Poor's selects the stocks
included in the S&P 500 Index on a market capitalization basis, and the S&P 500
Index is heavily weighted toward stocks with large market capitalizations.
Rather than using traditional methods of investment management, index funds such
as the Equity Index Fund are managed with the aid of a computer program. The
Adviser purchases and sells securities for the Fund in an attempt to produce
investment results that substantially duplicate the performance of the common
stocks of the issuers represented in the S&P 500 Index.
The Fund does not expect to hold all of the stocks included in the S&P 500 Index
at any particular time. However, the Adviser believes that it will be able to
construct and maintain the Fund's investment portfolio so that it reasonably
tracks the performance of the S&P 500 Index by using a capitalization weighting
and sector balancing technique.
The Adviser believes the quarterly performance of the Fund and the S&P 500 Index
will be within +0.3% under normal market conditions. The Adviser believes that
through the application of a capitalization weighting and sector balancing
technique that it will be able to construct and maintain the Fund's investment
portfolio so that it reasonably tracks the performance of the S&P 500 Index. In
the event the performance of the Fund is not comparable to the performance of
the S&P 500 Index, the Board of Directors will examine the reasons for the
deviation and the availability of corrective measures. These measures would
include additional fee waivers by the Adviser and Co-Administrators or
adjustments to the Adviser's portfolio management practices. If substantial
deviation in the Fund's performance continued for extended periods, it is
expected the Board of Directors would consider possible changes to the Fund's
investment objective.
The Fund may invest in futures contracts.
PRINCIPAL RISKS
The following principal investment risks are described in more detail under the
heading "Types of Investment Risk." Some additional risks, which apply to the
Fund, are also described under that heading.
The Fund is subject to market risk. Market risk is the risk that the value of
the securities in which a Fund invests may go up or down in response to the
prospects of individual companies and/or general economic conditions. Your
investment follows the large-cap portion of the U.S. stock market, as measured
by the S&P 500 Index, during upturns as well as downturns. Because of its
indexing strategy, the Fund cannot take steps to reduce market volatility or to
lessen the effects of a declining market. Whenever large-cap stocks perform less
than mid- or small-cap stocks, the Fund may underperform funds that have
exposure to those segments. Further, the Fund will not necessarily dispose of a
security in response to adverse events affecting the issuer of a security (such
as adverse credit factors or failure to pay dividends).
If a large number of shareowners were to redeem shares, however, the Adviser may
be forced to reduce the number of issuers represented in the portfolio. This
could have an adverse effect on the accuracy with which the Fund matches the
performance of the S&P 500 Index.
The Adviser may be required to sell common stock if the issuer is eliminated
from the S&P 500 Index. Such sales may result in:
- - lower prices, or
- - losses, that may not have been incurred if the Adviser did not have to
purchase or sell the securities.
The Fund's futures transactions involve derivatives risk. Derivatives risk is
the risk of loss from transactions which may be more sensitive to or otherwise
not react in tandem with interest rate changes or market moves and may be
leveraged. Futures contracts could cause the Fund to track the Index less
closely if they don't perform as expected.
Standard & Poor's makes no representation or warranty regarding the advisability
of investing in index funds or the ability of the S&P 500 Index to track general
stock market performance.
BAR CHART AND PERFORMANCE TABLE
The Fund offers three types of shares, as described under "Investing with
Firstar Funds" - Institutional, Retail A and Retail B. These types of shares
bear differing levels of expenses, as described under "Investing with Firstar
Funds." The following bar chart and table provide an indication of the risks of
investing in the Fund by showing: (a) changes in the performance of the Fund's
Institutional Shares from year to year, and (b) how the average annual returns
of the Fund's Retail A and Institutional Shares compare to those of a broad-
based securities market index. The bar chart and performance table assume
reinvestment of dividends and distributions. Remember, past performance is not
indicative of future results. Prior to January 10, 1995, the Fund offered to
investors one series of shares with neither a sales charge nor a service fee.
The average annual total return calculation reflects a maximum initial sales
charge of 4.50% for the Retail A Shares, but for periods prior to January 10,
1995, performance does not reflect service organization fees. If service
organization fees had been reflected, performance would be reduced. Because the
bar chart reflects Institutional Share performance, it does not reflect the
sales load applicable to Retail A and B Shares. If the sales loads were
reflected, returns would be reduced. Performance reflects fee waivers in effect.
If fee waivers were not in place, a Fund's performance would be reduced. The
Retail B Shares commenced operations on March 1, 1999. Because those shares have
less than one year's performance, no average annual returns are shown for that
class in this section.
YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)(INSTITUTIONAL SHARES)
1998 28.72
1997 32.59
1996 22.65
1995 36.98
1994 1.02
1993 9.11
1992 6.97
1991 29.96
1990 -3.29
1989
BEST QUARTER: Q 4 '98 21.52%
WORST QUARTER: Q 3 '90 (13.60)%
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98 (Retail A Shares and Institutional
Shares)
1 YEAR 5 YEARS 10 YEARS
EQUITY INDEX FUND -
Retail A Shares 22.62% 22.33% 18.08%
Institutional Shares 28.72% 23.69% 18.74%
S&P 500 INDEX 28.58% 24.06% 19.21%
The S&P 500 Index is an unmanaged index of 500 common stocks that is generally
considered representative of the U.S. stock market. The Index is heavily
weighted towards stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks. Index figures do not reflect any fees or expenses. Investors cannot
invest directly in the Index.
The performance of the Equity Index Fund for the period prior to December 29,
1989 is represented by the performance of a collective investment fund which
operated prior to the effectiveness of the registration statement of the Firstar
Equity Index Fund. At the time of Firstar Equity Index Funds' inception, the
collective investment fund was operated using substantially the same investment
objectives, policies and restrictions as Firstar Equity Index Fund. In
connection with Firstar Equity Index Funds' commencement of operations, on
December 29, 1989, the collective investment fund transferred its assets to the
Firstar Equity Index Fund.
The collective investment fund was not open to the public generally, nor
registered under the Investment Company Act of 1940 (the "1940 Act") or subject
to certain restrictions that are imposed by the 1940 Act and the Internal
Revenue Code. If the collective investment fund had been registered under the
1940 Act, performance may have been adversely affected. Performance of the
collective investment fund has been restated to reflect the Firstar Equity Index
Funds' actual expenses during its first fiscal year. Performance quotations of
the collective investment fund represent past performance of the FIRMCO managed
collective fund, which is separate and distinct from Firstar Equity Index Fund;
do not represent past performance of the Fund; and should not be considered as
representative of future results of the Fund.
At the time of the transfer, the Adviser did not manage any other collective
investment or common trust funds using materially equivalent investment
objectives, policies, guidelines and restrictions to those of the Equity Index
Fund.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Equity
Index Fund.
INSTITUTIONAL RETAIL A RETAIL B
SHAREOWNER FEES (fees paid SHARES SHARES SHARES
directly from your investment)
Maximum Sales Charge (Load) Imposed
on Purchases (as a percentage
of offering price) None 4.50% None
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price) None None 5.00%<F1>
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends None None None
Redemption Fees None<F2> None<F2> None<F2>
Exchange Fees None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEES<F4> (12B-1)FEES<F5> EXPENSES<F6> EXPENSES<F7>
Equity Index Fund - Retail A 0.25% 0.00% 0.43% 0.68%
Equity Index Fund - Retail B3 0.25% 0.75% 0.43% 1.43%
Equity Index Fund -
Institutional 0.25% 0.00% 0.18% 0.43%
<F1> A contingent deferred sales charge is imposed on Retail B Shares redeemed
within six years of purchase at a rate of 5% in the first year,
4% in the second year, 3% in the third and fourth year, 2% in the fifth year,
declining to 1% in the sixth year. Thereafter Retail B Shares convert to Retail
A Shares, which do not bear a contingent deferred sales charge.
<F2> A fee of $12.00 is charged for each wire redemption (Retail Shares) and
$15.00 for each non-systematic withdrawal from a Retirement Account for which
Firstar Bank, Milwaukee, N.A. is custodian.
<F3> The Annual Operating Expenses for the Retail B Shares are based on Fund
expenses for the prior fiscal year, but "Other Expenses" is restated to reflect
estimated expenses for Retail B Shares.
<F4> The Adviser has voluntarily agreed that a portion of its management fee
will not be imposed on the Fund during the current fiscal year. As a result of
the fee waiver, current management fees for the Fund are 0.19% of the Fund's
average daily net assets. This waiver is expected to remain in effect for the
current fiscal year. However, it is voluntary and can be modified or terminated
at any time without the Fund's consent.
<F5> The total of all 12b-1 fees and shareowner servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not intend to pay 12b-1 fees with
respect to the Retail A Shares for the current fiscal year. The Fund does not
intend to pay more than 0.75% in 12b-1 fees with respect to the Retail B Shares
for the current fiscal year.
<F6> "Other Expenses" includes (1) administration fees, transfer agency fees and
all other ordinary operating expenses of the Fund not listed above and (2) for
the Retail A and Retail B Shares, the payment of a Shareowner Servicing fee to
institutions under a Service Plan (described below under "Management of the
Funds - Shareowner Organizations") equal to 0.25% of the average daily net
assets of the Fund's Retail A Shares and Retail B Shares.
<F7> As a result of the fee waiver set forth in note 4, the Total Fund Operating
Expenses of the Retail A, Retail B and Institutional Shares of the Fund are
estimated to be 0.62%, 1.37% and 0.37%, respectively, for the current fiscal
year. Although the fee waiver is expected to remain in effect for the current
fiscal year, this waiver is voluntary and may be terminated at any time at the
option of the Adviser.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund (without the fee waivers) with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes your investment has a 5% return each year and
that the Fund's operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Equity Index Fund -
Retail A Shares $516 $658 $812 $1,258
Equity Index Fund - Retail B Shares
Assuming complete redemption
at end of period $646 $752 $982 $1,321
Assuming no redemption $146 $452 $782 $1,321
Equity Index Fund - Institutional $144 $138 $241 $1,542
Retail B Shares convert to Retail A Shares six years after purchase; therefore,
Retail A Shares expenses are used in the hypothetical example after year six.
In addition to the compensation itemized above, shareowner organizations may
charge fees for providing services in connection with their clients' investments
in the Fund's shares.
GROWTH FUND
OBJECTIVE
The Growth Fund seeks capital appreciation through investment in securities of
large-sized companies. This investment objective may be changed by the Board of
Directors without approval of Shareowners, although no change is currently
anticipated.
EQUITY SECURITIES
During normal market conditions, the Fund invests at least 50% of total assets
in equity securities. Most of these equity securities are publicly-traded common
stocks of companies incorporated in the U.S.
PRINCIPAL INVESTMENT STRATEGIES
The Adviser may sell a security for reasons including those relating to
fundamental deterioration or valuation. Fundamental deterioration occurs when a
company is no longer able to achieve the results generally expected by the
investment community due to a specific issue, such as a loss of a customer or
pricing pressure in the industry. The Adviser may sell for reasons relating to
valuation when for example a security's price has reached a target specified by
the Adviser, and the Adviser believes potential increases in price are limited.
LARGE-SIZED COMPANIES
The Fund generally invests in large-sized companies with stock market
capitalizations over $3 billion that the Adviser considers to be well-managed
and to have attractive fundamental financial characteristics (see box on page --
for examples of these characteristics). The Fund may also invest a portion of
its assets in companies with market capitalizations below $3 billion.
OTHER
The Fund also invests in bonds, notes, debentures and preferred stocks
convertible into common stocks, if, in the Adviser's opinion, they present
opportunities for capital appreciation.
To the extent consistent with its objective, the Fund may purchase non-
convertible debt and preferred stocks that, in the opinion of the Adviser,
present opportunities for capital appreciation. These obligations must be
investment grade at time of purchase or unrated but deemed comparable by the
Adviser. See "Taxable Bond Funds" for a description of investment grade
securities. After purchase, a security may cease to be rated or may have its
rating reduced below the minimum rating required by the Fund for purchase. The
Adviser will consider whether to continue to hold the security.
PRINCIPAL RISKS
The following principal investment risks are described in more detail under the
heading "Types of Investment Risk." Some additional risks which apply to the
Fund are also described under that heading.
The Fund is subject to market risk. Market risk is the risk that the value of
the securities in which a Fund invests may go up or down in response to the
prospects of individual companies and/or general economic conditions. The Fund's
investments in debt securities are subject to credit risk and interest rate
risk. Credit risk is the risk that an issuer of fixed-income securities may
default on its obligation to pay interest and repay principal. Interest rate
risk is the risk that, when interest rates increase, fixed-income securities
will decline in value. In particular, convertible securities frequently have
speculative characteristics and may be acquired without regard to minimum
quality ratings. The Fund intends to invest no more than 5% of net assets in
securities rated non-investment grade at the time of purchase, or unrated
securities of comparable quality. Convertible securities and obligations rated
in the lowest of the top four rating categories have speculative
characteristics, and are subject to greater credit and interest rate risk than
higher rated securities.
BAR CHART AND PERFORMANCE TABLE
The Fund offers three types of shares, as described under "Investing with
Firstar Funds" - Institutional, Retail A and Retail B. These types of shares
bear differing levels of expenses, as described under "Investing with Firstar
Funds." The following bar chart and table provide an indication of the risks of
investing in the Fund by showing: (a) changes in the performance of the Fund's
Institutional Shares from year to year, and (b) how the average annual returns
of the Fund's Retail A and Institutional Shares compare to those of a broad-
based securities market index. The bar chart and performance table assume
reinvestment of dividends and distributions. Remember, past performance is not
indicative of future results. Prior to January 10, 1995, the Fund offered to
investors one series of shares with neither a sales charge nor a service fee.
The average annual total return calculation reflects a maximum initial sales
charge of 4.50% for the Retail A Shares, but for periods prior to January 10,
1995, performance does not reflect service organization fees. If service
organization fees had been reflected, performance would be reduced. Because the
bar chart reflects Institutional Share performance, it does not reflect the
sales load applicable to Retail A and B Shares. If the sales loads were
reflected, returns would be reduced. Performance reflects fee waivers in effect.
If fee waivers were not in place, a Fund's performance would be reduced. The
Retail B Shares commenced operations on March 1, 1999. Because those shares have
less than one year's performance, no average annual returns are shown for that
class in this section.
YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)(INSTITUTIONAL SHARES)
1998 30.46
1997 22.91
1996 18.15
1995 30.03
1994 -5.34
1993 9.98
1992
1991
1990
1989
BEST QUARTER: Q 4 '98 24.04%
WORST QUARTER: Q 3 '98 (11.12)%
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98 (Retail A Shares and Institutional
Shares)
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (DEC. 29, 1992)
GROWTH FUND - Retail A Shares 24.31% 17.14% - 15.98%
Institutional Shares 30.46% 18.44% - 17.06%
S&P 500 INDEX 28.58% 24.06% - 21.61%
The S&P 500 Index is an unmanaged index of 500 common stocks that is generally
considered representative of the U.S. stock market. The Index is heavily
weighted towards stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks. The Index figures do not reflect any fees or expenses. Investors cannot
invest directly in the Index.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Growth Fund.
INSTITUTIONAL RETAIL A RETAIL B
SHAREOWNER FEES (fees paid directly) SHARES SHARES SHARES
from your investment
Maximum Sales Charge (Load) Imposed
on Purchases (as a percentage
of offering price) None 4.50% None
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price) None None 5.00%<F1>
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends None None None
Redemption Fees None<F2> None<F2> None<F2>
Exchange Fees None<F1> None<F1> None<F1>
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEES (12B-1)FEES<F4> EXPENSES<F5> EXPENSES
Growth Fund - Retail A 0.75% 0.00% 0.46% 1.21%
Growth Fund - Retail B<F3> 0.75% 0.75% 0.46% 1.96%
Growth Fund - Institutional 0.75% 0.00% 0.21% 0.96%
<F1> A contingent deferred sales charge is imposed on Retail B Shares redeemed
within six years of purchase at a rate of 5% in the first year, 4% in the
second year, 3% in the third and fourth year, 2% in the fifth year, declining to
1% in the sixth year. Thereafter Retail B Shares convert to Retail A Shares,
which do not bear a contingent deferred sales charge.
<F2> A fee of $12.00 is charged for each wire redemption (Retail Shares) and
$15.00 for each non-systematic withdrawal from a Retirement Account for which
Firstar Bank, Milwaukee, N.A. is custodian.
<F3> The Annual Operating Expenses for the Retail B Shares are based on Fund
expenses for the prior fiscal year, but are restated to reflect estimated
expenses for Retail B Shares.
<F4> The total of all 12b-1 fees and shareowner servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not intend to pay 12b-1 fees with
respect to the Retail A Shares for the current fiscal year. The Fund does not
intend to pay more than 0.75% in 12b-1 fees with respect to the Retail B Shares
for the current fiscal year.
<F5> "Other Expenses" includes (1) administration fees, transfer agency fees and
all other ordinary operating expenses of the Fund not listed above and (2) for
the Retail A and Retail B Shares, the payment of a Shareowner Servicing fee to
institutions under a Service Plan (described below under "Management of the
Funds - Shareowner Organizations") equal to 0.25% of the average daily net
assets of the Fund's Retail A Shares and Retail B Shares.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. The example also assumes
that your investment has a 5% return each year and that the Fund's operating
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Growth Fund - Retail A Shares $568 $817 $1,085 $1,850
Growth Fund - Retail B Shares
Assuming complete redemption
at end of period 699 915 1,257 1,913
Assuming no redemption 199 615 1,057 1,913
Growth Fund - Institutional 98 306 531 1,178
Retail B Shares convert to Retail A Shares six years after purchase; therefore,
Retail A Shares expenses are used in the hypothetical example after year six.
In addition to the compensation itemized above, shareowner organizations may
charge fees for providing services in connection with their clients' investments
in the Fund's shares.
SPECIAL GROWTH FUND
OBJECTIVE
The Special Growth Fund seeks capital appreciation. This investment objective
may be changed by the Board of Directors without approval of Shareowners,
although no change is currently anticipated.
PRINCIPAL INVESTMENT STRATEGIES
EQUITY SECURITIES/POTENTIAL PRICE APPRECIATION
The Fund selects securities based on their potential for price appreciation.
During normal market conditions, the Fund invests at least 50% of total assets
in equity securities. Most of these equity securities are publicly traded common
stocks of companies incorporated in the U.S.
The Adviser may sell a security for reasons including those relating to
fundamental deterioration or valuation. Fundamental deterioration occurs when a
company is no longer able to achieve the results generally expected by the
investment community due to a specific issue, such as a loss of a customer or
pricing pressure in the industry. The Adviser may sell for reasons relating to
valuation when for example a security's price has reached a target specified by
the Adviser, and the Adviser believes potential increases in price are limited.
MEDIUM-SIZED COMPANIES
The Fund generally invests in medium-sized companies with stock market
capitalizations between $700 million and $5 billion that the Adviser considers
to be well-managed and to have attractive fundamental financial characteristics
(see box on page 21 for examples of these characteristics). The Fund may also
invest a portion of its assets in companies with smaller or larger market
capitalizations.
OTHER
The Fund also invests in bonds, notes, debentures and preferred stocks
convertible into common stocks, and may invest up to 5% of net assets in other
types of securities having common stock characteristics, such as rights and
warrants to purchase equity securities.
The Fund may purchase non-convertible debt and preferred stocks that, in the
opinion of the Adviser, present opportunities for capital appreciation. These
obligations must be investment-grade at time of purchase or unrated but deemed
comparable by the Adviser. See "Taxable Bond Funds" for a description of
investment grade securities. After purchase, a security may cease to be rated or
may have its rating reduced below the minimum rating required by the Fund for
purchase. The Adviser will consider whether to continue to hold the security.
PRINCIPAL RISKS
The following principal investment risks are described in more detail under the
heading "Types of Investment Risk." Some additional risks which apply to the
Fund are also described under that heading.
The Fund may be suitable for you only if you are prepared to invest without
concern for current income and are financially able to assume risk in search of
long-term capital appreciation. The Adviser believes, however, that there is
greater potential for price appreciation among medium-sized companies in which
the Fund invests, since they tend to be less widely followed by other securities
analysts and thus may be more likely to be undervalued by the market.
The Fund is subject to market risk. Market risk is the risk that the value of
the securities in which a Fund invests may go up or down in response to the
prospects of individual companies and/or general economic conditions. The Fund's
investments in debt securities are subject to credit risk and interest rate
risk. Credit risk is the risk that an issuer of fixed-income securities may
default on its obligation to pay interest and repay principal. Interest rate
risk is the risk that, when interest rates increase, fixed-income securities
will decline in value. Convertible securities frequently have speculative
characteristics and may be acquired without regard to minimum quality ratings.
The Fund intends to invest no more than 5% of net assets in securities rated
non-investment grade at the time of purchase or unrated securities of comparable
quality. Convertible securities and obligations rated in the lowest of the top
four rating categories are subject to greater credit and interest rate risk than
higher rated securities.
BAR CHART AND PERFORMANCE TABLE
The Fund offers three types of shares, as described under "Investing with
Firstar Funds" - Institutional, Retail A and Retail B. These types of shares
bear differing levels of expenses, as described under "Investing with Firstar
Funds." The following bar chart and table provide an indication of the risks of
investing in the Fund by showing: (a) changes in the performance of the Fund's
Institutional Shares from year to year, and (b) how the average annual returns
of the Fund's Retail A and Institutional Shares compare to those of a broad-
based securities market index. The bar chart and performance table assume
reinvestment of dividends and distributions. Remember, past performance is not
indicative of future results. Prior to January 10, 1995, the Fund offered to
investors one series of shares with neither a sales charge nor a service fee.
The average annual total return calculation reflects a maximum initial sales
charge of 4.50% for the Retail A Shares, but for periods prior to January 10,
1995, performance does not reflect service organization fees. If service
organization fees had been reflected, performance would be reduced. Because the
bar chart reflects Institutional Share performance, it does not reflect the
sales load applicable to Retail A and B Shares. If the sales loads were
reflected, returns would be reduced. Performance reflects fee waivers in effect.
If fee waivers were not in place, a Fund's performance would be reduced. The
Retail B Shares commenced operations on March 1, 1999. Because those shares have
less than one year's performance, no average annual returns are shown for that
class in this section.
YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)(INSTITUTIONAL SHARES)
1998 4.91
1997 17.42
1996 18.87
1995 29.94
1994 -2.01
1993 8.02
1992 7.22
1991 57.96
1990 1.00
1989
BEST QUARTER: Q 1 '91 21.67%
WORST QUARTER: Q 3 '98 (19.63)%
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98 (Retail A Shares and Institutional
Shares)
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (DEC. 28, 1989)
SPECIAL GROWTH FUND -
Retail A Shares (0.07)% 12.01% - 14.17%
Institutional Shares 4.91% 13.26% - 14.88%
S&P 500 INDEX 28.58% 24.06% - 17.89%
S&P MIDCAP 400 INDEX 19.11% 18.84% - -
The S&P 500 Index is an unmanaged index of 500 common stocks that is generally
considered representative of the U.S. stock market. The Index is heavily
weighted towards stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks. The S&P MidCap 400 Index is a capitalization weighted index that
represents the aggregate market value of the common equity of 400 stocks chosen
by S&P with a median capitalization of approximately $700 million and measures
the performance of the mid-range sector of the U.S. stock market. The Index
figures do not reflect any fees or expenses. Investors cannot invest directly in
the Index.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Special Growth Fund.
INSTITUTIONAL RETAIL A RETAIL B
SHAREOWNER FEES (fees paid SHARES SHARES SHARES
directly from your investment)
Maximum Sales Charge (Load) Imposed
on Purchases (as a percentage
of offering price) None 4.50% None
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price) None None 5.00%<F1>
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends None None None
Redemption Fees None<F2> None<F2> None<F2>
Exchange Fees None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEES (12B-1)FEES<F4>EXPENSES<F5> EXPENSES
Special Growth Fund - Retail A 0.75% 0.00% 0.45% 1.20%
Special Growth Fund -
Retail B<F3> 0.75% 0.75% 0.45% 1.95%
Special Growth Fund -
Institutional 0.75% 0.00% 0.20% 0.95%
<F1> A contingent deferred sales charge is imposed on Retail B Shares redeemed
within six years of purchase at a rate of 5% in the first year, 4% in the second
year, 3% in the third and fourth year, 2% in the fifth year, declining to 1% in
the sixth year. Thereafter the Retail B Shares convert to Retail A Shares, which
do not bear a contingent deferred sales charge.
<F2> A fee of $12.00 is charged for each wire redemption (Retail Shares) and
$15.00 for each non-systematic withdrawal from a Retirement Account for which
Firstar Bank, Milwaukee, N.A. is custodian.
<F3> The Annual Operating Expenses for the Retail B Shares are based on Fund
expenses for the prior fiscal year, but "Other Expenses" is restated to reflect
estimated expenses for Retail B Shares.
<F4> The total of all 12b-1 fees and shareowner servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not intend to pay 12b-1 fees with
respect to the Retail A Shares for the current fiscal year. The Fund does not
intend to pay more than 0.75% in 12b-1 fees with respect to the Retail B Shares
for the current fiscal year.
<F5> "Other Expenses" includes (1) administration fees, transfer agency fees and
all other ordinary operating expenses of the Fund not listed above and (2) for
the Retail A and Retail B Shares, the payment of a Shareowner Servicing fee to
institutions under a Service Plan (described below under "Management of the
Funds - Shareowner Organizations") equal to 0.25% of the average daily net
assets of the Fund's Retail A Shares and Retail B Shares.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. The example also assumes
that your investment has a 5% return each year and that the Fund's operating
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Special Growth Fund - Retail A Shares $567 $814 $1,080 $1,839
Special Growth Fund - Retail B Shares
Assuming complete redemption
at end of period 698 912 1,252 1,902
Assuming no redemption 198 612 1,052 1,902
Special Growth Fund - Institutional 97 303 525 1,166
Retail B Shares convert to Retail A Shares six years after purchase; therefore,
Retail A Shares expenses are used in the hypothetical example after year six.
In addition to the compensation itemized above, shareowner organizations may
charge fees for providing services in connection with their clients' investments
in the Fund's shares.
EMERGING GROWTH FUND
OBJECTIVE
The Emerging Growth Fund seeks capital appreciation. This investment objective
may be changed by the Board of Directors without approval of Shareowners,
although no change is currently anticipated.
PRINCIPAL INVESTMENT STRATEGIES
EQUITY SECURITIES/POTENTIAL PRICE APPRECIATION
The Fund selects securities based on their potential for price appreciation.
During normal market conditions, the Fund invests at least 50% of total assets
in equity securities. Most of these equity securities will be publicly traded
common stocks of companies incorporated in the U.S.
The Adviser may sell a security for reasons including those relating to
fundamental deterioration or valuation. Fundamental deterioration occurs when a
company is no longer able to achieve the results generally expected by the
investment community due to a specific issue, such as a loss of a customer or
pricing pressure in the industry. The Adviser may sell for reasons relating to
valuation when for example a security's price has reached a target specified by
the Adviser, and the Adviser believes potential increases in price are limited.
SMALL-SIZED COMPANIES
The Fund generally invests in small-sized companies with stock market
capitalizations between $250 million and $2 billion that the Adviser considers
to be well managed and to have attractive fundamental financial characteristics
(see box on page 21 for examples of these characteristics). The Fund may
also invest a portion of its assets in companies with larger or smaller market
capitalizations.
- --------------------------------------------------------------------------------
The Fund invests primarily in small-sized companies with stock market
capitalizations between $250 million and $2 billion.
- --------------------------------------------------------------------------------
OTHER
The Fund also invests in bonds, notes, debentures and preferred stocks
convertible into common stocks, and may invest up to 5% of net assets in other
types of securities having common stock characteristics, such as rights and
warrants to purchase equity securities.
The Fund may purchase non-convertible bonds, notes, debentures, preferred stocks
and other obligations that, in the opinion of the Adviser, present opportunities
for capital appreciation. These obligations must be investment grade at time of
purchase or unrated but deemed comparable by the Adviser. See "Taxable Bond
Funds" for a description of investment-grade securities. After purchase, a
security may cease to be rated or may have its rating reduced below the minimum
rating required by the Fund for purchase. The Adviser will consider whether to
continue to hold the security.
PRINCIPAL RISKS
The following principal investment risks are described in more detail under the
heading "Types of Investment Risk." Some additional risks, which apply to the
Fund, are also described under that heading.
The Fund may be suitable for you only if you are prepared to invest without
concern for current income and are financially able to assume an above-average
level of market risk in search of long-term capital appreciation. The Adviser
believes, however, that there is greater potential for price appreciation among
small-sized companies in which the Fund invests, since they tend to be less
widely followed by other securities analysts and thus may be more likely to be
undervalued by the market.
The Fund is subject to market risk. Market risk is the risk that the value of
the securities in which a Fund invests may go up or down in response to the
prospects of individual companies and/or general economic conditions. The Fund's
investments in debt securities are subject to credit risk and interest rate
risk. Credit risk is the risk that an issuer of fixed income securities may
default on its obligation to pay interest and repay principal. Interest rate
risk is the risk that, when interest rates increase, fixed income securities
will decline in value. In particular, convertible securities frequently have
speculative characteristics and may be acquired without regard to minimum
quality ratings. The Fund intends to invest no more than 5% of net assets in
securities rated non-investment grade at the time of purchase or unrated
securities of comparable quality. Convertible securities and obligations rated
in the lowest of the top four rating categories are subject to greater credit
and interest rate risk than higher rated securities.
The Fund's holdings are subject to small cap stock risks.
BAR CHART AND PERFORMANCE TABLE
The Fund offers three types of shares, as described under "Investing with
Firstar Funds" - Institutional, Retail A and Retail B. These types of shares
bear differing levels of expenses, as described under "Investing with Firstar
Funds." The following bar chart and table provide an indication of the risks of
investing in the Fund by showing: (a) changes in the performance of the Fund's
Institutional Shares from year to year, and (b) how the average annual returns
of the Fund's Retail A and Institutional Shares compare to those of a broad-
based securities market index. The bar chart and performance table assume
reinvestment of dividends and distributions. Remember, past performance is not
indicative of future results. The average annual total return calculation
reflects a maximum initial sales charge of 4.50% for the Retail A Shares.
Because the bar chart reflects Institutional Share performance, it does not
reflect the sales load applicable to Retail A and B Shares. If the sales loads
were reflected, returns would be reduced. Performance reflects fee waivers in
effect. If fee waivers were not in place, a Fund's performance would be reduced.
The Retail B Shares commenced operations on March 1, 1999. Because those shares
have less than one year's performance, no average annual returns are shown for
that class in this section.
YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)(INSTITUTIONAL SHARES)
1998 8.49
1997
1996
1995
1994
1993
1992
1991
1990
1989
BEST QUARTER: Q 4 '98 21.11%
WORST QUARTER: Q 3 '98 (19.59)%
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98 (Retail A Shares and Institutional
Shares)
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (Aug. 15, 1997)
EMERGING GROWTH FUND -
Retail A Shares 3.43% - - 3.59%
Institutional Shares 8.49% - - 7.31%
S&P SMALLCAP 600 (1.31)% - - 3.98%
WILSHIRE NEXT 1750 INDEX (1.31)% - - 3.98%
The S&P SmallCap 600 Index is a capitalization weighted index that measures the
performance of selected U.S. stocks with small market capitalizations. The
Wilshire Next 1750 Index is an unmanaged index, which shows the next largest
1,750 companies after the Top 750 of the Wilshire 5000 Stock Index. The Index
figures do not reflect any fees or expenses. Investors cannot invest directly in
the Index.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Emerging Growth Fund.
INSTITUTIONAL RETAIL A RETAIL B
SHAREOWNER FEES (fees paid directly SHARES SHARES SHARES
from your investment)
Maximum Sales Charge (Load) Imposed
on Purchases (as a percentage
of offering price) None 4.50% None
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price) None None 5.00%<F1>
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends None None None
Redemption Fees None<F2> None<F2> None<F2>
Exchange Fees None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEES<F4> (12B-1) FEES<F5> EXPENSES<F6>EXPENSES<F7>
Emerging Growth Fund -
Retail A 0.75% 0.00% 0.63% 1.38%
Emerging Growth Fund -
Retail B<F3> 0.75% 0.75% 0.63% 2.13%
Emerging Growth Fund -
Institutional 0.75% 0.00% 0.38% 1.13%
<F1> A contingent deferred sales charge is imposed on Retail B Shares redeemed
within six years of purchase at a rate of 5% in the first year,
4% in the second year, 3% in the third and fourth year, 2% in the fifth year,
declining to 1% in the sixth year. Thereafter the Retail B Shares convert to
Retail A Shares, which do not bear a contingent deferred sales charge.
<F2> A fee of $12.00 is charged for each wire redemption (Retail Shares) and
$15.00 for each non-systematic withdrawal from a Retirement Account for which
Firstar Bank, Milwaukee, N.A. is custodian.
<F3> The Annual Operating Expenses for the Retail B Shares are based on Fund
expenses for the prior fiscal year, but "Other Expenses" is restated to reflect
estimated expenses for Retail B Shares.
<F4> The Adviser has voluntarily agreed that a portion of its management fee
will not be imposed on the Fund during the current fiscal year. As
a result of the fee waiver, current management fees for the Fund are 0.73% of
the Fund's average daily net assets. This waiver is expected to remain in effect
for the current fiscal year. However, it is voluntary and can be modified or
terminated at any time without the Fund's consent.
<F5> The total of all 12b-1 fees and shareowner servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not intend to pay 12b-1 fees with
respect to the Retail A Shares for the current fiscal year. The Fund does not
intend to pay more than 0.75% in 12b-1 fees with respect to the Retail B Shares
for the current fiscal year.
<F6> "Other Expenses" includes (1) administration fees, transfer agency fees and
all other ordinary operating expenses of the Fund not listed above and (2) for
the Retail A and Retail B Shares, the payment of a Shareowner Servicing fee to
institutions under a Service Plan (described below under "Management of the
Funds - Shareowner Organizations") equal to 0.25% of the average daily net
assets of the Fund's Retail A Shares and Retail B Shares.
<F7> As a result of the fee waiver set forth in note 4, the Total Annual Fund
Operating Expenses of the Retail A, Retail B and Institutional Shares of the
Fund, are estimated to be 1.36%, 2.11% and 1.11%, respectively, for the current
fiscal year. Although the fee waiver is expected to remain in effect for the
current fiscal year, this waiver is voluntary and may be terminated at any time
at the option of the Adviser.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund (without the fee waivers) with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
EMERGING GROWTH FUND - Retail A Shares $584 $867 $1,171 $2,033
EMERGING GROWTH FUND - Retail B Shares
ASSUMING COMPLETE REDEMPTION AT
END OF PERIOD 716 967 1,344 2,096
ASSUMING NO REDEMPTION 216 667 1,144 2,096
EMERGING GROWTH FUND - Institutional 115 359 622 1,375
Retail B Shares convert to Retail A Shares six years after purchase; therefore,
Retail A Shares expenses are used in the hypothetical example after year six.
In addition to the compensation itemized above, shareowner organizations may
charge fees for providing services in connection with their clients' investments
in the Fund's shares.
MICROCAP FUND
OBJECTIVE
The investment objective of the MicroCap Fund is capital appreciation. This
investment objective may be changed by the Board of Directors without approval
of Shareowners, although no change is currently anticipated.
PRINCIPAL INVESTMENT STRATEGIES
COMMON STOCKS/POTENTIAL PRICE APPRECIATION
The Fund selects securities based on their potential for price appreciation.
Most of the securities the Fund holds will be common stocks of companies
incorporated in the U.S.
The Adviser may sell a security for reasons including those relating to
fundamental deterioration or valuation. Fundamental deterioration occurs when a
company is no longer able to achieve the results generally expected by the
investment community due to a specific issue, such as a loss of a customer or
pricing pressure in the industry. The Adviser may sell for reasons relating to
valuation when for example a security's price has reached a target specified by
the Adviser, and the Adviser believes potential increases in price are limited.
MICRO CAPITALIZATION COMPANIES
At least 65% of the Fund's total assets will be invested in equity and debt
securities of micro capitalization companies that, in general, the Adviser
considers to be well managed and to have attractive fundamental financial
characteristics (see box on page 21 for examples of these characteristics).
Micro capitalization companies are those with capitalizations at the time of
purchase below the median market capitalization of the Russell 2000 Index, which
is currently approximately $481 million. The Fund may invest up to 35% of its
assets at the time of purchase in companies in excess of the median market
capitalization of the Russell 2000 Index. If the market capitalization of a
company in which the Fund has invested increases above the median market
capitalization of the Russell 2000 Index, the Fund may continue to hold the
security.
The Adviser believes that there is greater potential for price appreciation
among small-sized companies in which the Fund invests, since they tend to be
less widely followed by other securities analysts and thus may be more likely to
be undervalued by the market.
The Fund intends to invest no more than 5% of net assets in securities rated
non-investment grade at the time of purchase (or unrated securities of
comparable quality).
OTHER
The Fund may invest up to 25% of total assets in the securities of foreign
issuers, either directly or through sponsored American Depository Receipts.
American Depository Receipts are receipts issued by an American bank or trust
company evidencing ownership of underlying securities issued by a foreign
issuer. American Depository Receipts may be listed on a national securities
exchange or may trade in the over-the-counter market. American Depository
Receipts are denominated in U.S. dollars. The underlying securities may be
denominated in a foreign currency.
The Fund also invests in bonds, notes, debentures and preferred stocks
convertible into common stocks.
The Fund may purchase non-convertible debt and preferred stocks that, in the
opinion of the Adviser, present opportunities for capital appreciation. These
obligations must be investment grade at time of purchase or be unrated but
deemed comparable by the Adviser. See "Taxable Bond Funds" for a description of
investment-grade securities. After purchase, a security may cease to be rated or
may have its rating reduced below the minimum rating required by the Fund for
purchase. The Adviser will consider whether to continue to hold the security.
The Fund may acquire securities of unseasoned companies (companies with less
than three years of continuous operation) when the Adviser believes the
investments offer possibilities of attractive capital appreciation, but will not
invest more than 20% of the value of its total assets in the securities of
unseasoned companies.
PRINCIPAL RISKS
The following principal investment risks are described in more detail under the
heading "Types of Investment Risk." Some additional risks, which apply to the
Fund, are also described under that heading.
The Fund may be suitable for you only if you are prepared to invest without
concern for current income and are financially able to assume an above-average
level of market risk in search of long-term capital gain. Market risk is the
risk that the value of the securities in which a Fund invests may go up or down
in response to the prospects of individual companies and/or general economic
conditions. The Fund's expenses in a year may exceed income. There can be no
assurance the investment objective of the Fund will be realized or the value of
the Fund's investments will not decline in value. You should consider the Fund
to be a long-term investment and not a vehicle for seeking short-term profits
and income.
The Fund's investments in debt securities are subject to credit risk and
interest rate risk. Credit risk is the risk that an issuer of fixed-income
securities may default on its obligation to pay interest and repay principal.
Interest rate risk is the risk that, when interest rates increase, fixed income
securities will decline in value. In particular, convertible securities
frequently have speculative characteristics and may be acquired without regard
to minimum quality ratings. Obligations rated in the lowest of the top four
rating categories are subject to greater credit and interest rate risk than
higher rated securities.
The Fund's holdings are subject to micro cap stock risks. Micro capitalization
stocks involve greater risks than those associated with larger, more established
companies. Small company stocks may be subject to more abrupt or erratic price
movements. Also, securities of micro cap companies are less liquid, and are
subject to liquidity risk. Liquidity risk is the risk that certain securities
may be difficult or impossible to sell at a desirable time and price. There
normally is less publicly available information concerning these securities. In
addition, the Fund's investments in unseasoned companies present risks
considerably greater than investments in more established companies. Further,
the securities in which the Fund invests will often be traded only in the over-
the-counter market or on a regional securities exchange, may be listed only in
the quotation service commonly known as the "pink sheets," and may not be traded
every day or in the volume typical of trading on a national securities exchange.
They may be subject to wide fluctuations in market value. The trading market for
any given security may be sufficiently thin as to make it difficult for the Fund
to dispose of a substantial block of such securities. These securities are less
liquid than other more widely traded securities. The disposition by the Fund of
portfolio securities to meet redemptions or otherwise may require the Fund to
sell these securities at a discount from market prices or during periods when,
in the Adviser's judgment, such disposition is not desirable or to make many
small sales over a lengthy period of time.
The Fund's investments in foreign securities and American Depository Receipts
are subject to foreign risks. Foreign risks, which are not typically associated
with domestic issuers, result from less government regulation, less public
information and less economic, political and social stability. The Fund will
also be subject to the risk of negative foreign currency fluctuations. Foreign
risks will normally be greatest when the Fund invests in issuers located in
emerging countries.
BAR CHART AND PERFORMANCE TABLE
The Fund offers three types of shares, as described under "Investing with
Firstar Funds" - Institutional, Retail A and Retail B. These types of shares
bear differing levels of expenses, as described under "Investing with Firstar
Funds." The following bar chart and table provide an indication of the risks of
investing in the Fund by showing: (a) changes in the performance of the Fund's
Institutional Shares from year to year, and (b) how the average annual returns
of the Fund's Retail A and Institutional Shares compare to those of a broad-
based securities market index. The bar chart and performance table assume
reinvestment of dividends and distributions. Remember, past performance is not
indicative of future results. The average annual total return calculation
reflects a maximum initial sales charge of 4.50% for the Retail A Shares.
Because the bar chart reflects Institutional Share performance, it does not
reflect the sales load applicable to Retail A and B Shares. If the sales loads
were reflected, returns would be reduced. Performance reflects fee waivers in
effect. If fee waivers were not in place, a Fund's performance would be reduced.
The Retail B Shares commenced operations on March 1, 1999. Because those shares
have less than one year's performance, no average annual returns are shown for
that class in this section.
YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)(INSTITUTIONAL SHARES)
1998 -2.45
1997 13.92
1996 57.23
1995
1994
1993
1992
1991
1990
1989
BEST QUARTER: Q 4 '98 23.07%
WORST QUARTER: Q 3 '98 (30.81)%
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98 (Retail A Shares and Institutional
Shares)
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (Aug. 1, 1995)
MICROCAP FUND - Retail A Shares (7.08)% - - 22.06%
Institutional Shares (2.45)% - - 24.05%
RUSSELL 2000 (2.55)% - - 12.04%
The Russell 2000, an unmanaged index, consists of the smallest 2,000 companies
in a group of 3,000 U.S. companies in the Russell 3000 Index, as ranked by total
market capitalization. The Index figures do not reflect any fees or expenses.
Investors cannot invest directly in the Index.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the MicroCap Fund.
INSTITUTIONAL RETAIL A RETAIL B
SHAREOWNER FEES (fees paid directly SHARES SHARES SHARES
from your investment)
Maximum Sales Charge (Load) Imposed
on Purchases (as a percentage
of offering price) None 4.50% None
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price) None None 5.00%<F1>
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends None None None
Redemption Fees None<F2> None<F2> None<F2>
Exchange Fees None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEES (12B-1) FEES<F4> EXPENSES<F5> EXPENSES
MicroCap Fund - Retail A 1.50% 0.00% 0.55% 2.05%
MicroCap Fund -
Retail B<F3> 1.50% 0.75% 0.55% 2.80%
MicroCap Fund -
Institutional 1.50% 0.00% 0.30% 1.80%
<F1> A contingent deferred sales charge is imposed on Retail B Shares redeemed
within six years of purchase at a rate of 5% in the first year,
4% in the second year, 3% in the third year and fourth year, 2% in the fifth
year, declining to 1% in the sixth year. Thereafter the Retail B Shares convert
to Retail A Shares, which do not bear a contingent deferred sales charge.
<F2> A fee of $12.00 is charged for each wire redemption (Retail Shares) and
$15.00 for each non-systematic withdrawal from a Retirement Account for which
Firstar Bank, Milwaukee, N.A. is custodian.
<F3> The total of all 12b-1 fees and shareowner servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not intend to pay 12b-1 fees with
respect to the Retail A Shares for the current fiscal year. The Fund does not
intend to pay 12b-1 fees with respect to the Retail A Shares for the current
fiscal year. The Fund does not intend to pay more than 0.75% in 12b-1 fees with
respect to the Retail B Shares for the current fiscal year.
<F4> The Annual Operating Expenses for the Retail B Shares are based on Fund
expenses for the prior fiscal year, but other expenses are restated to reflect
estimated expenses for Retail B Shares.
<F5> "Other Expenses" includes (1) administration fees, transfer agency fees and
all other ordinary operating expenses of the Fund not listed above and (2) for
the Retail A and Retail B Shares, the payment of a Shareowner Servicing fee to
institutions under a Service Plan (described below under "Management of the
Funds - Shareowner Organizations") equal to 0.25% of the average daily net
assets of the Fund's Retail A Shares and Retail B Shares.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. The example also assumes
that your investment has a 5% return each year and that the Fund's operating
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
MICROCAP FUND - Retail A Shares $649 $1,064 $1,504 $2,722
MICROCAP FUND - Retail B Shares
ASSUMING COMPLETE REDEMPTION AT
END OF PERIOD 783 1,168 1,679 2,786
ASSUMING NO REDEMPTION 283 868 1,479 2,786
MICROCAP FUND - Institutional 183 566 975 2,116
Retail B Shares convert to Retail A Shares six years after purchase; therefore,
Retail A Shares expenses are used in the hypothetical example after year six.
In addition to the compensation itemized above, shareowner organizations may
charge fees for providing services in connection with their clients' investments
in the Fund's shares.
INTERNATIONAL EQUITY FUND
OBJECTIVE
The investment objective of the International Equity Fund is to seek capital
appreciation through investing in foreign securities which the Sub-Adviser
believes are undervalued. This investment objective may be changed by the Board
of Directors without approval of Shareowners, although no change is currently
anticipated.
PRINCIPAL INVESTMEMT STRATEGIES
Hansberger Global Investors, Inc. (the Sub-Adviser) chooses securities based on
a long-term investment perspective. The Sub-Adviser seeks opportunities to
invest in many countries and believes that this international search provides
flexibility to shift portfolio investments not only from company to company and
industry to industry, but also country to country, in search of undervalued
securities.
- --------------------------------------------------------------------------------
The Fund's policy under normal market conditions is to invest at least 65% of
its total assets in foreign common stocks, convertible securities, rights to
purchase equity securities, and warrants. UNDER NORMAL MARKET CON DITIONS, AT
LEAST 80% OF ASSETS WILL BE INVESTED IN THREE COUNTRIES OTHER THAN THE U.S.
- -------------------------------------------------------------------------------
The Adviser may sell a security for reasons including those relating to
fundamental deterioration or valuation. Fundamental deterioration occurs when a
company is no longer able to achieve the results generally expected by the
investment community due to a specific issue, such as a loss of a customer or
pricing pressure in the industry. The Adviser may sell for reasons relating to
valuation when for example a security's price has reached a target specified by
the Adviser, and the Adviser believes potential increases in price are limited.
The Fund generally invests in common stocks, but may also invest in preferred
stocks and certain rated or unrated debt securities when the Sub-Adviser
believes there's a potential for appreciation. The Fund may also invest in
warrants or rights to subscribe to or purchase such securities, and sponsored or
unsponsored:
- American Depository Receipts
- European Depository Receipts
- Global Depository Receipts, and
- other depository receipts
American Depository Receipts are receipts issued by an American bank or trust
company evidencing ownership of underlying securities issues by a foreign
issuer. American Depository Receipts may be listed on a national securities
exchange or may trade in the over-the-counter market. American Depository
Receipts are denominated in U.S. dollars. The underlying securities may be
denominated in a foreign currency.
The Fund may also invest in:
- closed-end investment companies holding foreign securities
- options on securities and securities indices
- forward foreign currency contracts
- futures contracts and related options
PRINCIPAL RISKS
The following principal investment risks are described in more detail under the
heading "Types of Investment Risk." Some additional risks, which apply to the
Fund, are also described under that heading.
The Fund may be suitable for you only if you are prepared to invest for the
long-term and are not seeking to speculate on short-term stock market movements.
The Fund's value is expected to be volatile as a result of its investment in
foreign securities.
The Fund is subject to market risk. The Fund's investments in foreign
securities, ADRs, EDRs and GDRs are subject to foreign risks. In unsponsored ADR
programs, the issuer may not be directly involved in arranging its securities to
be traded in the form of depository receipts. Although regulatory requirements
with respect to sponsored and unsponsored programs are generally similar, in
some cases it may be easier to obtain financial information from an issuer that
has participated in the creation of a sponsored program. Accordingly, there may
be less information available regarding issuers of securities underlying
unsponsored programs and there may not be a correlation between such information
and the market value of the Depository Receipts. EDRs are receipts issued by a
European financial institution evidencing ownership of underlying foreign
securities. GDRs are receipts structured similarly to EDRs and are issued and
traded in several international financial markets. The underlying security may
be subject to foreign government taxes, which would reduce the yield on such
securities.
The Fund's foreign currency exchange transactions are subject to additional
risks. Forward foreign currency exchange contracts ("forward contracts"),
provide for the purchase of or sale of an amount of a specified currency at a
future date. This Fund may use forward contracts to protect against a foreign
currency's decline against the U.S. dollar between the trade date and settlement
date for a securities transaction, or to lock in the U.S. dollar value of
dividends declared on securities it holds, or generally to protect the U.S.
dollar value of the securities it holds against exchange rate fluctuations. This
Fund may also use forward contracts to protect against fluctuating exchange
rates and exchange control regulations. Forward contracts may limit the Fund's
losses due to exchange rate fluctuation, but they will also limit any gains that
the Fund might otherwise have realized. This Fund may also hedge its foreign
currency exchange rate risk by entering into foreign currency futures contracts
("currency futures"). The forecasting of short-term currency market movements is
extremely difficult and whether short-term hedging strategies would be
successful is highly uncertain.
The Fund's investments in convertible securities are subject to credit risk.
Convertible securities frequently have speculative characteristics and may be
acquired without regard to minimum quality ratings. The Fund intends to invest
no more than 5% of net assets in securities rated non-investment grade (or
equivalent rating by an agency recognized in the local market) at the time of
purchase (or unrated securities deemed to be of comparable quality). Convertible
securities and obligations rated in the lowest of the top four rating categories
are subject to greater credit and interest rate risk than higher rated
securities.
The emerging country securities in which the Fund may invest are subject to
significant risk and will not be required to meet any minimum rating standard.
The Fund's investments in options and futures involve derivatives risk. This is
the risk of loss from transactions which may be more sensitive to or otherwise
not react in tandem with interest rate changes or market moves and may be
leveraged.
Secondary markets generally do not exist for forward foreign currency contracts,
and there is no assurance that the Fund will be able to close out a forward
currency contract or close it out at a favorable price.
Warrants are options to purchase equity securities at a specific price valid for
a specific period of time. The purchase of warrants involves the risk that the
Fund could lose the purchase value of the warrant if the right to subscribe to
additional shares is not exercised prior to the warrant's expiration. Also, the
purchase of warrants involves the risk that the effective price paid for the
warrant added to the subscription price of the related security may exceed the
value of the subscribed security.
BAR CHART AND PERFORMANCE TABLE
The Fund offers three types of shares, as described under "Investing with
Firstar Funds" - Institutional, Retail A and Retail B. These types of shares
bear differing levels of expenses, as described under "Investing with Firstar
Funds." The following bar chart and table provide an indication of the risks of
investing in the Fund by showing: (a) changes in the performance of the Fund's
Institutional Shares from year to year, and (b) how the average annual returns
of the Fund's Retail A and Institutional Shares compare to those of a broad-
based securities market index. The bar chart and performance table assume
reinvestment of dividends and distributions. Remember, past performance is not
indicative of future results. Prior to January 10, 1995, the Fund offered to
investors one series of shares with neither a sales charge nor a service fee.
The average annual total return calculation reflects a maximum initial sales
charge of 4.50% for the Retail A Shares, but for periods prior to January 10,
1995, performance does not reflect service organization fees. If service
organization fees had been reflected, performance would be reduced. Because the
bar chart reflects Institutional Share performance, it does not reflect the
sales loads applicable to Retail A and B Shares. If the sales loads were
reflected, returns would be reduced. Performance reflects fee waivers in effect.
If fee waivers were not in place, a Fund's performance would be reduced. The
Retail B Shares commenced operations on March 1, 1999. Because those shares have
less than one year's performance, no average annual returns are shown for that
class in this section.
Effective September 2, 1997, Hansberger Global Investors, Inc. became investment
Sub-Adviser to the Firstar International Equity Fund.
YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)(INSTITUTIONAL SHARES)
1998 -9.55
1997 -10.46
1996 5.00
1995 4.49
1994
1993
1992
1991
1990
1989
BEST QUARTER: Q 1 '98 12.90%
WORST QUARTER: Q 3 '98 (21.06)%
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98 (Retail A Shares and Institutional
Shares)
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (Apr. 28, 1994)
INTERNATIONAL EQUITY FUND -
Retail A Shares (13.75)% - - (4.53)%
Institutional Shares (9.55)% - - (3.39)%
MSCI/EAFE INDEX 20.00% - - 8.10%
The Morgan Stanley Capital International Europe, Australia and Far East Index
("MSCI/EAFE") is a widely recognized unmanaged index composed of 20 European and
Pacific Basin countries. The Index figures do not reflect any fees or expenses.
Investors cannot invest directly in the Index.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the International Equity Fund.
INSTITUTIONAL RETAIL A RETAIL B
SHAREOWNER FEES (fees paid directly SHARES SHARES SHARES
from your investment)
Maximum Sales Charge (Load) Imposed
on Purchases (as a percentage
of offering price) None 4.50% None
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price) None None 5.00%<F1>
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends None None None
Redemption Fees None<F2> None<F2> None<F2>
Exchange Fees None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEES<F4> (12B-1)FEES<F5> EXPENSES<F6> EXPENSES<F7>
INTERNATIONAL EQUITY FUND -
Retail A 1.37% 0.00% 0.68% 2.05%
INTERNATIONAL EQUITY FUND -
Retail B<F3> 1.37% 0.75% 0.68% 2.80%
INTERNATIONAL EQUITY FUND -
Institutional 1.37% 0.00% 0.43% 1.80%
<F1> A contingent deferred sales charge is imposed on Retail B Shares redeemed
within six years of purchase at a rate of 5% in the first year,
4% in the second year, 3% in the third and fourth year, 2% in the fifth year,
declining to 1% in the sixth year. Thereafter the Retail B Shares convert to
Retail A Shares, which do not bear a contingent deferred sales charge.
<F2> A fee of $12.00 is charged for each wire redemption (Retail Shares) and
$15.00 for each non-systematic withdrawal from a Retirement Account for which
Firstar Bank, Milwaukee, N.A. is custodian.
<F3> The Annual Operating Expenses for the Retail B Shares are based on Fund
expenses for the prior fiscal year, but "Other Expenses" is restated to reflect
estimated expenses for Retail B Shares.
<F4> The Adviser has voluntarily agreed that a portion of its management fee
will not be imposed on the Fund during the current fiscal year. As a result of
the fee waiver, current management fees for the Fund are 1.14% of the Fund's
average daily net assets. This waiver is expected to remain in effect for the
current fiscal year. However, it is voluntary and can be modified or terminated
at any time without the Fund's consent.
<F5> The total of all 12b-1 fees and shareowner servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not intend to pay 12b-1 fees with
respect to the Retail A Shares for the current fiscal year. The Fund does not
intend to pay more than 0.75% in 12b-1 fees with respect to the Retail B Shares
for the current fiscal year.
<F6> "Other Expenses" includes (1) administration fees, transfer agency fees and
all other ordinary operating expenses of the Fund not listed above and (2) for
the Retail A and Retail B Shares, the payment of a Shareowner Servicing fee to
institutions under a Service Plan (described below under "Management of the
Funds - Shareowner Organizations") equal to 0.25% of the average daily net
assets of the Fund's Retail A Shares and Retail B Shares.
<F7> As a result of the fee waiver set forth in note 4, the Total Annual Fund
Operating Expenses of the Retail A, Retail B and Institutional Shares of the
Fund are estimated to be 1.82%, 2.57% and 1.57%, respectively, for the current
fiscal year. Although the fee waiver is expected to remain in effect for the
current fiscal year, this waiver is voluntary and may be terminated at any time
at the option of the Adviser.
EXAMPLE
The following example is intended to help you compare the cost of investing in
the Fund (without the fee waivers) with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
INTERNATIONAL EQUITY FUND -
Retail A Shares $649 $1,064 $1,504 $2,722
INTERNATIONAL EQUITY FUND -
Retail B Shares
ASSUMING COMPLETE REDEMPTION AT
END OF PERIOD 783 1,168 1,679 2,786
ASSUMING NO REDEMPTION 283 868 1,479 2,786
INTERNATIONAL EQUITY FUND -
Institutional 183 566 975 2,116
Retail B Shares convert to Retail A Shares six years after purchase; therefore
Retail A Shares expenses are used in the hypothetical example after year six.
In addition to the compensation itemized above, shareowner organizations may
charge fees for providing services in connection with their clients' investments
in a Fund's shares.
TYPES OF INVESTMENT RISK
The principal risks of investing in each Fund are described previously in this
Prospectus. The following list provides more detail about some of those risks,
along with information on additional types of risks which may apply to the
Funds. Risks associated with particular types of investments each Fund makes are
described in this section and in the Additional Statement referred to on the
back page.
GENERAL RISKS OF INVESTING IN EACH OF THE FUNDS
COMPLETE INVESTMENT PROGRAM - ALL FUNDS
An investment in a single Fund, by itself, does not constitute a complete
investment plan.
CREDIT RISK - MONEY MARKET FUNDS, BOND FUNDS, BALANCED FUNDS, AND ANY OTHER FUND
TO THE EXTENT THAT IT INVESTS IN FIXED-INCOME SECURITIES
An issuer of fixed-income securities may default on its obligation to pay
interest and repay principal. Also, changes in the financial strength of an
issuer or changes in the credit rating of a security may affect its value.
Credit risk includes "counterparty risk" - the risk that the other party to a
transaction will not fulfill its contractual obligation. This risk applies, for
example, to repurchase agreements which each Fund may enter.
Securities rated below investment grade are particularly subject to credit risk.
These securities are predominantly speculative and are commonly referred to as
"junk bonds." To the extent a Fund purchases or holds convertible or other
securities that are below investment grade, a greater risk exists as to the
timely repayment of the principal of, and the timely payment of interest or
dividends on, such securities.
DERIVATIVES RISK - ALL FUNDS
The term derivative covers a wide number of investments, but in general it
refers to any financial instrument whose value is derived, at least in part,
from the price of another security or a specified index, asset or rate. Some
derivatives may be more sensitive to or otherwise not react in tandem with
interest rate changes or market moves, and some may be susceptible to changes in
yields or values due to their structure or contract terms. Loss may result from
a Fund's investments in options, futures, swaps, structured securities and other
derivative instruments, which may be leveraged. A Fund may use derivatives to:
increase yield; hedge against a decline in principal value; invest with greater
efficiency and lower cost than is possible through direct investment; adjust the
Fund's duration; or provide daily liquidity.
Hedging is the use of one investment to offset the effects of another
investment. To the extent that a derivative is used as a hedge against an
opposite position that the Fund also holds, a loss generated by the derivative
should be substantially offset by gains on the hedged investment, and vice
versa. While hedging can reduce or eliminate losses, it can also reduce or
eliminate gains. Hedging also involves correlation risk - the risk that changes
in the value of a hedging instrument may not match those of the asset being
hedged.
Investment by the Taxable Bond Funds in collateralized mortgage obligations and
mortgage- and asset-backed securities are subject to derivatives risk.
To the extent that a derivative is not used as a hedge, the Fund is directly
exposed to the risks of that derivative. Gains or losses from speculative
positions in a derivative may be substantially greater than the derivative's
original cost.
INTEREST RATE RISK - MONEY MARKET FUNDS, BOND FUNDS, BALANCED FUNDS AND ANY
OTHER FUND TO THE EXTENT THAT IT INVESTS IN FIXED-INCOME SECURITIES
When interest rates increase, fixed-income securities tend to decline in value
and when interest rates decrease, fixed-income securities tend to increase in
value. A change in interest rates could cause the value of your investment to
change. Fixed-income securities with longer maturities are more susceptible to
interest rate fluctuations than those with shorter maturities. Therefore, the
risk of interest rate fluctuation is greater in the case of the Bond IMMDEX/TM
Fund and the Tax-Exempt Intermediate Bond Fund than in the case of the Short-
Term Bond Market Fund or the Money Market Funds. Changes in interest rates may
also extend or shorten the duration of certain types of instruments, such as
asset-backed securities, thereby affecting their value and the return on your
investment.
Stripped securities in which the Taxable Bond Funds and Balanced Funds may
invest and zero coupon securities in which the Taxable Bond Funds may invest are
subject to greater interest rate risk than many of the more typical fixed-income
securities.
LIQUIDITY RISK - ALL FUNDS
Certain securities may be difficult or impossible to sell at the time and price
that the Fund would like. A Fund may have to lower the price, sell other
securities instead or forego an investment opportunity, any of which could have
a negative effect on fund management or performance. This risk applies, for
example, to: variable and floating rate demand notes, variable amount demand
securities and restricted securities which the Funds may purchase, short-term
funding agreements which the Money Market Fund and Institutional Money Market
Fund may purchase, the GICs which the Taxable Bond Funds may purchase and the
futures contracts in which the Taxable Bond Funds, Growth and Income Fund,
Equity Index Fund, MicroCap Fund and International Equity Fund may engage.
Illiquid securities also include repurchase agreements and time deposits with
notice/termination dates of greater than seven days and certain unlisted over-
the-counter options and other securities traded in the U.S. but are subject to
trading restrictions because they are not registered under the Securities Act of
1933. There may be no active secondary market for these securities. Each Fund
may invest up to 15% of its net assets at the time of purchase, in securities
that are illiquid, except that each Money Market Fund may invest up to 10% of
its net assets at the time of purchase in securities that are illiquid. A
domestically traded security which is not registered under the Securities Act of
1933 will not be considered illiquid if the Adviser determines an adequate
investment trading market exists for that security. Because illiquid and
restricted securities may be difficult to sell at an acceptable price, they may
be subject to greater volatility and may result in a loss to a Fund.
LOSS OF MONEY - ALL FUNDS
An investment in the Funds is not a deposit of Firstar Bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. An investment in a Fund involves risk, including the risk of
losing money. Although the money market funds attempt to preserve the value of
your investment at $1.00 per share, it is possible to lose money by investing in
the money market funds.
MANAGEMENT RISK - ALL FUNDS
A strategy which the Adviser or Sub-Adviser uses may fail to produce the
intended results. The particular securities and types of securities a Fund holds
may underperform other securities and types of securities. There can be no
assurance a Fund will achieve its investment objective. Certain policies of each
Fund, which may not be changed without a shareowner vote, are described in the
Additional Statement.
MARKET RISK - ALL FUNDS
The value of the securities in which a Fund invests may go up or down in
response to the prospects of individual companies and/or general economic
conditions. Price changes may be temporary or last for extended periods.
OTHER TYPES OF INVESTMENTS - ALL FUNDS
This Prospectus describes each Fund's principal investment strategies, and the
types of securities in which each Fund principally invests. Each Fund may, from
time to time, make other types of investments and pursue other investment
strategies in support of its overall investment goal. These supplemental
investment strategies - and the risk involved - are described in detail in the
Additional Statement, which is referred to on the back cover of this Prospectus.
PORTFOLIO TURNOVER RISK - ALL FUNDS
The Adviser and Sub-Adviser will not consider the portfolio turnover rate a
limiting factor in making investment decisions for a Fund. A high rate of
portfolio turnover (100% or more) involves correspondingly greater expenses
which must be borne by a Fund and its shareowners. It may also result in higher
short-term capital gains taxable to shareowners. See "Financial Highlights" for
the Funds' historical portfolio turnover rates. The Money Market Funds may have
high portfolio turnover, but brokerage commissions are not normally paid on
Money Market instruments. Portfolio turnover is not expected to have a material
effect on the Money Market Funds' net investment income.
TEMPORARY INVESTMENT RISK - ALL FUNDS
Each of the Funds may, for temporary defensive purposes, invest a percentage of
its total assets, without limitation, in cash or various short-term instruments
(except for the MicroCap Fund, which may invest up to 30% of its assets in money
market instruments for temporary defensive purposes). This may occur for
example, when a Fund is attempting to respond to adverse market, economics,
political or other conditions. In particular, the U.S. Treasury Money Market
Fund may temporarily hold cash; the Tax-Exempt Money Market Fund and the Tax-
Exempt Intermediate Bond Fund may, from time to time, hold uninvested cash
reserves or invest in short-term taxable money market obligations (taxable
obligations purchased by each Fund normally will not exceed 20% of total assets
at the time of purchase); and the International Equity Fund may invest in money
market securities denominated in U.S. or foreign currency. When a Fund's assets
are invested in these instruments, the Fund may not be achieving its investment
objective.
VALUATION RISK - ALL FUNDS
This is a risk that a Fund has valued certain securities at a higher or lower
price than the Fund can sell them.
YEAR 2000 RISK - ALL FUNDS
Like other investment companies and financial service providers, each Fund could
be adversely affected if the computer systems used by its investment adviser
(and sub-adviser in the case of the International Equity Fund) and the Funds'
other service providers do not properly process and calculate date-related
information and data beginning on January 1, 2000. This possibility is commonly
known as the "Year 2000 Problem." The Year 2000 Problem arises because most
computer systems were designed only to recognize a two-digit year, not a four-
digit year. When the year 2000 begins, these computers may interpret "00" as the
year 1900 and either stop processing date-related computations or process them
incorrectly. These failures could have a negative impact on the handling of
securities trades, pricing and account services. FIRMCO, the investment adviser
to each Fund, and Firstar Corporation, FIRMCO's parent company, are taking steps
to address the Year 2000 Problem with respect to the computer systems they use
and are working with those entities with which it has business relationships
which may impact the services provided to the Funds to determine the status of
their Year 2000 initiatives. As of the date of this Prospectus, it is not
anticipated shareowners will experience negative effects on their investment, or
on the services provided in connection therewith, as a result of the Year 2000
Problem relating to the investment adviser or the Funds' other major service
providers. However, there can be no assurance that these steps taken by these
service providers will be successful, or that interaction with other non-
complying computer systems will not adversely impact the Funds. Also, companies
in which the Funds invest could be adversely affected by the Year 2000 Problem.
Also, it is possible that the normal operations of the Fund will in any event,
be disrupted significantly by the failure of communications and public utility
companies, governmental entities, financial processors or others to perform
their services as a result of the Year 2000 Problem.
ADDITIONAL RISKS WHICH APPLY TO INVESTMENT IN CERTAIN OF THE FUNDS
EXTENSION RISK - TAXABLE BOND FUNDS, BALANCED FUNDS AND MONEY MARKET FUNDS
This is the risk that an issuer will exercise its right to pay principal on an
obligation held by a Fund (such as a mortgage- or asset-backed security) later
than expected. This may happen when there is a rise in interest rates. These
events may lengthen the duration and potentially reduce the value of these
securities.
FOREIGN RISKS - INTERNATIONAL EQUITY FUND; EACH OTHER FUND - OTHER THAN THE U.S.
TREASURY MONEY MARKET FUND AND U.S. GOVERNMENT MONEY MARKET FUND - TO THE EXTENT
IT INVESTS IN FOREIGN SECURITIES
When a Fund invests in foreign securities, it will be subject to special risks
not typically associated with domestic issuers resulting from less government
regulation, less public information and less economic, political and social
stability. Foreign securities, and in particular foreign debt securities, are
sensitive to changes in interest rates. In addition, investment in securities of
foreign governments involves the risk that foreign governments may default on
their obligations or may otherwise not respect the integrity of their debt. A
Fund which invests in foreign securities will also be subject to the diplomatic
risk that an adverse change in the diplomatic relations between the U.S. and
another country might reduce the value or liquidity of investments. Future
political and economic developments, the possible imposition of withholding
taxes on dividend income, the possible seizure or nationalization of foreign
holdings, the possible establishment of exchange controls or freezes on the
convertibility of currency, or the adoption of other governmental restrictions
might adversely affect an investment in foreign securities. Additionally,
foreign banks and foreign branches of domestic banks may be subject to less
stringent reserve requirements, and to different accounting, auditing and
recordkeeping requirements.
Foreign risks will normally be greatest when a Fund invests in issuers located
in emerging markets. Securities issued in emerging market countries, in
particular, may be more sensitive to certain economic changes and less liquid.
These countries are located in the Asia/Pacific region, Eastern Europe, Latin
and South America and Africa. In general, the securities markets of these
countries are less liquid, are subject to greater price volatility, have smaller
market capitalizations and have problems with securities registration and
custody. In addition, because the securities settlement procedures are less
developed in these countries, a Fund may be required to deliver securities
receiving payment and also be unable to complete transactions during market
disruptions. As a result of these and other risks, investments in these
countries generally present a greater risk of loss to a Fund.
Investment in foreign securities also involves higher costs than investment in
U.S. securities, including higher transaction and custody costs as well as the
imposition of additional taxes by foreign governments.
Each of the Funds, other than the money market funds, may invest in foreign
currency denominated securities. A Fund which invests in foreign currency
denominated securities will also be subject to the risk of negative foreign
currency rate fluctuations. A change in the exchange rate between U.S. dollars
and foreign currency may reduce the value of an investment made in a security
denominated in that foreign currency. The International Equity Fund may hedge
against foreign currency risk, and the other Funds may do so on unsettled
trades, but none of the Funds is required to do so.
The International Equity Fund also may invest in obligations of foreign
countries and political entities ("sovereign debt") which may trade at a
substantial discount from face value. An issuer of sovereign debt may be
unwilling or unable to repay interests and principal as due. The Fund may
purchase Brady Bonds as part of its investment in sovereign debt of countries
that have restructured or are restructuring their sovereign debt pursuant to the
Brady Plan. The Brady Plan is an initiative announced by former U.S. Treasury
Secretary Nicholas F. Brady in 1989 as a mechanism for debtor nations to
restructure their external debt. Investments in Brady bonds can be viewed as
speculative.
PREPAYMENT RISK - TAXABLE BOND FUNDS, BALANCED FUNDS AND MONEY MARKET FUNDS
This is the risk that an issuer will exercise its right to pay principal on an
obligation held by a Fund (such as a mortgage- or asset-backed security) earlier
than expected. This may happen when there is a decline in interest rates. These
events may make a Fund unable to recoup its initial investment and may result in
reduced yields.
SMALL CAP STOCK RISK - SPECIAL GROWTH FUND, EMERGING GROWTH FUND AND
MICROCAP FUND
Smaller capitalization stocks involve greater risks than those associated with
larger, more established companies. Small company stocks may be subject to more
abrupt or erratic price movements, for reasons including that the stocks are
traded in lower volume and that the issuers are more sensitive to changing
conditions and have less certain growth prospects. Also, there are fewer market
makers for these stocks and wider spreads between quoted bid and asked prices in
the over-the-counter market for these stocks. Small cap stocks tend to be less
liquid, particularly during periods of market disruption. There normally is less
publicly available information concerning these securities. Small companies in
which the Funds may invest may have limited product lines, markets or financial
resources, or may be dependent on a small management group. In particular,
investments in unseasoned companies present risks considerably greater than
investments in more established companies.
TAX RISK - TAX-EXEMPT MONEY MARKET FUND, U.S. TREASURY MONEY MARKET FUND AND
TAX-EXEMPT INTERMEDIATE BOND FUND
These Funds may be more adversely impacted by changes in tax rates and policies
than the other Funds. Because interest income on municipal obligations is
normally not subject to regular federal income taxation, the attractiveness of
municipal obligations in relation to other investment alternatives is affected
by changes in federal income tax rates applicable to, or the continuing federal
income tax-exempt status of, such interest income. Any proposed or actual
changes in such rates or exempt status, therefore, can significantly affect the
demand for and supply, liquidity and marketability of municipal obligations,
which could in turn affect a Fund's ability to acquire and dispose of municipal
obligations at desirable yield and price levels.
Investment in tax-exempt securities poses additional risks. In many cases, the
Internal Revenue Service has not ruled on whether the interest received on a
tax-exempt obligation is tax-exempt, and accordingly, purchases of these
securities are based on the opinion of bond counsel to the issuers at the time
of issuance. The Fund and the Adviser rely on these opinions and will not review
the basis for them.
ADDITIONAL RISKS WHICH APPLY TO PARTICULAR TYPES OF SECURITIES
OTHER INVESTMENT COMPANIES - ALL FUNDS
The Funds may invest their cash balances in other investment companies which
invest in high quality, short-term debt securities. A pro rata portion of the
other investment companies' expenses will be borne by the Fund's shareowners.
GOVERNMENT OBLIGATIONS - MONEY MARKET FUNDS OTHER THAN THE TAX-EXEMPT MONEY
MARKET, TAXABLE BOND FUNDS, BALANCED FUNDS
In addition to U.S. Treasury obligations, the Funds may invest in other
securities issued or guaranteed by the U.S. government, its agencies and
instrumentalities. No assurance can be given that the U.S. government will
provide financial support to U.S. government-sponsored agencies or
instrumentalities where it is not obligated to do so by law.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES - TAXABLE BOND FUNDS AND BALANCED
FUNDS
Each of these Funds may purchase residential and commercial mortgage-backed as
well as other asset-backed securities (i.e., securities backed by credit card
receivables, automobile loans or other assets). In addition to credit and market
risk, mortgage- and asset-backed securities involve prepayment risk because the
underlying assets (loans) may be prepaid at any time. The value of these
securities may also change because of actual or perceived changes in the
creditworthiness of the originator, the servicing agent, the financial
institution providing the credit support, or the counterparty. Like other fixed-
income securities, when interest rates rise, the value of an asset-backed
security generally will decline. However, when interest rates decline, the value
of an asset-backed security with prepayment features may not increase as much as
that of other fixed-income securities. The relative payment rights of certain
types of mortgage-backed securities may make them subject to greater volatility
and interest rate risk than other types of mortgage-backed securities. In
addition, non-mortgage asset-backed securities involve certain risks not
presented by mortgage-backed securities. Primarily, these securities do not have
the benefit of the same security interest in the underlying collateral. Credit
card receivables are generally unsecured, and the debtors are entitled to the
protection of a number of state and federal consumer credit laws. Automobile
receivables are subject to the risk that the trustee for the holders of the
automobile receivables may not have an effective security interest in all of the
obligations backing the receivables. In times of financial stress, the secondary
market for asset-backed securities may not be as liquid as the market for other
types of securities which could result in a Fund experiencing difficulty in
valuing or liquidating such securities.
BORROWINGS, REVERSE REPURCHASE AGREEMENTS - ALL FUNDS
Each Fund may borrow money to the extent allowed (as described in the Additional
Statement) to meet shareowner redemptions from banks or through reverse
repurchase agreements. These strategies involve leveraging. If the securities
held by a Fund declines in value while these transactions are outstanding, the
net asset value of the Fund's outstanding shares will decline in value by
proportionately more than the decline in value of the securities. In addition,
reverse repurchase agreements involve the risks that the interest income earned
by a Fund (from the investment of the proceeds) will be less than the interest
expense of the transaction, that the market value of the securities sold by a
Fund will decline below the price the Fund is obligated to pay to repurchase the
securities, and that the securities may not be returned to the Fund.
SHORT SALES - MICROCAP FUND, EMERGING GROWTH FUND
Short selling is the selling of securities which have been borrowed on the
expectation that the market price will drop. These transactions may result in
gains if a security's price declines, but may result in losses if a security's
price does not decline in price.
OPTIONS - TAXABLE BOND FUNDS, BALANCED FUNDS AND EQUITY FUNDS
An option is a type of derivative instrument that gives the holder the right
(but not the obligation) to buy (a "call") or sell (a "put") an asset in the
future at an agreed upon price prior to the expiration date of the option.
Options can be used to manage exposure to certain markets, enhance income or
hedge against a decline in value of portfolio securities. Options may relate to
particular securities or various stock or bond indices and may or may not be
listed on a national securities exchange and issued by the Options Clearing
Corporation. Purchasing options is a specialized investment technique which
entails a substantial risk of a complete loss of the amount paid as premiums to
the writer of the option.
The value of options can be highly volatile, and their use can result in loss if
the Adviser or Sub-Adviser is incorrect in its expectation of price
fluctuations. The successful use of options for hedging purposes also depends in
part on the ability of the Adviser or Sub-Adviser to manage future price
fluctuations and the degree of correlation between the options and securities
markets.
The Funds, other than the International Equity Fund, may purchase put and call
options in an amount not to exceed 5% of their respective net assets. The
International Equity Fund may purchase put and call options without limit.
The Taxable Bond Funds and International Equity Fund will engage in unlisted
over-the-counter options only with broker-dealers deemed creditworthy by the
Adviser (or the Sub-Adviser). Closing transactions in certain options are
usually effected directly with the same broker-dealer that effected the original
option transaction. A Fund bears the risk that the broker-dealer will fail to
meet its obligations. There is no assurance a liquid secondary trading market
exists for closing out an unlisted option position. Furthermore, unlisted
options are not subject to the protections afforded purchasers of listed options
by the Options Clearing Corporation, which performs the obligations of its
members who fail to perform in connection with the purchase or sale of options.
In addition, each Fund may write call options on securities and on various stock
or bond indices. Each Fund may write a call option only if the option is
"covered." A Fund may "cover" a call option by owning the security underlying
the option or through other means which would allow for immediate satisfaction
of its obligation. Such options will be listed on a national securities
exchange. The aggregate value of the Fund's assets subject to options written by
the Taxable Bond Funds, Growth and Income, Equity Index and MicroCap Funds will
not exceed 5%, 25%, 5% and 5%, respectively, of the value of its net assets
during the current year. The International Equity Fund may write call options on
securities and on various stock indices which will be traded on a recognized
securities or futures exchange or over the counter. During the current year the
aggregate value of the International Equity Fund's assets subject to options
written by the Fund will not exceed 5% of the value of its net assets. In order
to close out an option position, a Fund will be required to enter into a
"closing purchase transaction" (the purchase of a call option on a security or
an index with the same exercise price and expiration date as the call option
which it previously wrote on the same security or index).
The Special Growth Fund, Emerging Growth Fund, MicroCap Fund, International
Equity Fund and the Balanced Funds may invest in warrants. Warrants are options
to purchase equity securities at a specific price valid for a specific period of
time. The purchase of warrants involves the risk that the Fund could lose the
purchase value of the warrant if the right to subscribe to additional shares is
not exercised prior to the warrant's expiration. Also, the purchase of warrants
involves the risk that the effective price paid for the warrant added to the
subscription price of the related security may exceed the value of the
subscribed security.
The International Equity Fund may also write (i.e., sell) covered put options on
securities and various securities indices. The writer of a put incurs an
obligation to buy the security underlying the option from the put's purchaser at
the exercise price at any time on or before the termination date, at the
purchaser's election (certain options the Fund writes will be exercisable by the
purchaser only on a specific date). Generally, a put is "covered" if the Fund
maintains cash, U.S. government securities or other liquid high grade debt
obligations equal to the exercise price of the option or if the Fund holds a put
on the same underlying security with a similar or higher exercise price. By
writing a covered put option on a security, the Fund receives a premium for
writing the option; however the Fund assumes the risk that the value of the
security will decline before the exercise date, in which event, the Fund may
incur a loss in excess of the premium received when the put is exercised.
Risks associated with the use of options on securities include (i) imperfect
correlation between the change in market value of the securities the Fund holds
and the prices of options relating to the securities purchased or sold by the
Fund; and (ii) the possible lack of a liquid secondary market for an option. The
Additional Statement includes additional information relating to option trading
practices and related risks.
FUTURES CONTRACTS AND RELATED OPTIONS - TAXABLE BOND FUNDS, BALANCED FUNDS AND
EQUITY FUNDS
A futures contract is a type of derivative instrument that obligates the holder
to buy or sell an asset in the future at an agreed upon price. For example, a
futures contract may obligate a Fund, at maturity, to take or make delivery of
certain domestic or foreign securities, the cash value of a securities index or
a stated quantity of a foreign currency. When a Fund purchases an option on a
futures contract, it has the right to assume a position as a purchaser or seller
of a futures contract at a specified exercise price during the option period.
When a Fund sells an option on a futures contract it becomes obligated to
purchase or sell a futures contract if the option is exercised.
Each Fund may invest in futures contracts and options on futures contracts for
hedging purposes, to have fuller exposure to price movements in a stock or bond
index, to increase total return or to maintain liquidity to meet potential
shareowner redemptions, invest cash balances or dividends or minimize trading
costs. In addition, the Equity Index Fund may purchase and sell futures and
related options (based only on the S&P 500 Index) to maintain cash reserves
while simulating full investment in the stocks underlying the S&P 500 Index, to
keep substantially all of its assets exposed to the market (as represented by
the S&P 500 Index), and to reduce transaction costs.
Futures contracts and options present the following risks: imperfect correlation
between the change in market value of a Fund's securities and the price of
futures contracts and options; the possible inability to close a futures
contract when desired; losses due to unanticipated market movements which are
potentially unlimited; and the possible inability of the investment management
team to correctly predict the direction of securities prices, interest rates,
currency exchange rates and other economic factors. The Funds may buy and sell
futures contracts and related options on foreign exchanges or boards of trade
(which do not offer the same protections as U.S. exchanges).
Each Fund's commodities transactions must constitute bona fide hedging or other
permissible transactions pursuant to regulations promulgated by the Commodities
and Futures Trading Commission ("CFTC"). In addition, a Fund may not engage in
such transactions if the sum of the amount of initial margin deposits and
premiums paid for unexpired commodity options, other than for bona fide hedging
transactions, would exceed 5% of the liquidation value of its assets, after
taking into account unrealized profits and unrealized losses on such contracts
it has entered into; provided, however, that in the case of an option that is
in-the-money at the time of purchase, the in-the-money amount may be excluded in
calculating the percentage limitation. Pursuant to SEC requirements, a Fund may
be required to segregate cash or high quality money market instruments in
connection with its commodities transactions in an amount generally equal to the
value of the underlying commodity. The Company intends to comply with the
regulations of the CFTC exempting the Fund from registration as a "commodity
pool operator."
The Taxable Bond Funds and Growth and Income Fund intend to limit their
transactions in futures contracts and related options so that not more than 5%
of each Fund's respective net assets are at risk. The Equity Index Fund and
International Equity Fund intend to limit their transactions in futures
contracts so that not more than 10% and 25% of each Fund's respective net assets
are at risk. For a more detailed description of futures contracts and futures
options, including a discussion of the limitations imposed by federal tax law,
see Appendix B to the Additional Statement.
GUARANTEED INVESTMENT CONTRACTS AND ZERO COUPON SECURITIES - TAXABLE BOND FUNDS
The Taxable Bond Funds may purchase guaranteed investment contracts ("GIC's")
issued by highly rated U.S. insurance companies and zero coupon securities.
GIC's are subject to liquidity risk, which is the risk that certain securities
may be difficult or impossible to sell at a desirable time and price.
INVESTING WITH FIRSTAR FUNDS
SHARE CLASSES AVAILABLE
This section describes for you the procedures for opening an account and how to
buy, sell or exchange Fund shares.
The Firstar Funds offer one class of Shares in the Money Market Funds and three
classes of Shares in the Non-Money Market Funds: Retail A, Retail B and
Institutional.
INSTITUTIONAL SHARES
- - No sales charge (A securities dealer, broker, financial institution or other
industry professional ("Shareowner Organization") may charge transaction or
other fees for providing administrative or other services in connection with
investments in Fund shares)
- -Available for:
- - trust, agency or custodial accounts opened through Firstar Bank, Milwaukee,
N.A.;
- - employer-sponsored qualified retirement plans other than those serviced by
certain external organizations who have service agreements with Firstar or its
affiliates;
- - all clients of FIRMCO; and
- - those purchasing through certain broker-dealers who have agreed to provide
certain services with respect to shares of the Funds, including Waterhouse
Securities, Inc. and Jack White, a division of Waterhouse Securities, Inc.
RETAIL A SHARES
- - Initial sales charge of 4.50% or less (but no initial sales charge for Money
Market Funds)
- - No deferred sales charge
- - Reduced sales charge for larger investments. See "Sales Charges and Waivers"
for more information
- - Available to any investor who does not qualify to purchase Institutional
shares
RETAIL B SHARES
- -No initial sales charge
- -Deferred sales charge - Maximum of 5% for redemptions during the first year,
4% in the second year, 3% in the third and fourth year, 2% in the fifth year,
1% in the sixth year and 0% thereafter
- -Converts to Retail A shares after six years
- -Available to any investor who does not qualify to purchase Institutional
shares
SALES CHARGES AND WAIVERS
INITIAL SALES CHARGES - for Retail A Shares of Funds other than Money Market
Funds: The public offering price for Retail A Shares is the net asset value of
the Retail A Shares purchased plus any applicable front-end sales charge. A
sales charge will not be assessed on Retail A Shares purchased through
reinvestment of dividends or capital gains distributions. The sales charge is as
follows:
SHAREOWNER
ORGANIZATION
SALES CHARGE AS A SALES CHARGE AS A REALLOWANCE AS A
AMOUNT OF TRANSACTION PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
AT OFFERING PRICE OFFERING PRICE NET ASSET VALUE OFFERING PRICE
EQUITY BOND EQUITY BOND EQUITY BOND
Less than $100,000 4.50% 3.75% 4.71% 3.90% 4.00% 3.25%
$100,000 to $249,999 3.75% 3.00% 3.90% 3.09% 3.25% 2.50%
$250,000 to $499,999 2.50% 1.75% 2.56% 1.78% 2.00% 1.25%
$500,000 to $749,999 2.00% 1.25% 2.04% 1.27% 1.50% 0.75%
$750,000 to $999,999 1.00% 0.75% 1.01% 0.76% 0.50% 0.25%
$1,000,000 and above 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
You only pay a sales charge when you buy shares. The Distributor may reallow the
entire sales charge to certain shareowner organizations and the amount reallowed
may change periodically. To the extent that 90% or more of the sales charge is
reallowed, shareowner organizations may be deemed to be underwriters under the
Act.
REDUCING YOUR SALES CHARGES AND WAIVERS - RETAIL A SHARES
To qualify for a reduction of, or exception to the sales charge, you must notify
your shareowner organization or the Distributor at the time of purchase or
exchange. The reduction in sales charge is subject to confirmation of your
holdings through a check of records. The Company may modify or terminate
quantity discounts at any time.
WAIVERS - RETAIL A SHARES
You may purchase retail shares without a sales charge if:
(a) you are an employee, director, retiree or registered representative of
Firstar Corporation or its affiliates or of Firstar Funds, Inc.
(b) you are a spouse, parent, in-law, sibling or child of an individual who
falls within the preceding
category (a) above
(c) you make any purchase for your medical savings account for which Firstar
Corporation or an affiliate serves in a custodial capacity
(d) you purchase through certain external organizations that have entered into a
service agreement with Firstar or its affiliates
REDUCING YOUR SALES CHARGES - RETAIL A SHARES
- -Right of Accumulation - Existing Equity, Balanced and Bond Fund shares can be
combined with new purchases for purposes of calculating reduced sales charges.
- -Letter of Intent - Fund shares purchased in a 13-month period qualify for the
same reduced sales charge as if all purchased at once. You may obtain a reduced
sales charge by means of a written Letter of Intent which expresses your non-
binding commitment to invest in the aggregate $100,000 or more in Retail A
Shares of a Equity, Balanced or Bond Fund within a period of 13 months. Any
investments you make during the period receive the discounted sales charge based
on the full amount of your investment commitment. The Additional Statement
includes details about the Letter of Intent.
For purposes of applying the Rights of Accumulation and Letter of Intent
privileges, the sales charge schedule applies to the combined purchases made by
any individual and/or spouse purchasing securities for his, her or their own
account, or the aggregate investments of a trustee or other fiduciary or IRA for
the benefit of the persons previously listed.
CONTINGENT DEFERRED SALES CHARGE - RETAIL B SHARES
The public offering price for Retail B Shares is the net asset value of the
Retail B Shares purchased. Although investors pay no front-end sales charge on
purchases of Retail B Shares, such Shares are subject to a contingent deferred
sales charge at the rates set forth on the next page if they are redeemed within
six years of purchase.
The amount of any contingent deferred sales charge an investor must pay depends
on the number of years that elapse between the purchase date and the date such
Retail B Shares are redeemed. Solely for purposes of this determination, all
payments during a month will be aggregated and deemed to have been made on the
first day of the month.
NUMBER OF YEARS CONTINGENT DEFERRED SALES CHARGE
ELAPSED SINCE PURCHASE (AS % OF DOLLAR AMOUNT SUBJECT
TO THE CHARGE)
Less than one 5.00%
At least one but less than two 4.00%
At least two but less than three 3.00%
At least three but less than four 3.00%
At least four but less than five 2.00%
At least five but less than six 1.00%
At least six None
The contingent deferred sales charge on Retail B Shares is based on the lesser
of the net asset value of the Shares on the redemption date or the original cost
of the Shares being redeemed. As a result, no sales charge is imposed on any
increase in the net asset value of an investor's Retail B Shares. In addition, a
contingent deferred sales charge will not be assessed on Retail B Shares
purchased through reinvestment of dividends or capital gains distributions.
When a shareowner redeems his or her Retail B Shares, the redemption request is
processed to minimize the amount of the contingent deferred sales charge that
will be charged. Retail B Shares are redeemed first from those shares that are
not subject to a contingent deferred sales charge (that is, Retail B Shares that
were acquired through reinvestment of dividends or distributions or that qualify
for other deferred sales charge exemptions, if any) and after that from the
Retail B Shares that have been held the longest.
Shareowner organizations will receive commissions in connection with sales of
Retail B Shares. A commission equal to 4% of the amount invested is paid to
authorized dealers.
The contingent deferred sales charge a shareowner may pay upon redemption is
remitted to the Distributor or other party, which may use such amounts to defray
the expenses associated with the distribution-related services involved in
selling Retail B Shares.
WAIVERS - RETAIL B SHARES
Certain types of redemptions may also qualify for an exemption from the
contingent deferred sales charge. If you think you may be eligible for a
contingent deferred sales charge waiver listed below, be sure to notify your
shareowner organization or the Distributor at the time Retail B Shares are
redeemed. The contingent deferred sales charge with respect to Retail B Shares
is not assessed on:
(i) exchanges described under "Exchange of Shares"
(ii) redemptions in connection with shares sold for certain retirement
distributions or because of disability or death.
(iii)redemptions effected pursuant to a Fund's right to liquidate a shareowner's
account if the aggregate net asset value of Retail B Shares held in the
account is less than the minimum account size set forth under "Redemption
of Shares - Other Transaction Information - Accounts Below the Minimum
Balance;"
(iv) redemptions in connection with the combination of a Fund with any other
investment company registered under the 1940 Act by merger, acquisition of
assets, or by any other transaction; or
(v) redemptions resulting from a certain tax-free return of an excess
contribution.
In addition to the foregoing exemptions, no contingent deferred sales charge
will be imposed on redemptions made pursuant to the Company's systematic
withdrawal plan. The Funds reserve the right to limit such redemptions without a
contingent deferred sales charge, on an annual basis, to 12% of the value of
your Retail B Shares on the redemption date. See the Additional Statement for
more information.
CONVERSION - RETAIL B SHARES
Retail B Shares will automatically convert into Retail A Shares of the same Fund
six years after the beginning of the calendar month in which the purchase date
occurred. If you acquire Retail B Shares of a Fund by exchange from Retail B
Shares of another Fund, your Retail B Shares will convert into Retail A Shares
of that Fund based on the date of the initial purchase.
If you acquire Retail B Shares through reinvestment of distributions, your
Retail B Shares will convert into Retail A Shares at the earlier of two dates -
either six years after the beginning of the calendar month in which the purchase
date occurred (based on the date of the initial purchase of the shares on which
the distribution was paid) or the date of conversion of the most recently
purchased Retail B Shares that were not acquired through reinvestment of
dividends or distributions. For example, if a shareowner makes a one-time
purchase of Retail B Shares of a Fund and subsequently acquires additional
Retail B Shares of that Fund only through reinvestment of dividends and/or
distributions, all of such shareowner's Retail B Shares of that Fund, including
those acquired through reinvestment, will convert to Retail A Shares of such
fund on the same date.
Upon conversion, the converted shares will be relieved of the distribution and
shareowner servicing fees borne by Retail B Shares, although they will be
subject to the shareowner servicing fees borne by Retail A Shares.
The conversion of Retail B Shares to Retail A Shares will not occur at any time
the Funds are advised that such conversions may constitute taxable events for
federal tax purposes, which the Funds believe is unlikely. If conversions do not
occur as a result of possible taxability, Retail B Shares would continue to be
subject to higher expenses than Retail A Shares for an indeterminate period.
REINSTATEMENT PRIVILEGE
If you sell shares of a Firstar Fund or Firstar Stellar Fund, you may reinvest
some or all of the proceeds in the Retail A Shares of any Firstar Fund within 60
days without a sales charge, as long as your investment professional is notified
before you reinvest. All accounts involved must have the same registration. You
may be subject to taxes as a result of a redemption. Consult your tax adviser
concerning the results of a redemption or reinvestment.
HOW TO DECIDE WHETHER TO BUY RETAIL A OR RETAIL B SHARES
The decision as to which type of Shares to purchase depends on the amount you
invest, the intended length of the investment and your personal situation.
RETAIL A SHARES - If you are making an investment of an amount that qualifies
for a reduced sales charge, you may consider purchasing Retail A Shares.
RETAIL B SHARES - If you plan to hold your investment for a significant period
of time and would prefer not to pay an initial sales charge, you might consider
purchasing Retail B Shares. By not paying a front-end sales charge, your entire
purchase in Retail B Shares is invested from the time you make your initial
investment. However, the distribution and service fee paid by Retail B Shares
will cause your Retail B Shares (until conversion to Retail A Shares) to have a
higher expense ratio and thus, lower performance and lower dividend payments (to
the extent dividends are paid) than Retail A Shares.
PURCHASE OF SHARES
Shares of the Funds are offered and sold on a continuous basis by the
distributor for the Funds, B.C. Ziegler and Company (the "Distributor"), which
is independent of the Adviser. The Distributor is a registered broker-dealer
with offices at 215 North Main Street, West Bend, Wisconsin 53095.
MINIMUM INVESTMENTS -RETAIL SHARES
The minimum initial investment for Retail Shares in a Fund is $1,000. The
minimum subsequent investment is $50. The minimum initial investment will be
waived if you participate in the Periodic Investment Plan with the exception of
the MicroCap Fund. For the MicroCap Fund the maximum investment is $5,000,000.
INSTITUTIONAL SHARES
The minimum initial investment in the Institutional Money Market Fund is
$1,000,000 by an individual or combination of accounts. There is no minimum
initial or subsequent investment for Institutional Shares of other Funds. The
maximum investment for MicroCap Fund is $5,000,000.
BUYING SHARES
Purchase requests for a money market fund received in proper form before 11:30
a.m. Central time (12:30 p.m. Central time for the Institutional Money Market
Fund) on a business day for the Funds generally are processed at 11:30 a.m.
Central time (12:30 p.m. Central time for the Institutional Money Market Fund)
on the same day. In order to be processed at 11:30 a.m. Central time time (12:30
p.m. Central time for the Institutional Money Market Fund), payment must be
received in immediately available funds wired to the transfer agent by the close
of business. All checks received will be processed at that day's inserts closing
price.
Purchase requests accompanied by a check or wire payment for the money market
funds which are received at or after 11:30 a.m. Central time (12:30 p.m. Central
time for the Institutional Money Market Fund), and purchase requests accompanied
by a check or wire payment for any other Fund which are received by the transfer
agent before 3:00 p.m. Central time on a business day for the Funds will be
executed the same day, at that day's closing price provided that payment is
received by the close of regular trading hours. Orders received after 3:00 p.m.
Central Time and orders for which payment is not received by the close of
regular trading hours on the New York Stock Exchange will be executed on the
next business day after receipt of both order and payment in proper form.
THROUGH A SHAREOWNER ORGANIZATION
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
Contact your Shareowner Organization. Contact your Shareowner
Organization.
BY MAIL
Complete an application and mail it along Make your check payable to Firstar
with a check payable to Firstar Funds, Funds. Please include your sixteen-
P.O. Box 3011, Milwaukee, digit account number on your check
WI 53201-3011. and mail it to the
address at the left.
For overnight delivery mail to:
615 E. Michigan St., Milwaukee, WI 53202.
AUTOMATICALLY (Retail A and B Shares)
Call 1-800-228-1024 to obtain a purchase Complete a Periodic Investment Plan
application, which includes information for Application to automatically
a Periodic Investment Plan or purchase more shares.
ConvertiFundR Account.
Open a ConvertiFundR account to
automatically invest proceeds from
one account to another account of
the Firstar Family of Funds.
BY WIRE
Call 1-800-228-1024 prior to sending Call 1-800-228-1024 prior to
the wire in order to obtain a sending the wire in order to
confirmation number and to obtain a confirmation number and to
ensure prompt and accurate handling ensure prompt and accurate
of funds. Ask your bank to transmit handling of funds.
immediately available funds Ask your bank to transmit
by wire in the amount of immediately available
your purchase to: funds by wire as described at the
Please Firstar Bank Milwaukee, N.A. left. Please include your sixteen-
ABA # 0750-00022 digit account number.
Firstar Trust Department The Fund and its transfer agent are
Account # 112-952-137 not responsible for the
for further credit to consequences of delays resulting
[name of Fund] from the banking or Federal Reserve
[name/title on the account]. Wire system, or from incomplete
The Fund and its transfer wiring instructions.
agent are not responsible
for the consequences of delays
resulting from the banking or Federal
Reserve Wire system, or from
incomplete wiring instructions.
INTERNET www.firstarfunds.com
Not Available Use Firstar Funds Direct to
exchange from another Firstar Fund
account with the same registration
including name, address and
taxpayer ID number.
Purchase additional shares using an
electronic funds transfer from your
banking institution for payment.
Call 1-800-228-1024 to authorize
this service.
BY TELEPHONE EXCHANGE
Call 1-800-228-1024 to exchange Call 1-800-228-1024 to exchange
from another Firstar Fund account from another Firstar Fund account
with the same registration with the same registration
including name, address and taxpayer including name, address and
taxpayer ID number. ID number.
- ------------------------------------------------------------------------------
PLEASE NOTE: All checks must be drawn on a bank located within the United
States and must be payable in U.S. dollars to Firstar Funds. A $25 fee will be
imposed by the Funds' transfer agent if any check used for investment in an
account does not clear, and the investor involved will be responsible for any
loss incurred by a Fund. Prior to the transfer agent receiving a completed
application, investors may make an initial investment. However, redemptions
will not be paid until the transfer agent has received the completed
application.
- -----------------------------------------------------------------------------
ADDITIONAL INFORMATION ON BUYING SHARES
- - The Funds will not accept payment in cash or third party checks for the
purchase of shares.
- - Federal regulations require that each investor provide a Social Security
number or other certified taxpayer identification number upon opening or
reopening an account. The Funds reserve the right to reject applications
without such a number or an indication that a number has been applied for. If
a number has been applied for, the number must be provided and certified
within sixty days of the date of the application. Any accounts opened without
a proper number will be subject to backup withholding at a rate of 31% on all
liquidations and dividend and capital gain distributions.
- - Payment for shares of a Fund in the amount of $1,000,000 or more may, at the
discretion of the Adviser, be made in the form of securities that are
permissible investments for the respective Fund.
FOR OWNERS OF INSTITUTIONAL SHARES
All share purchases are effected pursuant to a customer's account at Firstar
Bank Milwaukee, N.A. Trust Department ("Firstar Trust") or at another chosen
institution or broker-dealer pursuant to procedures established in connection
with the requirements of the account. Confirmations of share purchases and
redemptions will be sent to Firstar Trust or the other shareowner organizations
involved. Firstar Trust and the other shareowner organizations or their nominees
will normally be the holders of record of Fund shares, and will reflect their
customers' beneficial ownership of shares in the account statements provided by
them to their customers. The exercise of voting rights and the delivery to
customers of shareowner communications from the Fund will be governed by the
customers' account agreements with Firstar Trust and the other shareowner
Organizations. Investors wishing to purchase shares of the Funds should contact
their account representatives.
In the case of participants in certain employee benefit plans investing in
certain Funds, purchase and redemption orders will be processed on a particular
day based on whether a service organization acting on their behalf received the
order by the close of regular trading on that day.
The Funds may authorize one or more brokers and other shareowner organizations
to accept on their behalf purchase, redemption and exchange orders, and may
authorize such shareowner organizations to designate other intermediaries to
accept purchase, redemption and exchange orders on the Funds' behalf. In these
cases, a Fund will be deemed to have received an order when an authorized
shareowner organization or intermediary accepts the order, and customer orders
will be priced at the Fund's net asset value next computed after they are
accepted by a shareowner organization or intermediary. Shareowner organizations
and intermediaries will be responsible for transmitting accepted orders to the
Funds within the period agreed upon by them. Shareowners should contact their
shareowner organization or intermediaries to learn whether they are authorized
to accept orders for Funds.
It is the responsibility of Shareowner organizations to transmit orders and
payment for the purchase of shares by their customers to the transfer agent on a
timely basis and to provide account statements in accordance with the procedures
previously stated.
REDEMPTION OF SHARES
SELLING SHARES
Redemption requests for a money market fund received by the transfer agent by
phone before 11:30 a.m. Central time (12:30 p.m. Central time for the
Institutional Money Market Fund) on a business day for the Funds generally are
processed at 11:30 a.m. Central Time (12:30 p.m. Central time for the
Institutional Money Market Fund) on the same day. Redemption requests for money
market funds received at or after 11:30 a.m. Central time (12:30 p.m. Central
time for the Institutional Money Market Fund) and redemption requests for other
Funds received by the transfer agent before 3:00 p.m. Central time on a business
day for the Funds will be executed the same day, at that day's closing price.
Orders received after 3:00 p.m. Central time will be executed on the next
business day.
THROUGH A SHAREOWNER ORGANIZATION
Contact your Shareowner Organization.
BY PHONE
Call 1-800-228-1024 with your account name, sixteen-digit account number and
amount of redemption (minimum $500). Redemption proceeds will only be sent to a
shareowner's address or bank account of a commercial bank located within the
United States as shown on the transfer agent's records. (Available only if
telephone redemptions have been authorized on the account application and if
there has been no change of address by telephone within the preceding 15 days).
BY MAIL
Mail your instructions to the Firstar Funds, P.O. Box 3011, Milwaukee, WI 53201-
3011 (via overnight delivery to 615 E. Michigan Street, Milwaukee, WI 53202).
Include the number of shares or the amount to be redeemed, your sixteen-digit
account number and Social Security number or other taxpayer identification
number. Your instructions must be signed by all persons required to sign for
transactions exactly as their names appear on the account. If the redemption
amount exceeds $50,000, or if the proceeds are to be sent elsewhere than the
address of record, or the address of record has been changed by telephone within
the preceding 15 days, each signature must be guaranted in writing by either a
commercial bank that is a member of the FDIC, a trust company, a credit union, a
savings association, a member firm of a national securities exchange or other
eligible guarantor institution.
INTERNET
Use Firstar Funds Direct to redeem up to $25,000. Call 1-800-228-1024 to
authorize this service.
AUTOMATICALLY
Call 1-800-228-1024 for a Systematic Withdrawal Plan application ($5,000 account
minimum and $50 minimum per transaction).
- --------------------------------------------------------------------------------
Guarantees must be signed by an eligible guarantor institution and "Signature
Guaranteed" must appear with the signature.
- ----------------------------------------------------------------------------
The Funds may require additional supporting documents for redemptions made by
corporations, executors, administrators, trustees and guardians. A redemption
request will not be deemed to be properly received until the transfer agent
receives all required documents in proper form. Purchases of additional shares
concurrently with withdrawals could be disadvantageous because of the sales
charge involved in the additional purchases.
- -----------------------------------------------------------------------------
ADDITIONAL TRANSACTION INFORMATION
TELEPHONE REQUESTS
In order to arrange for telephone redemptions after you have opened your account
or to change the bank or account designated to receive redemption proceeds, send
a written request to the Firstar Mutual Fund Services, LLC or contact your
registered representative. Each shareowner of the account must sign the request.
The Funds may request further documentation from corporations, executors,
administrators, trustees and guardians.
The Funds reserve the right to refuse a telephone redemption if they believe it
is advisable to do so. Procedures for redeeming shares by telephone may be
modified or terminated by the Funds at any time upon notice to shareowners.
During periods of substantial economic or market change, telephone redemptions
may be difficult to implement. If a shareowner is unable to contact the transfer
agent by telephone, shares may also be redeemed by delivering the redemption
request to the transfer agent.
In an effort to prevent unauthorized or fraudulent purchase and redemption
requests by telephone, Firstar employs reasonable procedures to confirm that
such instructions are genuine. Among the procedures used to determine
authenticity, investors electing to transact by telephone will be required to
provide their account number (unless opening a new account). All telephone
transactions will be recorded and, except for transactions in Money Market
Funds, confirmed in writing. Statements of accounts shall be conclusive if not
objected to in writing within 10 days after transmitted by mail. Firstar may
implement other procedures from time to time. If reasonable procedures are not
implemented, Firstar may be liable for any loss due to unauthorized or
fraudulent transactions. In all other cases, the shareowner is liable for any
loss for unauthorized transactions.
CHECK REDEMPTION
You may request on the purchase application or by written request that a Fund
provides Redemption Checks ("Checks"). Checks may be made payable in the amount
of $250 or more. Any checks drawn on a joint account will only require one
signature. There is no charge for the use of the Checks; however, the transfer
agent will impose a $25 charge for stopping payment of a Check upon your
request, or if the transfer agent cannot honor a Check due to insufficient funds
or other valid reason. Because dividends on each Fund accrue daily, Checks may
not be used to close an account, as a small balance is likely to result.
CHECKS ARE NOT AVAILABLE FOR NON-MONEY MARKET FUNDS, INSTITUTIONAL MONEY MARKET
FUND, IRAS OR OTHER RETIREMENT PLANS FOR WHICH FIRSTAR ACTS AS CUSTODIAN.
CERTIFICATES
Certificates are only issued upon shareowner request. If certificates have been
issued, the transfer agent must receive the certificates, properly endorsed or
accompanied by a properly executed stock power and accompanied by signature
guarantees, prior to a redemption request.
ADDITIONAL REDEMPTION INFORMATION
The Funds will make payment for redeemed shares typically within one or two
business days, but no later than the seventh day after receipt by the transfer
agent of a request in proper form, except as provided by SEC rules. HOWEVER, IF
ANY PORTION OF THE SHARES TO BE REDEEMED REPRESENTS AN INVESTMENT MADE BY CHECK,
THE FUNDS WILL DELAY THE PAYMENT OF THE REDEMPTION PROCEEDS UNTIL THE TRANSFER
AGENT IS REASONABLY SATISFIED THAT THE CHECK HAS BEEN COLLECTED, WHICH MAY TAKE
TWELVE DAYS FROM THE PURCHASE DATE. An investor must have filed a purchase
application before any redemption requests can be paid.
ACCOUNTS BELOW THE MINIMUM BALANCE
If your account falls below $1,000, the Funds may redeem your account. The Fund
will impose no charge and will give you sixty days' written notice prior to any
redemption. A Fund may also redeem shares involuntarily if it is appropriate to
do so to carry out the Fund's responsibilities under the 1940 Act and, in
certain cases, may make payment for redemption in securities. Investors would
bear any brokerage or other transaction costs incurred in converting the
securities so received to cash. See the Additional Statement referred to on the
last page for examples of when such redemptions might be appropriate.
EXCHANGE OF SHARES
Without a sales charge, you may exchange shares of a money market fund for
shares of another money market fund. Except as described in the next paragraph,
you may also exchange shares of a money market fund for Institutional, Retail A
or Retail B Shares or of a non- money market fund provided you are eligible to
purchase the class at time of the exchange. You may exchange your money market
fund shares for money market fund Shares (except that Retail B Shares are not
exchangeable for Institutional money market fund Shares) or for shares of other
Firstar Funds within the same share class if you are eligible to purchase the
class at the time of the exchange. Unless you qualify for a sales charge
exemption, an initial sales charge will be imposed on the exchange if the shares
of the Fund being acquired have an initial sales charge and the shares being
redeemed were purchased without a sales charge. Retail B Shares acquired in an
exchange and money market fund Shares acquired in an exchange for Retail B
Shares will be subject to a contingent deferred sales charge upon redemption in
accordance with this prospectus. For purposes of computing the contingent
deferred sales charge, the length of time of ownership will be measured from the
date of the original purchase of Retail B Shares.
Shares of a money market fund which were acquired upon exchange for Retail A
Shares may not be exchanged for Retail B Shares. Shares of a money market fund
which were acquired upon exchange for Retail B Shares may not be exchanged for
Retail A Shares. Shares of the Institutional Money Market Fund are not
exchangeable for Retail A or Retail B Shares of any non-money market fund.
Shares of the Institutional Money Market Fund are exchangeable only for
Institutional Shares of a non-money market fund, and only if you are eligible to
purchase the Institutional Shares at the time of the exchange.
Telephone exchange privileges automatically apply to each shareowner of record
unless the transfer agent receives written instructions canceling the privilege.
Firstar reserves the right to terminate the exchange privilege of any party who
requests more than four exchanges within a calendar year. Firstar may do so with
prior notice based on a consideration of both the number of exchanges and the
time period over which those exchange requests have been made, together with the
level of expense to the Funds or other adverse effects which may result from the
additional exchange requests.
For federal income tax purposes, an exchange of shares is a taxable event and,
accordingly, an investor may realize a capital gain or loss. Before making an
exchange request, an investor should consult a tax or other financial adviser to
determine the tax consequences of a particular exchange. No exchange fee is
currently imposed by Firstar on exchanges. However, Firstar reserves the right
to impose a charge in the future. In addition, shareowner organizations may
charge a fee for providing administrative or other services in connection with
exchanges. The Fund reserves the right to reject any exchange request with prior
notice to a shareowner and the exchange privilege may be modified or terminated
at any time. At least sixty days' notice will be given to shareowners of any
material modification or termination except where notice is not required under
SEC regulations. Also keep in mind:
- - Exchanges are available only in states where exchanges may be legally made.
- - The minimum amount which may be exchanged is $1,000.
- - If any portion of the shares to be exchanged represents an investment made by
check, a Fund will delay the acquisition of new shares in an exchange until
the transfer agent is reasonably satisfied that the check has been collected,
which may take up to twelve days from the purchase date.
- - It may be difficult to make telephone exchanges in times of drastic economic
or market changes.
ADDITIONAL SHAREHOLDER SERVICES
SHAREOWNER REPORTS
Shareowners will be provided with a report showing portfolio investments and
other information at least semiannually; and after the close of the Fund's
fiscal year with an annual report containing audited financial statements. To
eliminate unnecessary duplication, only one copy of shareowner reports will be
sent to shareowners with the same mailing address. Shareowners may request
duplicate copies free of charge.
Account statements will be mailed to money market shareowners monthly,
summarizing all transactions. For all other funds, account statements will be
mailed after each purchase, reinvestment of dividends and redemption. Statements
of accounts shall be conclusive if not objected to in writing within 10 days
after transmitted by mail. Generally, the Fund does not send statements for
Funds held in brokerage, retirement or other similar accounts.
FIRSTAR FUNDS WEBSITE (WWW.FIRSTARFUNDS.COM)
The site offers educational information and interactive financial planning tools
as well as product-specific information.
Generally, Shareowners can request purchases, exchanges and redemptions of Fund
shares on-line via the Internet after an account is opened. Redemption requests
of up to $25,000 will be accepted through the Internet. Payment for shares
purchased online must be made by electronic funds transfer from your banking
institution. To authorize this service, call Firstar Mutual Fund Services, LLC
at 1-800-228-1024.
Firstar Funds and their agents will not be responsible for any losses resulting
from unauthorized on-line transactions when procedures are followed which are
designed to confirm that the on-line transaction request is genuine. Statements
of accounts shall be conclusive if not objected to in writing within 10 days
after transmitted by mail. During periods of significant economic or market
change, it may be difficult to reach the Funds on-line. If this happens, you may
initiate transactions in your share accounts by mail or as otherwise described
in the prospectus.
AUTOMATED TELERESPONSE SERVICE
Shareowners using a touch-toneR telephone can access information on the Funds
twenty four hours a day, seven days a week. When calling Firstar Mutual Fund
Services, LLC at 1-800-228-1024, shareowners may choose to use the automated
information feature or, during regular business hours (8:00 a.m. to 7:00 p.m.
Central time, Monday through Friday), speak with a Firstar representative.
RETIREMENT PLANS
The Fund offers individual retirement accounts including SIMPLE and SEP IRAs.
For details concerning Retirement Accounts (including service fees), please call
Firstar Mutual Fund Services, LLC at 1-800-228-1024.
ADDITIONAL INFORMATION
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
- --------------------------------------------------------------------------------
Dividends from net investment income, including net realized gains and losses,
if any, earned on the investments held by a Fund, of the money market funds are
declared on each business day on the shares that are outstanding immediately
after 11:30 a.m. Central time (12:30 P.M. Central time for Institutional Money
Market) on the declaration date.
- --------------------------------------------------------------------------------
Dividends from net investment income of the Bond Funds are declared and paid
monthly. Dividends from net investment income of the Balanced Income, Balanced
Growth, Growth and Income and Equity Index Funds are declared and paid
quarterly.
Dividends from net investment income of the Growth, Special Growth, Emerging
Growth, MicroCap and International Equity Funds are declared and paid annually.
Any capital gains are distributed annually. A shareowner's dividends and capital
gains distributions will be reinvested automatically in additional shares unless
the Fund is notified that the shareowner elects to receive distributions in
cash.
If a shareowner has elected to receive dividends and/or capital gain
distributions in cash and the postal or other delivery service is unable to
deliver checks to shareowner's address of record, such shareowner's distribution
option will automatically be converted to having all dividend and other
distributions reinvested in additional shares. No interest will accrue on
amounts represented by uncashed distribution or redemption checks.
FEDERAL TAXES
Each Fund contemplates declaring as dividends each year all, or substantially
all, of its taxable income, including its net capital gain (the excess of long-
term capital gain over short-term capital loss). You will be subject to income
tax on these distributions regardless of whether they are paid in cash or
reinvested in additional Shares. Distributions attributable to the net capital
gain of a Fund will be taxable to you as long-term capital gain, regardless of
how long you have held your Shares. Other Fund distributions will generally be
taxable as ordinary income. You will be notified annually of the tax status of
distributions to you.
You should note that if you purchase Shares just prior to a capital gain
distribution, the purchase price will reflect the amount of the upcoming
distribution, but you will be taxable on the entire amount of the distribution
received, even though, as an economic matter, the distribution simply
constitutes a return of capital. This is known as "buying into a dividend."
You will recognize taxable gain or loss on a sale, exchange or redemption of
your shares, including an exchange for shares of another Fund, based on the
difference between your tax basis in the Shares and the amount you receive for
them. (To aid in computing your tax basis, you generally should retain your
account statements for the periods during which you held Shares.) Any loss
realized on Shares held for six months or less will be treated as a long-term
capital loss to the extent of any capital gain dividends that were received on
the shares.
The one major exception to these tax principles is that distributions on, and
sales, exchanges and redemptions of, Shares held in an IRA (or other tax-
qualified plan) will not be currently taxable.
THE INTERNATIONAL EQUITY FUND. It is expected that the International Equity Fund
will be subject to foreign withholding taxes with respect to dividends or
interest received from sources in foreign countries. The International Equity
Fund may make an election to treat a proportionate amount of such taxes as
constituting a distribution to each Shareowner, which would allow each
Shareowner either (1) to credit such proportionate amount of taxes against U.S.
federal income tax liability or (2) to take such amount as an itemized
deduction.
THE TAX-EXEMPT MONEY MARKET FUND AND TAX-EXEMPT INTERMEDIATE BOND FUND. It is
expected that the Tax-Exempt Money Market Fund and Tax-Exempt Intermediate Bond
Fund will distribute dividends derived from interest earned on Exempt
Securities, and these "exempt interest dividends" will be exempt income for
Shareowners for federal income tax purposes. However, distributions, if any,
derived from net capital gains will generally be taxable to you as capital
gains. It is expected that the Tax-Exempt Intermediate Bond Fund may pay such
capital gains distributions from time to time. Dividends, if any, derived from
taxable interest income will be taxable to you as ordinary income.
Interest on indebtedness incurred by a Shareowner to purchase or carry shares of
the Tax-Exempt Money Market Fund and Tax-Exempt Intermediate Bond Fund generally
will not be deductible for federal income tax purposes.
You should note that a portion of the exempt-interest dividends paid by the Tax-
Exempt Money Market Fund and Tax-Exempt Intermediate Bond Fund may constitute an
item of tax preference for purposes of determining federal alternative minimum
tax liability. Exempt-interest dividends will also be considered along with
other adjusted gross income in determining whether any Social Security or
railroad retirement payments received by you are subject to federal income
taxes.
If you receive an exempt-interest dividend with respect to any Share and the
Share is held by you for six months or less, any loss on the sale or exchange of
the Share will be disallowed to the extent of such dividend amount.
The foregoing is only a summary of certain tax considerations under current law,
which may be subject to change in the future. You should consult your tax
adviser for further information regarding federal, state, local and/or foreign
tax consequences relevant to your specific situation.
STATE AND LOCAL TAXES
Shareowners may also be subject to state and local taxes on distributions and
redemptions. State income taxes may not apply, however, to the portions of each
Fund's distributions, if any, that are attributable to interest on Federal
securities or interest on securities of the particular state. Shareowners should
consult their tax advisers regarding the tax status of distributions in their
state and locality.
MANAGEMENT OF THE FUNDS
ADVISORY SERVICES
FIRMCO, a Wisconsin Limited Liability Company and subsidiary of Firstar
Corporation, a bank holding company, serves as investment adviser to each Fund.
FIRMCO, with principal offices at Firstar Center, 777 East Wisconsin Avenue, 8th
Floor, Milwaukee, Wisconsin 53202, has provided investment advisory services
since 1986. FIRMCO currently has $26.9 billion in assets under management.
Firstar Corporation has agreed to permit the Company to use the name "Firstar
Funds" and expansions thereof on a non-exclusive and royalty-free basis in
connection with mutual fund management and distribution services within the
United States, its territories and possessions. This agreement may be terminated
by Firstar Corporation under specified circumstances, including if no affiliate
of Firstar Corporation is serving as investment adviser for any portfolio
offered by the Company.
Subject to the general supervision of the Board of Directors and in accordance
with the respective investment objective and policies of each Fund, the Adviser
manages each Fund's portfolio securities and maintains records relating to such
purchases and sales (except for the International Equity Fund). Subject to the
general supervision of the Board of Directors and in accordance with the
investment objective and policies of the International Equity Fund, the Adviser
is responsible for the Fund's investment program, general investment criteria
and policies.
The Adviser has retained Hansberger Global Investors, Inc. (HGI) as Sub-Adviser
for the International Equity Fund a Delaware corporation founded in 1994, with
its principal office at 515 East Las Olas Boulevard, Suite 1300, Fort
Lauderdale, Florida 33301, currently has $2.1 billion in assets under
management. Subject to the oversight and supervision of the Fund's Board of
Directors and Adviser, the Sub-Adviser formulates and implements a continuous
investment program for the Fund.
The Adviser (or Sub-Adviser for the International Equity Fund) is authorized to
allocate purchase and sale orders for portfolio securities to Shareowner
Organizations, including, in the case of agency transactions, Shareowner
Organizations which are affiliated with the Adviser (or Sub-Adviser), to take
into account the sale of Fund shares if the Adviser (or Sub-Adviser for the
International Equity Fund) believes that the quality of the transaction and the
amount of the commission are comparable to what they would be with other
qualified brokerage firms.
For the fiscal year ended October 31, 1998, the Adviser received from each Fund
a fee, calculated daily and payable monthly, at the following annual rates (as a
percentage of the Fund's average daily net assets): 0.37% for the Money Market
Fund, 0.29% for the Institutional Money Market Fund, 0.49% for the U.S. Treasury
Money Market Fund, 0.50% for the U.S. Government Money Market Fund, 0.48% for
the Tax-Exempt Money Market Fund, 0.30% for the Short-Term Bond Market Fund,
0.36% for the Intermediate Bond Market Fund, 0.36% for the Tax-Exempt
Intermediate Bond Fund, 0.30% for the Bond IMMDEX/TM Fund, 0.33% for the
Balanced Income Fund, 0.73% for the Balanced Growth Fund, 0.75% for the Growth
and Income Fund, 0.19% for the Equity Index Fund, 0.75% for the Growth Fund,
0.75% for the Special Growth Fund, 0.73% for the Emerging Growth Fund, 1.50% for
the MicroCap Fund and 1.14% for the International Equity Fund.
The Sub-Adviser is entitled to a fee, payable by the Adviser, for its services
and expenses incurred with respect to the International Equity Fund. The fee is
computed daily and paid monthly at the following annual rates (as a percentage
of the Fund's average daily net assets): 0.75% on the Fund's first $25 million,
0.50% of the next $75 million and 0.35% of the Fund's average daily net assets
in excess of $100 million.
FUND MANAGERS
- --------------------------------------------------------------------------------
Chartered Financial Analyst (CFA) designation is a globally recognized standard
for measuring the competence and integrity of financial analysts.
- -------------------------------------------------------------------------------
Mary Ellen Stanek, CFA and Sharon deGuzman co-manage the Short-Term Bond Market
Fund. Ms. Stanek is the President and Chief Executive Officer of FIRMCO, and
Director of Fixed Income Services. In addition, Ms. Stanek has served as an
officer of the Funds since September 1994. She has 20 years of investment
management experience and was named a Director of FIRMCO in 1992. Prior to
joining FIRMCO, Ms. Stanek headed the Fixed Income and Quantitative Investment
Management Department at Firstar Trust Company. She has been the Fund's
portfolio manager since its inception on December 29, 1989. Ms. deGuzman is an
Assistant Vice President and Portfolio Manager and has been with Firstar since
1994. She has 8 years of investment management experience and has been a
portfolio manager of the Fund since March 1, 1999.
Mary Ellen Stanek and Warren Pierson, CFA co-manage the Intermediate Bond Market
Fund. Ms. Stanek has managed the Fund since its inception on January 5, 1993.
Mr. Pierson joined Firstar in 1985 and has 14 years of fixed income experience
at Firstar. He is a Senior Vice President and Senior Portfolio Manager of FIRMCO
and has been a portfolio manager of the Fund since March 1, 1999.
Warren Pierson, also manages the Tax-Exempt Intermediate Bond Fund. Mr. Pierson
has managed the Fund since June 22, 1993.
Mary Ellen Stanek and Daniel Tranchita, CFA co-manage the Bond IMMDEX/TM Fund.
Ms. Stanek has managed the Fund since its inception on December 29, 1989. Mr.
Tranchita is a Senior Vice President and Senior Portfolio Manager and has been
with Firstar since 1989. He has 10 years of investment management experience and
has been a portfolio manager of the Fund since March 1, 1999.
Marian Zentmyer, CFA and Warren Pierson co-manage the Balanced Income Fund. Ms.
Zentmyer is FIRMCO's Equity Chief Investment Officer, a Senior Vice President
and Senior Portfolio Manager. She has been with Firstar since 1982 and has 20
years of investment management experience. Ms. Zentmyer is a Certified Financial
Planner. Ms. Zentmyer and Mr. Pierson have managed the Fund since its inception
on December 1, 1997.
Marian Zentmyer and Dan Tranchita co-manage the Balanced Growth Fund. Ms.
Zentmyer has managed the Fund since June 18, 1996 and Mr. Tranchita since March
1, 1999.
Marian Zentmyer and Walter Dewey, CFA co-manage the Growth and Income Fund. Ms.
Zentmyer has managed the Fund since February 22, 1993 and Mr. Dewey since June
29, 1998. Mr. Dewey is a Senior Vice President and Senior Portfolio Manager of
FIRMCO. He has been with Firstar since 1986 and has 16 years of investment
management experience.
Marian Zentmyer and Walter Dewey also co-manage the Growth Fund. Ms. Zentmyer
has managed the Fund since June 18, 1996 and Mr. Dewey since July 7, 1997.
Todd Krieg, CFA and Matt D'Attilio, CFA co-manage the Special Growth Fund. Mr.
Krieg is the Director of Equity Research and a Senior Vice President and Senior
Portfolio Manager of FIRMCO. Mr. Krieg has been with Firstar since 1992 and has
six years of investment management experience. Mr. Krieg has managed the Fund
since September 1, 1994. Mr. D'Attilio is a Senior Vice President and Senior
Portfolio Manager of FIRMCO and has been with Firstar since 1993. He has five
years of investment management experience and has managed the Fund since
December 1, 1998.
Todd Krieg and Matthew D'Attilio, CFA also co-manage the Emerging Growth Fund.
Both have managed the Fund since its inception on August 15, 1997.
Joe Frohna, CFA, CPA manages the MicroCap Fund. Mr. Frohna is a Senior Vice
President and Senior Portfolio Manager of FIRMCO and has been with Firstar since
1995. He has six years of investment management experience and has managed the
Fund since September 9, 1997.
The portfolio management team comprised of James Chaney, Robert Mazuelos and
John Hock manages the International Equity Fund for the Sub-Adviser. Mr. Chaney
is primarily responsible for the day to day management of the Fund. Mr. Chaney
joined the Sub-Adviser as Chief Investment Officer in 1996 and has 15 years of
investment experience. Prior to joining the Sub-Adviser, he was Executive Vice
President for Templeton Worldwide, Inc. and a senior member of its Portfolio
Management/Strategy Committee. Robert Mazuelos joined the Sub-Adviser in 1995 as
a research analyst and has eight years of investment management experience.
Prior to joining the Sub-Adviser, he was a performance analyst at Templeton
Investment Counsel, Inc. where he was responsible for return analysis on
separate accounts and mutual funds. John Hock joined the Sub-Adviser in 1996 as
a research analyst. Prior to joining the Sub-Adviser, he was a senior analyst in
the global securities research and economics group at Merrill Lynch.
ADMINISTRATIVE SERVICES
Firstar Mutual Fund Services, LLC and B.C. Ziegler and Company ("Ziegler") serve
as the Co-Administrators (the "Co-Administrators") and receives fees for those
services.
SHAREOWNER ORGANIZATIONS - RETAIL A AND B SHARES; MONEY MARKET FUNDS (OTHER THAN
INSTITUTIONAL MONEY MARKET FUND)
The Funds have adopted distribution and service plans for the Retail A and
Retail B Shares. Under the distribution and service plans, the Funds may pay
distribution fees for the sale and distribution of their shares and service fees
for shareowner services. These fees are regulated by Rule 12b-1 under the
Investment Company Act of 1940 and are subject to the NASD Conduct Rules.
Because these fees are paid out of the Funds' assets on an ongoing basis, over
time, these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.
The Funds also have adopted service plans for the Retail A and B Shares, under
which the Funds may pay service fees for shareowner services to Retail A and B
shareowners.
For their services with respect to the Retail A Shares, shareowner organizations
may be entitled to receive fees from a Fund at an annual rate of up to 0.25% of
the average daily net asset value of the shares covered by their agreement for
distribution and/or shareowner support services. Under the distribution and
service plan for the Retail B Shares, the Distributor is entitled to receive
fees at an annual rate of up to 0.75% of the average daily net asset value of
the Retail B Shares for distribution services with respect to the Retail B
Shares. For their services with respect to the Retail B Shares, shareowner
Organizations may be entitled to receive fees from a Fund at an annual rate of
up to 0.25%, and 0.25% of the average daily net asset value of the shares
covered by their agreement, respectively, for shareowner liaison under the
distribution and service plan and for other support services under the service
plan (as described below).
Under these Plans, the Funds may enter into agreements with shareowner
Organizations, including affiliates of the Adviser (such as FIS). The shareowner
Organizations are required to provide a schedule of any fees that they may
charge to their customers relating to the investment of their assets in shares
covered by the agreements. Investors should read this Prospectus in light of
such fee schedules and under the terms of their shareowner Organization's
agreement with Firstar. In addition, investors should contact their shareowner
Organizations with respect to the availability of shareowner services and the
particular shareowner organization's procedures for purchasing and redeeming
shares. It is the responsibility of shareowner organizations to transmit
purchase and redemption orders and record those orders in customers' accounts on
a timely basis in accordance with their agreements with customers.
The Funds make no payments to their Distributor under the Plans for the Retail A
Shares or under the service plan for the Retail B Shares. The Funds make
payments to their Distributor under the distribution and service plan for
distribution services with respect to the Retail B Shares. Payments to
shareowner organizations, including affiliates of the Adviser, under the plans,
and to the Distributor under the distribution and service plan for the Retail B
Shares are not tied directly to their own out-of-pocket expenses and therefore
may be used as they elect (for example, to defray their overhead expenses), and
may exceed their direct and indirect costs.
Shareowner organizations will provide support and/or, in the case of the
distribution and service plan for the Retail A Shares, distribution services to
their customers who are the shareowners of the Funds. Under the Service
Agreements, shareowner support services may include:
- - assisting investors in processing purchase, exchange and redemption requests
- - processing dividend and distribution payments from the Funds
- - providing information periodically to customers showing their positions in
Fund shares
- - providing sub-accounting
- - forwarding sales literature and advertising
Shareowner liaison services may include responding to customers' inquires and
providing information on their investments, and other personal and account
maintenance services within NASD Rules.
The Glass-Steagall Act and other applicable laws, among other things, prohibit
banks from engaging in the business of underwriting securities. Accordingly,
banks will be engaged under agreements with Firstar only to perform the
administrative and investor servicing functions described above, and will
represent to Firstar that in no event will the services provided by them under
the agreements be primarily intended to result in the sale of Fund shares.
Conflict-of-interest restrictions may apply to the receipt of compensation paid
by Firstar to a shareowner organization in connection with the investment of
fiduciary funds in Fund shares. Institutions, including banks regulated by the
Comptroller of the Currency and investment advisers and other money managers
subject to the jurisdiction of the SEC, the Department of Labor or state
securities commissions, are urged to consult legal counsel before entering into
agreements with Firstar.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, AND ACCOUNTING SERVICES AGENT
Firstar Mutual Fund Service, LLC, an affiliate of the Adviser, provides transfer
agency, dividend disbursing agency and accounting services for the Funds and
receive fees for these services. Inquiries to the transfer agent may be sent to:
Mutual Fund Service, LLC, P.O. Box 3011, Milwaukee, Wisconsin 53201-3011.
Firstar Bank, Milwaukee, N.A., an affiliate of the Adviser, provides custodial
services for the Funds and receives fees for those services.
NET ASSET VALUE AND DAYS OF OPERATION
The price of the Retail A, Retail B and Institutional Shares (each, a "class")
is based on net asset value per share. This amount is calculated separately for
each class of shares by dividing the value of all securities and other assets
attributable to the class, less the liabilities attributable to that class, by
the number of outstanding shares of that class. The price at which a purchase or
redemption is effected is based on the next calculation of net asset value after
the order is accepted.
MONEY MARKET FUNDS
The net asset value of the money market funds for purposes of pricing purchase
and redemption orders is determined as of 11:30 a.m. Central time (12:30 p.m.
Central time for Institutional Money Market Fund) and as of the close of regular
trading hours on the Exchange, normally, 3:00 p.m. Central Time, on each day on
which both the Exchange is open for trading and the Federal Reserve Banks'
Fedline System is open. Net asset value per share is calculated by dividing the
value of all securities and other assets owned by each Fund, less the
liabilities charged to the Fund, by the number of the Fund's outstanding shares.
Net asset value is computed using the amortized cost method as permitted by SEC
rules.
- ------------------------------------------------------------------------------
The Company intends to use its best efforts to maintain the net asset value of
each Money Market Fund at $1.00 per share, although there is no assurance that
it will be able to do so.
- ------------------------------------------------------------------------------
NON-MONEY MARKET FUNDS
Net asset value for purposes of pricing purchase and redemption orders is
determined as of the close of regular trading hours on the Exchange, normally,
3:00 p.m. Central time, on each day the Exchange is open for trading.
The Funds' investments are valued based on market quotations, except that
restricted securities and securities for which market quotations are not readily
available and other assets are valued at fair value by the Adviser under the
supervision of the Board of Directors. Short-term investments having a maturity
of 60 days or less are valued at amortized cost, unless the amortized cost does
not approximate market value.
Portfolio securities which are primarily traded on foreign securities exchanges
are generally valued at the preceding closing values of such securities on their
respective exchanges, except when an occurrence subsequent to the time a value
was so established is likely to have changed such value. In such an event, the
fair value of those securities will be determined through the consideration of
other factors by or under the direction of the Board of Directors. A Fund's
foreign securities may trade on weekends or other days when the Fund does not
price its shares. Accordingly, the net asset value per share of a Fund may
change on days when shareowners will not be able to purchase or redeem the
Fund's shares.
Each Fund's securities may be valued based on valuations provided by an
independent pricing service. The Adviser reviews these valuations. If the
Adviser believes that a valuation received from the service does not represent a
fair value, it values the security by a method that the Board of Directors
believes will determine a fair value. Any pricing service used may employ
electronic data processing techniques, including a "matrix" system, to determine
valuations.
Quotations of foreign securities in foreign currency are converted to U.S.
dollar equivalents using the foreign exchange quotation in effect at the time
net asset value is computed. Foreign securities held by the International Equity
Fund may trade in their local markets on days the Fund is closed, and the Fund's
net asset value may, therefore, change on days when investors may not purchase
or redeem Fund shares.
APPENDIX
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years (or, if shorter, the period of the
Fund's operations). Certain information reflects financial results for a single
Fund share. The total returns in the table represent the rate that an investor
would have earned (or lost) on an investment in the Fund (assuming reinvestment
of all dividends and distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the Fund's financial
statements, are included in the Annual Report, which is available upon request.
Contact the Firstar Mutual Funds Services, LLC for a free copy of the Annual
Report or Additional Statement.
<TABLE>
<CAPTIONS>
MONEY MARKET FUNDS Supplemental Data and Ratios
------------------------------------------------
Ratio of
Net Asset Dividends Net Asset Net Assets, Ratio of Net Investment
Value, Net from Net Value, End of Net Expenses Income to
Beginning Investment Investment End of Period to Average Average Net Total
of Period Income Income Period (000s) Net Assets Assets Return
--------- ---------- ---------- ------- --------- ---------- -------- ------
MONEY MARKET FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year Ended 1994 1.00 0.03 (0.03) 1.00 165,018 0.60%<F1> 3.44%<F1> 3.42%
Year Ended 1995 1.00 0.05 (0.05) 1.00 172,261 0.60%<F1> 5.36%<F1> 5.51%
Year Ended 1996 1.00 0.05 (0.05) 1.00 224,036 0.60%<F1> 4.94%<F1> 5.06%
Year Ended 1997 1.00 0.05 (0.05) 1.00 261,017 0.60%<F1> 4.98%<F1> 5.12%
Year Ended 1998 1.00 0.05 (0.05) 1.00 289,088 0.60%<F1> 5.05%<F1> 5.16%
INSTITUTIONAL MONEY
MARKET FUND
Year Ended 1994 1.00 0.04 (0.04) 1.00 754,636 0.37%<F2> 3.64%<F2> 3.65%
Year Ended 1995 1.00 0.06 (0.06) 1.00 716,566 0.35%<F2> 5.63%<F2> 5.77%
Year Ended 1996 1.00 0.05 (0.05) 1.00 750,051 0.35%<F2> 5.19%<F2> 5.32%
Year Ended 1997 1.00 0.05 (0.05) 1.00 1,201,341 0.35%<F2> 5.23%<F2> 5.38%
Year Ended 1998 1.00 0.05 (0.05) 1.00 1,623,970 0.35%<F2> 5.30%<F2> 5.41%
U.S. TREASURY
MONEY MARKET FUND
Year Ended 1994 1.00 0.03 (0.03) 1.00 56,020 0.60%<F3> 3.14%<F3> 3.20%
Year Ended 1995 1.00 0.05 (0.05) 1.00 64,655 0.60%<F3> 5.04%<F3> 5.16%
Year Ended 1996 1.00 0.05 (0.05) 1.00 53,430 0.60%<F3> 4.70%<F3> 4.80%
Year Ended 1997 1.00 0.05 (0.05) 1.00 78,478 0.60%<F3> 4.67%<F3> 4.80%
Year Ended 1998 1.00 0.05 (0.05) 1.00 91,872 0.60%<F3> 4.62%<F3> 4.71%
U.S. GOVERNMENT MONEY
MARKET FUND
Year Ended 1994 1.00 0.03 (0.03) 1.00 183,591 0.60%<F4> 3.29%<F4> 3.35%
Year Ended 1995 1.00 0.05 (0.05) 1.00 163,068 0.60%<F4> 5.24%<F4> 5.37%
Year Ended 1996 1.00 0.05 (0.05) 1.00 198,334 0.60%<F4> 4.84%<F4> 4.96%
Year Ended 1997 1.00 0.05 (0.05) 1.00 198,592 0.60%<F4> 4.83%<F4> 4.99%
Year Ended 1998 1.00 0.05 (0.05) 1.00 233,176 0.60%<F4> 4.90%<F4> 4.97%
TAX-EXEMPT MONEY
MARKET FUND
Year Ended 1994 1.00 0.02 (0.02) 1.00 70,436 0.60%<F5> 2.23%<F5> 2.25%
Year Ended 1995 1.00 0.03 (0.03) 1.00 84,084 0.60%<F5> 3.36%<F5> 3.42%
Year Ended 1996 1.00 0.03 (0.03) 1.00 79,328 0.60%<F5> 3.09%<F5> 3.13%
Year Ended 1997 1.00 0.03 (0.03) 1.00 108,639 0.60%<F5> 3.06%<F5> 3.12%
Year Ended 1998 1.00 0.03 (0.03) 1.00 122,451 0.60%<F5> 3.02%<F5> 3.04%
<FN>
<F1> Without fees waived, ratios of net expenses to average net assets for the
fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994 would have been
0.86%, 0.84%, 0.81%, 0.90%, 0.93%, respectively; and ratios of net investment
income to average net assets for the fiscal years ended October 31, 1998,
1997, 1996, 1995, 1994 would have been 4.79%, 4.73%, 4.73%, 5.06%, 3.11%,
respectively.
<F2> Without fees waived, ratios of net expenses to average net assets for the
fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994 would have been
0.64%, 0.66%, 0.64%, 0.69%, 0.85%, respectively; and ratios of net investment
income to average net assets for the fiscal years ended October 31, 1998,
1997, 1996, 1995, 1994 would have been 5.01%, 4.92%, 4.90%, 5.29%, 3.16%,
respectively.
<F3> Without fees waived, ratios of net expenses to average net assets for the
fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994 would have been
0.77%, 0.78%, 0.80%, 0.83%, 0.94%, respectively; and ratios of net investment
income to average net assets for the fiscal years ended October 31,1998,
1997, 1996, 1995, 1994 would have been 4.45%, 4.49%, 4.50%, 4.81%, 2.80%,
respectively.
<F4> Without fees waived, ratios of net expenses to average net assets for the
fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994 would have been
0.71%, 0.70%, 0.71%, 0.75%, 0.88%, respectively; and ratios of net investment
income to average net assets for the fiscal years ended October 31, 1998, 1997,
1996, 1995, 1994 would have been 4.79%, 4.73%, 4.73%, 5.09%, 3.01%,
respectively.
<F5> Without fees waived, ratios of net expenses to average net assets for the
fiscal years ended Octboer 31, 1998, 1997, 1996, 1995, 1994 would have been
0.75%, 0.75%, 0.78%, 0.84%, 0.93%, respectively; and ratios of net investment
income to average net assets for the fiscal years ended October 31, 1998, 1997,
1996, 1995, 1994 would have been 2.87%, 2.91%, 2.91%, 3.12%, 1.90%,
respectively.
</TABLE>
<TABLE>
<CAPTION>
RETAIL A SHARE BOND FUNDS
Income from Investment Operations Less Distributions
------------------------------------- ---------------------------------------
Net Net Realized and Dividends Distributions
Asset Value, Net Unrealized Gains Total From from Net From
Beginning Investment or (Losses) on Investment Investment Capital Total
of Period Income<F1> Securities Operations Income Gains Distributions
- -----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM
BOND MARKET
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
Year Ended 1994 10.56 0.56 (0.41) 0.15 (0.56) (0.12) (0.68)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 10.03 0.61 0.24 0.85 (0.60) - (0.60)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 10.28 0.58 (0.03) 0.55 (0.58) - (0.58)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 10.25 0.60 0.02 0.62 (0.60) - (0.60)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 10.27 0.58 0.07 0.65 (0.58) - (0.58)
- -----------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE
BOND MARKET
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 10.45 0.51 (0.69) (0.18) (0.51) (0.09) (0.60)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 9.67 0.60 0.53 1.13 (0.59) - (0.59)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 10.21 0.56 (0.02) 0.54 (0.56) - (0.56)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 10.19 0.58 0.12 0.70 (0.58) - (0.58)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 10.31 0.57 0.19 0.76 (0.57) - (0.57)
- -----------------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT
INTERMEDIATE BOND
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 10.26 0.41 (0.48) (0.07) (0.41) - (0.41)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 9.78 0.42 0.45 0.87 (0.42) - (0.42)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 10.23 0.40 (0.01) 0.39 (0.41) - (0.41)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 10.21 0.42 0.14 0.56 (0.42) - (0.42)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 10.35 0.41 0.17 0.58 (0.41) - (0.41)
- -----------------------------------------------------------------------------------------------------------------------------------
BOND IMMDEX/TM
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 28.91 1.65 (2.74) (1.09) (1.65) (0.50) (2.15)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 25.67 1.68 2.30 3.98 (1.79) (0.04) (1.83)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 27.82 1.61 (0.26) 1.35 (1.63) - (1.63)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 27.54 1.66 0.64 2.30 (1.68) - (1.68)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 28.16 1.64 0.85 2.49 (1.64) - (1.64)
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Data and Ratios
-------------------------------------
Ratio of Net
Net Assets, Ratio of Net Investment
Net Asset End of Expenses Income Portfolio
Value, End Total Period to Average to Average Turnover
of Period Return (000s) Net Assets Net Assets Rate
- -----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM
BOND MARKET
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 10.03 1.46% 122,368 0.50%<F3> 5.43%<F3> 76.13%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 10.28 8.74% 47,730 0.69%<F3> 6.04%<F3> 100.58%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 10.25 5.54% 58,843 0.75%<F3> 5.67%<F3> 59.62%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 10.27 6.21% 65,567 0.75%<F3> 5.79%<F3> 77.12%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 10.34 6.58% 75,410 0.75%<F3> 5.67%<F3> 78.20%
- -----------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE
BOND MARKET
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 9.67 (1.73)% 88,306 0.50%<F4> 5.19%<F4> 56.25%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 10.21 12.04% 11,576 0.50%<F4> 6.07%<F4> 66.69%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 10.19 5.51% 17,392 0.50%<F4> 5.59%<F4> 59.29%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 10.31 7.09% 20,691 0.50%<F4> 5.71%<F4> 40.61%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 10.50 7.57% 29,550 0.50%<F4> 5.50%<F4> 27.29%
- -----------------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT
INTERMEDIATE BOND
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 9.78 (0.73)% 26,167 0.60%<F5> 4.04%<F5> 58.54%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 10.24 9.07% 7,711 0.71%<F5> 4.25%<F5> 44.13%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 10.21 3.87% 10,690 0.75%<F5> 3.99%<F5> 30.46%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 10.36 5.60% 19,199 0.75%<F5> 4.11%<F5> 11.22%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 10.52 5.73% 32,466 0.75%<F5> 4.00%<F5> 14.38%
- -----------------------------------------------------------------------------------------------------------------------------------
BOND IMMDEX/TM
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 25.67 (3.89)% 256,778 0.48%<F6> 6.14%<F6> 49.70%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 27.82 16.05% 21,875 0.64%<F6> 6.31%<F6> 41.67%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 27.54 5.06% 42,671 0.68%<F6> 5.98%<F6> 33.38%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 28.16 8.68% 64,144 0.67%<F6> 6.08%<F6> 35.12%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 29.01 9.11% 95,301 0.67%<F6> 5.77%<F6> 20.07%
- -----------------------------------------------------------------------------------------------------------------------------------
<F1> For the Tax-Exempt Intermediate Bond Fund, substantially all investment income is exempt from federal income tax.
<F2> The total return calculation for the Funds does not reflect the maximum sales charge of 3.75%.
<F3> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 1.11%, 1.11%, 1.12%, 1.10%, 0.90%, respectively; and ratios of net investment income to average net
assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 5.31%, 5.43%, 5.30%, 5.63%, 5.03%, respectively.
<F4> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 0.96%, 0.98%, 0.99%, 0.98%, 0.78%, respectively; and 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%, 5.49%, 5.35%, 5.78%,
4.91%, respectively.
<F5> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 1.06%, 1.13%, 1.22%, 1.20%, 0.98%, respectively; and ratios of net investment income to average net
assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994 would have been 3.69%, 3.73%, 3.52%, 3.76%, 3.67%,
respectively.
<F6> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 0.74%, 0.74%, 0.75%, 0.71%, 0.51%, respectively; and ratios of net investment income to average net
assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994, would have been 5.70%, 6.01%, 5.91%, 6.24%, 6.10%,
respectively.
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL BOND FUNDS
Income from Investment Operations Less Distributions
------------------------------------- ---------------------------------------
Net Net Realized and Dividends Distributions
Asset Value, Net Unrealized Gains Total From from Net From
Beginning Investment or (Losses) on Investment Investment Capital Total
of Period Income<F1> Securities Operations Income Gains Distributions
- -----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM
BOND MARKET
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
Year Ended 1994 10.56 0.56 (0.41) 0.15 (0.56) (0.12) (0.68)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 10.03 0.63 0.24 0.87 (0.62) - (0.62)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 10.28 0.61 (0.03) 0.58 (0.61) - (0.61)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 10.25 0.62 0.02 0.64 (0.62) - (0.62)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 10.27 0.61 0.07 0.68 (0.61) - (0.61)
- -----------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE
BOND MARKET
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 10.45 0.51 (0.69) (0.18) (0.51) (0.09) (0.60)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 9.67 0.62 0.53 1.15 (0.61) - (0.61)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 10.21 0.59 (0.02) 0.57 (0.59) - (0.59)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 10.19 0.60 0.12 0.72 (0.60) - (0.60)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 10.31 0.59 0.19 0.78 (0.59) - (0.59)
- -----------------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT
INTERMEDIATE BOND
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 10.26 0.41 (0.48) (0.07) (0.41) - (0.41)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 9.78 0.44 0.46 0.90 (0.44) - (0.44)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 10.24 0.43 (0.03) 0.40 (0.43) - (0.43)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 10.21 0.44 0.15 0.59 (0.44) - (0.44)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 10.36 0.44 0.16 0.60 (0.44) - (0.44)
- -----------------------------------------------------------------------------------------------------------------------------------
BOND IMMDEX/TM
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 28.91 1.65 (2.74) (1.09) (1.65) (0.50) (2.15)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 25.67 1.74 2.29 4.03 (1.84) (0.04) (1.88)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 27.82 1.70 (0.27) 1.43 (1.70) - (1.70)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 27.55 1.75 0.61 2.36 (1.75) - (1.75)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 28.16 1.72 0.85 2.57 (1.71) - (1.71)
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Data and Ratios
-------------------------------------
Ratio of Net
Net Assets, Ratio of Net Investment
Net Asset End of Expenses Income Portfolio
Value, End Total Period to Average to Average Turnover
of Period Return (000s) Net Assets Net Assets Rate
- -----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM
BOND MARKET
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 10.03 1.46% 122,368 0.50%<F2> 5.43%<F2> 76.13%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 10.28 8.95% 94,959 0.50%<F2> 6.23%<F2> 100.58%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 10.25 5.80% 147,466 0.50%<F2> 5.92%<F2> 59.62%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 10.27 6.47% 136,084 0.50%<F2> 6.04%<F2> 77.12%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 10.34 6.84% 120,693 0.50%<F2> 5.92%<F2> 78.20%
- -----------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE
BOND MARKET
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 9.67 (1.73)% 88,306 0.50%<F3> 5.19%<F3> 56.25%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 10.21 12.25% 128,941 0.50%<F3> 6.26%<F3> 66.69%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 10.19 5.77% 173,468 0.50%<F3> 5.84%<F3> 59.29%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 10.31 7.36% 254,521 0.50%<F3> 5.96%<F3> 40.61%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 10.50 7.83% 291,289 0.50%<F3> 5.75%<F3> 27.29%
- -----------------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT
INTERMEDIATE BOND
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 9.78 (0.73)% 26,167 0.60%<F4> 4.04%<F4> 58.54%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 10.24 9.38% 27,595 0.51%<F4> 4.45%<F4> 44.13%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 10.21 4.02% 36,652 0.50%<F4> 4.24%<F4> 30.46%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 10.36 5.96% 52,208 0.50%<F4> 4.36%<F4> 11.22%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 10.52 5.88% 66,427 0.50%<F4> 4.25%<F4> 14.38%
- -----------------------------------------------------------------------------------------------------------------------------------
BOND IMMDEX/TM
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 25.67 (3.89)% 256,778 0.48%<F5> 6.14%<F5> 49.70%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 27.82 16.26% 290,274 0.44%<F5> 6.51%<F5> 41.67%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 27.55 5.35% 370,556 0.43%<F5> 6.23%<F5> 33.38%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 28.16 8.90% 408,018 0.42%<F5> 6.33%<F5> 35.12%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 29.02 9.41% 471,425 0.42%<F5> 6.02%<F5> 20.07%
- -----------------------------------------------------------------------------------------------------------------------------------
<F1> For the Tax-Exempt Intermediate Bond Fund, substantially all investment income is exempt from federal income tax.
<F2> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 0.86%, 0.86%, 0.87%, 0.91%, 0.90%, respectively; and ratios of net investment income to average
net assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994 would have been 5.56%, 5.68%, 5.55%, 5.82%,
5.03%, respectively.
<F3> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 0.71%, 0.73%, 0.74%, 0.79%, 0.78%, respectively; and ratios of net investment income to average
net assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994, would have been 5.54%, 5.74%, 5.60%, 5.97%,
4.91%, respectively.
<F4> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 0.81%, 0.88%, 0.97%, 1.00%, 0.98%, respectively; and ratios of net investment income to average
net assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994 would have been 3.94%, 3.98%, 3.77%, 3.96%,
3.67%, respectively.
<F5> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 0.49%, 0.49% ,0.50%, 0.51%, 0.51%, respectively; and ratios of net investment income to average
net assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994, would have been 5.95%, 6.26%, 6.16%, 6.44%,
6.10%, respectively.
</TABLE>
<TABLE>
<CAPTION>
RETAIL A SHARE EQUITY FUNDS
Income from Investment Operations Less Distributions
------------------------------------- ---------------------------------------
Net Net Realized and Dividends Distributions
Asset Value, Net Unrealized Gains Total From from Net From
Beginning Investment or (Losses) on Investment Investment Capital Total
of Period Income<F1> Securities Operations Income Gains Distributions
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
BALANCED INCOME
- -----------------------------------------------------------------------------------------------------------------------------------
Dec. 1, 1997<F1>
through Oct. 31, 1998 10.00 0.28 0.96 1.24 (0.24) - (0.24)
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCED GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 22.76 0.44 (0.66) (0.22) (0.44) - (0.44)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 22.10 0.49 3.77 4.26 (0.47) - (0.47)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 25.89 0.47 2.64 3.11 (0.47) (0.55) (1.02)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 27.98 0.58 4.19 4.77 (0.59) (1.68) (2.27)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 30.48 0.56 1.86 2.42 (0.58) (2.50) (3.08)
- -----------------------------------------------------------------------------------------------------------------------------------
GROWTH AND INCOME
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 23.70 0.43 (0.03) 0.40 (0.42) (0.59) (1.01)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 23.09 0.37 5.14 5.51 (0.38) (0.60) (0.98)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 27.62 0.42 6.61 7.03 (0.39) (1.19) (1.58)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 33.07 0.37 8.92 9.29 (0.39) (2.73) (3.12)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 39.24 0.36 6.55 6.91 (0.35) (1.39) (1.74)
- -----------------------------------------------------------------------------------------------------------------------------------
EQUITY INDEX
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 33.04 0.77 0.35 1.12 (0.75) - (0.75)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 33.41 0.70 7.70 8.40 (0.68) (0.06) (0.74)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 41.07 0.77 8.69 9.46 (0.78) (0.35) (1.13)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 49.40 0.80 14.33 15.13 (0.81) (0.61) (1.42)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 63.11 0.84 12.58 13.42 (0.84) (1.11) (1.95)
- -----------------------------------------------------------------------------------------------------------------------------------
GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 21.40 0.06 0.06 0.12 (0.05) - (0.05)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 21.47 (0.02) 4.16 4.14 (0.03) - (0.03)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 25.58 (0.07) 4.81 4.74 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 30.32 (0.05) 6.30 6.25 - (1.30) (1.30)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 35.27 (0.02) 5.66 5.64 (0.02) (5.17) (5.19)
- -----------------------------------------------------------------------------------------------------------------------------------
SPECIAL GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 32.34 0.04 0.85 0.89 (0.04) - (0.04)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 33.19 (0.07) 8.49 8.42 - (0.21) (0.21)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 41.40 (0.13) 4.70 4.57 - (4.59) (4.59)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 41.38 (0.20) 8.44 8.24 - (5.26) (5.26)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 44.36 (0.24) (2.07) (2.31) - (4.46) (4.46)
- -----------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
Aug. 15, 1997<F1>
through Oct. 31, 1997 10.00 0.02 0.29 0.31 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 10.31 0.03 (0.71) (0.68) (0.02) (0.05) (0.07)
- -----------------------------------------------------------------------------------------------------------------------------------
MICROCAP
- -----------------------------------------------------------------------------------------------------------------------------------
Aug. 1, 1995<F1>
through June 30, 1996 10.00 (0.02) 6.10 6.08 (0.04) (0.62) (0.66)
- -----------------------------------------------------------------------------------------------------------------------------------
July 1, 1996
through Oct. 31, 1996 15.42 (0.08) 0.82 0.74 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 16.16 (0.18) 4.24 4.06 - (2.75) (2.75)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 17.47 (0.25) (3.17) (3.42) - (1.67) (1.67)
- -----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Apr. 28, 1994<F1>
through Oct. 31, 1994 20.00 0.04 (0.05) (0.01) - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 19.99 0.08 (0.87) (0.79) (0.04) (0.01) (0.05)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 19.15 0.07 1.43 1.50 (0.07) (0.37) (0.44)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 20.21 0.06 (1.10) (1.04) (0.13) (0.46) (0.59)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 18.58 0.20 (3.15) (2.95) (0.08) (0.37) (0.45)
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Data and Ratios
-------------------------------------
Ratio of Net
Net Assets, Ratio of Net Investment
Net Asset End of Expenses Income Portfolio
Value, End Total Period to Average to Average Turnover
of Period Return<F2><F13> (000s) Net Assets<F3> Net Assets<F3> Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
BALANCED INCOME
- -----------------------------------------------------------------------------------------------------------------------------------
Dec. 1, 1997<F1>
through Oct. 31, 1998 11.00 12.46% 10,614 1.00%<F4> 2.82%<F4> 58.33%
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCED GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 22.10 (0.93)% 94,657 0.75%<F5> 2.03%<F5> 59.77%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 25.89 19.55% 21,832 0.94%<F5> 2.05%<F5> 61.87%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 27.98 12.30% 29,034 1.00%<F5> 1.80%<F5> 63.91%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 30.48 18.07% 44,026 1.00%<F5> 2.06%<F5> 69.90%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 29.82 8.60% 59,657 1.00%<F5> 1.91%<F5> 56.44%
- -----------------------------------------------------------------------------------------------------------------------------------
GROWTH AND INCOME
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 23.09 1.84% 164,053 0.90%<F6> 1.89%<F6> 56.85%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 27.62 24.75% 42,424 1.09%<F6> 1.51%<F6> 47.85%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 33.07 26.62% 71,310 1.15%<F6> 1.42%<F6> 51.37%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 39.24 30.47% 128,070 1.12%<F6> 1.09%<F6> 31.36%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 44.41 18.08% 190,331 1.12%<F6> 0.86%<F6> 48.56%
- -----------------------------------------------------------------------------------------------------------------------------------
EQUITY INDEX
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 33.41 3.51% 107,563 0.50%<F7> 2.38%<F7> 13.28%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 41.07 25.79% 18,663 0.66%<F7> 2.14%<F7> 4.61%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 49.40 23.36% 39,656 0.66%<F7> 1.76%<F7> 7.48%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 63.11 31.08% 76,866 0.63%<F7> 1.40%<F7> 9.81%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 74.58 21.63% 110,129 0.58%<F7> 1.18%<F7> 2.91%
- -----------------------------------------------------------------------------------------------------------------------------------
GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 21.47 0.56% 113,197 0.88%<F8> 0.30%<F8> 33.24%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 25.58 19.31% 10,105 1.09%<F8> (0.06)% <F8> 49.84%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 30.32 18.53% 16,636 1.15%<F8> (0.29)% <F8> 56.75%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 35.27 21.30% 25,043 1.14%<F8> (0.16)% <F8> 62.09%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 35.72 18.58% 38,213 1.14%<F8> (0.05)% <F8> 51.82%
- -----------------------------------------------------------------------------------------------------------------------------------
SPECIAL GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 33.19 2.77% 395,584 0.89%<F9> 0.13%<F9> 69.74%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 41.40 25.56% 87,269 1.09%<F9> (0.19)% <F9> 79.25%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 41.38 12.27% 111,159 1.13%<F9> (0.35)% <F9> 103.34%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 44.36 22.18% 147,396 1.12%<F9> (0.50)% <F9> 97.40%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 37.59 (5.91)% 136,146 1.13%<F9> (0.57)% <F9> 77.39%
- -----------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
Aug. 15, 1997<F1>
through Oct. 31, 1997 10.31 3.10% 5,355 1.15%<F10> 0.93%<F10> 14.51%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 9.56 (6.58)% 12,884 1.15%<F10> 0.24%<F10> 132.63%
- -----------------------------------------------------------------------------------------------------------------------------------
MICROCAP
- -----------------------------------------------------------------------------------------------------------------------------------
Aug. 1, 1995<F1>
through June 30, 1996 15.42 63.52% 9,036 1.99%<F11> (0.36)% <F11> 283.67%
- -----------------------------------------------------------------------------------------------------------------------------------
July 1, 1996
through Oct. 31, 1996 16.16 4.80% 9,273 1.97%<F11> (1.69)% <F11> 64.44%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 17.47 29.78% 16,793 1.95%<F11> (1.45)% <F11> 158.39%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 12.38 (21.71)% 12,419 1.99%<F11> (1.63)% <F11> 135.61%
- -----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY
- -----------------------------------------------------------------------------------------------------------------------------------
Apr. 28, 1994<F1>
through Oct. 31, 1994 19.99 (0.05)% 23,756 1.49%<F12> 0.44%<F12> 6.55%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 19.15 (3.95)% 1,633 1.70%<F12> 0.46%<F12> 15.12%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 20.21 7.95% 3,769 1.75%<F12> 0.37%<F12> 31.57%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 18.58 (5.30)% 6,502 1.75%<F12> 0.25%<F12> 97.09%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 15.18 (16.16)% 6,486 1.75%<F12> 1.12%<F12> 43.96%
- -----------------------------------------------------------------------------------------------------------------------------------
<F1> Commencement of operations.
<F2> Not annualized for the period ended October 31, 1998 for the Balanced Income, for the period ended October 31, 1997 for the
Emerging Growth Fund, for the period ended June 30, 1996 and October 31, 1996 for
the MicroCap Fund and for the period ended October 31, 1994 for the International Equity Fund.
<F3> Annualized for the period ended October 31, 1998 for the Balanced Income, for the period ended October 31, 1997 for the
Emerging Growth Fund, for the period ended June 30, 1996 and October 31, 1996 for the
MicroCap Fund and for the period ended October 31, 1994 for the International Equity Fund.
<F4> Without fees waived, ratios of net expenses to average net assets for the period ended October 31, 1998 would have been 1.63%
and ratio of net investment income to average net assets for the period ended
October 31, 1998 would have been 2.19%.
<F5> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 1.24%, 1.25%, 1.28%, 1.25%, 1.05%, respectively; and ratios
of net investment income to average net assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994 would have
been 1.67%, 1.80%, 1.52%, 1.74%, 1.73%, respectively.
<F6> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 1.19%, 1.19%, 1.23%, 1.20%, 1.01%, respectively; and ratios
of net investment income to average net assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994, would have
been 0.79%, 1.02%, 1.35%, 1.40%, 1.78%, respectively.
<F7> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 0.69%, 0.70%, 0.73%, 0.73%, 0.57%, respectively; and ratios
of net investment income to average net assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994 would have
been 1.07%, 1.33%, 1.69%, 2.07%, 2.31%, respectively.
<F8> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 1.21%, 1.21%, 1.23%, 1.21%, 1.00%, respectively; and ratios of net investment income to average net
assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994 would have been (0.12)%, (0.24)%, (0.36)%, (0.18)%,
0.19%, respectively.
<F9> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 1.20%, 1.20%, 1.20%, 1.17%, 0.98%, respectively; and ratios of net investment income to average net
assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994 would have been (0.64)%, (0.57)%, (0.42)%, (0.27)%,
0.04%, respectively.
<F10>Without fees waived, ratios of net expenses to average net assets for the fiscal year ended October 31, 1998 and the period
ended October 31, 1997 would have been 1.42%, 1.59%, respectively; and ratios of net
investment income to average net assets for the fiscal year ended October 31, 1998 and the period ended October 31, 1997 would
have been (0.03)%, 0.59%, respectively.
<F11>Without fees waived, the ratio of net expenses to average net assets for the periods ended October 31, 1998, 1997, 1996 and
June 30, 1996 would have been 2.06%, 2.03%, 2.04% and 2.22%, respectively, and the ratio of net investment income (loss) to
average net assets for the periods ended October 31, 1998, 1997, 1996 and June 30, 1996 would have been (1.70)%, (1.53)%,
(1.76)% and (0.59)%, respectively.
<F12>Without fees waived, ratios of net expenses to average net assets for the fiscal year ended October 31, 1998, 1997, 1996, 1995
and the period ended October 31, 1994 would have been 2.16%, 2.50%, 2.61%, 2.85% and 2.85%, respectively; and ratios of net
investment income to average net assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995 and the period ended
October 31, 1994 would have been 0.71%, (0.50)%, (0.48)%, (0.69)% and (0.92)%, respectively.
<F13>The total return calculations for the Funds do not reflect the maximum sales charge of 4.50%.
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL EQUITY FUNDS
Income from Investment Operations Less Distributions
------------------------------------- ---------------------------------------
Net Net Realized and Dividends Distributions
Asset Value, Net Unrealized Gains Total From from Net From
Beginning Investment or (Losses) on Investment Investment Capital Total
of Period Income Securities Operations Income Gains Distributions
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
BALANCED INCOME
- -----------------------------------------------------------------------------------------------------------------------------------
Dec. 1, 1997<F1> through
Oct. 31, 1998 10.00 0.30 0.96 1.26 (0.25) - (0.25)
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCED GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 22.76 0.44 (0.66) (0.22) (0.44) - (0.44)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 22.10 0.53 3.78 4.31 (0.51) - (0.51)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 25.90 0.55 2.62 3.17 (0.53) (0.55) (1.08)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 27.99 0.66 4.20 4.86 (0.66) (1.68) (2.34)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 30.51 0.62 1.86 2.48 (0.64) (2.50) (3.14)
- -----------------------------------------------------------------------------------------------------------------------------------
GROWTH AND INCOME
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 23.70 0.43 (0.03) 0.40 (0.42) (0.59) (1.01)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 23.09 0.42 5.14 5.56 (0.42) (0.60) (1.02)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 27.63 0.50 6.61 7.11 (0.47) (1.19) (1.66)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 33.08 0.46 8.94 9.40 (0.47) (2.73) (3.20)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 39.28 0.47 6.55 7.02 (0.45) (1.39) (1.84)
- -----------------------------------------------------------------------------------------------------------------------------------
EQUITY INDEX
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 33.04 0.77 0.35 1.12 (0.75) - (0.75)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 33.41 0.76 7.71 8.47 (0.74) (0.06) (0.80)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 41.08 0.91 8.68 9.59 (0.89) (0.35) (1.24)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 49.43 0.95 14.33 15.28 (0.94) (0.61) (1.55)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 63.16 1.02 12.59 13.61 (1.00) (1.11) (2.11)
- -----------------------------------------------------------------------------------------------------------------------------------
GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 21.40 0.06 0.06 0.12 (0.05) - (0.05)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 21.47 0.03 4.16 4.19 (0.05) - (0.05)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 25.61 (0.01) 4.83 4.82 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 30.43 0.04 6.31 6.35 - (1.30) (1.30)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 35.48 0.07 5.70 5.77 (0.03) (5.17) (5.20)
- -----------------------------------------------------------------------------------------------------------------------------------
SPECIAL GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 32.34 0.04 0.85 0.89 (0.04) - (0.04)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 33.19 0.00 8.49 8.49 - (0.21) (0.21)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 41.47 (0.04) 4.74 4.70 - (4.59) (4.59)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 41.58 (0.11) 8.49 8.38 - (5.26) (5.26)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 44.70 (0.14) (2.09) (2.23) - (4.46) (4.46)
- -----------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
Aug. 15, 1997<F1> through
Oct. 31, 1997 10.00 0.02 0.29 0.31 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 10.31 0.05 (0.71) (0.66) (0.02) (0.05) (0.07)
- -----------------------------------------------------------------------------------------------------------------------------------
MICROCAP
- -----------------------------------------------------------------------------------------------------------------------------------
Aug. 1, 1995<F1> through
June 30, 1996 10.00 (0.02) 6.14 6.12 (0.05) (0.62) (0.67)
- -----------------------------------------------------------------------------------------------------------------------------------
July 1, 1996 through
Oct. 31, 1996 15.45 (0.07) 0.82 0.75 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 16.20 (0.15) 4.27 4.12 - (2.75) (2.75)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 17.57 (0.22) (3.19) (3.41) - (1.67) (1.67)
- -----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY
- -----------------------------------------------------------------------------------------------------------------------------------
Apr. 28, 1994<F1> through
Oct. 31, 1994 20.00 0.04 (0.05) (0.01) - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 19.99 0.12 (0.87) (0.75) (0.04) (0.01) (0.05)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 19.19 0.11 1.44 1.55 (0.10) (0.37) (0.47)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 20.27 0.10 (1.10) (1.00) (0.17) (0.46) (0.63)
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 18.64 0.24 (3.16) (2.92) (0.09) (0.37) (0.46)
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Data and Ratios
-------------------------------------
Ratio of Net
Net Assets, Ratio of Net Investment
Net Asset End of Expenses Income Portfolio
Value, End Total Period to Average to Average Turnover
of Period Return (000s) Net Assets Net Assets Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
BALANCED INCOME
- -----------------------------------------------------------------------------------------------------------------------------------
Dec. 1, 1997<F1> through
Oct. 31, 1998 11.01 12.70% 34,036 0.75%<F4> 3.07%<F4> 58.33%
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCED GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 22.10 (0.93)% 94,657 0.75%<F5> 2.03%<F5> 59.77%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 25.90 19.79% 104,552 0.75%<F5> 2.24%<F5> 61.87%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 27.99 12.56% 129,415 0.75%<F5> 2.05%<F5> 63.91%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 30.51 18.39% 164,382 0.75%<F5> 2.31%<F5> 69.90%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 29.85 8.83% 188,123 0.75%<F5> 2.16%<F5> 56.44%
- -----------------------------------------------------------------------------------------------------------------------------------
GROWTH AND INCOME
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 23.09 1.84% 164,053 0.90%<F6> 1.89%<F6> 56.85%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 27.63 25.00% 162,752 0.90%<F6> 1.70%<F6> 47.85%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 33.08 26.90% 226,888 0.90%<F6> 1.67%<F6> 51.37%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 39.28 30.83% 366,020 0.87%<F6> 1.34%<F6> 31.36%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 44.46 18.35% 474,603 0.87%<F6> 1.11%<F6> 48.56%
- -----------------------------------------------------------------------------------------------------------------------------------
EQUITY INDEX
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 33.41 3.51% 107,563 0.50%<F7> 2.38%<F7> 13.28%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 41.08 26.02% 138,106 0.46%<F7> 2.34%<F7> 4.61%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 49.43 23.68% 212,072 0.41%<F7> 2.01%<F7> 7.48%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 63.16 31.38% 315,759 0.38%<F7> 1.66%<F7> 9.81%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 74.66 21.93% 452,752 0.33%<F7> 1.43%<F7> 2.91%
- -----------------------------------------------------------------------------------------------------------------------------------
GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 21.47 0.56% 113,197 0.88%<F8> 0.30%<F8> 33.24%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 25.61 19.55% 134,428 0.90%<F8> 0.13%<F8> 49.84%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 30.43 18.82% 155,293 0.90%<F8> (0.04)%<F8> 56.75%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 35.48 21.56% 181,650 0.89%<F8> 0.09%<F8> 62.09%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 36.05 18.89% 197,798 0.89%<F8> 0.20%<F8> 51.82%
- -----------------------------------------------------------------------------------------------------------------------------------
SPECIAL GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1994 33.19 2.77% 395,584 0.89%<F9> 0.13%<F9> 69.74%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 41.47 25.79% 434,228 0.90%<F9> 0.00%<F9> 79.25%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 41.58 12.58% 482,857 0.88%<F9> (0.10)% <F9> 103.34%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 44.70 22.44% 569,028 0.87%<F9> (0.25)% <F9> 97.40%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 38.01 (5.66)% 464,858 0.88%<F9> (0.32)% <F9> 77.39%
- -----------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
Aug. 15, 1997<F1> through
Oct. 31, 1997 10.31 3.10% 48,044 0.90%<F10> 1.18%<F10> 14.51%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 9.58 (6.35)% 60,400 0.90%<F10> 0.49%<F10> 132.63%
- -----------------------------------------------------------------------------------------------------------------------------------
MICROCAP
- -----------------------------------------------------------------------------------------------------------------------------------
Aug. 1, 1995<F1> through
June 30, 1996 15.45 63.93% 63,595 1.74%<F11> (0.16)% <F11> 283.67%
- -----------------------------------------------------------------------------------------------------------------------------------
July 1, 1996 through
Oct. 31, 1996 16.20 4.85% 66,368 1.72%<F11> (1.44)% <F11> 64.44%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 17.57 30.12% 103,840 1.70%<F11> (1.20)% <F11> 158.39%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 12.49 (21.51)% 72,696 1.74%<F11> (1.38)% <F11> 135.61%
- -----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY
- -----------------------------------------------------------------------------------------------------------------------------------
Apr. 28, 1994<F1> through
Oct. 31, 1994 19.99 (0.05)% 23,756 1.49%<F12> 0.44%<F12> 6.55%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1995 19.19 (3.75)% 31,187 1.50%<F12> 0.66%<F12> 15.12%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1996 20.27 8.21% 43,182 1.50%<F12> 0.62%<F12> 31.57%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1997 18.64 (5.10)% 57,206 1.50%<F12> 0.50%<F12> 97.09%
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended 1998 15.26 (15.97)% 44,670 1.50%<F12> 1.37%<F12> 43.96%
- -----------------------------------------------------------------------------------------------------------------------------------
<F1> Commencement of operations.
<F2> Not annualized for the period ended October 31, 1998 for the Balanced Income, for the period ended October 31, 1997 for the
Emerging Growth Fund, for the period ended June 30, 1996 and
October 31, 1996 for the MicroCap Fund and for the period ended October 31, 1994 for the International Equity Fund.
<F3> Annualized for the period ended October 31, 1998 for the Balanced Income, for the period ended October 31, 1997 for the
Emerging Growth Fund, for the period ended June 30, 1996 and
October 31, 1996 for the MicroCap Fund and for the period ended October 31, 1994 for the International Equity Fund.
<F4> Without fees waived, ratios of net expenses to average net assets for the period ended October 31, 1998 would have been 1.38%
and ratio of net investment income to average net assets for the period
ended October 31, 1998 would have been 2.44%.
<F5> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 0.99%, 1.00%, 1.03%, 1.06%, 1.05%, respectively;
and ratios of net investment income to average net assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994
would have been 1.92%, 2.05%, 1.77%, 1.93%, 1.73%, respectively.
<F6> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 0.94%, 0.94%, 0.98%, 1.01%, 1.01%, respectively;
and ratios of net investment income to average net assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994
would have been 1.04%, 1.27%, 1.59%, 1.59%, 1.78%, respectively.
<F7> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 0.44%, 0.45%, 0.48%, 0.53%, 0.57%, respectively;
and ratios of net investment income to average net assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994
would have been 1.32%, 1.59%, 1.94%, 2.27%, 2.31%, respectively.
<F8> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 0.96%, 0.96%, 0.98%, 1.02%, 1.00%, respectively; and ratios of net investment income to average net
assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994 would have been 0.13%, 0.01%, (0.12)%, 0.01%, 0.19%,
respectively.
<F9> Without fees waived, ratios of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997, 1996,
1995, 1994 would have been 0.95%, 0.95%, 0.95%, 0.98%, 0.98%, respectively; and ratios of net investment income to average net
assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995, 1994 would have been (0.39)%, (0.32)%, (0.17)%, (0.08)%,
0.04%, respectively.
<F10> Without fees waived, ratios of net expenses to average net assets for the fiscal year ended October 1998 and for the period
ended October 31, 1997 would have been 1.17%, 1.24%, respectively; and ratios of net investment income to average net assets
for the fiscal year ended October 1998 and for the period ended October 31, 1997 would have been 0.22%, 0.84%, respectively.
<F11> Without fees waived, the ratio of net expenses to average net assets for the fiscal years ended October 31, 1998, 1997 and for
the periods ended October 31, 1996 and June 30, 1996 would have been 1.81%, 1.78%, 1.79% and 1.97%, respectively, and the ratio
of net investment income (loss) to average net assets for the fiscal years ended October 31, 1998, 1997 and for the periods
ended October 31, 1996 and June 30, 1996 would have been (1.45)%, (1.28)%, (1.51)% and (0.39)%, respectively.
<F12> Without fees waived, ratios of net expenses to average net assets for the fiscal year ended October 31, 1998, 1997, 1996, 1995
and the period ended October 31, 1994 would have been 1.92%, 2.25%, 2.36%, 2.65% and 2.85%, respectively; and ratios of net
investment income to average net assets for the fiscal years ended October 31, 1998, 1997, 1996, 1995 and the period ended
October 31, 1994 would have been 0.96%, (0.25)%, (0.24)%, (0.49)% and (0.92)%, respectively.
<FN> Effective September 2, 1997, Hansberger Global Investors assumed the investment sub-advisory responsibilities of State Street
Global Advisers.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUNDS' ADDITIONAL
STATEMENT INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS OR THEIR
DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUNDS OR BY
THEIR DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE
MADE.
"STANDARD & POOR'SR", S&PR", "S&P 500R", "STANDARD & POOR'S 500", AND "500" ARE
TRADEMARKS OF THE MCGRAW HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE BY
FIRSTAR FUNDS. THE EQUITY INDEX FUND IS NOT SPONSORED, ENDORSED, SOLD OR
PROMOTED BY STANDARD & POOR'S AND STANDARD & POOR'S MAKES NO
REPRESENTATION REGARDING THE ADVISABILITY OF INVESTING IN THE EQUITY INDEX FUND.
THE LEHMAN BROTHERS 1-3 YEAR GOVERNMENT/CORPORATE BOND INDEX, THE LEHMAN
BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX AND THE LEHMAN BROTHERS
GOVERNMENT/CORPORATE BOND INDEX ARE TRADEMARKS OF LEHMAN BROTHERS. THE FUND, ITS
ADVISER AND THE CO-ADMINISTRATORS ARE NOT AFFILIATED IN ANY WAY WITH LEHMAN
BROTHERS. INCLUSION OF A SECURITY IN THE BOND INDEX IN NO WAY IMPLIES AN OPINION
BY LEHMAN BROTHERS AS TO ITS ATTRACTIVENESS OR APPROPRIATENESS AS AN INVESTMENT.
LEHMAN BROTHERS' PUBLICATION OF THE BOND INDEX IS NOT MADE IN CONNECTION WITH
ANY SALE OR OFFER FOR SALE OF SECURITIES OR ANY SOLICITATIONS OF ORDERS FOR
THE PURCHASE OF SECURITIES.
FOR MORE INFORMATION
ANNUAL/SEMIANNUAL REPORTS
Additional information about the Funds' investments is available in the Funds'
annual and semiannual reports to shareowners. In the Funds' annual reports, you
will find a discussion of the market conditions and investment strategies that
significantly affected the Funds' performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION
Additional information about the Funds and their policies is also available in
the Funds' Statement of Additional Information ("Additional Statement"). The
Additional Statement is incorporated by reference into this Prospectus (and is
legally considered part of this Prospectus).
The Funds' annual and semiannual reports and the Additional Statement are
available free upon request by calling Firstar Funds at 1-800-228-1024 or 1-414-
287-3808.
To obtain other information and for shareowner inquiries:
By telephone - call 1-800-228-1024 or 1-414-287-3808
By mail - Firstar Funds
615 East Michigan Street
P.O. Box 3011
Milwaukee, Wisconsin 53201-3011
By e-mail - [email protected]
On the Internet - Text only version of the Funds' documents are located online
and may be downloaded from: SEC - http://www.sec.gov
You may review and obtain copies of Fund documents by visiting the SEC's Public
Reference Room in Washington, D.C. You may also obtain copies of Fund documents
by sending your request and a duplicating fee to the SEC's Public Reference
Section, Washington, D.C. 20549-6009. Information on the operation of the public
reference room may be obtained by calling the SEC at 1-800-SEC-0330.
The Fund's Investment Company Act File Number is 811-5380
</TABLE>
