<PAGE> 1
1933 Act File No. 33-24848
1940 Act File No. 811-5669
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
-----
Pre-Effective Amendment No. _____ . . . . . . . . . . . . .
-----
Post-Effective Amendment No. 17 . . . . . . . . . . . . . X
----- -----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
-----
Amendment No. 18 . . . . . . . . . . . . . . . . . . . . . . . . X
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FOUNTAIN SQUARE FUNDS
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road, Columbus, Ohio 43219-3035
(Address of Principal Executive Offices)
(614) 470-8000
(Registrant's Telephone Number)
Robert C. Rosselot, Esquire
Howard & Howard Attorneys, P.C.
Suite 101, The Pinehurst Office Center
1400 North Woodward Avenue
Bloomfield Hills, Michigan 48304-2856
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to paragraph (b)
_____ on ____________________________ pursuant to paragraph (b)
X 60 days after filing pursuant to paragraph (a)(i)
- -----
_____ on ____________________________ pursuant to paragraph (a)(i)
_____ 75 days after filing pursuant to paragraph (a)(ii)
_____ on ____________________________ pursuant to paragraph (a)(ii) of Rule
485.
If appropriate, check the following box:
_____ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange Commission a declaration
pursuant to Rule 24f-2 under the Investment Company Act of 1940, and:
X filed the Notice required by that Rule on September 15, 1995; or
- -----
_____ intends to file the Notice required by that Rule on or about
___________________; or
_____ during the most recent fiscal year did not sell any securities pursuant
to Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to Rule
24f-2(b)(2), need not file the Notice.
<PAGE> 2
CROSS-REFERENCE SHEET
---------------------
This Amendment to the Registration Statement of FOUNTAIN SQUARE FUNDS,
which is comprised of ten portfolios, each portfolio consisting of two separate
classes of shares: Investment A Shares and Investment C Shares (unless
otherwise noted): (1) Fountain Square U.S. Government Securities Fund; (2)
Fountain Square Quality Bond Fund; (3) Fountain Square Quality Growth Fund; (4)
Fountain Square Mid Cap Fund; and (5) Fountain Square Balanced Fund; (6)
Fountain Square Ohio Tax Free Bond Fund; (7) Fountain Square U.S. Treasury
Obligations Fund; (8) Fountain Square Commercial Paper Fund, which consists of
two classes of shares: (a) Trust Shares and (b) Investment Shares; (9)
Fountain Square Government Cash Reserves Fund, which consists of two classes of
shares: (a) Trust Shares and (b) Investment Shares; and (10) Fountain Square
International Equity Fund, relates only to Funds (1-6), and (10), and is
comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
<TABLE>
<CAPTION>
Prospectus Heading
(Rule 404(c) Cross Reference)
-----------------------------
<S> <C> <C>
Item 1. Cover Page Cover Page.
Item 2. Synopsis . . . . . . . . . . . . . . . . Synopsis; Expenses of the Funds.
Item 3. Condensed Financial
Information . . . . . . . . . . . . . . Financial Highlights;
Performance Information.
Item 4. General Description of
Registrant . . . . . . . . . . . . . . . Objective of Each Fund; Portfolio
Investments and Strategies.
Item 5. Management of the Fund . . . . . . . . . Fountain Square Funds Information;
Management of the Trust;
Administration of the Funds;
Brokerage Transactions; Expenses
of the Funds, Investment A Shares, and
Investment C Shares; Other Payments
to Financial Institutions;
Distribution Plan;
Distribution of Shares of the Funds.
Item 6. Capital Stock and Other
Securities . . . . . . . . . . . . . . . Shareholder Information; Voting Rights; Massachusetts Law;
Effect of Banking Laws; Tax Information;
Federal Income Tax; Dividends and Capital Gains
(10) Capital Gains; (6) Additional Tax Information
for Ohio Tax
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Free Bond Fund; (10) Additional Tax
Information for International Equity Fund.
Item 7. Purchase of Securities Being
Offered . . . . . . . . . . . . . . . . Net Asset Value; Investing in the Fund(s);
Share Purchases; Minimum Investment Required;
Investing In Investment A Shares; What Shares Cost;
Purchases at Net Asset Value; Dealer Concessions;
Reducing/Eliminating the Sales Charge;
Investing in Investment C Shares; Exchanging Securities
for Fund Shares; Systematic Investment Program;
Certificates and Confirmations; Exchanges.
Item 8. Redemption or Repurchase . . . . . . . . Redeeming Shares; Through Fifth Third Bank or Fifth Third
Securities; Systematic Withdrawal Program; Accounts With Low
Balances; Contingent Deferred Sales Charge.
Item 9. Pending Legal Proceedings . . . . . . . . None.
</TABLE>
<PAGE> 4
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
<TABLE>
<S> <C> <C>
Item 10. Cover Page . . . . . . . . . . . . . . . Cover Page.
Item 11. Table of Contents . . . . . . . . . . . . Table of Contents.
Item 12. General Information and History . . . . . General Information About the
Trust.
Item 13. Investment Objectives and Policies . . . Investment Objective and
Policies of the Funds.
Item 14. Management of the Funds . . . . . . . . . Fountain Square Funds Management;
Trustees' Compensation.
Item 15. Control Persons and Principal
Holders of Securities . . . . . . . . . Trust Ownership.
Item 16. Investment Advisory and Other
Services . . . . . . . . . . . . . . . . Investment Advisory Services;
Administrative Services.
Item 17. Brokerage Allocation . . . . . . . . . . Brokerage Transactions.
Item 18. Capital Stock and Other Securities . . . Not applicable.
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered . . . . . . Purchasing Shares; Redeeming
Shares; Determining Net Asset
Value.
Item 20. Tax Status . . . . . . . . . . . . . . . Tax Status.
Item 21. Underwriters . . . . . . . . . . . . . . Not applicable.
Item 22. Calculation of Performance Data . . . . . Performance Comparisons;
Total Return; Yield;
(6) Tax-Equivalent Yield.
Item 23. Financial Statements . . . . . . . . . . Incorporated by reference to the
Annual Report to Shareholders of the
Fountain Square Funds dated July 31, 1995
(File No. 811-5669).
</TABLE>
<PAGE> 5
FOUNTAIN SQUARE FUNDS
Investment A Shares
Investment C Shares
PROSPECTUS
Fountain Square Funds (the "Trust") is an open-end management investment
company (a mutual fund). This combined prospectus offers investors interests
in Investment A Shares and Investment C shares of the following seven separate
investment portfolios (the "Funds"), each having a distinct investment
objective and policies:
-Fountain Square U.S. Government Securities Fund;
-Fountain Square Quality Bond Fund;
-Fountain Square Ohio Tax Free Bond Fund;
-Fountain Square Quality Growth Fund;
-Fountain Square Mid Cap Fund,
-Fountain Square Balanced Fund; and
-Fountain Square International Equity Fund
This combined prospectus contains the information you should read and know
before you invest in any of the Funds. Keep this prospectus for future
reference.
Additional information about the Funds is contained in the Funds' Combined
Statement of Additional Information, dated March ______, 1996, which has also
been filed with the Securities and Exchange Commission. The information
contained in the Combined Statement of Additional Information is incorporated
by reference into this prospectus. You may request a copy of the Combined
Statement of Additional Information free of charge, obtain other information,
or make inquiries about any of the Funds by writing to or calling the Trust at
1-800-654-5372.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF FIFTH
THIRD BANK, ARE NOT ENDORSED OR GUARANTEED BY FIFTH THIRD BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Prospectus dated March ______, 1996
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
SYNOPSIS . . . . . . . . . . . . . . . . . . . . 1 Restricted and Illiquid Securities . . . . . . . 27
Risk Factors . . . . . . . . . . . . . . . . . 2 Repurchase Agreements . . . . . . . . . . . . . 28
When-Issued and Delayed Delivery Transactions . 28
EXPENSES OF THE FUNDS Lending of Portfolio Securities . . . . . . . . 28
Options and Futures . . . . . . . . . . . . . . 29
INVESTMENT A SHARES . . . . . . . . . . . . . . . 3 Put and Call Options . . . . . . . . . . . . . 29
Futures and Options on Futures . . . . . . . . 29
EXPENSES OF THE FUNDS Risks . . . . . . . . . . . . . . . . . . . . 31
Equity Investment Considerations . . . . . . . 31
INVESTMENT A SHARES . . . . . . . . . . . . . . . 5 Foreign Investments . . . . . . . . . . . . . . 31
Exchange Rates . . . . . . . . . . . . . . . . 31
EXPENSES OF THE FUNDS Foreign Companies . . . . . . . . . . . . . . 32
INVESTMENT C SHARES . . . . . . . . . . . . . . . 7 U.S. Government Policies . . . . . . . . . . . 32
Emerging Markets . . . . . . . . . . . . . . . 32
EXPENSES OF THE FUNDS Foreign Bank Instruments . . . . . . . . . . . 33
INVESTMENT C SHARES . . . . . . . . . . . . . . . 9 Bond Ratings . . . . . . . . . . . . . . . . . 33
Temporary Investments . . . . . . . . . . . . . 33
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . 11 Variable Rate Demand Notes . . . . . . . . . . 33
Commercial Paper . . . . . . . . . . . . . . . 33
OBJECTIVE OF EACH FUND . . . . . . . . . . . . . 18 Bank Instruments . . . . . . . . . . . . . . . 33
Government Securities Fund . . . . . . . . . . 18
Acceptable Investments . . . . . . . . . . . . 18 FOUNTAIN SQUARE FUNDS INFORMATION . . . . . . . 34
Investment Limitations . . . . . . . . . . . . 19 Management of the Trust . . . . . . . . . . . 34
Quality Bond Fund . . . . . . . . . . . . . . . 19 Board of Trustees . . . . . . . . . . . . . 34
Acceptable Investments . . . . . . . . . . . . 19 Investment Advisor . . . . . . . . . . . . . 34
Collateralized Mortgage Obligations . . . . . 19 Advisory Fees . . . . . . . . . . . . . . . 34
Investment Limitations . . . . . . . . . . . . 20 Advisor's Background . . . . . . . . . . . . 34
Ohio Tax Free Fund . . . . . . . . . . . . . . 20 Portfolio Managers' Background . . . . . . . 35
Acceptable Investments . . . . . . . . . . . . 20 Sub-Advisor . . . . . . . . . . . . . . . . 35
Characteristics . . . . . . . . . . . . . . . 20 Sub-Advisory Fees . . . . . . . . . . . . . 35
Participation Interests . . . . . . . . . . . 20 Sub-Advisor's Background . . . . . . . . . . 35
Variable Rate Municipal Securities . . . . . . 21 Portfolio Managers' Background . . . . . . . 35
Municipal Leases . . . . . . . . . . . . . . . 21 Distribution of Shares of the Funds . . . . . 36
Temporary Investments . . . . . . . . . . . . 21 Distribution Plan. . . . . . . . . . . . . . . 36
Ohio Municipal Securities . . . . . . . . . . 21
Investment Risks . . . . . . . . . . . . . . . 21 Administrative Services
Agreement (Investment C Shares Only) . . . . 37
Non-Diversification . . . . . . . . . . . . . 22
Investment Limitations . . . . . . . . . . . . 22 Other Payments to Financial Institutions . . 37
Quality Growth Fund . . . . . . . . . . . . . . 22 Administration of the Funds . . . . . . . . . 37
Acceptable Investments . . . . . . . . . . . . 22 Administrative Services . . . . . . . . . . 37
Convertible Securities . . . . . . . . . . . . 23 Custodian, Transfer Agent and Dividend Disbursing
Investment Limitations . . . . . . . . . . . . 23 Agent . . . . . . . . . . . . . . . . . . . 37
Mid Cap Fund . . . . . . . . . . . . . . . . . 23 Independent Auditors . . . . . . . . . . . . 37
Acceptable Investments . . . . . . . . . . . . 23 Expenses of the Funds, Investment A Shares, and
Investment Limitations . . . . . . . . . . . . 24 Investment C Shares . . . . . . . . . . . . 38
Balanced Fund . . . . . . . . . . . . . . . . . 24 Brokerage Transactions . . . . . . . . . . . 38
Acceptable Investments . . . . . . . . . . . . 24
Money Market Instruments . . . . . . . . . . . 24 NET ASSET VALUE . . . . . . . . . . . . . . . . 38
Investment Limitations . . . . . . . . . . . . 24
International Equity Fund . . . . . . . . . . . 25 INVESTING IN THE FUNDS . . . . . . . . . . . . 39
Acceptable Investments . . . . . . . . . . . . 26 Share Purchases . . . . . . . . . . . . . . . 39
Money Market Instruments . . . . . . . . . . . 26 Through Fifth Third Bank or Fifth Third
Foreign Currency Transactions . . . . . . . . 26 Securities . . . . . . . . . . . . . . . . 39
Forward Foreign Currency Exchange Contracts . 26 Minimum Investment Required . . . . . . . . . 39
Investment Limitations . . . . . . . . . . . . 27
Risk Considerations . . . . . . . . . . . . . 27 Investing In Investment A Shares . . . . . . 39
PORTFOLIO INVESTMENTS AND STRATEGIES . . . . . . 27 Purchases at Net Asset Value . . . . . . . . 40
Borrowing Money . . . . . . . . . . . . . . . . 27 Dealer Concessions . . . . . . . . . . . . . 40
Diversification . . . . . . . . . . . . . . . . 27 Reducing/Eliminating the Sales Charge . . . 40
Quantity Discounts and Accumulated Purchases 41
I
<PAGE> 7
Letter of Intent . . . . . . . . . . . . . . . 41
Fifth Third Bank Club 53, One Account Plus,
One Account Gold or One Account Advantage
Programs . . . . . . . . . . . . . . . . . 41
Purchases with Proceeds from Redemptions of
Unaffiliated Mutual Fund Shares . . . . . . 42
Purchases with Proceeds from Distributions of
Qualified Retirement Plans or Other Trusts
Administered by Fifth Third Bank . . . . . . 42
Concurrent Purchases . . . . . . . . . . . . . 42
Investing in Investment C Shares . . . . . . . . 42
Exchanging Securities for Fund Shares . . . . . 42
Systematic Investment Program . . . . . . . . . 43
Certificates and Confirmations . . . . . . . . 43
Dividends and Capital Gains . . . . . . . . . . 43
EXCHANGES . . . . . . . . . . . . . . . . . . . . 43
REDEEMING SHARES . . . . . . . . . . . . . . . . 44
Through Fifth Third Bank or Fifth Third
Securities . . . . . . . . . . . . . . . . . . 44
By Telephone . . . . . . . . . . . . . . . . . 44
By Mail . . . . . . . . . . . . . . . . . . . 45
Systematic Withdrawal Program . . . . . . . . . 45
Accounts with Low Balances . . . . . . . . . . 46
Contingent Deferred Sales Charge . . . . . . . 46
SHAREHOLDER INFORMATION . . . . . . . . . . . . . 47
Voting Rights . . . . . . . . . . . . . . . . . 47
Massachusetts Law . . . . . . . . . . . . . . . 47
EFFECT OF BANKING LAWS . . . . . . . . . . . . . 47
TAX INFORMATION . . . . . . . . . . . . . . . . . 48
Federal Income Tax . . . . . . . . . . . . . . 48
Additional Tax Information for Ohio Tax Free Bond
Fund . . . . . . . . . . . . . . . . . . . . . 48
State of Ohio Income Taxes . . . . . . . . . . 48
Other State and Local Taxes . . . . . . . . . 48
Additional Tax Information for International
Equity Fund . . . . . . . . . . . . . . . . . 48
PERFORMANCE INFORMATION . . . . . . . . . . . . . 49
ADDRESSES . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
II
<PAGE> 8
SYNOPSIS
______________________________________________________________________________
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated September 15, 1988. The Declaration of Trust permits the Trust
to offer separate series of shares of beneficial interest representing
interests in separate portfolios of securities. This prospectus relates only
to the seven Funds described herein. The Funds are designed for individuals
and institutions as a convenient means of accumulating interests in
professionally managed portfolios.
Shares of the following seven Funds are offered in this prospectus:
- Fountain Square U.S. Government Securities Fund ("Government Securities
Fund") seeks to provide a high level of current income by investing
primarily in U.S. government securities, including U.S. Treasury and
government agency issues;
- Fountain Square Quality Bond Fund ("Quality Bond Fund") seeks to provide a
high level of current income with capital growth as a secondary objective
by investing in investment grade debt securities of U.S. corporations, U.S.
dollar-denominated issues of foreign corporations, U.S. government
securities, and collateralized mortgage obligations;
- Fountain Square Ohio Tax Free Bond Fund ("Ohio Tax Free Fund") seeks to
provide current income exempt from federal income tax and the personal
income taxes imposed by the state of Ohio and Ohio municipalities by
investing primarily in Ohio municipal securities. The Fund is not likely
to be a suitable investment for non-Ohio taxpayers or retirement plans
since it intends to invest in Ohio municipal securities;
- Fountain Square Quality Growth Fund ("Quality Growth Fund") seeks to
provide growth of capital by investing primarily in common stocks of
high-quality companies, generally leaders in their industries, with minimum
market capitalization of $100 million;
- Fountain Square Mid Cap Fund ("Mid Cap Fund") seeks to provide growth of
capital with income as a secondary objective by investing primarily in
common stocks of companies with superior long-term growth opportunities and
maximum market capitalizations of approximately $3 billion;
- Fountain Square Balanced Fund ("Balanced Fund") seeks to provide capital
appreciation and income by investing primarily in common stocks of high
quality companies, generally leaders in their industries, and in investment
grade debt securities of U.S. corporations, U.S. dollar- denominated issues
of foreign corporations, U.S. government securities, and collateralized
mortgage obligation; and
- Fountain Square International Equity Fund ("International Equity Fund")
seeks to provide long-term capital appreciation by investing primarily in
equity securities of non-U.S. issuers.
For information on how to purchase shares of any of the Funds, please refer to
"Investing in the Funds." A minimum initial investment of $1,000 is required
for each Fund. Subsequent investments must be in amounts of at least $50.
Investment A Shares of each Fund are sold at net asset value plus any
applicable sales charge, and are redeemed at net asset value. Investment C
Shares of each Fund are sold at net asset value, but may be subject to a
contingent deferred sales charge of 1.00% if redeemed within the first 12
months following purchase. Information on redeeming shares may be found under
"Redeeming Shares." The Funds are advised by Fifth Third Bank (the "Advisor").
The International Equity Fund is sub-advised by Morgan Stanley Asset
Management, Inc. (the "Sub-Advisor").
1
<PAGE> 9
RISK FACTORS
Investors should be aware of the following general considerations: market
values of fixed-income securities, which constitute a major part of the
investments of some Funds, may vary inversely in response to changes in
prevailing interest rates. The foreign securities in which some Funds may
invest may be subject to certain risks in addition to those inherent in U.S.
investments. One or more Funds may make certain investments and employ certain
investment techniques that involve other risks, including entering into
repurchase agreements, lending portfolio securities and entering into financial
futures contracts and related options as hedges. These risks and those
associated with investing in mortgage-backed securities, when-issued
securities, options and variable rate securities are described under "Objective
of Each Fund" and "Portfolio Investments and Strategies."
2
<PAGE> 10
EXPENSES OF THE FUNDS
INVESTMENT A SHARES
______________________________________________________________________________
INVESTMENT A SHARES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.50%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable) . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Redemption Fees (as a percentage of amount redeemed, if applicable) . . . . . . . . . . . None
Exchange Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
</TABLE>
INVESTMENT A SHARES
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
<TABLE>
<CAPTION>
Government Quality Ohio
Securities Bond Tax Free
Fund Fund Fund
---- ---- ----
<S> <C> <C> <C>
Management Fees (after waivers)(1) . . . . . . . . . . .0.31% 0.51% 0.52%
12b-1 Fees (after waivers)(2) . . . . . . . . . . . . . .0.00% 0.00% 0.00%
Other Expenses (after waivers and/or reimbursements)(3) .0.44% 0.24% 0.23%
Total Investment A Shares Operating Expenses(4) . . . . .0.75% 0.75% 0.75%(5)
<FN>
(1) The management fee of the Government Securities Fund, Quality Bond Fund and
Ohio Tax Free Fund have been reduced to reflect the voluntary waiver of the
investment advisory fee by the investment advisor. The advisor can
terminate this voluntary waiver at any time at its sole discretion. With
respect to each of the above-mentioned Funds, the maximum management fee is
0.55%.
(2) As of the date of this prospectus, the Investment A Shares are not paying
or accruing 12b-1 fees. Investment A Shares will not accrue or pay 12b-1
fees until a separate class of shares for certain trust or employee benefit
customers of Fifth Third Bank is created or a determination is made that
such investors will be subject to the 12b-1 fees. Investment A Shares can
pay up to 0.35% as a 12b-1 fee to the distributor.
(3) Other expenses have been reduced to reflect the voluntary waiver by the
custodian. In addition, other expenses of the Ohio Tax Free Fund have been
further reduced to reflect the anticipated voluntary reimbursement of other
expenses by the investment advisor. Other expenses of the Ohio Tax Free
Fund are estimated to be 0.46% absent the anticipated voluntary
reimbursement.
(4) Total Investment A Shares Operating Expenses for the Government Securities
Fund and the Quality Bond Fund would have been 1.14% and 0.84%,
respectively, absent the voluntary waivers by the investment advisor and
custodian. Total Investment A Shares Operating Expenses for the Ohio Tax
Free Fund would have been 1.12% absent the voluntary reimbursement by the
investment advisor, and the voluntary waiver
</TABLE>
3
<PAGE> 11
by the investment advisor and custodian. The Total Investment
A Shares Operating Expenses of the Ohio Tax Free Fund
were 0.35% for the fiscal year ended July 31, 1995.
(5) For the fiscal year ending July 31, 1996, Ohio Tax Free Bond Fund
projected Total Investment A Shares Operating Expenses of 1.05% absent
the voluntary reimbursement by the investment advisor, and the
voluntary waiver by the investment advisor and custodian.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER IN INVESTMENT A SHARES OF EACH
FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS
OF THE VARIOUS COSTS AND EXPENSES, SEE "FOUNTAIN SQUARE FUNDS INFORMATION" AND
"INVESTING IN THE FUNDS." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY
BE SUBJECT TO ADDITIONAL FEES.
LONG-TERM SHAREHOLDERS MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE
MAXIMUM FRONT-END SALES CHARGE PERMITTED UNDER THE RULES OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC.
EXAMPLE
You would pay the following expenses on a $1,000 investment in
Investment A Shares assuming (1) 5% annual return; (2) redemption at the end of
each time period; and (3) payment of the maximum sales charge. Investment A
Shares charge no redemption fees.
<TABLE>
<CAPTION>
Government Ohio
Securities Quality Tax Free
Fund Bond Fund Fund
---- ---------- ----
<S> <C> <C> <C>
1 Year . . . . . . . . . $ 52 $ 52 $ 52
3 Years . . . . . . . . $ 68 $ 68 $ 68
5 Years . . . . . . . . $ 85 $ 85 $ 85
10 Years . . . . . . . . $134 $134 $134
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
4
<PAGE> 12
EXPENSES OF THE FUNDS
INVESTMENT A SHARES
______________________________________________________________________________
INVESTMENT A SHARES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
<S> <C>
Maximum Sales Load Imposed on Purchases (as a Percentage of offering price) . . . . 4.50%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) . . . . . . . . . . . . . . . . . . . . . . . None
Contingent Deferred Sales Charge
(as a percentage of original purchase price or redemption proceeds, as applicable) None
Redemption Fees (as a percentage of amount redeemed, if applicable) . . . . . . . . None
Exchange Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
</TABLE>
INVESTMENT A SHARES
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
<TABLE>
<CAPTION>
Quality International
Growth Mid Cap Balanced Equity
Fund Fund Fund Fund
---- ---- ---- ----
<S> <C> <C> <C> <C>
Management Fees (after waivers)(1) . . . 0.80% 0.75% 0.75% 0.90%
12b-1 Fees (after waivers)(2). . . . . . 0.00% 0.00% 0.00% 0.00%
Other Expenses (after waivers) . . . . . 0.20%(3) 0.25%(3) 0.25%(3) 0.75%
Total Investment A Shares 1.00% 1.00% 1.00% 1.65%
Operating Expenses(4) . . . . . . . . . .
<FN>
(1) The management fee of each Fund has been reduced to reflect the voluntary
waiver of the investment advisory fee by the investment advisor. The
advisor can terminate this voluntary waiver at any time at its sole
discretion. With respect to each of the above-mentioned Funds, the maximum
management fee is 0.80%, except for the International Equity Fund which is
1.00%.
(2) As of the date of this prospectus, the Investment A Shares are not paying
or accruing 12b-1 fees. Investment A Shares will not accrue or pay 12b-1
fees until a separate class of shares for certain trust or employee benefit
customers of Fifth Third Bank is created or a determination is made that
such investors will be subject to the 12b-1 fees. Investment A Shares can
pay up to 0.35% as a 12b-1 fee to the distributor.
(3) Other expenses have been reduced to reflect the voluntary waiver of its
fees by the custodian.
(4) Total Investment A Shares Operating Expenses for the Quality Growth Fund,
the Mid Cap Fund, and the Balanced Fund would have been 1.05%, 1.18%, and
1.06%, respectively, absent the voluntary waivers by the investment advisor
and custodian. Total Investment A Shares Operating Expenses for the
International Equity Fund would have been 1.72% absent the voluntary waiver
by the investment advisor.
</TABLE>
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER IN INVESTMENT A SHARES OF EACH
FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS
OF THE VARIOUS COSTS AND EXPENSES, SEE "FOUNTAIN SQUARE FUNDS INFORMATION" AND
"INVESTING IN THE FUNDS." Wire-transferred redemptions of less than $5,000 may
be subject to additional fees.
LONG-TERM SHAREHOLDERS MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE
MAXIMUM FRONT-END SALES CHARGE PERMITTED UNDER THE RULES OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC.
5
<PAGE> 13
EXAMPLE
You would pay the following expenses on a 1,000 investment in
Investment A Shares assuming (1) 5% annual return; (2) redemption at the end of
each time period; and (3) payment of the maximum sales charge. Investment A
Shares charge no redemption fees.
<TABLE>
<CAPTION>
Quality International
Growth Mid Cap Balanced Equity
Fund Fund Fund Fund
---- ---- ---- ----
<S> <C> <C> <C> <C>
1 Year . . . . . . . . . . . . . . . . . $ 55 $ 55 $ 55 $ 61
3 Years . . . . . . . . . . . . . . . . . $ 75 $ 75 $ 75 $ 95
5 Years . . . . . . . . . . . . . . . . . $ 98 $ 98 $ 98 $131
10 Years . . . . . . . . . . . . . . . . $162 $162 $162 $232
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
6
<PAGE> 14
EXPENSES OF THE FUNDS
INVESTMENT C SHARES
______________________________________________________________________________
INVESTMENT C SHARES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price) . . . . . . . . . . . . . . . . . . . . . . . . . . None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.00%
Redemption Fees (as a percentage of amount redeemed, if applicable) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Exchange Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
</TABLE>
INVESTMENT C SHARES
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
<TABLE>
<CAPTION>
Government Quality Ohio
Securities Bond Tax Free
Fund Fund Fund
---- ---- ----
<S> <C> <C> <C>
Management Fees (after waivers)(2) . . . . . . . . . . . . 0.31% 0.51% 0.52%
12b-1 Fees (after waivers)(3) . . . . . . . . . . . . . . . 0.50% 0.50% 0.50%
Administrative Service Fee . . . . . . . . . . . . . . . . 0.25% 0.25% 0.25%
Other Expenses (after waivers and/or reimbursements)(4) . . 0.44% 0.24% 0.23%
Total Investment C Shares Operating Expenses(5) . . . . . 1.50% 1.50% 1.50%(6)
<FN>
(1) A contingent deferred sales charge of 1.00% of the lesser of the original
purchase price or the net asset value of Shares redeemed within one year of
the purchase date. (See "Contingent Deferred Sales Charge").
(2) The management fee of the Government Securities Fund, Quality Bond Fund,
and Ohio Tax Free Fund have been reduced to reflect the voluntary waiver of
a portion of the investment advisory fee by the investment advisor. The
advisor can terminate this voluntary waiver at any time at its sole
discretion. With respect to each of the above-mentioned Funds, the maximum
management fee is 0.55%.
(3) The Investment C Shares of the Funds can pay up to 0.75% as a 12b-1 fee to
the distributor.
(4) Other expenses have been reduced to reflect the voluntary waiver by the
custodian. In addition, other expenses of the Ohio Tax Free Fund have been
further reduced to reflect the anticipated voluntary reimbursement of other
expenses by the investment advisor. Other expenses of Ohio Tax Free Fund
are estimated to be 0.46% absent the anticipated voluntary reimbursement.
(5) Total Investment C Shares Operating Expenses for the Government Securities
Fund and the Quality Bond Fund would have been 2.14% and 1.84%,
respectively, absent the voluntary waivers by the investment advisor and
custodian, and the waiver of a portion of the 12b-1 fee. Total Investment
C Shares Operating Expenses for the Ohio Tax Free Fund would have been
2.12% absent the voluntary reimbursement by the
</TABLE>
7
<PAGE> 15
investment advisor, the voluntary waiver by the investment
advisor and custodian, and the waiver of a portion of the 12b-1 fee.
(6) For the fiscal year ending July 31, 1996, Ohio Tax Free
Fund projected Total Investment C Shares Operating Expenses of 2.05%
absent the voluntary reimbursement by the investment advisor, the
voluntary waiver by the investment advisor and custodian, and the
waiver of a portion of the 12b-1 fee.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER IN INVESTMENT C SHARES OF EACH
FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS
OF THE VARIOUS COSTS AND EXPENSES, SEE "FOUNTAIN SQUARE FUNDS INFORMATION" AND
"INVESTING IN THE FUNDS." Wire transferred redemptions of less than $5,000 may
be subject to additional fees.
LONG-TERM SHAREHOLDERS MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE
MAXIMUM FRONT-END SALES CHARGE PERMITTED UNDER THE RULES OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC.
EXAMPLE
- -------
You would pay the following expenses on a $1,000 investment in
Investment C Shares assuming (1) 5% annual return; (2) either redemption at the
end of year 1 or no redemption; and (3) payment of the maximum sales charge.
<TABLE>
<CAPTION>
Government Ohio
Securities Quality Tax Free
Fund Bond Fund Fund
---- --------- ----
<S> <C> <C> <C>
Year 1 (assuming redemption) . . . . . . . . . . . . . . $ 25 $ 25 $ 25
--------- --------- ---------
Year 1 (assuming no redemption) . . . . . . . . . . . . . . $ 15 $ 15 $ 15
--------- --------- ---------
3 Years . . . . . . . . . . . . . . . . . . . . . . . . . . $ 47 $ 47 $ 47
--------- --------- ---------
5 Years . . . . . . . . . . . . . . . . . . . . . . . . . . $ 82 $ 82 $ 82
--------- --------- ---------
10 Years . . . . . . . . . . . . . . . . . . . . . . . . . $ 179 $ 179 $ 179
--------- --------- ---------
</TABLE>
The above example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
8
<PAGE> 16
EXPENSES OF THE FUNDS
INVESTMENT C SHARES
______________________________________________________________________________
INVESTMENT C SHARES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price) . . . . . . . . . . . . . . . . . . . . . . . . . . None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.00%
Redemption Fees (as a percentage of amount redeemed, if applicable) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Exchange Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
</TABLE>
ANNUAL INVESTMENT C SHARES OPERATING EXPENSES
(As a percentage of average net assets)
<TABLE>
<CAPTION>
Quality Mid International
Growth Cap Balanced Equity
Fund Fund Fund Fund
---- ---- ---- ----
<S> <C> <C> <C> <C>
Management Fees (after waivers)(2) . . . . . . . 0.80% 0.75% 0.75% 0.90%
12b-1 Fees (after waivers)(3) . . . . . . . . . . 0.50% 0.50% 0.50% 0.50%
Administrative Service Fee . . . . . . . . . . . 0.25% 0.25% 0.25% 0.25%
Other Expenses (after waivers) . . . . . . . . . 0.20%(4) 0.25%(4) 0.25%(4) 0.75%
Total Investment C Shares Operating Expenses(5) 1.75% 1.75% 1.75% 2.40%
<FN>
(1) The contingent deferred sales charge is 1.00% of the lesser of the original
purchase price or the net asset value of Shares redeemed within one year of
the purchase date. (See "Contingent Deferred Sales Charge").
(2) The management fee of each Fund has been reduced to reflect the voluntary
waiver of the investment advisory fee by the investment advisor. The
advisor can terminate this voluntary waiver at any time at its sole
discretion. With respect to each of the above-mentioned Funds, the maximum
management fee is 0.80%, except for the International Equity Fund which is
1.00%.
(3) The Investment C Shares of the Funds can pay up to 0.75% as a 12b-1 fee to
the distributor.
(4) Other expenses have been reduced to reflect the voluntary waiver of its
fees by the custodian.
(5) Total Investment C Shares Operating Expenses for the Quality Growth Fund,
the Mid Cap Fund, and the Balanced Fund would have been 2.05%, 2.18% and
2.06%, respectively, absent the voluntary waivers by the investment advisor
and custodian, and the waiver of a portion of the 12b-1 fee. Total
Investment C Shares Operating Expenses for the International Equity Fund
would have been 2.72% absent the voluntary waiver by the investment advisor
and the waiver of a portion of the 12b-1 fee.
</TABLE>
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER IN INVESTMENT C SHARES OF EACH
FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE
9
<PAGE> 17
DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES, SEE "FOUNTAIN SQUARE FUNDS
INFORMATION" AND "INVESTING IN THE FUNDS." Wire transferred redemptions of
less than $5,000 may be subject to additional fees.
LONG-TERM SHAREHOLDERS MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE
MAXIMUM FRONT-END SALES CHARGE PERMITTED UNDER THE RULES OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC.
EXAMPLE
- -------
You would pay the following expenses on a $1,000 investment in
Investment C Shares assuming (1) 5% annual return; (2) either redemption at the
end of year 1 or no redemption; and (3) payment of the maximum sales charge.
<TABLE>
<CAPTION>
Quality Mid International
Growth Cap Balanced Equity
Fund Fund Fund Fund
---- --------- ---- ----
<S> <C> <C> <C> <C>
Year 1 (assuming redemption) . . . . . . . . . . . . . . $ 28 $ 28 $ 28 $ 34
--------- --------- --------- ---------
Year 1 (assuming no redemption) . . . . . . . . . . . . . . $ 18 $ 18 $ 18 $ 24
--------- --------- --------- ---------
3 Years . . . . . . . . . . . . . . . . . . . . . . . . . . $ 55 $ 55 $ 55 $ 75
--------- --------- --------- ---------
5 Years . . . . . . . . . . . . . . . . . . . . . . . . . . $ 95 $ 95 $ 95 $ 128
--------- --------- --------- ---------
10 Years . . . . . . . . . . . . . . . . . . . . . . . . . $ 206 $ 206 $ 206 $ 274
--------- --------- --------- ---------
</TABLE>
The above example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.
10
<PAGE> 18
FOUNTAIN SQUARE U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
________________________________________________________________________________
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
The following table has been audited by Ernst & Young LLP, the Trust's
independent auditors. Their report dated September 15, 1995, on the Funds'
financial statements for the year ended July 31, 1995 is included in the
Combined Annual Report, which is incorporated by reference. This table should
be read in conjunction with the Funds' financial statements and notes thereto,
which may be obtained from the Trust. The Financial Highlights presented below
are historical information for shares of Fountain Square U.S. Government
Securities Fund, which were the predecessor to Investment A Shares of the Fund.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------
1995 1994 1993*
---- ---- ----
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.64 $10.21 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.58 0.51 0.35
Net realized and unrealized gain (loss) on investments 0.13 (0.49) 0.13
------ ------ ------
Total from investment operations 0.71 0.02 0.48
LESS DISTRIBUTIONS (0.58) (0.57) (0.27)
Dividends to shareholders from net investment income
Distributions to shareholders from net realized gain on -- (0.02) --
investment transactions ---------- ------ ----------
Total distributions (0.58) (0.59) (0.27)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 9.77 $ 9.64 $10.21
TOTAL RETURN** ====== ====== ======
RATIOS TO AVERAGE NET ASSETS 7.66% 0.11% 4.87%
Expenses
Net investment income 0.75% 0.75% 0.74%(b)
Expense waiver/reimbursement (a) 5.98% 5.17% 5.36%(b)
SUPPLEMENTAL DATA 0.39% 0.18% 0.33%(b)
Net assets, end of period (000 omitted) $25,054 $29,107 $29,603
Portfolio turnover rate 115% 55% 23%
<FN>
*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.
(b) Computed on an annualized basis.
</TABLE>
Further information about the Fund's performance is contained in the Combined
Annual Report dated July 31, 1995, which can be obtained free of charge.
11
<PAGE> 19
FOUNTAIN SQUARE QUALITY BOND FUND
FINANCIAL HIGHLIGHTS
______________________________________________________________________________
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Ernst & Young LLP, the Trust's
independent auditors. Their report dated September 15, 1995, on the Funds'
financial statements for the year ended July 31, 1995 is included in the
Combined Annual Report, which is incorporated by reference. This table should
be read in conjunction with the Funds' financial statements and notes thereto,
which may be obtained from the Trust. The Financial Highlights presented below
are historical information for shares of Fountain Square Quality Bond Fund,
which were the predecessor to Investment A Shares of the Fund.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------
1995 1994 1993*
---- ---- ----
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.55 $10.29 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.64 0.57 0.41
Net realized and unrealized gain (loss) on investments 0.17 (0.69) 0.26
------- ------ -------
Total from investment operations 0.81 (0.12) 0.67
LESS DISTRIBUTIONS
Dividends to shareholders from net investment income (0.64) (0.59) (0.38)
Distributions to shareholders from net realized gain on
investment transactions -- (0.03) --
------- ------ -------
Total distributions (0.64) (0.62) (0.38)
------ ------ -------
NET ASSET VALUE, END OF PERIOD $ 9.72 $ 9.55 $10.29
TOTAL RETURN** ======= ====== =======
RATIOS TO AVERAGE NET ASSETS 8.89% (1.25%) 6.78%
Expenses
Net investment income 0.75% 0.75% 0.74%(b)
Expense waiver/reimbursement (a) 6.72% 5.76% 6.07%(b)
SUPPLEMENTAL DATA 0.09% 0.11% 0.23%(b)
Net assets, end of period (000 omitted) $55,767 $47,272 $37,962
Portfolio turnover rate 138% 112% 19%
<FN>
*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.
(b) Computed on an annualized basis.
</TABLE>
Further information about the Fund's performance is contained in the Combined
Annual Report dated July 31, 1995, which can be obtained free of charge.
12
<PAGE> 20
FOUNTAIN SQUARE OHIO TAX FREE BOND FUND
FINANCIAL HIGHLIGHTS
________________________________________________________________________________
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Ernst & Young LLP, the Trust's
independent auditors. Their report dated September 15, 1995, on the Funds'
financial statements for the year ended July 31, 1995 is included in the
Combined Annual Report, which is incorporated by reference. This table should
be read in conjunction with the Funds' financial statements and notes thereto,
which may be obtained from the Trust. The Financial Highlights presented below
are historical information for shares of Fountain Square Ohio Tax Free Bond
Fund, which were the predecessor to Investment A Shares of the Fund.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------
1995 1994 1993*
---- ---- ----
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.75 $ 9.95 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.42 0.40 0.05
Net realized and unrealized gain (loss) on investments 0.24 (0.21) (0.05)
Total from investment operations 0.66 0.19 0.00
LESS DISTRIBUTIONS
Dividends to shareholders from net investment income (0.42) (0.39) (0.05)
NET ASSET VALUE, END OF PERIOD $ 9.99 $ 9.75 $ 9.95
------ ------ ------
TOTAL RETURN** 7.02% 1.95% (0.01%)
RATIOS TO AVERAGE NET ASSETS
Expenses 0.35% 0.00% 0.00%
Net investment income 4.36% 4.18% 3.53%(b)
Expense waiver/reimbursement (a) 0.71% 1.33% 2.21%(b)
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $28,315 $23,854 $8,163
Portfolio turnover rate 27% 94% 31%
<FN>
*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.
(b) Computed on an annualized basis.
</TABLE>
Further information about the Fund's performance is contained in the Combined
Annual Report dated July 31, 1995, which can be obtained free of charge.
13
<PAGE> 21
FOUNTAIN SQUARE QUALITY GROWTH FUND
FINANCIAL HIGHLIGHTS
________________________________________________________________________________
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Ernst & Young LLP, the Trust's
independent auditors. Their report dated September 15, 1995, on the Funds'
financial statements for the year ended July 31, 1995 is included in the
Combined Annual Report, which is incorporated by reference. This table should
be read in conjunction with the Funds' financial statements and notes thereto,
which may be obtained from the Trust. The Financial Highlights presented below
are historical information for shares of Fountain Square Quality Growth Fund,
which were the predecessor to Investment A Shares of the Fund.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------
1995 1994 1993*
---- ---- ----
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.70 $ 9.54 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.14 0.13 0.10
Net realized and unrealized gain (loss) on investments 2.09 0.17 (0.47)
------ ------ ------
Total from investment operations 2.23 0.30 (0.37)
LESS DISTRIBUTIONS
Dividends to shareholders from net investment income (0.14) (0.13) (0.09)
Distributions to shareholders in excess of net
investment income (a) -- (0.01) --
------ ------ ------
Total distributions (0.14) (0.14) (0.09)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $11.79 $ 9.70 $ 9.54
====== ====== ======
TOTAL RETURN** 23.21% 3.17% (3.73%)
RATIOS TO AVERAGE NET ASSETS
Expenses 1.00% 1.00% 0.99%(c)
Net investment income 1.44% 1.42% 1.47%(c)
Expense waiver/reimbursement (b) 0.05% 0.03% 0.05%(c)
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $82,594 $69,648 $67,681
Portfolio turnover rate 34% 37% 28%
<FN>
*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) These distributions did not represent a return of capital for federal tax
purposes for the year ended July 31, 1994.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(c) Computed on an annualized basis.
</TABLE>
Further information about the Fund's performance is contained in the Combined
Annual Report dated July 31, 1995, which can be obtained free of charge.
14
<PAGE> 22
FOUNTAIN SQUARE MID CAP FUND
FINANCIAL HIGHLIGHTS
________________________________________________________________________________
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Ernst & Young LLP, the Trust's
independent auditors. Their report dated September 15, 1995, on the Funds'
financial statements for the year ended July 31, 1995 is included in the
Combined Annual Report, which is incorporated by reference. This table should
be read in conjunction with the Funds' financial statements and notes thereto,
which may be obtained from the Trust. The Financial Highlights presented below
are historical information for shares of Fountain Square Mid Cap Fund, which
were the predecessor to Investment A Shares of the Fund.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------
1995 1994 1993*
---- ---- ----
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.10 $ 9.68 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.08 0.06 0.06
Net realized and unrealized gain (loss) on investments 2.48 0.43 (0.33)
------ ------ ------
Total from investment operations 2.56 0.49 (0.27)
LESS DISTRIBUTIONS
Dividends to shareholders from net investment income (0.07) (0.07) (0.05)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $12.59 $10.10 $ 9.68
====== ====== ======
TOTAL RETURN** 25.45% 5.07% (2.73%)
RATIOS TO AVERAGE NET ASSETS
Expenses 1.00% 1.00% 0.99%(b)
Net investment income 0.77% 0.60% 0.88%(b)
Expense waiver/reimbursement (a) 0.18% 0.33% 0.40%(b)
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $47,184 $30,210 $24,019
Portfolio turnover rate 23% 44% 20%
<FN>
*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.
(b) Computed on an annualized basis.
</TABLE>
Further information about the Fund's performance is contained in the Combined
Annual Report dated July 31, 1995, which can be obtained free of charge.
15
<PAGE> 23
FOUNTAIN SQUARE BALANCED FUND
FINANCIAL HIGHLIGHTS
______________________________________________________________________________
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Ernst & Young LLP, the Trust's
independent auditors. Their report dated September 15, 1995, on the Funds'
financial statements for the year ended July 31, 1995 is included in the
Combined Annual Report, which is incorporated by reference. This table should
be read in conjunction with the Funds' financial statements and notes thereto,
which may be obtained from the Trust. The Financial Highlights presented below
are historical information for shares of Fountain Square Balanced Fund, which
were the predecessor to Investment A Shares of the Fund.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------
1995 1994 1993*
---- ---- ----
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.70 $ 9.78 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.28 0.26 0.20
Net realized and unrealized gain (loss) on investments 1.57 (0.06) (0.25)
------ ------ ------
Total from investment operations 1.85 0.20 (0.05)
LESS DISTRIBUTIONS
Dividends to shareholders from net investment income (0.27) (0.26) (0.17)
Distributions to shareholders in excess of net
investment income (a) -- (0.02) --
------ ------ ------
Total distributions (0.27) (0.28) (0.17)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $11.28 $ 9.70 $ 9.78
====== ====== ======
TOTAL RETURN** 19.37% 2.02% (0.51%)
RATIOS TO AVERAGE NET ASSETS
Expenses 1.00% 1.00% 1.00%(c)
Net investment income 2.73% 2.64% 3.04%(c)
Expense waiver/reimbursement (b) 0.06% 0.06% 0.08%(c)
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $58,075 $59,363 $60,168
Portfolio turnover rate 58% 53% 30%
<FN>
*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) These distributions did not represent a return of capital for federal tax
purposes for the year ended July 31, 1994.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(c) Computed on an annualized basis.
</TABLE>
Further information about the Fund's performance is contained in the Combined
Annual Report dated July 31, 1995, which can be obtained free of charge.
16
<PAGE> 24
FOUNTAIN SQUARE INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
________________________________________________________________________________
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
The following table has been audited by Ernst & Young LLP, the Trust's
independent auditors. Their report dated September 15, 1995, on the Funds'
financial statements for the year ended July 31, 1995 is included in the
Combined Annual Report, which is incorporated by reference. This table should
be read in conjunction with the Funds' financial statements and notes thereto,
which may be obtained from the Trust. The Financial Highlights presented below
are historical information for shares of Fountain Square International Equity
Fund, which were the predecessor to Investment A Shares of the Fund.
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31, 1995
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05
Net realized and unrealized gain (loss) on investments (0.22)
------
Total from investment operations (0.17)
NET ASSET VALUE, END OF PERIOD $ 9.83
======
TOTAL RETURN** (1.70%)
RATIOS TO AVERAGE NET ASSETS
Expenses 1.65%(b)
Net investment income 0.62%(b)
Expense waiver/reimbursement (a) 0.07%(b)
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $86,442
Portfolio turnover rate 54%
<FN>
* Reflects operations for the period from August 19, 1994 (date of initial
public investment) to July 31, 1995.
** Based on net asset value, which does not reflect the sales load or
continent deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
</TABLE>
Further information about the Fund's performance is contained in the Combined
Annual Report dated July 31, 1995, which can be obtained free of charge.
17
<PAGE> 25
OBJECTIVE OF EACH FUND
________________________________________________________________________________
The investment objective and policies of each Fund appear below. The
investment objective of a Fund cannot be changed without the approval of
holders of a majority of that Fund's shares. While there is no assurance that
a Fund will achieve its investment objective, it endeavors to do so by
following the investment policies described in this prospectus.
Unless indicated otherwise, the investment policies and limitations of a Fund
may be changed by the Board of Trustees ("Trustees") without approval of
shareholders. Shareholders will be notified before any material change in
these policies becomes effective.
Additional information about investment limitations, strategies that one or
more Funds may employ, and certain investment policies mentioned below, appears
in the "Portfolio Investments and Strategies" section of this combined
prospectus and in the Combined Statement of Additional Information.
GOVERNMENT SECURITIES FUND
The investment objective of the Government Securities Fund is to provide a high
level of current income. Capital growth is a secondary objective. The Fund
pursues its investment objectives by investing in a diversified portfolio of
U.S. government securities, including both U.S. Treasury and government agency
issues. The Fund will purchase only securities with remaining maturities of
seven years or less. In managing the portfolio, the Advisor seeks to minimize
fluctuations in the value of the Fund's Investment A Shares and Investment C
Shares.
ACCEPTABLE INVESTMENTS. The U.S. government securities in which the Fund
invests are either issued or guaranteed by the U.S. government, its agencies,
or instrumentalities. The prices of fixed income securities fluctuate
inversely to the direction of interest rates. These securities include, but
are not limited to:
- direct obligations of the U.S. Treasury such as U.S. Treasury bills, notes
and bonds; and
- obligations of U.S. government agencies or instrumentalities such as
Federal Home Loan Banks, Federal National Mortgage Association, Government
National Mortgage Association, Farm Credit System, including the National
Bank for Cooperatives, Farm Credit Banks, and Banks for Cooperatives,
Tennessee Valley Authority, Export-Import Bank of the United States,
Farmers Home Administration, Housing and Urban Development, Private Export
Funding Corporation, Commodity Credit Corporation, Federal Financing Bank,
Student Loan Marketing Association, Federal Home Loan Mortgage Corporation,
or National Credit Union Administration. Some of these obligations may be
in the form of collateralized mortgage obligations, which are generally
described below for the Quality Bond Fund.
Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government are backed by the full faith and credit of the U.S. Treasury.
No assurances can be given that the U.S. government will provide financial
support to other agencies or instrumentalities, since it is not obligated to do
so. The instrumentalities are supported by:
- the issuer's right to borrow an amount limited to a specific line of credit
from the U.S. Treasury;
- discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
- the credit of the agency or instrumentality.
18
<PAGE> 26
In addition, the Fund may borrow money, lend portfolio securities, invest in
restricted and illiquid securities, enter into repurchase agreements, and
engage in put and call options, futures and options on futures, and when-issued
and delayed delivery transactions. (See "Portfolio Investments and
Strategies.")
INVESTMENT LIMITATIONS. The Fund's investment limitations are discussed below
under "Borrowing Money," "Restricted and Illiquid Securities," and
"Diversification."
QUALITY BOND FUND
The investment objective of the Quality Bond Fund is to achieve high current
income. Capital growth is a secondary objective. The Fund pursues its
investment objectives by investing in the bonds and other instruments described
below. Under normal market conditions, the Fund will invest at least 65% of
its assets in quality bonds. As used herein, the Fund considers bonds rated
Baa or higher by Moody's Investors Service, Inc. ("Moody's") or BBB or higher
by Standard & Poor's Ratings Group ("S&P"), or unrated bonds that are
determined by the Advisor to be of comparable quality, to be quality bonds.
ACCEPTABLE INVESTMENTS. The Fund invests primarily in a professionally
managed, diversified portfolio of investment grade securities which include:
- domestic issues of corporate debt obligations rated Baa or higher by
Moody's or BBB or higher by S&P, or unrated bonds that are determined
by the Advisor to be of comparable quality. Downgrades will be evaluated
on a case by case basis by the Advisor. The Advisor will determine
whether or not the security continues to be an acceptable investment. If
not, the security will be sold;
- U.S. dollar denominated issues of foreign corporations, governments and
government agencies that meet the same quality standards as stated for
domestic issuers. The Fund may not invest more than 25% of its assets in
foreign investments. (See "Foreign Investments");
- obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities, of the types eligible for purchase by the Government
Securities Fund, as described above; and
- collateralized mortgage obligations.
Bond maturities or average lives will be less than 15 years.
In addition, the Fund may borrow money, lend portfolio securities, invest in
restricted and illiquid securities, invest in repurchase agreements, engage in
options and futures transactions and participate in when-issued and delayed
delivery transactions. (See "Portfolio Investments and Strategies.")
COLLATERALIZED MORTGAGE OBLIGATIONS. The Fund may invest in collateralized
mortgage obligations ("CMOs") which are rated Baa or better by Moody's or BBB
or higher by S&P and which are issued by private entities such as investment
banking firms and companies related to the construction industry. The CMOs in
which the Fund may invest may be: (i) privately issued securities which are
collateralized by pools of mortgages in which each mortgage is guaranteed as to
payment of principal and interest by an agency or instrumentality of the U.S.
government; (ii) privately issued securities which are collateralized by pools
of mortgages in which payment of principal and interest is guaranteed by the
issuer and such guarantee is collateralized by U.S. government securities;
(iii) other privately issued securities in which the proceeds of the issuance
are invested in mortgage-backed securities and payment of the principal and
interest is supported by the credit of an agency or instrumentality of the U.S.
government; and (iv) privately issued securities in which each mortgage is
secured by the underlying real estate and payment is guaranteed by the
mortgagee. The mortgage-related securities provide for a periodic payment
consisting of both interest and principal. The interest portion of these
payments will be distributed by the Fund as income, and the capital portion
will be reinvested.
Because the mortgages underlying mortgage-backed securities often may be
prepaid without penalty or premium, mortgage-backed securities are generally
subject to higher prepayment risks than most other types of debt
19
<PAGE> 27
instruments. Prepayment risks on mortgage securities tend to increase during
periods of declining mortgage interest rates, because many borrowers refinance
their mortgages to take advantage of the more favorable rates. Depending upon
market conditions, the yield that the Fund receives from the reinvestment of
such prepayments, or any scheduled principal payments, may be lower than the
yield on the original mortgage security. As a consequence, mortgage securities
may be a less effective means of `locking in' interest rates than other types
of debt securities having the same stated maturity and may also have less
potential for capital appreciation. For certain types of asset pools, such as
collateralized mortgage obligations, prepayments may be allocated to one
tranche of securities ahead of other tranches, in order to reduce the risk of
prepayment for the other tranches. Prepayments may result in a capital loss to
the Fund to the extent that the prepaid mortgage securities were purchased at a
market premium over their stated principal amount. Conversely, the prepayment
of mortgage securities purchased at a market discount from their stated
principal amount will accelerate the recognition of interest income by the
Fund, which would be taxed as ordinary income when distributed to the
shareholders.
INVESTMENT LIMITATIONS. The Fund's investment limitations are discussed below
under "Borrowing Money," "Diversification," and "Restricted and Illiquid
Securities."
OHIO TAX FREE FUND
The investment objective of the Ohio Tax Free 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 pursues its investment
objective by investing primarily in Ohio municipal securities. Interest income
of the Fund that is exempt from the income taxes described above retains its
exempt status when distributed to the Fund's shareholders. Income distributed
by the Fund may not necessarily be exempt from state or municipal taxes in
states other than Ohio.
ACCEPTABLE INVESTMENTS. The municipal securities in which the Fund invests
are:
- obligations issued by or on behalf of the state of Ohio, its political
subdivisions, or agencies;
- debt obligations of any state, territory, or possession of the United
States, including the District of Columbia, or any political subdivision of
any of these; and
- participation interests, as described below, in any of the above
obligations,
the interest from which is, in the opinion of bond counsel for the issuers or
in the opinion of officers of the Fund and/or the Advisor to the Fund, exempt
from both federal income tax and the personal income tax imposed by the state
of Ohio and Ohio municipalities. As a matter of investment policy, which may
not be changed without shareholder approval, under normal market conditions at
least 80% of the value of the Fund's net assets will be invested in Ohio
municipal securities, as defined above, or at least 80% of the Fund's income
will be derived from such securities.
In addition, the Fund may borrow money, lend portfolio securities, invest in
restricted securities, enter into repurchase agreements, and engage in
when-issued and delayed delivery transactions. (See "Portfolio Investments and
Strategies.")
CHARACTERISTICS. The Ohio municipal securities which the Fund buys are
investment grade bonds rated Aaa, Aa, A or Baa by Moody's, or AAA, AA, A or BBB
by S&P or Fitch Investors Service, Inc. In certain cases, the Fund's Advisor
may choose bonds which are unrated if it judges the bonds to have the same
characteristics as the investment grade bonds described above. A description
of the rating categories is contained in the Appendix to the Combined Statement
of Additional Information. As a matter of investment policy, under normal
market conditions, the Fund will invest at least 65% of its assets in bonds.
PARTICIPATION INTERESTS. The Fund may purchase participation interests from
financial institutions such as commercial banks, savings and loan associations,
and insurance companies. These participation interests give the
20
<PAGE> 28
Fund an undivided interest in Ohio municipal securities. The financial
institutions from which the Fund purchases participation interests frequently
provide or secure irrevocable letters of credit or guarantees to assure that
the participation interests are of high quality.
VARIABLE RATE MUNICIPAL SECURITIES. Some of the Ohio municipal securities
which the Fund purchases may have variable interest rates. Variable interest
rates are normally based on a published interest rate or interest rate index or
a similar standard, such as the 91-day U.S. Treasury bill rate. Many variable
rate municipal securities are subject to payment of principal on demand by the
Fund in not more than seven days. All variable rate municipal securities will
meet the quality standards for the Fund. The Fund's Advisor has been
instructed by the Trustees to monitor the pricing, quality, and liquidity of
the variable rate municipal securities, including participation interests held
by the Fund on the basis of published financial information and reports of the
rating agencies and other analytical services.
MUNICIPAL LEASES. Municipal leases are obligations issued by state and local
governments or authorities to finance the acquisition of equipment and
facilities. They may take the form of a lease, an installment purchase
contract, a conditional sales contract, or a participation certificate on any
of the above.
TEMPORARY INVESTMENTS. The Fund normally invests its assets so that at least
80% of its annual interest income is exempt from federal income tax and the
personal income taxes imposed by the state of Ohio and Ohio municipalities, or
at least 80% of its net assets are invested in obligations the interest from
which is exempt from such taxes. However, from time to time, during periods of
other than normal market conditions, the Fund may invest in non-Ohio municipal
tax-exempt obligations or taxable temporary investments. These temporary
investments include: notes issued by or on behalf of municipal or corporate
issuers; obligations issued or guaranteed by the U.S. government, its agencies,
or instrumentalities; other debt securities; commercial paper; certificates of
deposit of banks; and repurchase agreements.
There are no rating requirements applicable to temporary investments. However,
the Advisor will limit temporary investments to those rated within the
investment grade categories described under "Acceptable
Investments--Characteristics" if rated, or if unrated, those which the Advisor
judges to have the same characteristics as such investment grade securities.
Although the Fund is permitted to make taxable, temporary investments, there is
no current intention of generating income subject to federal income tax or
personal income taxes imposed by the state of Ohio or Ohio municipalities.
OHIO MUNICIPAL SECURITIES. Ohio municipal securities are generally issued to
finance public works, such as airports, bridges, highways, housing, hospitals,
mass transportation projects, schools, streets, and water and sewer works.
They are also issued to repay outstanding obligations, to raise funds for
general operating expenses, and to make loans to other public institutions and
facilities.
Ohio municipal securities include industrial development bonds issued by or on
behalf of public authorities to provide financing aid to acquire sites or
construct and equip facilities for privately or publicly owned corporations.
The availability of this financing encourages these corporations to locate
within the sponsoring communities and thereby increases local employment.
The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment
of principal and interest. However, interest on and principal of revenue bonds
are payable only from the revenue generated by the facility financed by the
bond or other specified sources of revenue. Revenue bonds do not represent a
pledge of credit or create any debt of or charge against the general revenues
of a municipality or public authority. Industrial development bonds are
typically classified as revenue bonds.
INVESTMENT RISKS. Yields on Ohio municipal securities depend on a variety of
factors, including: the general conditions of the municipal bond market; the
size of the particular offering; the maturity of the obligations; and the
rating of the issue. Further, any adverse economic conditions or developments
affecting the state of Ohio or its
21
<PAGE> 29
municipalities could impact the Fund's portfolio. The state of Ohio and
certain underlying municipalities face potential economic problems over the
longer term. The state economy has grown more slowly than that of the nation
as a whole, resulting in a gradual erosion of its relative economic affluence.
The causes of this relative decline are varied and complex, involving in many
cases national and international demographic and economic trends beyond the
influence of the state. The ability of the Fund to achieve its investment
objective also depends on the continuing ability of the issuers of Ohio
municipal securities and participation interests, or the guarantors of either,
to meet their obligations for the payment of interest and principal when due.
Investing in Ohio municipal securities which meet the Fund's quality standards
may not be possible if the state of Ohio or its municipalities do not maintain
their current credit ratings. In addition, certain Ohio constitutional
amendments, legislative measures, executive orders, administrative regulations,
and voter initiatives could result in adverse consequences affecting Ohio
municipal securities.
NON-DIVERSIFICATION. The Fund is a non-diversified investment portfolio. As
such, there is no limit on the percentage of assets which can be invested in
any single issuer. An investment in the Fund, therefore, will entail greater
risk than would exist in a diversified portfolio of securities because the
higher percentage of investments among fewer issuers may result in greater
fluctuation in the total market value of the Fund's portfolio. Any economic,
political, or regulatory developments affecting the value of the securities in
the Fund's portfolio will have a greater impact on the total value of the
portfolio than would be the case if the portfolio were diversified among more
issuers.
The Fund intends to comply with Subchapter M of the Internal Revenue Code.
This undertaking requires that at the end of each quarter of the taxable year:
(a) with regard to at least 50% of the Fund's total assets, no more than 5% of
its total assets are invested in the securities of a single issuer and (b) no
more than 25% of its total assets are invested in the securities of a single
issuer.
INVESTMENT LIMITATIONS. The Fund's investment limitations are discussed below
under "Borrowing Money" and "Restricted and Illiquid Securities."
QUALITY GROWTH FUND
The investment objective of the Quality Growth Fund is to provide growth of
capital. Income is a secondary objective. The Fund pursues its investment
objectives by investing primarily in a professionally managed and diversified
portfolio of common stocks of high-quality companies. The Fund intends to
invest in industries and companies which, in the opinion of the Advisor, have
potential primarily for capital growth. These companies generally are leaders
in their industries ant are characterized by sound management and the ability
to finance expected growth. Among other things, the Advisor would look for
strength in the following areas: historical and five year projected dividend
growth and earnings growth, debt to capital ratio, and quality of management.
The Fund's investment approach is based on the conviction that over the long
term the economy will continue to expand and develop, which will be reflected
in the growth of the revenues and earnings of major corporations. Under normal
market conditions, at least 65% of the Fund's assets will be invested in the
types of quality common stocks as described above.
ACCEPTABLE INVESTMENTS. The securities in which the Fund invests include, but
are not limited to the following:
- common stock of U.S. companies with at least $100 million in market
capitalization which are listed on the New York or American Stock Exchanges
or traded in over-the-counter markets and preferred stock which is
convertible into common stock of such companies;
- American Depositary Receipts ("ADRs") of foreign companies traded on the
New York Stock Exchange or in the over-the-counter market. The Fund may
not invest more than 25% of its assets in ADRs. (See "Foreign
Investments."); and
- convertible bonds rated at least BBB by S&P, or at least Baa by Moody's, or
if not rated, are determined to be of comparable quality by the advisor.
22
<PAGE> 30
In addition, the Fund may borrow money, enter into repurchase agreements, lend
portfolio securities, invest in restricted and illiquid securities, warrants,
and engage in put and call options, futures and options on futures, and
when-issued and delayed delivery transactions. (See "Portfolio Investments and
Strategies.")
CONVERTIBLE SECURITIES. Convertible securities are securities which may be
exchanged or converted into a predetermined number of the issuer's underlying
common stock at the option of the holder during a specified time period.
Convertible securities may take the form of convertible bonds, convertible
preferred stock or debentures, units consisting of "usable" bonds and warrants
or a combination of the features of several of these securities. The
investment characteristics of each convertible security vary widely, which
allows convertible securities to be employed for different investment
objectives.
Convertible bonds and convertible preferred stocks are fixed income securities
that generally retain the investment characteristics of fixed income securities
until they have been converted but also react to movements in the underlying
equity securities. The holder is entitled to receive the fixed income of a
bond or the dividend preference of a preferred stock until the holder elects to
exercise the conversion privilege. Usable bonds are corporate bonds that can
be used in whole or in part, customarily at full face value, in lieu of cash to
purchase the issuer's common stock. When owned as part of a unit along with
warrants, which entitle the holder to buy the common stock, they function as
convertible bonds, except that the warrants generally will expire before the
bonds' maturity. Convertible securities are senior to equity securities, and
therefore have a claim to assets of the corporation prior to the holders of
common stock in the case of liquidation. However, convertible securities are
generally subordinated to similar nonconvertible securities of the same
company. The interest income and dividends from convertible bonds and
preferred stocks provide a stable stream of income with generally higher yields
than common stocks, but lower than non-convertible securities of similar
quality. The Fund will exchange or convert the convertible securities held in
its portfolio into shares of the underlying common stocks when, in the
advisor's opinion, the investment characteristics of the underlying common
shares will assist the Fund in achieving its investment objectives. Otherwise,
the Fund will hold or trade the convertible securities. In selecting
convertible securities for the Fund, the Fund's Advisor evaluates the
investment characteristics of the convertible security as a fixed income
instrument, and the investment potential of the underlying equity security for
capital appreciation. In evaluating these matters with respect to a particular
convertible security, the Advisor considers numerous factors, including the
economic and political outlook, the value of the security relative to other
investment alternatives, trends in the determinants of the issuer's profits,
and the issuer's management capability and practices.
INVESTMENT LIMITATIONS. The Fund's investment limitations are discussed under
"Borrowing Money," "Diversification," and "Restricted and Illiquid Securities."
MID CAP FUND
The investment objective of the Mid Cap Fund is to provide growth of capital.
Income is a secondary objective. The Fund invests primarily in equity
securities of companies selected by the Advisor on the basis of traditional
research techniques, including assessment of earnings and dividend growth
prospects and the risk and volatility of the company's business. Under normal
market conditions, at least 65% of the Fund's assets will be invested in common
stocks of companies meeting the market capitalization criteria set forth below.
ACCEPTABLE INVESTMENTS. The securities in which the Fund invests include, but
are not limited to the following:
- common stock of U.S. companies with at least $100 million in market
capitalization and a maximum of approximately $3 billion in market
capitalization which are listed on the New York or American Stock Exchanges
or traded in over-the-counter markets, preferred stock of such companies,
and preferred stock convertible into common stock of such companies. The
Fund intends to invest in industries and companies which, in the opinion of
the Advisor, have potential primarily for capital growth and secondarily
for income;
23
<PAGE> 31
- American Depositary Receipts ("ADRs") of foreign companies traded on the
New York Stock Exchange or in the over-the-counter market. The Fund may
not invest more than 25% of its assets in ADRs. (See "Foreign
Investments."); and
- Convertible securities rated at least BBB by S&P, or at least Baa by
Moody's, or if not rated are determined to be of comparable quality by the
Advisor. Downgrades will be evaluated on a case by case basis by the
Advisor. The Advisor will determine whether or not the security continues
to be an acceptable investment. If not, the security will be sold.
In addition, the Fund may borrow money, lend portfolio securities, invest in
restricted and illiquid securities, warrants, enter into repurchase agreements,
and engage in put and call options, futures and options on futures, and
when-issued and delayed delivery transactions. (See "Portfolio Investments and
Strategies.")
INVESTMENT LIMITATIONS. The Fund's investment limitations are discussed under
"Borrowing Money," "Diversification," and "Restricted and Illiquid Securities."
BALANCED FUND
The investment objective of the Balanced Fund is to pursue capital appreciation
and income. The Fund invests primarily in a diversified portfolio of common
and preferred stocks, U.S. government securities, convertible securities,
investment grade corporate bonds, and prime money market instruments.
ACCEPTABLE INVESTMENTS. Those income and equity securities acceptable for
investment in this Fund are outlined under the "Acceptable Investments"
sections of the Quality Bond Fund, the Quality Growth Fund, and the Mid Cap
Fund. In addition, the Balanced Fund may invest in money market instruments
that are either rated in the highest short-term rating category by a nationally
recognized statistical rating organization or are of comparable quality to
securities having such ratings.
In addition, the Fund may borrow money, lend portfolio securities, invest in
restricted and illiquid securities, warrants, repurchase agreements, and engage
in put and call options, futures and options on futures, and when-issued and
delayed delivery transactions. (See "Portfolio Investments and Strategies.")
The asset mix of the Fund will normally range between 40-75 percent in common
stock and convertible securities, 25-50 percent in preferred stock and bonds,
and 0-25 percent in money market instruments. Moderate shifts between assets
classes are made in order to maximize returns or reduce risk. The Fund will
maintain at least 25% of its assets in fixed income senior securities
(including the value of convertible senior securities attributable to their
fixed income characteristics).
MONEY MARKET INSTRUMENTS. The money market instruments in which the Fund
invests include but are not limited to:
- prime commercial paper including master demand notes;
- securities issued and/or guaranteed as to payment of principal and interest
by the U.S. government, its agencies, or instrumentalities; and
- repurchase agreements.
INVESTMENT LIMITATIONS. The Fund's investment limitations are discussed below
under "Borrowing Money," "Diversification," and "Restricted and Illiquid
Securities."
24
<PAGE> 32
INTERNATIONAL EQUITY FUND
The investment objective of the International Equity Fund is to seek long-term
capital appreciation. The Fund invests primarily in equity securities of
non-U.S. issuers. The objective is based on the premise that investing in
non-U.S. securities provides three potential benefits over investing solely in
U.S. securities:
- the opportunity to take advantage of investment opportunities in countries
outside the U.S. which may arise because of differing economic and
political cycles;
- the opportunity to invest in financial markets of foreign countries, some
of which are believed to have superior growth potential; and
- the opportunity to reduce the overall volatility compared to a portfolio of
investments solely in domestic issuers by combining domestic and
international investments and thereby diversifying across a wide range of
countries and currencies.
The Fund will invest at least 65%, and under normal market conditions
substantially all, of its total assets in equity securities of issuers located
in at least three countries outside of the United States.
The Fund pursues its objective by investing in accordance with country
weightings determined by the Advisor, Fifth Third Bank, in consultation with
Morgan Stanley Asset Management, Inc., in common stocks of non-U.S. issuers
which, in the aggregate, generally replicate broad country indices. The
Sub-Advisor utilizes a top-down approach in selecting investments for the Fund
that emphasizes country selection and weighting rather than individual stock
selection. This approach reflects the philosophy that a diversified selection
of securities representing exposure to world markets based upon the economic
outlook and current valuation levels (as discussed below) for each country is
an effective way to maximize the return and minimize the risk associated with
international investment. (Although, of course there can be no assurance that
these goals will be achieved.)
In consultation with the Advisor, the Sub-Advisor determines country
allocations for the Fund on an ongoing basis within policy ranges dictated by
each country's market capitalization and liquidity. The Fund will invest
substantially in industrialized countries throughout the world that comprise
the Morgan Stanley Capital International EAFE (Europe, Australia and the Far
East) Index. In addition, the Fund may invest in emerging country equity
securities. As used in this prospectus, the term "emerging country" applies to
any country which, in the opinion of the Sub-Advisor, is generally considered
to be an emerging or developing country by the international financial
community, including the International Bank for Reconstruction and Development
(more commonly known as the World Bank) and the International Finance
Corporation. There are currently over 130 countries which, in the opinion of
the Sub-Advisor, are generally considered to be emerging or developing
countries by the international financial community, approximately 40 of which
currently have stock markets. These countries generally include every nation
in the world except the United States, Canada, Japan, Australia, New Zealand,
and most nations located in Western Europe. Currently, investing in many
emerging countries is not feasible or may involve unacceptable political risks.
The Fund will focus its investments on those emerging market countries in which
it believes the economies are developing strongly and in which the markets are
becoming more sophisticated. As markets in other countries develop, the Fund
expects to expand and further diversify the emerging countries in which it
invests. The Fund does not intend to invest in any security in a country where
the currency is not freely convertible to U.S. dollars, unless the Fund has
obtained the necessary governmental licensing to convert such currency or other
appropriately licensed or sanctioned contractual guarantee to protect such
investment against loss of that currency's external value, or the Fund has a
reasonable expectation at the time the investment is made that such
governmental licensing or other appropriately licensed or sanctioned guarantee
would be obtained or that the currency in which the security is quoted would be
freely convertible at the time of any proposed sale of the security by the
Fund.
By analyzing a variety of macroeconomic and political factors, the Sub-Advisor
develops fundamental projections on interest rates, currencies, corporate
profits and economic growth for each country. These country projections are
then used to determine what is believed to be a fair value for the stock market
of each country. Discrepancies
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between actual value and fair value as determined by the Sub-Advisor provide an
expected return for each stock market. The expected return is adjusted by
currency return expectations derived from the Sub-Advisor's purchasing-power
parity exchange rate model to arrive at an expected total return in U.S.
dollars. The final country allocation decision is then arrived at by
considering the expected total return in light of various country specific
considerations such as market size, volatility, liquidity and country risk.
Within a particular country, investments generally are made through the
purchase of common stocks which, in aggregate, replicate a broad market index,
which in most cases will be the Morgan Stanley Capital International Index for
the given country. The Sub-Advisor may overweight or underweight an industry
segment of a particular index if it concludes this would be advantageous to the
Fund. Stock selection by the Fund in this manner helps reduce stock-specific
risk through diversification and minimizes transaction costs, which can be
substantial in foreign markets.
ACCEPTABLE INVESTMENTS. The securities in which the Fund invests include, but
are not limited to the following:
- common stocks of non-U.S issuers;
- common stock equivalents (such as rights and warrants and securities that
are not convertible into common stocks); and
- corporate and government fixed income securities dominated in currencies
other than U.S. dollars.
In addition, the Fund may enter into repurchase agreements, invest in
restricted and illiquid securities, engage in options and futures contracts,
participate in when-issued and delayed delivery transactions, and lend
portfolio securities. (See "Portfolio Investments and Strategies.") The Fund
may also make the following investments.
MONEY MARKET INSTRUMENTS. The Fund may acquire money market instruments rated
in one of the two highest rating categories by a Nationally Recognized
Statistical Rating Organization or which, in the opinion of the Advisor or
Sub-Advisor, are of commensurate quality. The Fund may invest in U.S. and
foreign short-term money market instruments, including interest-bearing call
deposits with banks, government obligations, certificates of deposit, bankers'
acceptances, commercial paper, short-term corporate debt securities, and
repurchase agreements. These investments may be used to temporarily invest
cash received from the sale of Fund Shares, to establish and maintain reserves
for temporary defensive purposes, or to take advantage of market opportunities.
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or exchange
control regulations. Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such as foreign securities
or funds deposited in foreign banks, as measured in U.S. dollars. Although
foreign currency exchanges may be used by the Fund to protect against a decline
in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund. (Please
see Foreign Currency Transactions in the Combined Statement of Additional
Information for further information about the risks.)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell an
amount of a particular currency at a specific price and on a future date agreed
upon by the parties.
Generally, no commission charges or deposits are involved. At the time the
Fund enters into a forward contract, Fund assets with a value equal to the
Fund's obligation under the forward contract are segregated and are maintained
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until the contract has been settled. The Fund will not enter into a forward
contract with a term of more than one year.
The Fund will generally enter into a forward contract to provide the proper
currency to settle a securities transaction at the time the transaction occurs
("trade date"). The period between trade date and settlement date will vary
between 24 hours and 60 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts
and the constantly changing value of the securities involved. Although the
Sub-Advisor will consider the likelihood of changes in currency values when
making investment decisions, the Sub-Advisor believes that it is important to
be able to enter into forward contracts when it believes the interests of the
Fund will be served. The Fund will not enter into forward contracts for
hedging purposes in a particular currency in an amount in excess of the Fund's
assets denominated in that currency, but, as consistent with its other
investment policies, is not otherwise limited in its ability to use this
strategy.
INVESTMENT LIMITATIONS. The Fund's investment limitations are discussed below
under "Borrowing Money," "Diversification," and "Restricted and Illiquid
Securities.
RISK CONSIDERATIONS. Risk considerations relating to investing in non-U.S.
securities are discussed below under "Foreign Investments.
PORTFOLIO INVESTMENTS AND STRATEGIES
_______________________________________________________________________________
BORROWING MONEY
The Funds will not borrow money directly or through reverse repurchase
agreements (arrangements in which a Fund sells a money market or other
portfolio instrument, as applicable, for a percentage of its cash value with an
agreement to buy it back on a set date) or pledge securities except, under
certain circumstances, a Fund may borrow money up to one-third of the value of
its total assets and pledge assets as necessary to secure such borrowings.
This policy cannot be changed without the approval of holders of a majority of
a Fund's Shares.
DIVERSIFICATION
With respect to 75% of the value of total assets, all of the Funds (with the
exception of the Ohio Tax Free Fund) will not invest more than 5% in securities
of any one issuer or acquire more than 10% of the outstanding voting securities
of any one issuer, other than cash, cash items or securities issued or
guaranteed by the government of the United States or its agencies or
instrumentalities and repurchase agreements collateralized by U.S. government
securities. This policy cannot be changed without the approval of holders of a
majority of a Fund's Shares.
RESTRICTED AND ILLIQUID SECURITIES
The Funds may invest in restricted securities. Restricted securities are any
securities in which the Fund may otherwise invest pursuant to its investment
objective and policies but which are subject to restrictions on resale under
federal securities law. Restricted securities may be issued by new and early
stage companies which may include a high degree of business and financial risk
that can result in substantial losses. As a result of the absence of a public
trading market for these securities, they may be less liquid than publicly
traded securities. Although these securities may be resold in privately
negotiated transactions, the prices realized from these sales could be less
than those originally paid by the Fund, or less than what may be considered the
fair value of such securities. Further, companies whose securities are not
publicly traded may not be subject to the disclosure and other investor
protection
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<PAGE> 35
requirements which might be applicable if their securities were publicly
traded. If such securities are required to be registered under the securities
laws of one or more jurisdictions before being resold, the Fund may be required
to bear the expense of registration. The Fund will limit investments in
illiquid securities, including certain restricted securities not determined by
the Trustees to be liquid, over-the-counter options, and repurchase agreements
providing for settlement in more than seven days after notice, to 15% of its
net assets.
All of the Funds (with the exception of the Ohio Tax Free Fund) may invest in
commercial paper issued in reliance on the exemption from registration afforded
by Section 4(2) of the Securities Act of 1933. Section 4(2) commercial paper
is restricted as to disposition under federal securities law, and is generally
sold to institutional investors, such as one of these Funds, who agree that
they are purchasing the paper for investment purposes and not with a view to
public distribution. Any resale by the purchaser must be in an exempt
transaction. Section 4(2) commercial paper is normally resold to other
institutional investors through or with the assistance of the issuer or
investment dealers who make a market in Section 4(2) commercial paper, thus
providing liquidity. The Funds believe that Section 4(2) commercial paper and
certain other restricted securities, which meet the criteria for liquidity
established by the Trustees, are quite liquid. Therefore, the Funds intend to
treat these securities as liquid and not subject to the investment limitation
applicable to illiquid securities. In addition, because these securities are
liquid, the Funds will not subject such securities to the limitation otherwise
applicable to restricted securities.
REPURCHASE AGREEMENTS
The securities in which each Fund invests may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S.
government securities or other securities to a Fund and agree at the time of
sale to repurchase them at a mutually agreed upon time and price. To the
extent that the original seller does not repurchase the securities from a Fund,
that Fund could receive less than the repurchase price on any sale of such
securities. The Funds will only enter into repurchase agreements with banks
and other recognized financial institutions such as broker/dealers which are
deemed by the Advisor to be creditworthy pursuant to guidelines established by
the Trustees.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
Each Fund may purchase securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The seller's failure to
complete these transactions may cause a Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices. Accordingly, a Fund may pay
more/less than the market value of the securities on the settlement date. A
Fund may dispose of a commitment prior to settlement if the Advisor or
Sub-Advisor deems it appropriate to do so. In addition, a Fund may enter into
transactions to sell its purchase commitments to third parties at current
market values and simultaneously acquire other commitments to purchase similar
securities at later dates. A Fund may realize short-term profits or losses
upon the sale of such commitments.
LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, the Funds may lend portfolio securities
on a short-term or long-term basis, up to one-third of the value of their total
assets to broker/dealers, banks, or other institutional borrowers of
securities. The Funds will only enter into loan arrangements with
broker/dealers, banks, or other institutions which the Advisor has determined
are creditworthy under guidelines established by the Trustees and will receive
collateral in the form of cash or U.S. government securities equal to at least
100% of the value of the securities loaned. There is the risk that when
lending portfolio securities, the securities may not be available to the Fund
on a timely basis and the Fund may, therefore, lose the opportunity to sell the
securities at a desirable price. In addition, in the event that a borrower of
securities would file for bankruptcy or become insolvent, disposition of the
securities may be delayed pending court action.
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OPTIONS AND FUTURES
The Funds (with the exception of the Ohio Tax Free Fund) may engage in options
and futures transactions as described below.
PUT AND CALL OPTIONS. Each Fund (with the exception of the Ohio Tax Free Fund)
may purchase put options on their portfolio securities. These options will be
used as a hedge to attempt to protect securities which a Fund holds against
decreases in value. Each of the Funds (with the exception of the Ohio Tax Free
Fund) may also write covered call options on all or any portion of its
portfolio to generate income. A Fund will write call options on securities
either held in its portfolio, for which it has the right to obtain without
payment of further consideration, or for which it has segregated cash or U.S.
government securities in the amount of any additional consideration.
The International Equity Fund may deal in options on foreign currencies,
securities, and securities indices, and on futures contracts involving these
items, which options may be listed for trading on an international securities
exchange or traded over-the-counter. The Fund may use options to manage
interest rate and currency risks. The Fund may also write covered call options
and secured put options to generate income or lock in gains. The Fund may
write covered call options and secured put options on up to 25% of its net
assets and may purchase put and call options provided that no more than 5% of
the fair market value of its net assets may be invested in premiums on such
options.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying currency, security or other asset at the
exercise price during the option period. A put option gives the purchaser the
right to sell, and the writer the obligation to buy, the underlying currency,
security or other asset at the exercise price during the option period. The
writer of a covered call owns assets that are acceptable for escrow, and the
writer of a secured put invests an amount not less than the exercise price in
eligible assets to the extent that it is obligated as a writer. If a call
written by the Fund is exercised, the Fund forgoes any possible profit from an
increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that the Fund may
be required to take delivery of the underlying asset at a disadvantageous
price.
A Fund may purchase and write over-the-counter options ("OTC Options") on
portfolio securities in negotiated transactions with the buyers or writers of
the options when options on the portfolio securities held by the Fund are not
traded on an exchange. A Fund purchases and writes options only with
investment dealers and other financial institutions (such as commercial banks
or savings and loan associations) deemed creditworthy by the Advisor or
Sub-Advisor.
OTC options are two party contracts with price and terms negotiated between
buyer and seller. In contrast, exchange-traded options are third party
contracts with standardized strike prices and expiration dates and are
purchased from a clearing corporation. Exchange-traded options have a
continuous liquid market while over-the-counter options may not.
OTC options differ from exchange traded options in several respects. They are
transacted directly with dealers and not with a clearing corporation, and there
is a risk of nonperformance by the dealer as a result of the insolvency of such
dealer or otherwise, in which event the Fund may experience material losses.
However, in writing options, the premium is paid in advance by the dealer. OTC
options, which may not be continuously liquid, are available for a greater
variety of assets, and with a wider range of expiration dates and exercise
prices, than are exchange traded options.
FUTURES AND OPTIONS ON FUTURES. The Funds (with the exception of the Ohio Tax
Free Fund) 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 conditions. The Quality 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.
Futures contracts call for the delivery of particular securities at a certain
time in the future. The seller of the contract agrees to make delivery of the
type
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<PAGE> 37
of instrument called for in the contract and the buyer agrees to take delivery
of the instrument at the specified future time.
The International Equity Fund may enter into futures contracts involving
foreign currency, securities and securities indices, or options thereon, for
bona fide hedging purposes. The Fund may also enter into such futures
contracts or related options for purposes other than bona fide hedging if the
aggregate amount of initial margin deposits on the Fund's futures and related
options positions would not exceed 5% of the net liquidation value of the
Fund's assets, provided further that in the case of an option that is
in-the-money at the time of the purchase, the in-the-money amount may be
excluded in calculating the 5% limitation.
A Fund may not sell futures contracts if the value of such futures contracts
exceeds the total market value of the Fund's portfolio securities. Futures
contracts and options thereon sold by a Fund are generally subject to
segregation and coverage requirements established by either the Commodity
Futures Trading Commission ("CFTC") or the SEC, with the result that, if the
Fund does not hold the instrument underlying the futures contract or option,
the Fund will be required to segregate on an ongoing basis with its custodian
cash, U.S. government securities, or other liquid high grade debt obligations
in an amount at least equal to the Fund's obligations with respect to such
instruments.
The Funds may enter into securities index futures contracts and purchase and
write put and call options on securities index futures contracts that are
traded on regulated exchanges, (in the case of the International Equity Fund,
including non-U.S. exchanges) to the extent permitted by the CFTC. Securities
index futures contracts are based on indexes that reflect the market value of
securities of the firms included in the indexes. An index futures contract is
an agreement pursuant to which two parties agree to take or make delivery of an
amount of cash equal to the differences between the value of the index at the
close of the last trading day of the contract and the price at which the index
contract was originally written.
The Funds may enter into securities index futures contracts to sell a
securities index in anticipation of or during a market decline to attempt to
offset the decrease in market value of securities in its portfolio that might
otherwise result. When a Fund is not fully invested and anticipates a
significant market advance, it may enter into futures contracts to purchase the
index in order to gain rapid market exposure that may in part or entirely
offset increases in the cost of securities that it intends to purchase. In
many of these transactions, a Fund will purchase such securities upon
termination of the futures position but, depending on market conditions, a
futures position may be terminated without the corresponding purchases of
common stock. A Fund may also invest in securities index futures contracts
when the Advisor or Sub-Advisor believes such investment is more efficient,
liquid or cost-effective than investing directly in the securities underlying
the index.
A Fund may also write call options and purchase put options on futures
contracts as a hedge to attempt to protect securities in its portfolio against
decreases in value. When a Fund writes a call option on a futures contract, it
is undertaking the obligation of selling a futures contract at a fixed price at
any time during a specified period if the option is exercised. Conversely, as
purchaser of a put option on a futures contract, a Fund is entitled (but not
obligated) to sell a futures contract at the fixed price during the life of the
option. An option on a securities index futures contract gives the purchaser
the right, in return for the premium paid, to assume a position in a securities
index futures contract. A Fund may purchase and write put and call options on
securities index futures contracts in order to hedge all or a portion of its
investment and may enter into closing purchase transactions with respect to
written options in order to terminate existing positions. There is no
guarantee that such closing transactions can be effected. A Fund may also
invest in options on securities index futures contracts when the Advisor or
Sub-Advisor believes such investment is more efficient, liquid or
cost-effective than investing directly in the futures contract or in the
securities underlying the index, or when the futures contract or underlying
securities are not available for investment upon favorable terms.
Except as indicated above with respect to the International Equity Fund, 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
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<PAGE> 38
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.
RISKS. The use of futures and related options involves special considerations
and risks. For example, the ability of a Fund to utilize futures successfully
will depend on the Advisor's or Sub-Advisor's ability to predict pertinent
market movements, and the Advisor or Sub-Advisor could be incorrect in its
expectations about the direction or extent of market factors such as stock
price movement. In these events, the Fund may lose money on the future
contract or option. Also, there might be imperfect correlation, or even no
correlation, between the change in market value of the securities held by Fund
and the prices of the futures and options thereon relating to the securities
purchased or sold by Fund. This may cause the futures contract and any related
options to react differently than the portfolio securities to market changes.
The use of futures and related options may reduce risk of loss by wholly or
partially offsetting the negative effect of unfavorable price movements but
they can also reduce the opportunity for gain by offsetting the positive effect
of favorable price movements in positions. No assurance can be given that the
Advisor's or Sub-Advisor's judgment in this respect will be correct.
It is not certain that a secondary market for positions in futures contracts or
for options will exist at all times. Although the Advisor or Sub-Advisor will
consider liquidity before entering into these transactions, there is no
assurance that a liquid secondary market on an exchange or otherwise will exist
for any particular futures contract or option at any particular time. A Fund's
ability to establish and close out futures and options positions depends on
this secondary market.
EQUITY INVESTMENT CONSIDERATIONS
With respect to the Quality Growth, Mid Cap, Balanced and International Equity
Funds, as with other mutual funds that invest primarily in equity securities,
the Funds are subject to market risks. Since equity markets tend to be
cyclical, the possibility exists that common stocks could decline over short or
even extended periods of time. With respect to the Mid Cap Fund, because this
Fund invests primarily in medium capitalization stocks, there are some
additional risk factors associated with investments in this Fund. In
particular, stocks in the medium capitalization sector of the United States
equity market tend to be slightly more volatile in price than larger
capitalization stocks, such as those included in the S&P 500 Index. This is
because, among other things, medium-sized companies have less certain growth
prospects than larger companies, have a lower degree of liquidity in the equity
market, and tend to have a greater sensitivity to changing economic conditions.
Further, in addition to exhibiting slightly higher volatility, the stocks of
medium-sized companies may, to some degree, fluctuate independently of the
stocks of large companies. That is, the stocks of medium-sized companies may
decline in price as the price of large company stocks rises or vice versa.
Therefore, investors should expect that the Fund will be slightly more volatile
than, and may fluctuate independently of, broad stock market indices such as
the Standard & Poor's 500 Index.
FOREIGN INVESTMENTS
Investing in non-U.S. securities carries substantial risks in addition to those
associated with domestic investments. While a number of the considerations
noted below under "Foreign Companies" are relevant to the ability of several
funds to invest in ADRs, the following is of particular interest with respect
to the International Equity Fund. In an attempt to reduce some of these risks,
the International Equity Fund diversifies its investments broadly among foreign
countries, which may include both developed and emerging countries. At least
three different countries will always be represented in that portfolio.
EXCHANGE RATES. Foreign securities are denominated in foreign currencies.
Therefore, the value in U.S. dollars of the Fund's assets and income may be
affected by changes in exchange rates and regulations. Although the Fund
values its assets daily in U.S. dollars, it will not convert its holding of
foreign currencies to U.S. dollars daily. When the Fund converts its holdings
to another currency, it may incur conversion costs. Foreign exchange dealers
realize a profit on the difference between the prices at which they buy and
sell currencies.
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FOREIGN COMPANIES. Other differences between investing in foreign and U.S.
companies include:
- - less publicly available information about foreign companies;
- - the lack of uniform financial accounting standards applicable to foreign
companies;
- - less readily available market quotations on foreign companies;
- - differences in government regulation and supervision of foreign stock
exchanges, brokers, listed companies, and banks;
- - differences in legal systems which may affect the ability to enforce
contractual obligations or obtain court judgments;
- - generally lower foreign stock market volume and possible delays in
settlement of foreign transactions (which could adversely affect shareholder
equity);
- - the likelihood that foreign securities may be less liquid or more volatile;
- - foreign brokerage commissions may be higher;
- - unreliable mail service between countries; and
- - political or financial changes which adversely affect investments in some
countries (including possible governmental seizure or nationalization of
assets).
U.S. GOVERNMENT POLICIES. In the past, U.S. government policies have
discouraged or restricted certain investments abroad by investors such as the
Fund. Although the Fund is unaware of any current restrictions, investors are
advised that these policies could be reinstituted.
EMERGING MARKETS. The International Equity Fund may take advantage of the
unusual opportunities for higher returns available from investing in emerging
countries. These investments, however, carry considerably more volatility and
risk because they generally are associated with less mature economies and less
stable political systems. The economies of individual emerging countries may
differ favorably or unfavorably from the U.S. economy in such respects as
growth of gross domestic product, rate of inflation, currency depreciation,
capital reinvestment, resource self-sufficiency and balance of payments
position. Further, the economies of developing countries generally are heavily
dependent upon international trade and, accordingly, have been, and may
continue to be, adversely affected by trade barriers, exchange controls,
managed adjustments in relative currency values and other protectionist
measures imposed or negotiated by the countries with which they trade. These
economies also have been, and may continue to be, adversely affected by
economic conditions in the countries with which they trade.
Prior governmental approval for foreign investments may be required under
certain circumstances in some emerging countries, and the extent of foreign
investment in certain debt securities and domestic companies may be subject to
limitation in other emerging countries. Foreign ownership limitations also may
be imposed by the charters of individual companies in emerging countries to
prevent, among other concerns, violation of foreign investment limitations.
Repatriation of investment income, capital and the proceeds of sales by foreign
investors may require governmental registration and/or approval in some
emerging countries. The Fund could be adversely affected by delays in, or a
refusal to grant, any required governmental registration or approval for such
repatriation. Any investment subject to such repatriation controls will be
considered illiquid if it appears reasonably likely that this process will take
more than seven days.
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With respect to any emerging country, there is the possibility of
nationalization, expropriation or confiscatory taxation, political changes,
governmental regulation, social instability or diplomatic developments
(including war) which could affect adversely the economies of such countries or
the value of the Fund's investments in those countries. In addition, it may be
difficult to obtain and enforce a judgment in a court outside of the U.S.
FOREIGN BANK INSTRUMENTS. Different risks may also exist for Eurodollar
Certificates of Deposit ("ECDs"), Eurodollar Time Deposits ("ETDs") and Yankee
Certificates of Deposit ("Yankee CDs") because the banks issuing these
instruments, or their domestic or foreign branches, are not necessarily subject
to the same regulatory requirements that apply to domestic banks, such as
reserve requirements, loan limitations, examinations, accounting, auditing,
recordkeeping and the public availability of information.
BOND RATINGS
Bonds rated BBB by S&P or Baa by Moody's have speculative characteristics.
Changes in economic conditions or other circumstances are more likely to lead
to a weakened capacity to make principal and interest payments than higher
rated bonds. If a security's rating is reduced below the required minimum
after a Fund has purchased it, the Fund is not required to sell the security,
but may consider doings so.
TEMPORARY INVESTMENTS
For defensive purposes only, the Government Securities Fund, Quality Bond Fund,
Quality Growth Fund, Mid Cap Fund, and Balanced Fund may also invest
temporarily in cash and money market instruments during times of unusual market
conditions and to maintain liquidity as described below. Temporary investments
may include obligations such as:
- domestic issues of corporate debt obligations including variable rate
demand notes;
- commercial paper and other money market instruments;
- securities issued and/or guaranteed as to payment of principal and interest
by U.S. government, its agencies, or instrumentalities;
- instruments of domestic and foreign banks; and
- repurchase agreements.
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term corporate
debt instruments that have variable or floating interest rates and provide the
Funds with the right to tender the security for repurchase at its stated
principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at par.
The interest rate may float or be adjusted at regular intervals (ranging from
daily to annually), and is normally based on published interest rate or
interest rate index. Most variable rate demand notes allow a Fund to demand
the repurchase of the security on not more than seven days prior notice. Other
notes only permit a Fund to tender the security at the time of each interest
rate adjustment or at other fixed intervals. A Fund treats variable rate demand
notes as maturing on the later of the date of the next interest adjustment or
the date on which a Fund may next tender the security for repurchase.
COMMERCIAL PAPER. The Funds may acquire commercial paper rated A-1 by S&P,
Prime-1 by Moody's, or F-1 by Fitch Investors Service, and money market
instruments (including commercial paper) which are not rated but are determined
by the Trustees to be of comparable quality to other bank or corporate
obligations.
BANK INSTRUMENTS. The Funds may acquire instruments of domestic banks and
foreign banks (such as certificates of deposit, demand and time deposits,
saving shares, and bankers' acceptances) if those banks have capital, surplus,
and undivided profits of over $100,000,000 and/or if their deposits are insured
by the Federal Deposit Insurance
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Corporation ("FDIC"). These instruments may include ECDs, Yankee CDs, and ETDs
which are subject to the same risks as detailed previously under "Foreign
Investments."
In addition, all of the Funds may purchase shares of other investment
companies, primarily for the purpose of investing short-term cash on a
temporary basis.
FOUNTAIN SQUARE FUNDS INFORMATION
______________________________________________________________________________
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising
all the Trust's powers except those reserved for the shareholders.
INVESTMENT ADVISOR. Pursuant to an investment advisory contract with the
Trust, investment decisions for the Funds are made by Fifth Third Bank, the
Funds' Advisor, subject to direction by the Trustees. As noted below,
investment decisions for the International Equity Fund are made by Morgan
Stanley Asset Management, Inc. The Advisor continually conducts investment
research and supervision for the Funds and is responsible for the purchase or
sale of portfolio instruments, for which it receives an annual fee from
the assets of each Fund.
With respect to the International Equity Fund, as discussed further below, the
Advisor has retained the Sub-Advisor to act as sub-advisor to the Fund. As
Advisor, Fifth Third Bank will conduct a program for ongoing oversight and
evaluation of the Sub-Advisor's services to this Fund, and will regularly
report to the Trustees on these matters. Fifth Third Bank will also assist in
the formulation of, and will continue to monitor, the structure and strategies
of this Fund's portfolio to meet the needs of shareholders. As part of the
above, Fifth Third Bank will review the portfolio daily and will monitor the
Fund's expenses, as well as the brokerage and research services provided to the
Fund and selection of brokers by the Sub-Advisor.
ADVISORY FEES. The Advisor receives an investment advisory fee at annual
rates equal to percentages of the relevant Fund's average net assets
as follows: the Government Securities Fund, the Quality Bond Fund, and
the Ohio Tax Free Fund 0.55%; the Quality Growth Fund, the Mid Cap Fund
the Balanced Fund 0.80%; the International Equity Fund 1.00%. The fees
paid by the Quality Growth, the Mid Cap, the Balanced, and the
International Equity Funds while higher than the advisory fee paid by
other mutual funds in general, are comparable to fees paid by many mutual
funds with similar objectives and policies. The investment advisory
contract provides for the voluntary waiver of expenses by the Advisor
from time to time. The Advisor has undertaken to waive up to the amount
of the advisory fee, for operating expenses, in excess of limitations
established by certain states. The Advisor may voluntarily choose to
waive a portion of its fees or reimburse the Funds for certain other
expenses, but reserves the right to terminate such waiver or
reimbursement at any time at its sole discretion.
ADVISOR'S BACKGROUND. Fifth Third Bank, an Ohio state chartered bank, is
a wholly-owned subsidiary of Fifth Third Bancorp, a bank holding company
organized under the laws of Ohio. Fifth Third Bank is a commercial bank
offering a wide range of banking services to its customers. As of July
31, 1995, Fifth Third Bank and its affiliates managed assets in excess of
$8.5 billion on a discretionary basis and provided custody services for
additional assets in excess of $71.1 billion.
Fifth Third Bank has managed pools of commingled funds since 1953.
Currently, the Trust and Investment Division manages 14 such pools
with total assets of over $1.12 billion. Fifth Third Bank has managed
mutual funds since 1988.
As part of its regular banking operations, Fifth Third Bank may make
loans to public companies. Thus, it may be possible from time to time,
for the Funds to hold or acquire the securities of issuers which are
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<PAGE> 42
also lending clients of Fifth Third Bank. The lending relationship
will not be a factor in the selection of securities.
PORTFOLIO MANAGERS' BACKGROUND. Steven E. Folker is the Chief Equity
Strategist for Fifth Third Trust and Investment Services and is a
Chartered Financial Analyst. He is a Vice President and Trust Officer of
Fifth Third Bank. Mr. Folker has over 16 years of investment experience
and has been the portfolio manager for the Growth and Balanced Funds
since February of 1993 and manager of the Mid Cap Fund since June 1993.
He earned a B.B.A. in Finance and Accounting and an M.S. in Finance,
Investments, and Banking from the University of Wisconsin. He is also a
member of the Cincinnati Society of Financial Analysts. Prior to joining
Fifth Third Bank in July 1992, Mr. Folker was Director of Research with
Central Trust Bank/PNC Bank in Cincinnati for six years.
John B. Schmitz manages large institutional accounts and the
International Equity Fund for Fifth Third Trust and Investment Services.
Mr. Schmitz is a Vice President and Trust Officer of Fifth Third Bank and
a Chartered Financial Analyst. Mr. Schmitz graduated with a B.B.A.
in Finance and Real Estate from the University of Cincinnati. He is also
a member of the Cincinnati Society of Financial Analysts. Mr. Schmitz
has over 12 years of investment experience and has been with Fifth Third
Bank for over 10 years.
Thomas H. Atteberry is the Chief Fixed Income Strategist for Fifth Third
Trust and Investment Services and is a Chartered Financial Analyst. He
is a Vice President and Trust Officer of Fifth Third Bank. Mr. Atteberry
graduated from Texas Christian University with a B.B.A. and a minor in
radio, television, and film. Mr. Atteberry has over 14 years of
investment experience and has been the portfolio manager for the
Balanced, Quality Bond, and Government Securities Funds since their
inception in November of 1992, and manager of the Ohio Tax Free Fund
since its inception in May of 1993. Prior to joining Fifth Third Bank in
September of 1990, Mr. Atteberry was the Chief Investment Officer for
Mercantile Bank in Joplin, Missouri.
SUB-ADVISOR. Under the terms of a Sub-Advisory Agreement between Fifth Third
Bank and the Sub-Advisor, the Sub-Advisor will be responsible as sub-advisor
for managing the International Equity Fund's portfolio, selecting investments
for purchase or sale, along with the countries in which the Fund will invest,
and the dealers in these securities. In addition, the Sub-Advisor will furnish
to Fifth Third Bank such investment advice and statistical and other factual
information as may from time to time be reasonably requested by Fifth Third
Bank.
SUB-ADVISORY FEES. The Advisor will be responsible for compensating
the Sub-Advisor at the annual rate of 0.50% of the Fund's average daily
net assets.
SUB-ADVISOR'S BACKGROUND. Morgan Stanley Asset Management Inc., with
principal offices at 1221 Avenue of the Americas, New York, NY 10020, is
a wholly-owned subsidiary of Morgan Stanley Group Inc. It conducts a
worldwide portfolio management business, providing a broad range of
portfolio management services to customers in the United States and
abroad. At June 30, 1995, the Sub-Advisor managed investments totaling
approximately $40.0 billion under active management and $15.1 billion as
Named Fiduciary or Fiduciary Advisor.
PORTFOLIO MANAGERS' BACKGROUND. Barton M. Biggs has been Chairman and
a Director of the Sub-Advisor since 1980 and Managing Director of Morgan
Stanley & Co. Incorporated since 1975. He is also a Director
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<PAGE> 43
of Morgan Stanley Group, Inc. and a Director and Officer of six
registered investment companies to which the Sub-Advisor and certain of
its affiliates provides investment advisory services. Mr. Biggs holds a
B.A. from Yale University and an M.B.A. from New York University.
Madhav Dhar is a Managing Director of Morgan Stanley & Co. Incorporated.
He joined the Sub-Advisor in 1984 to focus on global asset allocation and
investment strategy and now heads the Sub-Advisor's emerging markets
group and serves as the group's principal portfolio manager. He holds a
B.S. (honors) from St. Stephens College, Delhi University (India), and an
M.B.A. from Carnegie-Mellon University.
Francine Bovich joined the Sub-Advisor as a Principal in 1993. She is
responsible for product development, portfolio management and
communication of the Sub-Advisor's asset allocation strategy to
institutional investor clients. Previously, Ms. Bovich was a principal
and Executive Vice President of Westwood Management Corp., a registered
investment advisor. Before joining Westwood Management Corp., she was a
Managing Director of Citicorp Investment Management, Inc. (now Chancellor
Capital Management), where she was responsible for the Institutional
Investment Management Group. Ms. Bovich began her investment career with
Banker's Trust Company. She holds a B.A. in Economics from Connecticut
College and an M.B.A. from New York University.
Ann Thivierge is a Vice President of the Sub-Advisor. She is a member of
the Sub-Advisor's asset allocation committee, primarily representing the
Total Fund Management Team since its inception in 1991. Ms.
Thivierge holds a B.A. in International Relations from James Madison
College. Michigan State University, and an M.B.A. in Finance from New
York University.
DISTRIBUTION OF SHARES OF THE FUNDS
BISYS Fund Services L.P. serves as the distributor for the Trust. BISYS Fund
Services L.P. is wholly-owned by BISYS Group, Inc., 150 Clove Road, Little
Falls, NJ 07424, a publicly owned company engaged in information processing
and recordkeeping services to and through banking and other financial
organizations.
The distributor may offer to pay financial institutions an amount equal to 1%
of the net asset value of Investment C Shares purchased by their clients or
customers at the time of purchase. These payments will be made directly by the
distributor from its assets, and will not be made from assets of the Fund.
Financial institutions may elect to waive the initial payment described above;
such waiver will result in the waiver by the Fund of the otherwise applicable
contingent deferred sales charge.
DISTRIBUTION PLAN
Under a distribution plan adopted in accordance with Investment Company Act
Rule 12b-1 (the "Distribution Plan"), Investment A Shares and Investment C
Shares may pay a fee to the distributor in an amount computed at an annual rate
of up to .35% and .75%, respectively, of the average daily net assets of each
class of Shares to finance any activity which is principally intended to result
in the sale of Shares subject to the Distribution Plan. For Investment A
Shares and Investment C Shares, the distributor may select financial
institutions such as banks, fiduciaries, custodians for public funds,
investment advisors, and broker/dealers to provide sales services or
distribution-related support services as agents for their clients or customers.
The Distribution Plan is a compensation type plan. As such, the Funds make no
payments to the distributor except as described above. Therefore, the Funds do
not pay for unreimbursed expenses of the distributor, including amounts
expended by the distributor in excess of amounts received by it from the Funds,
interest, carrying or other financing charges in connection with excess amounts
expended, or the distributor's overhead expenses. However, the distributor may
be able to recover such amounts or may earn a profit from future payments made
by Shares under the Plan. The Funds will not accrue or pay distribution
expenses pursuant to the Distribution Plan with respect to Investment A Shares
until a separate class of shares has been created for certain trust or employee
benefit customers of Fifth Third Bank or a determination is made that such
investors will be subject to the distribution expenses.
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<PAGE> 44
ADMINISTRATIVE SERVICES AGREEMENT (INVESTMENT C SHARES ONLY)
In addition, the Funds have entered into an Administrative Services Agreement
with respect to Investment C Shares with Fifth Third Bank, under which the
Funds may make payments up to 0.25 of 1% of the average daily net asset value
of Investment C Shares to obtain certain administrative services for
shareholders and for the maintenance of shareholder accounts ("Administrative
Services"). Under the Administrative Services Agreement, Fifth Third Bank will
either perform Administrative Services directly or will select certain firms to
perform Administrative Services.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Distribution Plan and
Administrative Services Agreement, BISYS Fund Services and Fifth Third Bank,
from their own assets, may pay financial institutions supplemental fees for the
performance of sales services, distribution-related support services, or
shareholder and administrative services.
The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or savings association) from being an underwriter or distributor of most
securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the capacities described above or should
Congress relax current restrictions on depository institutions, the Trustees
will consider appropriate changes in the services.
State securities laws governing the ability of depository institutions to act
as underwriters or distributors of securities may differ from interpretations
given to the Glass-Steagall Act and, therefore, banks and financial
institutions may be required to register as dealers pursuant to state laws.
ADMINISTRATION OF THE FUNDS
ADMINISTRATIVE SERVICES. BISYS Fund Services L.P. serves as the administrator.
The administrator generally assists in all aspects of the Trust's
administration and operation including providing the Funds with certain
administrative personnel and services necessary to operate the Funds, such as
legal and accounting services. BISYS Fund Services L.P. provides these at an
annual rate as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE FUND
------------------ ----------------------
<S> <C>
.10% of the first $1 billion
.08% of the next $1 billion
.07% in excess of $2 billion
</TABLE>
The administrator may periodically waive all or a portion of its administrative
fee which will cause the yield of a Fund to be higher than it would otherwise
be in the absence of such a waiver.
Pursuant to a separate agreement with BISYS Fund Services L.P., Fifth Third
Bank performs sub-administration services on behalf of each Fund including
providing certain administrative personnel and services necessary to operate
the Fund for which it receives a fee from BISYS Fund Services L.P. computed
daily and paid periodically calculated at an annual rate of 0.025% of average
daily net assets.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Fifth Third Bank,
Cincinnati, Ohio, is custodian for the securities and cash of the Funds,
transfer agent for the shares of the Funds, and dividend disbursing agent for
the Funds.
INDEPENDENT AUDITORS. The independent auditors for the Funds are Ernst & Young
LLP, Cincinnati, Ohio.
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<PAGE> 45
EXPENSES OF THE FUNDS, INVESTMENT A SHARES, AND INVESTMENT C SHARES
Holders of Investment A Shares and Investment C Shares pay their allocable
portion of Trust and Fund expenses.
The Trust expenses for which holders of Investment A Shares and Investment C
Shares pay their allocable portion include, but are not limited to: the cost
of organizing the Trust and continuing its existence; registering the Trust
with federal and state securities authorities; Trustees' fees; auditors' fees;
the cost of meetings of Trustees; legal fees of the Trust; association
membership dues; and such non-recurring and extraordinary items as may arise
from time to time.
The Fund expenses for which holders of Investment A Shares and Investment C
Shares pay their allocable portion include, but are not limited to: registering
the Fund and Investment A Shares and Investment C Shares of the Fund;
investment advisory services; taxes and commissions; custodian fees; insurance
premiums; auditors' fees; legal expenses of the Fund; organizational expenses;
and such non-recurring and extraordinary items as may arise from time to time.
At present, the only expenses which are allocated specifically to Investment A
Shares and Investment C Shares as classes are expenses under the Trust's
Distribution Plan and fees for Administrative Services. However, the Trustees
reserve the right to allocate certain other expenses to holders of Investment A
Shares and Investment C Shares as they deem appropriate ("Class Expenses"). In
any case, Class Expenses would be limited to: distribution fees; transfer
agent fees as identified by the transfer agent as attributable to holders of
Investment A Shares and Investment C Shares; printing and postage expenses
related to preparing and distributing materials such as shareholder reports,
prospectuses and proxies to current shareholders; registration fees paid to the
Securities and Exchange Commission and to state securities commissions;
expenses related to administrative personnel and services as required to
support holders of Investment A Shares and Investment C Shares; legal fees
relating solely to Investment A Shares or Investment C Shares; and Trustees'
fees incurred as a result of issues related solely to Investment A Shares or
Investment C Shares.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Advisor and Sub-Advisor look for prompt execution of the order
at a favorable price. In working with dealers, the Advisor and Sub-Advisor
will generally utilize those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can be
obtained elsewhere. In selecting among firms believed to meet these criteria,
the Advisor and Sub-Advisor may give consideration to those firms which have
sold or are selling shares of the Fund. The Advisor and Sub-Advisor make
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Trustees.
Subject to the overriding objective of obtaining the best possible execution of
orders, a portion of International Equity Fund's portfolio brokerage
transactions may be allocated to broker affiliates of the sub-advisor. In
order for such affiliates to effect any portfolio transactions for the Fund,
the commissions, fees or other remuneration they receive must be reasonable and
fair compared to the commissions, fees or other remuneration paid to other
brokers in connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable period of
time. Furthermore, the Trustees of the Fund, including a majority of the
Trustees who are not "interested persons," have adopted procedures which are
reasonably designed to provide that any commissions, fees or other remuneration
paid to such affiliates are consistent with the foregoing standard.
NET ASSET VALUE
______________________________________________________________________________
The net asset value per share of each Fund fluctuates daily. The net asset
value for Shares of each Fund is determined by adding the interest of each
class of Shares in the market value of all securities and other assets of each
Fund, subtracting the interest of each class of Shares in the liabilities of
such Fund and those attributable to each class of Shares, and dividing the
remainder by the total number of each class of Shares outstanding. The net
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<PAGE> 46
asset value for each class of Shares may differ due to the variance in daily
net income realized by each class. Such variance will reflect only accrued net
income to which the shareholders of a particular class are entitled.
The net asset value of each class of Shares of the Funds is determined as of
the close of trading (normally 4:00 p.m., Eastern time) on the New York Stock
Exchange, Monday through Friday, except on days on which there are not
sufficient changes in the value of a Fund's portfolio securities that its net
asset value might be materially affected and days during which no Shares are
tendered for redemption and no orders to purchase Shares are received.
INVESTING IN THE FUNDS
______________________________________________________________________________
The Funds offer investors two classes of Shares that either carry sales loads
or contingent deferred sales charges in different forms and amounts and which
bear different levels of expense.
SHARE PURCHASES
Shares of the Funds are sold on days on which the New York Stock Exchange and
the Federal Reserve Bank of Cleveland are open for business. Customers of the
Fifth Third Trust and Investment Division may purchase Shares of the Funds
through their Trust Officer. Customers of Fifth Third Securities may purchase
Shares through their Fifth Third Securities representative. All other
investors should purchase Shares directly from the distributor. In connection
with the sale of Shares of the Funds, the distributor may from time to time
offer certain items of nominal value to any shareholder or investor. The Funds
reserve the right to reject any purchase request. Purchases through Fifth
Third Bank may not be available to investors in all states.
THROUGH FIFTH THIRD BANK OR FIFTH THIRD SECURITIES. To place an order for
Shares, a customer of the Trust and Investment Division may telephone their
Fifth Third Trust Officer. Customers other than those of the Trust and
Investment Division may telephone Fifth Third Securities at (513) 744-8888 in
Cincinnati or toll-free (800) 334-0483.
Purchase orders must be received by Fifth Third Bank by 4:00 p.m. (Cincinnati
time) in order for Shares to be purchased at that day's price. Payment may be
made to Fifth Third Bank either by check or federal funds. Purchases by check
are considered received after payment by check is converted into federal funds
and received by Fifth Third Bank. This is normally the next business day after
Fifth Third Bank receives the check. When payment is made with federal funds,
the order is considered received when federal funds are received by Fifth Third
Bank. Federal funds should be wired to Fifth Third Bank as follows: ABA No.
042 000 314 Fifth Third Cincinnati, Attention: Fountain Square Funds
Department; For Credit to: (shareholder name and account number); For Further
Credit to: Fountain Square (Name of Fund and applicable Class of Shares).
Investors not purchasing through Fifth Third Bank should consult their
financial institutions for wiring instructions. Orders placed through
financial institutions other than Fifth Third Bank must be received by the
financial institution and transmitted to Fifth Third Bank before 4:00 p.m.
(Eastern time) in order for Shares to be purchased at that day's price. It
is the financial institution's responsibility to transmit orders promptly, and
investors should allow sufficient time for orderly processing and transmission.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Shares of a Fund by an investor is $1,000.
Subsequent investments must be in amounts of at least $50.
INVESTING IN INVESTMENT A SHARES
Investment A Shares of the Funds are sold at their net asset value next
determined after an order is received, plus a sales charge as follows:
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<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE AS
A PERCENTAGE A PERCENTAGE
OF PUBLIC OF NET AMOUNT
AMOUNT OF TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $50,000 . . . . . . . . . . . . . . . . . . . . . 4.50% 4.71%
$50,000 but less than $100,000 . . . . . . . . . . . . . . 4.00% 4.17%
$100,000 but less than $150,000 . . . . . . . . . . . . . . 3.00% 3.09%
$150,000 but less than $250,000 . . . . . . . . . . . . . . 2.00% 2.04%
$250,000 but less than $500,000 . . . . . . . . . . . . . . 1.00% 1.01%
$500,000 or more . . . . . . . . . . . . . . . . . . . . . 0.00% 0.00%
</TABLE>
The net asset value for the Funds is determined at the close of trading on the
New York Stock Exchange, normally 4:00 p.m. (Eastern time) Monday through
Friday, except on days on which there are not sufficient changes in the value
of a Fund's portfolio securities that its net asset value might be materially
affected and days during which no Shares are tendered for redemption and no
orders to purchase Shares are received. No orders to purchase or redeem Shares
are processed on the following holidays: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Columbus Day, Veterans' Day, Thanksgiving Day, and Christmas Day.
PURCHASES AT NET ASSET VALUE. Investment A Shares of the Funds may be
purchased at net asset value, without a sales charge, by current and retired
employees and Directors of Fifth Third Bancorp and their spouses and children
under 21, Fountain Square Fund Trustees, and clients of Fifth Third Bank who
make purchases through the Trust and Investment Division.
DEALER CONCESSIONS. For sales of Investment A Shares of a Fund, a dealer will
normally receive up to 85% of the applicable sales charge. Any portion of the
sales charge which is not paid to a dealer will be retained by the distributor.
However, the distributor, in its sole discretion, may uniformly offer to pay to
all dealers selling Investment A Shares of the Funds, all or a portion of the
sales charge it normally retains. If accepted by the dealer, such additional
payments will be predicated upon the amount of Fund Investment A Shares sold.
The sales charge for Investment A Shares sold other than through registered
broker/dealers will be retained by the distributor. The distributor may pay
fees to banks out of the sales charge in exchange for sales and/or
administrative services performed on behalf of the bank's customers in
connection with the initiation of customer accounts and purchases of Investment
A Shares.
REDUCING/ELIMINATING THE SALES CHARGE. The sales charge can be reduced or
eliminated on the purchase of Investment A Shares through:
- quantity discounts and accumulated purchases;
- signing a 13-month letter of intent;
- Fifth Third Bank's Club 53, One Account Plus, One Account Gold or One
Account Advantage Programs;
- purchases with proceeds from redemptions of unaffiliated mutual fund
shares;
- purchases with proceeds from distributions of qualified retirement plans or
other trusts administered by Fifth Third Bank; or
- concurrent purchases.
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<PAGE> 48
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. As shown in the table above,
larger purchases of a Fund's Investment A Shares reduce the sales charge paid.
The distributor will combine purchases made on the same day by the investors,
their spouses, and the investor's children under age 21 when it calculates the
sales charge. In addition, the sales charge, if applicable, is reduced for
purchases made at one time by a trustee or fiduciary for a single trust estate
or a single fiduciary account.
If an additional purchase of Investment A Shares of a Fund is made, the
distributor will aggregate such additional purchases with previous purchases of
Investment A Shares of the Funds provided the prior purchase is still invested
in either of these Funds. For example, if a shareholder already owns
Investment A Shares having a current value at the public offering price of
$40,000 and he purchases $10,000 more at the current public offering price, the
sales charge on the additional purchase according to the schedule now in effect
would be 4.00%, not 4.50%.
To receive the sales charge reduction, an investor should complete the
appropriate section of the account application at the time the purchase is made
indicating that Investment A Shares of a Fund have been purchased and are still
invested or that such purchases are being combined. The distributor will
reduce the sales charge after it confirms the purchase.
LETTER OF INTENT. If a shareholder intends to purchase at least $50,000 of
Fund Investment A Shares over the next 13 months, the sales charge may be
reduced by signing a letter of intent to that effect. This letter of intent
includes a provision for a sales charge adjustment depending on the amount
actually purchased within the 13-month period and a provision for the Fund's
custodian to hold up to 4.50% of the total amount intended to be purchased in
escrow (in shares of the Fund) until such purchase is completed.
The amount held in escrow will be applied to the shareholder's account at the
end of the 13-month period unless the amount specified in the letter of intent,
which must be $50,000 or more of Fund Investment A Shares, is not purchased.
In this event, an appropriate number of escrowed Investment A Shares may be
redeemed in order to realize the difference in the sales charge.
This letter of intent will not obligate the shareholder to purchase Investment
A Shares, but if he does, each purchase during the period will be at the sales
charge applicable to the total amount intended to be purchased. The letter may
be dated as of a prior date to include any purchases made within the past 90
days; however, these previous purchases will not receive the reduced sales
charge.
FIFTH THIRD BANK CLUB 53, ONE ACCOUNT PLUS, ONE ACCOUNT GOLD OR ONE ACCOUNT
ADVANTAGE PROGRAMS. All shareholders who have a Club 53 Account, One Account
Plus, One Account Gold, or One Account Advantage through Fifth Third Bank are
eligible for a reduced sales charge on the purchase of Investment A Shares of
the Funds. Shareholders should consult their local Fifth Third Banking Center
or Fifth Third Securities Representative for details.
The reduced sales charges applicable to the accounts are as follows:
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<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE AS
A PERCENTAGE A PERCENTAGE
OF PUBLIC OF NET AMOUNT
AMOUNT OF TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $50,000 . . . . . . . . . . . . . . . . . . . . . 3.97% 4.13%
$50,000-$99,999 . . . . . . . . . . . . . . . . . . . . . . 3.47% 3.59%
$100,000-$149,999 . . . . . . . . . . . . . . . . . . . . . 2.47% 2.53%
$150,000-$249,999 . . . . . . . . . . . . . . . . . . . . . 1.47% 1.49%
$250,000-$499,999 . . . . . . . . . . . . . . . . . . . . . 0.47% 0.47%
$500,000 or more . . . . . . . . . . . . . . . . . . . . . 0.00% 0.00%
</TABLE>
PURCHASES WITH PROCEEDS FROM REDEMPTIONS OF UNAFFILIATED MUTUAL FUND SHARES.
Investors may purchase Investment A Shares of the Funds at net asset value,
without a sales charge, with the proceeds from the redemption of shares of a
mutual fund which was sold with a sales charge or commission. The purchase
must be made within 60 days of the redemption, and Fifth Third Securities must
be notified by the investor in writing, or by his financial institution, at the
time the purchase is made.
PURCHASES WITH PROCEEDS FROM DISTRIBUTIONS OF QUALIFIED RETIREMENT PLANS OR
OTHER TRUSTS ADMINISTERED BY FIFTH THIRD BANK. Investors may purchase
Investment A Shares of the Funds at net asset value, without a sales charge,
with the proceeds from the distribution of a qualified retirement plan or other
trust administered by Fifth Third Bank.
CONCURRENT PURCHASES. For purposes of qualifying for a sales charge reduction,
a shareholder has the privilege of combining concurrent purchases of two or
more Funds in the Trust, the purchase price of which includes a sales charge.
For example, if a shareholder concurrently invested $20,000 in Investment A
Shares of one of the Funds of the Trust with a sales charge, and $30,000 in
Investment A Shares of another Fund with a sales charge, the sales charge would
be reduced on both purchases.
To receive this sales charge reduction, Fifth Third Bank or BISYS
must be notified by the shareholder in writing or by their financial
institution at the time the concurrent purchases are made. The Funds will
reduce the sales charge after they confirm the purchases.
INVESTING IN INVESTMENT C SHARES
Investment C Shares are sold at net asset value next determined after an order
is received. A contingent deferred sales charge of 1.00% will be charged on
assets redeemed within the first full 12 months following purchase. For a
complete description of this charge, see "Contingent Deferred Sales Charge."
Investment C Shares provide an investor the benefit of putting all of the
investor's dollars to work from the time the investment is made, but will have a
higher expense ratio and pay lower dividends than Investment A Shares of the
Funds due to the imposition of the 12b-1 fee and the Administrative Services
fee.
No orders to purchase or redeem Investment C Shares are processed on the
following holidays: New Year's Day, Martin Luther King Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans'
Day, Thanksgiving Day, and Christmas Day.
EXCHANGING SECURITIES FOR FUND SHARES
Investors may exchange certain securities or a combination of certain
securities and cash for Fund Shares. The securities and any cash must have a
market value of at least $25,000. The Funds reserve the right to determine the
acceptability of securities to be exchanged. On the day securities are
accepted by a Fund, they are valued in the same manner as a Fund values its
assets. Investors wishing to exchange securities should first contact Fifth
Third Bank.
42
<PAGE> 50
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment
on a regular basis in a minimum amount of $50. Under this program, funds may
be automatically withdrawn periodically from the shareholder's checking account
and invested in Fund Shares at the net asset value next determined after an
order is received by Fifth Third Bank, plus any applicable sales charge. The
minimum investment requirement does not apply for those shareholders who
participate in the Systematic Investment Program. A shareholder may apply for
participation in this program through Fifth Third Securities.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Funds, Fifth Third Bank maintains a Share account for
each shareholder of record. Share certificates are not issued. Detailed
statements that include account balances, information on each purchase or
redemption, and a report of dividends paid are sent to shareholders.
DIVIDENDS AND CAPITAL GAINS
Dividends are declared just prior to determining net asset value. Capital
gains realized by a Fund, if any, will be distributed at least once every 12
months. Dividends and capital gains will be reinvested in additional Shares on
payment dates at the ex-dividend date net asset value without a sales charge
unless cash payments are requested by shareholders by writing to the
appropriate Fund or Fifth Third Bank as appropriate.
Dividends are paid to all shareholders who are invested in a Fund on that
Fund's record date. With respect to the Government Securities Fund, the
Quality Bond Fund, and the Ohio Tax Free Fund, dividends are declared and paid
monthly. With respect to the Quality Growth Fund, the Mid Cap Fund, and the
Balanced Fund, dividends are declared and paid quarterly. With respect to the
International Equity Fund, dividends, if any, are declared and paid annually.
EXCHANGES
______________________________________________________________________________
A shareholder who is a customer of the Fifth Third Trust and Investment
Division may exchange Shares of one Fund for Shares of the same class of any of
the other Funds in the Trust by calling or sending a written request to their
Fifth Third Trust Officer.
Shareholders who are clients of Fifth Third Securities may exchange Shares of
one Fund for Shares of the same class of any of the other Funds in the Trust by
calling Fifth Third Securities at (513) 744-8888 in Cincinnati or toll-free
(800) 334-0483 or sending a written request to Fifth Third Securities.
Telephone exchange instructions may be recorded. If reasonable procedures are
not followed by the Funds, they may be liable for losses due to unauthorized or
fraudulent telephone instructions.
Orders to exchange Shares of one Fund for Shares of the same class of any of
the other Funds will be executed by redeeming the Shares owned at net asset
value and purchasing Shares of the same class of any of the other Funds at the
net asset value determined after the exchange request is received. Orders for
exchanges received by a Fund prior to 4:00 p.m. (Eastern time) on any day
that Fund is open for business will be executed as of the close of business
that day. Orders for exchanges received after 4:00 p.m. (Eastern time) an
any business day will be executed at the close of the next business day.
When exchanging into and out of Investment A Shares of the Funds in the Trust,
shareholders who have paid a sales load once upon purchasing Investment A
Shares of any Fund will not have to pay a sales load again on an exchange.
When exchanging into and out of Investment C Shares of the Funds in the Trust,
the time for which the exchanged-for Shares are to be held will be added to the
time for which exchanged-from Shares were held for
43
<PAGE> 51
purposes of satisfying the applicable holding period. For more information,
see "Contingent Deferred Sales Charge."
An excessive number of exchanges may be disadvantageous to the Trust.
Therefore the Trust, in addition to its right to reject any exchange, reserves
the right to modify or terminate the exchange privilege at any time.
Shareholders would be notified prior to any modification or termination.
An exchange order must comply with the requirements for a redemption and must
specify the dollar value or number of Shares to be exchanged. Exchanges are
subject to the minimum initial investment requirement of the Fund being
acquired. An exchange constitutes a sale for federal income tax purposes.
The exchange privilege is only available in states where Shares of the Fund
being acquired may legally be sold. Before the exchange, a shareholder must
receive a prospectus of the Fund for which the exchange is being made.
REDEEMING SHARES
________________________________________________________________________________
Each Fund redeems Shares at their net asset value, less any applicable
contingent deferred sales charge, next determined after the Fund receives the
redemption request. Redemptions will be made on days on which the New York
Stock Exchange and the Federal Reserve Bank of Cleveland are open for business.
Telephone or written requests for redemption must be received in proper form as
described below and can be made through the Fifth Third Trust and Investment
Division or Fifth Third Securities by their respective customers or directly
through the Fund by all other investors. Orders placed through financial
institutions other than Fifth Third Bank must be received by the financial
institution and transmitted to Fifth Third Bank before 4:00 p.m. (Eastern
time) in order for Shares to be redeemed at that day's price. It is the
financial institution's responsibility to transmit orders promptly, and
investors should allow sufficient time for orderly processing and transmission.
THROUGH FIFTH THIRD BANK OR FIFTH THIRD SECURITIES
BY TELEPHONE. Shareholders who are customers of Fifth Third Trust and
Investment Division may telephone their Fifth Third Trust Officer.
Shareholders other than those of the Fifth Third Trust and Investment Division
may telephone Fifth Third Securities at (513) 744-8888 in Cincinnati or
toll-free (800) 334-0483. Telephone redemption instructions may be recorded.
If reasonable procedures are not followed by the Funds, they may be liable for
losses due to unauthorized or fraudulent telephone instructions.
For calls received before 4:00 p.m. (Eastern time), proceeds will normally
be disbursed the next day to the shareholder's account at Fifth Third Bank or
Fifth Third Securities, or a check will be sent to the address of record.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days after receipt of a proper request for redemption has
been received provided the Fund or its agents have received payment for Shares
from the shareholder. If at any time a Fund shall determine it necessary to
terminate or modify this method of redemption, shareholders would be promptly
notified.
An authorization form permitting a Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are
available from the Fifth Third Trust and Investment Division, Fifth Third
Securities, or the distributor.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If such a case should occur,
another method of redemption, such as "By Mail," should be considered.
44
<PAGE> 52
BY MAIL. A shareholder who is a customer of the Fifth Third Trust and
Investment Division may redeem Shares by sending a written request to:
Fifth Third Bank
Trust and Investment Division
Fountain Square Redemptions 1090E5
38 Fountain Square Plaza
Cincinnati, OH 45263
Shareholders other than those of the Fifth Third Bank Trust and Investment
Division may redeem Shares by sending a written request to:
Fifth Third Securities, Inc.
Fountain Square Redemptions
P.O. Box 1639
Cincinnati, OH 45201
The written request should include the shareholder's name, the Fund and
applicable Class name, the account number, the Share or dollar amount requested
and the proper endorsement. Shareholders should call their Trust Officer or
their Fifth Third Securities representative for assistance in redeeming by
mail.
Shareholders requesting a redemption of $50,000 or more, a redemption of any
amount to be sent to an address other than that on record with the appropriate
Fund, or a redemption payable other than to the shareholder of record must have
signatures on written redemption requests guaranteed by:
- a trust company or commercial bank whose deposits are insured by the FDIC;
- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
- a savings and loan association or a savings bank whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Funds do not accept signatures guaranteed by a notary public.
The Funds and their transfer agent have adopted standards for accepting
signature guarantees from the above institutions. The Funds may elect in the
future to limit eligible signature guarantors to institutions that are members
of a signature guarantee program. The Funds and their transfer agent reserve
the right to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed to the shareholder within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request, provided the Fund or its agents have received
payment for Shares from the shareholder.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Fund
Shares are redeemed to provide for periodic withdrawal payments in an amount
directed by the shareholder. Depending upon the amount of the withdrawal
payments, the amount of dividends paid and capital gains distributions with
respect to Fund Shares, and the fluctuation of the net asset value of Fund
Shares redeemed under this program, redemptions may reduce, and eventually
exhaust, the shareholder's investment in a Fund. For this reason, payments
under this program should not be considered as yield or income on the
shareholder's investment in a Fund. To be eligible to participate in this
program, a shareholder
45
<PAGE> 53
must have an account value of at least $10,000. A shareholder may apply for
participation in this program through Fifth Third Securities. Due to the fact
that Shares are sold with a sales charge, it is not advisable for shareholders
to be purchasing Shares while participating in this program. A contingent
deferred sales charge may be imposed on Investment C Shares redeemed under the
Program.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, a Fund may
redeem shares in any account and pay the proceeds to the shareholder if, due to
shareholder redemptions, the account balance falls below the required minimum
value of $1,000.
Before redeeming shares to close an account, a Fund will notify the shareholder
in writing and allow the shareholder 30 days to purchase additional Shares to
meet the minimum requirement.
CONTINGENT DEFERRED SALES CHARGE
Shareholders redeeming Investment C Shares from their Fund accounts within one
full year of the purchase date of those Shares will be charged a contingent
deferred sales charge by the Fund's distributor of 1.00%. Any applicable
contingent deferred sales charge will be imposed on the lesser of the net asset
value of the redeemed Investment C Shares at the time of purchase or the net
asset value of the redeemed Investment C Shares at the time of redemption.
The contingent deferred sales charge will be deducted from the redemption
proceeds otherwise payable to the shareholder and will be retained by the
distributor. The contingent deferred sales charge will not be imposed with
respect to: (1) Shares acquired through the reinvestment of dividends or
distributions of long-term capital gains; and (2) Shares held for more than one
full year from the date of purchase. Redemptions will be processed in a manner
intended to maximize the amount of redemption which will not be subject to a
contingent deferred sales charge. In computing the amount of the applicable
contingent deferred sales charge, redemptions are deemed to have occurred in
the following order: (1) Shares acquired through the reinvestment of dividends
and long-term capital gains; (2) Shares held for more than one full year from
the date of purchase; (3) Shares held for fewer than one full year from the
date of purchase, on a first-in, first-out basis. A contingent deferred sales
charge is not assessed in connection with an exchange of Fund Shares for Shares
of other funds in the Trust (see "Exchanges"). Any contingent deferred sales
charge imposed at the time the exchanged for Shares are redeemed is calculated
as if the shareholder had held the Shares from the date on which he became a
shareholder of the exchanged-from Shares.
The contingent deferred sales charge will be eliminated with respect to the
following redemptions: (1) redemptions following the death or disability, as
defined in Section 72(m)(7) of the Internal Revenue Code of 1986, of a
shareholder; (2) redemptions representing distributions from an Individual
Retirement Account or other retirement plan; and (3) involuntary redemptions by
a Fund of Shares in shareholder accounts that do not comply with the minimum
balance requirements. No contingent deferred sales charge will be imposed on
redemptions of Shares held by Directors, employees and sales representatives of
the Fund, the distributor, or affiliates of the Fund or distributor; employees
of any financial institution that sells Shares of a Fund pursuant to a sales
agreement with the distributor; and spouses and children under the age of 21 of
the aforementioned persons. The Trustees reserve the right to discontinue
elimination of the contingent deferred sales charge. Shareholders will be
notified of such elimination. Any Investment C Shares purchased prior to the
termination of such waiver would have the contingent deferred sales charge
eliminated as provided in the Funds' prospectus at the time of the purchase of
the Shares. If a shareholder making a redemption qualifies for an elimination
of the contingent deferred sales charge, the shareholder must notify the
transfer agent in writing that he is entitled to such elimination.
46
<PAGE> 54
SHAREHOLDER INFORMATION
______________________________________________________________________________
VOTING RIGHTS
Each Share of a Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All Shares of each Fund in
the Trust have equal voting rights, except that in matters affecting only a
particular Fund, only Shares of that Fund are entitled to vote. As a
Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust or a Fund's operation and for the election of Trustees
under certain circumstances.
As of __________________________, 1996, Fifth Third Bank, may for certain
purposes be deemed to control the Funds because it is owner of record of
certain shares of the Funds.
Trustees may be removed by a two-thirds vote of the number of Trustees prior to
such removal or by a two-thirds vote of the shareholders at a special meeting.
The Trustees shall call a special meeting of shareholders upon the written
request of shareholders owning at least 10% of the Trust's outstanding Shares
of all series entitled to vote.
MASSACHUSETTS LAW
Under certain circumstances, shareholders may be held personally liable under
Massachusetts law for acts or obligations of the Trust on behalf of a Fund. To
protect shareholders of a Fund, the Trust has filed legal documents with
Massachusetts that expressly disclaim the liability of shareholders of a Fund
for such acts or obligations of the Trust. These documents require inclusion
of this disclaimer in each agreement, obligation, or instrument the Trust or
its Trustees enter into or sign on behalf of a Fund.
In the unlikely event a shareholder of a Fund is held personally liable for the
Trust's obligations on behalf of a Fund, the Trust is required by the
Declaration of Trust to use the property of a Fund to protect or compensate the
shareholder. On request, the Trust will defend any claim made and pay any
judgment against a shareholder of a Fund for any act or obligation of the Trust
on behalf of a Fund. Therefore, financial loss resulting from liability as a
shareholder of a Fund will occur only if the Trust cannot meet its obligations
to indemnify shareholders and pay judgments against them from the assets of a
Fund.
EFFECT OF BANKING LAWS
______________________________________________________________________________
The Glass-Steagall Act and other banking laws and regulations presently
prohibit a bank holding company registered under the Federal Bank Holding
Company Act of 1956, as amended, or any affiliate thereof from sponsoring,
organizing or controlling a registered, open-end investment company
continuously engaged in the issuance of its shares, and from issuing,
underwriting, selling or distributing securities in general. Such laws and
regulations do not prohibit such a holding company or affiliate from acting as
investment advisor, transfer agent, custodian, fund accountant, or dividend
disbursing agent to such an investment company or from purchasing shares of
such a company as agent for and upon the order of their customers. The Funds'
Advisor, Fifth Third Bank, is subject to such banking laws and regulations.
Fifth Third Bank believes that it may perform the investment advisory services
for any Fund contemplated by its advisory agreement with the Trust without
violating the Glass-Steagall Act or other applicable banking laws or
regulations. Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of present or future statutes and regulations, could prevent
Fifth Third Bank from continuing to perform all or a part of the above services
for its customers and/or a Fund. In such event, changes in the operation of a
Fund may occur, including the possible alteration or termination of any
automatic or other Fund share investment or redemption services then being
provided by Fifth Third Bank, and the Trustees would consider alternative
investment advisors and other means of continuing available investment
services. It is not expected that an existing Fund's shareholders
47
<PAGE> 55
would suffer any adverse financial consequences (if another advisor with
equivalent abilities to Fifth Third Bank is found) as a result of any of these
occurrences.
TAX INFORMATION
______________________________________________________________________________
FEDERAL INCOME TAX
The Funds will pay no federal income tax because each Fund expects to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
Each Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by a
Fund, if any, will not be combined for tax purposes with those realized by any
of the other Funds.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in
cash or as additional shares. Distributions representing long-term capital
gains, if any, will be taxable to shareholders as long-term capital gains no
matter how long the shareholders have held the Shares. No federal income tax
is due on any dividend earned in an IRA or qualified retirement plan until
distributed.
Shareholders are urged to consult their own tax advisors regarding the status
of their accounts under state and local tax laws.
ADDITIONAL TAX INFORMATION FOR OHIO TAX FREE BOND FUND
Dividends of the Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.
Distributions representing net long-term capital gains realized by the Fund, if
any, will be taxable as long-term capital gains regardless of the length of
time shareholders have held their Shares.
These tax consequences apply whether dividends are received in cash or as
additional Shares. Information on the tax status of dividends and
distributions is provided annually.
STATE OF OHIO INCOME TAXES. Dividends of the Fund representing interest from
obligations held by the Fund which are issued by the state of Ohio or its
subdivisions, which interest is exempt from federal income tax when received by
a shareholder, should also be exempt from the Ohio individual income tax.
Dividends of the Fund representing interest from obligations held by the Fund
which are issued by the state of Ohio or its subdivisions should also be exempt
from any Ohio municipal income tax even if the municipality is permitted under
current Ohio law to levy a tax on intangible income.
OTHER STATE AND LOCAL TAXES. Income from the Fund is not necessarily free from
state income taxes in states other than Ohio or from personal property taxes.
State laws differ on this issue, and shareholders are urged to consult their
own tax advisors regarding the status of their accounts under state and local
tax laws.
ADDITIONAL TAX INFORMATION FOR INTERNATIONAL EQUITY FUND
The Fund may invest in the stock of certain foreign corporations which would
constitute a Passive Foreign Investment Company (PFIC). Federal income taxes
may be imposed on the Fund upon disposition of PFIC investments.
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<PAGE> 56
Investment income received by the Fund from sources within foreign countries
may be subject to foreign taxes withheld at the source. The United States has
entered into tax treaties with many foreign countries that entitle the Fund to
reduced tax rates or exemption on this income. The effective rate of foreign
tax cannot be predicted since the amount of Fund assets to be invested within
various countries is unknown. However, the Fund intends to operate so as to
qualify for treaty-reduced tax rates where applicable.
If more than 50% of the value of the Fund's assets at the end of the tax year
is represented by stock or securities of foreign corporations, the Fund intends
to qualify for certain Internal Revenue Code stipulations that would allow
shareholders to claim a foreign tax credit or deduction on their U.S. income
tax returns. The Internal Revenue Code, as amended, may limit a shareholder's
ability to claim a foreign tax credit. Furthermore, shareholders who elect to
deduct their portion of the Fund's foreign taxes rather than take the foreign
tax credit must itemize deductions on their income tax returns.
PERFORMANCE INFORMATION
______________________________________________________________________________
From time to time, the Funds advertise total return and yield for each class of
Shares. In addition, the Ohio Tax Free Fund may advertise tax- equivalent
yield.
Total return represents the change, over a specified period of time, in the
value of an investment in each class of Shares of a Fund after reinvesting all
income and capital gains distributions. It is calculated by dividing that
change by the initial investment and is expressed as a percentage.
The yield of each class of Shares of a Fund is calculated by dividing the net
investment income per share (as defined by the Securities and Exchange
Commission) earned by each class of Shares over a thirty-day period by the
maximum offering price per Share of each class on the last day of the period.
This number is then annualized using semi-annual compounding. The yield does
not necessarily reflect income actually earned by each class of Shares and,
therefore, may not correlate to the dividends or other distributions paid to
shareholders.
The tax-equivalent yield of the Ohio Tax Free Fund is calculated similarly to
the yield, but is adjusted to reflect the taxable yield that would have to be
earned to equal the actual yield of each class of Shares of the Fund, assuming
a specific tax rate. The yield and tax-equivalent yield do not necessarily
reflect income actually earned by each class of Shares and, therefore, may not
correlate to the dividends or other distributions paid to shareholders.
The performance information reflects the effect of non-recurring charges, such
as the maximum sales load or contingent deferred sales load which, if excluded,
would increase the total return, yield, and tax-equivalent yield.
From time to time, advertisements for each class of Shares of the Funds may
refer to ratings, rankings, and other information in certain financial
publications and/or compare the performance of such class of Shares to certain
indices.
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<PAGE> 57
ADDRESSES
_______________________________________________________________________________
Fountain Square U.S. Government Fountain Square Funds
Securities Fund c/o Fifth Third Bank
Fountain Square Quality Bond Fund 38 Fountain Square Plaza
Fountain Square Ohio Tax Free Bond Fund Cincinnati, Ohio 45263
Fountain Square Quality Growth Fund
Fountain Square Mid Cap Fund
Fountain Square Balanced Fund
Fountain Square International Equity Fund
_______________________________________________________________________________
Investment Advisor
Fifth Third Bank 38 Fountain Square Plaza
Cincinnati, Ohio 45263
______________________________________________________________________________
Custodian, Transfer Agent, Dividend
Disbursing Agent, and Sub-Administrator
Fifth Third Bank 38 Fountain Square Plaza
Cincinnati, Ohio 45263
______________________________________________________________________________
Distributor
BISYS Fund Services L.P. 3435 Stelzer Road
Columbus, Ohio 43219
______________________________________________________________________________
Independent Auditors
Ernst & Young LLP 1300 Chiquita Center
250 East Fifth Street
Cincinnati, Ohio 45202
______________________________________________________________________________
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FOUNTAIN SQUARE FUNDS
INVESTMENT A SHARES
INVESTMENT C SHARES
COMBINED STATEMENT OF ADDITIONAL INFORMATION
This Combined Statement of Additional Information relates only to the following
seven portfolios (the "Funds") of Fountain Square Funds (the "Trust"):
- Fountain Square U.S. Government Securities Fund;
- Fountain Square Quality Bond Fund;
- Fountain Square Ohio Tax Free Bond Fund;
- Fountain Square Quality Growth Fund;
- Fountain Square Mid Cap Fund;
- Fountain Square Balanced Fund; and
- Fountain Square International Equity Fund
This Combined Statement of Additional Information should be read with the
combined prospectus for Investment A Shares and Investment C Shares of the
Funds dated March _____, 1996. This Statement is not a prospectus itself. To
receive a copy of the prospectus, customers of Fifth Third Bank Trust and
Investment Division may write the Trust or call (513) 579-6039 in Cincinnati,
Ohio or toll-free (800) 654-5372; customers of Fifth Third Securities may write
the Trust or call (513) 744-8888 in Cincinnati, Ohio or toll-free (800)
334-0483.
FOUNTAIN SQUARE FUNDS
C/O FIFTH THIRD BANK
38 FOUNTAIN SQUARE PLAZA
CINCINNATI, OHIO 45263
Statement dated March _____, 1996
<PAGE> 59
<TABLE>
<CAPTION>
TABLE OF CONTENTS
_______________________________________________________________________________
<S> <C> <C> <C>
GENERAL INFORMATION ABOUT THE TRUST . . . . . 1 BROKERAGE TRANSACTIONS . . . . . . . . . . . 22
INVESTMENT OBJECTIVE AND POLICIES OF THE FUNDS 1 PURCHASING SHARES . . . . . . . . . . . . . . 23
Types of Investments . . . . . . . . . . . 1 Distribution Plan and Administrative Services
Repurchase Agreements . . . . . . . . . . . 9 Agreement (Investment C Shares Only) . . . 23
Reverse Repurchase Agreements . . . . . . . 9 Conversion to Federal Funds . . . . . . . . 24
When-Issued and Delayed Delivery Transactions 10 Exchanging Securities for Fund Shares . . . 24
Lending of Portfolio Securities . . . . . . 10
Restricted And Illiquid Securities . . . . 10 DETERMINING NET ASSET VALUE . . . . . . . . . 24
Portfolio Turnover . . . . . . . . . . . . 11 Determining Market Value of Securities . . 25
Investment Limitations . . . . . . . . . . 11 Valuing Municipal Bonds . . . . . . . . . . 25
Investment Risks (Ohio Tax Free Fund) . . . 15 Use of Amortized Cost . . . . . . . . . . . 25
Trading in Foreign Securities . . . . . . . 25
FOUNTAIN SQUARE FUNDS MANAGEMENT . . . . . . 17
Officers and Trustees . . . . . . . . . . . 17 REDEEMING SHARES . . . . . . . . . . . . . . 26
Trust Ownership . . . . . . . . . . . . . . 18 Redemption in Kind . . . . . . . . . . . . 26
Trustees' Compensation . . . . . . . . . . 19
Trustee Liability . . . . . . . . . . . . . 19 TAX STATUS . . . . . . . . . . . . . . . . . 26
The Funds' Tax Status . . . . . . . . . . . 26
INVESTMENT ADVISORY SERVICES . . . . . . . . 19 Shareholders' Tax Status . . . . . . . . . . 26
Advisor to the Trust . . . . . . . . . . . 19 State and Local Taxes . . . . . . . . . . . 26
Advisory Fees . . . . . . . . . . . . . . . 20 Capital Gains . . . . . . . . . . . . . . . 27
Sub-Advisor . . . . . . . . . . . . . . . . 20 Foreign Taxes . . . . . . . . . . . . . . . 27
Sub-Advisory Fees . . . . . . . . . . . . . 20 TOTAL RETURN . . . . . . . . . . . . . . . . 27
Transfer Agent and Dividend Disbursing Agent 22 YIELD . . . . . . . . . . . . . . . . . . . 28
TAX-EQUIVALENT YIELD . . . . . . . . . . . . 28
Tax-Equivalent Table . . . . . . . . . . . . 29
PERFORMANCE COMPARISONS . . . . . . . . . . . 30
FINANCIAL STATEMENTS . . . . . . . . . . . . 33
APPENDIX . . . . . . . . . . . . . . . . . . 34
</TABLE>
<PAGE> 60
GENERAL INFORMATION ABOUT THE TRUST
_______________________________________________________________________________
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated September 15, 1988. This Combined Statement of Additional
Information relates only to Investment A Shares and Investment C Shares
(individually and collectively referred to as "Shares," as the context may
require) of the following seven Funds: Fountain Square U.S. Government
Securities Fund ("Government Securities Fund"), Fountain Square Quality Bond
Fund ("Quality Bond Fund"), Fountain Square Ohio Tax Free Bond Fund ("Ohio Tax
Free Fund"), Fountain Square Quality Growth Fund ("Quality Growth Fund"),
Fountain Square Mid Cap Fund ("Mid Cap Fund"), Fountain Square Balanced Fund
("Balanced Fund"), and Fountain Square International Equity Fund
("International Equity Fund").
The Funds are advised by Fifth Third Bank (the "Advisor"), with the
International Equity Fund being sub-advised by Morgan Stanley Asset Management,
Inc. (the "Sub-Advisor"), (collectively herein referred to as the "Advisors").
INVESTMENT OBJECTIVE AND POLICIES OF THE FUNDS
_______________________________________________________________________________
The combined prospectus discusses the objective of each Fund and the policies
employed to achieve those objectives. The following discussion supplements the
description of the Funds' investment policies in the prospectus. The Funds'
respective investment objectives cannot be changed without approval of
shareholders. Unless otherwise indicated, the investment policies described
below may be changed by the Board of Trustees ("Trustees") without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.
TYPES OF INVESTMENTS
BANK INSTRUMENTS
The Quality Bond Fund, the Quality Growth Fund, the Mid Cap Fund and the
Balanced Fund may invest in the instruments of banks and savings and loans
whose deposits are insured by the Bank Insurance Fund or the Savings
Association Insurance Fund, both of which are administered by the Federal
Deposit Insurance Corporation, such as certificates of deposit, demand and
time deposits, savings shares, and bankers' acceptances. However, these
instruments are not necessarily guaranteed by those organizations.
FUTURES AND OPTIONS TRANSACTIONS
All of the Funds may engage in futures and options transactions as described
below to the extent consistent with their investment objectives and
policies.
As a means of reducing fluctuations in the net asset value of Shares of the
Funds, the Funds may attempt to hedge all or a portion of their portfolio
through the purchase of put options on portfolio securities and put options
on financial futures contracts for portfolio securities. The Funds may
attempt to hedge all or a portion of their portfolio by buying and selling
financial futures contracts and writing call options on futures contracts.
The Funds may also write covered call options on portfolio securities to
attempt to increase current Income.
The Funds will maintain their position in securities, options, and
segregated cash subject to puts and calls until the options are exercised,
closed, or have expired. An option position may be
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<PAGE> 61
closed out over-the-counter or on an exchange which provides a secondary
market for options of the same series.
FUTURES CONTRACTS. The Funds may enter into futures contracts. A futures
contract is a firm commitment by two parties, the seller who agrees to make
delivery of the specific type of security called for in the contract ("going
short") and the buyer who agrees to take delivery of the security ("going
long") at a certain time in the future. However, a securities index futures
contract is an agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to the difference between the value of
the index at the close of the last trading day of the contract and the price
at which the index was originally written. No physical delivery of the
underlying security in the index is made.
Financial futures contracts call for the delivery of particular debt
instruments issued or guaranteed by the U.S. Treasury or by specified
agencies or instrumentalities of the U.S. government at a certain time in
the future.
The purpose of the acquisition or sale of a futures contract by a Fund is to
protect it from fluctuations in the value of securities caused by
unanticipated changes in interest rates or stock prices without necessarily
buying or selling securities. For example, in the fixed income securities
market, price moves inversely to interest rates. A rise in rates means a
drop in price. Conversely, a drop in rates means a rise in price. In order
to hedge its holdings of fixed income securities against a rise in market
interest rates, a Fund could enter into contracts to "go short" to protect
itself against the possibility that the prices of its fixed income
securities may decline during the Fund's anticipated holding period. The
Fund would "go long" to hedge against a decline in market interest rates.
The International Equity Fund may also invest in securities index futures
contracts when the Sub-Advisor believes such investment is more efficient,
liquid or cost-effective than investing directly in the securities
underlying the index.
STOCK INDEX OPTIONS. The Funds may purchase put options on stock indices
listed on national securities exchanges or traded in the over-the-counter
market. A stock index fluctuates with changes in the market values of the
stocks included in the index.
The effectiveness of purchasing stock index options will depend upon the
extent to which price movements in the Funds' portfolio correlate with price
movements of the stock index selected. Because the value of an index option
depends upon movements in the level of the index rather than the price of a
particular stock, whether the Funds will realize a gain or loss from the
purchase of options on an index depends upon movements in the level of stock
prices in the stock market generally or, in the case of certain indices, in
an industry or market segment, rather than movements in the price of a
particular stock. Accordingly, successful use by the Funds of options on
stock indices will be subject to the ability of the Advisors to predict
correctly movements in the direction of the stock market generally or of a
particular industry. This requires different skills and techniques than
predicting changes in the price of individual stocks.
PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS. The Funds may purchase listed
(and, in the case of International Equity Fund, over-the-counter) put
options on financial futures contracts. The Funds would use these options
only to protect portfolio securities against decreases in value resulting
from market factors such as anticipated increase in interest rates, or in
the case of the International Equity Fund when the Sub-Advisor believes such
investment is more efficient, liquid or cost-effective than investing
directly in the futures contract or the underlying securities or when such
futures contracts or securities are unavailable for investment upon
favorable terms.
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Unlike entering directly into a futures contract, which requires the
purchaser to buy a financial instrument on a set date at a specified price,
the purchase of a put option on a futures contract entitles (but does not
obligate) its purchaser to decide on or before a future date whether to
assume a short position at the specified price. Generally, if the hedged
portfolio securities decrease in value during the term of an option, the
related futures contracts will also decrease in value and the option will
increase in value. In such an event, a Fund will normally close out its
option by selling an identical option. If the hedge is successful, the
proceeds received by a Fund upon the sale of the second option will be large
enough to offset both the premium paid by a Fund for the original option
plus the realized decrease in value of the hedged securities.
Alternatively, a Fund may exercise its put option to close out the position.
To do so, it would simultaneously enter into a futures contract of the type
underlying the option (for a price less than the strike price of the option)
and exercise the option. A Fund would then deliver the futures contract in
return for payment of the strike price. If a Fund neither closes out nor
exercises an option, the option will expire on the date provided in the
option contract, and only the premium paid for the contract will be lost.
The International Equity Fund may write listed put options on financial
futures contracts to hedge its portfolio or when the Sub-Advisor believes
such investment is more efficient, liquid or cost-effective than investing
directly in the futures contract or the underlying securities or when such
futures contracts or securities are unavailable for investment upon
favorable terms. When the Fund writes a put option on a futures contract,
it receives a premium for undertaking the obligation to assume a long
futures position (buying a futures contract) at a fixed price at any time
during the life of the option.
CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS. The Funds may write listed
call options or over-the-counter call options on futures contracts, to hedge
their portfolios against an increase in market interest rates, or in the
case of International Equity Fund, when the Sub-Advisor believes such
investment is more efficient, liquid or cost-effective than investing
directly in the futures contract or the underlying securities or when such
futures contracts or securities are unavailable for investment upon
favorable terms. When a Fund writes a call option on a futures contract, it
is undertaking the obligation of assuming a short futures position (selling
a futures contract) at the fixed strike price at any time during the life of
the option if the option is exercised. As market interest rates rise and
cause the price of futures to decrease, a Fund's obligation under a call
option on a future (to sell a futures contract) costs less to fulfill,
causing the value of a Fund's call option position to increase.
In other words, as the underlying future's price goes down below the strike
price, the buyer of the option has no reason to exercise the call, so that a
Fund keeps the premium received for the option. This premium can help
substantially offset the drop in value of a Fund's portfolio securities.
Prior to the expiration of a call written by a Fund, or exercise of it by
the buyer, a Fund may close out the option by buying an identical option.
If the hedge is successful, the cost of the second option will be less than
the premium received by a Fund for the initial option. The net premium
income of a Fund will then substantially offset the realized decrease in
value of the hedged securities.
The International Equity Fund may buy listed call options on financial
futures contracts to hedge its portfolio. When the Fund purchases a call
option on a futures contract, it is purchasing the
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right (not the obligation) to assume a long futures position (buy a futures
contract) at a fixed price at any time during the life of the option.
LIMITATION ON OPEN FUTURES POSITIONS. A Fund will not maintain open
positions in futures contracts it has sold or options it has written on
futures contracts if, in the aggregate, the value of the open positions
(marked to market) exceeds the current market value of its securities
portfolio plus or minus the unrealized gain or loss on those open positions,
adjusted for the correlation of volatility between the securities or
securities index underlying the futures contract and the futures contracts.
If a Fund exceeds this limitation at any time, it will take prompt action to
close out a sufficient number of open contracts to bring its open futures
and options positions within this limitation.
"MARGIN" IN FUTURES TRANSACTIONS. Unlike the purchase or sale of a
security, the Funds do not pay or receive money upon the purchase or sale of
a futures contract. Rather, the Funds are required to deposit an amount of
"initial margin" in cash or U.S. Treasury bills with its custodian (or the
broker, if legally permitted). The nature of initial margin in futures
transactions is different from that of margin in securities transactions in
that a futures contract's initial margin does not involve the borrowing by a
Fund to finance the transactions. Initial margin is in the nature of a
performance bond or good faith deposit on the contract which is returned to
a Fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied.
A futures contract held by a Fund is valued daily at the official settlement
price of the exchange on which it is traded. Each day a Fund pays or
receives cash, called "variation margin," equal to the daily change in value
of the futures contract. This process is known as "marking to market."
Variation margin does not represent a borrowing or loan by a Fund but is
instead settlement between a Fund and the broker of the amount one would owe
the other if the futures contract expired. In computing its daily net asset
value, a Fund will mark to market its open futures positions.
The Funds are also required to deposit and maintain margin when they write
call options on futures contracts.
PURCHASING PUT OPTIONS ON PORTFOLIO SECURITIES. The Funds may purchase put
options on portfolio securities to protect against price movements in
particular securities in their respective portfolios. A put option gives a
Fund, in return for a premium, the right to sell the underlying security to
the writer (seller) at a specified price during the term of the option.
WRITING COVERED CALL OPTIONS ON PORTFOLIO SECURITIES. The Funds may also
write covered call options to generate income. As the writer of a call
option, a Fund has the obligation, upon exercise of the option during the
option period, to deliver the underlying security upon payment of the
exercise price. A Fund may sell call options either on securities held in
its portfolio or on securities which it has the right to obtain without
payment of further consideration (or securities for which it has segregated
cash in the amount of any additional consideration).
OVER-THE-COUNTER OPTIONS. The Funds may purchase and write over-the-counter
options on portfolio securities in negotiated transactions with the buyers
or writers of the options for those options on portfolio securities held by
a Fund and not traded on an exchange.
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COLLATERALIZED MORTGAGE OBLIGATIONS ("CMO"S)
The Government Securities Fund, Quality Bond Fund and Balanced Fund may
invest in CMOs. Privately issued CMOs generally represent an ownership
interest in a pool of federal agency mortgage pass-through securities such
as those issued by the Government National Mortgage Association. The terms
and characteristics of the mortgage instruments may vary among pass-through
mortgage loan pools.
The market for such CMOs has expanded considerably since its inception. The
size of the primary issuance market and the active participation in the
secondary market by securities dealers and other investors make
government-related pools highly liquid.
CONVERTIBLE SECURITIES
The Quality Growth Fund, Mid Cap Fund, Balanced Fund and International
Equity Fund may invest in convertible securities. Convertible securities
include fixed-income securities that may be exchanged or converted into a
predetermined number of shares of the issuer's underlying common stock at
the option of the holder during a specified period. Convertible securities
may take the form of convertible preferred stock, convertible bonds or
debentures, units consisting of "usable" bonds and warrants or a combination
of the features of several of these securities. The investment
characteristics of each convertible security vary widely, which allows
convertible securities to be employed for a variety of investment
strategies. Each of these Funds will exchange or convert the convertible
securities held in its portfolio into shares of the underlying common stock
when, in the Advisor's opinion, the investment characteristics of the
underlying common shares will assist the Fund in achieving its investment
objectives. Otherwise the Fund may hold or trade convertible securities.
In selecting convertible securities for the Fund, the Advisor evaluates the
investment characteristics of the convertible security as a fixed income
instrument and the investment potential of the underlying equity security
for capital appreciation. In evaluating these matters with respect to a
particular convertible security, the Advisor considers numerous factors,
including the economic and political outlook, the value of the security
relative to other investment alternatives, trends in the determinants of the
issuer's profits, and the issuer's management capability and practices.
WARRANTS
The Quality Growth Fund, Mid Cap Fund, Balanced Fund and International
Equity Fund may invest in warrants. Warrants are basically options to
purchase common stock at a specific price (usually at a premium above the
market value of the optioned common stock at issuance) valid for a specific
period of time. Warrants may have a life ranging from less than a year to
twenty years or may be perpetual. However, most warrants have expiration
dates after which they are worthless. In addition, if the market price of
the common stock does not exceed the warrant's exercise price during the
life of the warrant, the warrant will expire as worthless. Warrants have no
voting rights, pay no dividends, and have no rights with respect to the
assets of the corporation issuing them. The percentage increase or decrease
in the market price of the warrant may tend to be greater than the
percentage increase or decrease in the market price of the optioned common
stock.
OHIO MUNICIPAL SECURITIES
The Ohio Tax Free Fund may invest in Ohio municipal securities which have
the characteristics set forth in the prospectus. If a high-rated bond loses
its ratings or has its rating reduced after the Fund has purchased it, the
Fund is not required to drop the bond from the portfolio, but will
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consider doing so. If ratings made by Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Ratings Group ("S&P") or Fitch Investors
Service, Inc. ("Fitch") change because of changes in those organizations or in
their rating systems, the Fund will try to use comparable ratings as standards
in accordance with the investment policies described in the Fund's prospectus.
Examples of Ohio Municipal Securities are:
- governmental lease certificates of participation issued by state or
municipal authorities where payment is secured by installment payments
for equipment, buildings, or other facilities being leased by the state
or municipality. Government lease certificates purchased by the Fund
will not contain nonappropriation clauses;
- municipal notes and tax-exempt commercial paper;
- serial bonds;
- tax anticipation notes sold to finance working capital needs of
municipalities in anticipation of receiving taxes at a later date;
- bond anticipation notes sold in anticipation of the issuance of long-term
bonds in the future;
- pre-refunded municipal bonds whose timely payment of interest and
principal is ensured by an escrow of U.S. government obligations; and
- general obligation bonds.
PARTICIPATION INTERESTS. The Ohio Tax Free Fund may invest in participation
interests. The financial institutions from which Ohio Tax Free Fund
purchases participation interests frequently provide or secure from another
financial institution irrevocable letters of credit or guarantees and give
the Fund the right to demand payment of the principal amounts of the
participation interests plus accrued interest on short notice (usually
within seven days).
VARIABLE RATE MUNICIPAL SECURITIES. The Ohio Tax Free Fund may invest in
variable rate municipal securities. Variable interest rates generally
reduce changes in the market value of municipal securities from their
original purchase prices. Accordingly, as interest rates decrease or
increase, the potential for capital appreciation or depreciation is less for
variable rate municipal securities than for fixed income obligations. Many
municipal securities with variable interest rates purchased by the Fund are
subject to repayment of principal (usually within seven days) on the Fund's
demand. The terms of these variable-rate demand instruments require payment
of principal and accrued interest from the issuer of the municipal
obligations, the issuer of the participation interests, or a guarantor of
either issuer.
MUNICIPAL LEASES. The Ohio Tax Free Fund may purchase municipal securities
in the form of participation interests which represent undivided
proportional interests in lease payments by a governmental or non-profit
entity. The lease payments and other rights under the lease provide for and
secure the payments on the certificates. Lease obligations may be limited
by municipal charter or the nature of the appropriation for the lease. In
particular, lease obligations may be subject to periodic appropriation. If
the entity does not appropriate funds for future lease payments, the entity
cannot be compelled to make such payments. Furthermore, a lease may provide
that the certificate trustee cannot accelerate lease obligations upon
default. The trustee
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would only be able to enforce lease payments as they become due. In the event
of a default or failure of appropriation, it is unlikely that the trustee
would be able to obtain an acceptable substitute source of payment. In
determining the liquidity of municipal lease securities, the Advisor, under
the authority delegated by the Trustees, will base its determination on the
following factors: (a) whether the lease can be terminated by the lessee; (b)
the potential recovery, if any, from a sale of the leased property upon
termination of the lease; (c) the lessee's general credit strength (e.g., its
debt, administrative, economic and financial characteristics and, prospects);
(d) the likelihood that the lessee will discontinue appropriating funding for
the leased property because the property is no longer deemed essential to its
operations (e.g., the potential for an "event of nonappropriation"); and (e)
any credit enhancement or legal recourse provided upon an event of
nonappropriation or other termination of the lease.
TEMPORARY INVESTMENTS. The Ohio Tax Free Fund may also invest in temporary
investments, such as repurchase agreements and reverse repurchase
agreements, during times of unusual market conditions for defensive
purposes.
From time to time, such as when suitable Ohio municipal bonds are not
available, the Fund may invest a portion of its assets in cash. Any portion
of the Fund's assets maintained in cash will reduce the amount of assets in
Ohio municipal bonds and thereby reduce the Fund's yield.
FOREIGN CURRENCY TRANSACTIONS
The International Equity Fund may engage in foreign currency transactions.
CURRENCY RISKS. The exchange rates between the U.S. dollar and foreign
currencies are a function of such factors as supply and demand in the
currency exchange markets, international balances of payments, governmental
intervention, speculation and other economic and political conditions.
Although the Fund values its assets daily in U.S. dollars, the Fund may not
convert its holdings of foreign currencies to U.S. dollars daily. The Fund
may incur conversion costs when it converts its holdings to another
currency. Foreign exchange dealers may realize a profit on the difference
between the price at which the Fund buys and sells currencies.
The Fund will engage in foreign currency exchange transactions in connection
with its portfolio investments. The Fund will conduct its foreign currency
exchange transactions either on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market or through forward
contracts to purchase or sell foreign currencies.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund may enter into
forward foreign currency exchange contracts in order to protect against a
possible loss resulting from an adverse change in the relationship between
the U.S. dollar and a foreign currency involved in an underlying
transaction. However, forward foreign currency exchange contracts may limit
potential gains which could result from a positive change in such currency
relationships. The Advisors believe that it is important to have the
flexibility to enter into forward foreign currency exchange contracts
whenever it determines that it is in the Fund's best interest to do so. The
Fund will not speculate in foreign currency exchange.
The Fund will not enter into forward foreign currency exchange contracts or
maintain a net exposure in such contracts when it would be obligated to
deliver an amount of foreign currency in excess of the value of its
portfolio securities or other assets denominated in that currency or, in the
case of a "cross-hedge" denominated in a currency or currencies that the
Advisors believe will tend to be closely correlated with that currency with
regard to price movements. Generally,
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the Fund will not enter into a forward foreign currency exchange contract
with a term longer than one year.
FOREIGN CURRENCY OPTIONS. A foreign currency option provides the option
buyer with the right to buy or sell a stated amount of foreign currency at
the exercise price on a specified date or during the option period. The
owner of a call option has the right, but not the obligation, to buy the
currency. Conversely, the owner of a put option has the right, but not the
obligation, to sell the currency.
When the option is exercised, the seller (i.e., writer) of the option is
obligated to fulfill the terms of the sold option. However, either the
seller or the buyer may, in the secondary market, close its position during
the option period at any time prior to expiration.
A call option on foreign currency generally rises in value if the underlying
currency appreciates in value, and a put option on foreign currency
generally rises in value if the underlying currency depreciates in value.
Although purchasing a foreign currency option can protect the Fund against
an adverse movement in the value of a foreign currency, the option will not
limit the movement in the value of such currency. For example, if the Fund
was holding securities denominated in a foreign currency that was
appreciating and had purchased a foreign currency put to hedge against a
decline in the value of the currency, the Fund would not have to exercise
their put option. Likewise, if the Fund were to enter into a contract to
purchase a security denominated in foreign currency and, in conjunction with
that purchase, were to purchase a foreign currency call option to hedge
against a rise in value of the currency, and if the value of the currency
instead depreciated between the date of purchase and the settlement date,
the Fund would not have to exercise its call. Instead, the Fund could
acquire in the spot market the amount of foreign currency needed for
settlement.
SPECIAL RISKS ASSOCIATED WITH FOREIGN CURRENCY OPTIONS. Buyers and sellers
of foreign currency options are subject to the same risks that apply to
options generally. In addition, there are certain additional risks
associated with foreign currency options. The markets in foreign currency
options are relatively new, and the Fund's ability to establish and close
out positions on such options is subject to the maintenance of a liquid
secondary market. Although the Fund will not purchase or write such options
unless and until, in the opinion of the Advisors, the market for them has
developed sufficiently to ensure that the risks in connection with such
options are not greater than the risks in connection with the underlying
currency, there can be no assurance that a liquid secondary market will
exist for a particular option at any specific time.
In addition, options on foreign currencies are affected by all of those
factors that influence foreign exchange rates and investments generally.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price of
the option position may vary with changes in the value of either or both
currencies and may have no relationship to the investment merits of a
foreign security. Because foreign currency transactions occurring in the
interbank market involve substantially larger amounts than those that may be
involved in the use of foreign currency options, investors may be
disadvantaged by having to deal in an odd lot market (generally consisting
of transactions of less than $1 million) for the underlying foreign
currencies at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised
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on a timely basis. Available quotation information is generally
representative of very large transactions in the interbank market and
thus may not reflect relatively smaller transactions (i.e., less than
$1 million) where rates may be less favorable. The interbank
market in foreign currencies is a global, around-the-clock
market. To the extent that the U.S. option markets are closed while
the markets for the underlying currencies remain open, significant
price and rate movements may take place in the underlying markets that
cannot be reflected in the options markets until they reopen.
FOREIGN CURRENCY FUTURES TRANSACTIONS. By using foreign currency
futures contracts and options on such contracts, the Fund may be able
to achieve many of the same objectives as it would through the use of
forward foreign currency exchange contracts. The Fund may be
able to achieve these objectives possibly more effectively and at a
lower cost by using futures transactions instead of forward foreign
currency exchange contracts.
SPECIAL RISKS ASSOCIATED WITH FOREIGN CURRENCY FUTURES CONTRACTS AND
RELATED OPTIONS. Buyers and sellers of foreign currency futures
contracts are subject to the same risks that apply to the use of
futures generally. In addition, there are risks associated with
foreign currency futures contracts and their use as a hedging device
similar to those associated with options on currencies, as described
above.
Options on foreign currency futures contracts may involve certain
additional risks. Trading options on foreign currency futures
contracts is relatively new. The ability to establish and close out
positions on such options is subject to the maintenance of a liquid
secondary market. To reduce this risk, the Fund will not purchase or
write options on foreign currency futures contracts unless and
until, in the opinion of the Advisors, the market for such options has
developed sufficiently that the risks in connection with such options
are not greater than the risks in connection with transactions in the
underlying foreign currency futures contracts. Compared to the
purchase or sale of foreign currency futures contracts, the purchase
of call or put options on futures contracts involves less potential
risk to the Fund because the maximum amount at risk is the premium
paid for the option (plus transaction costs). However, there may be
circumstances when the purchase of a call or put option on a futures
contract would result in a loss, such as when there is no movement in
the price of the underlying currency or futures contract.
REPURCHASE AGREEMENTS
The Funds require their custodian to take possession of the securities subject
to repurchase agreements and these securities will be marked to market daily.
To the extent that the original seller does not repurchase the securities from
a Fund, a Fund could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by a Fund might be delayed
pending court action. The Funds believe that under the regular procedures
normally in effect for custody of a Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor of
a Fund and allow retention or disposition of such securities. The Funds will
only enter into repurchase agreements with banks and other recognized financial
institutions such as broker/dealers which are deemed by the Advisors to be
creditworthy pursuant to guidelines established by the Trustees.
REVERSE REPURCHASE AGREEMENTS
The Funds may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase agreement,
a Fund transfers possession of a portfolio instrument to another person, such
as a financial institution, broker, or dealer, in return for a percentage of
the instrument's market value in cash and agrees that on a stipulated date in
the future it will repurchase the portfolio instrument by remitting the
original
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consideration plus interest at an agreed upon rate. The use of reverse
repurchase agreements may enable a Fund to avoid selling portfolio instruments
at a time when a sale may be deemed to be disadvantageous, but the ability to
enter into reverse repurchase agreements does not ensure that a Fund will be
able to avoid selling portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of a Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated on a Fund's records at the trade date. These securities are
marked to market daily and maintained until the transaction is settled.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price or yield for a Fund. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of a Fund sufficient
to make payment for the securities to be purchased are segregated on the Fund's
records at the trade date. These assets are marked-to-market daily and are
maintained until the transaction has been settled. The Funds do not intend to
engage in when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of their assets.
LENDING OF PORTFOLIO SECURITIES
The collateral received when a Fund lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the
option of a Fund or the borrower. A Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of
the interest earned on the cash or equivalent collateral to the borrower or
placing broker. A Fund would not have the right to vote securities on loan,
but would terminate the loan and regain the right to vote if that were
considered important with respect to the investment.
RESTRICTED AND ILLIQUID SECURITIES
The Funds may invest in securities issued in reliance on the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933. Section
4(2) securities are restricted as to disposition under the federal securities
laws and are generally sold to institutional investors, such as the Funds, who
agree that they are purchasing such securities for investment purposes and not
with a view to public distributions. Any resale by the purchaser must be in an
exempt transaction. Section 4(2) securities are normally resold to other
institutional investors like the Funds through or with the assistance of the
issuer or investment dealers who make a market in such securities, thus
providing liquidity. The Funds believe that Section 4(2) securities and
possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees are quite liquid. The Funds intend,
therefore, to treat the restricted securities which meet the criteria for
liquidity established by the Trustees, including Section 4(2) securities, as
determined by the Advisors, as liquid and not subject to the investment
limitation applicable to illiquid securities.
The ability of the Trustees to determine the liquidity of certain restricted
securities is permitted under the Securities and Exchange commission ("SEC")
staff position set forth in the adopting release for Rule 144A under the
Securities Act of 1933 (the "Rule"). The Rule is a non-exclusive safe harbor
for certain secondary market transactions involving securities subject to
restrictions on resale under federal securities laws. The Rule provides an
exemption from registration for resales of otherwise restricted securities to
qualified institutional buyers. The Rule was expected to further enhance the
liquidity of the secondary market for securities eligible for resale under Rule
144A. The Fund believes that the Staff of the SEC has left the question of
determining the liquidity of all restricted securities to the Trustees. The
Trustees consider the following criteria in determining the liquidity of
certain restricted securities:
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- the frequency of trades and quotes for the security;
- the number of dealers willing to purchase or sell the security and the
number of other potential buyers:
- dealer undertakings to make a market in the security: and
- the nature of the security and the nature of the marketplace trades.
PORTFOLIO TURNOVER
The Funds will not attempt to set or meet portfolio turnover rates since any
turnover would be incidental to transactions undertaken in an attempt to
achieve the Funds' investment objectives. The following is a list of the
portfolio turnover rates for the Funds:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FISCAL YEAR ENDED
JULY 31, 1995 JULY 31, 1994
<S> <C> <C>
Government Securities Fund 115% 55%
Quality Bond Fund 138% 112%
Ohio Tax Free Fund 27% 94%
Quality Growth Fund 34% 37%
Mid Cap Fund 23% 44%
Balanced Fund 58% 53%
</TABLE>
For the period from August 19, 1994 (date of initial public investment) to July
31, 1995 the portfolio turnover rate for International Equity Fund was 54%.
Portfolio turnover during the year ended July 31, 1995 for U.S. Government
Securities Fund was 115%. During the past fiscal year, the Fund had two major
investment events that contributed to the increase in asset turnover. The
first was a complete change in the portfolio's mortgage holdings. This
affected approximately 25% of the Fund. This change was made in March of 1995,
to better position the mortgage holdings against any changes in average life
given a falling interest rate environment.
The other event was the use of floating rate agency notes during the first six
month of the fiscal year. These floating rate notes represented about 25% of
the Fund's assets by calendar year end and were eliminated from the Fund by
fiscal year end 1995. We used the floating rate notes during the fall of 1994
to protect the Fund's share price during a rising interest rate environment.
Once rates started falling in 1995, this protection was no longer needed and
the notes were sold.
INVESTMENT LIMITATIONS
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Funds will not issue senior securities except that a Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amount borrowed;
and except to the extent that a Fund (with the exception of Ohio Tax Free
Fund) may enter into futures contracts, as applicable. The Funds will not
borrow money or engage in reverse repurchase agreements for investment
leverage, but rather as a temporary, extraordinary, or emergency measure or
to facilitate management of the portfolio by enabling a Fund to meet
redemption requests when the liquidation of portfolio securities is deemed
to be
11
<PAGE> 71
inconvenient or disadvantageous. A Fund will not purchase any securities
while any borrowings in excess of 5% of its total assets are outstanding.
SELLING SHORT AND BUYING ON MARGIN
The Funds will not sell any securities short or purchase any securities on
margin, but may obtain such short-term credits as are necessary for
clearance of purchases and sales of securities.
The deposit or payment by the Funds (with the exception of Ohio Tax Free
Fund) of initial or variation margin in connection with futures contracts or
related options transactions is not considered the purchase of a security on
margin.
PLEDGING ASSETS
The Funds will not mortgage, pledge, or hypothecate any assets, except to
secure permitted borrowings. In these cases, the Funds may pledge assets as
necessary to secure such borrowings. For purposes of this limitation, where
applicable, (a) the deposit of assets in escrow in connection with the
writing of covered put or call options and the purchase of securities on a
when-issued basis and (b) collateral arrangements with respect to: (i) the
purchase and sale of stock options (and options on stock indices) and (ii)
initial or variation margin for futures contracts, will not be deemed to be
pledges of a Fund's assets.
LENDING CASH OR SECURITIES
The Funds will not lend any of their respective assets except portfolio
securities up to one-third of the value of total assets. This shall not
prevent a Fund from purchasing or holding U.S. government obligations, money
market instruments, publicly or non-publicly issued municipal bonds,
variable rate demand notes, bonds, debentures, notes, certificates of
indebtedness, or other debt securities, entering into repurchase agreements,
or engaging in other transactions where permitted by a Fund's investment
objective, policies, and limitations or the Trust's Declaration of Trust.
The Ohio Tax Free Fund may, however, acquire temporary investments or enter
into repurchase agreements in accordance with its investment objective,
policies and limitations or its Declaration of Trust.
INVESTING IN COMMODITIES
None of the Funds will purchase or sell commodities, commodity contracts, or
commodity futures contracts except to the extent that the Funds (with the
exception of Ohio Tax Free Fund and Government Securities Fund) may engage
in transactions involving futures contracts or options on futures contracts.
INVESTING IN REAL ESTATE
None of the Funds will purchase or sell real estate, including limited
partnership interests, although the Funds (with the exception of Government
Securities Fund) may invest in securities of issuers whose business involves
the purchase or sale of real estate or in securities which are secured by
real estate or interests in real estate.
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<PAGE> 72
DIVERSIFICATION OF INVESTMENTS
With respect to 75% of the value of their respective total assets, a
Fund (with the exception of Ohio Tax Free Fund) will not purchase
securities issued by any one issuer (other than cash, cash items or
securities issued or guaranteed by the government of the United States
or its agencies or instrumentalities and repurchase agreements
collateralized by such securities), if as a result more than 5% of the
value of their total assets would be invested in the securities of
that issuer. A Fund will not acquire more than 10% of the outstanding
voting securities of any one issuer.
DEALING IN PUTS AND CALLS
The Ohio Tax Free Fund will not buy or sell puts, calls,
straddles, spreads, or any combination of these.
CONCENTRATION OF INVESTMENTS
The Government Securities Fund, Quality Bond Fund, Quality Growth
Fund, Mid Cap Fund, Balanced Fund and International Equity Fund will
not invest 25% or more of the value of their respective total assets
in any one industry, except that these Funds may invest more than
25% of the value of its total assets in securities issued or
guaranteed by the U.S. government, its agencies, or instrumentalities
and repurchase agreements collateralized by such securities.
The Ohio Tax Free Fund will not purchase securities if, as a result of
such purchase, 25% or more of the value of its total assets would be
invested in any one industry or in industrial development bonds or
other securities, the interest upon which is paid from revenues of
similar types of projects. However, the Fund may invest as temporary
investments more than 25% of the value of its assets in cash or cash
items, securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities, or instruments secured by these money
market instruments, i.e., repurchase agreements.
UNDERWRITING
A Fund will not underwrite any issue of securities, except as a Fund
may be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its
investment objective, policies, and limitations.
The above limitations cannot be changed with respect to a Fund without approval
of the holders or a majority of that Fund's Shares. The following limitations
may be changed by the Trustees without shareholder approval. Shareholders will
be notified before any material change in these limitations becomes effective.
INVESTING IN RESTRICTED SECURITIES
The Funds will not invest more than 10% of the value of their
respective net assets in securities that are subject to restrictions
on resale under federal securities law.
INVESTING IN ILLIQUID SECURITIES
The Funds will not invest more than 15% of the value of their
respective net assets in illiquid securities, including, as
applicable, repurchase agreements providing for settlement more than
seven days after notice, over-the-counter options, certain restricted
securities not determined by the Trustees to be liquid, and
non-negotiable time deposits with maturities over seven days.
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<PAGE> 73
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Funds will limit their respective investments in other investment
companies to no more than 3% of the total outstanding voting stock of
any investment company, invest no more than 5% of their respective
total assets in any one investment company, and will invest no more
than 10% of their respective total assets in investment companies in
general. The Funds will purchase securities of closed-end investment
companies only in open market transactions involving only customary
broker's commissions. However, these limitations are not applicable
if the securities are acquired in a merger, consolidation,
reorganization, or acquisition of assets. It should be noted that
investment companies incur certain expenses such as management fees
and, therefore, any investment by a Fund in shares of another
investment company would be subject to such expenses. The Fund will
invest in other investment companies primarily for the purpose of
investing its short-term cash on a temporary basis. The Advisors will
waive their investment advisory fee and sub-advisory fees on assets
invested in securities of open-end investment companies.
INVESTING IN NEW ISSUERS
The Government Securities Fund, Quality Bond Fund, Quality Growth
Fund, Mid Cap Fund, Balanced Fund and International Equity Fund will
not invest more than 5% of the value of their respective total
assets in securities of issuers which have records of less than three
years of continuous operations, including the operation of any
predecessor.
The Ohio Tax Free Fund will not invest more that 5% of the value of
its total assets in industrial development bonds where the principal
and interest are the responsibility of companies (or guarantors, where
applicable) with less than three years of continuous operations,
including the operation of any predecessor.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF THE
TRUST
A Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or its investment advisor, owning
individually more than 1/2 of 1% of the issuer's securities, together
own more than 5% of the issuer's securities.
INVESTING IN MINERALS
A Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, except they may
purchase the securities of issuers which invest in or sponsor such
programs.
ARBITRAGE TRANSACTIONS
A Fund will not enter into transactions for the purpose of
engaging in arbitrage.
PURCHASING SECURITIES TO EXERCISE CONTROL
A Fund will not purchase securities of a company for the
purpose of exercising control or management.
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<PAGE> 74
INVESTING IN WARRANTS
The Quality Growth Fund, Mid Cap Fund, Balanced Fund and International
Equity Fund may not invest more than 5% of their net assets in
warrants, including those acquired in units or attached to other
securities. To comply with certain state restrictions, a Fund will
limit its investment in such warrants not listed on the New
York or American Stock Exchanges to 2% of its net assets. (If state
restrictions change, this latter restriction may be revised without
notice to shareholders.) For purposes of this investment restriction,
warrants will be valued at the lower of cost or market, except that
warrants acquired by a Fund in units with or attached to securities
may be deemed to be without value.
INVESTING IN PUT OPTIONS
The International Equity Fund will not purchase put options on
securities or futures contracts, unless the securities or futures
contracts are held in the Fund's portfolio or unless the Fund in
entitled to them in deliverable form without further payment or after
segregating cash in the amount of any further payment.
WRITING COVERED CALL OPTIONS
The International Equity Fund will not write call options on
securities or futures contracts unless the securities of futures
contracts are held in the Fund's portfolio or unless the Fund is
entitled to them in deliverable form without further payment or after
segregating cash in the amount of any further payment.
Except with respect to the Funds' policy of borrowing money, if a percentage
limitation is adhered to at the time of investment, a later increase or
decrease in percentage resulting from any change in value or net assets will
not result in a violation of such restriction. For purposes of its policies
and limitations, the Funds consider certificates of deposit and demand and time
deposits issued by a U.S. branch of a domestic bank or savings and loan having
capital, surplus, and undivided profits in excess of $100,000,000 at the time
of investment to be "cash items."
The Ohio Tax Free Fund does not expect to borrow money or pledge securities in
excess of 5% of the value of its net assets during the coming fiscal year.
To comply with registration requirements in certain states, Government
Securities Fund, Quality Bond Fund, Quality Growth Fund, Mid Cap Fund, and
Balanced Fund: (1) will limit the aggregate value of the assets underlying
covered call options or put options written by a Fund to not more than 25% of
its net assets, (2) will limit the premiums paid for options purchased by a
Fund to 5% of its net assets, (3) will limit the margin deposits on futures
contracts entered into by a Fund to 5% of its net assets, (4) will limit their
investment in restricted securities to 10% of their net assets, and (5) will
not engage in portfolio lending. To comply with restrictions in certain
states, Growth Fund, Mid Cap Fund, Balanced Fund and International Equity Fund
will limit their investment in restricted securities to 5% of their net assets.
(If state requirements change, these restrictions may be revised without
shareholder notification.)
INVESTMENT RISKS (OHIO TAX FREE FUND)
The economy of the state of Ohio is reliant in part on durable goods
manufacturing, largely concentrated in motor vehicles and equipment, steel,
rubber products and household appliances. During the past decade, competition
in various industries in the state of Ohio has changed from being domestic to
international in nature. In addition, these industries may be characterized as
having excess capacity in particular product segments. The steel industry, in
particular, and the automobile industry, to a lesser extent, share these
characteristics. Because the state of Ohio and certain underlying
municipalities have large exposure to these industries and their respective
aftermarkets, trends
15
<PAGE> 75
in these industries may, over the long term, impact the demographic and
financial position of the state of Ohio and its municipalities. To the degree
that domestic manufacturers in industries to which Ohio municipalities have
exposure fail to make competitive adjustments, employment statistics and
disposable income of residents in Ohio may deteriorate, possibly leading to
population declines and erosion of municipality tax bases.
Both the economic trends above and the political climate in various
municipalities may have contributed to the decisions of various businesses and
individuals to relocate outside the state. A municipality's political climate
in particular may affect its own credit standing. For both the state of Ohio
and underlying Ohio municipalities, adjustment of credit ratings by the rating
agencies may affect the ability to issue securities and thereby affect the
supply of obligations meeting the quality standards for investment by the Fund.
The state ended fiscal year 1993 with a positive budgetary fund balance of over
$100 million. The 1994-1995 biennial budget was formulated with reasonable
revenue assumptions. The state implemented a revenue enhancement package in
January of 1993 that increased the cigarette tax and the income tax bracket for
incomes over $200,000, broadened the sales tax base and capped tax
distributions to local governments. These and other minor revenue enhancements
are budgeted to add $912 million of additional revenue to the 1994-1995
biennial budget. The state's fund balance reserve levels continue to be
minimal but the state has demonstrated its ability to manage with limited
financial flexibility.
The state has established procedures for municipal fiscal emergencies under
which joint state/local commissions are established to monitor the fiscal
affairs of a financially troubled municipality. When these procedures are
invoked, the municipality must develop a financial plan to eliminate deficits
and cure any defaults. Since their adoption in 1979, these procedures have
been applied to approximately twenty-two cities and villages, including the
city of Cleveland; in sixteen of these communities, the fiscal situation has
been resolved and the procedures terminated.
The foregoing discussion only highlights some of the significant financial
trends and problems affecting the state of Ohio and underlying municipalities.
16
<PAGE> 76
FOUNTAIN SQUARE FUNDS MANAGEMENT
_______________________________________________________________________________
OFFICERS AND TRUSTEES
Officers and Trustees of the Trust are listed with their addresses, principal
occupations, and present positions. Except as listed below, none of the
Trustees or officers are affiliated with Fifth Third Bank (the "Advisor"),
Fifth Third Bancorp, The BISYS Group, Inc., BISYS Fund Services, Inc., BISYS
Fund Services Ohio, Inc., or BISYS Fund Services Limited Partnership.
_______________________________________________________________________________
Albert E. Harris
5905 Graves Road
Cincinnati, OH 45243
Birthdate: July 2, 1932
Chairman of the Board of Trustees
Formerly, Chairman of the Board EDB Holdings, Inc. (retired July, 1993)
_______________________________________________________________________________
Edward Burke Carey
394 East Town Street
Columbus, OH 43215
Birthdate: July 2, 1945
Member of the Board of Trustees
President of Carey Leggett Realty Advisors
_______________________________________________________________________________
Lee A. Carter
Cincinnati Commerce Center
Suite 2020
Cincinnati, OH 45202
Birthdate: December 17, 1938
Member of the Board of Trustees
Formerly, President, Local Marketing Corporation (retired December 31, 1993)
_______________________________________________________________________________
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<PAGE> 77
Stephen G. Mintos
3435 Stelzer Road
Columbus, Ohio 43219-3035
Birthdate: February 5, 1954
President
From January 1987 to the present, employee of BISYS Fund Services, Inc.
________________________________________________________________________________
George R. Landreth
3435 Stelzer Road
Columbus, Ohio 43219-3035
Birthdate: July 11, 1942
Vice President
From December 1992 to present, employee of BISYS Fund Services, Inc.; from July
1991 to December 1992, employee of PNC Financial Corporation; from October 1984
to July 1991, employee of The Central Trust Co., N.A.
________________________________________________________________________________
Jeffrey C. Cusick
3435 Stelzer Road
Columbus, Ohio 43219-3035
Birthdate: May 19, 1959
Secretary and Treasurer
From July 1995 to present, employee of BISYS Fund Services, Inc.; from
September 1993 to July 1995, Assistant Vice President, Federated Administrative
Services; from 1989 to September 1993, Manager, Client Services, Federated
Administrative Services.
________________________________________________________________________________
TRUST OWNERSHIP
Officers and Trustees own less than 1% of the outstanding Shares of each Fund.
As of ______________________, 1996, Ms. Joan Bernard owned approximately
__________ shares (________%) of the outstanding shares of the Ohio Tax Free
Bond Fund.
Fifth Third Bank, as nominee for numerous trust and agency accounts, was the
owner of record of more than 5% of the outstanding shares of each Fund as of
_____________________. The following list indicates the extent of its
ownership for each Fund.
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<PAGE> 78
Government Securities Fund: _________ shares ____%
Quality Bond Fund: _________ shares ____%
Ohio Tax Free Fund: _________ shares ____%
Quality Growth Fund: _________ shares ____%
Mid Cap Fund: _________ shares ____%
Balanced Fund: _________ shares ____%
International Equity Fund _________ shares ____%
TRUSTEES' COMPENSATION
NAME AGGREGATE
POSITION WITH COMPENSATION FROM
TRUST TRUST*+
________________________________________________________________________________
J. Christopher Donahue $ 0
Chairman of Board of
Former Trustee, President and Treasurer@
Edward Burke Carey $ 7,800
Trustee
Lee A. Carter $ 7,800
Trustee
Albert E. Harris $ 7,800
Trustee
*Information is furnished for the fiscal year ended July 31, 1995. The Trust
is the only investment company in the Fund complex.
+The aggregate compensation is provided for the Trust which is comprised of ten
portfolios.
@Mr. Donahue resigned as Trustee, President and Treasurer of the Trust
effective December 1, 1995.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
INVESTMENT ADVISORY SERVICES
________________________________________________________________________________
ADVISOR TO THE TRUST
The Trust's advisor is Fifth Third Bank. It provides investment advisory
services through its Trust and Investment Division. Fifth Third Bank is a
wholly-owned subsidiary of Fifth Third Bancorp.
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<PAGE> 79
The Advisor shall not be liable to the Trust, a Fund, or any shareholder of any
of the Funds for any losses that may be sustained in the purchase, holding, or
sale of any security or for anything done or omitted by it, except acts or
omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the
Trust.
Because of the internal controls maintained by Fifth Third Bank to restrict the
flow of non-public information, a Fund's investments are typically made without
any knowledge of Fifth Third Bank's or affiliates' lending relationship with an
issuer.
ADVISORY FEES
For its advisory services, Fifth Third Bank receives an annual investment
advisory fee as described in the prospectus. The following shows all
investment advisory fees incurred by the Funds and the amounts of those fees
that were voluntarily waived by the Advisor for the fiscal years ended July 31,
1995, July 31, 1994, and July 31, 1993:
<TABLE>
<CAPTION>
YEAR ENDED AMOUNT YEAR ENDED AMOUNT YEAR ENDED AMOUNT
FUND NAME JULY 31, 1995 WAIVED-1995 JULY 31, 1994 WAIVED-1994 JULY 31, 1993 WAIVED-1993
<S> <C> <C> <C> <C> <C> <C>
Government Securities $ 134,241 $ 83,786 $ 184,118 $ 45,402 $ 88,059* $ 11,967
Fund
Quality Bond Fund $ 265,658 $ 33,033 $ 251,563 $ 33,221 $ 103,014* $ 5,125
Ohio Tax Free Fund**** $ 142,708 $ 7,814 $ 109,659 $ 7,912 $ 4,181** $ 4,181
Quality Growth Fund $ 536,144 $ 18,889 $ 575,044 $ 10,880 $ 343,745* $ 12,890
Mid Cap Fund $ 287,494 $ 52,747 $ 220,198 $ 74,740 $ 104,664* $ 7,850
Balanced Fund $ 424,672 $ 18,857 $ 501,193 $ 25,861 $ 287,907* $ 15,179
International Equity $ 641,669*** $ 45,670 $ ------- $ ------- $ ------- $ -------
Fund
<FN>
* For the period from November 20, 1992 (date of initial public investment) to
July 31, 1993.
** For the period from May 26, 1993 (date of initial public investment) to July
31, 1993.
***For the period from August 19, 1994 (date of initial public investment) to
July 31, 1995.
****In addition to the waivers noted, the Advisor voluntarily reimbursed
certain operating expenses of the Fund during the fiscal years ended July 31, 1995,
and July 31, 1994, of $179,400 and $244,304, respectively.
</TABLE>
SUB-ADVISOR
Morgan Stanley Asset Management, Inc. is the sub-advisor to International
Equity Fund under the terms of a Sub-Advisory Agreement between Fifth Third
Bank and Morgan Stanley Asset Management, Inc.
SUB-ADVISORY FEES
For its sub-advisory services, Morgan Stanley Asset Management, Inc. receives
an annual sub-advisory fee as described in the prospectus.
For the period from August 19, 1994 (date of initial public investment) through
July 31, 1995, the Sub-Advisor earned fees from International Equity Fund of
$320.835, of which $22,835 was waived.
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<PAGE> 80
STATE EXPENSE LIMITATIONS
The Advisor and Sub-Advisor have undertaken to comply with the expense
limitations established by certain states for investment companies
whose shares are registered for sale in those states. If a Fund's
normal operating expenses (including the investment advisory fee, but
not including brokerage commissions, interest, taxes, and
extraordinary expenses) exceed 2 1/2% per year of the first $30
million of average net assets, 2% per year of the next $70 million of
average net assets, and 1 1/2% per year of the remaining average net
assets, the Advisor has agreed to reimburse the Fund for its expenses
over the limitation up to the amount of the advisory fee in any single
fiscal year.
If a Fund's monthly projected operating expenses exceed this
limitation, the investment advisory and sub-advisory fees paid
will be reduced by the amount of the excess, subject to an annual
adjustment.
This arrangement is not part of the advisory contract and
sub-advisory agreement and may be amended or rescinded in the future.
ADMINISTRATIVE SERVICES
________________________________________________________________________________
Until December 1, 1995, Federated Administrative Services, which is a
subsidiary of Federated Investors, provided administrative personnel and
services to the Funds. The following shows all fees earned by Federated
Administrative Services and the amounts of those fees that were voluntarily
waived for the fiscal years ended July 31, 1995, July 31, 1994, and July 31,
1993:
<TABLE>
<CAPTION>
YEAR ENDED AMOUNT YEAR ENDED AMOUNT YEAR ENDED AMOUNT
FUND NAME JULY 31, 1995 WAIVED-1995 JULY 31, 1994 WAIVED-1994 JULY 31, 1993 WAIVED-1993
<S> <C> <C> <C> <C> <C> <C>
Government Securities $ 50,047 $ 0 $ 50,002 $ 4,247 $ 34,384* $ 34,384
Fund
Quality Bond Fund $ 53,404 $ 0 $ 53,076 $ 4,247 $ 34,385* $ 34,385
Ohio Tax Free Fund $ 50,000 $ 0 $ 50,002 $ 0 $ 9,041** $ 9,041
Quality Growth Fund $ 74,089 $ 0 $ 82,765 $ 0 $ 52,614* $ 0
Mid Cap Fund $ 50,000 $ 0 $ 50,000 $ 4,247 $ 38,384* $ 38,384
Balanced Fund $ 58,741 $ 0 $ 72,146 $ 0 $ 44,044* $ 0
International Equity $ 142,192*** $ 0 $ ------- $ 0 $ ------- $ -------
Fund
<FN>
* For the period from November 20, 1992 (date of initial public investment) to
July 31, 1993.
** For the period from May 26, 1993 (date of initial public investment) to July
31, 1993.
***For the period from August 19, 1994 (date of initial public investment) to
July 31, 1995.
</TABLE>
Effective December 1, 1995, BISYS Fund Services L.P., 3435 Stelzer Road,
Columbus, Ohio 43219, provided administrative services to the Funds for the
fees set forth in the prospectus.
21
<PAGE> 81
Effective December 1, 1995, pursuant to a separate agreement with BISYS Fund
Services L.P., Fifth Third Bank performs sub-administration services on behalf
of each Fund, for which it receives compensation from BISYS Fund Services L.P.
Under the custodian agreement, Fifth Third Bank holds each Fund's portfolio
securities and keeps all necessary records and documents relating to its
duties. Pursuant to an agreement with Fifth Third Bank, Morgan Stanley Trust
Company, Brooklyn, NY, acts as the International Equity Fund's sub-custodian
for foreign assets held outside the United States and employs sub-custodians
who were approved by the Trustees of the Fund in accordance with regulations of
the SEC. Morgan Stanley Trust Company is an affiliate of Morgan Stanley Asset
Management, Inc. Fees for custody services are based upon the market value of
Fund securities held in custody plus out-of-pocket expenses. All fees earned
by Fifth Third Bank as the custodian were voluntarily waived for the fiscal
year ended July 31, 1995.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Fifth Third Bank serves as transfer agent and dividend disbursing agent for the
Funds. The fee paid to the transfer agent is based upon the size, type and
number of accounts and transactions made by shareholders.
Fifth Third Bank also maintains the Trust's accounting records. The fee paid
for this service is based upon the level of the Funds' average net assets for
the period plus out-of-pocket expenses.
BROKERAGE TRANSACTIONS
________________________________________________________________________________
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Advisor and Sub-Advisor look for prompt execution of the order
at a favorable price. In working with dealers, the Advisor and Sub-Advisor
will generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can be
obtained elsewhere. The Advisor and Sub-Advisor make decisions on portfolio
transactions and selects brokers and dealers subject to guidelines established
by the Trustees.
The Advisor and Sub-Advisor may select brokers and dealers who offer brokerage
and research services. These services may be furnished directly to the Funds
or to the Advisor and Sub-Advisor and may include:
- advice as to the advisability of investing in securities;
- security analysis and reports;
- economic studies;
- industry studies;
- receipt of quotations for portfolio evaluations; and
- similar services.
The Advisor and Sub-Advisor and their affiliates exercise reasonable business
judgment in selecting brokers who offer brokerage and research services to
execute securities transactions. They determine in good faith that commissions
charged by such persons are reasonable in relationship to the value of the
brokerage and research services provided.
22
<PAGE> 82
Research services provided by brokers may be used by the Advisor and
Sub-Advisor in advising the Funds and other accounts. To the extent that
receipt of these services may supplant services for which the Advisor and
Sub-Advisor or their affiliates might otherwise have paid, it would tend to
reduce their expenses.
Although investment decisions for the Funds are made independently from those
of the other accounts managed by the Advisor and Sub-Advisor, investments of
the type the Funds may make may also be made by those other accounts. When one
of the Funds and one or more other accounts managed by the Advisor and
Sub-Advisor are prepared to invest in, or desire to dispose of, the same
security, available investments or opportunities for sales will be allocated in
a manner believed by the Advisor and Sub-Advisor to be equitable to each. In
some cases, this procedure may adversely affect the price paid or received by
the Funds or the size of the position obtained or disposed of by the Funds. In
other cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Funds.
For the fiscal year ended July 31, 1995 and July 31, 1994, Quality Growth Fund,
Mid Cap Fund and Balanced Fund paid $82,652, $34,525, $47,855, and $58,123,
$32,444, $43,250, respectively, in commissions on brokerage transactions. For
the period from November 20, 1992 (date of initial public investment) to July
31, 1993, Quality Growth Fund, Mid Cap Fund and Balanced Fund paid $80,480,
$28,647, $74,546, respectively in commissions on brokerage transactions.
For the period from August 19, 1994 (date of initial public investment) to July
31, 1995, International Equity Fund paid $320,889 in commissions on brokerage
transactions. For the same period, Morgan Stanley & Co. Incorporated, an
affiliate of the Fund, earned $31,034 in brokerage commissions, representing
9.67% of the total brokerage commissions paid by the Fund. These transactions
with Morgan Stanley & Co. Incorporated amounted to 4.91% of the value of the
Fund's securities transactions on which commissions were paid. Morgan Stanley
& Co. Incorporated executed trades for the Fund in Mexico and Indonesia which,
in general, involve higher transaction costs than trades done in such other
markets as Japan or the European countries, which accounts for the differences
in these percentages.
PURCHASING SHARES
________________________________________________________________________________
Shares of the Funds are sold at their net asset value with an applicable sales
charge or contingent deferred sales charge on days the New York Stock Exchange
and the Federal Reserve Bank of Cleveland are open for business. The procedure
for purchasing Investment A Shares or Investment C Shares of the Funds is
explained in the prospectus under "Investing in the Funds."
DISTRIBUTION PLAN AND ADMINISTRATIVE SERVICES AGREEMENT (INVESTMENT C SHARES
ONLY)
With respect to Investment A Shares and Investment C Shares of the Funds, the
Trust has adopted a Plan pursuant to Rule 12b-1 which was promulgated by the
Securities and Exchange Commission pursuant to the Investment Company Act of
1940. The Plan provides for payment of fees to the distributor to finance any
activity which is principally intended to result in the sale of a Fund's Shares
subject to the Plan. Such activities may include the advertising and marketing
of Shares; preparing printing, and distributing prospectuses and sales
literature to prospective shareholders, brokers, or administrators; and
implementing and operating the Plan. Pursuant to the Plan, the distributor may
pay fees to brokers for distribution and administrative services and to
administrators for administrative services as to Shares. The administrative
services are provided by a representative who has knowledge of the
shareholder's particular circumstances and goals, and include, but are not
limited to: communicating account openings; communicating account closings;
entering purchase transactions; entering redemption transactions; providing or
arranging to provide accounting support for all transactions, wiring funds and
receiving funds for Share purchases and redemptions, confirming and reconciling
all transactions, reviewing the activity in Fund accounts, and providing
training and supervision of broker personnel; posting and reinvesting
23
<PAGE> 83
dividends to Fund accounts or arranging for this service to be performed by the
Funds' transfer agent; and maintaining and distributing current copies of
prospectuses and shareholder reports to the beneficial owners of Shares and
prospective shareholders.
The Trustees expect that the Plan will result in the sale of a sufficient
number of Shares so as to allow a Fund to achieve economic viability. It is
also anticipated that an increase in the size of a Fund will facilitate more
efficient portfolio management and assist a Fund in seeking to achieve its
investment objective.
As of the date of this Statement of Additional Information, the Funds are not
accruing or paying 12b-1 fees for either Investment A Shares or Investment C
Shares. The Funds do not intend to accrue or pay 12b-1 fees with respect to
Investment A Shares until either separate classes of shares have been created
for certain fiduciary investors for the Funds or a determination is made that
such investors will be subject to the 12b-1 fees.
With respect to Investment C Shares, an Administrative Services Agreement
permits the payment of fees to financial institutions, including Fifth Third
Bank, to cause services to be provided to shareholders by a representative who
has knowledge of the shareholder's particular circumstances and goals.
Benefits to shareholders of Investment C Shares of the Funds may include: (1)
providing personal services to shareholders; (2) investing shareholder assets
with a minimum of delay and administrative detail; (3) enhancing shareholder
recordkeeping systems; and (4) responding promptly to shareholders' requests
and inquiries concerning their accounts.
As of the date of this Statement of Additional Information, the Funds have not
accrued or paid administrative service fees with respect to Investment C
Shares.
CONVERSION TO FEDERAL FUNDS
It is the Funds' policy to be as fully invested as possible so that maximum
interest or dividends may be earned. To this end, all payments from
shareholders must be in federal funds or be converted into federal funds.
Fifth Third Bank acts as the shareholder's agent in depositing checks and
converting them to federal funds.
EXCHANGING SECURITIES FOR FUND SHARES
Investors may exchange securities they already own for Shares of a Fund or they
may exchange a combination of securities and cash for Fund Shares. Any
securities to be exchanged must meet the investment objective and policies of
each Fund, must have a readily ascertainable market value, must be liquid, and
must not be subject to restrictions on resale. An investor should forward the
securities in negotiable form with an authorized letter of transmittal to Fifth
Third Bank. A Fund will notify the investor of its acceptance and valuation of
the securities within five business days of their receipt by the advisor.
A Fund values such securities in the same manner as a Fund values its assets.
The basis of the exchange will depend upon the net asset value of Shares of a
Fund on the day the securities are valued. One Share of a Fund will be issued
for each equivalent amount of securities accepted.
Any interest earned on the securities prior to the exchange will be considered
in valuing the securities. All interest, dividends, subscription, conversion,
or other rights attached to the securities become the property of a Fund, along
with the securities.
DETERMINING NET ASSET VALUE
________________________________________________________________________________
Net asset values of the Funds generally change each day. The days on which the
net asset value is calculated by these Funds are described in the prospectus.
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<PAGE> 84
DETERMINING MARKET VALUE OF SECURITIES
The market value of the Funds' portfolio securities (with the exception of Ohio
Tax Free Fund) are determined as follows:
- for equity securities, according to the last sale price on a national
securities exchange, if available;
- in the absence of recorded sales for listed equity securities, according to
the mean between the last closing bid and asked prices;
- for unlisted equity securities, the latest bid prices;
- for bonds and other fixed income securities, as determined by an
independent pricing service;
- for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service except that
short-term obligations with remaining maturities of less than 60 days at
the time of purchase may be valued at amortized cost; or
- for all other securities, at fair value as determined in good faith by the
Board of Trustees.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may reflect institutional trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data.
The Funds will value futures contracts, options and put options on financial
futures at their market values established by the exchanges at the close of
option trading on such exchanges unless the Trustees determine in good faith
that another method of valuing option positions is necessary to appraise their
fair value.
VALUING MUNICIPAL BONDS
With respect to Ohio Tax Free Fund, the Trustees use an independent pricing
service to value municipal bonds. The independent pricing service takes into
consideration yield, stability, risk, quality, coupon rate, maturity, type of
issue, trading characteristics, special circumstances of a security or trading
market, and any other factors or market data it considers relevant in
determining valuations for normal institutional size trading units of debt
securities, and does not rely exclusively on quoted prices.
USE OF AMORTIZED COST
The Trustees have decided that the fair value of debt securities authorized to
be purchased by the Fund with remaining maturities of 60 days or less at the
time of purchase may be their amortized cost value, unless the particular
circumstances of the security indicate otherwise. Under this method, portfolio
instruments and assets are valued at the acquisition cost as adjusted for
amortization of premium or accumulation of discount rather than at current
market value. The Executive Committee continually assesses this method of
valuation and recommends changes where necessary to assure that the Fund's
portfolio instruments are valued at their fair value as determined in good
faith by the Trustees.
TRADING IN FOREIGN SECURITIES
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange. In computing the net asset value,
International Equity Fund values foreign securities at the latest closing price
on the exchange on which they are traded immediately prior to the closing of
the New York Stock Exchange. Certain foreign currency exchange rates may also
be determined at the latest rate prior to the closing of the
25
<PAGE> 85
New York Stock Exchange. Foreign securities quoted in foreign currencies are
translated into U.S. dollars at current rates. Occasionally, events that
affect these values and exchange rates may occur between the times at which
they are determined and the closing of the New York Stock Exchange. If such
events materially affect the value of portfolio securities, these securities
may be valued at their fair value as determined in good faith by the Trustees,
although the actual calculation may be done by others.
REDEEMING SHARES
________________________________________________________________________________
Shares are redeemed at the next computed net asset value after a Fund receives
the redemption request. Redemption procedures are explained in the prospectus
under "Redeeming Shares." Although Fifth Third Bank does not charge for
telephone redemptions, it reserves the right to charge a fee for the cost of
wire-transferred redemptions of less than $5,000.
Investment C Shares redeemed within one year of purchase may be subject to a
contingent deferred sales charge. The contingent deferred sales charge may be
reduced with respect to a particular shareholder where a financial institution
selling Investment C Shares elects not to receive a commission from the
distributor with respect to its sale of such Shares.
REDEMPTION IN KIND
The Trust has elected to be governed by Rule 18f-1 of the Investment Company
Act of 1940 under which the Trust is obligated to redeem Shares for any one
shareholder in cash only up to the lesser of $250,000 or 1% of a Fund's net
asset value during any 90-day period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that payments should be in kind. In such a case, the Trust will pay
all or a portion of the remainder of the redemption in portfolio instruments,
valued in the same way as the Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving their securities and selling them before their
maturity could receive less than the redemption value of their securities and
could incur certain transaction costs.
TAX STATUS
________________________________________________________________________________
THE FUNDS' TAX STATUS
The Funds will pay no federal income tax because they expect to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. to qualify for this treatment, each Fund must,
among other requirements:
- derive at least 90% of its gross income from dividends,
interest, and gains from the sale of securities;
- derive less than 30% of its gross income from the sale of
securities held less than three months;
- invest in securities within certain statutory limits; and
- distribute to its shareholders at least 90% of its net
income earned during the year.
SHAREHOLDERS' TAX STATUS
With respect to Government Securities Fund, Quality Bond Fund, Quality Growth
Fund, Mid Cap Fund, Balanced Fund, and International Equity Fund, shareholders
are subject to federal income tax on dividends received as cash or additional
shares. No portion of any income dividend paid by a Fund is eligible for the
dividends received deduction available to corporations. These dividends, and
any short-term capital gains, are taxable as ordinary income.
STATE AND LOCAL TAXES
The Fund intends to limit its investments to U.S. government securities paying
interest which, if owned directly by shareholders of the Fund, would generally
be exempt from state personal income tax. However, from time to time, the Fund
may also invest in other U.S. government securities if the advisor deems it
advantageous to do so. Moreover, under the laws of some states, the net
investment income generally distributed by the Fund may be taxable to
shareholders. State laws differ on this issue, and shareholders are urged to
consult their own tax advisors regarding the status of their accounts under
state and local tax laws.
26
<PAGE> 86
CAPITAL GAINS
With respect to Government Securities Fund, Quality Bond Fund, Quality Growth
Fund, Mid Cap Fund, Balanced Fund, and International Equity Fund, long-term
capital gains distributed to shareholders will be treated as long-term capital
gains regardless of how long shareholders have held shares.
With respect to Ohio Tax Free Fund, capital gains or losses may be realized by
the Fund on the sale of portfolio securities and as a result of discounts from
par value on securities held to maturity. Sales would generally be made because
of:
- the availability of higher relative yields;
- differentials in market values;
- new investment opportunities;
- changes in creditworthiness of an issuer; or
- an attempt to preserve gains or limit losses.
Distributions of long-term capital gains are taxed as such, whether they are
taken in cash or reinvested, and regardless of the length of time the
shareholder has owned shares. Any loss by a shareholder on shares held for less
than six months and sold after a capital distribution will be treated as a
long-term capital loss to the extent of the capital gains distribution.
FOREIGN TAXES
Investment income on certain foreign securities in which International Equity
Fund may invest may be subject to foreign withholding or other taxes that could
reduce the return on these securities. Tax treaties between the United States
and foreign countries, however, may reduce or eliminate the amount of foreign
taxes to which the Fund would subject.
TOTAL RETURN
________________________________________________________________________________
The average annual total returns for Government Securities Fund, Quality Bond
Fund, Quality Growth Fund, Mid Cap Fund and Balanced Fund for the fiscal year
ended July 31, 1995 were 2.86%, 3.99%, 17.63%, 19.76% and 13.97%, respectively.
The average annual total returns for Government Securities Fund, Quality Bond
Fund, Quality Growth Fund, Mid Cap Fund and Balanced Fund for the period from
November 20, 1992 (date of initial public investment) to July 31, 1994, were
2.89%, 3.48%, 5.96%, 7.79%, and 5.56%, respectively.
The average annual total returns for Ohio Tax Free Fund for the fiscal year
ended July 31, 1995 and for the period from May 26, 1993 (date of initial
public investment) through July 31, 1995 were 2.20% and 1.91%, respectively.
27
<PAGE> 87
The average annual total return for the Funds is the average compounded rate of
return for a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the period by
the offering price per share at the end of the period. The number of shares
owned at the end of the period is based on the number of shares purchased at
the beginning of the period with $1,000, less any applicable sales load,
adjusted over the period by any additional shares, assuming the monthly
reinvestment of all dividends and distributions.
The cumulative total return for International Equity Fund for the period from
August 19, 1994 (date of initial public investment) to July 31, 1995 was
(6.11%). Cumulative total return reflects the International Equity Fund's total
performance over a specific period of time. This total return assumes and is
reduced by the payment of the maximum sales load. The Fund's total return is
representative of approximately 11 months of activity since its date of initial
public investment.
YIELD
________________________________________________________________________________
The SEC yields for Government Securities Fund, Quality Bond Fund, Ohio Tax Free
Fund, Quality Growth Fund, Mid Cap Fund, Balanced Fund, and International
Equity Fund for the thirty-day period ended July 31, 1995 were 5.58%, 6.36%,
3.97%, 1.29%, 0.47%, 2.27% and 0.12%, respectively.
The yield for the Funds is determined by dividing the net investment income per
share (as defined by the SEC) earned by the Fund over a thirty-day period by
the maximum offering price per share of the Fund on the last day of the period.
This value is then annualized using semi-annual compounding. This means that
the amount of income generated during the thirty-day period is assumed to be
generated each month over a 12-month period and is reinvested every six months.
The yield does not necessarily reflect income actually earned by the Fund
because of certain adjustments required by the SEC and, therefore, may not
correlate to the dividends or other distributions paid to shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in a Fund,
the performance will be reduced for those shareholders paying those fees.
TAX-EQUIVALENT YIELD
________________________________________________________________________________
The tax-equivalent yield for Ohio Tax Free Fund for the thirty-day period ended
July 31, 1995 was 6.39%. The tax-equivalent yield of the Fund is calculated
similarly to the yield, but is adjusted to reflect the taxable yield that the
Fund would have had to earn to equal its actual yield, assuming a 37.90% tax
rate and assuming that income is 100% tax-exempt.
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<PAGE> 88
TAX EQUIVALENCY TABLE
The Ohio Tax Free Fund may also use a tax-equivalency table in advertising and
sales literature. The interest earned by the municipal obligations in the
Fund's portfolio generally remains free from federal regular income tax and is
free from income taxes imposed by the state of Ohio. As the table below
indicates, a "tax-free" investment is an attractive choice for investors,
particularly in times of narrow spreads between "tax-free" and taxable yields.
TAXABLE YIELD EQUIVALENT FOR 1995
STATE OF OHIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
FEDERAL TAX BRACKET:
<S> <C> <C> <C> <C>
15.00% 28.00% 31.00% 36.00% 39.60%
COMBINED FEDERAL AND STATE TAX BRACKET:
19.457% 33.201% 37.900% 43.500% 47.100%
- ----------------------------------------------------------------------------
SINGLE $1- $23,351- $56,551- $117,951- OVER
RETURN 23,350 56,550 117,950 256,500 256,500
- ----------------------------------------------------------------------------
Tax-Exempt
Yield Taxable Yield Equivalent
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1.50% 1.86% 2.25% 2.42% 2.65% 2.84%
2.00% 2.48% 2.99% 3.22% 3.54% 3.78%
2.50% 3.10% 3.74% 4.03% 4.42% 4.73%
3.00% 3.72% 4.49% 4.83% 5.31% 5.67%
3.50% 4.35% 5.24% 5.64% 6.19% 6.62%
4.00% 4.97% 5.99% 6.44% 7.08% 7.56%
4.50% 5.59% 6.74% 7.25% 7.96% 8.51%
5.00% 6.21% 7.49% 8.05% 8.85% 9.45%
5.50% 6.83% 8.23% 8.86% 9.73% 10.40%
6.00% 7.45% 8.98% 9.66% 10.62% 11.34%
</TABLE>
Note: The maximum marginal tax rate for each bracket was used in calculating
the taxable yield equivalent. Furthermore, additional state and local taxes
paid on comparable taxable investments were not used to increase federal
deductions.
The chart above is for illustrative purposes only. It is not an indicator of
past or future performance of Ohio Tax Free Bond Fund shares.
29
<PAGE> 89
- Some portion of Ohio Tax Free Fund's income may be subject to the
federal alternative minimum tax and state and local income taxes.
PERFORMANCE COMPARISONS
- ------------------------------------------------------------------------------
Each Fund's performance depends upon such variables as:
- portfolio quality;
- average portfolio maturity;
- type of instruments in which the portfolio is invested;
- changes in interest rates and market value of portfolio securities;
- changes in each Fund's expenses; and
- various other factors
Each Fund's performance fluctuates on a daily basis largely because net
earnings and offering price per share fluctuate daily. Both net earnings and
net asset value per share are factors in the computation of yield and total
return as described above.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composisiton of any index
used, prevailing market conditions, portfolio compositions of other funds, and
methods used to value portfolio securities and compute offering price. The
financial publications and/or indices which the Funds use in advertising may
include:
- LEHMAN BROTHERS GOVERNMENT/CORPORATE (TOTAL) INDEX is comprised of
approximately 5,000 issues which include non-convertible bonds
publicly issued by the U.S. government or its agencies; corporate
bonds guaranteed by the U.S. government and quasi-federal corporations;
and publicly issued, fixed rate, non-convertible domestic bonds of
companies in industry, public utilities and finance. The average
maturity of these bonds approximates nine years. Tracked by Shearson
Lehman Brothers, Inc., the index calculates total returns for one
month, three month, twelve month and ten year periods and year-to-date.
(Government Securities, Balanced, and Quality Bond Funds)
- MERRILL LYNCH COMPOSITE 1-5 YEAR TREASURY INDEX is comprised of
approximately 66 issues of U.S. Treasury securities maturing between
1 and 4.99 years, with coupon rates of 4.25% of more. These total return
figures are calculated for one, three, six, and twelve month periods
and year-to-date and include the value of the bond plus income and
any price appreciation or depreciation. (Government Securities Fund)
- SALOMON BROTHERS 3-5 YEAR GOVERNMENT INDEX quotes total returns for
U.S. Treasury issues (excluding flower bonds) which have maturities of
three to five years. There total returns are year-to-date figures which
are calculated each month following January 1. (Government Securities
Fund)
30
<PAGE> 90
- LIPPER ANALYTICAL SERVICE, INC. ranks funds in various fund categories
by making comparative calculations using total return. Total return
assumes the reinvestment of all capital gains distributions and income
dividends and takes into account any change in net asset value over a
specific period of time. From time to time, the Fund will quote its
Lipper ranking in the applicable funds category in advertising and
sales literature. (All of the Funds)
- MERRILL LYNCH 3-5 YEAR TREASURY INDEX is comprised of approximately
24 issued of intermediate-term U.S. government and U.S. Treasury
securities with maturities between 3 and 4.99 years and coupon rates
above 4.25%. Index returns are calculated as total returns for periods
of one, three, six and twelve months as well as year-to-date.
(Government Securities Fund)
- MERRILL LYNCH 3-YEAR TREASURY YIELD CURVE INDEX is an unmanaged index
comprised of the most recently issued 3-year U.S. Treasury notes.
Index returns are calculated as total returns for periods of one,
three, six, and twelve months as well as year-to-date. (Government
Securities Fund)
- LEHMAN BROTHERS GOVERNMENT INDEX is an unmanaged index comprised of all
publicly issued, non-convertible domestic debt of the U.S. government,
or any agency thereof, or any quasi-federal corporation and of
corporate debt guaranteed by the U.S. government. Only notes and bonds
with a minimum outstanding principal of $1 million and a minimum
maturity of one year are included. (Government Securities, Balanced,
and Quality Bond Funds)
- LEHMAN BROTHERS AGGREGATE BOND INDEX is a total return index measuring
both the capital price changes and income provided by the underlying
universe of securities, weighted by market value outstanding. The
Aggregate Bond Index is comprised of the Lehman Brothers Government
Bond Index, Corporate bond Index, Mortgage-Backed Securities Index and
the Yankee Bond Index. These indices include: U.S. Treasury
obligations, including bonds and notes; U.S. agency obligations,
including those of the Federal Farm Credit Bank, Federal Land Bank and
the Bank for Co-Operatives; foreign obligations, U.S. investment-grade
corporate debt and mortgage-backed obligations. All corporate debt
included in the Aggregate Bond Index has a minimum S&P rating of BBB, a
minimum Moody's rating of Baa, or a Fitch rating of BBB. (Balanced and
Bond Funds)
- MERRILL LYNCH CORPORATE AND GOVERNMENT INDEX includes issues which must
be in the form of publicly placed, nonconvertible, coupon-bearing
domestic debt and must carry a term of maturity of at least one year.
Par amounts outstanding must be no less than $10 million at the start
and at the close of the performance measurement period. Corporate
instruments must be rated by S&P or by Moody's as investment grade
issues (i.e., BBB/Baa or better), (Balanced and Bond Funds)
- MERRILL LYNCH DOMESTIC MASTER INDEX includes issues which must be in
the form of publicly place, nonconvertible, coupon-bearing domestic
debt and must carry a term to maturity of at least one year. Par
amounts outstanding must be no less than $10 million at the start and
at the close of the performance measurement period. The Domestic Master
Index is a broader index than the Merrill Lynch Corporate and Government
Index and includes, for example, mortgage related securities. The
mortgage market is divided by agency, type of mortgage and coupon and
the amount outstanding in each agency/type/coupon subdivision must be
no less than $200 million at the start and at the close of the
performance measurement period. Corporate instruments must be rated by
S&P or by Moody's as investment grade issues (i.e., BBB/Baa or better).
(Balanced and Bond Funds)
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<PAGE> 91
- DOW JONES INDUSTRIAL AVERAGE ("DJIA") represents share prices of
selected blue-chip industrial corporations. The DJIA indicates daily
changes in the average price of stock of these corporations. Because it
represents the top corporations of America, the DJIA index is a leading
economic indicator for the stock market as a whole. (Quality Growth,
Balanced, and Mid Cap Funds)
- STANDARD & POOR'S RATINGS GROUP DAILY STOCK PRICE INDICES of 500 and
400 Common Stocks are composite indices of common stocks in industry,
transportation, and financial and public utility companies that can be
used to compare to the total returns of funds whose portfolios are
invested primarily in common stocks. In addition, the S&P indices
assume reinvestment of all dividends paid by stocks listed on its
indices. Taxes due on any of these distributions are not included, nor
are brokerage or other fees calculated in the S&P figures. (Quality
Growth, Balanced, and Mid Cap Funds)
- S&P MID CAP 400 INDEX is comprised of the 400 common stocks issued by
medium-sized domestic companies whose market capitalizations range from
$200 million to $5 billion. The stocks are selected on the basis of the
issuer's market size, liquidity and industry group representation.
- S&P/BARRA GROWTH INDEX is a sub-index of the S&P 500 composite index of
common stocks. The index represents approximately fifty percent of the
S&P 500 market capitalization and is comprised of those companies with
higher price-to-book ratios (one distinction associated with "growth
stocks"). The index is maintained by Standard and Poor's in conjunction
with BARRA, an investment technology firm.
- WILSHIRE MID CAP 750 INDEX is a subset of the Wilshire 5000 index of
common stocks. The Mid Cap 750 index consists of those Wilshire 5000
companies ranked between 501 and 1,250 according to market
capitalization. The index ranges in market capitalization from $400
million to $1.7 billion.
- SALOMON BROTHERS AAA-AA CORPORATE INDEX calculates total returns of
approximately 775 issues which include long-term, high-grade domestic
corporate taxable bonds, rated AAA-AA with maturities of twelve years
or more and companies in industry, public utilities, and finance.
(Balanced and Quality Bond Funds)
- LEHMAN BROTHERS 5 YEAR MUNICIPAL BOND INDEX is comprised of 2,900
issues which include fixed-rate debt obligations of state and local
government entities. The securities have maturities not less than four
years but no more than six years, have been issued within the last five
years, and have a minimum Moody's debt rating of BAA.
- LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX: An
unmanaged index comprised of all the bonds issued by the Lehman
Brothers Government/Corporate Bond Index with maturities between 1 and
9.99 years. Total return is based on price appreciation/depreciation
and income as a percentage of the original investment. Indices are
rebalanced monthly by market capitalization. (Balanced, Quality Bond
and Government Securities Funds)
- EUROPE, AUSTRALIA, AND FAR EAST (EAFE) is a market capitalization
weighted foreign securities index, which is widely used to measure the
performance of European, Australian, New Zealand, and Far Eastern stock
markets. The index covers approximately 1,020 companies drawn from 18
countries in the above regions. The index values its securities daily
in both U.S. dollars and local currency and calculates total returns
monthly. EAFE U.S. dollar total return is a net
32
<PAGE> 92
divided figure less Luxembourg withholding tax. The EAFE is monitored
by Capital International, S.A., Geneva, Switzerland. (International
Equity Fund)
- MORNINGSTAR, INC., an independent rating service, is the publisher of
the bi-weekly Mutual Fund Values. Mutual Fund Values rates more than
1,000 NASDAQ-listed mutual funds of all types, according to their
risk-adjusted returns. The maximum rating is five stars, and ratings
are effective for two weeks.
Advertisements and other sales literature for the Funds may quote total returns
which are calculated on non-standardized base periods. These total returns also
represent the historic change in the value of an investment in the Funds based
on monthly/quarterly reinvestment of dividends over a specified period of time.
Advertisements may quote performance information which does not reflect the
effect of the sales load.
FINANCIAL STATEMENTS
________________________________________________________________________________
The financial statements for Fountain Square U.S. Government Securities Fund,
Fountain Square Quality Bond Fund, Fountain Square Ohio Tax Free Bond Fund,
Fountain Square Quality Growth Fund, Fountain Square Mid Cap Fund, Fountain
Square Balanced Fund and Fountain Square International Equity Fund for the
fiscal year ended July 31, 1995 are incorporated herein by reference to the
Annual Report to Shareholders of the Fountain Square Equity and Income Mutual
Funds dated July 31, 1995 (File Nos. 33-24848 and 811-5669.) In addition, the
financial statements of the Funds for the six-month period ended January 31,
1996, are incorporated herein by reference to the Semi-Annual Report for the
Fountain Square Funds dated January 31, 1996. A copy of the Annual Report or
the Semi-Annual Report may be obtained without charge by contacting the Trust
at the address located on the back cover of the prospectus.
33
<PAGE> 93
APPENDIX
- ------------------------------------------------------------------------------
STANDARD & POOR'S RATINGS GROUP CORPORATE AND MUNICIPAL BOND RATING DEFINITIONS
AAA--Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A--Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
NR--NR indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligations as a matter of policy. S&P may apply a plus (+)
or minus (-) to the above rating classifications to show relative standing
within the classification.
MOODY'S INVESTORS SERVICE, INC. CORPORATE AND MUNICIPAL BOND RATING DEFINITIONS
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations
(i.w., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
NR--Not rated by Moody's. Moody's applies numerical modifiers, 1, 2, and 3 in
each generic rating classification from Aa through B in its bond rating system.
The modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.
34
<PAGE> 94
FITCH INVESTORS SERVICE, INC. LONG-TERM DEBT RATING DEFINITIONS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.
NR--NR indicates that Fitch does not rate the specific issue. Plus (+) or Minus
(-): Plus and minus signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the AAA category.
STANDARD AND POOR'S RATINGS GROUP MUNICIPAL NOTE RATING DEFINITION
SP-1--Very strong or strong capacity to pay principal amd interest. Those
issues determined to possess overwhelming safety characteristics will be given
a plus sign (+) designation.
SP-2--Satisfactory capacity to pay principal and interest.
SP-3--Speculative capacity to pay principal and interest.
MOODY'S INVESTORS SERVICE SHORT-TERM LOAN RATING DEFINITIONS
MIG1/VMIG1--This designation denotes best quality. There is a present strong
protection by established cash flows, superior liquidity support or
demonstrated broad based access to the market for refinancing.
MIG2/VMIG2--This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
FITCH INVESTORS SERVICE, INC. SHORT-TERM DEBT RATING DEFINITIONS
F-1+--Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2--Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as the F-1+ and F-1 categories.
STANDARD AND POOR'S RATINGS GROUP COMMERCIAL PAPER RATING DEFINITIONS
A-1--This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to have extremely strong safety
characteristics are denoted with a plus (+) sign.
35
<PAGE> 95
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
MOODY'S INVESTORS SERVICE, INC. COMMERCIAL PAPER RATING DEFINITIONS
PRIME-1--Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of senior short-term promissory obligations.
Prime-1 repayment capacity will often be evidenced by the following
characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
P-2--Issuers (or supporting institutions) rated Prime-2 (P-2) have a strong
capacity for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Cusip 350756888
Cusip 350756706
Cusip 350756862
Cusip 350756870
Cusip 350756805
Cusip 350756607
Cusip 350756854
2090403B (9/95)
36
<PAGE> 96
<TABLE>
<CAPTION>
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
<S> <C>
(a) Financial Statements (1-6, 10) Incorporated by reference to the Annual Report
to Shareholders of the Fountain Square Funds dated July 31, 1995 (File No.
811-5669).
(b) Exhibits:
(1) Conformed Copy of Declaration of Trust of the Registrant including
Amendments Nos.1 through 7 (4);
(i) Conformed copy of Amendment No. 8 to the Declaration of Trust+;
(ii) Conformed copy of Amendment No. 9 to the Declaration of Trust*;
(2) Copy of By-Laws of the Registrant (4);
(3) Not applicable;
(4) Not applicable;
(5) (i) Conformed Copy of Investment Advisory Contract of the Registrant
through and including Exhibit J (4);
(ii) Conformed Copy of Sub-Advisory Agreement (1);
(6) (i) Conformed Copy of Distributor's Contract of the Registrant+;
(ii) Copy of Administrative Services Agreement of the Registrant*;
(7) Not applicable;
(8) Conformed Copy of Custody Agreement of the Registrant (4);
(9) Conformed Copy of Agency Agreement of the Registrant (4);
(10) Conformed Copy of Opinion and Consent of Counsel as to legality of shares being
registered (5);
(11) (i) Conformed Copy of Consent of Independent Auditors+;
(ii) Conformed Copy of Opinion of Counsel as to status of shareholders
of Ohio Tax Free Bond Fund regarding Ohio income taxes (2);
(12) Not applicable;
(13) Conformed Copy of Initial Capital Understanding (4);
(14) Not applicable;
(15) (i) Conformed Copy of Distribution Plan through and including
Exhibits A and B+;
(ii) Form of Rule 12b-1 Agreement+;
<FN>
__________________________________
+ All exhibits have been filed electronically.
* To be filed by Amendment.
1. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 filed June 1, 1994. (File Nos. 811-5669 and
33-24848).
2. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed September 24, 1993. (File
Nos. 811-5669 and 33-24848).
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 15 on Form N-1A filed February 28, 1995. (File Nos.
8115669 and 33-24848).
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 on Form N-1A filed on or about September 30,
1995. (File Nos. 811-5669 and 33-24848).
</TABLE>
<PAGE> 97
<TABLE>
<S> <C> <C>
(16) (i) Copy of Schedule for Computation of Fund Performance Data
for Fountain Square Balanced Fund (3);
(ii) Copy of Schedule for Computation of Fund Performance Data
for Fountain Square Commercial Paper Fund (4);
(iii) Copy of Schedule for Computation of Fund Performance Data
for Fountain Square Government Cash Reserves Fund (4);
(iv) Copy of Schedule for Computation of Fund Performance Data
for Fountain Square Mid Cap Fund (3);
(v) Copy of Schedule for Computation of Fund Performance Data
for Fountain Square Quality Bond Fund (3);
(vii) Copy of Schedule for Computation of Fund Performance Data
for Fountain Square Quality Growth Fund (3);
(viii) Copy of Schedule for Computation of Fund Performance Data
for Fountain Square Ohio Tax Free Bond Fund (2);
(ix) Copy of Schedule for Computation of Fund Performance Data
for Fountain Square U.S. Government Securities Fund (3);
(x) Copy of Schedule for Computation of Fund Performance Data
for Fountain Square U.S. Treasury Obligations Fund (4);
(xi) Copy of Schedule for Computation of Fund Performance Data
for Fountain Square International Equity Fund (4);
(17) Copy of Financial Data Schedule; +
(18) Copy of Multiple Class Plan+;
(19) (i) Conformed copy of Power of Attorney+;
(ii) Consent of Howard & Howard Attorneys, P.C.+;
<FN>
__________________________
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 filed June 1, 1994. (File Nos. 811-5669 and
33-24848).
2. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed September 24, 1993. (File Nos.
811-5669 and 33-24848).
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 on Form N-1A filed March 25, 1993. (File Nos.
811-5669 and 33-24848).
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 15 on Form N-1A filed February 28, 1995. (File Nos.
811-5669 and 33-24848).
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 on Form N-1A (File Nos. 811-5669 and 33-24848).
</TABLE>
2
<PAGE> 98
Item 25. Persons Controlled by or Under Common Control with Registrant:
None
Item 26. Number of Holders of Securities:
<TABLE>
<CAPTION>
Shares of beneficial interest Number of Records Holders
(no par value) as of January 12, 1996
------------------------------- --------------------------
<S> <C>
U.S. Government Securities Fund . . . . . . . . . . . . . . . . 5
Quality Bond Fund . . . . . . . . . . . . . . . . . . . . . . . 5
Ohio Tax Free Bond Fund . . . . . . . . . . . . . . . . . . . . 5
Quality Growth Fund . . . . . . . . . . . . . . . . . . . . . . 5
Mid Cap Fund . . . . . . . . . . . . . . . . . . . . . . . . . 5
Balanced Fund . . . . . . . . . . . . . . . . . . . . . . . . . 5
U.S. Treasury Obligations Fund . . . . . . . . . . . . . . . . . 5
International Equity Fund . . . . . . . . . . . . . . . . . . . 3
Government Case Reserves Fund
Trust Shares . . . . . . . . . . . . . . . . . . . . . 5
Investment Shares . . . . . . . . . . . . . . . . . . . 5
Commercial Paper Fund
Trust Shares . . . . . . . . . . . . . . . . . . . . . 5
Investment Shares . . . . . . . . . . . . . . . . . . . 5
Item 27. Indemnification: (6) . . . . . . . . . . . . .
<FN>
__________________________
6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 7 on Form N-1A filed September 27, 1991. (File Nos.
811-5669 and 33-24848).
</TABLE>
3
<PAGE> 99
Item 28. Business and Other Connections of Investment Advisor:
<TABLE>
<CAPTION>
Other Substantial
Position with Business, Profession,
Name the Advisor Vocation or Employment
---- ---------------- ----------------------
<S> <C> <C>
Clement L. Buenger Director
George A. Schaefer, Jr. President, Chief Executive
Officer and Director
George W. Landry Executive Vice President and
Cashier
Stephen J. Schrantz Executive Vice President
P. Michael Brumm Executive Vice President and
Chief Financial Officer
Michael K. Keating Executive Vice President, and
Secretary
Thomas B. Donnell Chairman, Fifth Third Bank of
Northwestern Ohio and Director
Robert P. Niehaus Executive Vice President
Michael D. Baker Executive Vice President
Henry W. Hobson, III Senior Vice President
J. Patrick Bell Senior Vice President
Tom A. Bobenread Senior Vice President
James J. Hudepohl Senior Vice President
Edward H. Silva, Jr. Senior Vice President
Gerald L. Wissel Senior Vice President and
Director of Audit
Neal E. Arnold Senior Vice President and
Director of Audit
Paul L. Reynolds Vice President, General Counsel
and Assistant Secretary
John F. Barrett Director President and CEO, Western-
Southern Life Insurance Company
Richard T. Farmer Director Chairman & CEO, Cintas Corp.
John D. Geary Director Former President, Midland
Enterprises, Inc.
Joseph H. Head, Jr. Director Chairman & CEO, Atkins and
Pearce
William G. Kagler Director Chairman, Skyline Chili, Inc.
</TABLE>
4
<PAGE> 100
<TABLE>
<S> <C> <C>
William J. Keating Director Retired Publisher and Chairman,
The Cincinnati Enquirer
James D. Kiggen Director Chairman, CEO & President, Xtek,
Inc.
Robert B. Morgan Director President and Chief Executive
Officer, Cincinnati Financial
Corp.
Michael H. Norris Director Former President, The Deerfield
Manufacturing Co.
Brian H. Rowe Director Chairman, GE Aircraft Engines
John J. Schiff, Jr. Director Chairman, John J. & Thomas R.
Schiff & Co.
Dennis J. Sullivan, Jr. Director Executive Counselor, Dan Pinger
Public Relations
Dudley S. Taft Director President, Taft Broadcasting Co.
Joan R. Herschede Director President and CEO, The Frank
Herschede Company
Ivan W. Gorr Director Retired as Chairman & CEO,
Cooper Tire & Rubber Co.
Milton C. Boesel, Jr. Director Counsel, Ritter, Robinson,
McCready & James
Gerald V. Dirvin Director Retired Executive Vice
President, The Proctor & Gamble
Company
</TABLE>
Business and Other Connections of Sub-Advisors (International Equity Fund):
Listed below are the officers and Directors of Morgan Stanley Asset Management
Inc. ("MSAM"), the Sub-Advisor to the International Equity Fund. The
information as to any other business, profession, vocation, or employment of
substantial nature engaged in by the Chairman, President and Directors during
the past two fiscal years, is incorporated by reference to Schedule A and D of
Form ADV filed by MSAM pursuant to the Advisors Act (SEC File No. 801-15757).
MORGAN STANLEY ASSET MANAGEMENT
Officers (Principals and Managing Directors)
Barton M. Biggs, Chairman/Managing Director
Peter A. Nadosy, President/Managing Director
James A. Allwin, Managing Director
A. MacDonald Caputo, Managing Director
Garry B. Crowder, Managing Director
Richard B. Fisher, Managing Director
Gordon S. Gray, Managing Director
Gary Latainer, Managing Director
Donald H. McAllister, Managing Director
Dennis G. Sherva, Managing Director
Dominic Caldecott, Managing Director
5
<PAGE> 101
Ean Wah Chin, Managing Director
Michael A. Crowe, Managing Director
Madhav Dhar, Managing Director
Kurt Fauerman, Managing Director
Richard G. Woolworth, Managing Director
John R. Alkier, Principal
Robert E. Angevine, Principal
Warren J. Ackerman, III, Principal
Jeffry D. Brown, Principal
Gerald P. Barth, Principal
Francine J. Bovich, Principal
Arthur Certosimo, Principal
James Cheng, Principal
Terence Carmichael, Principal
Stephen C. Cordy, Principal
Elleen Cresham, Principal
Jacqueline A. Day, Principal
Paul Ghaffari, Principal
James A. Grisham, Principal
Perry E. Hall II, Principal
Marianne Hay, Principal
Bruce S. Ives, Principal
Margaret Kinsley Johnson, Principal
Kathryn Jonas, Principal
Debra Kushma, Principal
Marianne Lippmann, Principal
Gary J. Mangino, Principal
Paul Martin, Principal
Walter Maynard, Principal
Robert L. Meyer, Principal
Margaret P. Naylor, Principal
Warren J. Olsen, Principal
Russell Platt, Principal
Gail H. Reeke, Principal
Christine Reilly, Principal
Robert Sargent, Principal
Kiat Seng Seah, Principal
Vlnod Sethi, Principal
Stephen C. Sexauer, Principal
Harold Schaaff, Principal
Robert M. Smith, Principal
Christopher G. Petrow, Principal
Phillip W. Warner, Principal
Phillip W. Winters, Principal
Alford E. Zick, Principal
Stefano Russo, Principal
Item 29. Principal Underwriters:
(a) BISYS Fund Services Limited Partnership, formerly known as The
Winsbury Company Limited Partnership ("BISYS"), acts as
distributor and administrator for Registrant. BISYS also
distributes the securities of The Victory Portfolios, The
HighMark Group, the AmSouth Mutual Funds, The
6
<PAGE> 102
Sessions Group, the Conestoga Family of Funds, The Coventry
Group, the BB&T Mutual Funds Group, the American Performance
Funds, the ARCH Fund, Inc., the ARCH Tax-Exempt Trust, the MMA
Praxis Mutual Funds, the Market Watch Funds, the Pacific
Capital Funds, The Parkstone Group of Funds, the Qualivest
Funds, the Riverfront Funds, Inc. and the Summit Investment
Trust, each of which is an investment management company.
BISYS Administers the securities of Payden & Rygel Investment
Group.
(b) Directors, officers and partners of BISYS, as of January 12,
1996 were as follows:
<TABLE>
<CAPTION>
Name and Principal Business Positions and Offices with The Positions and Offices with
Addresses Winsbury Company Registrant
----------------------------- --------------------------------- ---------------------------
<S> <C> <C>
The BISYS Group, Inc. Sole Shareholder of BISYS Fund None
150 Clove Road Services, Inc. and Sole Limited
Little Falls, NJ 07424 Partner
BISYS Fund Services, Inc. Sole General Partner None
3435 Stelzer Road
Columbus, Ohio 43219
G. Ronald Henderson Executive Officer None
3435 Stelzer Road
Columbus, Ohio 43219
J. David Huber Senior Vice President
3435 Stelzer Road Business Development
Columbus, Ohio 43219 Fund Services Division
Stephen G. Mintos Executive Vice President President
3435 Stelzer Road General Manager
Columbus, Ohio 43219 Fund Services Division
Kenneth B. Quintenz Executive Officer None
3435 Stelzer Road
Columbus, Ohio 43219
</TABLE>
(c) Not applicable.
Item 30. Location of Accounts and Records.
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
<TABLE>
<S> <C>
Registrant 3435 Stelzer Road
Columbus, Ohio 43219-3035
Fifth Third Bank 38 Fountain Square Plaza
("Transfer Agent and Dividend Cincinnati, Ohio 45263
Disbursing Agent")
BISYS 3435 Stelzer Road
("Administrator") Columbus, Ohio 43219-3035
</TABLE>
7
<PAGE> 103
<TABLE>
<S> <C>
Fifth Third Bank 38 Fountain Square Plaza
("Advisor") Cincinnati, Ohio 45263
Morgan Stanley Asset 1221 Avenue of the Americas
Management Inc. New York, New York 10020
("Sub-Advisor to the Fountain
Square International Equity
Fund")
Fifth Third Bank 38 Fountain Square Plaza
("Custodian") Cincinnati, Ohio 45263
</TABLE>
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered, a copy of the Registrant's latest
annual report to shareholders, upon request and without
charge.
8
<PAGE> 104
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, FOUNTAIN SQUARE FUNDS, has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereto duly authorized, in the City of Columbus and State
of Ohio, on the 12th day of January, 1996.
FOUNTAIN SQUARE FUNDS
BY: /s/Stephen G. Mintos
Stephen G. Mintos, President
Attorney in Fact for Edward Burke
Carey, Lee A. Carter, and Albert
E. Harris
January 12, 1996
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the following
person in the capacity and on the date indicated:
<TABLE>
<CAPTION>
NAME TITLE DATE
<S><C> <C> <C>
By: /s/Stephen G. Mintos January 12, 1996
Stephen G. Mintos Attorney In Fact
PRESIDENT For the Persons
Listed Below
</TABLE>
<TABLE>
<CAPTION>
NAME TITLE
<S> <C>
Edward Burke Carey* Trustee
Lee A. Carter* Trustee
Albert E. Harris* Trustee
</TABLE>
*By Power of Attorney
9
<PAGE> 1
EXHIBIT 1(i) UNDER FORM N-1A
December 15, 1993
Ms. Sheila Burke
The Commonwealth of Massachusetts
Office of the Secretary of State
Room 1712 - Trust Division
One Ashburton Place
Boston, Massachusetts 02108
Re: Fountain Square Funds
Dear Ms. Burke:
I, S. Elliott Cohan, Assistant Secretary of Fountain Square Funds, am
writing to inform you that on November 18, 1993, the Board of Trustees voted to
change the Resident Agent of said Trust, from 176 Federal Street, Boston,
Massachusetts 02110 to Donnelly, Conroy & Gelhaar, One Post Office Square,
Boston, Massachusetts 02109-2105. Please return a date stamped copy of the
change.
Very truly yours,
/s/ S. Elliott Cohan
S. Elliott Cohan
Assistant Secretary
<PAGE> 1
EXHIBIT 6(i)
DISTRIBUTION AGREEMENT
AGREEMENT made this 1st day of December, 1995, between Fountain Square
Funds (the "Trust"), having its principal place of business at 38 Fountain
Square Plaza, Cincinnati, Ohio 45263, and BISYS Fund Services Limited
Partnership d/b/a BISYS Fund Services ("Distributor"), having its principal
place of business at 3435 Stelzer Road, Columbus, Ohio 43219.
WHEREAS, the Trust is an open-end management investment company,
organized as a Massachusetts business trust and registered with the Securities
and Exchange Commission (the "Commission") under the Investment Company Act of
1940 (the "1940 Act"); and
WHEREAS, it is intended that Distributor act as the distributor of the
units of beneficial interest ("Shares") of each of the investment portfolios of
the Trust identified in Schedule A hereto as such Schedule may be amended from
time to time (such portfolios being referred to individually as a "Fund" and
collectively as the "Funds").
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Distributor
-----------------------
1.1 Distributor will act as agent for the distribution of the
Shares covered by the registration statement and prospectus of the Trust then
in effect under the Securities Act of 1933, as amended (the "Securities Act").
As used in this Agreement, the term "registration statement" shall mean Parts A
(the prospectus), B (the Statement of Additional Information) and C of each
registration statement that is filed on Form N-1A, or any successor thereto,
with the Commission, together with any amendments thereto. The term
"prospectus" shall mean each form of prospectus and Statement of Additional
Information used by the Funds for delivery to shareholders and prospective
shareholders after the effective dates of the above-referenced registration
statements, together with any amendments and supplements thereto.
1.2 Distributor agrees to use appropriate efforts to solicit
orders for the sale of the Shares and will undertake such advertising and
promotion as it believes reasonable in connection with such solicitation. The
Trust understands that Distributor is now and may in the future be the
distributor of the shares of several investment companies or series (together,
"Companies") including Companies having investment objectives similar to those
of the Trust. The Trust further understands that investors and potential
investors in the Trust may invest in shares of such other Companies. The Trust
agrees that Distributor's duties to such Companies shall not be deemed in
conflict with its duties to the Trust under this paragraph 1.2.
Distributor shall, at its own expense, finance appropriate activities
which it deems reasonable which are primarily intended to result in the sale of
the Shares, including, but not limited to, advertising, compensation of
underwriters, dealers and sales personnel, the printing
<PAGE> 2
EXHIBIT 6(i)
and mailing of prospectuses to other than current Shareholders, and the
printing and mailing of sales literature.
1.3 In its capacity as distributor of the Shares, all activities
of Distributor and its partners, agents, and employees shall comply with all
applicable laws, rules and regulations, including, without limitation, the 1940
Act, each state as required, all rules and regulations promulgated by the
Commission thereunder and all rules and regulations adopted by any securities
association registered under the Securities Exchange Act of 1934.
1.4 Distributor will provide one or more persons, during normal
business hours, to respond to telephone questions with respect to the Trust.
1.5 Distributor will transmit any orders when received by it for
purchase or redemption of the Shares to the transfer agent and custodian for
the Funds.
1.6 Whenever in their judgment such action is warranted by unusual
market, economic or political conditions, or by abnormal circumstances of any
kind, the Trust's officers may decline to accept any orders for, or make any
sales of, the Shares until such time as those officers deem it advisable to
accept such orders and to make such sales.
1.7 Distributor will act only on its own behalf as principal if it
chooses to enter into selling agreements with selected dealers or others.
1.8 The Trust agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the qualification
of the Shares for sale in such states as Distributor may designate.
1.9 The Trust shall furnish from time to time, for use in
connection with the sale of the Shares, such information with respect to the
Funds and the Shares as Distributor may reasonably request; and the Trust
warrants that the statements contained in any such information shall fairly
show or represent what they purport to show or represent. The Trust shall also
furnish Distributor upon request with: (a) unaudited semi-annual financial
statements prepared by the Trust, (b) a monthly itemized list of the securities
in the Funds, (c) monthly balance sheets as soon as practicable after the end
of each month, and (d) from time to time such additional information regarding
the financial condition of the Funds as Distributor may reasonably request.
1.10 The Trust represents to Distributor that, with respect to the
Shares, all current and existing registration statements and prospectuses filed
by the Trust with the Commission under the Securities Act have been carefully
prepared in conformity with requirements of said Act and rules and regulations
of the Commission thereunder. The registration statement and prospectus
2
<PAGE> 3
EXHIBIT 6(i)
contain all statements required to be stated therein in conformity with said
Act and the rules and regulations of said Commission and all statements of fact
contained in any such registration statement and prospectus are true and
correct. Furthermore, neither any registration statement nor any prospectus
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading to a purchaser of the Shares. The Trust may, but shall not be
obligated to, propose from time to time such amendment or amendments to any
registration statement and such supplement or supplements to any prospectus as,
in the light of future developments, may, in the opinion of the Trust's
counsel, be necessary or advisable. If the Trust shall not provide such
amendment or amendments and/or supplement or supplements within fifteen days
after receipt by the Trust following a written request from Distributor to do
so, Distributor may, at its option, terminate this Agreement. The Trust shall
not file any amendment to any registration statement or supplement to any
prospectus without giving Distributor reasonable notice thereof in advance;
provided, however, that nothing contained in this Agreement shall in any way
limit the Trust's right to file at any time such amendments to any registration
statement and/or supplements to any prospectus, of whatever character, as the
Trust may deem advisable, such right being in all respects absolute and
unconditional.
1.11 The Trust authorizes Distributor and dealers to use any
prospectus in the form furnished from time to time in connection with the sale
of the Shares. The Trust agrees to indemnify, defend and hold Distributor, its
several partners and employees, and any person who controls Distributor within
the meaning of Section 15 of the Securities Act free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investing or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which Distributor, its partners
and employees, or any such controlling person, may incur under the Securities
Act or under common law or otherwise, arising out of or based upon any untrue
statement, or alleged untrue statement, of a material fact contained in any
registration statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated
in either any registration statement or any prospectus or necessary to make the
statements in either thereof not misleading. Provided, however, that the
Trust's agreement to indemnify Distributor, its partners or employees, and any
such controlling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any statements or representations as are
contained in any prospectus and in such financial and other statements as are
furnished in writing to the Trust by Distributor and used in the answers to the
registration statement or in the corresponding statements made in the
prospectus, or arising out of or based upon any omission or alleged omission to
state a material fact in connection with the giving of such information
required to be stated in such answers or necessary to make the answers not
misleading; and further provided that the Trust's agreement to indemnify
Distributor and the Trust's representations and warranties hereinbefore set
forth in paragraph 1.10 shall not be deemed to cover any liability to the Trust
or its Shareholders to which Distributor would otherwise be subject by reason
of willful misfeasance, bad faith or negligence in the performance of its
duties, or by reason of
3
<PAGE> 4
EXHIBIT 6(i)
Distributor's reckless disregard of its obligations and duties under this
Agreement. The Trust's agreement to indemnify Distributor, its partners and
employees and any such controlling person, as aforesaid, is expressly
conditioned upon the Trust being notified of any action brought against
Distributor, its partners or employees, or any such controlling person, such
notification to be given by letter or by telegram addressed to the Trust at its
principal office in Columbus, Ohio and sent to the Trust by the person against
whom such action is brought, within 10 days after the summons or other first
legal process shall have been served. The failure to so notify the Trust of any
such action shall not relieve the Trust from any liability which the Trust may
have to the person against whom such action is brought by reason of any such
untrue, or allegedly untrue, statement or omission, or alleged omission.
otherwise than on account of the Trust's indemnity agreement contained in this
paragraph 1.11. The Trust will be entitled to assume the defense of any suit
brought to enforce any such claim, demand or liability, but, in such case, such
defense shall be conducted by counsel of good standing chosen by the Trust and
approved by Distributor, which approval shall not be unreasonably withheld. In
the event the Trust elects to assume the defense of any such suit and retain
counsel of good standing approved by Distributor, the defendant or defendants
in such suit shall bear the fees and expenses of any additional counsel
retained by any of them; but in case the Trust does not elect to assume the
defense of any such suit, or in case Distributor reasonably does not approve of
counsel chosen by the Trust, the Trust will reimburse Distributor, its partners
and employees, or the controlling person or persons named as defendant or
defendants in such suit, for the fees and expenses of any counsel retained by
Distributor or them. The Trust's indemnification agreement contained in this
paragraph 1.11 and the Trust's representations and warranties in this Agreement
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of Distributor, its partners and employees,
of any controlling person, and shall survive the delivery of any Shares.
This Agreement of indemnity will inure exclusively to Distributor's
benefit, to the benefit of its several partners and employees, and their
respective estates, and to the benefit of the controlling persons And their
successors. The Trust agrees promptly to notify Distributor of the commencement
of any litigation or proceedings against the Trust or any of its officers or
Trustees in connection with the issue and sale of any Shares.
1.12 Distributor agrees to indemnify, defend and hold the Trust, its
several officers and Trustees and any person who controls the Trust within the
meaning, of Section 15 of the Securities Act free and harmless from and against
any and all claims, demands, liabilities and expenses (including the costs of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the Trust, its officers or
Trustees or any such controlling person may incur under the Securities Act or
under common law or otherwise, but only to the extent that such liability or
expense incurred by the Trust, its officers or Trustees or such controlling
person resulting from such claims or demands, shall arise out of or be based
upon any untrue, or alleged untrue, statement of a material fact contained in
information furnished in writing by Distributor to the Trust and used in the
answers to any of
4
<PAGE> 5
EXHIBIT 6(i)
the items of the registration statement or in the corresponding statements made
in the prospectus, or shall out of or be based upon any omission, or alleged
omission, to state a material fact in connection with such information
furnished in writing, by Distributor to the Trust required lo be stated in such
answers or necessary to make such information not misleading. Distributor's
agreement to indemnify the Trust, its officers and Trustees, and any such
controlling person, as aforesaid, is expressly conditioned upon Distributor
being notified of any action brought against the Trust, its officers or
Trustees, or any such controlling person, such notification to be given by
letter or telegram addressed to Distributor at its principal office in
Columbus, Ohio, and sent to Distributor by the person against whom such action
is brought, within 10 days after the summons or other first legal process shall
have been served. Distributor shall have the right of first control of the
defense of such action, with counsel of its own choosing, satisfactory to the
Trust, if such action is based solely upon such alleged misstatement or
omission on Distributor's part, and in any other event the Trust, its officers
or Trustees or such controlling person shall each have the right to participate
in the defense or preparation of the defense of any such action. The failure to
so notify Distributor of any such action shall not relieve Distributor from any
liability which Distributor may have to the Trust, its officers or Trustees, or
to such controlling person by reason of any such untrue or alleged untrue
statement, or omission or alleged omission, otherwise than on account of
Distributor's indemnity agreement contained in this paragraph 1.12.
1.13 No Shares shall be offered by either Distributor or the Trust
under any of the provisions of this Agreement and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act or if and so long as a current prospectus as required by Section
10(b)(2) of said act is not on file with the commission; provided, however,
that nothing contained in this paragraph 1.13 shall in any way restrict or have
an application to or bearing upon the Trust's obligation to repurchase Shares
from any shareholder in accordance with the provisions of the Trust's
prospectus, Agreement and Declaration of Trust, or Bylaws.
1.14 The Trust agrees to advise Distributor as soon as reasonably
practical by a notice in writing delivered to Distributor or its counsel:
(a) of any request by the Commission for amendments to the
registration statement or prospectus then in effect or for
additional information;
(b) in the event of the issuance by the Commission of any stop
order suspending the effectiveness of the registration
statement or prospectus then in effect or the initiation by
service of process on the Trust of any proceeding for that
purpose;
(c) of the happening of any event that makes untrue any statement
of a material fact made in the registration statement or
prospectus then in effect or which requires
5
<PAGE> 6
EXHIBIT 6(i)
the making of a change in such registration statement or
prospectus in order to make the statements therein not
misleading; and
(d) of all action of the Commission with respect to any amendment
to any registration statement or prospectus which may from
time to time be filed with the Commission.
For purposes of this section, informal requests by or acts of the
Staff of the Commission shall not be deemed actions of or requests by the
Commission.
1.15 Distributor agrees on behalf of itself and its partners and
employees to treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust and its prior, present
or potential Shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except, after prior notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be withheld where
Distributor may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
1.16 This Agreement shall be governed by the laws of the State of
Ohio.
2. Representations
---------------
2.1 The Distributor hereby represents that it is a member in good
standing of the National Association of Securities Dealers, Inc. and that it
is a broker-dealer properly registered and qualified under all applicable
federal, state and local laws to engage in the business and transactions
described in this Agreement. The Distributor further represents that, neither
it nor any of its partners, officers or employees is ineligible to serve as a
principal underwriter, trustee, officer or employee of a registered investment
company by virtue of his or her status as a person described in Section 9 of
the 1940 Act.
3. Fee
---
3.1 The Distributor shall receive from the Funds identified on
Schedule B hereto (the "Distribution Plan Funds") a distribution fee at the
rate and upon the terms and conditions set forth in the Trust's Rule 12b-1 Plan
as amended from time to time. The distribution fee shall be accrued daily and
shall be paid on the first business day of each month, or at such time(s) as
the Distributor shall reasonably request.
4. Sale and Payment.
----------------
Pursuant to the Agreement and Declaration of Trust dated September 15,
1988, each
6
<PAGE> 7
EXHIBIT 6(i)
Fund may be divided into separate classes of Shares in which case the Shares of
one or more classes may be subject to a sales load and may be subject to the
imposition of a distribution fee pursuant to the Distribution and Shareholder
Services Plan referred to above. To the extent that shares of a Fund are sold
at an offering price which includes a sales load or that Shares of one or more
classes of a Fund are sold at such an offering price, such Shares shall
hereinafter be referred to collectively as "Loan Shares" and individually as a
"Load Share." A Fund that contains Load Shares shall hereinafter be referred to
collectively as "Load Funds" and individually as a "Load Fund." Under this
Agreement, the following provisions shall apply with respect to the sale of,
and payment for, Load Shares of the Load Funds identified in Schedule C
attached hereto.
4.1 Distributor shall have the right to purchase Load Shares at
their net asset value and to sell such Load Shares to the public against orders
therefor at the applicable public offering price, as defined in Section 5
hereof Distributor shall also have the right to sell Load Shares to dealers
against orders therefor at the public offing price less a concession determined
by Distributor, which concession shall not exceed the amount of the sales
charge or underwriting discount, if any, referred to in Section 5 below.
4.2 Prior to the time of delivery of any Load Shares by a Load
Fund to, or on the order of, the Distributor, the Distributor shall pay or
cause to be paid to the Load Fund or to its order an amount in Boston or New
York clearing house funds, (or in federal finds in those instances in which the
Distributor has received federal funds) equal to the applicable net asset value
of such Shares. The Distributor may retain so much of any sales charge or
underwriting discount as is not allowed by the Distributor as a concession to
dealers.
5. Public Offering Price.
----------------------
The public offering price of a Load Share, plus any applicable sales
charge, all as set forth in the current prospectus of the Load Fund. The net
asset value of Shares shall be determined in accordance with the provisions of
the Agreement and Declaration of Trust and Bylaws of Load Fund.
6. Issuance of Shares.
------------------
The Trust reserves the right to issue, transfer or sell Load Shares at
net asset value (a) in connection with the merger or consolidation of the Trust
or the Load Fund(s) with any other investment company or the acquisition by the
Trust or the Load Fund(s) of all or substantially all of the assets or of the
outstanding Shares of any other investment company; (b) in connection with a
pro rata distribution directly to the holders of Shares in the nature of a
stock dividend or split; (c) upon the exercise of subscription rights granted
to the holders of Shares on a pro rata basis; (d) in connection with the
issuance of Load Shares pursuant to any exchange and reinvestment privileges
described in any then current prospectus of the
7
<PAGE> 8
EXHIBIT 6(i)
Load Fund; and (3) otherwise in accordance with any then current prospectus of
the Load Fund.
7. Term, Duration and Termination.
------------------------------
This Agreement shall become effective with respect to each Fund listed
on Schedule A hereof as of the date first written above (or, if a particular
Fund is not in existence on such date, on the date an amendment to Schedule A
to this Agreement relating to that Fund is executed) and, unless sooner
terminated as provided herein, shall continue until December 1, 1997.
Thereafter, if not terminated, this Agreement shall continue with respect to a
particular Fund automatically for successive one-year terms, provided that such
continuance is specifically approved at least annually (a) by the vote of a
majority of the members of the Trust's Board of Trustees who are not parties to
this Agreement or interested person for the purpose of voting on such approval
and (b) by the vote of a majority of the outstanding voting securities of such
Fund. This Agreement is terminable without penalty, on not more than
sixty-days prior written notice, by the Trust's Board of Trustees, by vote of a
majority of the outstanding voting securities of the Trust or by the
Distributor. This Agreement will also terminate automatically in the event of
its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities", "interested persons" and "assignment" shall
have the same meanings as ascribed to such terms in the 1940 Act.)
8. Limitation of Liability of the Trustees and Shareholders.
---------------------------------------------------------
The names "Fountain Square Funds" and "Trustees of "Fountain Square
Funds" refer respectively to the Trust created and the Trustees, as trustees
but not individually or personally, acting from time to time under the
Agreement and Declaration of Trust dated September 15, 1988 to which reference
is hereby made and a copy of which is on file at the office of the Secretary of
State of the Commonwealth of Massachusetts and elsewhere as required by law,
and to any and all amendments thereto so filed or hereafter filed. The
obligations of "Fountain Square Funds" entered into in the name or on behalf
thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, Shareholders or representatives of the Trust personally, but bind
only the assets of the Trust, and all persons dealing with any series of Shares
of the Trust must look solely to the assets of the Trust belonging to such
series for the enforcement of any claims against the Trust.
IN WITNESS WHEREFORE, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first
written above.
FOUNTAIN SQUARE FUNDS BISYS FUND SERVICES
LIMITED PARTNERSHIP
8
<PAGE> 9
EXHIBIT 6(i)
By: /s/ George R. Landreth By: /s/ Stephen G. Mintos
------------------------- ----------------------------
Print Name: George R. Landreth Print Name: Stephen G. Mintos
------------------------- ----------------------------
Title: Vice President Name: Executive Vice President
------------------------- ----------------------------
Date: December 1, 1995 Date: December 1, 1995
------------------------- ----------------------------
9
<PAGE> 10
EXHIBIT 6(i)
SCHEDULE A
TO THE
DISTRIBUTION AGREEMENT
BETWEEN FOUNTAIN SQUARE FUNDS AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
Name of Fund
Fountain Square Government Cash Reserves Fund
Fountain Square Commercial Paper Fund
Fountain Square U.S. Treasury Obligations Fund
Fountain Square U.S. Government Securities Fund
Fountain Square Quality Bond Fund
Fountain Square Ohio Tax-Free Bond Fund
Fountain Square Quality Growth Fund
Fountain Square Mid Cap Fund
Fountain Square Balanced Fund
Fountain Square International Equity Fund
FOUNTAIN SQUARE FUNDS
BY: /s/ George R. Landreth
----------------------------------
Print Name: George R. Landreth
----------------------------------
Title: Vice President
----------------------------------
BISYS FUND SERVICES
LIMITED PARTNERSHIP
By: BISYS Fund Services, inc.
General Partner
BY: /s/ Stephen G. Mintos
----------------------------------
Print Name: Stephen G. Mintos
----------------------------------
Title: Executive Vice President
----------------------------------
10
<PAGE> 11
EXHIBIT 6(i)
SCHEDULE B TO THE
DISTRIBUTION AGREEMENT
BETWEEN FOUNTAIN SQUARE FUNDS AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
Name of Distribution Plan Fund
Fountain Square Government Cash Reserves Fund
Fountain Square Commercial Paper Fund
Fountain Square U.S. Treasury Obligations Fund
Fountain Square U.S. Government Securities Fund
Fountain Square Quality Bond Fund
Fountain Square Ohio Tax-Free Bond Fund
Fountain Square Quality Growth Fund
Fountain Square Mid Cap Fund
Fountain Square Balanced Fund
Fountain Square International Equity Fund
FOUNTAIN SQUARE FUNDS
BY: /s/ George R. Landreth
----------------------------------
Print Name: George R. Landreth
----------------------------------
Title: Vice President
----------------------------------
BISYS FUND SERVICES
LIMITED PARTNERSHIP
By: BISYS Fund Services, inc.
General Partner
BY: /s/ Stephen G. Mintos
----------------------------------
Print Name: Stephen G. Mintos
----------------------------------
Title: Executive Vice President
----------------------------------
I:\b358\rcr\fsf\distribution.agr
11
<PAGE> 12
EXHIBIT 6(i)
SCHEDULE C
TO THE
DISTRIBUTION AGREEMENT
BETWEEN FOUNTAIN SQUARE FUNDS AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
Name of Load Fund
- -----------------
Fountain Square Government Cash Reserves Fund
Fountain Square Quality Bond Fund
Fountain Square Ohio Tax-Free Bond Fund
Fountain Square Quality Growth Fund
Fountain Square Mid Cap Fund
Fountain Square Balanced Fund
Fountain Square International Equity Fund
FOUNTAIN SQUARE FUNDS
BY: /s/ George R. Landreth
----------------------------------
Print Name: George R. Landreth
----------------------------------
Title: Vice President
----------------------------------
BISYS FUND SERVICES
LIMITED PARTNERSHIP
By: BISYS Fund Services, inc.
General Partner
BY: /s/ Stephen G. Mintos
----------------------------------
Print Name: Stephen G. Mintos
----------------------------------
Title: Executive Vice President
----------------------------------
I:\b358\rcr\fsf\distribution.agr
12
<PAGE> 1
EXHIBIT 11(I) UNDER FORM N-1A
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Financial
Highlights" and "Independent Auditors" and to the use of our reports dated
September 15, 1995, in Post-Effective Amendment Number 17 to the Registration
Statement (Form N-1A No. 33-24848) and the related Prospectus of certain
Fountain Square Funds (comprising respectively, Fountain Square Ohio Tax Free
bond Fund, 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 International Equity
Fund).
/s/ Ernst & Young LLP
-------------------------------
Pittsburgh, Pennsylvania
January 12, 1996
<PAGE> 1
EXHIBIT 15(I) UNDER FORM N-1A
FOUNTAIN SQUARE FUNDS
RULE 12B-1 PLAN
This Rule 12b-1 Plan ("Plan") is adopted as of December 1, 1995, by
the Board of Trustees of FOUNTAIN SQUARE FUNDS (the "Trust"), a Massachusetts
business trust, with respect to certain classes of shares ("Classes") of the
portfolios of the Trust (the "Funds") set forth in exhibits hereto.
1. This Plan is adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "Act"), so as to allow the Trust to make
payments as contemplated herein, in conjunction with the distribution of
Classes of the Funds' shares (the "Shares").
2. This Plan is designed to finance activities of BISYS Fund
Services Limited Partnership ("BISYS") principally intended to result in the
sale of Shares to include: (a) providing incentives to broker/dealers
("Brokers") to sell Shares and to provide administrative support services to
the Funds and their shareholders; (b) compensating other participating
financial institutions and other persons ("Participating Organizations") for
providing distribution assistance and support services to the Funds and their
shareholders; (c) paying for the costs incurred in conjunction with advertising
and marketing of Shares to include expenses of preparing, printing and
distributing prospectuses and sales literature to prospective shareholders,
Brokers or Participating Organizations; and (d) other costs incurred in the
implementation and operation of the Plan. In compensation for services
provided pursuant to this Plan, BISYS will be paid a fee in respect of the
applicable Classes set forth in the applicable exhibit.
3. Any payment to BISYS in accordance with this Plan will be made
pursuant to the "Distribution Agreement" entered into by the Trust and BISYS.
Any payments made by BISYS to Brokers and Participating Organizations with
funds received as compensation under this Plan will be made pursuant to the
"Rule 12b-1 Agreement" entered into by BISYS and the Broker or Participating
Organizations.
4. BISYS has the right (i) to select, in its sole discretion, the
Brokers and Participating Organizations to participate in the Plan and (ii) to
terminate without cause and in its sole discretion any Rule 12b-1 Agreement.
5. Quarterly in each year that this Plan remains in effect, BISYS
shall prepare and furnish to the Board of Trustees of the Trust, and the Board
of Trustees shall review, a written report of the amounts expended under the
Plan and the purpose for which such expenditures were made.
6. This Plan shall become effective with respect to each Class
(i) after approval by majority votes of: (a) the Trust's Board of Trustees;
(b) the Disinterested Trustees of the Trust, cast in person at a meeting called
for the purpose of voting on the Plan; and (c) the outstanding
<PAGE> 2
EXHIBIT 15(I) UNDER FORM N-1A
voting securities of the particular Class, as defined in Section 2(a)(42) of
the Act and (ii) upon execution of an exhibit adopting this Plan with respect
to such Class.
7. This Plan shall remain in effect with respect to each Class
presently set forth on an exhibit and any subsequent Classes added pursuant to
an exhibit during the initial year of this Plan for the period of one year from
the date set forth above and may be continued thereafter if this Plan is
approved with respect to each Class at least annually by a majority of the
Trust's Board of Trustees and a majority of the Disinterested Trustees, cast in
person at a meeting called for the purpose of voting on such Plan. If this
Plan is adopted with respect to a Class after the first annual approval by the
Trustees as described above, this Plan will be effective as to that Class upon
execution of the applicable exhibit pursuant to the provisions of paragraph
6(ii) above and will continue in effect until the next annual approval of this
Plan by the Trustees and thereafter for successive periods of one year subject
to approval as described above.
8. All material amendments to this Plan must be approved by a
vote of the Board of Trustees of the Trust and of the Disinterested Trustees,
cast in person at a meeting called for the purpose of voting on it.
9. This Plan may not be amended in order to increase materially
the costs which the Classes may bear for distribution pursuant to the Plan
without being approved by a majority vote of the outstanding voting securities
of the Classes as defined in Section 2(a)(42) of the Act.
10. This Plan may be terminated with respect to a particular Class
at any time by: (a) a majority vote of the Disinterested Trustees; or (b) a
vote of a majority of the outstanding voting securities of the particular Class
as defined in Section 2(a)(42) of the Act; or (c) by BISYS on 60 days notice to
the particular Trust.
11. While this Plan shall be in effect, the selection and
nomination of Disinterested Trustees of the Trust shall be committed to the
discretion of the Disinterested Trustees then in office.
12. All agreements with any person relating to the implementation
of this Plan shall be in writing and any agreement related to this Plan shall
be subject to termination, without penalty, pursuant to the provisions of
Paragraph 10 herein.
13. This Plan shall be construed in accordance with and governed
by the laws of the State of Ohio.
Adopted: _____________________________
<PAGE> 3
EXHIBIT 15(I) UNDER FORM N-1A
EXHIBIT A
to
FOUNTAIN SQUARE FUNDS
RULE 12B-1 PLAN
INVESTMENT A SHARES
The Rule 12b-1 Plan is adopted by Fountain Square Funds with respect
to the Investment A Shares of the Series of the Trust set forth below (the
"Applicable Funds"):
Commercial Paper Fund
Government Cash Reserves Fund
U.S. Government Securities Fund
Quality Bond Fund
Quality Growth Fund
Mid-Cap Fund
Balanced Fund
Ohio Tax-Free Bond Fund
International Equity Fund
In compensation for the services provided pursuant to this Plan, BISYS
Fund Services Limited Partnership will be paid a monthly fee computed at the
annual rate of up to 0.35% of the average aggregate net asset value of the
Investment A Shares of each Applicable Fund held during the month.
FOUNTAIN SQUARE FUNDS
By: /s/ Stephen G. Mintos
----------------------------
Stephen G. Mintos, President
Date: December 1, 1995
----------------------------
<PAGE> 4
EXHIBIT 15(I) UNDER FORM N-1A
EXHIBIT B
to
FOUNTAIN SQUARE FUNDS
RULE 12B-1 PLAN
INVESTMENT C SHARES
The Rule 12b-1 Plan is adopted by Fountain Square Funds with respect
to the Investment C Shares of the Series of the Trust set forth below (the
"Applicable Funds"):
U.S. Government Securities Fund
Quality Bond Fund
Quality Growth Fund
Mid-Cap Fund
Balanced Fund
Ohio Tax-Free Bond Fund
International Equity Fund
In compensation for the services provided pursuant to this Plan, BISYS
Fund Services Limited Partnership will be paid a monthly fee computed at the
annual rate of up to 0.75% of the average aggregate net asset value of the
Investment C Shares of each Applicable Fund held during the month.
FOUNTAIN SQUARE FUNDS
By: /s/ Stephen G. Mintos
--------------------------------
Stephen G. Mintos, President
Date: December 1, 1995
-------------------------------
<PAGE> 1
EXHIBIT 15(II) UNDER FORM N-1A
RULE 12B-1 AGREEMENT
This Agreement is made between the organization executing this
Agreement ("Participating Organization") and BISYS ("BISYS") for the shares of
beneficial interest (the "Shares") of the registered management investment
companies listed on Exhibit A to this Agreement, which Shares may be offered in
one or more series (the "Funds") and one or more classes thereof (the
"Classes") and which have adopted a Rule 12b-1 Plan ("Plan") in relation to
such Funds and Classes, this form of agreement having been approved pursuant to
Rule 12b-1 under the Investment Company Act of 1940. In consideration of the
mutual covenants hereinafter contained, it is hereby agreed by and between the
parties hereto as follows:
1. BISYS hereby appoints Participating Organization to render or
cause to be rendered distribution and support services to the Funds with
respect to the Classes thereof and their shareholders.
2. The services to be provided under Paragraph 1 may include, but
are not limited to, the following:
(a) communicating account openings through computer
terminals located on the Participating Organization's
premises ("computer terminals"), through a toll-free
telephone number or otherwise;
(b) communicating account closings via the computer
terminals, through a toll-free telephone number
or otherwise;
(c) entering purchase transactions through the computer
terminals, through a toll-free telephone number or
otherwise;
(d) entering redemption transactions through the computer
terminals, through a toll-free telephone number or
otherwise;
(e) electronically transferring and receiving funds for
Fund Share purchase and redemptions, and confirming
and reconciling all such transactions;
(f) reviewing the activity in Fund accounts;
(g) providing training and supervision of its personnel;
(h) maintaining and distributing current copies of
prospectuses and shareholder reports;
(i) advertising the availability of its services and
products;
<PAGE> 2
EXHIBIT 15(II) UNDER FORM N-1A
(j) providing assistance and review in designing
materials to send to customers and potential
customers and developing methods of making such
materials accessible to customers and potential
customers; and
(k) responding to customers' and potential customers'
questions about the Funds.
The services listed above are illustrative. The Participating Organization is
not required to perform each service and may at any time perform either more or
fewer services than described above.
3. During the term of this Agreement, BISYS will pay the
Participating Organization fees for each Fund or Class thereof set forth in a
written schedule delivered to the Participating Organization pursuant to this
Agreement. BISYS's fee schedule for Participating Organization may be changed
by BISYS sending a new fee schedule to the Participating Organization pursuant
to Paragraph 12 of this Agreement. For the payment period in which this
Agreement becomes effective or terminates, there shall be an appropriate
proration of the fee on the basis of the number of days that the Rule 12b-1
Agreement is in effect during the period.
4. The Participating Organization will not perform or provide any
duties which would cause it to be a fiduciary under Section 4975 of the
Internal Revenue Code, as amended. For purposes of that Section, the
Participating Organization understands that any person who exercises any
discretionary authority or discretionary control with respect to any individual
retirement account or its assets, or who renders investment advice for a fee,
or has any authority or responsibility to do so, or has any discretionary
authority or discretionary responsibility in the administration of such an
account, is a fiduciary.
5. The Participating Organization understands that the Department
of Labor views ERISA as prohibiting fiduciaries of discretionary ERISA assets
from receiving compensation from funds in which the fiduciary's discretionary
ERISA assets are invested. To date, the Department of Labor has not issued any
exemptive order or advisory opinion that would exempt fiduciaries from this
interpretation. Receipt of such compensation could violate ERISA provisions
against fiduciary self-dealing and conflict of interest and could subject the
fiduciary to substantial penalties.
6. The Participating Organization agrees not to solicit or cause
to be solicited directly, or indirectly, at any time in the future, any proxies
from the shareholders of any or all of the Funds in opposition to proxies
solicited by management of the Fund or Funds, unless a court of competent
jurisdiction shall have determined that the conduct of a majority of the
Trustees of the Fund or Funds constitutes willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties. This Paragraph 6 will
survive the term of this Agreement.
2
<PAGE> 3
EXHIBIT 15(II) UNDER FORM N-1A
7. With respect to each Fund or class thereof, this Agreement
shall continue in effect for one year from the date of its execution, and
thereafter for successive periods of one year if the form of this Agreement is
approved at least annually by the Trustees of the mutual fund, including a
majority of the Trustees of the Fund who are not interested persons of the Fund
and have no direct or indirect financial interest in the operation of the
Fund's Plan or in any related documents to the Plan ("Disinterested Trustees")
cast in person at a meeting for that purpose.
8. Notwithstanding Paragraph 7, this Agreement may be terminated
as follows:
(a) at any time, without the payment of any penalty, by
the vote of a majority of the Disinterested Trustees
of the Fund or by a vote of a majority of the
outstanding voting securities of the Fund or any
Class thereof as defined in the Investment Company
Act of 1940 on not more than sixty (60) days' written
notice to the parties to this Agreement;
(b) automatically in the event of the Agreement's
assignment as defined in the Investment Company Act
of 1940 or upon the termination of the "Distributor's
Contract" between the Fund or Funds and BISYS; and
(c) by either party to the Agreement without cause by
giving the other party at least sixty (60) days'
written notice of its intention to terminate.
9. The termination of this Agreement with respect to any one Fund
or Class thereof will not cause the Agreement's termination with respect to any
other Fund or Class thereof.
10. The Participating Organization agrees to obtain any taxpayer
identification number certification form its customers required under Section
3406 of the Internal Revenue Code, and any applicable Treasury regulations, and
to provide BISYS or its designee with timely written notice of any failure to
obtain such taxpayer identification number certification in order to enable the
implementation of any required backup withholding.
11. This Agreement supersedes any prior service agreements between
the parties for the Funds.
12. This Agreement may be amended by BISYS from time to time by
the following procedure. BISYS will mail a copy of the amendment to the
Participating Organization's address, as shown below. If the Participating
Organization does not object to the amendment with thirty (30) days after its
receipt, the amendment will become part of the Agreement. The Participating
Organization's objection must be in writing and be received by BISYS within
such thirty days.
3
<PAGE> 4
EXHIBIT 15(II) UNDER FORM N-1A
13. This Agreement shall be construed in accordance with the Laws
of the State of Ohio.
Dated: [PARTICIPATING ORGANIZATION]
------------------------
[Address]
[City, State, Zip Code]
By:
---------------------------------
Authorized Signature
------------------------------------
[Print Name of Authorized Signature]
Title:
------------------------------
BISYS FUND SERVICES
Limited Partnership
By:
----------------------------
Title:
----------------------------
4
<PAGE> 5
EXHIBIT 15(II) UNDER FORM N-1A
EXHIBIT A
TO
RULE 12b-1 AGREEMENT
The following Funds and their respective Classes of Shares shall be
subject to the Rule 12b-1 Agreement by and between the Participating
Organization and BISYS:
Fountain Square Commercial Paper Fund
Investment A Shares
Fountain Square Government Cash Reserves Fund
Investment A Shares
Fountain Square U.S. Government Securities Fund
Investment A Shares
Investment C Shares
Fountain Square Quality Bond Fund
Investment A Shares
Investment C Shares
Fountain Square Quality Growth Fund
Investment A Shares
Investment C Shares
Fountain Square Mid-Cap Fund
Investment A Shares
Investment C Shares
Fountain Square Balanced Fund
Investment A Shares
Investment C Shares
Fountain Square Ohio Tax-Free Bond Fund
Investment A Shares
Investment C Shares
Fountain Square International Equity Fund
Investment A Shares
Investment C Shares
5
<PAGE> 1
EXHIBIT 18 UNDER FORM N-1A
FOUNTAIN SQUARE FUNDS
MULTIPLE CLASS PLAN
This Multiple Class Plan ("Plan") is adopted by FOUNTAIN SQUARE FUNDS
(the "Trust"), a Massachusetts business trust, with respect to the classes of
shares (the "Classes") of the portfolios of the Trust (the "Funds") set forth
in exhibits hereto.
Purpose
-------
1. This Plan is adopted pursuant to Rule 18f-3 under the Investment
Company Act of 1940, as amended (the "Rule"), in connection with the
issuance by the Trust of more than one class of shares of any or all
of the Funds ("Covered Classes") in reliance on the Rule.
2. Separate Arrangements/Class Differences
---------------------------------------
The Funds set forth on Exhibit A offer two Classes of shares which are
titled Investment A Shares and Trust Shares. The Funds set forth on
Exhibit B offer two Classes of shares which are titled Investment A
Shares and Investment C Shares. The only expenses allocated to the
shares as a Class are, for Investment A Shares, those expenses
incurred under the Trust's distribution plan adopted pursuant to Rule
12b-1 (the "Rule 12b-1 Plan"), and for Investment C Shares, those
expenses incurred under the Rule 12b-1 Plan and those incurred under
an administrative service arrangement (the "Administrative Services
Agreement").
Investment A Shares and Investment C Shares may be purchased through
Fifth Third Securities, Inc., as well as from the Distributor.
Trust Shares may be purchased through the Trust and Investment
Division of The Fifth Third Bank.
The minimum initial investments in the Covered Classes are $1,000.00
for Trust Shares and $1,000.00 for Investment A Shares and Investment
C Shares. Subsequent investments may be made in the amount of $50.00
for all Covered Classes.
Shareholders are entitled to one vote for each share held on the
record date for any action requiring a vote by the shareholders and a
proportionate fractional vote for each fractional share held.
Shareholders of the Trust will vote in the aggregate and not by Fund
or Class except (i) as otherwise expressly required by law or when
<PAGE> 2
Exhibit 18 Under Form N-1A
the Trustees determine that the matter to be voted upon affects only
the interests of the shareholders of a particular Fund or Class, and
(ii) only holders of Investment A Shares and/or Investment C Shares,
as the case may be, will be entitled to vote on matters submitted to a
shareholder vote with respect to the Rule 12b-1 Plan applicable to
such Class.
3. Expense Allocations
-------------------
The expenses incurred pursuant to the Rule 12b-1 Plan will be borne
solely by the Investment A Shares and/or the Investment C Shares, as
may be the case, of the applicable Fund. The expenses incurred
pursuant to the Administrative Services Agreement will be borne solely
by the Investment C Shares of the applicable Fund.
4. Exchange Features
-----------------
A shareholder may exchange shares of one Fund for the appropriate
Class of shares of any other Fund in the Trust. Shares of Funds with a
sales charge may be exchanged at net asset value for shares of other
Funds with an equal sales charge or no sales charge. Shares of Funds
with a sales charge may be exchanged for shares of Funds with a higher
sales charge at net asset value, plus the additional sales charge.
Shares of Funds with no sales charge, whether acquired by direct
purchase, reinvestment of dividends on such shares, or otherwise, may
be exchanged for shares of Funds with a sales charge at net asset
value, plus the applicable sales charge. When an exchange is made from
a Fund with a sales charge to a Fund with no sales charge, the shares
exchanged and additional shares which have been purchased by
reinvesting dividends or capital gains on such shares retain the
character of the exchanged shares for purposes of exercising further
exchange privileges.
5. Effectiveness
-------------
This Plan shall become effective with respect to each Class, (i) to
the extent required by the Rule, after approval by a majority vote of:
(a) the Trust's Board of Trustees; (b) the members of the Board of
Trustees of the Trust who are not interested persons of the Trust and
have no direct or indirect financial interest in the operation of the
Trust's Plan; and/or (ii) upon execution of an exhibit adopting this
Plan with respect to such Class.
<PAGE> 3
Exhibit 18 Under Form N-1A
6. Amendment
---------
This Plan may be amended at any time, with respect to any Class, by a
majority vote of: (i) the Trust's Board of Trustees; and (ii) the
members of the Board of Trustees who are not interested persons of the
Trust and have no direct or indirect financial interest in the
operation of this Plan.
<PAGE> 4
Exhibit 18 Under Form N-1A
FOUNTAIN SQUARE FUNDS
EXHIBIT A
to the
Multiple Class Plan
TRUST SHARES
INVESTMENT A SHARES
Each of the portfolios of the Fountain Square Funds (the "Trust") set
forth below shall be covered by the Multiple Class Plan adopted by the Trust
and to which this Exhibit is attached with respect to the Trust Shares and the
Investment A Shares of such portfolio:
Commercial Paper Fund
Government Cash Reserves Fund
Witness the due execution hereof this 1st day of December, 1995.
FOUNTAIN SQUARE FUNDS
By:/s/ Stephen G. Mintos
-------------------------
Stephen G. Mintos
President
<PAGE> 5
Exhibit 18 Under Form N-1A
FOUNTAIN SQUARE FUNDS
EXHIBIT B
to the
Multiple Class Plan
INVESTMENT A SHARES
INVESTMENT C SHARES
Each of the portfolios of the Fountain Square Funds (the "Trust") set
forth below shall be covered by the Multiple Class Plan adopted by the Trust
and to which this Exhibit is attached with respect to the Investment A Shares
and the Investment C Shares of such portfolio:
U.S. Government Securities Fund
Quality Bond Fund
Quality Growth Fund
Mid-Cap Fund
Balanced Fund
Ohio Tax-Free Bond Fund
International Equity Fund
Witness the due execution hereof this 1st day of December, 1995.
FOUNTAIN SQUARE FUNDS
By:/s/ Stephen G. Mintos
-------------------------
Stephen G. Mintos
President
<PAGE> 1
EXHIBIT 19(I) UNDER FORM N-1A
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the President, Secretary, and Assistant Secretary of Fountain Square
Funds, and each of them, their true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution for them and in their names,
place and stead, in any and all capacities, to sign any and all documents to be
filed with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, the Securities Exchange Act of 1934, and the Investment Company
Act of 1940, by means of the Securities and Exchange Commission's electronic
disclosure system known as EDGAR; and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to sign and perform each and every act and
thing requisite and necessary to be done in connection therewith, as fully to
all intents and purposes as each of them might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes, may lawfully do or cause to be done by
virtue thereof.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/ Albert E. Harris Chairman of the Board January 12, 1996
- -----------------------
Albert E. Harris
/s/ Edward Burke Carey Trustee January 12, 1996
- -----------------------
Edward Burke Carey
/s/ Lee A. Carter Trustee January 12, 1996
- -----------------------
Lee A. Carter
</TABLE>
Sworn to and subscribed before me this 12th day of January, 1996.
- ------------------------------------
<PAGE> 1
Exhibit 19(ii) Under Form N-1A
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the references to our
firm under the caption "Legal Counsel" included in or made a part of the
Post-Effective Amendment No. 17 to the Registration Statement on Form N-1A,
File No. 33-24848, filed under the Securities Act of 1933, as amended, and
Amendment No. 18 to the Registration Statement on Form N-1A, File No.
811-5669, filed under the Investment Company Act of 1940, as amended, of the
Fountain Square Funds.
Bloomfield Hills, Michigan HOWARD & HOWARD ATTORNEYS, P.C.
January 16, 1996
By: /s/ Robert C. Rosselot
-------------------------------
Robert C. Rosselot
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> FOUNTAIN SQAURE COMMERCIAL PAPER FUND TRUST SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 235,056,289
<INVESTMENTS-AT-VALUE> 235,056,289
<RECEIVABLES> 5,865
<ASSETS-OTHER> 308
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 235,062,462
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,253,718
<TOTAL-LIABILITIES> 1,253,718
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 233,808,744
<SHARES-COMMON-STOCK> 223,640,160
<SHARES-COMMON-PRIOR> 213,126,064
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 223,640,180
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13,526,740
<OTHER-INCOME> 0
<EXPENSES-NET> 1,174,570
<NET-INVESTMENT-INCOME> 12,352,170
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 12,352,170
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11,852,325
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,114,106,500
<NUMBER-OF-SHARES-REDEEMED> 1,103,592,962
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 14,535,962
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 968,506
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,420,300
<AVERAGE-NET-ASSETS> 239,708,796
<PER-SHARE-NAV-BEGIN> 1,000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 49
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> FOUNTAIN SQAURE COMMERCIAL PAPER FUND INVESTMENT SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 235,056,289
<INVESTMENTS-AT-VALUE> 235,056,289
<RECEIVABLES> 5,865
<ASSETS-OTHER> 308
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 235,062,462
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,253,718
<TOTAL-LIABILITIES> 1,253,718
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 233,808,744
<SHARES-COMMON-STOCK> 10,168,564
<SHARES-COMMON-PRIOR> 6,146,718
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 10,168,564
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13,526,740
<OTHER-INCOME> 0
<EXPENSES-NET> 1,174,570
<NET-INVESTMENT-INCOME> 12,352,170
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 12,352,170
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 499,845
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25,274,657
<NUMBER-OF-SHARES-REDEEMED> 21,252,811
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 14,535,962
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 958,506
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,420,300
<AVERAGE-NET-ASSETS> 239,708,796
<PER-SHARE-NAV-BEGIN> 1,000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1,000
<EXPENSE-RATIO> 49
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> FOUNTAIN SQUARE U.S. TREASURY OBLIGATIONS FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 323,044,022
<INVESTMENTS-AT-VALUE> 323,044,022
<RECEIVABLES> 350,327
<ASSETS-OTHER> 494
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 323,394,843
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,754,725
<TOTAL-LIABILITIES> 1,754,725
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 321,640,118
<SHARES-COMMON-STOCK> 321,640,118
<SHARES-COMMON-PRIOR> 336,225,580
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 321,540,118
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 18,977,975
<OTHER-INCOME> 0
<EXPENSES-NET> 1,515,405
<NET-INVESTMENT-INCOME> 17,462,570
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 17,462,570
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 17,462,570
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,029,179,974
<NUMBER-OF-SHARES-REDEEMED> 1,043,768,436
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (14,588,462)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,377,583
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,910,845
<AVERAGE-NET-ASSETS> 344,404,392
<PER-SHARE-NAV-BEGIN> 1,000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1,000
<EXPENSE-RATIO> 44
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> FOUNTAIN SQUARE GOVERNMENT CASH REVENUES FUND TRUST SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 175,645,808
<INVESTMENTS-AT-VALUE> 175,645,808
<RECEIVABLES> 543,243
<ASSETS-OTHER> 37,663
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 176,226,714
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 897,894
<TOTAL-LIABILITIES> 897,894
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 175,328,820
<SHARES-COMMON-STOCK> 129,603,214
<SHARES-COMMON-PRIOR> 106,632,448
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 129,603,214
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,570,187
<OTHER-INCOME> 0
<EXPENSES-NET> 756,020
<NET-INVESTMENT-INCOME> 7,814,167
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 7,814,167
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,273,259
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 195,672,222
<NUMBER-OF-SHARES-REDEEMED> 172,701,456
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 57,623,688
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 604,802
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,010,384
<AVERAGE-NET-ASSETS> 151,200,477
<PER-SHARE-NAV-BEGIN> 1,000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 1.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> FOUNTAIN SQUARE GOVERNMENT CASH RESERVES FUND INVESTMENT SHA
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 175,645,808
<INVESTMENTS-AT-VALUE> 175,645,808
<RECEIVABLES> 543,243
<ASSETS-OTHER> 37,663
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 176,226,714
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 897,894
<TOTAL-LIABILITIES> 897,894
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 175,928,820
<SHARES-COMMON-STOCK> 45,725,608
<SHARES-COMMON-PRIOR> 11,072,684
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 45,725,606
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,570,187
<OTHER-INCOME> 0
<EXPENSES-NET> 756,020
<NET-INVESTMENT-INCOME> 7,814,167
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 7,814,167
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,540,908
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 71,651,634
<NUMBER-OF-SHARES-REDEEMED> 36,998,712
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 57,823,688
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 804,802
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,010,384
<AVERAGE-NET-ASSETS> 151,200,477
<PER-SHARE-NAV-BEGIN> 1,000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1,000
<EXPENSE-RATIO> 50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> FOUNTAIN SQUARE U.S. GOVERNMENT SECURITIES FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 24,002,710
<INVESTMENTS-AT-VALUE> 24,685,994
<RECEIVABLES> 430,434
<ASSETS-OTHER> 4,235
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 25,120,663
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 66,611
<TOTAL-LIABILITIES> 66,611
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 26,462,334
<SHARES-COMMON-STOCK> 2,565,532
<SHARES-COMMON-PRIOR> 3,019,019
<ACCUMULATED-NII-CURRENT> 39,186
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,130,752)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 663,384
<NET-ASSETS> 25,054,052
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,643,297
<OTHER-INCOME> 0
<EXPENSES-NET> 183,160
<NET-INVESTMENT-INCOME> 1,480,127
<REALIZED-GAINS-CURRENT> (1,805,278)
<APPREC-INCREASE-CURRENT> 1,797,653
<NET-CHANGE-FROM-OPS> 1,652,512
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,463,482
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 761,792
<NUMBER-OF-SHARES-REDEEMED> 1,351,707
<SHARES-REINVESTED> 136,428
<NET-CHANGE-IN-ASSETS> (4,053,117)
<ACCUMULATED-NII-PRIOR> 38,330
<ACCUMULATED-GAINS-PRIOR> (525,474)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 134,241
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 278,946
<AVERAGE-NET-ASSETS> 24,687,877
<PER-SHARE-NAV-BEGIN> 9,640
<PER-SHARE-NII> 0.580
<PER-SHARE-GAIN-APPREC> 0.130
<PER-SHARE-DIVIDEND> 0.580
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 9.770
<EXPENSE-RATIO> 75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> FOUNTAIN SQUARE QUALITY BOND FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 57,449,947
<INVESTMENTS-AT-VALUE> 58,246,640
<RECEIVABLES> 816,842
<ASSETS-OTHER> 5,037
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 59,070,519
<PAYABLE-FOR-SECURITIES> 3,232,941
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 70,423
<TOTAL-LIABILITIES> 3,303,364
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 58,047,370
<SHARES-COMMON-STOCK> 5,740,097
<SHARES-COMMON-PRIOR> 4,948,600
<ACCUMULATED-NII-CURRENT> 39,415
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,118,323)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 798,693
<NET-ASSETS> 55,787,155
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,609,849
<OTHER-INCOME> 0
<EXPENSES-NET> 362,195
<NET-INVESTMENT-INCOME> 3,247,654
<REALIZED-GAINS-CURRENT> (939,623)
<APPREC-INCREASE-CURRENT> 1,727,043
<NET-CHANGE-FROM-OPS> 4,035,074
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,268,269
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,854,143
<NUMBER-OF-SHARES-REDEEMED> 1,316,177
<SHARES-REINVESTED> 253,531
<NET-CHANGE-IN-ASSETS> 8,495,118
<ACCUMULATED-NII-PRIOR> 60,030
<ACCUMULATED-GAINS-PRIOR> (2,178,700)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 265,658
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 407,228
<AVERAGE-NET-ASSETS> 48,616,463
<PER-SHARE-NAV-BEGIN> 9.550
<PER-SHARE-NII> 0.540
<PER-SHARE-GAIN-APPREC> 0.170
<PER-SHARE-DIVIDEND> 0.640
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 9.720
<EXPENSE-RATIO> 75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> FOUNTAIN SQUARE QUALITY GROWTH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 71,160,549
<INVESTMENTS-AT-VALUE> 84,103,838
<RECEIVABLES> 749,796
<ASSETS-OTHER> 8,395
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 84,862,029
<PAYABLE-FOR-SECURITIES> 2,092,404
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 175,164
<TOTAL-LIABILITIES> 2,267,568
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 71,231,586
<SHARES-COMMON-STOCK> 7,007,161
<SHARES-COMMON-PRIOR> 7,183,246
<ACCUMULATED-NII-CURRENT> 84,786
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,665,179)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,943,268
<NET-ASSETS> 82,594,461
<DIVIDEND-INCOME> 185,170
<INTEREST-INCOME> 1,451,256
<OTHER-INCOME> 0
<EXPENSES-NET> 670,178
<NET-INVESTMENT-INCOME> 966,250
<REALIZED-GAINS-CURRENT> 2,790,895
<APPREC-INCREASE-CURRENT> 10,829,608
<NET-CHANGE-FROM-OPS> 14,386,754
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 920,006
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,243,996
<NUMBER-OF-SHARES-REDEEMED> 2,499,604
<SHARES-REINVESTED> 79,524
<NET-CHANGE-IN-ASSETS> 12,946,548
<ACCUMULATED-NII-PRIOR> 38,541
<ACCUMULATED-GAINS-PRIOR> (4,456,074)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 536,144
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 701,065
<AVERAGE-NET-ASSETS> 67,923,226
<PER-SHARE-NAV-BEGIN> 9.700
<PER-SHARE-NII> 0.140
<PER-SHARE-GAIN-APPREC> 2.090
<PER-SHARE-DIVIDEND> 0.140
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.790
<EXPENSE-RATIO> 100
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> FOUNTAIN SQUARE MID CAP FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 38,614,970
<INVESTMENTS-AT-VALUE> 47,897,822
<RECEIVABLES> 85,057
<ASSETS-OTHER> 3,992
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 47,986,871
<PAYABLE-FOR-SECURITIES> 293,414
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 509,710
<TOTAL-LIABILITIES> 803,124
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,265,238
<SHARES-COMMON-STOCK> 3,747,058
<SHARES-COMMON-PRIOR> 2,991,865
<ACCUMULATED-NII-CURRENT> 41,359
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (405,702)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,282,852
<NET-ASSETS> 47,183,747
<DIVIDEND-INCOME> 474,426
<INTEREST-INCOME> 160,533
<OTHER-INCOME> 0
<EXPENSES-NET> 359,037
<NET-INVESTMENT-INCOME> 275,922
<REALIZED-GAINS-CURRENT> 456,337
<APPREC-INCREASE-CURRENT> 3,275,255
<NET-CHANGE-FROM-OPS> 9,007,514
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 234,563
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,702,064
<NUMBER-OF-SHARES-REDEEMED> 965,426
<SHARES-REINVESTED> 18,555
<NET-CHANGE-IN-ASSETS> 16,973,892
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (862,039)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 287,494
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 423,784
<AVERAGE-NET-ASSETS> 36,227,551
<PER-SHARE-NAV-BEGIN> 10.100
<PER-SHARE-NII> 0.080
<PER-SHARE-GAIN-APPREC> 2.480
<PER-SHARE-DIVIDEND> 0.070
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 12.590
<EXPENSE-RATIO> 100
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> FOUNTAIN SQUARE BALANCED FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 50,997,159
<INVESTMENTS-AT-VALUE> 58,596,301
<RECEIVABLES> 3,065,856
<ASSETS-OTHER> 8,594
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 61,670,751
<PAYABLE-FOR-SECURITIES> 3,575,889
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20,359
<TOTAL-LIABILITIES> 3,596,248
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52,281,931
<SHARES-COMMON-STOCK> 5,147,223
<SHARES-COMMON-PRIOR> 6,121,993
<ACCUMULATED-NII-CURRENT> 115,336
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,921,876)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,599,112
<NET-ASSETS> 58,074,503
<DIVIDEND-INCOME> 796,237
<INTEREST-INCOME> 1,186,058
<OTHER-INCOME> 0
<EXPENSES-NET> 530,942
<NET-INVESTMENT-INCOME> 1,451,351
<REALIZED-GAINS-CURRENT> 1,045,572
<APPREC-INCREASE-CURRENT> 6,783,347
<NET-CHANGE-FROM-OPS> 9,280,270
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,395,986
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,325,352
<NUMBER-OF-SHARES-REDEEMED> 2,432,622
<SHARES-REINVESTED> 132,700
<NET-CHANGE-IN-ASSETS> (1,288,263)
<ACCUMULATED-NII-PRIOR> 59,971
<ACCUMULATED-GAINS-PRIOR> (2,967,449)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 424,672
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 561,799
<AVERAGE-NET-ASSETS> 53,756,625
<PER-SHARE-NAV-BEGIN> 9.700
<PER-SHARE-NII> 0.280
<PER-SHARE-GAIN-APPREC> 1.570
<PER-SHARE-DIVIDEND> 0.270
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.280
<EXPENSE-RATIO> 100
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> FOUNTAIN SQUARE OHIO TAX-FREE BOND FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 28,159,288
<INVESTMENTS-AT-VALUE> 28,302,030
<RECEIVABLES> 367,658
<ASSETS-OTHER> 3,795
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28,673,483
<PAYABLE-FOR-SECURITIES> 257,280
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 101,633
<TOTAL-LIABILITIES> 358,913
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28,424,198
<SHARES-COMMON-STOCK> 2,835,189
<SHARES-COMMON-PRIOR> 2,447,826
<ACCUMULATED-NII-CURRENT> 23,094
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (275,463)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 142,741
<NET-ASSETS> 28,314,570
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,222,638
<OTHER-INCOME> 0
<EXPENSES-NET> 91,951
<NET-INVESTMENT-INCOME> 1,130,687
<REALIZED-GAINS-CURRENT> (242,783)
<APPREC-INCREASE-CURRENT> 890,009
<NET-CHANGE-FROM-OPS> 1,777,913
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,131,709
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,075,184
<NUMBER-OF-SHARES-REDEEMED> 760,820
<SHARES-REINVESTED> 72,999
<NET-CHANGE-IN-ASSETS> 4,480,085
<ACCUMULATED-NII-PRIOR> 24,116
<ACCUMULATED-GAINS-PRIOR> (32,680)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 142,708
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 291,165
<AVERAGE-NET-ASSETS> 25,915,609
<PER-SHARE-NAV-BEGIN> 9.750
<PER-SHARE-NII> 0.420
<PER-SHARE-GAIN-APPREC> 0.240
<PER-SHARE-DIVIDEND> 0.420
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 9.990
<EXPENSE-RATIO> 35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> FOUNTAIN SQUARE INTERNATIONAL EQUITY FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 78,017,775
<INVESTMENTS-AT-VALUE> 82,532,535
<RECEIVABLES> 1,097,777
<ASSETS-OTHER> 2,995,907
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 86,626,319
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 184,767
<TOTAL-LIABILITIES> 184,767
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 85,338,628
<SHARES-COMMON-STOCK> 8,792,599
<SHARES-COMMON-PRIOR> 10
<ACCUMULATED-NII-CURRENT> 399,551
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,665,104)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,368,477
<NET-ASSETS> 56,441,552
<DIVIDEND-INCOME> 1,128,465
<INTEREST-INCOME> 329,674
<OTHER-INCOME> 0
<EXPENSES-NET> 1,058,588
<NET-INVESTMENT-INCOME> 399,551
<REALIZED-GAINS-CURRENT> (4,665,104)
<APPREC-INCREASE-CURRENT> 5,368,477
<NET-CHANGE-FROM-OPS> 1,102,924
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,108,191
<NUMBER-OF-SHARES-REDEEMED> 315,602
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 86,441,552
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 641,669
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,104,258
<AVERAGE-NET-ASSETS> 65,788,085
<PER-SHARE-NAV-BEGIN> 10,000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> (0.220)
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 9.830
<EXPENSE-RATIO> 165
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
