Fountain
Square
Commercial
Paper Fund
(Logo)
Fifth Third Bank
Investment Advisor
Fountain Square Funds
Semi-Annual Report
to Shareholders
January 31, 1994
FEDERATED SECURITIES CORP. is the distributor of the funds.
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the January 31, 1994 Semi-Annual Report to Shareholders
of Fountain Square Commercial Paper Fund (the "Fund"). The following pages
contain the Fund's Investment Review, followed by Financial Statements which
include the Portfolio of Investments. In addition, Financial Highlights tables
have been included for both Investment Shares and Trust shares.
The Fund continues to be a practical way to put your cash to work pursuing
competitive money market income, stability of principal* and daily access to
your money through a diversified portfolio of short-term, high quality money
market securities.
During the six-month reporting period, dividends paid to shareholders totaled $3
million. At the end of the period, net assets grew to $221 million.
Thank you for choosing Fountain Square Commercial Paper Fund to put your cash to
work. We will continue to keep you up to date on your investment. As always, we
welcome your questions or comments.
Sincerely,
J. Christopher Donahue
President
March 15, 1993
* Although no money market mutual fund can guarantee a stable $1.00 share value,
the Fund has done so since its inception.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Fountain Square Commercial Paper Fund is a no load money market mutual fund
which invests at least 65% of its assets in commercial paper of high quality
companies, and the remaining 35% of its assets in certificates of deposit, time
deposits, and repurchase agreements. The Fund is maintaining a short maturity
strategy with its overall maturity ranging from 28 to 33 days.
The short-term interest rate environment has changed significantly in recent
months. After five years of falling or stable short-term interest rates, the
fixed income market has entered a new cycle of rising rates. Indications of a
growing economy coupled with inflationary control actions by the Federal Reserve
have driven short-term interest rates upward. As a result, commercial paper
rates have increased. Further examination of the commercial paper market reveals
higher interest rate spreads against comparable Treasuries exist with 30 day
commercial paper versus 90 day commercial paper.
In this environment, we believe the short maturity strategy will capitalize on
rising short-term rates and will provide shareholders with a competitive yield
without compromising the conservative structure of the Fund. As economic and
market conditions change, investment strategies will be implemented to best
serve the shareholders of the Fund.
FOUNTAIN SQUARE COMMERCIAL PAPER FUND
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMERCIAL PAPER--76.3%
- ----------------------------------------------------------------------------------
BANKING--14.5%
------------------------------------------------------------------
Banc One Corp.
------------------------------------------------------------------
$10,000,000 3.125%, 3/24/94-4/15/94 $ 9,945,470
------------------------------------------------------------------
Bankers Trust New York Corp.
------------------------------------------------------------------
6,000,000 3.125%, 3/1/94 5,985,627
------------------------------------------------------------------
Deutsche Bank Financial Inc.
------------------------------------------------------------------
5,000,000 3.15%, 4/5/94 4,972,175
------------------------------------------------------------------
Rabobank Nederland
------------------------------------------------------------------
2,000,000 3.10%, 3/16/94 1,992,499
------------------------------------------------------------------
Republic New York Corp.
------------------------------------------------------------------
8,000,000 3.10%, 2/10/94-6/17/94 7,960,350
------------------------------------------------------------------
US West Financial Corp.
------------------------------------------------------------------
1,150,000 3.10%, 2/23/94 1,147,871
------------------------------------------------------------------ ------------
Total 32,003,992
------------------------------------------------------------------ ------------
CHEMICAL--1.4%
------------------------------------------------------------------
duPont (E.I.) deNemours and Company
------------------------------------------------------------------
3,000,000 3.10%, 2/16/94 2,996,188
------------------------------------------------------------------ ------------
CONSUMER PRODUCTS--6.5%
------------------------------------------------------------------
Pfizer Inc.
------------------------------------------------------------------
3,000,000 3.11%, 2/24/94 2,994,193
------------------------------------------------------------------
Procter & Gamble Company
------------------------------------------------------------------
11,400,000 3.11%, 2/1/94-4/11/94 11,365,934
------------------------------------------------------------------ ------------
Total 14,360,127
------------------------------------------------------------------ ------------
</TABLE>
FOUNTAIN SQUARE COMMERCIAL PAPER FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMERCIAL PAPER--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--AUTOMOTIVE--1.8%
------------------------------------------------------------------
Toyota Motor Credit Corp.
------------------------------------------------------------------
$ 4,000,000 3.10%, 2/16/94-10/3/94 $ 3,952,463
------------------------------------------------------------------ ------------
FINANCE--COMMERCIAL--7.0%
------------------------------------------------------------------
General Electric Capital Corp.
------------------------------------------------------------------
8,000,000 3.11%, 3/11/94-6/16/94 7,959,745
------------------------------------------------------------------
Pitney Bowes Credit Corp.
------------------------------------------------------------------
7,487,000 3.11%, 2/15/94-4/12/94 7,446,593
------------------------------------------------------------------ ------------
Total 15,406,338
------------------------------------------------------------------ ------------
FOOD & BEVERAGE--10.6%
------------------------------------------------------------------
Anheuser Busch Corp.
------------------------------------------------------------------
11,000,000 3.125%, 6/15/94 10,865,702
------------------------------------------------------------------
Heinz (H.J.)
------------------------------------------------------------------
1,000,000 3.11%, 3/10/94 996,840
------------------------------------------------------------------
Kellogg Co.
------------------------------------------------------------------
2,000,000 3.11%, 2/23/94 1,996,272
------------------------------------------------------------------
Sara Lee Corp.
------------------------------------------------------------------
9,500,000 3.10%, 2/2/94-3/3/94 9,491,123
------------------------------------------------------------------ ------------
Total 23,349,937
------------------------------------------------------------------ ------------
FOREST PRODUCTS--0.9%
------------------------------------------------------------------
Kimberly Clark
------------------------------------------------------------------
2,000,000 3.11%, 3/2/94 1,995,118
------------------------------------------------------------------ ------------
FUNDING CORPORATION--3.1%
------------------------------------------------------------------
Prudential Funding Corp.
------------------------------------------------------------------
7,000,000 3.11%, 2/14/94-5/20/94 6,959,388
------------------------------------------------------------------ ------------
INSURANCE--3.2%
------------------------------------------------------------------
AIG Funding, Inc.
------------------------------------------------------------------
7,000,000 3.125%, 3/4/94-3/30/94 6,971,964
------------------------------------------------------------------ ------------
</TABLE>
FOUNTAIN SQUARE COMMERCIAL PAPER FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
*COMMERCIAL PAPER--CONTINUED
- ----------------------------------------------------------------------------------
OIL & GAS--6.3%
------------------------------------------------------------------
Chevron USA, Inc.
------------------------------------------------------------------
$ 9,000,000 3.15%, 2/4/94-2/15/94 $ 8,993,007
------------------------------------------------------------------
Exxon Supply Corp.
------------------------------------------------------------------
5,000,000 3.10%, 2/11/94 4,995,764
------------------------------------------------------------------ ------------
Total 13,988,771
------------------------------------------------------------------ ------------
PHARMACEUTICALS & HEALTH CARE--7.2%
------------------------------------------------------------------
Lilly (Eli) & Co.
------------------------------------------------------------------
4,000,000 3.10%, 2/8/94 3,997,581
------------------------------------------------------------------
Schering-Plough
------------------------------------------------------------------
6,000,000 3.10%, 4/26/94 5,957,020
------------------------------------------------------------------
Warner-Lambert
------------------------------------------------------------------
6,000,000 3.10%, 3/7/94 5,982,292
------------------------------------------------------------------ ------------
Total 15,936,893
------------------------------------------------------------------ ------------
TELECOMMUNICATIONS--10.1%
------------------------------------------------------------------
Ameritech Corp.
------------------------------------------------------------------
11,500,000 3.125%, 2/8/94-4/18/94 11,454,707
------------------------------------------------------------------
Bell South Telecommunications
------------------------------------------------------------------
11,000,000 3.125%, 2/7/94-4/11/94 10,960,621
------------------------------------------------------------------ ------------
Total 22,415,328
------------------------------------------------------------------ ------------
UTILITIES--3.7%
------------------------------------------------------------------
Consolidated Natural Gas
------------------------------------------------------------------
8,120,000 3.15%, 2/8/94-2/22/94 8,109,481
------------------------------------------------------------------ ------------
TOTAL COMMERCIAL PAPER 168,445,988
------------------------------------------------------------------ ------------
</TABLE>
FOUNTAIN SQUARE COMMERCIAL PAPER FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
**REPURCHASE AGREEMENTS--24.0%
- ----------------------------------------------------------------------------------
$18,000,000 B.T. Securities Corp, 3.15%, dated 1/31/94, due 2/1/94 $ 18,000,000
------------------------------------------------------------------
17,000,000 Deutsche Bank Capital Corp, 3.10%, dated 1/31/94, due 2/1/94 17,000,000
------------------------------------------------------------------
17,962,000 Prudential Securities Corp., 3.10%, dated 1/31/94, due 2/1/94 17,962,000
------------------------------------------------------------------ ------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 52,962,000
------------------------------------------------------------------ ------------
TOTAL INVESTMENTS, AT AMORTIZED COST 221,407,988+
------------------------------------------------------------------ ------------
</TABLE>
* Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
** Repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($220,745,416) at January 31, 1994.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE COMMERCIAL PAPER FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------
Investments in other securities $168,445,988
- -----------------------------------------------------------------
Investments in repurchase agreements (Note 2B) 52,962,000
- ----------------------------------------------------------------- ------------
Total investments, at amortized cost and value (Note 2A) $221,407,988
- --------------------------------------------------------------------------------
Cash 460
- --------------------------------------------------------------------------------
Interest receivable 10,279
- --------------------------------------------------------------------------------
Deferred expenses (Note 2F) 546
- -------------------------------------------------------------------------------- ------------
Total assets 221,419,273
- --------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------
Dividends payable 575,223
- -----------------------------------------------------------------
Accrued expenses 98,634
- ----------------------------------------------------------------- ------------
Total liabilities 673,857
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 220,745,416 shares of beneficial interest outstanding $220,745,416
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
Trust Shares ($213,567,880 / 213,567,880 shares of beneficial interest
outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
Investment Shares ($7,177,536 / 7,177,536 shares of beneficial interest
outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE COMMERCIAL PAPER FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------
Interest income (Note 2C) $3,589,824
- ------------------------------------------------------------------------------------
EXPENSES--
- ------------------------------------------------------------------------------------
Investment advisory fee (Note 5) $ 453,979
- ----------------------------------------------------------------------
Administrative personnel and services fees (Note 5) 131,722
- ----------------------------------------------------------------------
Custodian fee (Note 5) 13,027
- ----------------------------------------------------------------------
Recordkeeper, transfer and dividend disbursing agent fees and
expenses (Note 5) 35,443
- ----------------------------------------------------------------------
Distribution services fee (Note 5) 10,775
- ----------------------------------------------------------------------
Fund share registration costs 22,724
- ----------------------------------------------------------------------
Legal fees 4,226
- ----------------------------------------------------------------------
Auditing fees 8,459
- ----------------------------------------------------------------------
Printing and postage 11,371
- ----------------------------------------------------------------------
Miscellaneous 16,156
- ---------------------------------------------------------------------- ----------
Total expenses 707,882
- ----------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------
Waiver of investment advisory fee (Note 5) $124,850
- -----------------------------------------------------------
Waiver of custodian fee (Note 5) 13,027
- -----------------------------------------------------------
Waiver of distribution services fee (Note 5) 10,775 148,652
- ----------------------------------------------------------- -------- ----------
Net expenses 559,230
- ------------------------------------------------------------------------------------ ----------
Net investment income $3,030,594
- ------------------------------------------------------------------------------------ ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE COMMERCIAL PAPER FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------
1994* 1993
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------
Net investment income $ 3,030,594 $ 5,481,504
- -------------------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- --------------------------------------------------------------
Dividends to shareholders from net investment income:
- --------------------------------------------------------------
Trust Shares (2,947,708) (5,400,274)
- --------------------------------------------------------------
Investment Shares (82,886) (81,230)
- -------------------------------------------------------------- ------------- -------------
Change in net assets from distributions to shareholders (3,030,594) (5,481,504)
- -------------------------------------------------------------- ------------- -------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- --------------------------------------------------------------
Proceeds from sale of shares 503,614,268 780,791,408
- --------------------------------------------------------------
Cost of shares redeemed (467,648,089) (790,320,524)
- -------------------------------------------------------------- ------------- -------------
Change in net assets from Fund share transactions 35,966,179 (9,529,116)
- -------------------------------------------------------------- ------------- -------------
Change in net assets 35,966,179 (9,529,116)
- --------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------
Beginning of period 184,779,237 194,308,353
- -------------------------------------------------------------- ------------- -------------
End of period $ 220,745,416 $ 184,779,237
- -------------------------------------------------------------- ------------- -------------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE COMMERCIAL PAPER FUND
FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31,
-------------------
1994* 1993**
------ ------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00
- --------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------
Net investment income 0.01 0.03
- -------------------------------------------------------------------- ----- ------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------
Dividends to shareholders from net investment income (0.01 ) (0.03)
- -------------------------------------------------------------------- ----- ------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00
- -------------------------------------------------------------------- ----- ------
TOTAL RETURN*** 1.35 % 2.70%
- --------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------
Expenses 0.49 %(a) 0.48%(a)
- --------------------------------------------------------------------
Net investment income 2.67 %(a) 2.69%(a)
- --------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.47 %(a) 0.47%(a)
- --------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------
Net assets, end of period (000 omitted) $7,178 $4,714
- --------------------------------------------------------------------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
** Reflects operations for the period from August 11, 1992 (the date of initial
public investment) to July 31, 1993.
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE COMMERCIAL PAPER FUND
FINANCIAL HIGHLIGHTS
TRUST SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------------------------------------------------------
1994** 1993 1992 1991 1990 1989*
-------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------
Net investment income 0.01 0.03 0.04 0.07 0.08 0.01
- ------------------------------------------ -------- -------- -------- -------- -------- -------
LESS DISTRIBUTIONS
- ------------------------------------------
Dividends to shareholders from net
investment income (0.01) (0.03) (0.04) (0.07) (0.08) (0.01)
- ------------------------------------------ -------- -------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------ -------- -------- -------- -------- -------- -------
TOTAL RETURN*** 1.35% 2.78% 4.27% 6.89% 8.22% 1.19%
- ------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------
Expenses 0.49%(a) 0.48% 0.46% 0.50% 0.53% 0.45%(a)
- ------------------------------------------
Net investment income 2.67%(a) 2.75% 4.19% 6.61% 7.86% 8.95%(a)
- ------------------------------------------
Expense waiver/reimbursement (b) 0.12%(a) 0.12% 0.14% 0.14% 0.16% 0.35%(a)
- ------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------
Net assets, end of period
(000 omitted) $213,568 $180,065 $194,308 $213,889 $174,727 $62,225
- ------------------------------------------
</TABLE>
* Reflects operations for the period from June 14, 1989 (date of initial
public offering) to July 31, 1989. For the period from the start of
business, May 3, 1989 to June 13, 1989, net investment income aggregating
$0.01 per share ($1,093) was distributed to Federated Administrative
Services.
** Six months ended January 31, 1994 (unaudited).
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE COMMERCIAL PAPER FUND
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Fountain Square Funds (the "Trust") is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end, management investment
company. The Trust currently consists of nine portfolios. The financial
statements included herein are only those of Fountain Square Commercial Paper
Fund (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.
The Fund provides two classes of shares ("Trust Shares" and "Investment
Shares"). Investment Shares are identical in all respects to Trust Shares except
that Investment Shares are sold pursuant to a Distribution Plan ("Plan") adopted
in accordance with Rule 12b-1 under the Investment Company Act of 1940.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Board of Trustees ("Trustees") has determined that
the best method currently available for valuing portfolio securities is
amortized cost. The Fund's use of the amortized cost method to value its
portfolio securities is conditioned on its compliance with Rule 2a-7 under
the Investment Company Act of 1940.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System or to have segregated within the custodian bank's vault,
all securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Fund to
monitor on a daily basis, the market value of each repurchase agreement's
underlying securities to ensure the existence of a proper level of
collateral.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are deemed by
the Trust's adviser to be creditworthy pursuant to guidelines established by
the Trustees. Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral securities.
FOUNTAIN SQUARE COMMERCIAL PAPER FUND
- --------------------------------------------------------------------------------
C. INCOME--Interest income is recorded on the accrual basis. Interest income
includes interest and discount earned (net of premium), including original
issue discount as required by the Internal Revenue Code, plus realized net
gains, if any, on portfolio securities.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and
distribute to shareholders each year all of its taxable income. Accordingly,
no provision for federal income tax is necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities and maintains security positions such that sufficient liquid
assets will be available to make payment for the securities purchased.
Securities purchased on a when-issued or delayed delivery basis are marked to
market daily and begin earning interest on the settlement date.
F. DEFERRED EXPENSES--Costs incurred by the Fund in connection with its initial
share registration, other than organization expenses, were deferred and are
being amortized on a straight-line basis through June 13, 1994.
G. OTHER--Investment transactions are accounted for on the trade date of the
transaction.
(3) DIVIDENDS
The Fund computes its net income daily and, immediately prior to the calculation
of its net asset value at the close of business, declares and records dividends
to shareholders of record at the time of the previous computation of the Fund's
net asset value. Payment of dividends is made monthly in cash, or in additional
shares at the net asset value on the payable date.
FOUNTAIN SQUARE COMMERCIAL PAPER FUND
- --------------------------------------------------------------------------------
(4) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At
January 31, 1994, capital paid in aggregated $220,745,416. Transactions in Fund
shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------
TRUST SHARES 1994* 1993
- ---------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Shares outstanding, beginning of period 180,064,721 194,308,253
- ----------------------------------------------------------------
Shares sold 493,686,003 763,105,620
- ----------------------------------------------------------------
Shares redeemed (460,182,844) (777,349,152)
- ---------------------------------------------------------------- ------------ ------------
Shares outstanding, end of period 213,567,880 180,064,721
- ---------------------------------------------------------------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------
INVESTMENT SHARES 1994* 1993
- ----------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Shares outstanding, beginning of period 4,714,516 100
- -----------------------------------------------------------------
Shares sold 9,928,265 17,685,788
- -----------------------------------------------------------------
Shares redeemed (7,465,245) (12,971,372)
- ----------------------------------------------------------------- ---------- -----------
Shares outstanding, end of period 7,177,536 4,714,516
- ----------------------------------------------------------------- ---------- -----------
</TABLE>
* Six months ended January 31, 1994.
(5) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Fifth Third Bank, the Fund's investment adviser ("Adviser"), receives for its
services an annual investment advisory fee equal to .40 of 1% of the Fund's
average daily net assets. The Adviser may voluntarily choose to waive a portion
of its fee or reimburse certain operating expenses of the Fund. For the six
months ended January 31, 1994, Fifth Third Bank earned an investment advisory
fee of $453,979 of which $124,850 was voluntarily waived.
Administrative personnel and services were provided by Federated Administrative
Services ("FAS") at an annual rate of .15 of 1% on the first $250 million, .125
of 1% on the next $250 million, .10 of 1% on the next $250 million, and .075 of
1% on total average aggregate daily net assets of the Trust in excess of $750
million. FAS may voluntarily waive a portion of its fee. During the six months
ended January 31, 1994, FAS earned an administrative fee of $131,722.
Expenses of organizing the Fund ($34,678) were borne initially by FAS. The Fund
has agreed to reimburse FAS at an annual rate of .005 of 1% of average daily net
assets, until the organization expenses initially borne by FAS are reimbursed,
or five years from June 14, 1989, the date the Trust's portfolio become
effective, whichever occurs earlier. During the six months ended January 31,
1994, the Fund paid FAS $5,026 pursuant to this agreement.
FOUNTAIN SQUARE COMMERCIAL PAPER FUND
- --------------------------------------------------------------------------------
Fifth Third Bank, the Fund's custodian, earned $13,027, all of which was
voluntarily waived.
The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the assets of the
Investment Shares, for fees it paid which relate to the distribution and
administration of the Investment Shares. The Plan provides that the Investment
Shares may incur distribution expenses up to 0.35% of the average daily net
assets of the Investment Shares annually to pay commissions, maintenance fees
and to compensate the distributor. During the six months ended January 31, 1994,
FSC earned a distribution services fee of $10,775, all of which was voluntarily
waived.
Fifth Third Bank is the transfer agent for the Fund. Certain of the Officers and
Trustees of the Fund are Officers and Trustees of FAS.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
Lee A. Carter
J. Christopher Donahue
President and Treasurer
Edward Burke Carey
Craig P. Churman
J. Christopher Donahue
Vice President and Assistant
Treasurer
Jay S. Neuman
Albert E. Harris
Secretary
Mutual funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Fund's prospectus, which contains facts concerning its
objective and policies, management fees, expenses, and other information.
Fountain
Square
Government
Cash Reserves
Fund
Fountain Square Funds
(Logo)
Fifth Third Bank
Investment Advisor
Semi-Annual Report
to Shareholders
January 31, 1994
FEDERATED SECURITIES CORP. is the Distributor of the Funds.
2022415 (3/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the January 31, 1994 Semi-Annual Report to Shareholders
of Fountain Square Government Cash Reserves Fund (the "Fund"). The Report begins
with the Fund's Investment Review, followed by Financial Statements which
include the Portfolio of Investments. In addition, Financial Highlights tables
have been included for both Trust Shares and Investment Shares.
The Fund continues to put your cash to work pursuing competitive money market
income through a diversified portfolio of short-term U.S. government agency
securities. The Fund also pursues stability of principal* while offering you
daily access to your money.
During the six-month reporting period, dividends paid to shareholders totaled
$1.5 million. At the end of the period, net assets rose to $128 million.
Thank you for choosing Fountain Square Government Cash Reserves Fund to put your
cash to work. We will continue to keep you up to date on your investment. As
always, we welcome your questions or comments.
Sincerely,
J. Christopher Donahue
President
March 15, 1993
* Although no money market mutual fund can guarantee a stable $1.00 share value,
the Fund has done so since its inception.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Fountain Square Government Cash Reserves Fund is a no-load money market mutual
fund which invests in short-term U.S. government securities. The Fund intends to
limit its investments to U.S. government securities paying interest which, if
owned directly by the shareholders of the Fund, would generally be exempt from
state personal income tax. However, from time to time, the Fund managers may
invest in other U.S. government securities if deemed advantageous to do so.
Currently, the Fund is maintaining a short maturity strategy with its average
maturity ranging from 30 to 37 days.
The short-term interest rate environment has changed significantly in recent
months. After five years of falling or stable short-term interest rates, the
fixed income market has entered a new cycle of rising rates. Indications of a
growing economy coupled with inflationary control actions by the Federal Reserve
have driven short-term interest rates upward. As a result, three-month Treasury
bills have moved from a 2.96% low in late September to a substantially higher
3.45% in February.
In this environment, we believe the short maturity strategy will capitalize on
rising short-term rates and will provide shareholders with a competitive yield
without compromising the conservative structure of the Fund. As economic and
market conditions change, investment strategies will be implemented to best
serve the shareholders of the Fund.
FOUNTAIN SQUARE GOVERNMENT CASH RESERVES FUND
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
SHORT-TERM OBLIGATIONS--100.2%
- ------------------------------------------------------------------------------------
$50,855,000 * Federal Farm Credit Bank Discount Notes
3.05%-3.246%, 2/2/94-5/17/94 $ 50,715,704
----------------------------------------------------------------
59,065,000 * Federal Home Loan Bank Discount Notes
3.00%-3.18%, 2/1/94-6/13/94 58,902,372
----------------------------------------------------------------
19,000,000 Student Loan Marketing Association Master Note
3.02%, 2/1/94 19,000,000
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST $128,618,076+
---------------------------------------------------------------- ------------
</TABLE>
* Each issue shows the rate of discount at the time of purchase.
+ Also represents cost for federal tax purposes.
Note: The category of investments is shown as a percentage of net assets
($128,319,826) at January 31, 1994.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE GOVERNMENT CASH RESERVES FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------
Investments, at amortized cost and value (Note 2A) $128,618,076
- -------------------------------------------------------------------------------
Cash 122
- -------------------------------------------------------------------------------
Interest receivable 51,930
- -------------------------------------------------------------------------------
Deferred expenses (Note 2F) 14,690
- ------------------------------------------------------------------------------- ------------
Total assets 128,684,818
- -------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------
Dividends payable $303,482
- --------------------------------------------------------------------
Accrued expenses 61,510
- -------------------------------------------------------------------- --------
Total liabilities 364,992
- ------------------------------------------------------------------------------- ------------
NET ASSETS for 128,319,826 shares of beneficial interest outstanding $128,319,826
- ------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
Trust Shares ($120,474,903 / 120,474,903 shares of beneficial interest
outstanding) $1.00
- ------------------------------------------------------------------------------- ------------
Investment Shares ($7,844,923 / 7,844,923 shares of beneficial interest
outstanding) $1.00
- ------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE GOVERNMENT CASH RESERVES FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------
Interest income (Note 2C) $1,767,332
- -----------------------------------------------------------------------------------
EXPENSES--
- -----------------------------------------------------------------------------------
Investment advisory fee (Note 5) $223,192
- -----------------------------------------------------------------------
Administrative personnel and services fees (Note 5) 64,696
- -----------------------------------------------------------------------
Custodian fee (Note 5) 9,770
- -----------------------------------------------------------------------
Recordkeeper, transfer and dividend disbursing agent fees and
expenses (Note 5) 19,706
- -----------------------------------------------------------------------
Distribution services fee (Note 5) 16,308
- -----------------------------------------------------------------------
Legal fees 5,467
- -----------------------------------------------------------------------
Auditing fees 8,027
- -----------------------------------------------------------------------
Printing and postage 5,918
- -----------------------------------------------------------------------
Fund share registration costs 17,354
- -----------------------------------------------------------------------
Miscellaneous 3,845
- ----------------------------------------------------------------------- --------
Total expenses 374,283
- -----------------------------------------------------------------------
Deduct--
- -----------------------------------------------------------------------
Waiver of investment advisory fee (Note 5) $79,003
- -------------------------------------------------------------
Waiver of distribution services fees (Note 5) 16,308 95,311
- ------------------------------------------------------------- ------- --------
Net expenses 278,972
- ----------------------------------------------------------------------------------- ----------
Net investment income $1,488,360
- ----------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE GOVERNMENT CASH RESERVES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------
1994* 1993
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------
Net investment income $ 1,488,360 $ 2,818,684
- --------------------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- ---------------------------------------------------------------
Dividends to shareholders from net investment income:
- ---------------------------------------------------------------
Trust Shares (1,362,439) (2,418,082)
- ---------------------------------------------------------------
Investment Shares (125,921) (400,602)
- --------------------------------------------------------------- ------------- -------------
Change in net assets from distributions to shareholders (1,488,360) (2,818,684)
- ---------------------------------------------------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- ---------------------------------------------------------------
Proceeds from sale of shares 141,457,677 182,097,485
- ---------------------------------------------------------------
Cost of shares redeemed (117,053,586) (169,795,958)
- --------------------------------------------------------------- ------------- -------------
Change in net assets from Fund share transactions 24,404,091 12,301,527
- --------------------------------------------------------------- ------------- -------------
Change in net assets 24,404,091 12,301,527
- ---------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------
Beginning of period 103,915,735 91,614,208
- --------------------------------------------------------------- ------------- -------------
End of period $ 128,319,826 $ 103,915,735
- --------------------------------------------------------------- ------------- -------------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE GOVERNMENT CASH RESERVES FUND
FINANCIAL HIGHLIGHTS--TRUST SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------------------------------
1994* 1993 1992 1991**
-------- ------- ------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
- --------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------
Net investment income 0.01 0.03 0.04 0.003
- -------------------------------------------- -------- ------- ------- --------
LESS DISTRIBUTIONS
- --------------------------------------------
Dividends to shareholders from net
investment income (0.01) (0.03) (0.04) (0.003)
- -------------------------------------------- -------- ------- ------- --------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
- -------------------------------------------- -------- ------- ------- --------
TOTAL RETURN*** 1.35% 2.76% 4.19% 0.33%
- --------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------
Expenses 0.50%(a) 0.50% 0.50% 0.30%(a)
- --------------------------------------------
Net investment income 2.67%(a) 3.22% 4.14% 5.49%(a)
- --------------------------------------------
Expense waiver/reimbursement(b) 0.14%(a) 0.15% 0.15% 0.53%(a)
- --------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------
Net assets, end of period (000 omitted) $120,475 $92,993 $82,888 $87,097
- --------------------------------------------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
** Reflects operations for the period from July 10, 1991 (the date of initial
public offering), to July 31, 1991. For the period from the start of
business, May 21, 1991, through July 9, 1991, the Fund had no operations
other than those related to organizational matters.
*** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE GOVERNMENT CASH RESERVES FUND
FINANCIAL HIGHLIGHTS--INVESTMENT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------------------
1994* 1993 1992**
------ ------- ------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
- --------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------
Net investment income 0.01 0.03 0.03
- -------------------------------------------------------- ------ ------- -----
LESS DISTRIBUTIONS
- --------------------------------------------------------
Dividends to shareholders from net investment income (0.01) (0.03) (0.03 )
- -------------------------------------------------------- ------ ------- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
- -------------------------------------------------------- ------ ------- -----
TOTAL RETURN*** 1.35% 2.76% 2.61 %
- --------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------
Expenses 0.50%(a) 0.50% 0.50 %(a)
- --------------------------------------------------------
Net investment income 2.67%(a) 3.22% 3.68 %(a)
- --------------------------------------------------------
Expense waiver/reimbursement(b) 0.49%(a) 0.50% 0.50 %(a)
- --------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------
Net assets, end of period (000 omitted) $7,845 $10,923 $8,726
- --------------------------------------------------------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
** Reflects operations for the period from November 25, 1991 (the date of
initial public investment) to July 31, 1992. For the period from August 1,
1991 to November 24, 1991, net investment income aggregating $0.01 per share
was distributed to Federated Administrative Services.
*** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE GOVERNMENT CASH RESERVES FUND
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Fountain Square Funds (the "Trust") is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end, management investment
company. The Trust currently consists of nine portfolios. The financial
statements included herein are only those of Fountain Square Government Cash
Reserves Fund (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.
The Fund provides two classes of shares ("Trust Shares" and "Investment
Shares"). Investment Shares are identical in all respects to Trust Shares except
that Investment Shares are sold pursuant to a Distribution Plan ("Plan") adopted
in accordance with Rule 12b-1 under the Investment Company Act of 1940.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--The Board of Trustees ("Trustees") has determined that the best
method currently available for valuing portfolio securities is amortized cost. The
Fund's use of the amortized cost method to value its portfolio securities is conditioned
on its compliance with Rule 2a-7 under the Investment Company Act of 1940.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the custodian bank to
take possession, to have legally segregated in the Federal Reserve Book Entry System or
to have segregated within the custodian bank's vault, all securities held as collateral
in support of repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor on a daily basis, the market value of each repurchase
agreement's underlying securities to ensure the existence of a proper level of
collateral.
The Fund will only enter into repurchase agreements with banks and other recognized
financial institutions such as broker/dealers which are deemed by the Trust's adviser to
be creditworthy pursuant to guidelines established by the Trustees. Risks may arise from
the potential inability of counterparties to honor the terms of the repurchase
agreement. Accordingly, the Fund could receive less than the repurchase price on the
sale of collateral securities.
</TABLE>
FOUNTAIN SQUARE GOVERNMENT CASH RESERVES FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
C. INCOME--Interest income is recorded on the accrual basis. Interest income includes
interest and discount earned (net of premium), including original issue discount as
required by the Internal Revenue Code, plus realized net gains, if any, on portfolio
securities.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute to
shareholders each year all of its taxable income. Accordingly, no provision for federal
income tax is necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or
delayed delivery transactions. The Fund records when-issued securities and maintains
security positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed delivery
basis are marked to market daily and begin earning interest on the settlement date.
F. DEFERRED EXPENSES--Costs incurred by the Fund in connection with its initial share
registration, other than organization expenses, were deferred and are being amortized on
a straight-line basis through June 30, 1996.
G. OTHER--Investment transactions are accounted for on the trade date of the transaction.
</TABLE>
(3) DIVIDENDS
The Fund computes its net income daily and, immediately prior to the calculation
of its net asset value at the close of business, declares and records dividends
to shareholders of record at the time of the previous computation of the Fund's
net asset value. Payment of dividends is made monthly in cash, or in additional
shares at the net asset value on the payable date.
(4) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At
January 31, 1994, capital paid in aggregated $128,319,826. Transactions in Fund
shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-----------------------------
TRUST SHARES 1994* 1993
- --------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Shares outstanding, beginning of period 92,992,602 82,888,463
- ---------------------------------------------------------------
Shares sold 130,900,429 143,671,427
- ---------------------------------------------------------------
Shares redeemed (103,418,128) (133,567,288)
- --------------------------------------------------------------- ----------- ------------
Shares outstanding, end of period 120,474,903 92,992,602
- --------------------------------------------------------------- ----------- ------------
</TABLE>
* Six months ended January 31, 1994.
FOUNTAIN SQUARE GOVERNMENT CASH RESERVES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------
INVESTMENT SHARES 1994* 1993
- ---------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Shares outstanding, beginning of period 10,923,133 8,725,745
- ----------------------------------------------------------------
Shares sold 10,557,248 38,426,058
- ----------------------------------------------------------------
Shares redeemed (13,635,458) (36,228,670)
- ---------------------------------------------------------------- ---------- ----------
Shares outstanding, end of period 7,844,923 10,923,133
- ---------------------------------------------------------------- ---------- ----------
</TABLE>
* Six months ended January 31, 1994.
(5) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Fifth Third Bank, the Fund's investment adviser ("Adviser"), receives for its
services an annual investment advisory fee equal to .40 of 1% of the Fund's
average daily net assets. The Adviser may voluntarily choose to waive a portion
of its fee or reimburse certain operating expenses of the Fund. For the six
months ended January 31, 1994, Fifth Third Bank earned an investment advisory
fee of $223,192 of which $79,003 was voluntarily waived.
Administrative personnel and services were provided by Federated Administrative
Services ("FAS") at an annual rate of .15 of 1% on the first $250 million, .125
of 1% on the next $250 million, .10 of 1% on the next $250 million, and .075 of
1% on total average aggregate daily net assets of the Trust in excess of $750
million. FAS may voluntarily waive a portion of its fee. During the six months
ended January 31, 1994, FAS earned an administrative fee of $64,696.
Expenses of organizing the Fund ($30,250) were borne initially by FAS. The Fund
has agreed to reimburse FAS at an annual rate of .005 of 1% of average daily net
assets, until the organization expenses initially borne by FAS are reimbursed,
or five years from June 30, 1991, the date the Trust's portfolio became
effective, whichever occurs earlier. During the six months ended January 31,
1994, the Fund paid FAS $2,804 pursuant to this agreement.
Fifth Third Bank, the Fund's custodian, earned $9,770, for the six-months ended
January 31, 1994.
The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the assets of the
Investment Shares, for fees it paid which relate to the distribution and
administration of the Investment Shares. The Plan provides that the Investment
Shares may incur distribution expenses up to 0.35% of the average daily net
assets of the Investment Shares annually to pay commissions, maintenance fees
and to compensate the distributor. During the six months ended January 31, 1994,
FSC earned a distribution service fee of $16,308, all of which was voluntarily
waived.
Fifth Third Bank is the transfer agent for the Fund. Certain of the Officers and
Trustees of the Fund are Officers and Trustees of FAS.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
Lee A. Carter
J. Christopher Donahue
President and Treasurer
Edward Burke Carey
Craig P. Churman
J. Christopher Donahue
Vice President and Assistant
Treasurer
Jay S. Neuman
Albert E. Harris
Secretary
Mutual funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Fund's prospectus, which contains facts concerning its
objective and policies, management fees, expenses, and other information.
Fountain
Square
U.S. Treasury
Obligations
Fund
Fountain Square Funds
(Logo) Semi-Annual Report
Fifth Third Bank to Shareholders
Investment Advisor January 31, 1994
FEDERATED SECURITIES CORP. is the distributor of the Funds.
0022903 (3/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the January 31, 1994 Semi-Annual Report to Shareholders
of Fountain Square U.S. Treasury Obligations Fund (the "Fund"). The Report
begins with the Fund's Investment Review, followed by Financial Statements which
include the Portfolio of Investments.
The Fund continues to put your cash to work pursuing competitive money market
income through the quality of short-term U.S. Treasury securities and repurchase
agreements that are fully collateralized by these securities. In addition, the
Fund pursues stability of principal* and offers you daily access to your money.
During the six-month reporting period, dividends paid to shareholders totaled
$4.3 million. At the end of the period, net assets rose to $303 million.
Thank you for putting your cash to work through the quality of Fountain Square
U.S. Treasury Obligations Fund. We will continue to keep you up to date on your
investment. As always, we welcome your questions or comments.
Sincerely,
J. Christopher Donahue
President
March 15, 1994
* Although no money market mutual fund can guarantee a stable $1.00 share value,
the Fund has done so since its inception.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Fountain Square U.S. Treasury Obligations Fund is a no-load money market mutual
fund which invests in short-term U.S. Treasury obligations and in repurchase
agreements that are fully collateralized by U.S. Treasury obligations.
Currently, the Fund is maintaining a short maturity strategy, structuring its
portfolio to consist of 72% overnight repurchase agreements and 28% U.S.
Treasury obligations. The overall maturity of the Fund is currently ranging from
30 to 35 days.
The short-term interest rate environment has changed significantly in recent
months. After five years of falling or stable short-term interest rates, the
fixed income market has entered a new cycle of rising rates. Indications of a
growing economy coupled with inflationary control actions by the Federal Reserve
have driven short-term interest rates upward. As a result, three month Treasury
bills have moved from a 2.96% low in late September to a substantially higher
3.45% in February.
In this environment, we believe the short maturity strategy will capitalize on
rising short-term rates and will provide shareholders with a competitive yield
without compromising the conservative structure of the Fund. As economic and
market conditions change, investment strategies will be implemented to best
serve the shareholders of the Fund.
FOUNTAIN SQUARE U.S. TREASURY OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
The obligations listed below are issued or guaranteed by the U.S. government,
its agencies or instrumentalities or secured by such obligations.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------------- ------------
<C> <S> <C>
SHORT-TERM OBLIGATIONS--27.8%
- --------------------------------------------------------------------------------------
U.S. TREASURY BILLS--21.2%
-----------------------------------------------------------------------
$65,000,000 4/7/94-10/20/94 $ 64,199,159
----------------------------------------------------------------------- ------------
U.S. TREASURY NOTES--6.6%
-----------------------------------------------------------------------
20,000,000 4.25%-7.00%, 2/28/94-10/31/94 20,095,470
----------------------------------------------------------------------- ------------
TOTAL SHORT-TERM OBLIGATIONS 84,294,629
----------------------------------------------------------------------- ------------
*REPURCHASE AGREEMENTS--72.3%
- --------------------------------------------------------------------------------------
41,000,000 BT Securities Corp., 3.15%, dated 1/31/94, due 2/1/94 41,000,000
-----------------------------------------------------------------------
40,784,000 Deutsche Bank Government Securities, 3.10%, dated 1/31/94, due 2/1/94 40,784,000
-----------------------------------------------------------------------
11,000,000 Goldman, Sachs & Co., 3.05%, dated 1/31/94, due 2/1/94 11,000,000
-----------------------------------------------------------------------
41,000,000 Harris-Nesbitt, Thomson Securities, Inc., 3.15%, dated 1/31/94, due
2/1/94 41,000,000
-----------------------------------------------------------------------
11,000,000 Kidder Peabody & Co., Inc., 3.10%, dated 1/31/94, due 2/1/94 11,000,000
-----------------------------------------------------------------------
11,000,000 Merrill Lynch, Pierce, Fenner & Smith, Inc., 3.05%, dated 1/31/94, due
2/1/94 11,000,000
-----------------------------------------------------------------------
11,000,000 Morgan Stanley & Co., Inc., 3.08%, dated 1/31/94, due 2/1/94 11,000,000
-----------------------------------------------------------------------
11,000,000 Prudential Securities, Inc., 3.10%, dated 1/31/94, due 2/1/94 11,000,000
-----------------------------------------------------------------------
11,000,000 Sanwa-BGK Securities Co., 3.05%, dated 1/31/94, due 2/1/94 11,000,000
-----------------------------------------------------------------------
30,000,000 UBS Securities, Inc., 3.125%, dated 1/31/94, due 2/1/94 30,000,000
----------------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 218,784,000
----------------------------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST $303,078,629+
----------------------------------------------------------------------- ------------
</TABLE>
* Repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($302,553,959) at January 31, 1994.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE U.S. TREASURY OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------
Investments in repurchase agreements (Note 2B) $218,784,000
- -----------------------------------------------------------------
Investments in other securities 84,294,629
- ----------------------------------------------------------------- ------------
Total investments, at amortized cost and value (Note 2A) $303,078,629
- --------------------------------------------------------------------------------
Cash 448
- --------------------------------------------------------------------------------
Interest receivable 325,260
- -------------------------------------------------------------------------------- ------------
Total assets 303,404,337
- --------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------
Dividends payable 731,222
- -----------------------------------------------------------------
Accrued expenses 119,156
- ----------------------------------------------------------------- ------------
Total liabilities 850,378
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 302,553,959 shares of beneficial interest outstanding $302,553,959
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
($302,553,959 / 302,553,959 shares of beneficial interest outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE U.S. TREASURY OBLIGATIONS FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income (Note 2C) $5,055,601
- ---------------------------------------------------------------------------------
EXPENSES--
- ---------------------------------------------------------------------------------
Investment advisory fee (Note 5) $649,111
- ----------------------------------------------------------------------
Administrative personnel and services fees (Note 5) 188,508
- ----------------------------------------------------------------------
Custodian fees (Note 5) 26,191
- ----------------------------------------------------------------------
Recordkeeper, transfer and dividend disbursing agent fees and expenses
(Note 5) 29,049
- ----------------------------------------------------------------------
Legal fees 5,118
- ----------------------------------------------------------------------
Auditing fees 7,289
- ----------------------------------------------------------------------
Printing and postage 6,398
- ----------------------------------------------------------------------
Fund share registration costs 12,926
- ----------------------------------------------------------------------
Miscellaneous 20,376
- ---------------------------------------------------------------------- --------
Total expenses 944,966
- ----------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 5) 230,937
- ---------------------------------------------------------------------- --------
Net expenses 714,029
- --------------------------------------------------------------------------------- ----------
Net investment income $4,341,572
- --------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE U.S. TREASURY OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------------------
1994* 1993
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------
Net investment income $ 4,341,572 $ 8,643,280
- ------------------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- -------------------------------------------------------------
Dividends to shareholders from net investment income (4,341,572) (8,643,280)
- ------------------------------------------------------------- ------------- -------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- -------------------------------------------------------------
Proceeds from sale of shares 338,747,459 829,048,015
- -------------------------------------------------------------
Cost of shares redeemed (326,601,757) (878,563,498)
- ------------------------------------------------------------- ------------- -------------
Change in net assets from Fund share transactions 12,145,702 (49,515,483)
- ------------------------------------------------------------- ------------- -------------
Change in net assets 12,145,702 (49,515,483)
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Beginning of period 290,408,257 339,923,740
- ------------------------------------------------------------- ------------- -------------
End of period $ 302,553,959 $ 290,408,257
- ------------------------------------------------------------- ------------- -------------
</TABLE>
*Six months ended January 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE U.S. TREASURY OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SUPPLEMENTARY INFORMATION
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------------------------------------------------
1994* 1993 1992 1991 1990 1989**
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------
Net investment income 0.01 0.03 0.04 0.07 0.08 0.06
- ------------------------------------------- ----- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS
- -------------------------------------------
Dividends to shareholders from net
investment income (0.01) (0.03) (0.04) (0.07) (0.08) (0.06)
- ------------------------------------------- ----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------- ----- ----- ----- ----- ----- -----
TOTAL RETURN*** 1.36% 2.82% 4.32% 6.74% 8.15% 5.65%
- -------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------
Expenses 0.44%(a) 0.44% 0.45% 0.49% 0.54% 0.56%(a)
- -------------------------------------------
Net investment income 2.67%(a) 2.79% 4.18% 6.33% 7.84% 8.71%(a)
- -------------------------------------------
Expense waiver/reimbursement(b) 0.14%(a) 0.15% 0.15% 0.15% 0.15% 0.15%(a)
- -------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------
Net assets, end of period (000 omitted) $302,554 $290,408 $339,924 $242,247 $138,368 $141,743
- -------------------------------------------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
** Reflects operations for the period from December 1, 1988 (date of initial
public offering) to July 31, 1989. For the period from the start of
business, November 10, 1988 to November 30, 1988, net investment income
aggregating $0.004 per share ($385) was distributed to Federated
Administrative Services.
*** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE U.S. TREASURY OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Fountain Square Funds (the "Trust") is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end, management investment
company. The Trust currently consists of nine portfolios. The financial
statements included herein are only those of Fountain Square U.S. Treasury
Obligations Fund (the "Fund"). The financial statements of the other portfolios
are presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--The Board of Trustees ("Trustees") has determined that the best
method currently available for valuing portfolio securities is amortized cost. The
Fund's use of the amortized cost method to value its portfolio securities is conditioned
on its compliance with Rule 2a-7 under the Investment Company Act of 1940.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the custodian bank to
take possession, to have legally segregated in the Federal Reserve Book Entry System or
to have segregated within the custodian bank's vault, all securities held as collateral
in support of repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor on a daily basis, the market value of each repurchase
agreement's underlying securities to ensure the existence of a proper level of
collateral.
The Fund will only enter into repurchase agreements with banks and other recognized
financial institutions such as broker/dealers which are deemed by the Trust's adviser to
be creditworthy pursuant to guidelines established by the Trustees. Risks may arise from
the potential inability of counterparties to honor the terms of the repurchase
agreement. Accordingly, the Fund could receive less than the repurchase price on the
sale of collateral securities.
C. INCOME--Interest income is recorded on the accrual basis. Interest income includes
interest and discount earned (net of premium), including original issue discount as
required by the Internal Revenue Code, plus realized net gains, if any, on portfolio
securities.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies and distribute to shareholders
each year all of its taxable income. Accordingly, no provision for federal income tax is
necessary.
</TABLE>
FOUNTAIN SQUARE U.S. TREASURY OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in when-issued or
delayed delivery transactions. The Fund records when-issued securities and maintains
security positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed delivery
basis are marked to market daily and begin earning interest on the settlement date.
F. OTHER--Investment transactions are accounted for on the trade date of the transaction.
</TABLE>
(3) DIVIDENDS
The Fund computes its net income daily and, immediately prior to the calculation
of its net asset value at the close of business, declares and records dividends
to shareholders of record at the time of the previous computation of the Fund's
net asset value. Payment of dividends is made monthly in cash, or in additional
shares at the net asset value on the payable date.
(4) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At
January 31, 1994, capital paid in aggregated $302,553,959. Transactions in Fund
shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-----------------------------
1994* 1993
- --------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Shares outstanding, beginning of period 290,408,257 339,923,740
- ---------------------------------------------------------------
Shares sold 338,747,459 829,048,015
- ---------------------------------------------------------------
Shares redeemed (326,601,757) (878,563,498)
- --------------------------------------------------------------- ------------ ------------
Shares outstanding, end of period 302,553,959 290,408,257
- --------------------------------------------------------------- ------------ ------------
</TABLE>
* Six months ended January 31, 1994.
FOUNTAIN SQUARE U.S. TREASURY OBLIGATIONS FUND
- --------------------------------------------------------------------------------
(5) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Fifth Third Bank, the Fund's investment adviser ("Adviser"), receives for its
services an annual investment advisory fee equal to .40 of 1% of the Fund's
average daily net assets. The Adviser may voluntarily choose to waive a portion
of its fee or reimburse certain operating expenses of the Fund. For the six
months ended January 31, 1994, Fifth Third Bank earned an investment advisory
fee of $649,111 of which $230,937 was voluntarily waived.
Administrative personnel and services were provided by Federated Administrative
Services ("FAS") at an annual rate of .15 of 1% on the first $250 million, .125
of 1% on the next $250 million, .10 of 1% on the next $250 million, and .075 of
1% on total average aggregate daily net assets of the Trust in excess of $750
million. FAS may voluntarily waive a portion of its fee. During the six months
ended January 31, 1994, FAS earned an administrative fee of $188,508.
Expenses of organizing the Fund ($51,096) were borne initially by FAS. The Fund
has agreed to reimburse FAS, at an annual rate of .005 of 1% of average daily
net assets, until the organization expenses initially borne by FAS are
reimbursed, or five years from December 1, 1988, the date the Trust's portfolio
became effective, whichever occurs earlier. During the six months ended January
31, 1994, the Fund paid FAS $6,577, completing its obligation pursuant to this
agreement.
Fifth Third Bank, the Fund's custodian, earned $26,191 for the six-months ended
January 31, 1994.
Fifth Third Bank is the transfer agent for the Fund. Certain of the Officers and
Trustees of the Fund are Officers and Trustees of FAS.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
Lee A. Carter
J. Christopher Donahue
President and Treasurer
Edward Burke Carey
Craig P. Churman
J. Christopher Donahue
Vice President and Assistant
Treasurer
Jay S. Neuman
Albert E. Harris
Secretary
Mutual funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Fund's prospectus, which contains facts concerning its
objective and policies, management fees, expenses, and other information.
Fountain Square Funds
Equity and Income
Mutual Funds
U.S. Government Securities Fund
Quality Bond Fund
Quality Growth Fund
Mid Cap Fund
Balanced Fund
Ohio Tax Free Bond Fund
Fountain Square Funds
Semi-Annual Report to Shareholders
January 31, 1994
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the January 31, 1994 Semi-Annual Report to Shareholders
of the Fountain Square Equity and Income Funds (individually, a "Fund" or
collectively, the "Funds").
This Report includes complete financial information, including the investment
portfolio, for: Fountain Square U.S. Government Securities Fund, Fountain Square
Quality Bond Fund, Fountain Square Quality Growth Fund, Fountain Square Mid Cap
Fund, Fountain Square Balanced Fund, and Fountain Square Ohio Tax Free Bond
Fund.
Thank you for choosing the Fountain Square Funds to pursue your financial goals.
Remember, you have free exchange privileges among these Funds, so you can easily
diversify your investments as your goals change.
We will continue to provide you with the highest level of service as we keep you
up to date on your investment. Of course, your questions and comments are always
invited.
Sincerely,
J. Christopher Donahue
President
March 15, 1994
FOUNTAIN SQUARE U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
The investment objective of the Fountain Square U.S. Government Securities Fund
is to provide a high level of current income. Capital growth is a secondary
objective. The Fund is designed to meet the needs of conservative investors
seeking high credit quality. For the past six months, the Fund pursued its
objectives by allocating the portfolio in the following manner:
- 74% U.S. Treasury & Federal Agency Bonds
- 21% Mortgage Backed Securities
The average maturity of the Fund is 3.7 years.
Managing the average maturity will be a major focus for 1994. Accelerating
economic activity and fear of inflation has recently compelled the Federal
Reserve to raise short-term interest rates in an effort to slow the growth of
the economy. In order to minimize the negative effects rising interest rates
have on the value of bonds (especially long-term bonds), the average maturity of
the Fund is being shortened. By following this strategy, the Fund's yield should
continue to remain competitive. Of course, we will continue to maintain a
portfolio maturity structure which pursues high current income for the
shareholder.
FOUNTAIN SQUARE QUALITY BOND FUND
- --------------------------------------------------------------------------------
The investment objective of the Fountain Square Quality Bond Fund is to achieve
high current income. Capital growth is a secondary objective. The Fund is
designed to meet the needs of investors who require the advantages of a
diversified fixed-income portfolio, yet are comfortable with a more aggressive
approach than the U.S. Government Securities Fund. Two key differences in the
objectives between the two funds are that the Quality Bond Fund uses investment
grade corporate bonds and maintains a longer maturity.
Over the past six months, the Fund pursued its objectives by allocating the
portfolio across the following sectors:
- 35% U.S. Treasury & Federal Agency Bonds
- 20% Mortgage Backed Securities
- 41% Corporate Bonds
The Fund's average maturity is 7.0 years. Within the corporate sector, exposure
in the banking/finance area was increased to take advantage of improving
fundamentals in the group.
Rising interest rates, however, dictate a cautious approach for 1994. We
anticipate shortening the average maturity of the Fund and will continue to take
advantage of opportunities in industrial and international areas of the
corporate bond sector. A stronger economy in the U.S. and improving economics in
Europe and the Far East will help improve the financial condition of firms in
these groups. Of course, we will continue to maintain a portfolio maturity
structure which pursues high current income for the shareholder.
FOUNTAIN SQUARE QUALITY GROWTH FUND
- --------------------------------------------------------------------------------
The investment objective of the Fountain Square Quality Growth Fund is to
provide growth of capital. Income is a secondary objective. The Fund pursues
these objectives by investing in a diversified portfolio of common stocks of
high quality companies. The year 1993 witnessed a market which rewarded stocks
of companies that are lower quality and experience less consistency in their
growth rates in earnings and dividends. This is typical of the stock market
during early stages of economic recovery. However, we firmly believe that stocks
of high quality companies which have continued to achieve high earnings and
dividend growth rates offer attractive valuations relative to the market.
Over the next several years, we expect the economy to grow at a moderate, but
sustainable pace. Corporate profits should show reasonably good gains, although
price increases will be difficult to achieve. Individual companies that have
lowered their cost structures and maintain tight expense controls should produce
solid profit improvements from modest revenue gains. Many of these companies
will be in capital goods, technology, and transportation sectors. They will
serve a market niche that is growing at an above average rate, produce a product
that improves productivity for its customers, or have the ability to gain market
share.
The Fund is emphasizing companies that have these characteristics. Some positive
investment themes that we have exposure to and should be strong growth areas
include: productivity enhancement, the information age, entertainment and
leisure activities, remodeling and do-it yourself projects, health care cost
containment, and export markets/international growth. The Fund is currently
positioned to take advantage of these trends as it has weightings greater than
the Standard and Poor's 500 Index for technology, capital goods, and
transportation.
FOUNTAIN SQUARE MID CAP FUND
- --------------------------------------------------------------------------------
The investment objective of the Fountain Square Mid Cap Fund is growth of
capital. Income is a secondary objective. The Fund largely invests in
medium-sized companies, generally referred to as "Mid Cap," since their
capitalization is between $100 million and $3 billion. Market capitalization is
defined as the stock's market price times the number of shares outstanding.
Over the next several years, we expect the economy to grow at a moderate, but
sustainable pace. Corporate profits should show reasonably good gains, although
price increases will be difficult to achieve. Individual companies that have
lowered their cost structures and maintain tight expense controls should produce
solid profit improvements from modest revenue gains. Many of these companies
will be in capital goods, technology, and transportation sectors. They serve a
market niche that is growing at an above average rate, produce a product that
improves productivity for its customers, or have the ability to gain market
share.
The Fund continues to emphasize companies in the capital goods and basic
industry sectors. These companies serve market niches, providing specialty value
added products to a diverse group of industries, such as automotive suppliers,
medical research, machinery components, plastics, and stainless steel. With
sustained economic expansion in the U.S. and improving international markets, we
expect these companies will produce strong earnings gains over the next several
years. We have increased exposure in the technology sector, emphasizing
information processing companies that benefit from the trend toward outsourcing
as companies attempt to keep cost structures low.
FOUNTAIN SQUARE BALANCED FUND
- --------------------------------------------------------------------------------
The investment objective of the Fountain Square Balanced Fund is to pursue
capital appreciation and income.
The Fund employs the same strategy for equity and fixed income selection, as
used by the Quality Growth and Quality Bond Funds. The Fund emphasizes equity
exposure for growth potential and intermediate bond exposure for relative
stability. The Fund will generally not have a high exposure to money market
investments, as these investments tend to only keep pace with inflation.
The asset allocation is currently 66% equities and 34% fixed income and cash
securities. Stocks should be stronger performers for the long term, making
higher exposure to the equity markets rewarding to long-term investors.
FOUNTAIN SQUARE OHIO TAX FREE BOND FUND
- --------------------------------------------------------------------------------
The investment objective of the Fountain Square Ohio Tax Free Bond Fund is to
provide current income exempt from federal income tax and the personal income
taxes imposed by the state of Ohio and Ohio municipalities. The Fund is designed
to meet the needs of the investor looking to shelter income from both federal
and state income taxes. The Fund pursues its objective by investing the entire
portfolio in municipal bonds which generate interest exempt from both federal
and state of Ohio income taxes.
Over the past six months, a record supply of new municipal bonds was issued as
municipalities took advantage of the low interest rates to issue new debt and
pre-refund their existing debt. Moving into 1994, the supply of new municipal
bonds will decrease dramatically. This fact, coupled with higher marginal tax
rates on wealthier individuals, could lead to upward price pressure in the
municipal market. We feel the municipal market is the best fixed income
alternative for 1994.
FOUNTAIN SQUARE U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------- -----------
<C> <S> <C>
GOVERNMENT SECURITIES--73.8%
- ----------------------------------------------------------------------------------
GOVERNMENT AGENCIES--26.9%
-------------------------------------------------------------------
$ 387,000 Federal Farm Credit Bank, 6.56%, 12/23/99 $ 413,172
-------------------------------------------------------------------
1,000,000 Federal Farm Credit Bank, Medium-Term Note, 5.90%, 12/7/2000 1,035,599
-------------------------------------------------------------------
500,000 Federal Home Loan Bank, 6.46%, 2/1/2000 531,509
-------------------------------------------------------------------
1,750,000 Federal Home Loan Mortgage Corp., 5.00%, 8/17/98-7/15/2002 1,748,248
-------------------------------------------------------------------
500,000 Federal Home Loan Mortgage Corp., Debenture, 5.875%,
(Callable) 3/14/96 @ 100 512,729
-------------------------------------------------------------------
500,000 Federal Home Loan Mortgage Corp., Debenture, 6.16%,
(Callable) 3/29/96 @ 100 515,950
-------------------------------------------------------------------
750,000 Federal Home Loan Mortgage Corp., 6.45%, (Callable) 10/20/95 @ par 776,893
-------------------------------------------------------------------
1,000,000 Federal Home Loan Mortgage Corp., 5.90%, (Callable) 4/21/97 @ 100 1,018,630
-------------------------------------------------------------------
750,000 Federal National Mortgage Association, 6.15%, (Callable) 9/21/95 775,079
-------------------------------------------------------------------
500,000 Federal National Mortgage Association, Debenture, 6.30%, 12/11/97 519,759
-------------------------------------------------------------------
500,000 Federal National Mortgage Association, Medium-Term Notes,
6.37%, 9/14/99 518,315
-------------------------------------------------------------------
500,000 Tennessee Valley Authority, 6.00%, 1/15/97 511,844
-------------------------------------------------------------------
515,000 Tennessee Valley Authority, 6.25%, (Callable) 8/1/95 533,803
------------------------------------------------------------------- -----------
Total 9,411,530
------------------------------------------------------------------- -----------
U.S. TREASURY BOND--0.9%
-------------------------------------------------------------------
296,000 8.75%, 8/15/94 304,510
------------------------------------------------------------------- -----------
U.S. TREASURY NOTES--46.0%
-------------------------------------------------------------------
15,550,000 4.25%-9.50%, 2/15/94-1/17/2000 16,092,631
------------------------------------------------------------------- -----------
TOTAL GOVERNMENT SECURITIES (IDENTIFIED COST, $25,579,980) 25,808,671
------------------------------------------------------------------- -----------
MORTGAGE-BACKED SECURITIES--21.3%
- ----------------------------------------------------------------------------------
GOVERNMENT AGENCIES--21.3%
-------------------------------------------------------------------
1,960,000 Federal Home Loan Mortgage Corp., 5 Year Balloon Mortgage,
6.00%, 5/1/98-1/1/99 2,011,450
-------------------------------------------------------------------
435,899 Federal Home Loan Mortgage Corp., 7 Year Whole Loan, 6.50%,
2/15/2000 450,066
-------------------------------------------------------------------
1,872,784 Federal Home Loan Mortgage Corp., REMIC, 5.00%-5.80%,
7/17/2000-4/15/2003 1,858,045
-------------------------------------------------------------------
725,005 Federal National Mortgage Association, 7 Year Balloon Mortgage,
7.00%-7.50%, 1/3/2000-1/25/2000 753,236
-------------------------------------------------------------------
1,356,771 Federal National Mortgage Association, Inverse Floating Mortgage
7.401%-7.750%, 11/25/99-6/26/2000 1,360,293
-------------------------------------------------------------------
</TABLE>
FOUNTAIN SQUARE U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------- -----------
<C> <S> <C>
MORTGAGE-BACKED SECURITIES--CONTINUED
- ----------------------------------------------------------------------------------
GOVERNMENT AGENCIES--CONTINUED
-------------------------------------------------------------------
$ 1,000,000 Federal National Mortgage Association, REMIC, 5.75%, 1/26/2004 $ 1,010,559
------------------------------------------------------------------- -----------
TOTAL MORTGAGE-BACKED SECURITIES (IDENTIFIED COST, $7,445,246) 7,443,649
------------------------------------------------------------------- -----------
*REPURCHASE AGREEMENT--3.3%
- ----------------------------------------------------------------------------------
1,166,000 Harris-Nesbitt, Thomson Securities, Inc., 3.00%, dated 1/31/94, due
2/1/94 (at amortized cost)(Note 2B) 1,166,000
------------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST, $34,191,226) $34,418,320+
------------------------------------------------------------------- -----------
</TABLE>
* Repurchase agreement is fully collateralized by U.S. government and/or agency
obligations based on market prices at the date of the portfolio.
+ The cost of investments for federal tax purposes amounts to $34,191,226. The
net unrealized appreciation of investments on a federal tax basis amounts to
$227,094, which is comprised of $471,284 appreciation and $244,190
depreciation at January 31, 1994.
Note: The categories of investments are shown as a percentage of net assets
($34,977,279) at January 31, 1994.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at value (Notes 2A and 2B)
(identified and tax cost, $34,191,226) $34,418,320
- --------------------------------------------------------------------------------
Cash 682
- --------------------------------------------------------------------------------
Interest receivable 361,633
- --------------------------------------------------------------------------------
Receivable for Fund shares sold 210,714
- --------------------------------------------------------------------------------
Deferred expenses (Note 2G) 6,547
- -------------------------------------------------------------------------------- -----------
Total assets 34,997,896
- --------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------
Payable for Fund shares redeemed $ 2,530
- ----------------------------------------------------------------------
Accrued expenses and other liabilities 18,087
- ---------------------------------------------------------------------- -------
Total liabilities 20,617
- -------------------------------------------------------------------------------- -----------
NET ASSETS for 3,439,259 shares of beneficial interest outstanding $34,977,279
- -------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid-in capital $34,733,824
- --------------------------------------------------------------------------------
Unrealized appreciation of investments 227,094
- --------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (38,292)
- --------------------------------------------------------------------------------
Undistributed net investment income 54,653
- -------------------------------------------------------------------------------- -----------
Total $34,977,279
- -------------------------------------------------------------------------------- -----------
NET ASSET VALUE and Redemption Price Per Share:
($34,977,279 / 3,439,259 shares of beneficial interest outstanding) $10.17
- -------------------------------------------------------------------------------- -----------
COMPUTATION OF OFFERING PRICE:
- --------------------------------------------------------------------------------
Offering Price Per Share (100/95.5 of $10.17)* $10.65
- -------------------------------------------------------------------------------- -----------
</TABLE>
* See "What Shares Cost" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------
Interest income (Note 2C) $1,008,192
- -----------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------
Investment advisory fee (Note 5) $ 94,655
- -----------------------------------------------------------------------
Administrative personnel and services fees (Note 5) 25,206
- -----------------------------------------------------------------------
Custodian fee (Note 5) 4,908
- -----------------------------------------------------------------------
Recordkeeper, transfer and dividend disbursing agent fees
and expenses (Note 5) 13,589
- -----------------------------------------------------------------------
Legal fees 2,851
- -----------------------------------------------------------------------
Auditing fees 7,306
- -----------------------------------------------------------------------
Printing and postage 5,672
- -----------------------------------------------------------------------
Fund share registration costs 7,869
- -----------------------------------------------------------------------
Miscellaneous 731
- ----------------------------------------------------------------------- --------
Total expenses 162,787
- -----------------------------------------------------------------------
Deduct--
- -----------------------------------------------------------------------
Waiver of investment advisory fee (Note 5) $28,776
- -------------------------------------------------------------
Waiver of custodian fee (Note 5) 4,908 33,684
- ------------------------------------------------------------- ------- --------
Net expenses 129,103
- ----------------------------------------------------------------------------------- ----------
Net investment income $ 879,089
- ----------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------------------------------
Net realized gain (loss) on investments(identified cost basis) 61,572
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (18,086)
- ----------------------------------------------------------------------------------- ----------
Net realized and unrealized gain (loss) on investments 43,486
- ----------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $ 922,575
- ----------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------
1994* 1993**
------------ -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------
Net investment income $ 879,089 $ 867,512
- ----------------------------------------------------------------
Net realized gain (loss) on investment transactions ($61,572 net
gain and $38,527 net loss, respectively, as computed for
federal income tax purposes) (Note 2D) 61,572 (38,527)
- ----------------------------------------------------------------
Change in unrealized appreciation (depreciation) of investments (18,086) 245,180
- ---------------------------------------------------------------- ------------ -----------
Change in net assets resulting from operations 922,575 1,074,165
- ---------------------------------------------------------------- ------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- ----------------------------------------------------------------
Dividends to shareholders from net investment income (1,041,228) (650,720)
- ----------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment transactions (61,337) --
- ---------------------------------------------------------------- ------------ -----------
Change in net assets from distributions to shareholders (1,102,565) (650,720)
- ---------------------------------------------------------------- ------------ -----------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- ----------------------------------------------------------------
Net proceeds from sale of shares 14,539,007 34,104,160
- ----------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
dividends declared 1,065,726 645,382
- ----------------------------------------------------------------
Cost of shares redeemed (10,050,075) (5,570,376)
- ---------------------------------------------------------------- ------------ -----------
Change in net assets from Fund share transactions 5,554,658 29,179,166
- ---------------------------------------------------------------- ------------ -----------
Change in net assets 5,374,668 29,602,611
- ----------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------
Beginning of period 29,602,611 --
- ---------------------------------------------------------------- ------------ -----------
End of period (including undistributed net investment income of
$54,653 and $216,792, respectively) $ 34,977,279 $29,602,611
- ---------------------------------------------------------------- ------------ -----------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
** For the period from November 20, 1992 (date of initial public investment) to
July 31, 1993.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------
1994* 1993**
------ ------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.21 $10.00
- --------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------
Net investment income 0.26 0.35
- --------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.03 0.13
- -------------------------------------------------------------------- ------ -----
Total from investment operations 0.29 0.48
- --------------------------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------
Dividends to shareholders from net investment income (0.31) (0.27 )
- --------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment transactions (0.02) --
- -------------------------------------------------------------------- ------ -----
Total distributions (0.33) (0.27 )
- -------------------------------------------------------------------- ------ -----
NET ASSET VALUE, END OF PERIOD $10.17 $10.21
- -------------------------------------------------------------------- ------ -----
TOTAL RETURN*** 2.84% 4.87 %
- --------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------
Expenses 0.75%(a) 0.74 %(a)
- --------------------------------------------------------------------
Net investment income 5.11%(a) 5.36 %(a)
- --------------------------------------------------------------------
Expense waiver/reimbursement(b) 0.20%(a) 0.33 %(a)
- --------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------
Net assets, end of period $34,977 $29,603
- --------------------------------------------------------------------
Portfolio turnover rate 28% 23 %
- --------------------------------------------------------------------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
** Reflects operations for the period from November 20, 1992 (date of initial
public investment), to July 31, 1993.
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE QUALITY BOND FUND
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
CORPORATE BONDS--40.8%
- --------------------------------------------------------------------------------------
ASSET BACKED SECURITIES--0.1%
-------------------------------------------------------------------
$ 16,462 Ford Credit Grantor Trust Series 1990-A, 8.75%, 10/16/95 $ 16,710
------------------------------------------------------------------- -----------
BANKING--7.0%
-------------------------------------------------------------------
115,000 Bankers Trust of New York Corp., 10.20%, 3/15/99 115,785
-------------------------------------------------------------------
1,000,000 Chase Manhattan Bank, 6.50, 8/1/2005 994,480
-------------------------------------------------------------------
1,000,000 First American Corp., 6.875%, 4/15/2003 1,019,564
-------------------------------------------------------------------
1,000,000 First Hawaiian, Inc., 6.25%, 8/15/2000 1,015,884
-------------------------------------------------------------------
173,000 Republic Bank of New York, 6.40%, 4/17/95 178,184
------------------------------------------------------------------- -----------
Total 3,323,897
------------------------------------------------------------------- -----------
CHEMICAL--2.4%
-------------------------------------------------------------------
1,000,000 duPont (E.I.) deNemours, 8.125%, 3/15/2004 1,155,318
------------------------------------------------------------------- -----------
FINANCE--3.7%
-------------------------------------------------------------------
1,000,000 Bear Stearns Co., 6.50%, 6/15/2000 1,029,685
-------------------------------------------------------------------
750,000 Merrill Lynch, 5.875%, 12/1/95 768,218
------------------------------------------------------------------- -----------
Total 1,797,903
------------------------------------------------------------------- -----------
FINANCE--COMMERCIAL--3.6%
-------------------------------------------------------------------
115,000 General Electric Capital Corp., Medium-Term Notes, 8.90%, 9/15/2004 134,149
-------------------------------------------------------------------
231,000 General Electric Capital Corp., Variable Rate Note,
8.52%, 12/17/2007 239,836
-------------------------------------------------------------------
190,000 General Electric Capital Corp., Variable Rate Note,
8.65%, 5/1/2018 205,461
-------------------------------------------------------------------
1,000,000 General Electric Credit Corp., 5.50%, (Callable 10/14/93 @ 100),
11/1/2001 977,653
-------------------------------------------------------------------
115,000 ITT Financial Corp., 10.125%, 4/5/99 137,321
------------------------------------------------------------------- -----------
Total 1,694,420
------------------------------------------------------------------- -----------
FINANCE--RETAIL--0.4%
-------------------------------------------------------------------
173,000 Norwest Financial, Inc., Sr. Interest Note, 7.95%, 6/15/94 175,758
------------------------------------------------------------------- -----------
INSURANCE--2.5%
-------------------------------------------------------------------
115,000 Capital Holding, Medium-Term Note, 9.79%, 10/6/97 132,866
-------------------------------------------------------------------
115,000 Chubb Corp., 8.75%, 11/15/99 133,084
-------------------------------------------------------------------
</TABLE>
FOUNTAIN SQUARE QUALITY BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- --------------------------------------------------------------------------------------
INSURANCE--CONTINUED
-------------------------------------------------------------------
$ 283,000 Metlife Funding, 7.75%, 10/1/96 $ 302,456
-------------------------------------------------------------------
575,000 SAFECO Insurance Co., Medium-Term Note, 7.25%, 1/29/2003 624,691
------------------------------------------------------------------- -----------
Total 1,193,097
------------------------------------------------------------------- -----------
INTERNATIONAL--17.2%
-------------------------------------------------------------------
500,000 Bank of Nova Scotia, 6.875%, 5/1/2003 517,003
-------------------------------------------------------------------
115,000 Deutsche Bank Financial, Medium-Term Note, 9.28%, 5/31/99 134,607
-------------------------------------------------------------------
500,000 Hanson Overseas, 5.50%, 1/15/96 507,683
-------------------------------------------------------------------
500,000 Hanson Overseas, 7.375%, 1/15/2003 532,416
-------------------------------------------------------------------
173,000 Helaba Finance, Debenture, 8.00%, 9/16/96 186,840
-------------------------------------------------------------------
600,000 Hydro Quebec, Medium-Term Note, 7.00%, 3/1/2005 622,799
-------------------------------------------------------------------
500,000 Kingdom of Thailand, 8.25%, 3/15/2002 558,075
-------------------------------------------------------------------
750,000 Korean Development Bank, 6.25%, 5/1/2000 753,746
-------------------------------------------------------------------
800,000 Korean Development Bank, 7.90%, 2/1/2002 873,048
-------------------------------------------------------------------
1,000,000 Matsushita Electric, 7.25%, 8/1/2002 1,069,127
-------------------------------------------------------------------
289,000 National Westminster Bancorp, 9.375%, 11/17/2003 353,661
-------------------------------------------------------------------
800,000 Pohang Iron & Steel, 7.50%, 8/1/2002 852,907
-------------------------------------------------------------------
1,000,000 Toronto Dominion Bank, 6.45%, 1/15/2009 997,501
-------------------------------------------------------------------
231,000 Victoria Public Finance Authority, 8.45%, 10/1/2001 262,856
------------------------------------------------------------------- -----------
Total 8,222,269
------------------------------------------------------------------- -----------
OIL & GAS--2.2%
-------------------------------------------------------------------
1,000,000 Enron Corp., 6.75%, 7/1/2005 1,024,307
------------------------------------------------------------------- -----------
TRANSPORTATION--1.7%
-------------------------------------------------------------------
700,000 CSX Transportation, 5.91%, 3/15/2000 701,014
-------------------------------------------------------------------
110,545 CSX Transportation, 8.41%, 3/1/2006 132,058
------------------------------------------------------------------- -----------
Total 833,072
------------------------------------------------------------------- -----------
TOTAL CORPORATE BONDS (IDENTIFIED COST $19,180,391) 19,436,751
------------------------------------------------------------------- -----------
MORTGAGE-BACKED SECURITIES--19.5%
- --------------------------------------------------------------------------------------
PRIVATE LABEL CMOS**--7.4%
-------------------------------------------------------------------
156,000 Bear Stearns Securities Investment, Inc., Series 1991-2E, 7.50%,
12/21/98 161,663
-------------------------------------------------------------------
500,000 Bear Stearns Securities Investment, Inc., Series 1993-3-A11, 7.75%,
2/27/2023 500,910
-------------------------------------------------------------------
500,000 GE Capital Mortgage Services Corp., Series 1993-2F, 6.96%,
11/26/2007 504,255
-------------------------------------------------------------------
500,000 GE Capital Mortgage Services Corp., Series 1993-1D, 7.60%,
2/25/2022 513,852
-------------------------------------------------------------------
250,000 Prudential Funding Corp., CMO, Class 14-F, 8.40%, 3/21/2005 263,897
-------------------------------------------------------------------
500,000 Prudential Home Mortgage Securities Corp., Series 1993-9, 7.05%,
3/25/2008 504,474
-------------------------------------------------------------------
</TABLE>
FOUNTAIN SQUARE QUALITY BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
MORTGAGE-BACKED SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------
PRIVATE LABEL CMOS**--CONTINUED
-------------------------------------------------------------------
$ 500,000 Prudential Home Mortgage Securities Corp., Series 1993-27, 7.50%,
7/25/2023 $ 515,171
-------------------------------------------------------------------
500,000 Residential Funding Mortgage Securities Corp., Series 1993-S2-A4,
8.00%, 1/25/2023 517,066
-------------------------------------------------------------------
25,176 Ryland Acceptance Corp., Class 22-C, 9.45%, 7/1/2011 25,586
-------------------------------------------------------------------
6,669 SCFC Home Equity Loan Trust Series 1989-1A, 8.80%, 9/16/2002 6,837
------------------------------------------------------------------- -----------
Total 3,513,711
------------------------------------------------------------------- -----------
GOVERNMENT AGENCY--12.1%
-------------------------------------------------------------------
174,892 Federal Home Loan Mortgage Corp., 8.00%, 7/15/2020 181,079
-------------------------------------------------------------------
3,750,000 Federal Home Loan Mortgage Corp., REMIC, 6.25%-9.098%,
8/15/97-2/15/2019 3,798,684
-------------------------------------------------------------------
430,132 Federal Home Loan Mortgage Corp., Income Only Strips, 1.00%,
7/15/99 6,538
-------------------------------------------------------------------
1,750,000 Federal National Mortgage Assoc., REMIC, 5.95%-7.20%,
1/26/2015-11/25/2016 1,782,568
------------------------------------------------------------------- -----------
Total 5,768,869
------------------------------------------------------------------- -----------
TOTAL MORTGAGE-BACKED SECURITIES (IDENTIFIED COST $9,362,819) 9,282,580
------------------------------------------------------------------- -----------
GOVERNMENT SECURITIES--35.4%
- --------------------------------------------------------------------------------------
GOVERNMENT AGENCIES--15.1%
-------------------------------------------------------------------
1,292,566 Federal Home Loan Mortgage Corp., 5.75%-9.50%, 6/16/97-7/15/2020 1,306,542
-------------------------------------------------------------------
500,000 Federal Home Loan Mortgage Corp., 6.16% (Callable 3/29/96 @ 100),
3/29/2000 515,950
-------------------------------------------------------------------
2,163,896 Federal National Mortgage Assoc., 5.00%-11.098%, 7/21/97-7/27/2020 2,287,925
-------------------------------------------------------------------
615,000 Federal National Mortgage Assoc., Debenture, 7.30%-8.60%,
12/10/97-10/28/2002 653,937
-------------------------------------------------------------------
750,000 Federal National Mortgage Assoc., Debenture, 6.20% (Callable
7/10/98 @ 100), 7/10/2003 753,151
-------------------------------------------------------------------
900,000 Federal National Mortgage Assoc., 6.25% (Callable 8/12/98 @ 100),
8/12/2003 905,748
-------------------------------------------------------------------
173,000 Federal National Mortgage Assoc., Medium-Term Notes, 5.60%, 6/11/97 174,360
-------------------------------------------------------------------
86,581 Student Loan Marketing Assoc., 9.40%, 5/31/2002 108,486
-------------------------------------------------------------------
500,000 Tennessee Valley Authority, 6.25%, (Callable 8/1/95 @103), 8/2/99 518,256
------------------------------------------------------------------- -----------
Total 7,224,355
------------------------------------------------------------------- -----------
TREASURY SECURITIES--20.3%
-------------------------------------------------------------------
9,119,000 U.S. Treasury Notes, 4.25%-9.50%, 2/15/94-2/17/2003 9,673,414
-------------------------------------------------------------------
4,000 U.S. Treasury Bonds, 8.75%, 8/15/94 4,115
------------------------------------------------------------------- -----------
Total 9,677,529
------------------------------------------------------------------- -----------
TOTAL GOVERNMENT SECURITIES (IDENTIFIED COST $16,709,883) 16,901,884
------------------------------------------------------------------- -----------
</TABLE>
FOUNTAIN SQUARE QUALITY BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
*REPURCHASE AGREEMENT--4.2%
- --------------------------------------------------------------------------------------
$2,024,000 Harris-Nesbitt, Thomson Securities, Inc., 3.00%, dated 1/31/94, due
2/1/94 (at amortized cost) (Note 2B) $ 2,024,000
------------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST, $47,277,093) $47,645,215+
------------------------------------------------------------------- -----------
</TABLE>
* Repurchase agreement is fully collateralized by U.S. government and/or agency
obligations based on market prices at the date of the portfolio.
** Collateralized Mortgage Obligation
+ The cost for federal tax purposes amounts to $47,277,093. The net unrealized
appreciation of investments on a federal tax basis amounts to $368,122, which
is comprised of $629,593 appreciation and $261,471 depreciation at January
31, 1994.
Note: The categories of investments are shown as a percentage of net assets
($47,688,358) at January 31, 1994.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE QUALITY BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at value (Notes 2A and 2B)
(identified and tax cost, $47,277,093) $47,645,215
- --------------------------------------------------------------------------------
Cash 268
- --------------------------------------------------------------------------------
Interest receivable 632,168
- --------------------------------------------------------------------------------
Receivable for investments sold 245,249
- --------------------------------------------------------------------------------
Receivable for Fund shares sold 208,008
- --------------------------------------------------------------------------------
Deferred expenses (Note 2G) 8,782
- -------------------------------------------------------------------------------- -----------
Total assets 48,739,690
- --------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------
Payable for investments purchased $997,440
- ---------------------------------------------------------------------
Payable for Fund shares redeemed 33,805
- ---------------------------------------------------------------------
Accrued expenses and other liabilities 20,087
- --------------------------------------------------------------------- --------
Total liabilities 1,051,332
- -------------------------------------------------------------------------------- -----------
NET ASSETS for 4,645,793 shares of beneficial interest outstanding $47,688,358
- -------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid-in capital $47,215,683
- --------------------------------------------------------------------------------
Unrealized appreciation of investments 368,122
- --------------------------------------------------------------------------------
Accumulated net realized gain on investments 73,932
- --------------------------------------------------------------------------------
Undistributed net investment income 30,621
- -------------------------------------------------------------------------------- -----------
Total $47,688,358
- -------------------------------------------------------------------------------- -----------
NET ASSET VALUE and Redemption Price Per Share:
($47,688,358 / 4,645,793 shares of beneficial interest outstanding) $10.26
- -------------------------------------------------------------------------------- -----------
COMPUTATION OF OFFERING PRICE:
- --------------------------------------------------------------------------------
Offering Price Per Share (100/95.5 of $10.26)* $10.74
- -------------------------------------------------------------------------------- -----------
</TABLE>
* See "What Shares Cost" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE QUALITY BOND FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------
Interest income (Note 2C) $1,378,957
- -----------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------
Investment advisory fee (Note 5) $119,068
- -----------------------------------------------------------------------
Administrative personnel and services fees (Note 5) 25,596
- -----------------------------------------------------------------------
Custodian fee (Note 5) 6,001
- -----------------------------------------------------------------------
Recordkeeper, transfer and dividend disbursing agent fees and expenses
(Note 5) 13,910
- -----------------------------------------------------------------------
Legal fees 1,680
- -----------------------------------------------------------------------
Auditing fees 6,989
- -----------------------------------------------------------------------
Printing and postage 5,776
- -----------------------------------------------------------------------
Fund share registration costs 8,055
- -----------------------------------------------------------------------
Miscellaneous 60
- ----------------------------------------------------------------------- --------
Total expenses 187,135
- -----------------------------------------------------------------------
Deduct--
- -------------------------------------------------------------
Waiver of investment advisory fee (Note 5) $18,767
- -------------------------------------------------------------
Waiver of custodian fee (Note 5) 6,001 24,768
- ------------------------------------------------------------- ------- --------
Net expenses 162,367
- ----------------------------------------------------------------------------------- ----------
Net investment income 1,216,590
- ----------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------------------------------
Net realized gain on investments (identified cost basis) 160,066
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (81,912)
- ----------------------------------------------------------------------------------- ----------
Net realized and unrealized gain (loss) on investments 78,154
- ----------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $1,294,744
- ----------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE QUALITY BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------
1994* 1993**
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------
Net investment income $ 1,216,590 $ 1,152,069
- -----------------------------------------------------------------
Net realized gain on investment transactions ($160,066 and
$66,994 net gains, respectively, as computed for federal income
tax purposes) (Note 2D) 160,066 66,994
- -----------------------------------------------------------------
Change in unrealized appreciation (depreciation) of investments (81,912) 450,034
- ----------------------------------------------------------------- ----------- -----------
Change in net assets resulting from operations 1,294,744 1,669,097
- ----------------------------------------------------------------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- -----------------------------------------------------------------
Dividends to shareholders from net investment income (1,309,817) (1,028,221)
- -----------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment transactions (153,128) --
- ----------------------------------------------------------------- ----------- -----------
Change in net assets resulting from distributions to
shareholders (1,462,945) (1,028,221)
- -----------------------------------------------------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- -----------------------------------------------------------------
Net proceeds from sale of shares 12,342,576 42,126,363
- -----------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
dividends declared 1,246,382 979,189
- -----------------------------------------------------------------
Cost of shares redeemed (3,694,556) (5,784,271)
- ----------------------------------------------------------------- ----------- -----------
Change in net assets from Fund share transactions 9,894,402 37,321,281
- ----------------------------------------------------------------- ----------- -----------
Change in net assets 9,726,201 37,962,157
- -----------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------
Beginning of period 37,962,157 --
- ----------------------------------------------------------------- ----------- -----------
End of period (including undistributed net investment income of
$30,621 and $123,848, respectively) $47,688,358 $37,962,157
- ----------------------------------------------------------------- ----------- -----------
</TABLE>
* For the six months ended January 31, 1994 (unaudited).
** For the period from November 20, 1992 (date of initial public investment) to
July 31, 1993.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE QUALITY BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------
1994* 1993**
------ ------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.29 $10.00
- --------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------
Net investment income 0.29 0.41
- --------------------------------------------------------------------
Net realized and unrealized gain on investments 0.02 0.26
- -------------------------------------------------------------------- ----- ------
Total from investment operations 0.31 0.67
- --------------------------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------
Dividends to shareholders from net investment income (0.31 ) (0.38)
- --------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment transactions (0.03 ) --
- -------------------------------------------------------------------- ----- ------
Total distributions (0.34 ) (0.38)
- -------------------------------------------------------------------- ----- ------
NET ASSET VALUE, END OF PERIOD $10.26 $10.29
- -------------------------------------------------------------------- ----- ------
TOTAL RETURN*** 3.10 % 6.78%
- --------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------
Expenses 0.75 %(b) 0.74%(b)
- --------------------------------------------------------------------
Net investment income 5.61 %(b) 6.07%(b)
- --------------------------------------------------------------------
Expense waiver/reimbursement(a) 0.11 %(b) 0.23%(b)
- --------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------
Net assets, end of period (000 omitted) $47,688 $37,962
- --------------------------------------------------------------------
Portfolio turnover rate 18 % 19%
- --------------------------------------------------------------------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
** Reflects operations for the period from November 20, 1992 (date of initial
public investment) to July 31, 1993.
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 5).
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE QUALITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--93.6%
- --------------------------------------------------------------------------------------
BANKING--6.4%
-------------------------------------------------------------------
85,000 Firstar Corp. $ 2,656,250
-------------------------------------------------------------------
60,000 Wachovia Corp. 2,092,500
------------------------------------------------------------------- -----------
Total 4,748,750
------------------------------------------------------------------- -----------
BUILDING MATERIALS--5.2%
-------------------------------------------------------------------
30,000 Masco Corp. 1,166,250
-------------------------------------------------------------------
80,000 Sherwin Williams Co. 2,730,000
------------------------------------------------------------------- -----------
Total 3,896,250
------------------------------------------------------------------- -----------
CHEMICALS--7.3%
-------------------------------------------------------------------
66,000 Air Products and Chemicals 3,275,250
-------------------------------------------------------------------
110,000 RPM, Inc. 2,103,750
------------------------------------------------------------------- -----------
Total 5,379,000
------------------------------------------------------------------- -----------
COMPUTER SOFTWARE SERVICES--5.2%
-------------------------------------------------------------------
57,000 Automatic Data Processing 2,985,375
-------------------------------------------------------------------
10,000 Microsoft Corp. 851,250
------------------------------------------------------------------- -----------
Total 3,836,625
------------------------------------------------------------------- -----------
CONSUMER PRODUCTS--6.1%
-------------------------------------------------------------------
20,000 Colgate Palmolive Co. 1,195,000
-------------------------------------------------------------------
21,100 International Flavors & Fragrances 799,162
-------------------------------------------------------------------
60,000 Newell Co. 2,512,500
------------------------------------------------------------------- -----------
Total 4,506,662
------------------------------------------------------------------- -----------
ELECTRICAL EQUIPMENT--10.1%
-------------------------------------------------------------------
46,000 Emerson Electric Co. 2,817,500
-------------------------------------------------------------------
32,000 General Electric Co. 3,448,000
-------------------------------------------------------------------
20,000 W.W. Grainger, Inc. 1,252,500
------------------------------------------------------------------- -----------
Total 7,518,000
------------------------------------------------------------------- -----------
ELECTRONICS--3.3%
-------------------------------------------------------------------
38,000 Intel Corp. 2,479,500
------------------------------------------------------------------- -----------
ENTERTAINMENT--1.6%
-------------------------------------------------------------------
25,000 Disney (Walt) Co. 1,181,250
------------------------------------------------------------------- -----------
FOOD--PROCESSING--1.5%
-------------------------------------------------------------------
49,200 Sara Lee Corp. 1,082,400
------------------------------------------------------------------- -----------
</TABLE>
FOUNTAIN SQUARE QUALITY GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
HEALTHCARE--6.1%
-------------------------------------------------------------------
33,500 Abbott Laboratories $ 988,250
-------------------------------------------------------------------
21,000 Medtronic, Inc. 1,764,000
-------------------------------------------------------------------
14,700 Schering Plough Corp. 926,100
-------------------------------------------------------------------
10,000 United Healthcare 855,000
------------------------------------------------------------------- -----------
Total 4,533,350
------------------------------------------------------------------- -----------
INSURANCE--4.9%
-------------------------------------------------------------------
44,000 Capital Holding Corp. 1,595,000
-------------------------------------------------------------------
35,000 Cincinnati Financial Corp. 2,038,750
------------------------------------------------------------------- -----------
Total 3,633,750
------------------------------------------------------------------- -----------
MANUFACTURING--4.7%
-------------------------------------------------------------------
70,000 Federal Signal Corp. 1,881,250
-------------------------------------------------------------------
40,000 Illinois Tool Works 1,623,500
------------------------------------------------------------------- -----------
Total 3,504,750
------------------------------------------------------------------- -----------
MEDIA/PUBLISHING--5.5%
-------------------------------------------------------------------
20,000 Gannett Co., Inc. 1,140,000
-------------------------------------------------------------------
93,000 Interpublic Group Companies, Inc. 2,952,750
------------------------------------------------------------------- -----------
Total 4,092,750
------------------------------------------------------------------- -----------
OFFICE EQUIPMENT--3.5%
-------------------------------------------------------------------
58,000 Pitney Bowes, Inc. 2,602,750
------------------------------------------------------------------- -----------
OIL AND GAS--8.8%
-------------------------------------------------------------------
16,900 Chevron Corp. 1,578,038
-------------------------------------------------------------------
40,000 Exxon Corp. 2,660,000
-------------------------------------------------------------------
28,000 Mobil Corp. 2,268,000
------------------------------------------------------------------- -----------
Total 6,506,038
------------------------------------------------------------------- -----------
RETAILING--5.0%
-------------------------------------------------------------------
38,000 Home Depot 1,482,000
-------------------------------------------------------------------
35,000 Walgreen Co. 1,365,000
-------------------------------------------------------------------
32,100 Wal-Mart Stores, Inc. 850,650
------------------------------------------------------------------- -----------
Total 3,697,650
------------------------------------------------------------------- -----------
TRANSPORTATION--4.1%
-------------------------------------------------------------------
56,000 Union Pacific Corp. 3,007,250
------------------------------------------------------------------- -----------
</TABLE>
FOUNTAIN SQUARE QUALITY GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
UTILITIES--4.3%
-------------------------------------------------------------------
47,000 Alltel Corp. $ 1,310,125
-------------------------------------------------------------------
24,400 Ameritech Corp. 1,024,800
-------------------------------------------------------------------
24,600 Ipalco Enterprises 833,325
------------------------------------------------------------------- -----------
Total 3,168,250
------------------------------------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST, $65,160,558) 69,374,975
------------------------------------------------------------------- -----------
*REPURCHASE AGREEMENT--6.7%
- --------------------------------------------------------------------------------------
$4,959,000 Harris-Nesbitt, Thomson Securities, Inc., 3.00%, dated 1/31/94, due
2/1/94 (at amortized cost) (Note 2B) 4,959,000
------------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST, $70,119,558) $74,333,975+
------------------------------------------------------------------- -----------
</TABLE>
+ The cost for federal tax purposes amounts to $70,119,558 at January 31, 1994.
The net unrealized appreciation of investments on a federal tax basis amounts
to $4,214,417, which is comprised of $5,218,459 appreciation and $1,004,042
depreciation at January 31, 1994.
* Repurchase agreement is fully collateralized by U.S. government and/or agency
obligations based on market prices at the date of the portfolio.
Note: The categories of investments are shown as a percentage of net assets
($74,133,535) at January 31, 1994.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE QUALITY GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at value (Notes 2A and 2B)
(identified and tax cost, $70,119,558) $74,333,975
- --------------------------------------------------------------------------------
Cash 532
- --------------------------------------------------------------------------------
Receivable for investments sold 260,533
- --------------------------------------------------------------------------------
Receivable for Fund shares sold 244,033
- --------------------------------------------------------------------------------
Dividends and interest receivable 101,676
- --------------------------------------------------------------------------------
Deferred expenses (Note 2G) 13,945
- -------------------------------------------------------------------------------- -----------
Total assets 74,954,694
- --------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------
Payable for investments purchased $750,804
- ---------------------------------------------------------------------
Payable for Fund shares redeemed 36,593
- ---------------------------------------------------------------------
Accrued expenses and other liabilities 33,762
- --------------------------------------------------------------------- --------
Total liabilities 821,159
- -------------------------------------------------------------------------------- -----------
NET ASSETS for 7,365,052 shares of beneficial interest outstanding $74,133,535
- -------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid-in capital $73,455,365
- --------------------------------------------------------------------------------
Unrealized appreciation of investments 4,214,417
- --------------------------------------------------------------------------------
Accumulated net realized loss on investments (3,582,406)
- --------------------------------------------------------------------------------
Undistributed net investment income 46,159
- -------------------------------------------------------------------------------- -----------
Total $74,133,535
- -------------------------------------------------------------------------------- -----------
NET ASSET VALUE and Redemption Price Per Share:
($74,133,535 / 7,365,052 shares of beneficial interest outstanding) $10.07
- -------------------------------------------------------------------------------- -----------
COMPUTATION OF OFFERING PRICE:
- --------------------------------------------------------------------------------
Offering Price Per Share (100/95.5 of $10.07)* $10.54
- -------------------------------------------------------------------------------- -----------
</TABLE>
* See "What Shares Cost" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE QUALITY GROWTH FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------
Dividend income $ 860,801
- ----------------------------------------------------------------------------------
Interest income 32,374
- ---------------------------------------------------------------------------------- -----------
Total investment income (Note 2C) 893,175
- ----------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------
Investment advisory fee (Note 5) $288,547
- ----------------------------------------------------------------------
Administrative personnel and services fees (Note 5) 41,921
- ----------------------------------------------------------------------
Custodian fee (Note 5) 6,743
- ----------------------------------------------------------------------
Recordkeeper, transfer and dividend disbursing agent fees
and expenses (Note 5) 16,134
- ----------------------------------------------------------------------
Legal fees 4,383
- ----------------------------------------------------------------------
Auditing fees 7,853
- ----------------------------------------------------------------------
Printing and postage 829
- ----------------------------------------------------------------------
Fund share registration costs 10,329
- ----------------------------------------------------------------------
Miscellaneous 1,641
- ---------------------------------------------------------------------- --------
Total expenses 378,380
- ----------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------
Waiver of investment advisory fee (Note 5) $10,739
- ------------------------------------------------------------
Waiver of custodian fee (Note 5) 6,743 17,482
- ------------------------------------------------------------ ------- --------
Net expenses 360,898
- ---------------------------------------------------------------------------------- -----------
Net investment income 532,277
- ---------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------
Net realized loss on investment transactions (identified cost basis) (2,394,135)
- ----------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 6,210,852
- ---------------------------------------------------------------------------------- -----------
Net realized and unrealized gain (loss) on investments 3,816,717
- ---------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $ 4,348,994
- ---------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE QUALITY GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------
1994* 1993**
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------
Net investment income $ 532,277 $ 640,755
- -----------------------------------------------------------------
Net realized loss on investment transactions ($2,394,135, and
$1,188,271 net losses, respectively, as computed for federal
income tax purposes) (Note 2D) (2,394,135) (1,188,271)
- -----------------------------------------------------------------
Change in unrealized appreciation (depreciation) of investments 6,210,852 (1,996,435)
- ----------------------------------------------------------------- ----------- -----------
Change in net assets resulting from operations 4,348,994 (2,543,951)
- ----------------------------------------------------------------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- -----------------------------------------------------------------
Dividends to shareholders from net investment income (557,817) (569,056)
- ----------------------------------------------------------------- ----------- -----------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- -----------------------------------------------------------------
Net proceeds from sale of shares 9,108,678 78,736,882
- -----------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
dividends declared 534,873 559,992
- -----------------------------------------------------------------
Cost of shares redeemed (6,981,906) (8,503,154)
- ----------------------------------------------------------------- ----------- -----------
Change in net assets from Fund share transactions 2,661,645 70,793,720
- ----------------------------------------------------------------- ----------- -----------
Change in net assets 6,452,822 67,680,713
- -----------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------
Beginning of period 67,680,713 --
- ----------------------------------------------------------------- ----------- -----------
End of period (including undistributed net investment income
of $46,159 and $71,699, respectively) $74,133,535 $67,680,713
- ----------------------------------------------------------------- ----------- -----------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
** For the period from November 20, 1992 (date of initial public investment) to
July 31, 1993.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE QUALITY GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------
1994* 1993**
------ ------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.54 $10.00
- -----------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------
Net investment income 0.07 0.10
- -----------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.54 (0.47)
- ----------------------------------------------------------------- ------ ------
Total from investment operations 0.61 (0.37)
- -----------------------------------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------
Dividends to shareholders from net investment income (0.08) (0.09)
- ----------------------------------------------------------------- ------ ------
NET ASSET VALUE, END OF PERIOD $10.07 $ 9.54
- ----------------------------------------------------------------- ------ ------
TOTAL RETURN*** 6.38% (3.73%)
- -----------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------
Expenses 1.00%(a) 0.99%(a)
- -----------------------------------------------------------------
Net investment income 1.48%(a) 1.47%(a)
- -----------------------------------------------------------------
Expense waiver/reimbursement (b) 0.05%(a) 0.05%(a)
- -----------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------
Net assets, end of period (000 omitted) $74,134 $67,681
- -----------------------------------------------------------------
Portfolio turnover rate 25% 28%
- -----------------------------------------------------------------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
** Reflects operations for the period from November 20, 1992 (date of initial
public investment), to July 31, 1993.
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statement)
FOUNTAIN SQUARE MID CAP FUND
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--95.5%
- --------------------------------------------------------------------------------------
BANKING--4.2%
-------------------------------------------------------------------
37,000 Firstar Corp. $ 1,156,250
------------------------------------------------------------------- -----------
BUILDING MATERIALS--1.8%
-------------------------------------------------------------------
12,000 Valspar Corp. 486,000
------------------------------------------------------------------- -----------
CHEMICALS--12.3%
-------------------------------------------------------------------
26,100 Crompton & Knowles 590,513
-------------------------------------------------------------------
20,000 Loctite Corp. 802,500
-------------------------------------------------------------------
51,000 RPM, Inc. 975,375
-------------------------------------------------------------------
21,000 Sigma Aldrich Corp. 1,042,125
------------------------------------------------------------------- -----------
Total 3,410,513
------------------------------------------------------------------- -----------
COMMERCIAL SERVICES--3.3%
-------------------------------------------------------------------
27,000 Cintas Corp. 914,625
------------------------------------------------------------------- -----------
COMPUTER SOFTWARE SERVICES--9.3%
-------------------------------------------------------------------
13,000 Electronic Arts 372,125
-------------------------------------------------------------------
21,500 First Data Corp. 983,625
-------------------------------------------------------------------
40,000 Fiserv, Inc. 770,000
-------------------------------------------------------------------
11,250 Paychex, Inc. 450,000
------------------------------------------------------------------- -----------
Total 2,575,750
------------------------------------------------------------------- -----------
DISTRIBUTION/WHOLESALE--1.8%
-------------------------------------------------------------------
11,000 Cardinal Distribution, Inc. 484,000
------------------------------------------------------------------- -----------
ELECTRICAL EQUIPMENT--3.5%
-------------------------------------------------------------------
15,200 W.W. Grainger, Inc. 951,900
------------------------------------------------------------------- -----------
ELECTRONICS--4.3%
-------------------------------------------------------------------
10,000 Premier Industrial Corp. 258,750
-------------------------------------------------------------------
26,600 Vishay Intertechnologies, Inc. 924,350
------------------------------------------------------------------- -----------
Total 1,183,100
------------------------------------------------------------------- -----------
FINANCIAL SERVICES--2.3%
-------------------------------------------------------------------
16,000 United Asset Management 634,000
------------------------------------------------------------------- -----------
FOOD--PROCESSING--2.5%
-------------------------------------------------------------------
31,000 McCormick & Co., Inc. 705,250
------------------------------------------------------------------- -----------
</TABLE>
FOUNTAIN SQUARE MID CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS/WARES--2.6%
-------------------------------------------------------------------
17,000 Newell Co. $ 711,875
------------------------------------------------------------------- -----------
INSURANCE--10.1%
-------------------------------------------------------------------
17,000 Cincinnati Financial Corp. 990,250
-------------------------------------------------------------------
27,000 Equitable of Iowa Co. 786,375
-------------------------------------------------------------------
31,000 MGIC Investment Corp. 1,007,500
------------------------------------------------------------------- -----------
Total 2,784,125
------------------------------------------------------------------- -----------
IRON/STEEL--1.4%
-------------------------------------------------------------------
18,000 Allegheny Ludlum Corp. 400,500
------------------------------------------------------------------- -----------
MANUFACTURING--7.2%
-------------------------------------------------------------------
21,090 Kaydon Corp. 429,709
-------------------------------------------------------------------
5,000 La-Z Boy Chair Co. 191,250
-------------------------------------------------------------------
21,000 TriMas Corp. 501,375
-------------------------------------------------------------------
16,500 Watts Ind., Class A 878,625
------------------------------------------------------------------- -----------
Total 2,000,959
------------------------------------------------------------------- -----------
MEDIA/PUBLISHING--3.8%
-------------------------------------------------------------------
33,200 Interpublic Group Companies, Inc. 1,054,100
------------------------------------------------------------------- -----------
MEDICAL SUPPLIES--7.2%
-------------------------------------------------------------------
15,000 Bausch & Lomb, Inc. 789,375
-------------------------------------------------------------------
10,500 Medtronic, Inc. 882,000
-------------------------------------------------------------------
11,200 St. Jude Medical 327,600
------------------------------------------------------------------- -----------
Total 1,998,975
------------------------------------------------------------------- -----------
RETAIL--DRUG STORES--2.4%
-------------------------------------------------------------------
30,100 Medicine Shoppe International, Inc. 662,200
------------------------------------------------------------------- -----------
RETAIL--GROCERY--2.0%
-------------------------------------------------------------------
24,000 Hannaford Brothers 540,000
------------------------------------------------------------------- -----------
</TABLE>
FOUNTAIN SQUARE MID CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
RETAIL--GENERAL--2.9%
-------------------------------------------------------------------
29,625 Dollar General Corp. $ 807,281
------------------------------------------------------------------- -----------
TIRE & RUBBER--2.4%
-------------------------------------------------------------------
11,500 Bandag, Inc., Class A 651,188
------------------------------------------------------------------- -----------
TRUCKING & LEASING--5.6%
-------------------------------------------------------------------
46,500 Arnold Industries, Inc. 947,437
-------------------------------------------------------------------
20,000 Werner Enterprises, Inc. 590,000
------------------------------------------------------------------- -----------
Total 1,537,437
------------------------------------------------------------------- -----------
UTILITIES--2.6%
-------------------------------------------------------------------
17,500 Washington Gas & Light Co. 726,250
------------------------------------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST, $24,751,125) 26,376,278
------------------------------------------------------------------- -----------
*REPURCHASE AGREEMENT--5.5%
- --------------------------------------------------------------------------------------
$1,526,000 Harris-Nesbitt, Thomson Securities, Inc., 3.00%, dated 1/31/94, due
2/1/94 (at amortized cost)/(Note 2B) 1,526,000
------------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST, $26,277,125) $27,902,278+
------------------------------------------------------------------- -----------
</TABLE>
* Repurchase agreement is fully collateralized by U.S. government and/or agency
obligations based on market prices at the date of the portfolio.
+ The cost for federal tax purposes amounts to $26,277,125 at January 31, 1994.
The net unrealized appreciation of investments on a federal tax basis amounts
to $1,625,153 which is comprised of $2,300,020 appreciation and $674,867
depreciation at January 31, 1994.
Note: The categories of investments are shown as a percentage of net assets
($27,630,613) at January 31, 1994.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE MID CAP FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at value (Notes 2A and 2B)
(identified and tax cost, $26,277,125) $27,902,278
- --------------------------------------------------------------------------------
Cash 687
- --------------------------------------------------------------------------------
Receivable for Fund shares sold 47,457
- --------------------------------------------------------------------------------
Dividends receivable 20,590
- --------------------------------------------------------------------------------
Deferred expenses (Note 2G) 5,862
- -------------------------------------------------------------------------------- -----------
Total assets 27,976,874
- --------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------
Payable for investments purchased $309,428
- ---------------------------------------------------------------------
Payable for fund shares redeemed 29,203
- ---------------------------------------------------------------------
Accrued expenses and other liabilities 7,630
- --------------------------------------------------------------------- --------
Total liabilities 346,261
- -------------------------------------------------------------------------------- -----------
NET ASSETS for 2,649,139 shares of beneficial interest outstanding $27,630,613
- -------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid-in capital $26,526,270
- --------------------------------------------------------------------------------
Unrealized appreciation of investments 1,625,153
- --------------------------------------------------------------------------------
Accumulated net realized loss on investments (524,495)
- --------------------------------------------------------------------------------
Undistributed net investment income 3,685
- -------------------------------------------------------------------------------- -----------
Total $27,630,613
- -------------------------------------------------------------------------------- -----------
NET ASSET VALUE and Redemption Price Per Share:
($27,630,613 / 2,649,139 shares of beneficial interest outstanding) $10.43
- -------------------------------------------------------------------------------- -----------
COMPUTATION OF OFFERING PRICE:
- --------------------------------------------------------------------------------
Offering Price Per Share (100/95.5 of $10.43)* $10.92
- -------------------------------------------------------------------------------- -----------
</TABLE>
* See "What Shares Cost" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE MID CAP FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------
Interest income $ 32,002
- -----------------------------------------------------------------------------------
Dividend income 188,297
- ----------------------------------------------------------------------------------- ----------
Total investment income (Note 2C) 220,299
- -----------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------
Investment advisory fee (Note 5) $104,635
- -----------------------------------------------------------------------
Administrative personnel and services fees (Note 5) 25,207
- -----------------------------------------------------------------------
Custodian fee (Note 5) 5,648
- -----------------------------------------------------------------------
Recordkeeper, transfer and dividend disbursing agent fees
and expenses (Note 5) 14,785
- -----------------------------------------------------------------------
Legal fees 2,771
- -----------------------------------------------------------------------
Auditing fees 6,577
- -----------------------------------------------------------------------
Printing and postage 3,160
- -----------------------------------------------------------------------
Fund share registration cost 6,373
- -----------------------------------------------------------------------
Miscellaneous 1,474
- ----------------------------------------------------------------------- --------
Total expenses 170,630
- -----------------------------------------------------------------------
Deduct--
- -----------------------------------------------------------------------
Waiver of investment advisory fee (Note 5) $34,171
- -------------------------------------------------------------
Waiver of custodian fee (Note 5) 5,648 39,819
- ------------------------------------------------------------- ------- --------
Net expenses 130,811
- ----------------------------------------------------------------------------------- ----------
Net investment income 89,488
- ----------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------------------------------
Net realized loss on investment transactions (identified cost basis) (260,022)
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 2,196,124
- ----------------------------------------------------------------------------------- ----------
Net realized and unrealized gain (loss) on investments 1,936,102
- ----------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $2,025,590
- ----------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE MID CAP FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------
1994* 1993**
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------
Net investment income $ 89,488 $ 116,090
- -----------------------------------------------------------------
Net realized loss on investment transactions
($260,022 and $264,473 net losses, respectively, as computed for
federal income tax purposes) (Note 2D) (260,022) (264,473)
- -----------------------------------------------------------------
Change in unrealized appreciation (depreciation) of investments 2,196,124 (570,971)
- ----------------------------------------------------------------- ----------- -----------
Change in net assets resulting from operations 2,025,590 (719,354)
- ----------------------------------------------------------------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- -----------------------------------------------------------------
Dividends to shareholders from net investment income (105,901) (95,992)
- ----------------------------------------------------------------- ----------- -----------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- -----------------------------------------------------------------
Net proceeds from sale of shares 4,076,397 25,919,640
- -----------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
dividends declared 98,994 92,623
- -----------------------------------------------------------------
Cost of shares redeemed (2,483,928) (1,177,456)
- ----------------------------------------------------------------- ----------- -----------
Change in net assets from Fund share transactions 1,691,463 24,834,807
- ----------------------------------------------------------------- ----------- -----------
Change in net assets 3,611,152 24,019,461
- -----------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------
Beginning of period 24,019,461 --
- ----------------------------------------------------------------- ----------- -----------
End of period (including undistributed net investment income
of $3,685 and $20,098, respectively) $27,630,613 $24,019,461
- ----------------------------------------------------------------- ----------- -----------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
** For the period from November 20, 1992 (date of initial public investment) to
July 31, 1993.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE MID CAP FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------
1994* 1993**
------ ------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.68 $10.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
Net investment income 0.03 0.06
- ----------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.76 (0.33 )
- ---------------------------------------------------------------------- ------ -----
Total from investment operations 0.79 (0.27 )
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------
Dividends to shareholders from net investment income (0.04) (0.05 )
- ---------------------------------------------------------------------- ------ -----
NET ASSET VALUE, END OF PERIOD $10.43 $9.68
- ---------------------------------------------------------------------- ------ -----
TOTAL RETURN*** 8.19% (2.73 %)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------
Expenses 1.00%(a) 0.99 %(a)
- ----------------------------------------------------------------------
Net investment income 0.68%(a) 0.88 %(a)
- ----------------------------------------------------------------------
Expense waiver/reimbursement(b) 0.30%(a) 0.40 %(a)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------
Net assets, end of period (000 omitted) $27,631 $24,019
- ----------------------------------------------------------------------
Portfolio turnover rate 26% 20 %
- ----------------------------------------------------------------------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
** Reflects operations for the period from November 20, 1992 (date of initial
public investment), to July 31, 1993.
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE BALANCED FUND
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--66.0%
- --------------------------------------------------------------------------------------
BANKING--4.5%
-------------------------------------------------------------------
52,000 Firstar Corp. $ 1,625,000
-------------------------------------------------------------------
36,000 Wachovia Corp. 1,255,500
------------------------------------------------------------------- -----------
Total 2,880,500
------------------------------------------------------------------- -----------
BUILDING MATERIALS--4.1%
-------------------------------------------------------------------
26,000 Masco Corp. 1,010,750
-------------------------------------------------------------------
48,000 Sherwin Williams Co. 1,638,000
------------------------------------------------------------------- -----------
Total 2,648,750
------------------------------------------------------------------- -----------
CHEMICALS--5.1%
-------------------------------------------------------------------
43,000 Air Products and Chemicals 2,133,875
-------------------------------------------------------------------
60,000 RPM Inc. 1,147,500
------------------------------------------------------------------- -----------
Total 3,281,375
------------------------------------------------------------------- -----------
COMPUTER SOFTWARE SERVICES--3.8%
-------------------------------------------------------------------
37,000 Automatic Data Processing 1,937,875
-------------------------------------------------------------------
6,000 Microsoft Corp. 510,750
------------------------------------------------------------------- -----------
Total 2,448,625
------------------------------------------------------------------- -----------
CONSUMER PRODUCTS--3.1%
-------------------------------------------------------------------
8,100 International Flavors & Fragrances 306,787
-------------------------------------------------------------------
40,000 Newell Co. 1,675,000
------------------------------------------------------------------- -----------
Total 1,981,787
------------------------------------------------------------------- -----------
ELECTRICAL EQUIPMENT--7.3%
-------------------------------------------------------------------
29,000 Emerson Electric 1,776,250
-------------------------------------------------------------------
20,000 General Electric 2,155,000
-------------------------------------------------------------------
12,000 W.W. Grainger, Inc. 751,500
------------------------------------------------------------------- -----------
Total 4,682,750
------------------------------------------------------------------- -----------
ELECTRONICS--3.1%
-------------------------------------------------------------------
31,000 Intel Corp. 2,022,750
------------------------------------------------------------------- -----------
ENTERTAINMENT--1.2%
-------------------------------------------------------------------
16,000 Disney (Walt) Co. 756,000
------------------------------------------------------------------- -----------
FOOD--PROCESSING--1.0%
-------------------------------------------------------------------
30,000 Sara Lee Corp. 660,000
------------------------------------------------------------------- -----------
</TABLE>
FOUNTAIN SQUARE BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
HEALTH CARE--4.2%
-------------------------------------------------------------------
21,000 Abbott Labs $ 619,500
-------------------------------------------------------------------
12,000 Medtronic, Inc. 1,008,000
-------------------------------------------------------------------
9,000 Schering Plough Corp. 567,000
-------------------------------------------------------------------
6,000 United Healthcare 513,000
------------------------------------------------------------------- -----------
Total 2,707,500
------------------------------------------------------------------- -----------
INSURANCE--3.4%
-------------------------------------------------------------------
28,000 Capital Holdings Corp. 1,015,000
-------------------------------------------------------------------
20,000 Cincinnati Financial Corp. 1,165,000
------------------------------------------------------------------- -----------
Total 2,180,000
------------------------------------------------------------------- -----------
MANUFACTURING--3.4%
-------------------------------------------------------------------
40,000 Federal Signal Corp. 1,075,000
-------------------------------------------------------------------
26,000 Illinois Tool Works 1,105,000
------------------------------------------------------------------- -----------
Total 2,180,000
------------------------------------------------------------------- -----------
MEDIA/PUBLISHING--3.8%
-------------------------------------------------------------------
12,000 Gannett Co., Inc. 684,000
-------------------------------------------------------------------
55,000 Interpublic Group Companies 1,746,250
------------------------------------------------------------------- -----------
Total 2,430,250
------------------------------------------------------------------- -----------
OFFICE EQUIPMENT--2.5%
-------------------------------------------------------------------
36,000 Pitney Bowes Inc. 1,615,500
------------------------------------------------------------------- -----------
OIL/GAS--6.5%
-------------------------------------------------------------------
11,300 Chevron Corp. 1,055,138
-------------------------------------------------------------------
25,000 Exxon Corp. 1,662,500
-------------------------------------------------------------------
18,000 Mobil Corp. 1,458,000
------------------------------------------------------------------- -----------
Total 4,175,638
------------------------------------------------------------------- -----------
RAILROAD--2.8%
-------------------------------------------------------------------
28,000 Union Pacific 1,830,500
------------------------------------------------------------------- -----------
RETAILING--3.4%
-------------------------------------------------------------------
22,000 Home Depot, Inc. 858,000
-------------------------------------------------------------------
21,000 Walgreen Co. 819,000
-------------------------------------------------------------------
20,000 Wal-Mart Stores 530,000
------------------------------------------------------------------- -----------
Total 2,207,000
------------------------------------------------------------------- -----------
UTILITIES--2.8%
-------------------------------------------------------------------
28,600 Alltel Corp. 797,225
-------------------------------------------------------------------
12,400 Ameritech Corp. 520,800
-------------------------------------------------------------------
</TABLE>
FOUNTAIN SQUARE BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
UTILITIES--CONTINUED
-------------------------------------------------------------------
15,000 IPALCO Enterprises $ 508,125
------------------------------------------------------------------- -----------
Total 1,826,150
------------------------------------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST, $39,827,155) 42,515,075
------------------------------------------------------------------- -----------
CORPORATE BONDS--11.8%
- --------------------------------------------------------------------------------------
ASSET BACKED SECURITIES--0.0%
-------------------------------------------------------------------
$ 13,169 Ford Credit Grantor Trust, Series 1990--A, 8.75%, 10/16/95 13,368
------------------------------------------------------------------- -----------
BANKING--0.5%
-------------------------------------------------------------------
139,000 Bankers Trust NY Corp., 9.20%-10.20%, 3/15/99-7/15/99 147,370
-------------------------------------------------------------------
139,000 Republic Bank of NY, 6.40%, 4/17/95 143,165
------------------------------------------------------------------- -----------
Total 290,535
------------------------------------------------------------------- -----------
FINANCE--COMMERCIAL--0.2%
-------------------------------------------------------------------
93,000 ITT Financial Corp., 10.125%, 4/5/99 111,051
------------------------------------------------------------------- -----------
FINANCE--RETAIL--0.9%
-------------------------------------------------------------------
432,000 General Electric Credit Corp., 8.52%-8.90%, 9/15/2004-5/1/2018 467,050
-------------------------------------------------------------------
139,000 Norwest Financial, Inc., 7.95%, 6/15/94 141,216
------------------------------------------------------------------- -----------
Total 608,266
------------------------------------------------------------------- -----------
INSURANCE--2.5%
-------------------------------------------------------------------
500,000 Aon Corp., 6.875%, 10/1/99 525,236
-------------------------------------------------------------------
93,000 Capital Holding, 9.79%, 10/6/97 107,448
-------------------------------------------------------------------
93,000 Chubb Corp., 8.75%, 11/15/99 107,625
-------------------------------------------------------------------
228,000 Metlife Fund, 7.75%, 10/1/96 243,675
-------------------------------------------------------------------
575,000 SAFECO Insurance Co., 7.25%, 1/29/2003 624,691
------------------------------------------------------------------- -----------
Total 1,608,675
------------------------------------------------------------------- -----------
INTERNATIONAL--6.8%
-------------------------------------------------------------------
500,000 Bank of Nova Scotia, 6.875%, 5/1/2003 517,003
-------------------------------------------------------------------
500,000 Bank of Korea, 6.50%, 5/15/2000 511,539
-------------------------------------------------------------------
93,000 Deutche Bank Financial, 9.28%, 5/31/99 108,856
-------------------------------------------------------------------
1,000,000 Hanson Overseas, 5.50%-7.375%, 1/15/96-1/15/2003 1,040,099
-------------------------------------------------------------------
139,000 Helaba Finance, 8.00%, 9/16/96 150,120
-------------------------------------------------------------------
500,000 Kingdom of Thailand, 8.25%, 3/15/2002 558,075
-------------------------------------------------------------------
232,000 National Westminster Bancorp, 9.375%, 11/17/2003 283,908
-------------------------------------------------------------------
500,000 Pohang Iron & Steel, 6.625%, 7/1/2003 499,327
-------------------------------------------------------------------
500,000 Toronto Dominion Bank, 6.45%, 1/15/2009 498,751
-------------------------------------------------------------------
186,000 Victoria Public Authority Finance, 8.45%, 10/1/2001 211,650
------------------------------------------------------------------- -----------
Total 4,379,328
------------------------------------------------------------------- -----------
</TABLE>
FOUNTAIN SQUARE BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- --------------------------------------------------------------------------------------
TELECOMMUNICATIONS--0.8%
-------------------------------------------------------------------
$ 500,000 Northern Telecommunications, Ltd., 6.00%, 9/1/2003 $ 492,504
------------------------------------------------------------------- -----------
TRANSPORTATION--0.2%
-------------------------------------------------------------------
89,398 CSX Transportation, 8.41%, 3/1/2006 106,795
------------------------------------------------------------------- -----------
TOTAL CORPORATE BONDS (IDENTIFIED COST, $7,416,820) 7,610,522
------------------------------------------------------------------- -----------
MORTGAGE BACKED SECURITIES--9.2%
- --------------------------------------------------------------------------------------
PRIVATE LABEL CMOS**--4.6%
-------------------------------------------------------------------
500,000 Bear Stearns Mortgage Securities, Inc., Series 1993-3-A11, 7.75%,
2/27/2023 500,910
-------------------------------------------------------------------
126,000 Bear Stearns Securities Investment, Inc., Series 1991-2E, 7.50%,
12/21/98 130,574
-------------------------------------------------------------------
500,000 GE Capital Mortgage Service, Series 1993-1D, 7.60%, 2/25/2022 513,852
-------------------------------------------------------------------
500,000 GE Capital Mortgage Service, Series 1993-2F, 6.96%, 11/26/2007 504,255
-------------------------------------------------------------------
250,000 Prudential Funding Corp., Series 14-F, 8.40%, 3/21/2005 263,897
-------------------------------------------------------------------
500,000 Prudential Home Mortgage Service, Series 1993-9-A10, 7.05%,
3/25/2008 504,474
-------------------------------------------------------------------
500,000 Residential Funding Mortgage Securities, Series 1993-S2, 8.00%,
1/25/2023 517,066
-------------------------------------------------------------------
20,196 Ryland Acceptance Corp., Series 22-C, 9.45%, 7/1/2011 20,525
-------------------------------------------------------------------
5,130 SCFC Home Equity, Series 1989-1A, 8.80%, 9/16/2002 5,259
------------------------------------------------------------------- -----------
Total 2,960,812
------------------------------------------------------------------- -----------
GOVERNMENT AGENCIES--4.6%
-------------------------------------------------------------------
875,505 Federal Home Loan Mortgage Corp., 5.75%-9.50%, 6/16/97-8/15/2022 889,526
-------------------------------------------------------------------
344,105 Federal Home Loan Mortgage Corp. Income Only STRIPS,
Series 1282-D, 7/15/99 5,230
-------------------------------------------------------------------
1,969,380 Federal National Mortgage Association, 5.00%-11.031%,
6/11/97-7/27/2020 2,065,103
------------------------------------------------------------------- -----------
Total 2,959,859
------------------------------------------------------------------- -----------
TOTAL MORTGAGE BACKED SECURITIES (IDENTIFIED COST, $5,946,756) 5,920,671
------------------------------------------------------------------- -----------
GOVERNMENT SECURITIES--6.5%
- --------------------------------------------------------------------------------------
GOVERNMENT AGENCIES--0.9%
-------------------------------------------------------------------
69,445 Student Loan Marketing Association, 9.40%, 5/31/2002 87,016
-------------------------------------------------------------------
500,000 Tennessee Valley Authority, 6.25%, 8/2/99 518,256
------------------------------------------------------------------- -----------
Total 605,272
------------------------------------------------------------------- -----------
</TABLE>
FOUNTAIN SQUARE BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
GOVERNMENT SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------
TREASURY SECURITIES--5.6%
-------------------------------------------------------------------
$3,324,000 U.S. Treasury Notes, 4.625%-9.25%, 2/15/94-8/15/2003 $ 3,575,714
-------------------------------------------------------------------
26,000 U.S. Treasury Bonds, 8.75%, 8/15/94 26,748
------------------------------------------------------------------- -----------
Total 3,602,462
------------------------------------------------------------------- -----------
TOTAL GOVERNMENT SECURITIES (IDENTIFIED COST, $4,156,297) 4,207,734
------------------------------------------------------------------- -----------
*REPURCHASE AGREEMENT--6.0%
- --------------------------------------------------------------------------------------
3,843,000 Harris-Nesbitt, Thomson Securities, Inc., 3.00%, dated 1/31/94, due
2/1/94
(at amortized cost)/(Note 2B) 3,843,000
------------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST, $61,190,028) $64,097,002+
------------------------------------------------------------------- -----------
</TABLE>
+ The cost for federal tax purposes amounts to $61,190,028 at January 31, 1994.
The net unrealized appreciation of investments on a federal tax basis amounts
to $2,906,974, which is comprised of $3,724,040 appreciation and $817,066
depreciation at January 31, 1994.
* Repurchase agreement is fully collateralized by U.S. government and/or agency
obligations based on market prices at the date of the portfolio.
** Collateralized Mortgage Obligations.
Note: The categories of investments are shown as a percentage of total net
assets ($64,414,503) at January 31, 1994.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at value (Notes 2A and 2B)
(identified and tax cost, $61,190,028) $64,097,002
- --------------------------------------------------------------------------------
Cash 913
- --------------------------------------------------------------------------------
Receivable for investments sold 424,825
- --------------------------------------------------------------------------------
Dividends and interest receivable 314,494
- --------------------------------------------------------------------------------
Receivable for Fund shares sold 76,988
- --------------------------------------------------------------------------------
Deferred expenses (Note 2G) 12,724
- -------------------------------------------------------------------------------- -----------
Total assets 64,926,946
- --------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------
Payable for investments purchased $434,676
- ---------------------------------------------------------------------
Payable for Fund shares redeemed 49,754
- ---------------------------------------------------------------------
Accrued expenses and other liabilities 28,013
- --------------------------------------------------------------------- --------
Total liabilities 512,443
- -------------------------------------------------------------------------------- -----------
NET ASSETS for 6,339,483 shares of beneficial interest outstanding $64,414,503
- -------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid-in capital $63,436,358
- --------------------------------------------------------------------------------
Unrealized appreciation of investments 2,906,974
- --------------------------------------------------------------------------------
Accumulated net realized loss on investments (2,078,769)
- --------------------------------------------------------------------------------
Undistributed net investment income 149,940
- -------------------------------------------------------------------------------- -----------
Total $64,414,503
- -------------------------------------------------------------------------------- -----------
NET ASSET VALUE and Redemption Price Per Share:
($64,414,503 / 6,339,483 shares of beneficial interest outstanding) $ 10.16
- -------------------------------------------------------------------------------- -----------
COMPUTATION OF OFFERING PRICE:
- --------------------------------------------------------------------------------
Offering Price Per Share (100/95.5 of $10.16)* $ 10.64
- -------------------------------------------------------------------------------- -----------
</TABLE>
* See "What Shares Cost" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE BALANCED FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------
Interest income $ 641,301
- ----------------------------------------------------------------------------------
Dividend income 525,199
- ---------------------------------------------------------------------------------- -----------
Total investment income (Note 2C) 1,166,500
- ----------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------
Investment advisory fee (Note 5) $252,534
- ----------------------------------------------------------------------
Administrative personnel and services fees (Note 5) 36,693
- ----------------------------------------------------------------------
Custodian fee (Note 5) 10,574
- ----------------------------------------------------------------------
Recordkeeper, transfer and dividend disbursing agent fees and expenses
(Note 5) 16,911
- ----------------------------------------------------------------------
Legal fees 3,202
- ----------------------------------------------------------------------
Printing and postage 4,231
- ----------------------------------------------------------------------
Auditing fees 7,530
- ----------------------------------------------------------------------
Fund share registration costs 8,703
- ----------------------------------------------------------------------
Miscellaneous 1,167
- ---------------------------------------------------------------------- --------
Total expenses 341,545
- ----------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------
Waiver of investment advisory fee (Note 5) $15,306
- ------------------------------------------------------------
Waiver of custodian fee (Note 5) 10,574 25,880
- ------------------------------------------------------------ ------- --------
Net expenses 315,665
- ---------------------------------------------------------------------------------- -----------
Net investment income 850,835
- ---------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------
Net realized loss on investment transactions (identified cost basis) (1,421,938)
- ----------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 3,828,792
- ---------------------------------------------------------------------------------- -----------
Net realized and unrealized gain (loss) on investments 2,406,854
- ---------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $ 3,257,689
- ---------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE BALANCED FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------
1994* 1993**
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------
Net investment income $ 850,835 $ 1,093,825
- -----------------------------------------------------------------
Net realized loss on investment transactions ($1,421,938 and
$656,831 net loss, respectively, as computed for federal income
tax purposes) (Note 2D) (1,421,938) (656,831)
- -----------------------------------------------------------------
Change in unrealized appreciation (depreciation) of investments 3,828,792 (921,818)
- ----------------------------------------------------------------- ----------- -----------
Change in net assets resulting from operations 3,257,689 (484,824)
- ----------------------------------------------------------------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- -----------------------------------------------------------------
Dividends to shareholders from net investment income (881,168) (913,552)
- ----------------------------------------------------------------- ----------- -----------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- -----------------------------------------------------------------
Net proceeds from sale of shares 9,359,746 67,656,356
- -----------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 863,347 904,990
- -----------------------------------------------------------------
Cost of shares redeemed (8,353,408) (6,994,673)
- ----------------------------------------------------------------- ----------- -----------
Change in net assets from Fund share transactions 1,869,685 61,566,673
- ----------------------------------------------------------------- ----------- -----------
Change in net assets 4,246,206 60,168,297
- -----------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------
Beginning of period 60,168,297 --
- ----------------------------------------------------------------- ----------- -----------
End of period (including undistributed net investment income of
$149,940 and $180,273, respectively) $64,414,503 $60,168,297
- ----------------------------------------------------------------- ----------- -----------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
** For the period from November 20, 1992 (date of initial public investment) to
July 31, 1993.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE BALANCED FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------
1994* 1993**
------ ------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.78 $10.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
Net investment income 0.13 0.20
- ----------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.39 (0.25 )
- ---------------------------------------------------------------------- ------ -----
Total from investment operations 0.52 (0.05 )
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------
Dividends to shareholders from net investment income (0.14) (0.17 )
----
- ---------------------------------------------------------------------- ------
NET ASSET VALUE, END OF PERIOD $10.16 $9.78
----
- ---------------------------------------------------------------------- ------
TOTAL RETURN*** 5.35% (0.51 %)
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------
Expenses 1.00%(a) 1.00 %(a)
- ----------------------------------------------------------------------
Net investment income 2.70%(a) 3.04 %(a)
- ----------------------------------------------------------------------
Expense waiver/reimbursement(b) 0.08%(a) 0.08 %(a)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------
Net assets, end of period (000 omitted) $64,415 $60,168
- ----------------------------------------------------------------------
Portfolio turnover rate 22% 30 %
- ----------------------------------------------------------------------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
** Reflects operations for the period from November 20, 1992 (date of initial
public investment), to July 31, 1993.
*** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE OHIO TAX FREE BOND FUND
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- -------------------------------------------------------- ------------ -----------
<C> <S> <C> <C>
MUNICIPAL SECURITIES--96.5%
- ----------------------------------------------------------------------
OHIO
--------------------------------------------------------
$ 600,000 Akron, OH, 4.00%, LT GO Bonds, (FSA Insured), 12/1/2000 Aaa $ 600,324
--------------------------------------------------------
100,000 Bedford, OH, City School District, 4.70%, 12/1/99 A 103,236
--------------------------------------------------------
100,000 Bedford, OH, City School District, 5.50%, 12/1/2006 A 105,506
--------------------------------------------------------
100,000 Cincinnati, OH, 4.50%, UT GO Bonds, 12/1/97 Aa 103,954
--------------------------------------------------------
50,000 Cincinnati, OH, 4.50%, UT GO Bonds, 12/1/98 Aa 51,813
--------------------------------------------------------
50,000 Cincinnati, OH, 4.50%, UT GO Bonds, 12/1/2003 Aa 50,642
--------------------------------------------------------
200,000 Cincinnati, OH, City School District, 5.60%, RANs,
6/16/97 A+ 211,868
--------------------------------------------------------
200,000 Clermont County, OH, 4.90%, Refunding UT GO Bonds,
Building & Road Improvements, (AMBAC Insured), 9/3/2001 Aaa 209,932
--------------------------------------------------------
165,000 Clermont County, OH, 4.85%, Hospital Facilities Revenue
Bond, (Series-A)/(Mercy Health System)/(MBIA Insured),
1/3/2000 Aaa 171,262
--------------------------------------------------------
100,000 Clermont County, OH, 3.70%, Waterworks Refunding Revenue
Bond, (Series 1993)/(AMBAC Insured), 12/2/96 Aaa 101,232
--------------------------------------------------------
50,000 Clermont County, OH, 4.70%, Waterworks Refunding Revenue
Bond, (AMBAC Insured), 12/1/2000 Aaa 51,690
--------------------------------------------------------
500,000 Clermont County, OH, 4.30%, LT GO Bonds, (Court House
Project)/(AMBAC Insured), 12/1/98 AAA 513,140
--------------------------------------------------------
250,000 Clermont County, OH, Sewer System, 4.30%, Refunding
Revenue Bonds, (AMBAC Insured), 12/3/2001 Aaa 252,305
--------------------------------------------------------
400,000 Clermont County, OH, Sewer System, 4.60%, Refunding
Revenue Bonds, (AMBAC Insured)/(Callable 12/1/2003
@ 102), 12/1/2004 Aaa 401,672
--------------------------------------------------------
100,000 Cleveland, OH, 4.80%, LT GO Refunding Bonds, (AMBAC
Insured), 9/3/2001 Aaa 103,990
--------------------------------------------------------
100,000 Columbus, OH, 6.75%, LT GO Bonds, (Series A), 5/2/94 Aa1 101,055
--------------------------------------------------------
100,000 Columbus, OH, 3.30%, Refunding LT GO Bonds, (Series A),
7/3/95 Aa1 100,577
--------------------------------------------------------
300,000 Columbus, OH, 4.55%, Refunding UT GO Bonds, (Series D),
9/15/99 Aa1 310,512
--------------------------------------------------------
200,000 Columbus, OH, City School District, 4.00%, (FGIC
Insured), 12/2/96 Aaa 204,238
--------------------------------------------------------
100,000 Columbus, OH, 5.40%, Refunding Sewer Revenue, 6/1/98 A1 106,455
--------------------------------------------------------
100,000 Columbus, OH, 5.05%, Water System Refunding Revenue,
11/1/95 A1 103,482
--------------------------------------------------------
</TABLE>
FOUNTAIN SQUARE OHIO TAX FREE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- -------------------------------------------------------- ------------ -----------
<C> <S> <C> <C>
MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
OHIO--CONTINUED
--------------------------------------------------------
$ 500,000 Columbus, OH, City School District, 4.45%, UT GO Bonds,
Refunding Revenue Bonds, (FGIC Insured), 12/1/98 A1 $ 517,330
--------------------------------------------------------
500,000 Columbus, OH, 5.15%, Refunding LT GO Bonds, (Callable
9/15/2003 @ 102), 9/15/2004 Aa1 529,345
--------------------------------------------------------
50,000 Cuyahoga County, OH, 4.75%, Refunding Revenue Bonds,
(Series A), 10/1/2003 Aa 51,203
--------------------------------------------------------
50,000 Cuyahoga County, OH, 3.40%, LT GO Bonds, 5/15/95 Aa 50,203
--------------------------------------------------------
500,000 Cuyahoga County, OH, 4.50%, Refunding LT GO Bonds,
10/2/2000 Aa 512,710
--------------------------------------------------------
200,000 Cuyahoga County, OH, 4.625%, Public Improvement Bonds,
10/3/94 Aa 202,690
--------------------------------------------------------
150,000 Dublin, OH, City School District, 5.25%, UT GO Bonds,
(AMBAC Insured), 12/1/2000 Aaa 160,272
--------------------------------------------------------
100,000 Dublin, OH, City School District, 4.80%, UT GO Bonds,
Refunding Revenue Bonds, (AMBAC Insured), 12/1/2002 Aaa 103,711
--------------------------------------------------------
150,000 Dublin, OH, City School District, 5.95%, Refunding UT GO
Bonds, (FGIC Insured), 12/2/2002 Aaa 166,738
--------------------------------------------------------
160,000 Franklin County, OH, 4.95%, UT GO Bonds, Refunding
Revenue Bonds, (Callable 12/1/2003 @ 102), 12/1/2004 Aaa 166,389
--------------------------------------------------------
85,000 Franklin County, OH, 4.95%, UT GO Bonds, Refunding
Revenue Bonds, (Callable 12/1/2003 @ 102), 12/1/2004 Aaa 88,394
--------------------------------------------------------
250,000 Hamilton County, OH, 4.60%, Refunding LT GO Bonds,
(Court House Project), 12/1/2003 Aa 254,140
--------------------------------------------------------
500,000 Hamilton County, OH, Electric System, 4.75%, Refunding
Revenue Bonds, (Series A)/(FGIC Insured), 10/15/97 Aaa 521,165
--------------------------------------------------------
350,000 Hamilton County, OH, Hospital Facilities Revenue, 4.50%,
(Children's Hospital Project)/(MBIA Insured), 5/17/99 Aaa 358,464
--------------------------------------------------------
500,000 Hamilton County, OH, Sewer System, 3.90%, Refunding
Revenue & Improvement Bonds, (FGIC Insured), 12/2/96 Aaa 508,710
--------------------------------------------------------
200,000 Hamilton County, OH, City School District, 4.60%, Energy
Conservation Notes, 9/1/2000 A- 205,828
--------------------------------------------------------
250,000 Hamilton County, OH, 4.90%, Refunding LT GO Bonds,
(Court House Project)/(Callable 12/1/2002 @ 102 &
12/1/2004 @ 100), 12/1/2006 Aa 254,615
--------------------------------------------------------
500,000 Hamilton County, OH, 5.00%, LT GO Bonds, 12/2/2002 Aa 526,220
--------------------------------------------------------
200,000 Hilliard, OH, School District, 5.50%, Refunding UT GO
Bonds, (FGIC Insured), 12/1/97 Aaa 214,148
--------------------------------------------------------
500,000 Kettering, OH, 4.30%, Refunding UT GO Bonds, 12/1/98 Aa 511,805
--------------------------------------------------------
200,000 Kettering, OH, 4.50%, Refunding LT GO Bonds, 12/1/99 Aa 205,146
--------------------------------------------------------
200,000 Kettering, OH, 4.90%, Refunding UT GO Bonds, 2/2/2002 Aa 207,984
--------------------------------------------------------
</TABLE>
FOUNTAIN SQUARE OHIO TAX FREE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- -------------------------------------------------------- ------------ -----------
<C> <S> <C> <C>
MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
OHIO--CONTINUED
--------------------------------------------------------
$ 110,000 Marysville, OH, 3.70%, UT GO Bonds, (AMBAC Insured),
12/2/96 Aaa $ 111,504
--------------------------------------------------------
80,000 Marysville, OH, 4.30%, UT GO Bonds, (AMBAC Insured),
12/1/99 Aaa 81,453
--------------------------------------------------------
100,000 Miami University, OH, 2.90%, General Receipts Bonds,
12/1/94 A+ 100,218
--------------------------------------------------------
100,000 Montgomery County, OH, 4.90%, Sewer Revenue Bonds,
(Greater-Moraine Beaver Creek), 9/3/2001 Aaa 104,634
--------------------------------------------------------
100,000 Montgomery County, OH, 4.75%, Water Revenue Bonds,
(Greater-Moraine Beaver Creek)/(AMBAC Insured),
11/15/2001 AAA 104,155
--------------------------------------------------------
300,000 Ohio Housing Finance Agency, 2.40% Single Family Housing
Mortgage Refunding Revenue Bonds (GNMA Collateralized),
Optional Tender 3/2/2015 SP1+ 300,000
--------------------------------------------------------
200,000 Ohio Housing Finance Agency, 2.50% Single Family Housing
Mortgage Refunding Revenue Bonds (GNMA Collateralized)/
(Subject to AMT), Optional Tender 9/2/2019 NR 200,000
--------------------------------------------------------
200,000 Ohio Housing Finance Agency, 2.50% Single Family Housing
Mortgage Refunding Revenue Bonds (GNMA Collateralized)/
(Subject to AMT), Optional Tender 3/1/2019 SP1+ 200,000
--------------------------------------------------------
100,000 Ohio State, 5.10%, UT GO Bonds, 8/1/96 AA 104,554
--------------------------------------------------------
500,000 Ohio State, 5.15%, Refunding UT GO Bonds, 9/3/2001 Aa 533,230
--------------------------------------------------------
350,000 Ohio State Air Quality Development Authority, 4.70%,
(Buckeye Power Inc.), 8/1/2000 A1 360,062
--------------------------------------------------------
450,000 Ohio State Air Quality Development Authority, 4.90%,
(Buckeye Power, Inc.), Refunding Revenue Bonds, 8/1/2002 A1 465,489
--------------------------------------------------------
200,000 Ohio State Building Authority, 4.65%, (Ohio Arts Center
Project)/(Series A), 10/1/99 A 205,602
--------------------------------------------------------
200,000 Ohio State Building Authority, 5.30%, (State
Correctional Facilities Project)/(Series A), 10/2/2000 A 212,426
--------------------------------------------------------
250,000 Ohio State Building Authority, 4.10%, (State
Correctional Facilities Project), 10/2/95 A1 253,897
--------------------------------------------------------
300,000 Ohio State Building Authority, 4.40%, (State
Correctional Facilities Project), Refunding Revenue
Bonds, (Series A), 10/1/96 A1 308,499
--------------------------------------------------------
300,000 Ohio State Building Authority, 4.40%, (Worker's
Compensation), 4/1/2002 A 300,390
--------------------------------------------------------
100,000 Ohio State Facilities, 4.60%, (Series 11-A), Refunding
Bonds, Higher Education, (AMBAC Insured), 6/1/99 Aaa 103,093
--------------------------------------------------------
</TABLE>
FOUNTAIN SQUARE OHIO TAX FREE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- -------------------------------------------------------- ------------ -----------
<C> <S> <C> <C>
MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
OHIO--CONTINUED
--------------------------------------------------------
$ 100,000 Ohio State Higher Educational Facilities, 4.50%,
(Oberlin College Project), 10/1/99 AA- $ 102,661
--------------------------------------------------------
500,000 Ohio State Higher Education Facilities, 4.625%,
(University & College Improvements Project), 12/1/2000 A1 515,480
--------------------------------------------------------
100,000 Ohio State Highway, 4.70%, UT GO Bonds, (Series R),
5/15/97 Aa 103,944
--------------------------------------------------------
200,000 Ohio State Public Common Facilities, 6.30%, (Series
11-A)/ (Callable 12/1/2000 @ 102)/(MBIA Insured),
12/2/2002 Aaa 226,316
--------------------------------------------------------
100,000 Ohio State Public Common Facilities, 5.50%, (Series
11-A), Higher Education Facilities, 12/1/99 A 107,460
--------------------------------------------------------
500,000 Ohio State Public Common Facilities, 4.50%, (Series
11-A), Park & Recreation Revenue Bonds, 12/1/95 A1 512,180
--------------------------------------------------------
500,000 Ohio State Public Common Facilities, 4.30%, Refunding
Revenue Bonds, (Mental Health Facilities Project)/(FSA
Insured), 6/2/2003 NR 496,180
--------------------------------------------------------
500,000 Ohio State Public Common Facilities, 4.25%, (Series
11-B), Mental Health Facilities, 6/3/2002 A1 497,890
--------------------------------------------------------
475,000 Ohio State University, 4.85%, General Receipts Bonds,
(Series A-1 and A-2), 12/1/98 A1 495,530
--------------------------------------------------------
500,000 Ohio State University, 4.70%, General Receipts Bonds,
Refunding Revenue Bonds, (Callable 12/1/2003 @ 102),
12/1/2005 Aaa 506,775
--------------------------------------------------------
100,000 Ohio State Water Development Authority, 5.00%, Revenue
Refunding Bonds, (Safe Water Project)/(MBIA Insured),
12/1/99 Aaa 105,151
--------------------------------------------------------
500,000 Ohio State Water Development Authority, 4.95%, Revenue
Refunding Bonds, (MBIA Insured), 12/1/98 Aaa 527,855
--------------------------------------------------------
500,000 Ohio State Water Development Authority, 4.35%, Revenue
Bonds, (Pollution Control Project)/(MBIA Insured),
6/1/2000 Aaa 508,560
--------------------------------------------------------
500,000 Solon, OH, City School District, 4.50%, Refunding UT GO
Bonds, 12/1/2003 Aa 501,155
--------------------------------------------------------
150,000 Stark County, OH, 4.75%, Refunding LT GO Bonds, (AMBAC
Insured), 11/15/99 Aaa 155,674
--------------------------------------------------------
500,000 University of Cincinnati, OH, 3.60%, General Receipts
Bonds, 6/2/97 A1 502,010
--------------------------------------------------------
500,000 University of Cincinnati, OH, 4.55%, General Receipts
Refunding Revenue Bonds, 6/3/2002 A1 507,245
--------------------------------------------------------
100,000 University of Cincinnati, OH, 6.40%, Certificates of
Participation, (MBIA Insured), 12/1/2003 Aaa 113,901
--------------------------------------------------------
</TABLE>
FOUNTAIN SQUARE OHIO TAX FREE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL RATING:
AMOUNT MOODY'S
OR SHARES OR S&P* VALUE
- ---------- -------------------------------------------------------- ------------ -----------
<C> <S> <C> <C>
MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
OHIO--CONTINUED
--------------------------------------------------------
$ 150,000 Warren County, OH, Sewer System, 4.90%, Revenue Bonds,
(FGIC Insured), 12/2/2002 Aaa $ 156,660
--------------------------------------------------------
200,000 Warren County, OH, Sewer System, 5.10%, Revenue
Refunding Bonds, (Series 1993)/(Callable 12/1/2003 @
102)/(FGIC Insured), 12/1/2004 Aaa 209,836
-------------------------------------------------------- -----------
TOTAL MUNICIPAL SECURITIES (IDENTIFIED COST $20,797,954) 21,177,764
-------------------------------------------------------- -----------
REGULATED INVESTMENT COMPANIES--4.4%
- ----------------------------------------------------------------------
960,433 Midwest Ohio Tax-Free Money Market Fund (at net asset
value) NR 960,433
-------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $21,758,387) $22,138,197+
-------------------------------------------------------- -----------
</TABLE>
* See Notes to Portfolio of Investments
+ The cost of investments for federal tax purposes amounts to $21,758,387. The
net unrealized appreciation of investments on a federal tax basis amounts to
$379,810 which is comprised of $384,999 appreciation and $5,189 depreciation
at January 31, 1994.
Note: The categories of investments are shown as a percentage of net assets
($21,951,770) at January 31, 1994.
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C>
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
FGIC -- Financial Guaranty Insurance Co.
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
GO -- General Obligation
LT -- Limited Tax
MBIA -- Municipal Bond Investors Assurance
RANs -- Revenue Anticipation Notes
UT -- Unlimited Tax
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE OHIO TAX FREE BOND FUND
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
The municipal bonds rated by Moody's Investors Service, Inc. ("Moody's") in
which the Fund may invest are Aaa, Aa, A, or Baa. Municipal bonds rated Aaa are
judged to be of the "best quality." The rating of Aa is assigned to municipal
bonds which are of "high quality by all standards," but as to which margins of
protection or other elements make long-term risks appear somewhat larger than
Aaa-rated municipal bonds. The Aaa and Aa-rated municipal bonds comprise what
are generally known as "high-grade bonds." Municipal bonds which are rated A by
Moody's possess many favorable investment attributes and are considered "upper
medium grade obligations." Factors giving security to principal and interest of
A-rated municipal bonds are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class. Bonds which are rated Baa are
considered medium grade obligations, i.e., they are neither highly protected nor
poorly secured. The letter ratings carry numerical modifiers with 1 indicating
the higher end of the rating category, 2 indicating the mid-range and 3
indicating the lower end of the rating category.
The municipal bonds rated by Standard & Poor's Corporation ("Standard & Poor's")
in which the Fund may invest are AAA, AA, A and BBB. Municipal bonds rated AAA
are "obligations of the highest quality." The rating AA is accorded issues with
investment characteristics "only slightly less marked than those of the prime
quality issues." The category of A describes "the third strongest capacity for
payment of debt service." Principal and interest payments on bonds in this
category are regarded as safe. It differs from the two higher ratings because
with respect to general obligation bonds there is some weakness, either in the
local economic base, in debt burden, in the balance between revenues and
expenditures, or in quality of management. Under certain adverse circumstances,
any one such weakness might impair the ability of the issue to meet debt
obligations at some future date. With respect to revenue bonds, debt service
coverage is good, but not exceptional. Stability of the pledge revenues could
show some variations because of increased competition or economic influences on
revenues. Basic security provisions, while satisfactory, are less stringent.
Bonds which are rated BBB are considered medium grade obligations, i.e., the
lowest investment grade security rating. These ratings may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR indicates the securities are not currently rated by Moody's, Fitch or
Standard & Poor's. However, management considers them to be of equivalent
quality to the rated securities it purchases.
Bonds for which the security depends upon the completion of some act or the
fulfillment of some condition are rated conditionally.
FOUNTAIN SQUARE OHIO TAX FREE BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at value (Note 2A)
(identified and tax cost, $21,758,387) $22,138,197
- --------------------------------------------------------------------------------
Interest receivable 241,154
- --------------------------------------------------------------------------------
Receivable for Fund shares sold 77,726
- --------------------------------------------------------------------------------
Deferred expenses (Note 2G) 5,863
- -------------------------------------------------------------------------------- -----------
Total assets 22,462,940
- --------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------
Payable for investments purchased $499,975
- ---------------------------------------------------------------------
Payable for Fund shares redeemed 5,105
- ---------------------------------------------------------------------
Accrued expenses and other liabilities 6,090
- --------------------------------------------------------------------- --------
Total liabilities 511,170
- -------------------------------------------------------------------------------- -----------
NET ASSETS for 2,145,593 shares of beneficial interest outstanding $21,951,770
- -------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid-in capital $21,565,054
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments 379,810
- --------------------------------------------------------------------------------
Accumulated net realized gain on investments 1,318
- --------------------------------------------------------------------------------
Undistributed net investment income 5,588
- -------------------------------------------------------------------------------- -----------
Total $21,951,770
- -------------------------------------------------------------------------------- -----------
NET ASSET VALUE and Redemption Price Per Share:
($21,951,770 / 2,145,593 shares of beneficial interest outstanding) $10.23
- -------------------------------------------------------------------------------- -----------
COMPUTATION OF OFFERING PRICE:
- --------------------------------------------------------------------------------
Offering Price Per Share (100/95.5 of $10.23)* $10.71
- -------------------------------------------------------------------------------- -----------
</TABLE>
* See "What Shares Cost" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE OHIO TAX FREE BOND FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------
Interest income (Note 2C) $339,897
- -------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------
Investment advisory fee (Note 5) $ 43,026
- -------------------------------------------------------------------------
Administrative personnel and services fees (Note 5) 25,000
- -------------------------------------------------------------------------
Custodian fee (Note 5) 4,653
- -------------------------------------------------------------------------
Recordkeeper, transfer and dividend disbursing agent fees and expenses
(Note 5) 11,666
- -------------------------------------------------------------------------
Legal fees 1,939
- -------------------------------------------------------------------------
Auditing fees 4,808
- -------------------------------------------------------------------------
Printing and postage 3,489
- -------------------------------------------------------------------------
Fund share registration costs 8,753
- -------------------------------------------------------------------------
Miscellaneous 3,811
- ------------------------------------------------------------------------- --------
Total expenses 107,145
- -------------------------------------------------------------------------
Deduct--
- --------------------------------------------------------------
Waiver of custodian fee (Note 5) $ 4,653
- --------------------------------------------------------------
Reimbursement from investment adviser (Note 5) 102,492 107,145
- -------------------------------------------------------------- -------- --------
Net expenses 0
- ------------------------------------------------------------------------------------- --------
Net investment income 339,897
- ------------------------------------------------------------------------------------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -------------------------------------------------------------------------------------
Net realized gain on investments (identified cost basis) 1,318
- -------------------------------------------------------------------------------------
Net change in unrealized appreciation 426,027
- ------------------------------------------------------------------------------------- --------
Net realized and unrealized gain on investments 427,345
- ------------------------------------------------------------------------------------- --------
Change in net assets resulting from operations $767,242
- ------------------------------------------------------------------------------------- --------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE OHIO TAX FREE BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------------
1994* 1993**
----------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------
Net investment income $ 339,897 $ 27,796
- ------------------------------------------------------------------
Net realized gain on investment transactions ($1,318, and $0 net
gains, respectively, as computed for federal tax purposes) (Note
2D) 1,318 --
- ------------------------------------------------------------------
Change in unrealized appreciation (depreciation) of investments 426,027 (46,217)
- ------------------------------------------------------------------ ----------- ----------
Change in net assets resulting from operations 767,242 (18,421)
- ------------------------------------------------------------------ ----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- ------------------------------------------------------------------
Dividends to shareholders from net investment income (335,338) (26,767)
- ------------------------------------------------------------------ ----------- ----------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- ------------------------------------------------------------------
Net proceeds from sale of shares 16,081,568 8,596,164
- ------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
dividends declared 207,677 11,526
- ------------------------------------------------------------------
Cost of shares redeemed (2,932,516) (399,365)
- ------------------------------------------------------------------ ----------- ----------
Change in net assets from Fund share transactions 13,356,729 8,208,325
- ------------------------------------------------------------------ ----------- ----------
Change in net assets 13,788,633 8,163,137
- ------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------
Beginning of period 8,163,137 --
- ------------------------------------------------------------------ ----------- ----------
End of period (including undistributed net investment income of
$5,588 and $1,029, respectively) $21,951,770 $8,163,137
- ------------------------------------------------------------------ ----------- ----------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
** For the period from May 27, 1993 (date of initial public investment) to July
31, 1993.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE OHIO TAX FREE BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------
1994* 1993**
------- ------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.95 $10.00
- ---------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------
Net investment income 0.19 0.050
- ---------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.28 (0.051)
- --------------------------------------------------------------------- ------- -----
Total from investment operations 0.47 (0.001)
- ---------------------------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------------
Dividends to shareholders from net investment income (0.19) (0.049)
- --------------------------------------------------------------------- ------- -----
NET ASSET VALUE, END OF PERIOD $10.23 $9.95
- --------------------------------------------------------------------- ------- -----
TOTAL RETURN*** 4.78% (0.01 )%
- ---------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------
Expenses 0.00%(b) 0.00 %(b)
- ---------------------------------------------------------------------
Net investment income 3.95%(b) 3.53 %(b)
- ---------------------------------------------------------------------
Expense waiver/reimbursement(a) 1.25%(b) 2.21 %(b)
- ---------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------
Net assets, end of period (000 omitted) $21,952 $8,163
- ---------------------------------------------------------------------
Portfolio turnover rate 60% 31 %
- ---------------------------------------------------------------------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
** Reflects operations for the period from May 27, 1993 (date of initial public
investment) to July 31, 1993.
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 5).
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
FOUNTAIN SQUARE FUNDS
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Fountain Square Funds (the "Trust") is registered under the Investment Company
Act of 1940, as amended, as an open-end, management investment company. The
Trust currently consists of nine portfolios. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held. The Declaration of Trust permits the Trust to offer separate
series of shares of beneficial interest representing interests in the separate
portfolios of securities. As of January 31, 1994, the Funds are offering one
class of shares except for Fountain Square Commercial Paper Fund and Fountain
Square Government Cash Reserves Fund which are offering both Trust Shares and
Investment Shares. The financial statements included herein present only those
of Fountain Square U.S. Government Securities Fund ("Government Fund"), Fountain
Square Quality Bond Fund ("Bond Fund"), Fountain Square Quality Growth Fund
("Growth Fund"), Fountain Square Mid Cap Fund ("Mid Cap Fund"), Fountain Square
Balanced Fund ("Balanced Fund"), and Fountain Square Ohio Tax Free Bond Fund
("Ohio Tax Free Fund"), (hereinafter each individually referred to as a "Fund,"
or collectively as the "Funds"). The financial statements of the other Fountain
Square Funds are presented separately.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by each Fund in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale price
reported on national securities exchanges. Unlisted securities or listed securities in
which there were no sales are valued at the mean between bid and asked prices. Corporate
bonds and other fixed income securities are valued at the last sale price on a national
securities exchange, if available. Otherwise, they are valued on the basis of prices
furnished by independent pricing services. Short-term obligations are ordinarily valued
at the mean between bid and asked prices as furnished by an independent pricing service.
However, short-term obligations with maturities of sixty days or less may be valued at
amortized cost, which approximates value. All other securities are appraised at fair
value as determined in good faith by the Board of Trustees ("Trustees").
Municipal bonds are valued at fair market value. An independent pricing service values
the Fund's municipal bonds taking into consideration yield, stability, risk, quality,
coupon maturity, type of issue, trading characteristics, special circumstances of a
security or trading market, and any other factors or market data it deems relevant in
determining valuations for normal institutional size trading units of debt securities and
does not rely exclusively on quoted prices. The Trustees have determined that the fair
value of debt securities authorized to be purchased by the Fund with remaining maturities
of sixty days or less shall be their amortized cost value unless the particular
circumstances of the security indicate otherwise.
B. REPURCHASE AGREEMENTS--It is the policy of the Funds to require the custodian bank to
take possession, to have legally segregated in the Federal Reserve Book Entry System or
to have segregated within the custodian bank's vault, all securities held as collateral
in support of repurchase agreement investments. Additionally, procedures have been
established by the Funds to monitor, on a daily basis, the market value of each
repurchase agreement's underlying securities to ensure the existence of a proper level of
collateral.
These Funds will only enter into repurchase agreements with banks and other recognized
financial institutions such as broker/dealers which are deemed by the Trust's adviser to
be creditworthy pursuant to guidelines established by the Trustees. Risks may arise from
the potential inability of
</TABLE>
FOUNTAIN SQUARE FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
counterparties to honor the terms of the repurchase agreements. Accordingly, these Funds
could receive less than the repurchase price on the sale of collateral securities.
C. INCOME--Interest income is recorded on the accrual basis. Interest income includes
interest and discount earned (net of premium), on short-term obligations, and interest
earned on all other debt securities including market and original issue discount as
required by the Internal Revenue Code, as amended (the "Code").
Dividend income for the Balanced, Mid Cap and Growth Funds is recorded on the ex-dividend
date. Dividends to shareholders and capital gains distributions, if any, are recorded on
the ex-dividend date.
D. FEDERAL TAXES--It is each Fund's policy to comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute to
shareholders each year all of their net income, including any net realized gains on
investments. Accordingly, no provision for federal tax is necessary. Additionally, net
capital losses on the Government Fund, Growth Fund, Mid Cap Fund and Balanced Fund of
$38,527, $1,188,271, $264,473 and $656,831 attributable to security transactions incurred
after October 31, 1992 are treated as arising on the first day (August 1, 1993) of the
Fund's next taxable year.
E. FUTURES AND OPTIONS ON FUTURES CONTRACTS--The Funds may purchase and sell financial
futures contracts to hedge against the effects of changes in the value of portfolio
securities due to anticipated changes in interest rates and market condition. The Growth
Fund, the Mid Cap Fund and the Balanced Fund may also purchase and sell stock index
futures to hedge against changes in prices. The Funds will not engage in futures
transactions for speculative purposes.
A Fund may not purchase or sell futures contracts or related options if immediately
thereafter the sum of the amount of margin deposits on a Fund's existing futures
positions and premiums paid for related options would exceed 5% of the market value of a
Fund's total assets. When a Fund purchases futures contracts, an amount of cash and cash
equivalents, equal to the underlying commodity value of the futures contracts (less any
related margin deposits), will be deposited in a segregated account with the Fund's
custodian (or the broker, if legally permitted) to collateralize the position and thereby
insure that the use of such futures contract is unleveraged. When a Fund sells futures
contracts, it will either own or have the right to receive the underlying future or
security, or will make deposits to collateralize the position as discussed above.
F. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in when-issued or
delayed delivery transactions. The Funds record when issued securities and maintains
security positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed delivery
basis are marked to market daily and begin earning interest on the settlement date.
G. DEFERRED EXPENSES--The costs incurred by each Fund with respect to registration of its
shares in its first fiscal year, excluding the initial expense of registering the shares,
have been deferred and are being amortized using the straight-line method over a period
of five years from each Fund's commencement date.
H. OTHER--Investment transactions are accounted for on the trade date of the transaction.
</TABLE>
(3) DIVIDENDS
Payment of dividends by the Growth Fund, the Mid Cap Fund, and the Balanced Fund
is made quarterly in cash, or in additional shares at the net asset value on the
payable date. Payment of dividends by the Government Fund, the Ohio Tax Free
Fund and the Bond Fund is made monthly in cash or in additional shares at the
net asset value on the payable date. Distributions of any net realized capital
gains by a Fund are made at least once every twelve months.
FOUNTAIN SQUARE FUNDS
- --------------------------------------------------------------------------------
(4) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
GOVERNMENT FUND
YEAR ENDED JULY 31, BOND FUND GROWTH FUND
---------------------- YEAR ENDED JULY 31, YEAR ENDED JULY 31,
---------------------- ----------------------
1994* 1993** 1994* 1993** 1994* 1993**
- ---------------------------------------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares outstanding, beginning of period 2,900,014 -- 3,689,539 -- 7,093,203 --
- ----------------------------------------------
Shares sold 1,422,017 3,370,562 1,193,676 4,159,012 927,578 7,893,573
- ----------------------------------------------
Shares issued to shareholders in payment of
dividends declared 104,538 63,527 121,123 95,879 54,663 56,938
- ----------------------------------------------
Shares redeemed (987,310) (534,075) (358,545) (565,352) (710,392) (857,308)
- ---------------------------------------------- -------- -------- -------- -------- -------- --------
Shares outstanding, end of period 3,439,259 2,900,014 4,645,793 3,689,539 7,365,052 7,093,203
- ---------------------------------------------- -------- -------- -------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
MID CAP FUND BALANCED FUND OHIO TAX FREE FUND
YEAR ENDED JULY 31, YEAR ENDED JULY 31, YEAR ENDED JULY 31,
---------------------- ---------------------- ----------------------
1994* 1993** 1994* 1993** 1994* 1993+
- ---------------------------------------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares outstanding, beginning of period 2,480,627 -- 6,154,761 -- 820,417 --
- ----------------------------------------------
Shares sold 399,784 2,588,794 936,204 6,758,544 1,594,484 859,185
- ----------------------------------------------
Shares issued to shareholders in payment of
dividends declared 9,891 9,391 86,722 90,807 20,551 1,154
- ----------------------------------------------
Shares redeemed (241,163) (117,558) (838,204) (694,590) (289,859) (39,922)
- ---------------------------------------------- -------- -------- -------- -------- -------- --------
Shares outstanding, end of period 2,649,139 2,480,627 6,339,483 6,154,761 2,145,593 820,417
- ---------------------------------------------- -------- -------- -------- -------- -------- --------
</TABLE>
* Six months ended January 31, 1994.
** For the period from November 20, 1992 (date of initial public investment) to
July 31, 1993.
+ For the period from May 27, 1993 (date of initial public investment) to July
31, 1993.
(5) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Fifth Third Bank, the Trust's investment adviser ("Adviser"), receives for its
services an annual investment advisory fee equal to .55 of 1% of the Government
Fund, Bond Fund, and Ohio Tax Free Fund average daily net assets; .80 of 1% of
the Balanced Fund, Mid Cap Fund, and Growth Fund average daily net assets.
The Adviser may voluntarily choose to waive a portion of its fees or reimburse
certain operating expenses of each Fund. For the six months ended January 31,
1994, the Adviser earned and voluntarily waived the following investment
advisory fees on each Fund:
<TABLE>
<CAPTION>
INVESTMENT INVESTMENT
ADVISORY ADVISORY
FEES EARNED FEES WAIVED
----------- -----------
<S> <C> <C>
Government Fund................................ $ 94,655 $28,776
Bond Fund...................................... 119,068 18,767
Growth Fund.................................... 288,547 10,739
Mid Cap Fund................................... 104,635 34,171
Balanced Fund.................................. 252,534 15,306
Ohio Tax Free Fund............................. 43,026 0
</TABLE>
In addition, the Adviser reimbursed certain operating expenses of the Ohio Tax
Free Fund in the amount of $102,492.
Administrative personnel and services were provided for each Fund by Federated
Administrative Services ("FAS") at an annual rate of .15 of 1% on the first $250
million; .125 of 1% on the next $250 million; .10 of 1% on the next $250
million; and .075 of 1% on total average aggregate daily net
assets of the Trust in excess of $750 million. FAS may voluntarily waive a
portion of its fee for each Fund. For the six months ended January 31, 1994, FAS
earned and voluntarily waived the following on each Fund:
<TABLE>
<CAPTION>
FAS FAS
FEES EARNED FEES WAIVED
----------- -----------
<S> <C> <C>
Government Fund................................ $25,206 $ 0
Bond Fund...................................... 25,596 0
Growth Fund.................................... 41,921 0
Mid Cap Fund................................... 25,207 0
Balanced Fund.................................. 36,693 0
Ohio Tax Free Fund............................. 25,000 0
</TABLE>
Fifth Third Bank, the Funds' custodian, received and voluntarily waived fees for
its services for the six months ended January 31, 1994, in the amounts as
follows for each Fund:
<TABLE>
<CAPTION>
CUSTODIAN CUSTODIAN
FEES EARNED FEES WAIVED
----------- -----------
<S> <C> <C>
Government Fund................................ $ 4,908 $ 4,908
Bond Fund...................................... 6,001 6,001
Growth Fund.................................... 6,743 6,743
Mid Cap Fund................................... 5,648 5,648
Balanced Fund.................................. 10,574 10,574
Ohio Tax Free Fund............................. 4,653 4,653
</TABLE>
Expenses of organizing the Funds were borne initially by FAS. The Funds have
agreed to reimburse FAS for the organization expenses borne by FAS during the
five year period following the date the Trust's portfolio became effective.
<TABLE>
<CAPTION>
EXPENSES OF AMOUNT REIMBURSED
ORGANIZING TO FAS FOR THE
THE SIX MONTHS ENDED
FUNDS JANUARY 31, 1994
------------- -----------------
<S> <C> <C>
Government Fund......................... $14,730 $ 984
Bond Fund............................... 15,070 1,005
Growth Fund............................. 14,730 984
Mid Cap Fund............................ 14,739 984
Balanced Fund........................... 15,604 1,040
Ohio Tax Free Fund...................... 20,665 689
</TABLE>
The Trust has adopted a Distribution Plan, pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The Trust will pay Federated Securities Corp.
("FSC"), the principal distributor, up to .35 of 1% of the average daily net
assets of the Funds, annually, to pay commissions, maintenance fees and to
compensate the distributor. The Funds will not accrue or pay 12b-1 fees until
they have created a separate class of shares for certain institutional
investors.
Fifth Third Bank is the transfer agent for the Funds. Certain Officers and
Trustees of the Trust are also Officers and Trustees of FAS.
FOUNTAIN SQUARE FUNDS
- --------------------------------------------------------------------------------
(6) INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short-term investments), for the
six months ended January 31, 1994, for each Fund were as follows:
<TABLE>
<CAPTION>
GOVERNMENT BOND GROWTH MID CAP BALANCED OHIO TAX
FUND FUND FUND FUND FUND FREE FUND
- -------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
PURCHASES $15,753,983 $19,594,290 $17,141,438 $ 9,472,342 $15,924,992 $23,523,750
- -------------------------------------
SALES $8,982,198 $ 8,379,257 $17,026,583 $ 6,204,433 $13,389,023 $ 9,884,161
- -------------------------------------
</TABLE>
(7) INVESTMENT CONCENTRATION
The Ohio Tax Free Fund invests a substantial portion of its assets in
obligations and notes issued by the State of Ohio, any political subdivision
thereof, or any agency, instrumentality, authority or district of either the
state or political subdivision. Such issues must be rated Baa or better by
Moody's Investors Service, Inc. or BBB by Standard & Poor's Corporation or, if
not rated, of equivalent quality as determined by the Fund's investment adviser.
If there should be a default or other financial crisis relating to the State of
Ohio, an Ohio municipality or an agency or instrumentality of either, the market
value and marketability of the Ohio municipal bonds in the Ohio Tax Free Fund's
portfolio and the interest income to the Fund could be adversely affected.
In order to reduce the risk associated with such factors, at January 31, 1994,
52.4% of the securities in the Ohio Tax Free Fund's portfolio of investments
were backed by various assurance institutions. The aggregate percentages by
assurance institutions ranged from 3.2% to 16.1% of total investments.
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- ---------------------------------------------------------------------------------------------
Lee A. Carter J. Christopher Donahue
Edward Burke Carey President and Treasurer
J. Christopher Donahue Craig P. Churman
Albert E. Harris Vice President and Assistant Treasurer
Jay S. Neuman
Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank nor are they insured
by the
federal government or any of its agencies. Investment in these shares involves
risk,
including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Funds' prospectus, which contains facts concerning its
objective and policies, management fees, expenses, and other information.
(Logo)
Fifth Third Bank
Investment Advisor
FEDERATED SECURITIES CORP. is the distributor of the Funds
3030901 (3/94)
