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FOUNTAIN SQUARE(R) FUNDS
[PICTURE APPEARS HERE]
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QUALITY GROWTH FUND
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PINNACLE FUND
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EQUITY INCOME FUND
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BALANCED FUND
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MID CAP FUND
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INTERNATIONAL EQUITY FUND
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BOND FUND FOR INCOME
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QUALITY BOND FUND
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U.S. GOVERNMENT SECURITIES FUND
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MUNICIPAL BOND FUND
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OHIO TAX FREE BOND FUND
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Annual Report to Shareholders
July 31, 1998
- --------------------[LOGO OF FIFTH THIRD BANK APPEARS HERE]---------------------
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This report is authorized for distribution to prospective investors only when
preceded or accompanied by a prospectus for the Funds, which contains facts
concerning the objectives and policies, management fees, expenses and other
information.
For more complete information on the Fountain Square Funds, including fees,
expenses and sales charges, please call 1-888-799-5353 for a prospectus, which
you should read carefully before you invest or send money. The Fountain Square
Funds are distributed by BISYS Fund Services.
Fifth Third Bank and its affiliate Heartland Capital Management, Inc. serve as
Investment Advisors to the Funds and receive a fee for their
services.
Fountain Square Funds, like all mutual funds:
. are NOT FDIC insured
. have no bank guarantee
. may lose value
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Letter from the Chief Investment Officer
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Dear Shareholder:
We are pleased to present the Fountain Square Stock and Bond Mutual
Funds' Annual Report for the 12 months ended July 31, 1998. This letter
offers us an opportunity to discuss the Funds' performance during the
period, comment on recent market conditions, describe our investment
strategy in that environment, and review our outlook and strategy for the
coming months.
Strong performance amid volatility
The 12-month period ended July 31, 1998, was marked by moderate-to-strong
economic growth with a decline in inflation and interest rates, and
respectable corporate profits. In that environment, the stock market
continued to post gains, with the S&P 500(1) delivering a total return of
19.31%. The period also saw strong money flows into equities from
investors, and a solid performance from bonds. The low inflation
environment helped push the yield on the 30-year Treasury bond down from
6.45% to 5.70% at the end of the period.
As investors reacted to the Asian economic crisis that began last year,
there was considerable volatility from month to month. In our view,
investors were concerned that Asia's weak economy could possibly damage
the earnings of firms within the United States. We believe that investors
also worried that the tight labor market in the United States could lead
to an increase in inflation. Those concerns caused stock and bond prices
to fluctuate considerably during the period.
A solid, long-term approach
Our Funds performed well during the period. Based on peer group rankings
by Lipper Analytical Services, Inc. as of July 31, 1998, the Fountain
Square Equity Income Fund was ranked as the third best performing fund of
211 funds. The Fountain Square International Equity Fund performed in the
top 19% of its peer group, and the Fountain Square U.S. Government
Securities Fund was ranked 20th out of 100 funds in its peer group./2/
Those performances reflect our aim of seeking discipline, while having a
long-term approach to investing. We seek to keep our Funds fully
invested, making no attempt to time the market. We do not focus on
short-term events and price fluctuations. Instead, we attempt to identify
long-term trends driving the stock market. We seek to invest in
consistent, high-quality growth companies that may benefit from those
trends, when the shares of such firms trade at attractive valuations.
Our Equity Funds recently benefited from their investments in shares of
companies in the technology, healthcare and financial services sectors.
The technology sector has performed well due to huge investments in
technology, which replaced labor-intensive jobs and increased worker
productivity. Healthcare stocks have been strong performers as aging baby
boomers spend more money to fight the aging process, while financial
services shares have benefited as more baby boomers begin to invest for
their retirements.
We also take a long-term approach to the task of managing our Bond Funds.
We do not make large bets on the direction of interest rates. Instead, we
attempt to add value by focusing on sectors of the bond market that we
believe offer attractive opportunities, while attempting to minimize the
volatility of the Funds.
A challenging environment ahead
We are optimistic that inflation will remain low and that interest rates
will decline further in the months ahead. However, the continuing fallout
from the Asian crisis may dampen U.S. economic growth and hurt overall
corporate earnings.
1
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Letter from the Chief Investment Officer (continued)
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In that environment, we will continue to seek to invest in consistent,
high-quality growth companies. Such firms' shares often do not rise as much
as other shares in a strong bull market; but when the going gets tough,
investors may recognize and appreciate quality companies. Those are precisely
the types of companies in which the Fountain Square Funds endeavor to invest.
This is a good time to remind investors of the importance of building and
maintaining a diversified investment portfolio. Such a portfolio should
include a mix of small-, mid- and large-capitalization stocks that provide
the potential for long-term growth, as well as bonds that can offer some
stability. Some investors lately have concentrated their portfolios in
blue-chip stocks. But while large-company stocks have outperformed shares of
smaller firms in recent years, small-company stocks have outperformed other
major asset categories over the long term. Furthermore, shares of the largest
firms are highly valued at this point, while small-cap shares may offer good
values.
Investors also should consider a stake in international markets, which offer
further diversification benefits. Many European markets have performed well
this year, while Asian markets and elsewhere, though they underperformed, may
offer good values.
Periods of stock market volatility, such as the current one, can be
unsettling. But such times also offer an opportunity to revisit the
principles that guide our investment strategy. One principle is consistency:
We will maintain our strategy regardless of temporary fluctuations in
securities prices and will continue to invest in portfolios designed to meet
our Funds' stated long-term objectives.
There is little to be gained--and much to be lost--by adopting a strategy
that attempts to predict the financial markets' short-term movements. We are
firmly convinced that a sound and consistent long-term investment policy
offers the most effective way to cope with temporary market swings. Such a
policy also provides the best opportunity for our Funds and their
shareholders to achieve their financial goals.
During the coming period the Fountain Square Funds will change their name to
the Fifth Third Funds. The change reflect the Funds' association with the
Fifth Third Bank. The Funds themselves--their strategies, objectives and
management--will not change, however, shareholders can continue to rely upon
them to employ consistent strategies in pursuit of long-term goals.
Thank you for your continued confidence in the Fountain Square Funds. We will
aim to continue to manage the Funds with a disciplined, long-term approach
and to do our best to help you meet your financial goals while avoiding undue
risk.
Sincerely,
/s/ James D. Berghausen
James D. Berghausen, CFA
Chief Investment Officer
Fifth Third Bank
/1/ Standard & Poor's 500 Stock Index is an unmanaged market index. This
index does not include transaction costs associated with buying and
selling securities, nor does it include any management fees.
/2/ For the 1-year period ended July 31, 1998, The Fountain Square Equity
Income Fund (Investment A Shares), the Fountain Square International
Equity Fund (Investment A Shares) and the Fountain Square U.S.
Government Securities Fund (Investment A Shares) ranked 3 out of 211
funds, 89 out of 473 funds and 20 out of 100 funds within the Equity
Income Funds category, the International Funds category and the Short
Intermediate U.S. Government Funds categories, respectively. For the 5-
and 10-year periods ending July 31, 1998, the Fountain Square Equity
Income Fund (Investment A Shares), the Fountain Square International
Equity Fund (Investment A Shares) and the Fountain Square U.S.
Government Securities Fund (Investment A Shares) ranked 3 out of 210, 89
out of 472 and 74 out of 88, respectively. The Lipper rankings are based
on total return and do not reflect a sales charge.
2
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3
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Investment Reviews
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Fountain Square Quality Growth Fund
An interview with Steven E. Folker, portfolio manager.
Q. How did the Fund perform during the 12-month period ended July 31, 1998?
A. The fund posted a total return of 14.12% on Investment A Shares (before
deduction of sales charge) for the 12 months ended July 31, 1998. That
trailed the 19.31% return for the S&P 500 and the 24.77% total return for the
S&P/Barra Growth Index. But the Fund outpaced the 13.15% return for Lipper
Growth Fund Average.
Q. What were the economic or market conditions that contributed to the Fund's
performance?
A. Overall, the market was supported by factors such as strong liquidity,
declining interest rates and a healthy U.S. economy. Stocks also benefited
from continued strong growth in corporate earnings in the early part of the
period. But the Asian economic crisis emerged as a major concern for the U.S.
stock market in the fall of 1997, resulting in a significant slowdown of
earnings growth. The market's largest gains for the period were narrowly
focused on a relatively small number of liquid shares of the largest
companies.
Q. How did you manage the Fund in that environment?
A. Our strategy was to carefully monitor valuations, taking profits in more
highly valued companies. We also focused on companies with both strong
long-term fundamentals and good short-term outlooks.
Q. In what sectors did you find opportunities during the period?
A. We looked for opportunities in the healthcare sector, where many firms
benefited from favorable demographics and strong new-product development,
factors which are not closely linked to the state of the economy. The Fund
added investments in the medical devices company Guidant Corp. (3.1% of the
Fund's net assets) and pharmaceutical company Warner Lambert, Inc. (1.9%). We
also found opportunities in shares of consumer cyclical firms, which
benefited from the strong U.S. economy. Lowe's Companies, Inc. (1.5%) and
WalMart Stores, Inc. (2.2%) were new stocks we added from this sector. And we
added to the portfolio shares of diversified capital goods companies such as
Avery Dennison Corp. (1.6%) and Tyco International, Ltd. (2.5%). We reduced
our exposure to technology stocks but remain overweighted in that sector.*
Q. What stocks helped boost returns?
A. Strong performers included Cisco Systems Inc. (2.3% of net assets), up
80.5%, and Microsoft Corp. (1.3%), up 55.5%, in technology; Pfizer Inc.
(1.0%), up 85.4%, Schering-Plough Corp. (1.0%), up 78.6%, and Warner Lambert,
Inc. (1.6%), up 63.1%, in health care; Comair Holdings, Inc. (1.5%), up
76.7%, in transportation; and The Home Depot, Inc. (4.0%), up 68.7%.*
Q. In what sectors did you avoid or reduce your exposure?
A. We avoided exposure in the utilities sector and remained underweighted in
basic materials, energy and consumer staples.
Q. What is your outlook for the stock market, and how will you manage the
Fund in that environment?
A. We expect the stock market to post reasonably good returns over the
intermediate to long term, although the market may be volatile in the coming
months. We will carefully watch market valuations, periodically taking
profits from higher-valued stocks and using that cash to invest in companies
with solid long-term prospects.
Q. What were the Fund's top five holdings as of July 31, 1998?
A. The Fund's top five holdings were Intel Corp. (4.8% of net assets), Bank
of New York Co., Inc. (4.0%), The Home Depot Inc. (4.0%), Freddie Mac (3.9%)
and Illinois Tool Works (3.2%).*
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* The composition of the Fund's portfolio is subject to change.
4
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Growth of $10,000 Invested in the Fountain Square Quality Growth Fund
[LINE GRAPH APPEARS HERE]
Quality Growth
Investment Investment S&P 500 S&P/BARRA Lipper Growth
C Shares A Shares Stock Index Growth Index Funds Average
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Jul-88 10,000 9,550 10,000 10,000 10,000
Jul-89 12,648 12,144 13,187 13,329 12,788
Jul-90 14,051 13,528 14,040 14,908 13,512
Jul-91 16,502 15,949 15,834 17,216 15,447
Jul-92 18,854 18,312 17,854 19,331 17,196
Jul-93 19,025 18,498 19,403 19,617 19,372
Jul-94 19,630 19,086 20,409 20,613 20,263
Jul-95 24,184 23,514 25,727 26,947 25,475
Jul-96 27,207 26,497 29,986 31,700 27,949
Jul-97 41,561 40,803 45,615 49,602 40,354
Jul-98 47,134 46,566 54,423 61,888 45,661
Average Annual Total Return for the Period Ended July 31, 1998/1/
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Investment A* Investment C**
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1 Year ............................... 8.97% ..............13.41%
5 Year ...............................19.18% ..............19.90%
10 Year ..............................16.64% ..............16.77%
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Past performance is not indicative of future results. The investment return
and NAV will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
/1/ The quoted performance of the Quality Growth Fund includes performance
of certain collectively managed accounts advised by Fifth Third Bank, for
periods dating back to 7/31/88, and prior to the Quality Growth Fund's
commencement of operations on 11/20/92, as adjusted to reflect the expenses
associated with the Fund (without waivers or reimbursements). These
collectively managed accounts were not registered with the Securities and
Exchange Commission and, therefore, were not subject to the investment
restrictions imposed by law on registered mutual funds. If such accounts
had been registered, the performance may have been adversely affected. The
performance shown reflects the deduction of fees for value-added services
associated with a mutual fund, such as investment management and fund
accounting fees. The performance also reflects reinvestment of all
dividends and capital-gains distributions.
*Reflects the maximum sales charge of 4.50%.
**Investment C Shares were initially offered April 25, 1996. The
performance figures for Investment C Shares for periods prior to such date
represent the performance for Investment A Shares of the Fund. Investment C
shareholders that redeem within one year of purchase are subject to a
contingent deferred sales charge of 1.00%. Investment C Shares are also
subject to administrative service fees at a maximum rate of 0.25% and Rule
12b-1 fees of up to 0.75% of the average daily net asset value of
Investment C Shares. If these fees were reflected, performance would have
been lower. Investment A Shares are subject to Rule 12b-1 fees of up to
0.35% of the average daily net asset value of Investment A Shares.
The Fund's performance is measured against the Standard & Poor's 500 Stock
Index and the S&P/BARRA Growth Index, both of which are unmanaged indices
generally representative of the stock market, and the Lipper Growth Funds
Average, representative of the average of the total returns reported by all
of the mutual funds designated by Lipper Analytical Services, Inc. falling
into this category. The S&P 500 Stock Index and the S&P/BARRA Growth Index
do not reflect the deduction of fees associated with a mutual fund. The
Lipper Growth Funds Average and the Fund's performance reflect the
deduction of fees for these value-added services.
5
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Fountain Square Pinnacle Fund
An interview with portfolio managers Robert D. Markley, Thomas F. Maurath and
Barry F. Ebert.
Q. What was the Fund's total return during the 12-month period ended July 31,
1998?
A. The Fund posted a 23.21% return on Investment A Shares (before deduction of
sales charge). That compared to a 19.31% return for the Fund's benchmark, the
S&P 500 Stock Index.
Q. What factors affected the Fund's performance during this period?
A. The Fund provided strong returns in the context of the stock market
environment, as shares of the large capitalization growth companies outperformed
the market as a whole. The Pinnacle Fund invests primarily in those stocks, and
thus benefited from their superior performance.
There are several reasons shares of large growth-oriented companies outgained
the market. First, investors anticipated a slowdown in the economy, and thus
sought shares of companies with strong potential for consistent earnings growth.
Second, investors sought liquidity in the shares of the largest companies due to
concerns that troubles in the global economy would affect U.S. corporate
profits. Third, last July's capital gains tax cut makes growth stocks relatively
more attractive to investors than cyclical stocks. Those factors, combined with
superior stock picking, led to the Fund's strong performance.
Q. This Fund recently became available to Fountain Square investors. What are
its objectives?
A. The Fountain Square Pinnacle Fund, which at the end of the period had $36
million under management, became available to Fountain Square investors on March
9, 1998. Its objective is to generate long-term capital appreciation. The Fund
aims to be in the top 30% of stock mutual funds with similar styles.
Q. What kind of investments does the Pinnacle Fund make to pursue that goal?
A. The Fund seeks to invest in high-quality companies with strong earnings
growth prospects. We especially look for companies with unique characteristics,
such as special products or manufacturing processes, that will enable them to
sustain strong earnings growth and exceed Wall Street's expectations. Microsoft
Corp. (2.7% of net assets), a current holding, is a good example of the kind of
stock we like to buy.* The firm is dominant in its industry, has a strong and
varied product line and continues to produce earnings growth that outperforms
expectations. In the event that the stock market looks unattractive, the Fund
may keep some assets in cash. However, the Fund generally will be fully invested
in high-quality companies.
Q. How did that strategy work during the recent period?
A. The Fund's Investment A Shares gained 23.21% (before deduction of sales
charge) from inception through July 31, 1998.** That compares to 19.31% for the
Fund's benchmark, the Standard and Poor's 500 Index. The Fund benefited from the
strong performance of stocks such as Lucent Technology, Inc. (2.6% of net
assets), which returned 55.6% during the period, and Warner Lambert, Inc.
(2.7%), which gained 63%.*
Q. What type of investor might consider this Fund?
A. The Fund may be a good investment for anyone interested in building long-term
assets, whether they are saving for retirement, their children's education or
any other goal that is at least several years in the future.
Q. What were the Fund's top five holdings as of July 31,1998?
A. The Fund's top five holdings were Warner Lambert, Inc. (2.7% of net assets),
Microsoft Corp. (2.7%), Lucent Technology, Inc. (2.6%), Worldcom, Inc. (2.6%)
and Waste Management, Inc. (2.6%).*
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* The composition of the Fund's portfolio is subject to change.
** Performance information includes the performance of the Fund's
predecessor, The Pinnacle Fund.
6
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Growth of $10,000 Invested in the Fountain Square Pinnacle Fund
[LINE GRAPH APPEARS HERE]
Pinnacle Fund
Investment Investment
C Shares** A Shares* S&P 500 stock Index
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Jul-88 10,000 9,550 10,000
Jul-89 12,620 12,052 13,187
Jul-90 14,256 13,615 14,040
Jul-91 15,575 14,874 15,834
Jul-92 16,624 15,875 17,854
Jul-93 17,700 16,903 19,403
Jul-94 17,761 16,961 20,409
Jul-95 22,064 21,071 25,727
Jul-96 27,042 25,825 29,986
Jul-97 39,308 37,539 45,615
Jul-98 47,565 46,246 54,440
Average Annual Total Return for the Period Ended July 31, 1998/1/
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Investment A* Investment C**
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1 Year ............................... 17.67% ............. 22.78%
5 Year ............................... 21.18% ............. 22.22%
10 Year .............................. 16.55% ............. 17.05%
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Past performance is not indicative of future results. The investment return
and NAV will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
/1/ The quoted performance of the Fountain Square Pinnacle Fund includes
performance of its predecessor fund, The Pinnacle Fund, an open-end
investment company advised by Heartland Capital Management, Inc., for
periods dating back to 7/31/88 and prior to the Fountain Square Pinnacle
Fund's commencement of operations on 3/9/98. The performance for the Fund
shown for the periods prior to 3/9/98 reflects the deduction of fees
associated with The Pinnacle Fund. If the fees associated with the Fund had
been deducted, performance would have been lower. The performance also
reflects reinvestment of all dividends and capital-gains distributions.
* Reflects the maximum sales charge of 4.50%.
** Investment C Shares were initially offered March 9, 1998. The
performance figures for Investment C Shares for periods prior to such date
represent the performance for Investment A Shares of the Fund. Investment C
shareholders that redeem within one year of purchase are subject to a
contingent deferred sales charge of 1.00%. Investment C Shares are also
subject to administrative service fees at a maximum rate of 0.25% and Rule
12b-1 fees of up to 0.75% of the average daily net asset value of
Investment C Shares. If these fees were reflected, performance would have
been lower. Investment A Shares are subject to Rule 12b-1 fees of up to
0.35% of the average daily net asset value of Investment A Shares.
The Fund's performance is measured against the Standard & Poor's 500 Stock
Index. The S&P 500 Stock Index is an unmanaged index that is generally
representative of the U.S. stock market as a whole. The S&P 500 Stock Index
does not reflect the deduction of fees associated with a mutual fund.
7
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Fountain Square Equity Income Fund
An interview with John B. Schmitz, portfolio manager.
Q. How did the Fund perform during the 12-month period ended July 31, 1998?
A. The Fund posted a total return of 19.57% on Investment A Shares (before
deduction of sales charge) for the 12 months ended July 31, 1998. That compares
to a return of 19.31% for the S&P 500 and a 10.48% return for the Lipper Equity
Income Funds Average. The net asset value (as of 7/31/98) of the Fund rose from
$14.44 per share to $15.38 per share.
Q. What factors affected the Fund's performance?
A. Investors were concerned that the slowdown in Asia could lead to a decline in
corporate profits in this country. Those fears boosted demand for stocks of
high-quality firms with consistent earnings and dividend growth. This flight-to-
quality was particularly true in the last quarter of 1997.
Q. How did you manage the Fund in that environment?
A. We stayed fully invested in stocks of companies with stable earnings and
dividend growth. The Fund overweighted capital goods, financial services and
healthcare stocks. In the healthcare sector, Warner Lambert, Inc. (1.9% of net
assets), Schering-Plough Corp. (2.6%) and Abbott Labs (0.8%) helped boost the
Fund's performance. As of July 31, 1998, the fund's top five holdings were
Ameritech Corp. (5.3%), Bank of New York Co., Inc. (4.4%), GATX Corp. (4.1%),
Mellon Bank Corp. (4.0%) and Fannie Mae (3.9%).* Each of these five stocks
outperformed the S&P 500 over the past year.
Q. What is your outlook for the stock market, and how will you manage the
Fund in that environment?
A. We expect that investors may remain concerned about the impact of Asia's
financial problems on the U.S. economy, which will probably continue to grow at
a slow pace. Regardless of market conditions, however, we will continue to focus
on shares of high-quality companies with potentially strong earnings and
dividends growth. We believe that strategy will continue to deliver solid
returns in the long run.
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*The composition of the Fund's portfolio is subject to change.
8
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Growth of $10,000 Invested in the Fountain Square Equity Income Fund
[LINE GRAPH APPEARS HERE]
Equity Income Fund
Investment Investment S&P 500 Lipper Equity Income
C Shares** A Shares* Stock Index Funds Average
---------- --------- ----------- -------------
Jul-88 10,000 9,550 10,000 10,000
Jul-89 12,669 12,228 13,187 12,558
Jul-90 13,178 12,821 14,040 12,455
Jul-91 14,979 14,731 15,834 13,734
Jul-92 16,716 16,597 17,854 15,650
Jul-93 16,801 16,839 19,403 17,603
Jul-94 16,674 16,861 20,409 18,387
Jul-95 19,004 19,429 25,727 21,578
Jul-96 21,780 22,459 29,986 24,704
Jul-97 30,838 32,044 45,615 34,566
Jul-98 36,610 38,316 54,423 38,189
Average Annual Total Return for the Period Ended July 31, 1998/1/
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Investment A* Investment C**
------------- --------------
1 Year ............................... 14.19% ............. 18.72%
5 Year ............................... 16.80% ............. 16.86%
10 Year .............................. 14.39% ............. 13.86%
-----------------------------------------------------------------------
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Past performance is not indicative of future results. The investment return
and NAV will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
/1/ The quoted performance of the Equity Income Fund includes performance
of certain collectively managed accounts advised by Fifth Third Bank, for
periods dating back to 7/31/88, and prior to the Equity Income Fund's
commencement of operations on 1/27/97, as adjusted to reflect the expenses
associated with the Fund (without waivers or reimbursements). These
collectively managed accounts were not registered with the Securities and
Exchange Commission and, therefore, were not subject to the investment
restrictions imposed by law on registered mutual funds. If such accounts
had been registered, the performance may have been adversely affected. The
performance shown reflects the deduction of fees for value-added services
associated with a mutual fund, such as investment management and fund
accounting fees. The performance also reflects reinvestment of all
dividends and capital-gains distributions.
*Reflects the maximum sales charge of 4.50%.
**Investment C Shares were initially offered January 27, 1997. The
performance figures for Investment C Shares for periods prior to such date
represent the performance for Investment A Shares of the Fund. Investment C
shareholders that redeem within one year of purchase are subject to a
contingent deferred sales charge of 1.00%. Investment C Shares are also
subject to administrative service fees at a maximum rate of 0.25% and Rule
12b-1 fees of up to 0.75% of the average daily net asset value of
Investment C Shares. If these fees were reflected, performance would have
been lower. Investment A Shares are subject to Rule 12b-1 fees of up to
0.35% of the average daily net asset value of Investment A Shares.
The Fund's performance is measured against the Standard & Poor's 500 Stock
Index and the Lipper Equity Income Funds Average. The S&P 500 Stock Index
is an unmanaged index that is generally representative of the U.S. Stock
Market as a whole. The Lipper Equity Income Funds Average is representative
of the average of the total returns reported by all of the mutual funds
designated by Lipper Analytical Services, Inc. falling into this category.
The S&P 500 Stock Index does not reflect the deduction of fees associated
with a mutual fund. The Lipper Equity Income Funds Average and the Fund's
performance reflect the deduction of fees for these value-added services.
9
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Fountain Square Balanced Fund
An interview with Steven E. Folker and Roberta Tucker, portfolio managers.
Q. How did the Fund perform during the 12-month period ended July 31, 1998?
A. The Fund posted an 8.41% total return on Investment A Shares for the 12
months ended July 31, 1998 (before deduction of sales charge). That compares to
19.31% for the Fund's benchmark, the S&P 500 Stock Index and 9.75% for the
Lipper Balanced Fund Average.
Q. Describe the economic or market factors that affected the Fund's performance
during the period.
A. The market's strength was narrowly focused on a relatively small number of
very large, very liquid companies with strong earnings momentum. Their shares
benefited from favorable factors such as strong liquidity, declining interest
rates and a healthy U.S. economy. Strong growth in corporate earnings early in
the period also helped boost the market. But the Asian economic crisis emerged
last fall as a major concern for the U.S. stock market, creating some volatility
in share prices and resulting in a significant slowing of domestic corporate
earnings growth.
Q. How did you manage the Fund in that environment?
A. We took advantage of the best opportunities in both the large-cap and mid-cap
sectors. There were fewer opportunities to profit in mid-caps than in shares of
larger firms. But there may be greater opportunities in the mid-cap sector going
forward. Mid-sized companies have relatively low exposure to troubled Asian
economies, and their shares are trading at much lower valuations than shares of
larger firms.
Q. Did the Fund's allocation to stocks and bonds change during the period?
A. We maintained a mix of around two-thirds stocks and one-third fixed-income
investments during the period. As of July 31, 1998, the Fund's portfolio
consisted of 62.6% equities, 34.4% fixed-income securities and 4.1% cash.*
Q. How did you position the Fund's equity holdings?
A. We avoided the utilities sector and reduced our exposure in basic materials,
energy and consumer staples. We favored technology and financial services.
Q. What about the fund's bond holdings?
A. The fixed-income portion of the portfolio is managed like the portfolio of
the Quality Bond Fund. Thus, the Fund's bond holdings consisted of high-quality
issues, and we ended the period with an average maturity of 8.3 years. We found
opportunities in corporate bonds during the period, particularly among issues of
companies that do not look to be adversely affected by the Asian financial
crisis.
Q. What is your outlook for the stock and bond markets during the next several
months? How will you position the fund in that environment?
A. Although equities may experience ongoing volatility, we feel the stock market
will provide good intermediate- to long-term returns as earnings resume their
growth. In our opinion, interest rates will move lower, and the Federal Reserve
will maintain a neutral monetary policy. In that environment, we expect to see
better performance from the long end of the market. We also believe that high-
quality issues will be the strongest performers; thus, government and agency
bonds will likely deliver better returns than corporate securities.
Q. What were the fund's top five equity holdings as of July 31, 1998?
A. The Fund's five largest holdings as of July 31, 1998, were Intel Corp. (2.4%
of net assets), Guidant Corp. (2.1%), Freddie Mac (2.0%), Bank of New York Co.,
Inc. (2.0%) and Mellon Bank Corp. (1.6%).*
- ---------------------------
*The composition of the Fund's portfolio is subject to change.
10
<PAGE>
Growth of $10,000 Invested in the Fountain Square Balanced Fund
[LINE GRAPH APPEARS HERE]
Balanced Fund
<TABLE>
<CAPTION>
Investment Investment S&P 500 S&P/BARRA Lipper Balanced Lehman Brothers
C Shares** A Shares* Stock Index Growth Index Funds Average Aggregate Bond Index
---------- ---------- ----------- ------------ --------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Jul-88 10,000 9,550 10,000 10,000 10,000 10,000
Jul-89 12,520 12,001 13,187 13,329 12,075 11,520
Jul-90 14,012 13,511 14,040 14,908 12,539 12,333
Jul-91 16,492 15,962 15,834 17,216 14,069 13,652
Jul-92 19,395 18,845 17,854 19,331 15,899 15,671
Jul-93 20,058 19,510 19,403 19,617 17,608 17,266
Jul-94 20,467 19,907 20,409 20,613 18,119 17,280
Jul-95 24,431 23,763 25,727 26,947 20,967 19,027
Jul-96 25,976 25,311 29,986 31,700 23,085 20,078
Jul-97 35,723 35,050 45,615 49,602 30,304 22,242
Jul-98 38,461 37,998 54,423 61,888 33,259 23,992
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return for the Period Ended July 31, 1998/1/
- ---------------------------------------------------------------------------------
Investment A * Investment C **
--------------- ----------------
<S> <C> <C>
1 Year .......................................... 3.55%............. 7.67%
5 Year ..........................................13.22%.............13.91%
10 Year .........................................14.28%.............14.42%
- ---------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Past performance is not indicative of future results. The investment return and
NAV will fluctuate, so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
/1/ The quoted performance of the Balanced Fund includes performance of certain
collectively managed accounts advised by Fifth Third Bank, for periods dating
back to 7/31/88, and prior to the Balanced Fund's commencement of operations on
11/20/92, as adjusted to reflect the expenses associated with the Fund (without
waivers or reimbursements). These collectively managed accounts were not
registered with the Securities and Exchange Commission and, therefore, were not
subject to the investment restrictions imposed by law on registered mutual
funds. If such accounts had been registered, the performance may have been
adversely affected. The performance shown reflects the deduction of fees for
value-added services associated with a mutual fund, such as investment
management and fund accounting fees. The performance also reflects reinvestment
of all dividends and capital-gains distributions.
* Reflects the maximum sales charge of 4.50%.
** Investment C Shares were initially offered April 25, 1996. The performance
figures for Investment C Shares for periods prior to such date represent the
performance for Investment A Shares of the Fund. Investment C Shareholders that
redeem within one year of purchase are subject to a contingent deferred sales
charge of 1.00%. Investment C Shares are also subject to administrative service
fees at a maximum rate of 0.25% and Rule 12b-1 fees of up to 0.75% of the
average daily net asset value of Investment C Shares. If these fees were
reflected, performance would have been lower. Investment A Shares are subject to
Rule 12b-1 fees of up to 0.35% of the average daily net asset value of
Investment A Shares.
The Fund's performance is measured against the Standard & Poor's 500 Stock
Index, S&P/BARRA Growth Index, both of which are unmanaged indices generally
representative of the stock market; the Lehman Brothers Aggregate Bond Index, an
unmanaged index generally representative of the bond market as a whole, and the
Lipper Balanced Funds Average, representative of the average of the total
returns reported by all of the mutual funds designated by Lipper Analytical
Services, Inc. falling into this category. The S&P 500 Stock Index, the
S&P/BARRA Growth Index and the Lehman Brothers Aggregate Bond Index do not
reflect the deduction of fees associated with a mutual fund. The Lipper Balanced
Funds Average and the Fund's performance reflect the deduction of fees for these
value-added services.
11
<PAGE>
- --------------------------------------------------------------------------------
Fountain Square Mid Cap Fund
An interview with Steven E. Folker, portfolio manager.
Q. How did the Fund perform during the 12-month period ended July 31, 1998?
A. The total return for the Fund during the period was 5.69% on Investment A
Shares (before deduction of sales charge). That compares to a return of 11.21%
for the S&P 400 MidCap and 7.71% for the Lipper MidCap Funds Average.
Q. What economic or market conditions contributed to the Fund's performance?
A. Mid-cap stocks performed fairly well but trailed large-company stocks as
investors continued to favor liquid shares of very large firms. The Asian
economic crisis and uncertainty about its impact on corporate earnings in the
United States helped fuel a flight to quality that generated much larger gains
for blue chips than for the rest of the market.
Q. How did you manage the Fund in that environment?
A. We managed it very much as we managed the Quality Growth Fund, except for the
fact that this Fund focuses on medium-sized companies. That is, we aim to invest
in stocks that show above-average growth prospects and look to purchase their
shares when they are neglected by other investors. Among mid-caps, we found
companies with strong earnings prospects trading at more attractive valuations
than shares of larger firms. Moreover, many mid-sized firms have little exposure
to Asian markets and will therefore experience fewer effects of the Asian
economic problem. We anticipate that the combination of favorable valuations and
relatively positive earnings prospects should benefit many of the Fund's
holdings.
Q. In what sectors did you find opportunities during the period?
A. We found opportunities in healthcare industry stocks such as STERIS Corp.
(3.4% of the Fund's net assets) and consumer cyclical stocks such as Fastenal
Co. (1.6%) and Pier One Imports, Inc. (1.1%). Stocks that boosted the Fund's
returns included QLogic Corp. (3.4%), Century Telephone Enterprises, (2.4%),
Dollar General (2.6%) and Comair Holdings, Inc. (4.3%). We overweighted shares
in sectors that are likely to benefit from the current economic environment or
from long-term trends particular to their area of the economy. Such sectors
included capital goods, consumer cyclicals, financial services, healthcare and
transportation. At the same time, we underweighted basic materials, consumer
staples, energy and utilities, due to lack of strong, visible growth
opportunities.(*)
Q. What is your outlook for the stock market and mid-caps, and how will you
manage the Fund in that environment?
A. We anticipate more volatility with reasonably good returns over the
intermediate to long term. Mid-sized companies have as much or more potential
for growth as larger firms, and mid-cap stocks are trading at relatively
attractive valuations. We expect that those factors will help boost the Fund's
performance in the months ahead.
Q. What were the Fund's top five holdings as of July 31, 1998?
A. The Fund's top five holdings were First Tennessee National Corp. (4.4% of net
assets), Comair Holdings, Inc. (4.3%), Fiserv, Inc. (4.1%), QLogic Corp. (3.4%)
and Cintas Corp. (3.9%).(*)
- ------------
(*)The composition of the Fund's portfolio is subject to change.
12
<PAGE>
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in the Fountain Square Mid Cap Fund
[LINE GRAPH APPEARS HERE]
Mid Cap Fund
Investment Investment Standard & Poor's Lipper MidCap
C Shares** A Shares* MidCap 400 Index Funds Average
Jul-88 10,000 9,550 10,000 10,000
Jul-89 12,510 11,991 13,298 12,649
Jul-90 13,546 13,056 14,159 13,407
Jul-91 16,793 16,233 17,334 15,510
Jul-92 18,705 18,170 20,346 17,356
Jul-93 19,376 18,842 23,737 20,864
Jul-94 20,357 19,796 24,579 21,651
Jul-95 25,538 24,833 30,603 28,181
Jul-96 25,819 25,147 32,971 30,331
Jul-97 37,724 37,009 47,931 40,076
Jul-98 39,621 39,114 53,304 43,116
Average Annual Total Return for the Period Ended July 31, 1998/1/
- --------------------------------------------------------------------------------
Investment A(*) Investment C(**)
--------------- ----------------
1 Year ........................................ 0.93% ............ 5.03%
5 Year ........................................ 14.66% ............ 15.38%
10 Year ....................................... 14.62% ............ 14.76%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Past performance is not indicative of future results. The investment return and
NAV will fluctuate, so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
/1/ The quoted performance of the Mid Cap Fund includes performance of certain
collectively managed accounts advised by Fifth Third Bank, for periods dating
back to 7/31/88 and prior to the Mid Cap Fund's commencement of operations on
11/20/92, as adjusted to reflect the expenses associated with the Fund (without
waivers or reimbursements). These collectively managed accounts were not
registered with the Securities and Exchange Commission and, therefore, were not
subject to the investment restrictions imposed by law on registered mutual
funds. If such accounts had been registered, the performance may have been
adversely affected. The performance shown reflects the deduction of fees for
value-added services associated with a mutual fund, such as investment
management and fund accounting fees. The performance also reflects reinvestment
of all dividends and capital-gains distributions.
* Reflects the maximum sales charge of 4.50%.
** Investment C Shares were initially offered April 24, 1996. The performance
figures for Investment C Shares for periods prior to such date represent the
performance for Investment A Shares of the Fund. Investment C Shareholders that
redeem within one year of purchase are subject to a contingent deferred sales
charge of 1.00%. Investment C Shares are also subject to administrative service
fees at a maximum rate of 0.25% and Rule 12b-1 fees of up to 0.75% of the
average daily net asset value of Investment C Shares. If these fees were
reflected, performance would have been lower. Investment A Shares are subject to
Rule 12b-1 fees of up to 0.35% of the average daily net asset value of
Investment A Shares.
The Fund's performance is measured against the Standard & Poor's MidCap 400
Index, an unmanaged index generally representative of the mid-cap sector of the
U.S. stock market, and the Lipper MidCap Funds Average, representative of the
average of the total returns reported by all of the mutual funds designated by
Lipper Analytical Services, Inc. falling into this category. The Standard &
Poor's MidCap 400 Index does not reflect the deduction of fees associated with a
mutual fund. The Lipper MidCap Funds Average and the Fund's performance reflect
the deduction of fees for these value-added services.
13
<PAGE>
- --------------------------------------------------------------------------------
Fountain Square International Equity Fund/+/
An interview with John B. Schmitz, portfolio manager.
Q. What was the Fund's total return during the 12-month period ended July 31,
1998?
A: The Fund posted a 13.29% return on Investment A Shares (before deduction of
sales charge). That compared to a 5.75% return for the Morgan Stanley Capital
International EAFE (Europe, Australasia and Far East) Index.
Q. How did foreign markets perform during the period?
A. Foreign markets were volatile during the period, as the Asian financial
crisis caused investors to pull money out of that region. Some Asian markets
recovered briefly during the first quarter of 1998, but then fell again as
Japan's economic crisis appeared to worsen. In all, the Morgan Stanley Capital
International Far East Pacific (excluding Japan) Index lost 34.17% during the
period. European markets performed well during most of the period despite Asia's
continued crisis. Investors were encouraged by low interest rates and greater
corporate focus on shareholder value, as well as by the prospect of a single
currency. The MSCI Europe Index rose 33.90% during the period.
Q. What was the Fund's strategy in that environment?
A. The Fund benefited from its long-held strategy of overweighting Europe--as
much as 72% of the Fund's assets were held in Europe, versus 75% for the Fund's
benchmark (the MSCI EAFE Index). Markets that boosted the Fund's returns
included Italy (6.5% of the Fund's net assets), which gained 66.6% during the
period, and Spain (5.4%), which rose 57.3%.
We maintained a relatively small portion of the portfolio's assets in Japan
(8.6% of net assets, compared to a 20% weighting for the Fund's benchmark) and
other Asian markets. That decision also helped the Fund's returns, as those
markets suffered from the deepening crisis in that region.
In April, we eliminated the Fund's position in Hong Kong, a move that turned
out to be felicitous: Hong Kong's market fell 32% in U.S. dollar terms since the
end of March. Our decision to sell the Fund's stake in Malaysia's market also
benefited the Fund, as that market fell 75% during the period.(*)
Q. What is the outlook for foreign markets and how will you manage the Fund with
that in mind?
A. Asia is not in a recession, but rather, we believe, a depression. We believe
it is too soon to make a serious investment commitment in that region. Europe
still looks attractive because of the move to a single currency. Recent visits
to both Spain and Italy confirmed our conviction that these two markets offer
superb growth prospects.
There is a risk that the financial crisis in Asia will undermine the Western
economies, and indeed there are signs that both the U.S. and European economies
are slowing. If so, corporate earnings in those economies could be
disappointing--but interest rates should fall again. In such circumstances, the
response of the equity markets would depend on how severely corporate earnings
were affected. That said, we believe that international portfolios will
outperform United States equities in this environment. Europe is in an earlier
stage of the economic cycle than the United States, and productivity and
earnings should continue to increase. Meanwhile, the Asian and Japanese markets
have been hit hard, and as a result, stocks in that region offer good
valuations.
Q. What are the Fund's top five holdings as of July 31, 1998?
A. The Fund's top five holdings are Glaxo Holdings PLC (1.6% of net assets);
Novartis AG Registered (1.5%); Royal Dutch Petroleum Co. (1.3%); UBS AG
Registered (1.3%) and British Telecommunications PLC (1.2%).(*)
- ---------------
+ International investing involves increased risk and volatility.
* The composition of the Fund's portfolio is subject to change.
14
<PAGE>
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in the Fountain Square International Equity Fund
[LINE GRAPH APPEARS HERE]
International Equity
Investment Investment Morgan Stanley
C Shares** A Shares* Int'l EAFE Index
---------- --------- ----------------
8/18/94 10,000 9,550 10,000
Jul-95 9,830 9,388 10,477
Jul-96 10,710 10,257 10,879
Jul-97 12,986 12,490 12,886
Jul-98 14,618 14,150 13,627
Average Annual Total Return for the Period Ended July 31, 1998
- --------------------------------------------------------------------------------
Investment A* Investment C**
------------- --------------
1 Year ........................................ 8.17% ........... 12.57%
Start of Performance (8/19/94) ................ 9.19% ........... 10.09%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Past performance is not indicative of future results. The investment return and
NAV will fluctuate, so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
* Reflects the maximum sales charge of 4.50%.
** Investment C Shares were initially offered April 25, 1996. The performance
figures for Investment C Shares for periods prior to such date represent the
performance for Investment A Shares of the Fund. Investment C shareholders that
redeem within one year of purchase are subject to a contingent deferred sales
charge of 1.00%. Investment C Shares are also subject to administrative service
fees at a maximum rate of 0.25% and Rule 12b-1 fees of up to 0.75% of the
average daily net asset value of Investment C Shares. If these fees were
reflected, performance would have been lower. Investment A Shares are subject to
Rule 12b-1 fees of up to 0.35% of the average daily net asset value of
Investment A Shares.
The International Equity Fund's performance is measured against the Morgan
Stanley Capital International EAFE Index, an unmanaged index generally
representative of the foreign stock market. The Index does not reflect the
deduction of fees associated with a mutual fund, such as investment management
and fund accounting fees. The Fund's performance reflects the deduction of fees
for these value-added services.
15
<PAGE>
- --------------------------------------------------------------------------------
Fountain Square Bond Fund For Income
An interview with Roberta Tucker, portfolio manager.
Q. How did the Fund perform during the 12 months ended July 31, 1998?
A. The Fund's net asset value began and ended the period at $12.19. Its
Investment A Shares delivered a total return of 6.23% (before deduction of sales
charge), including a dividend of $0.69 per share. The Lehman Brothers
Intermediate Government Corporate Index delivered a total return of 6.75% during
the same period, while the Lipper Short-Intermediate Investment Grade Bond Funds
Average returned 5.84%.
Q. What were the conditions in the bond market during the recent 12-month
period?
A. The domestic economy grew at a robust pace, and inflation remained low.
Investors worried that financial problems in Asia would cause slower growth in
the United States, and also were concerned that corporations affected by the
Asian financial crisis might have trouble paying their debts. Those factors
caused investors to seek safety in Treasuries, pushing their yields down. At the
same time, corporations were forced to offer higher rates relative to Treasuries
to attract capital.
Q. How did you position the Fund in that environment?
A. The Fund seeks to provide shareholders with a high level of current income,
and therefore takes a somewhat cautious approach. The Fund's average maturity
began the period at 4.1 years, and finished the period at 4.4 years. Meanwhile,
the Fund's average credit quality rose from an already-high AA2 to AA1. That
strategy benefited the Fund, as investors, worried about the Asian crisis,
emphasized high-quality issues. At the same time, we took steps to maintain the
Fund's commitment to providing attractive levels of current income. In
particular, we overweighted the Fund's exposure to corporate bonds relative to
its benchmark, the Lehman Brothers Intermediate Government Corporate Index.
Corporate bonds made up 39.2% of the Fund's net assets at the end of the period,
compared to 30% for the benchmark. Treasury securities made up only 52.6% of the
portfolio at the end of the period, versus 70% for the Lehman Brothers
Intermediate Government Corporate Index.(*) That emphasis on corporate bonds
hurt the total returns of the Fund, but allowed it to distribute more income to
shareholders.
Q. What is your outlook for the bond market going forward?
A. We expect the Federal Reserve to maintain a neutral monetary policy, and we
believe rates in general will move lower. We will continue to emphasize issues
that provide high levels of income, including bonds issued by corporations that
are not likely to be affected by the Asian financial crisis. We believe that
high-quality investments will perform especially well given the uncertainty in
the global financial markets; with that in mind, we intend to maintain the
Fund's high credit quality.
- -------------
* The composition of the Fund's portfolio is subject to change.
16
<PAGE>
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in the Fountain Square Bond Fund For Income
[LINE GRAPH APPEARS HERE]
Bond Fund For Income
<TABLE>
<CAPTION>
Lipper Short-Intermediate Lehman Brothers
Investment Investment Investment Grade Bond Intermediate Gov't
C Shares** A Shares* Funds Average Corporate Index
---------- --------- ------------- ---------------
<S> <C> <C> <C> <C>
Jul-88 10,000 9,550 10,000 10,000
Jul-89 11,150 10,746 11,134 11,272
Jul-90 11,641 11,343 11,785 12,075
Jul-91 12,651 12,437 12,871 13,310
Jul-92 14,278 14,186 14,726 15,192
Jul-93 15,386 15,440 16,118 16,490
Jul-94 14,656 14,872 16,098 16,641
Jul-95 15,863 16,242 17,263 18,107
Jul-96 16,396 16,957 18,153 19,067
Jul-97 17,533 18,307 19,590 20,797
Jul-98 18,497 19,448 20,734 22,200
</TABLE>
Average Annual Total Return for the Period Ended July 31, 1998/1/
- --------------------------------------------------------------------------------
Investment A(*) Investment C(**)
--------------- ----------------
1 Year ...................................... 1.49% .............. 5.50%
5 Year ...................................... 3.76% .............. 3.75%
10 Year ..................................... 6.88% .............. 6.34%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Past performance is not indicative of future results. The investment return and
NAV will fluctuate, so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
/1/ The quoted performance of the Bond Fund For Income includes performance of
certain collectively managed accounts advised by Fifth Third Bank, for periods
dating back to 7/31/88, and prior to the Bond Fund For Income's commencement of
operations on 1/27/97, as adjusted to reflect the expenses associated with the
Fund (without waivers or reimbursements). These collectively managed accounts
were not registered with the Securities and Exchange Commission and, therefore,
were not subject to the investment restrictions imposed by law on registered
mutual funds. If such accounts had been registered, the performance may have
been adversely affected. The performance shown reflects the deduction of fees
for value-added services associated with a mutual fund, such as investment
management and fund accounting fees. The performance also reflects reinvestment
of all dividends and capital-gains distributions.
* Reflects the maximum sales charge of 4.50%.
** Investment C Shares were initially offered January 27, 1997. The performance
figures for Investment C Shares for periods prior to such date represent the
performance for Investment A Shares of the Fund. Investment C shareholders that
redeem within one year of purchase are subject to a contingent deferred sales
charge of 1.00%. Investment C Shares are also subject to administrative service
fees at a maximum rate of 0.25% and Rule 12b-1 fees of up to 0.75% of the
average daily net asset value of Investment C Shares. If these fees were
reflected, performance would have been lower. Investment A Shares are subject to
Rule 12b-1 fees of up to 0.35% of the average daily net asset value of
Investment A Shares.
The Fund's performance is measured against the Lehman Brothers Intermediate
Government Corporate Index, an unmanaged index generally representative of the
performance of the bond market as a whole. The Fund's performance is also
measured against the Lipper Short-Intermediate Investment Grade Bond Funds
Average, representative of the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. falling into
this category. The Lehman Brothers Intermediate Government Corporate Index does
not reflect the deduction of fees associated with a mutual fund. The Lipper
Short-Intermediate Investment Grade Bond Funds Average and the Fund's
performance reflect the deduction of fees for these value-added services.
17
<PAGE>
- --------------------------------------------------------------------------------
Fountain Square Quality Bond Fund
An interview with Roberta Tucker, portfolio manager.
Q. How did the Fund perform during the 12-month period ended July 31, 1998?
A. The Fund during the period delivered a total return of 6.91% on Investment A
Shares (before deduction of sales charge). That return reflected an income
distribution of $0.55 per share and an increase in the Fund's net asset value
from $9.85 to $9.96 per share. The Fund's benchmarks, the Lehman Brothers
Aggregate Bond Index and the Lipper Intermediate Investment Grade Debt Funds
Average, returned 7.87% and 6.81%, respectively.
Q. What were the conditions in the bond market during the recent 12-month
period?
A. The period was characterized by a decline in interest rates, with the
sharpest drops occurring in long-term securities. Rates on the 30-year Treasury
Bond dropped 58 basis points (0.58%). The difference between yields on three-
month and 30-year Treasuries shrank by 44 basis points (0.44%), while the
difference between yields on two-year and 30-year Treasuries declined by 34.5
basis points (0.35%). Spreads between yields on different types of bonds
fluctuated considerably. Investors' concerns about the impact of the Asian
financial crisis caused a flight to quality early in the period. That boosted
demand for Treasury bonds relative to other issues, causing Treasury yields to
decline relative to those on corporate or mortgage-backed securities. Strong
demand for Treasuries was especially noticeable among investors from foreign
countries.
Q. How did you structure the Fund's credit rating and average maturity?
A. The credit quality of the Fund began and ended the period at AA1, although at
times it rose to as high as AAA.(*) That approach served the Fund well as
investors sought safety in high-quality issues. The Fund's average maturity
fluctuated during the period as we seized opportunities that resulted from
market volatility. We kept the Fund's average maturity roughly neutral when
rates were high, and increased it as rates fell. However, the average maturity
finished the period where it started, at 8.3 years. That compares to an average
maturity of 7.0 years for the Fund's benchmark, the Lehman Brothers Aggregate
Bond Index.(*)
Q. What types of securities did you favor during the period?
A. We took advantage of relatively high rates on mortgage-backed securities
relative to Treasuries, to purchase index-weighted mortgages. That investment
boosted the returns of the Fund from January through July. We also found
opportunities in corporate bonds of companies that we think are unlikely to
suffer from Asia's economic problems. We kept the Fund slightly underweighted in
agency issues, because their yield advantage over Treasuries was so small.(*)
Q. What is your outlook for the bond market, and how will you manage the Fund
going forward?
A. We feel that rates may continue to move lower and the Federal Reserve could
maintain a neutral monetary policy. In that environment we expect to see better
performance from longer-term bonds, with government and agency bonds
outperforming corporate issues. Inflation remains low, and the economy continues
to show solid growth, fueled mainly by consumer spending. We will watch to see
if the financial crisis in Asia, or a decline in the stock market or in consumer
spending, puts pressure on U.S. economic growth. If that occurs, we may increase
the average maturity of the portfolio. Regardless, we will favor high-quality
issues to keep credit risk low.
- -------------
* The composition of the Fund's portfolio is subject to change.
18
<PAGE>
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in the Fountain Square Quality Bond Fund
[LINE GRAPH APPEARS HERE]
Quality Bond
Lipper Intermediate Lehman Brothers
Investment Investment Investment Grade Aggregate Bond
C Shares** A Shares* Debt Funds Average Index
---------- --------- ------------------ -----
Jul-88 10,000 9,550 10,000 10,000
Jul-89 11,223 10,769 11,238 11,520
Jul-90 11,732 11,307 11,901 12,333
Jul-91 12,751 12,355 13,045 13,652
Jul-92 14,498 14,098 15,043 15,671
Jul-93 15,543 15,130 16,613 17,266
Jul-94 15,349 14,941 16,352 17,280
Jul-95 16,712 16,268 17,834 19,027
Jul-96 17,330 16,895 18,797 20,078
Jul-97 18,833 18,487 20,808 22,242
Jul-98 19,948 19,764 22,225 23,992
Average Annual Total Return for the Period Ended July 31, 1998/1/
- --------------------------------------------------------------------------------
Investment A(*) Investment C(**)
--------------- ----------------
1 Year ..................................... 2.14% .............. 5.92%
5 Year ..................................... 4.53% .............. 5.12%
10 Year .................................... 7.05% .............. 7.15%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Past performance is not indicative of future results. The investment return and
NAV will fluctuate, so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
/1/ The quoted performance of the Quality Bond Fund includes performance of
certain collectively managed accounts advised by Fifth Third Bank, for periods
dating back to 7/31/88, and prior to the Quality Bond Fund's commencement of
operations on 11/20/92, as adjusted to reflect the expenses associated with the
Fund (without waivers or reimbursements). These collectively managed accounts
were not registered with the Securities and Exchange Commission and, therefore,
were not subject to the investment restrictions imposed by law on registered
mutual funds. If such accounts had been registered, the performance may have
been adversely affected. The performance shown reflects the deduction of fees
for value-added services associated with a mutual fund, such as investment
management and fund accounting fees. The performance also reflects reinvestment
of all dividends and capital-gains distributions.
* Reflects the maximum sales charge of 4.50%.
** Investment C Shares were initially offered April 25, 1996. The performance
figures for Investment C Shares for periods prior to such date represent the
performance for Investment A Shares of the Fund. Investment C Shareholders that
redeem within one year of purchase are subject to a contingent deferred sales
charge of 1.00%. Investment C Shares are also subject to administrative service
fees at a maximum rate of 0.25% and Rule 12b-1 fees of up to 0.75% of the
average daily net asset value of Investment C Shares. If these fees were
reflected, performance would have been lower. Investment A Shares are subject to
Rule 12b-1 fees of up to 0.35% of the average daily net asset value of
Investment A Shares.
The Fund's performance is measured against the Lehman Brothers Aggregate Bond
Index, an unmanaged index generally representative of the performance of the
bond market as a whole, and the Lipper Intermediate Investment Grade Debt Funds
Average, representative of the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. falling into
this category. The Lehman Brothers Aggregate Bond Index does not reflect the
deduction of fees associated with a mutual fund. The Lipper Intermediate
Investment Grade Debt Funds Average and the Fund's performance reflect the
deduction of fees for these value-added services.
19
<PAGE>
- --------------------------------------------------------------------------------
Fountain Square U.S. Government Securities Fund
An interview with Carla McGuire, portfolio manager.
Q. How did the Fund perform during the recent period?
A. The Fund distributed $0.52 per share, and its net asset value increased from
$9.75 to $9.82 per share, during the 12 months ended July 31, 1998. The
combination generated a total return of 6.17% on Investment A Shares (before
deduction of sales charge). That return compares to 6.83% for the Lehman
Brothers Intermediate Government Bond Index and 5.67% for the Lipper Short-
Intermediate Government Bond Funds Average.
Q. What were conditions like in the bond market during the period?
A. The period was marked by continued moderate-to-strong economic growth, low
inflation and declining interest rates. However, bond yields fluctuated
considerably during the period, due in large part to investors' changing
reactions to the Asian financial crisis and its potential impact on U.S.
economic growth. Yields on U.S. Treasury bonds rose early in the period, then
declined beginning in October as investors flocked to the highest-quality
securities due to concerns that the Asian crisis would lead to slower U.S.
economic growth. Rates rose again in April; therefore, signs of continued strong
growth in the first quarter of 1998 created fears that inflation would rise and
the Federal Reserve would raise interest rates. Those concerns faded later in
the period as further signs of weakness in Asia and other foreign markets sent
interest rates lower.
Q. How did you manage the Fund in that environment?
A. We extended the Fund's average duration from 2.8 to 3 years when interest
rates rose early in the period, and again to 3.2 years when rates climbed in
April. That boosted the Fund's return as rates finished the period lower than
they began it. We also benefited from our decision to employ a "barbell"
structure, i.e., a portfolio of bonds distributed like the shape of a barbell,
with most of the portfolio in short-term and long-term bonds, but few bonds in
intermediate maturities. The longer-term issues allowed us to take advantage of
the relatively high yields on such securities. The short-term issues, which are
relatively stable when interest rates fluctuate, helped moderate the Fund's
risk. We later purchased a mix of issues with various maturities to create a
laddered portfolio as the yield curve flattened, diminishing the yield advantage
on longer-term issues.
Q. What was the Fund's credit quality during the period?
A. The Fund maintained its high average credit rating of AAA. We invested
heavily in U.S. Treasury issues, which represented approximately 57.4% of the
portfolio's net assets on July 31, 1998. That overweighting benefited the Fund's
performance as investors, concerned about the Asian crisis, favored Treasuries.
We underweighted callable bonds and mortgage-backed securities, which tend to
benefit less than other issues from declines in interest rates.(*) That approach
helped the Fund perform in line with its benchmark, the Lehman Brothers
Intermediate Government Bond Index, as interest rates fell.
Q. What is your outlook going forward, and how will you manage the Fund?
A. We believe that continued effects of the Asian crisis will dampen U.S.
economic growth. The rate of inflation will likely remain low, although, we
believe it may increase slightly from its current levels. Therefore, it is our
opinion that interest rates will continue to decline, and that the Federal
Reserve will maintain a neutral monetary policy. The Federal budget surplus
means that fewer new Treasuries will be issued, which also should help to boost
Treasuries' prices. That said, we expect volatility in the bond market, and will
take advantage of that volatility to help boost the Fund's performance. We will
lengthen the portfolio's average maturity and duration slightly to lock in
higher yields when bond prices decline, and reduce it when prices rise and
yields fall. Agency issues are beginning to pay more attractive yields relative
to Treasuries, so we will reduce our exposure to Treasuries slightly and add
select, non-callable agency issues.
- --------------
* The composition of the Fund's portfolio is subject to change.
20
<PAGE>
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in the Fountain Square U.S.
Government Securities Fund
[LINE GRAPH APPEARS HERE]
U.S. Government Securities
<TABLE>
<CAPTION>
Lipper Short-Intermediate Lehman Brothers
Investment Investment U.S. Government Intermediate Government
C Shares** A Shares* Bond Funds Average Bond Index
---------- --------- ------------------ ----------
<S> <C> <C> <C> <C>
Jul-88 10,000 9,550 10,000 10,000
Jul-89 10,786 10,340 11,034 11,266
Jul-90 11,477 11,052 11,861 12,063
Jul-91 12,398 11,987 13,040 13,290
Jul-92 13,442 13,054 14,616 15,123
Jul-93 14,211 13,815 15,742 16,361
Jul-94 14,227 13,830 15,792 16,512
Jul-95 15,316 14,889 16,984 17,898
Jul-96 15,848 15,429 17,841 18,829
Jul-97 16,944 16,636 19,255 20,444
Jul-98 17,823 17,663 20,347 21,840
</TABLE>
Average Annual Total Return for the Period Ended July 31, 1998/1/
- --------------------------------------------------------------------------------
Investment A* Investment C**
------------- --------------
1 Year ..................................... 1.39% .............. 5.19%
5 Year ..................................... 4.08% .............. 4.63%
10 Year .................................... 5.86% .............. 5.95%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Past performance is not indicative of future results. The investment return and
NAV will fluctuate, so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
/1/ The quoted performance of the U.S. Government Securities Fund includes
performance of certain collectively managed accounts advised by Fifth Third
Bank, for periods dating back to 7/31/88, and prior to the U.S. Government
Securities Fund's commencement of operations on 11/20/92, as adjusted to reflect
the expenses associated with the Fund (without waivers or reimbursements). These
collectively managed accounts were not registered with the Securities and
Exchange Commission and, therefore, were not subject to the investment
restrictions imposed by law on registered mutual funds. If such accounts had
been registered, the performance may have been adversely affected. The
performance shown reflects the deduction of fees for value-added services
associated with a mutual fund, such as investment management and fund accounting
fees. The performance also reflects reinvestment of all dividends and
capital-gains distributions.
* Reflects the maximum sales charge of 4.50%.
** Investment C Shares were initially offered April 24, 1996. The performance
figures for Investment C Shares for periods prior to such date represent the
performance for Investment A Shares of the Fund. Investment C Shareholders that
redeem within one year of purchase are subject to a contingent deferred sales
charge of 1.00%. Investment C Shares are also subject to administrative service
fees at a maximum rate of 0.25% and Rule 12b-1 fees of up to 0.75% of the
average daily net asset value of Investment C Shares. If these fees were
reflected, performance would have been lower. Investment A Shares are subject to
Rule 12b-1 fees of up to 0.35% of the average daily net asset value of
Investment A Shares.
The Fund's performance is measured against the Lehman Brothers Intermediate
Government Bond Index, an unmanaged index generally representative of
intermediate-term government bonds, and the Lipper Short-Intermediate U.S.
Government Bond Funds Average, representative of the average of the total
returns reported by all of the mutual funds designated by Lipper Analytical
Services, Inc. falling into this category. The Lehman Brothers Intermediate
Government Bond Index does not reflect the deduction of fees associated with a
mutual fund. The Lipper Short-Intermediate U.S. Government Bond Funds Average
and the Fund's performance reflect the deduction for fees for these value-added
services.
21
<PAGE>
Fountain Square Municipal Bond Fund+
An interview with Carla McGuire, portfolio manager.
Q. How did the Fund perform during the period?
A. The Fund distributed $0.51 per share during the 12 months ended July 31,
1998. Its net asset value per share declined from $12.33 to $12.24, for a total
return of 4.28% on Investment A Shares (before deduction of sales charge). That
return compares to a 5.26% return for the Lehman Brothers 7-Year Municipal Bond
Index and a 4.60% return for the Lipper Intermediate Municipal Debt Funds
Average.
Q. How did the municipal bond market perform during the period?
A. Municipal bonds underperformed U.S. Treasuries during the period, as
investors flocked to the highest-quality government securities in the wake of
the Asian economic crisis. For example, when Treasury yields declined sharply
beginning in October, municipal bond yields remained relatively stable.
Municipal bonds temporarily outperformed Treasuries in May, when the relative
yield on 30-year municipal bonds declined from 94% to 85% of the yield on
Treasury bonds of comparable maturity. A heavy supply of municipal issues
throughout the period also dampened the market's performance, as many
municipalities refinanced outstanding issues in the low interest rate
environment.
Q. How did you position the Fund in that environment?
A. We lengthened the Fund's duration from 5.75 years at the beginning of the
period to 6.34 years at the end, in anticipation of lower interest rates (a
longer duration portfolio generally benefits more from falling rates). We made
that change by reducing our position in intermediate-term securities and
purchasing issues with longer maturities. We also continued to favor non-
callable bonds and bonds with good call structures that would benefit more from
a decline in interest rates.(*)
Q. What changes did you make to the Fund's credit quality during the period?
A. We maintained the Fund's high credit quality, with an average rating of AA.
The yield advantage on lower quality issues was not significant enough to make
up for their additional credit risk. We invested in select insured bonds and new
issues with strong credit quality. Our approach differed from that of the Fund's
benchmark, the Lehman Brothers 7-Year Municipal Bond Index and the Lipper
Intermediate Municipal Debt Fund in that the benchmark features some lower-
quality issues and zero bond municipal securities that the Fund avoids.
Q. What is your outlook for the economy and the municipal bond market in the
months ahead?
A. It appears that inflation could remain low as the Asian crisis continues to
dampen the growth of the U.S. economy. Therefore, we expect interest rates to
decline further. We also expect a reduction in the heavy supply of municipal
issues, which could help boost prices of municipal bonds.
Q. What will your strategy be in that environment?
A. We will extend the Fund's duration slightly, which should benefit its
performance as the municipal market rallies. As always, our primary objective is
to provide shareholders with a high level of current income. We also seek
attractive opportunities to help boost the Fund's yield. We will continue to
look for opportunities to protect and help increase the Fund's income while
structuring the portfolio to take advantage of the current interest rate
environment.
- --------
+ Some or all of the income may be subject to the federal alternative minimum
tax and to certain state and local taxes.
* The composition of the Fund's portfolio is subject to change.
22
<PAGE>
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in the Fountain Square Municipal Bond Fund
[LINE GRAPH APPEARS HERE]
Municipal Bond
<TABLE>
<CAPTION>
Lehman Brothers
Lipper Intermediate Municipal Bond Index/
Investment Investment Municipal Debt Lehman Brothers 7-Year
C Shares** A Shares* Funds Average Municipal Bond Index
---------- --------- ------------- --------------------
<S> <C> <C> <C> <C>
Jul-88 9,550 10,000 10,000
Jul-89 10,290 10,907 11,217
Jul-90 10,838 11,588 11,993
Jul-91 11,667 12,505 13,042
Jul-92 12,852 14,037 14,835
Jul-93 13,528 15,024 16,145
Jul-94 13,719 15,383 16,447
Jul-95 14,421 16,392 17,744
Jul-96 15,007 17,205 18,914
Jul-97 16,071 18,600 20,856
Jul-98 16,760 19,456 22,105
</TABLE>
Average Annual Total Return for the Period Ended July 31, 1998/1/
- --------------------------------------------------------------------------------
Investment A(*)
---------------
1 Year ......................................................... -0.40%
5 Year ......................................................... 3.42%
10 Year ........................................................ 5.30%
- --------------------------------------------------------------------------------
Past performance is not indicative of future results. The investment return and
NAV will fluctuate, so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
/1/ The quoted performance of the Municipal Bond Fund includes performance of
certain collectively managed accounts advised by Fifth Third Bank, for periods
dating back to 7/31/88, and prior to the Municipal Bond Fund's commencement of
operations on 1/27/97, as adjusted to reflect the expenses associated with the
Fund (without waivers or reimbursements). These collectively managed accounts
were not registered with the Securities and Exchange Commission and, therefore,
were not subject to the investment restrictions imposed by law on registered
mutual funds. If such accounts had been registered, the performance may have
been adversely affected. The performance shown reflects the deduction of fees
for value-added services associated with a mutual fund, such as investment
management and fund accounting fees. The performance also reflects reinvestment
of all dividends and capital-gains distributions.
* Reflects the maximum sales charge of 4.50%.
As of July 31, 1998 the Fountain Square Municipal Bond Fund had no Investment C
shares outstanding.
The Fund's performance is measured against the Lehman Brothers 7-Year Municipal
Bond Index, an unmanaged index that is generally representative of municipal
bonds with intermediate maturities. The Fund's performance is also measured
against the Lipper Intermediate Municipal Debt Funds Average, which is
representative of the average of the total returns reported by all of the mutual
funds designated by Lipper Analytical Services, Inc. falling into this category.
The Lehman Brothers 7-Year Municipal Bond Index does not reflect the deduction
of fees associated with a mutual fund. The Lipper Intermediate Municipal Debt
Funds Average and the Fund's performance reflect the deduction of fees for these
value-added services.
23
<PAGE>
- --------------------------------------------------------------------------------
Fountain Square Ohio Tax Free Bond Fund(dagger)+
An interview with Carla McGuire, portfolio manager.
Q. How did the Fund perform during the recent period?
A. The Fund posted a total return of 4.38% on Investment A Shares (before
deduction of sales charge) during the 12 months ended July 31, 1998. That return
reflected a decrease in the Fund's net asset value per share from $10.31 to
$10.29, and an income distribution per share of $0.42. The Fund's benchmarks,
the Lehman Brothers Municipal Bond Index and the Lipper Intermediate Municipal
Debt Funds Average, returned 5.99% and 4.60%, respectively.
Q. How did the Ohio municipal bond market perform during the period?
A. The Ohio municipal market reflected many of the factors that drove the
performance of the municipal market as a whole. Investors' flight to the
highest-quality securities in the wake of the Asian crisis caused municipal
bonds to underperform U.S. Treasuries. For example, when Treasury yields
declined sharply beginning in October, municipal bond yields remained relatively
stable. The supply of issues in the Ohio municipal market, although heavy, was
not as strong as the supply of issues nationwide. That benefited the performance
of Ohio municipal bonds to some extent.
Q. How did you manage the Fund in that environment?
A. We extended the Fund's duration during the period from 5.57 years to 6.25
years. We increased the Fund's position in longer-term bonds and reduced our
intermediate-term holdings in anticipation of continued low inflation and
declining interest rates, and because municipal bonds were inexpensive relative
to Treasuries. We also favored non-callable bonds and bonds with good call
structures, which tend to perform well in a falling rate environment.*
Q. What about the Fund's credit rating?
A. We maintained the Fund's high credit quality, with an overall rating of AA.
The extra yield available from lower-quality issues was not significant enough
to make up for such bonds' higher credit risk. We overweighted the Fund's
holdings in insured bonds.*
Q. What is your outlook for the Ohio municipal market in the months ahead,
and how will you manage the Fund in that environment?
A. Ohio's economy continues to be healthy, benefiting from U.S. economic growth
as well as from regional factors. What's more, Ohio has a high marginal tax
rate, which helps support demand for municipal issues. We expect the Asian
crisis could dampen U.S. economic growth in the months ahead, helping to keep
inflation low. Interest rates will likely fall in that environment. We will
extend the Fund's duration slightly going forward, to take advantage of any
decline in interest rates. We will also maintain our high-quality portfolio,
looking for attractive opportunities that do not carry undue credit or other
risk.
- --------
+ Some or all of the income may be subject to the federal alternative minimum
tax and to certain state and local taxes.
* The composition of the Fund's portfolio is subject to change.
24
<PAGE>
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in the Fountain Square Ohio Tax Free Bond Fund
Ohio Tax Free
Lipper Intermediate
Investment Investment Municipal Debt Lehman Brothers
C Shares** A Shares* Funds Average Municipal Bond Index
---------- --------- ------------- --------------------
Jul-88 10,000 9,550 10,000 10,000
Jul-89 10,641 10,230 10,907 11,217
Jul-90 11,160 10,790 11,588 11,995
Jul-91 11,924 11,564 12,505 13,043
Jul-92 13,179 12,844 14,037 14,837
Jul-93 13,641 13,337 15,024 16,148
Jul-94 13,907 13,597 15,383 16,451
Jul-95 14,883 14,551 16,392 17,747
Jul-96 15,475 15,180 17,205 18,916
Jul-97 16,532 16,317 18,600 20,860
Jul-98 17,120 17,033 19,456 22,109
Average Annual Total Return for the Period Ended July 31, 1998/1/
- --------------------------------------------------------------------------------
Investment A* Investment C**
------------ ------------
1 Year ...................................... -0.35% ............... 3.56%
5 Year ...................................... 4.05% ............... 4.65%
10 Year ..................................... 5.47% ............... 5.52%
- --------------------------------------------------------------------------------
Past performance is not indicative of future results. The investment return and
NAV will fluctuate, so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
/1/ The quoted performance of the Ohio Tax Free Bond Fund includes performance
of certain collectively managed accounts advised by Fifth Third Bank, for
periods dating back to 7/31/88, and prior to the Ohio Tax Free Bond Fund's
commencement of operations on 5/27/93, as adjusted to reflect the expenses
associated with the Fund (without waivers or reimbursements). These collectively
managed accounts were not registered with the Securities and Exchange Commission
and, therefore, were not subject to the investment restrictions imposed by law
on registered mutual funds. If such accounts had been registered, the
performance may have been adversely affected. The performance shown reflects the
deduction of fees for value-added services associated with a mutual fund, such
as investment management and fund accounting fees. The performance also reflects
reinvestment of all dividends and capital-gains distributions.
* Reflects the maximum sales charge of 4.50%.
** Investment C Shares were initially offered April 24, 1996. The performance
figures for Investment C Shares for periods prior to such date represent the
performance for Investment A Shares of the Fund. Investment C Shareholders that
redeem within one year of purchase are subject to a contingent deferred sales
charge of 1.00%. Investment C Shares are also subject to administrative service
fees at a maximum rate of 0.25% and Rule 12b-1 fees of up to 0.75% of the
average daily net asset value of Investment C Shares. If these fees were
reflected, performance would have been lower. Investment A Shares are subject to
Rule 12b-1 fees of up to 0.35% of the average daily net asset value of
Investment A Shares.
The Fund's performance is measured against the Lehman Brothers Municipal Bond
Index, an unmanaged index generally representative of the municipal bond market.
The Fund's performance is also measured against the Lipper Intermediate
Municipal Debt Funds Average, which is representative of the average of the
total returns reported by all of the mutual funds designated by Lipper
Analytical Services, Inc. falling into this category. The Lehman Brothers
Municipal Bond Index does not reflect the deduction of fees associated with a
mutual fund. The Lipper Intermediate Municipal Debt Funds Average and the Fund's
performance do reflect the deduction of fees for these value-added services.
Performance of the Ohio Tax Free Bond Fund is no longer compared to the Lehman
Brothers 5-Year Municipal Bond Index or the Lehman Brothers 7-Year Municipal
Bond Index. The Advisor believes the Lehman Brothers Municipal Bond Index better
represents the average maturity of the Fund. However, the ten year hypothetical
growth of a $10,000 investment for the Lehman Brothers 5-Year Municipal Bond
Index and the Lehman Brothers 7-Year Municipal Bond Index would have been
$19,538 and $22,105, respectively.
25
<PAGE>
Fountain Square Quality Growth Fund
Schedule of Portfolio Investments
July 31, 1998
(Amounts in thousands except share amounts)
- --------------------------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
------------------------------------------------------------------ -----------
Common Stocks -- 97.6%
- --------------------------------------------------------------------
Banking -- 9.3%
-------------------------------------------------------
330,000 Bank of New York Co., Inc. $ 21,119
-------------------------------------------------------
228,000 Mellon Bank Corp. 15,361
-------------------------------------------------------
360,000 Norwest Corp. (c) 12,938
------------------------------------------------------- -----------
Total 49,418
------------------------------------------------------- -----------
Beverages -- 2.1%
-------------------------------------------------------
70,000 Coca Cola Co. 5,648
-------------------------------------------------------
136,000 PepsiCo, Inc. 5,279
------------------------------------------------------- -----------
Total 10,927
------------------------------------------------------- -----------
Business Services -- 1.2%
-------------------------------------------------------
128,000 Cintas Corp. 6,504
-------------------------------------------------------
Chemicals -- 2.5%
-------------------------------------------------------
265,000 Praxair, Inc. 13,051
-------------------------------------------------------
Computer Software & Equipment-- 9.1%
-------------------------------------------------------
128,000 Cisco Systems (b) 12,255
-------------------------------------------------------
420,000 First Data Corp. (c) 12,154
-------------------------------------------------------
60,000 Microsoft Corp. (b) 6,608
-------------------------------------------------------
430,000 Oracle Corp. (b) 11,395
-------------------------------------------------------
115,000 Sun Microsystems, Inc. (b) 5,434
------------------------------------------------------- -----------
Total 47,846
------------------------------------------------------- -----------
Consumer Products -- 4.5%
-------------------------------------------------------
320,000 Newell Co. 16,480
-------------------------------------------------------
35,000 Procter & Gamble Co. 2,778
-------------------------------------------------------
150,000 Sherwin Williams Co. 4,781
------------------------------------------------------- -----------
Total 24,039
------------------------------------------------------- -----------
Electrical Equipment -- 3.9%
-------------------------------------------------------
125,000 Emerson Electric Co. (c) 7,430
-------------------------------------------------------
150,000 General Electric Co. 13,397
------------------------------------------------------- -----------
Total 20,827
------------------------------------------------------- -----------
Electronics -- 6.5%
-------------------------------------------------------
255,980 Adaptec, Inc. (b), (c) 2,977
-------------------------------------------------------
300,000 Intel Corp. 25,331
-------------------------------------------------------
210,000 Molex, Inc. 5,959
------------------------------------------------------- -----------
Total 34,267
------------------------------------------------------- -----------
Financial -- 3.9%
-------------------------------------------------------
435,000 Freddie Mac 20,554
-------------------------------------------------------
Healthcare -- 5.9%
-------------------------------------------------------
220,000 Guidant Corp. (c) 16,349
-------------------------------------------------------
600,000 Healthsouth Corp. (b), (c) 15,075
------------------------------------------------------- -----------
Total 31,424
------------------------------------------------------- -----------
Insurance -- 5.4%
-------------------------------------------------------
100,000 Allstate Corp. 4,244
-------------------------------------------------------
140,000 Cincinnati Financial Corp. 5,005
-------------------------------------------------------
136,000 Marsh & McLennan Co., Inc. 8,305
-------------------------------------------------------
200,000 MGIC Investment Corp. (c) 10,724
------------------------------------------------------- -----------
Total 28,278
------------------------------------------------------- -----------
Manufacturing -- 6.4%
-------------------------------------------------------
300,000 Illinois Tool Works 16,819
-------------------------------------------------------
215,000 Tyco International Limited (c) 13,317
-------------------------------------------------------
117,000 Zebra Technologies Corp., Class A (b), (c) 3,795
------------------------------------------------------- -----------
Total 33,931
------------------------------------------------------- -----------
Media/Publishing -- 3.1%
-------------------------------------------------------
270,000 Interpublic Group of Cos., Inc. (c) 16,268
-------------------------------------------------------
Medical Distribution -- 1.6%
-------------------------------------------------------
90,000 Cardinal Health, Inc. (c) 8,646
-------------------------------------------------------
Office Equipment & Supplies-- 3.3%
-------------------------------------------------------
150,000 Avery Dennison Corp. (c) 8,634
-------------------------------------------------------
170,000 Pitney-Bowes, Inc. 8,585
------------------------------------------------------- -----------
Total 17,219
------------------------------------------------------- -----------
Oil & Gas -- 4.2%
-------------------------------------------------------
45,000 Chevron Corp. (c) 3,718
-------------------------------------------------------
70,050 Ensco International 950
-------------------------------------------------------
136,000 Mobil Corp. 9,486
-------------------------------------------------------
137,000 Schlumberger Limited (c) 8,297
------------------------------------------------------- -----------
Total 22,451
------------------------------------------------------- -----------
Pharmaceuticals -- 8.1%
-------------------------------------------------------
120,000 American Home Products 6,180
-------------------------------------------------------
87,000 Amgen, Inc. (b) 6,389
-------------------------------------------------------
52,000 Bristol Myers Squibb Co. 5,925
-------------------------------------------------------
50,000 Pfizer, Inc. 5,500
-------------------------------------------------------
90,000 Schering -- Plough Corp. 8,708
-------------------------------------------------------
132,300 Warner Lambert, Inc. 9,996
------------------------------------------------------- -----------
Total 42,698
------------------------------------------------------- -----------
Retail -- 7.6%
-------------------------------------------------------
500,000 Home Depot, Inc. 20,937
-------------------------------------------------------
200,000 Lowe's Companies 7,700
-------------------------------------------------------
182,000 Wal-Mart Stores, Inc. (c) 11,489
------------------------------------------------------- -----------
Total 40,126
------------------------------------------------------- -----------
Telecommunications -- 7.5%
-------------------------------------------------------
120,000 Lucent Technology 11,093
-------------------------------------------------------
170,000 Tellabs, Inc. (b), (c) 12,798
-------------------------------------------------------
300,000 Worldcom, Inc. (b), (c) 15,862
------------------------------------------------------- -----------
Total 39,753
------------------------------------------------------- -----------
Transportation -- 1.5%
-------------------------------------------------------
250,000 Comair Holdings, Inc. (c) 7,891
------------------------------------------------------- -----------
Total Common Stocks 516,118
------------------------------------------------------- -----------
Repurchase Agreements -- 5.7%
- --------------------------------------------------------------------
$29,967 Warburg/Dillion, 5.55%, dated 7/31/98, due 8/3/98 29,967
(at amortized cost), collateralized by U.S. Treasury
Bond, 8.00%, due 11/15/21 with a value of $30,617.
-------------------------------------------------------
Short Term Securities Purchased with Collateral -- 22.1%
- --------------------------------------------------------------------
Commercial Paper -- 17.8%
-------------------------------------------------------
1,795 A.I. Credit Corp., 5.68%, 8/3/98 1,795
-------------------------------------------------------
2,375 AIG Funding, 5.60%, 8/3/98 2,374
-------------------------------------------------------
2,057 Air Products, 5.58%, 9/30/98 2,038
-------------------------------------------------------
7,315 Amgen Corp., 5.52%, 9/17/98 7,249
-------------------------------------------------------
-- Continued --
26
<PAGE>
Fountain Square Quality Growth Fund
- --------------------------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
----------------------------------------------------------------- -----------
$ 4,503 Bellsouth Telecommunications, 5.65%, 8/4/98 $ 4,499
------------------------------------------------------
9,758 Cargill, Inc., 5.66%, 8/3/98 9,753
------------------------------------------------------
4,897 Coca Cola, Inc., 5.52%, 8/4/98 4,865
------------------------------------------------------
7,535 Deutsche Bank, 5.53%, 8/21/98 7,503
------------------------------------------------------
4,624 Deutsche Bank, 5.53%, 8/24/98 4,601
------------------------------------------------------
6,286 Du Pont De Nemours & Co., 5.53%, 8/7/98 6,244
------------------------------------------------------
9,758 Ford Motor Credit Corp., 5.68%, 8/3/98 9,753
------------------------------------------------------
3,602 General Electric Capital, 5.57%, 8/17/98 3,592
------------------------------------------------------
7,315 Merrill Lynch, 5.52%, 9/18/98 7,248
------------------------------------------------------
760 Merrill Lynch, 5.58%, 8/12/98 759
------------------------------------------------------
1,576 Petrofina Delaware, 5.55%, 8/20/98 1,571
------------------------------------------------------
10,286 Prudential Funding, 5.64%, 8/4/98 10,277
------------------------------------------------------
9,758 Xerox Corp., 5.66%, 8/3/98 9,753
------------------------------------------------------ -----------
Total 93,874
------------------------------------------------------ -----------
Corporate Bond -- 1.9%
10,047 Goldman Sachs Floating Rate Note, 5.72%, 7/24/00 10,047
------------------------------------------------------
Repurchase Agreements -- 2.4%
------------------------------------------------------
12,759 Morgan Stanley, 5.63%, dated 7/31/98, due 8/3/98 (at
amortized cost), collateralized by U.S. Treasury
Bills, due 1/21/99 with a value of $13,080. 12,759
------------------------------------------------------ -----------
Total Short Term Securities
Purchased with Collateral 116,680
------------------------------------------------------ -----------
Total Investments (Cost $515,004) (a) -- 125.4% 662,765
------------------------------------------------------
Liabilities in excess of other assets -- (25.4)% (134,340)
------------------------------------------------------ -----------
TOTAL NET ASSETS-- 100.0% $528,425
------------------------------------------------------ -----------
Percentages indicated are based on net assets of $528,425.
(a) Represents cost for financial reporting and federal tax purposes. The net
unrealized appreciation of investments on federal tax basis amounts to $147,761,
which is composed of $163,540 appreciation and $15,779 depreciation at July 31,
1998.
(b) Non-income producing security.
(c) All or part of this security has been loaned at July 31, 1998.
(See Notes which are an integral part of the Financial Statements)
27
<PAGE>
Fountain Square Pinnacle Fund
Schedule of Portfolio Investments
July 31, 1998
(Amounts in thousands except share amounts)
- --------------------------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ---------- --------------------------------- -------------
Common Stocks -- 92.2%
- ----------------------------------------------
Banking -- 7.9%
---------------------------------
9,600 BankAmerica Corp. $862
---------------------------------
11,900 Crestar Financial 811
---------------------------------
12,000 Fannie Mae 744
---------------------------------
11,543 First Midwest Bancorp. 479
--------------------------------- -------------
Total 2,896
--------------------------------- -------------
Basic Industries -- 2.3%
---------------------------------
14,600 Monsanto Co. 827
---------------------------------
Capital Spending -- 7.0%
---------------------------------
9,400 General Electric Co. 840
---------------------------------
13,800 Tyco International Limited (c) 855
---------------------------------
9,100 United Technologies Corp. 871
--------------------------------- -------------
Total 2,566
--------------------------------- -------------
Computer Software & Services -- 6.2%
---------------------------------
14,400 Ceridian Corp. 824
---------------------------------
13,800 Computer Associates International, Inc. (c) 458
---------------------------------
8,800 Microsoft Corp. (b) 969
--------------------------------- -------------
Total 2,251
--------------------------------- -------------
Computer Systems & Equipment -- 9.4%
---------------------------------
8,800 Cisco Systems (b) 843
---------------------------------
9,800 Intel Corp. 827
---------------------------------
10,200 Lucent Technology 942
---------------------------------
10,900 Tellabs, Inc. (b) (c) 821
--------------------------------- -------------
Total 3,433
--------------------------------- -------------
Consumer Durables -- 2.1%
---------------------------------
26,200 Masco Corp. 748
---------------------------------
Consumer Products -- 6.9%
---------------------------------
9,200 Colgate 850
---------------------------------
17,300 Quaker Oats Co. 915
---------------------------------
10,600 Unilever NV 737
--------------------------------- -------------
Total 2,502
--------------------------------- -------------
Consumer Services -- 4.6%
---------------------------------
19,600 Service Corp., International 742
---------------------------------
16,893 Waste Management, Inc. (b) (c) 932
--------------------------------- -------------
Total 1,674
--------------------------------- -------------
Healthcare -- 4.4%
---------------------------------
10,500 Guidant (c) 780
---------------------------------
32,100 Healthsouth Corp. (b) (c) 807
--------------------------------- -------------
Total 1,587
--------------------------------- -------------
Insurance -- 11.0%
---------------------------------
5,450 American International Group, Inc. 822
---------------------------------
20,100 Conseco, Inc. 843
---------------------------------
13,800 Marsh & McLennan Co., Inc. 843
---------------------------------
13,800 MGIC Investment Corp. (c) 740
---------------------------------
12,100 Traveler's Group, Inc. 811
--------------------------------- -------------
Total 4,059
--------------------------------- -------------
Oil & Gas -- 4.4%
---------------------------------
11,900 Mobil Corp. 830
---------------------------------
12,800 Schlumberger Limited (c) 775
--------------------------------- -------------
Total 1,605
--------------------------------- -------------
Pharmaceuticals -- 4.9%
---------------------------------
6,800 Bristol Myers Squibb Co. 775
---------------------------------
13,200 Warner Lambert, Inc. 997
--------------------------------- -------------
Total 1,772
--------------------------------- -------------
Printing & Publishing -- 2.3%
---------------------------------
13,200 Gannett Com., Inc. 844
---------------------------------
Retail -- 9.4%
---------------------------------
21,200 CVS Corp. 869
---------------------------------
20,400 Home Depot 854
---------------------------------
18,900 Kroger Co. (b) 895
---------------------------------
12,600 Wal-Mart Stores, Inc. (c) 795
--------------------------------- -------------
Total 3,413
--------------------------------- -------------
Telecommunications -- 7.2%
---------------------------------
14,300 Airtouch Communications, Inc. (b) 841
---------------------------------
12,500 Bellsouth Corp. 854
---------------------------------
17,800 Worldcom, Inc. (b) 941
--------------------------------- -------------
Total 2,636
--------------------------------- -------------
Transportation -- 2.2%
---------------------------------
24,900 Southwest Airlines Co. 820
--------------------------------- -------------
Total Common Stocks 33,633
--------------------------------- -------------
Repurchase Agreement -- 8.8%
- ----------------------------------------------
$3,195 Warburg/Dillion, 5.55%, dated 3,195
7/31/98, due 8/3/98 (at amortized
cost), collateralized by U.S. Treasury
Bond, 8.00%, due 11/15/21 with a
value of $3,265.
---------------------------------
Short Term Securities Purchased with
Collateral -- 15.2%
- ----------------------------------------------
Commercial Paper -- 8.8%
---------------------------------
490 Amgen Corp., 5.52%, 9/17/98 486
---------------------------------
325 Bellsouth Telecommunications, 324
5.65%, 8/4/98
---------------------------------
300 Coca Cola, Inc., 5.52%, 8/4/98 299
---------------------------------
513 Deutsche Bank, 5.53%, 8/21/98 510
---------------------------------
348 Deutsche Bank, 5.53%, 8/24/98 347
---------------------------------
382 Du Pont DeNemours & Co., 5.53%, 379
8/7/98
---------------------------------
260 General Electric Capital, 5.57%, 259
8/17/98
---------------------------------
-- Continued --
28
<PAGE>
Fountain Square Pinnacle Fund
- --------------------------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ---------- ---------------------------------- ------------
Short Term Securities Purchased with Collateral--
Continued
- -----------------------------------------------
$ 490 Merrill Lynch, 5.52%, 9/18/98 $ 486
----------------------------------
114 Petrofina Delaware, 5.55%, 8/20/98 113
---------------------------------- ------------
Total 3,203
---------------------------------- ------------
Corporate Bond -- 1.9%
----------------------------------
684 Goldman Sachs, Floating Rate Note, 684
5.72%, 7/24/00
----------------------------------
Repurchase Agreement -- 4.5%
----------------------------------
1,648 Morgan Stanley, 5.63%, dated 1,648
7/31/98, due 8/3/98 (at
collaterized cost), collateralized
by U.S. Treasury Bills, due
1/21/99 with a value of $1,688.
---------------------------------- ------------
Total Short Term Securities
Purchased with Collateral 5,535
---------------------------------- ------------
Total Investments (Cost $31,927)
(a) -- 116.2% 42,363
----------------------------------
Liabilities in excess of other
assets -- (16.2)% (5,892)
---------------------------------- ------------
TOTAL NET ASSETS-- 100.0% $36,471
---------------------------------- ============
Percentages indicated are based on net assets of $36,471.
(a) Represents cost for financial reporting and federal tax purposes. The net
unrealized appreciation of investments on federal tax basis amounts to $10,436
which is composed of $10,780 appreciation and $344 depreciation at July 31,
1998.
(b) Non-income producing security.
(c) All or part of this security has been loaned at July 31, 1998.
(See Notes which are an integral part of the Financial Statements)
29
<PAGE>
Fountain Square Equity Income Fund
Schedule of Portfolio Investments
July 31, 1998
(Amounts in thousands except share amounts)
- --------------------------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ------------ ------------------------------------- -----------
Common Stock -- 98.7%
- --------------------------------------------------
Banking -- 14.2%
-------------------------------------
105,000 Bank of New York Co., Inc. $6,719
-------------------------------------
117,400 First Tennessee National Corp. (b) 3,683
-------------------------------------
90,000 Mellon Bank Corp. 6,064
-------------------------------------
142,000 Norwest Bank (b) 5,103
------------------------------------- -----------
Total 21,569
------------------------------------- -----------
Chemicals -- 3.9%
-------------------------------------
368,000 RPM, Inc. 5,842
-------------------------------------
Electrical Equipment -- 13.8%
-------------------------------------
65,000 Emerson Electric Co. 3,863
-------------------------------------
40,000 General Electric Co. 3,573
-------------------------------------
95,000 Hubbell, Inc. Class B 3,990
-------------------------------------
230,000 Nipsco Inds, Inc. 6,124
-------------------------------------
129,000 Teco Energy, Inc. (b) 3,273
------------------------------------- -----------
Total 20,823
------------------------------------- -----------
Financial Services -- 7.3%
-------------------------------------
78,000 A.G. Edwards, Inc. 3,047
-------------------------------------
96,000 Fannie Mae 5,952
-------------------------------------
74,500 United Asset Management Corp. (b) 2,007
------------------------------------- -----------
Total 11,006
------------------------------------- -----------
Food -- 7.2%
-------------------------------------
26,600 Bestfoods, Inc. 1,480
-------------------------------------
62,500 Conagra, Inc. 1,617
-------------------------------------
82,000 H.J. Heinz Co. 4,520
-------------------------------------
140,000 Sysco (b) 3,325
------------------------------------- -----------
Total 10,942
------------------------------------- -----------
Insurance -- 8.3%
-------------------------------------
50,000 American General Corp. 3,416
-------------------------------------
36,000 Cincinnati Financial Corp. 1,287
-------------------------------------
67,000 Marsh & McLennan Co., Inc. 4,091
-------------------------------------
85,300 Safeco Corp. (b) 3,844
------------------------------------- -----------
Total 12,638
------------------------------------- -----------
Manufacturing -- 1.9%
-------------------------------------
57,000 Federal Signal Corp. (b) 1,293
-------------------------------------
31,000 Newell Co. 1,597
------------------------------------- -----------
Total 2,890
------------------------------------- -----------
Office Equipment & Supplies -- 6.9%
-------------------------------------
94,000 Avery Dennison Corp. 5,411
-------------------------------------
100,000 Pitney-Bowes, Inc. 5,050
------------------------------------- -----------
Total 10,461
------------------------------------- -----------
Oil & Gas -- 6.3%
-------------------------------------
65,000 Chevron Corp. (b) 5,371
-------------------------------------
60,000 Mobil Corp. 4,185
------------------------------------- -----------
Total 9,556
------------------------------------- -----------
Pharmaceuticals -- 8.8%
-------------------------------------
28,000 Abbott Labs 1,164
-------------------------------------
38,900 Johnson & Johnson 3,005
-------------------------------------
20,000 Merck & Co., Inc. 2,466
-------------------------------------
40,000 Schering - Plough Corp. 3,870
-------------------------------------
37,500 Warner Lambert, Inc. 2,834
------------------------------------- -----------
Total 13,339
------------------------------------- -----------
Retail -- 2.3%
-------------------------------------
60,000 J.C. Penney Co., Inc. 3,521
-------------------------------------
Telecommunications -- 11.3%
-------------------------------------
102,500 Alltel Corp. (b) 4,299
-------------------------------------
162,000 Ameritech Corp. (b) 7,967
-------------------------------------
108,000 Bell Atlantic Corp. 4,901
------------------------------------- -----------
Total 17,167
------------------------------------- -----------
Transportation -- 4.1%
-------------------------------------
160,000 GATX Corp. 6,140
-------------------------------------
Utilities \ Electric -- 1.9%
-------------------------------------
90,000 Cinergy Corp. 2,841
-------------------------------------
Utilities \ Natural Gas -- 0.5%
-------------------------------------
28,390 LG&E Energy 692
------------------------------------- -----------
Total Common Stock 149,427
------------------------------------- -----------
Repurchase Agreement -- 1.0%
- --------------------------------------------------
$1,574 Warburg/Dillion, 5.55%, dated 1,574
7/31/98, due 8/3/98 (at amortized
cost), collateralized by U.S. Treasury
Bond, 8.00%, due 11/15/21 with a
value of $1,608.
-------------------------------------
Short Term Securities Purchased with
Collateral -- 17.6%
- --------------------------------------------------
Commercial Paper -- 14.2%
-------------------------------------
449 A.I. Credit Corp., 5.68%, 8/3/98 449
-------------------------------------
594 AIG Funding, 5.60%, 8/3/98 594
-------------------------------------
480 Air Products, 5.58%, 9/30/98 476
-------------------------------------
1,755 Amgen Corp., 5.52%, 9/17/98 1,739
-------------------------------------
1,231 BellSouth Telecommunications, 1,230
5.65%, 8/4/98
-------------------------------------
2,441 Cargill, Inc., 5.66%, 8/3/98 2,440
-------------------------------------
805 Coca Cola Co., 5.52%, 8/4/98 799
-------------------------------------
1,488 Deutsche Bank, 5.53%, 8/21/98 1,481
-------------------------------------
923 Deutsche Bank, 5.53%, 8/24/98 919
-------------------------------------
683 DuPont De Nemours & Co., 5.53%, 679
8/7/98
-------------------------------------
2,441 Ford Motor Credit Corp., 5.68%, 2,440
8/3/98
-------------------------------------
985 General Electric Capital, 5.57%, 982
8/17/98
-------------------------------------
1,755 Merrill Lynch, 5.52%, 9/18/98 1,739
-------------------------------------
177 Merrill Lynch, 5.58%, 8/12/98 177
-------------------------------------
431 Petrofina Delaware, 5.55%, 8/20/98 429
-------------------------------------
-- Continued --
30
<PAGE>
Fountain Square Equity Income Fund
- --------------------------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ------------ ------------------------------------- -----------
Short Term Securities Purchased with Collateral--
Continued
- --------------------------------------------------
$2,401 Prudential Funding, 5.64%, 8/4/98 $2,399
-------------------------------------
2,441 Xerox Corp., 5.66%, 8/3/98 2,441
------------------------------------- -----------
Total 21,413
------------------------------------- -----------
Corporate Bond -- 1.3%
-------------------------------------
1,984 Goldman Sachs Floating Rate
Note, 5.72%, 7/24/00 1,984
-------------------------------------
Repurchase Agreement -- 2.1%
-------------------------------------
3,192 Morgan Stanley, 5.63%, dated 3,192
7/31/98, due 8/3/98 (at amortized
cost), collateralized by U.S. Treasury
Bills, due 1/21/99 with a value of
$3,272.
------------------------------------- -----------
Total Short Term Securities
Purchased with Collateral 26,589
------------------------------------- -----------
Total Investments (Cost $132,179)
(a) -- 117.3% 177,590
-------------------------------------
Liabilities in excess of other assets
-- (17.3)% (26,218)
------------------------------------- -----------
TOTAL NET ASSETS -- 100.0% $151,372
------------------------------------- ===========
Percentages indicated are based on net assets of $151,372.
(a) Represents cost for financial reporting and federal tax purposes. The net
unrealized appreciation of investments on federal tax basis amounts to $45,411,
which is composed of $48,175 appreciation and $2,764 depreciation at July 31,
1998.
(b) All or part of this security has been loaned at July 31, 1998.
(See Notes which are an integral part of the Financial Statements)
31
<PAGE>
Fountain Square Balanced Fund
Schedule of Portfolio Investments
July 31, 1998
(Amounts in thousands except share amounts)
- --------------------------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ----------- ------------------------------------ -----------
Common Stocks -- 62.6%
- -------------------------------------------------
Banking -- 6.3%
------------------------------------
55,000 Bank of New York Co., Inc. $ 3,520
------------------------------------ -----------
70,000 First Tennessee National Corp. (d) 2,196
------------------------------------
43,000 Mellon Bank Corp. 2,897
------------------------------------
70,000 Norwest Corp. (d) 2,516
------------------------------------ -----------
Total 11,129
------------------------------------ -----------
Beverages -- 1.2%
------------------------------------
14,000 Coca Cola Co. 1,130
------------------------------------
26,000 PepsiCo, Inc. 1,009
------------------------------------ -----------
Total 2,139
------------------------------------ -----------
Business Services -- 1.2%
------------------------------------
30,000 Cintas Corp. 1,524
------------------------------------
12,000 Fastenal Co. (d) 524
------------------------------------ -----------
Total 2,048
------------------------------------ -----------
Chemicals -- 0.9%
------------------------------------
31,000 Praxair, Inc. 1,527
------------------------------------
Computer Software & Equipment
-- 6.6%
------------------------------------
102,000 Artesyn (b) 1,702
------------------------------------
21,000 Cisco Systems (b) 2,010
------------------------------------
65,000 First Data Corp. 1,881
------------------------------------
45,000 Fiserv, Inc. (b) 1,986
------------------------------------
18,000 Microchip Technology, Inc. (b) (d) 552
------------------------------------
9,600 Microsoft Corp. (b) 1,057
------------------------------------
65,000 Oracle Corp. (b) 1,723
------------------------------------
20,000 Sun Microsystems, Inc. (b) 945
------------------------------------ -----------
Total 11,856
------------------------------------ -----------
Consumer Products -- 1.5%
------------------------------------
32,000 Newell Co. 1,647
------------------------------------
4,000 Procter & Gamble Co. 318
------------------------------------
20,000 Sherwin Williams Co. 638
------------------------------------ -----------
Total 2,603
------------------------------------ -----------
Electrical Equipment -- 1.6%
------------------------------------
20,000 Belden, Inc. (d) 528
------------------------------------
12,000 Emerson Electric Co. 713
------------------------------------
18,000 General Electric Co. 1,607
------------------------------------ -----------
Total 2,848
------------------------------------ -----------
Electronics -- 5.3%
------------------------------------
61,940 Adaptec, Inc. (b) 720
------------------------------------
20,000 Berg Electronics Corp. (b) 410
------------------------------------
20,000 Flextronics, International (b) 816
------------------------------------
50,000 Intel Corp. 4,222
------------------------------------
65,000 Molex, Inc. 1,844
------------------------------------
25,000 QLogic Corp. (b) (d) 1,447
------------------------------------ -----------
Total 9,459
------------------------------------ -----------
Financial -- 3.4%
------------------------------------
19,000 AG Edwards, Inc. 742
------------------------------------
77,000 Freddie Mac 3,638
------------------------------------
45,000 T. Rowe Price Association (d) 1,598
-----------
Total 5,978
------------------------------------ -----------
General Building Contractors -- 0.5%
------------------------------------
54,000 Clayton Homes, Inc. (d) $969
------------------------------------
Healthcare -- 6.4%
------------------------------------
50,000 First Health Group Corp. 1,231
------------------------------------
50,000 Guidant Corp. (d) 3,715
------------------------------------
54,000 Health Care Retirement (b) 2,039
------------------------------------
100,000 HEALTHSOUTH Corp. (b) 2,512
------------------------------------
20,000 Respironics, Inc. (b) 299
------------------------------------
15,000 STERIS Corp. (b) (d) 915
------------------------------------
15,000 Universal Health Services, Inc. (b) 769
------------------------------------ -----------
Total 11,480
------------------------------------ -----------
Insurance -- 3.0%
------------------------------------
20,000 Allstate Corp. 849
------------------------------------
24,000 Cincinnati Financial Corp. 858
------------------------------------
27,000 Marsh & McLennan Co., Inc. 1,649
------------------------------------
36,000 MGIC Investment Corp. (d) 1,930
------------------------------------ -----------
Total 5,286
------------------------------------ -----------
Manufacturing -- 3.8%
------------------------------------
33,000 Chart Industry, Inc. 380
------------------------------------
38,000 Illinois Tool Works 2,130
------------------------------------
10,000 OM Group, Inc. 371
------------------------------------
36,000 Tyco International Ltd. (d) 2,229
------------------------------------
50,000 Zebra Technologies Corp., Class A
(b) (d) 1,622
------------------------------------ -----------
Total 6,732
------------------------------------ -----------
Media/Publishing -- 1.2%
------------------------------------
34,000 Interpublic Group of Cos., Inc. (d) 2,049
------------------------------------
Medical Distribution -- 0.3%
------------------------------------
6,000 Cardinal Health, Inc. (d) 576
------------------------------------
Office Equipment & Supplies -- 1.6%
------------------------------------
30,000 Avery Dennison Corp. 1,727
------------------------------------
22,000 Pitney-Bowes, Inc. 1,111
------------------------------------
Total 2,838
------------------------------------ -----------
Oil & Gas -- 3.0%
------------------------------------
8,000 Chevron Corp. (d) 661
------------------------------------
12,200 ENSCO International 165
------------------------------------
35,000 Global Marine (b) 479
------------------------------------
22,000 Mobil Corp. 1,535
------------------------------------
15,000 Schlumberger Ltd. 908
------------------------------------
100,000 Varco International, Inc. (b) 1,588
------------------------------------ -----------
Total 5,336
------------------------------------ -----------
Pharmaceuticals -- 3.6%
------------------------------------
20,000 American Home Products 1,030
------------------------------------
8,000 Amgen, Inc. (b) 588
------------------------------------
10,000 Bristol Myers Squibb Co. 1,139
------------------------------------
9,000 Pfizer, Inc. 990
------------------------------------
12,000 Schering -- Plough Corp. 1,161
------------------------------------
21,000 Warner Lambert, Inc. 1,587
------------------------------------ -----------
Total 6,495
------------------------------------ -----------
-- Continued --
32
<PAGE>
Fountain Square Balanced Fund
- --------------------------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ----------- ------------------------------------ -----------
Common Stocks -- Continued
- -------------------------------------------------
Retail -- 5.1%
------------------------------------
70,000 Consolidated Stores Corp. (b) (d) $ 2,354
------------------------------------
70,000 Home Depot, Inc. 2,931
------------------------------------
40,000 Lowe's Companies 1,540
------------------------------------
36,000 Wal-Mart Stores, Inc. (d) 2,273
------------------------------------ -----------
Total 9,098
------------------------------------ -----------
Telecommunications -- 4.9%
------------------------------------
22,500 Century Telephone Enterprises 1,119
------------------------------------
25,000 Lucent Technologies 2,311
------------------------------------
34,000 Tellabs, Inc. (b) (d) 2,560
------------------------------------
50,000 Worldcom, Inc. (b) 2,644
------------------------------------ -----------
Total 8,634
------------------------------------ -----------
Transportation -- 1.2%
------------------------------------ -----------
70,000 Comair Holdings, Inc. (d) 2,209
------------------------------------ -----------
Total Common Stocks 111,289
------------------------------------ -----------
Asset Backed Securities -- 0.4%
- -------------------------------------------------
Financial -- 0.4%
- -------------------------------------------------
$750 GE Capital Management, 6.94%, 759
3/25/27
------------------------------------ -----------
Total Asset Backed Securities 759
------------------------------------ -----------
Corporate Bonds -- 8.3%
- -------------------------------------------------
Business Services -- 0.6%
------------------------------------
1,000 Service Corp. International, 996
6.50%, 3/15/08
------------------------------------
Entertainment & Leisure -- 1.1%
------------------------------------
2,000 Carnival Cruise, 6.15%, 4/15/08 1,971
------------------------------------
Financial -- 4.6%
------------------------------------
46 Bankers Trust New York Corp., 47
9.20%, 7/15/99
------------------------------------
500 Ford Motor Credit, Floating Rate 500
Note, 11/9/98 (5.66%, 8/10/98) (c)
------------------------------------
2,000 General Motors Acceptance Corp., 2,005
6.25%, 5/1/05
------------------------------------
2,500 Phelps Dodge, 6.38%, 11/1/04 2,512
------------------------------------
3,000 Salomon Brothers Holdings, 3,192
7.38%, 5/15/07
------------------------------------ -----------
Total 8,256
------------------------------------ -----------
Manufacturing -- 2.0%
------------------------------------
2,000 Hasbro, 6.15%, 7/15/08 1,987
------------------------------------
500 IBP, Inc., 6.13%, 2/1/06 499
------------------------------------
1,000 Texas Instruments, 6.88%, 7/15/00 1,018
------------------------------------ -----------
Total 3,504
------------------------------------ -----------
Total Corporate Bonds 14,727
------------------------------------ -----------
Mortgage Backed Securities -- 12.1%
- -------------------------------------------------
U.S. Government Agencies -- 12.1%
------------------------------------
4 FHLMC, 9.50%, 10/1/02, 4
Pool #38-0009
------------------------------------
9 FHLMC, 8.00%, 8/1/08, 10
Pool #27-2525
------------------------------------
6,199 FNCL, 6.50%, 2/1/28, Pool #417392 6,167
------------------------------------
1,500 FNMA, 6.32%, 5/21/03 1,499
------------------------------------
632 FNMA, 6.00%, 4/1/11, Dwarf 625
Pool 344185
------------------------------------
1,860 FNMA, 7.00%, 7/18/27 1,820
------------------------------------
1,124 GNMA, 7.50%, 8/15/27, 1,157
Pool #449006
------------------------------------
6,078 GNMA, 7.50%, 9/15/27, 6,254
Pool #451459
------------------------------------
3,992 GNMA, 6.50%, 5/15/28 3,980
------------------------------------ -----------
Total Mortgage Backed Securities 21,516
------------------------------------ -----------
U.S. Government Securities -- 13.6%
- -------------------------------------------------
U.S. Treasury Bonds -- 4.2%
------------------------------------
6,750 6.63%, 2/15/27 (d) 7,541
------------------------------------
U.S. Treasury Notes -- 9.4%
------------------------------------
7,000 5.63%, 11/30/99 7,008
------------------------------------
4,750 5.38%, 2/15/01 (d) 4,735
------------------------------------
5,000 5.50%, 2/28/03 4,988
------------------------------------ -----------
Total 16,731
------------------------------------ -----------
Total U.S. Government Securities 24,272
------------------------------------ -----------
Repurchase Agreement -- 4.1%
- -------------------------------------------------
7,350 Warburg/Dillion, 5.55%, dated 7,350
7/31/98, due 8/3/98 (at amortized
cost), collateralized by U.S. Treasury
Bond, 8.00%, due 11/15/21 with a
value of $7,510.
------------------------------------
Short Term Securities Purchased with
Collateral -- 13.5%
- -------------------------------------------------
Commercial Paper -- 10.9%
------------------------------------
344 A.I. Credit Corp., 5.68%, 8/3/98 344
------------------------------------
455 AIG Funding, 5.60%, 8/3/98 455
------------------------------------
353 Air Products, 5.58%, 9/30/98 349
------------------------------------
2,073 Amgen Corp., 5.52%, 9/17/98 2,054
------------------------------------
969 BellSouth Telecommunications, 969
5.65%, 8/4/98
------------------------------------
1,869 Cargill, Inc., 5.66%, 8/3/98 1,868
------------------------------------
836 Coca Cola Co., 5.52%, 8/4/98 830
------------------------------------
1,585 Deutsche Bank, 5.53%, 8/21/98 1,578
------------------------------------
963 Deutsche Bank, 5.53%, 8/24/98 958
------------------------------------
1,225 DuPont De Nemours & Co., 5.53%, 1,217
8/7/98
------------------------------------
1,869 Ford Motor Credit Corp., 5.68%, 1,868
8/3/98
------------------------------------
776 General Electric Co., 5.57%, 8/17/98 773
------------------------------------
2,073 Merrill Lynch, 5.52%, 9/18/98 2,055
------------------------------------
130 Merrill Lynch, 5.58%, 8/12/98 130
------------------------------------
339 Petrofina Delaware, 5.55%, 8/20/98 338
------------------------------------
1,764 Prudential Funding, 5.64%, 8/4/98 1,763
------------------------------------
1,869 Xerox Corp., 5.66%, 8/3/98 1,868
------------------------------------ -----------
Total 19,417
------------------------------------ -----------
Corporate Bond -- 1.2%
------------------------------------
2,113 Goldman Sachs Floating Rate Note, 2,113
5.72%, 7/24/00
------------------------------------
-- Continued --
33
<PAGE>
Fountain Square Balanced Fund
- --------------------------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
--------- ------------------------------------- ----------
Short Term Securities Purchased with Collateral --
Continued
- --------------------------------------------------------------
Repurchase Agreement -- 1.4%
-------------------------------------
$2,444 Morgan Stanley, 5.63%, dated $2,444
7/31/98, due 8/3/98 (at amortized
cost), collateralized by U.S. Treasury
Bills, due 1/21/99 with a value
of $2,507.
------------------------------------- ----------
Total Short Term Securities
Purchased with Collateral 23,974
------------------------------------- ----------
Total Investments (Cost $178,891)
(a) -- 114.6% 203,887
-------------------------------------
Liabilities in excess of other assets
-- (14.6)% (25,914)
------------------------------------- ----------
TOTAL NET ASSETS -- 100.0% $177,973
------------------------------------- ----------
Percentages indicated are based on net assets of $177,973.
(a) Represents cost for financial reporting and federal tax purposes. The net
unrealized appreciation of investments on federal tax basis amounts to $24,996,
which is composed of $31,262 appreciation and $6,266 depreciation at July 31,
1998.
(b) Non-income producing security.
(c) Current rate and next reset date shown.
(d) All or part of this security has been loaned at July 31, 1998.
(See Notes which are an integral part of the Financial Statements)
34
<PAGE>
Fountain Square Mid Cap Fund
Schedule of Portfolio Investments
July 31, 1998
(Amounts in thousands except share amounts)
- --------------------------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ----------- ------------------------------------- ----------
Common Stocks -- 99.5%
- --------------------------------------------------
Banking -- 7.4%
-------------------------------------
310,000 First Tennessee National Corp. (c) $ 9,726
-------------------------------------
50,000 Firstar Corp. 2,497
-------------------------------------
95,000 Regions Financial Corp. (c) 3,848
------------------------------------- ----------
Total 16,071
------------------------------------- ----------
Business Services -- 5.5%
-------------------------------------
167,000 Cintas Corp. 8,486
-------------------------------------
82,000 Fastenal Co. (c) 3,580
------------------------------------- ----------
Total 12,066
------------------------------------- ----------
Computer Software & Equipment -- 8.4%
-------------------------------------
390,000 Artesyn (b) 6,508
-------------------------------------
204,000 Fiserv, Inc. (b) 9,002
-------------------------------------
90,000 Microchip Technology, Inc. (b), (c) 2,759
------------------------------------- ----------
Total 18,269
------------------------------------- ----------
Consumer Products -- 2.2%
-------------------------------------
95,000 Newell Co. 4,893
-------------------------------------
Electrical Equipment -- 2.3%
-------------------------------------
190,000 Belden, Inc. 5,011
-------------------------------------
Electronics -- 10.1%
-------------------------------------
163,080 Adaptec, Inc. (b) 1,896
-------------------------------------
175,000 Berg Electronics Corp. (b) 3,588
-------------------------------------
120,000 Flextronics, International (b) 4,897
-------------------------------------
155,000 Molex, Inc. 4,398
-------------------------------------
128,000 QLogic Corp. (b) 7,407
------------------------------------- ----------
Total 22,186
------------------------------------- ----------
Financial -- 3.8%
-------------------------------------
105,000 AG Edwards, Inc. 4,102
-------------------------------------
120,000 T. Rowe Price Associates, Inc. (c) 4,260
------------------------------------- ----------
Total 8,362
------------------------------------- ----------
General Building Contractors -- 2.1%
-------------------------------------
260,000 Clayton Homes, Inc. (c) 4,664
-------------------------------------
Healthcare -- 12.2%
-------------------------------------
255,000 Ballard Medical Products 5,228
-------------------------------------
180,000 First Health Group Corp. (b) 4,433
-------------------------------------
120,000 Health Care Retirement (b) 4,530
-------------------------------------
90,000 Respironics, Inc. (b) 1,344
-------------------------------------
123,000 STERIS Corp. (b), (c) 7,502
-------------------------------------
65,000 Universal Health Services, Inc. (b) 3,331
------------------------------------- ----------
Total 26,368
------------------------------------- ----------
Insurance -- 8.4%
-------------------------------------
80,000 Cincinnati Financial Corp. 2,860
-------------------------------------
115,000 MGIC Investment Corp. (c) 6,167
-------------------------------------
180,000 Mutual Risk Management, Limited (c) 6,863
-------------------------------------
45,000 Reinsurance Group America 2,503
------------------------------------- ----------
Total 18,393
------------------------------------- ----------
Manufacturing -- 8.0%
-------------------------------------
90,000 Advanced Lighting Technology, Inc. (b) 2,171
-------------------------------------
90,000 Applied Industrial Technologies, Inc. 1,524
-------------------------------------
277,500 Chart Industries, Inc. 3,191
-------------------------------------
124,000 OM Group, Inc. 4,596
-------------------------------------
182,000 Zebra Technologies Corp.,
Class A (b), (c) 5,904
------------------------------------- ----------
Total 17,386
------------------------------------- ----------
Media/Publishing -- 2.6%
-------------------------------------
110,000 Omnicom Group (c) 5,775
-------------------------------------
Medical Distribution -- 3.6%
-------------------------------------
83,000 Cardinal Health, Inc. (c) 7,973
-------------------------------------
Natural Gas -- 0.7%
-------------------------------------
80,000 Questar Corp. 1,490
-------------------------------------
Oil & Gas - 3.6%
-------------------------------------
200,000 Global Marine (b) 2,738
-------------------------------------
320,000 Varco International, Inc. (b) 5,080
------------------------------------- ----------
Total 7,818
------------------------------------- ----------
Retail -- 9.8%
-------------------------------------
344,000 Casey's General Stores 5,246
-------------------------------------
243,000 Consolidated Stores Corp. (b), (c) 8,170
-------------------------------------
140,000 Dollar General (c) 5,740
-------------------------------------
150,000 Pier One Imports, Inc. 2,334
------------------------------------- ----------
Total 21,490
------------------------------------- ----------
Telecommunications -- 2.4%
-------------------------------------
105,000 Century Telephone Enterprises 5,224
-------------------------------------
Transportation -- 6.4%
-------------------------------------
295,000 Comair Holdings, Inc. 9,311
-------------------------------------
120,000 GATX Corp. 4,605
------------------------------------- ----------
Total 13,916
------------------------------------- ----------
Total Common Stocks 217,355
------------------------------------- ----------
Repurchase Agreement -- 4.0%
- --------------------------------------------------
$8,850 Warburg/Dillion, 5.55%, dated 8,850
7/31/98, due 8/3/98 (at amortized
cost), collateralized by U.S. Treasury
Bond, 8.00%, due 11/15/21 with a
value of $9,043.
-------------------------------------
Short Term Securities Purchased with Collateral -- 29.1%
- --------------------------------------------------
Commercial Paper -- 23.2%
-------------------------------------
1,091 A.I. Credit Corp., 5.68%, 8/3/98 1,091
-------------------------------------
1,443 AIG Funding, 5.60%, 8/3/98 1,443
-------------------------------------
1,110 Air Products, 5.58%, 9/30/98 1,099
-------------------------------------
3,366 Amgen Corp., 5.52%, 9/17/98 3,336
-------------------------------------
2,972 BellSouth Telecommunications, 2,970
5.65%, 8/4/98
-------------------------------------
5,931 Cargill, Inc., 5.66%, 8/3/98 5,928
-------------------------------------
1,898 Coca Cola, Inc., 5.52%, 8/4/98 1,886
-------------------------------------
3,879 Deutsche Bank, 5.53%, 8/21/98 3,863
-------------------------------------
2,341 Deutsche Bank, 5.53%, 8/24/98 2,330
-------------------------------------
2,249 Du Pont De Nemours & Co., 5.53%,
8/7/98 2,234
-------------------------------------
5,931 Ford Motor Credit Corp., 5.68%,
8/3/98 5,928
-------------------------------------
2,378 General Electric Capital, 5.57%,
8/17/98 2,371
-------------------------------------
3,366 Merrill Lynch, 5.52%, 9/18/98 3,335
-------------------------------------
410 Merrill Lynch, 5.58%, 8/12/98 409
-------------------------------------
-- Continued --
35
<PAGE>
Fountain Square Mid Cap Fund
- --------------------------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ----------- ------------------------------------- ----------
Short Term Securities Purchased with Collateral--
Continued
- --------------------------------------------------
$ 1,040 Petrofina Delaware, 5.55%, 8/20/98 $ 1,037
-------------------------------------
5,549 Prudential Funding, 5.64%, 8/4/98 5,545
-------------------------------------
5,931 Xerox Corp., 5.66%, 8/3/98 5,927
------------------------------------- ----------
Total 50,732
------------------------------------- ----------
Corporate Bond -- 2.4%
-------------------------------------
5,173 Goldman Sachs, Floating Rate Note 5,173
5.72%, 7/24/00
-------------------------------------
Repurchase Agreement -- 3.5%
-------------------------------------
7,755 Morgan Stanley, 5.63%, dated
7/31/98, due 8/3/98 (at amortized
cost), collateralized by U.S. Treasury
Bills, due 1/21/99 with a value of
$7,950. 7,755
------------------------------------- ----------
Total Short Term Securities
Purchased with Collateral 63,660
------------------------------------- ----------
Total Investments (Cost $252,565)
(a) -- 132.6% 289,865
-------------------------------------
Liabilities in excess of other assets
-- (32.6)% (71,269)
------------------------------------- ----------
TOTAL NET ASSETS-- 100.0% $218,596
------------------------------------- ----------
Percentages indicated are based on net assets of $218,596.
(a) Represents cost for financial reporting and federal tax purposes. The net
unrealized appreciation of investments on federal tax basis amounts to $37,300,
which is composed of $54,372 appreciation and $17,072 depreciation at July 31,
1998.
(b) Non-income producing security.
(c) All or part of this security has been loaned at July 31, 1998.
(See Notes which are an integral part of the Financial Statements)
36
<PAGE>
Fountain Square International Equity Fund
Schedule of Portfolio Investments
July 31, 1998
(Amounts in thousands except share and principal amounts)
- --------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ----------- -------------------------------------- -----------
Common Stocks -- 81.3%
- --------------------------------------------------
Australia 1.3%
-------------------------------------
10,300 Amcor, Ltd. $ 43
-------------------------------------
4,879 Australian Gas & Light 32
-------------------------------------
14,000 Australian National Industries, Ltd. 7
-------------------------------------
19,276 Boral, Ltd. 34
-------------------------------------
3,500 Brambles Industries, Ltd. 74
-------------------------------------
30,618 Broken Hill Proprietary Co., Ltd. 248
-------------------------------------
7,695 Burns Philp & Co., Ltd. 1
-------------------------------------
12,160 Coca-Cola Amatil, Ltd. 48
-------------------------------------
12,160 Coca-Cola Beverages PLC 37
-------------------------------------
17,147 Coles Myer, Ltd. 64
-------------------------------------
15,866 Crown, Ltd. (b) 5
-------------------------------------
17,400 CSR, Ltd. 45
-------------------------------------
29,600 Fosters Brewing Group 66
-------------------------------------
19,958 General Property Trust Units 35
-------------------------------------
15,257 Gio Australia Holdings, Ltd. 40
-------------------------------------
19,502 Goodman Fielder Wattie, Ltd. 25
-------------------------------------
1,190 Homesteak Mining Company 12
-------------------------------------
3,200 Howard Smith, Ltd. 19
-------------------------------------
3,900 Leighton Holdings 13
-------------------------------------
3,946 Lend Lease Corp. 85
-------------------------------------
22,802 M.I.M. Holdings, Ltd. 11
-------------------------------------
19,491 National Australia Bank, Ltd. 272
-------------------------------------
4,134 Newcrest Mining, Ltd. (b) 5
-------------------------------------
28,411 News Corp., Ltd. (b) 207
-------------------------------------
25,195 Normandy Mining, Ltd. 19
-------------------------------------
10,777 North, Ltd. 23
-------------------------------------
4,694 Orica Ltd. 26
-------------------------------------
14,100 Pacific Dunlop, Ltd. 26
-------------------------------------
14,400 Pioneer International 34
-------------------------------------
3,110 Renison Goldfields Consolidated, Ltd. 5
-------------------------------------
5,100 Rio Tinto, Ltd. 56
-------------------------------------
9,512 Santos, Ltd. 25
-------------------------------------
2,060 Sons of Gwalia, Ltd. 5
-------------------------------------
9,990 Southcorp. Holdings, Ltd. 27
-------------------------------------
5,100 TABCORP Holdings, Ltd. 28
-------------------------------------
57,500 Telstra Corp. 164
-------------------------------------
15,603 Western Mining, Ltd. 47
-------------------------------------
21,340 Westfield Trust 44
-------------------------------------
27,382 Westpac Banking Corp., Ltd. 173
------------------------------------- -----------
Total 2,130
------------------------------------- -----------
Austria 0.6%
-------------------------------------
500 Austrian Airlines 18
-------------------------------------
4,130 Bank Austria 327
-------------------------------------
100 Bau Holding 5
-------------------------------------
200 BAU Holdings AG 12
-------------------------------------
400 Boehler-Uddeholm 23
-------------------------------------
100 BWT AG 19
-------------------------------------
200 EA-Generali AG 48
-------------------------------------
900 Flughafen Wein AG 42
-------------------------------------
200 Lenzing AG (b) 12
-------------------------------------
400 Mayr-Melnhof Karton AG 25
-------------------------------------
100 Mikro Systemeintl AG 5
-------------------------------------
200 Oesterreichische Brau-Beteiligun 11
-------------------------------------
1,100 Oesterreichische Elektrizitaetsw 182
-------------------------------------
800 OMV AG 102
-------------------------------------
500 Redex Herallith 24
-------------------------------------
300 Steyr-Daimler-Purch AG 9
-------------------------------------
500 VA Technologies 65
-------------------------------------
300 Weinerberger Baustoffindustrie 70
------------------------------------- -----------
Total 999
------------------------------------- -----------
Belgium 0.1%
-------------------------------------
1,000 Kredietbank 84
-------------------------------------
Denmark 0.2%
-------------------------------------
500 BG Bank 31
-------------------------------------
1,000 Danske Bank 133
-------------------------------------
200 Jyske Bank 23
-------------------------------------
1,000 Unidanmark 98
------------------------------------- -----------
Total 285
------------------------------------- -----------
France 10.4%
-------------------------------------
1,709 Accor SA 458
-------------------------------------
1,982 Air Liquid 319
-------------------------------------
3,922 Alcatel Alsthom 780
-------------------------------------
7,003 AXA SA 960
-------------------------------------
5,547 Banque Nationale De Paris 515
-------------------------------------
1,614 BIC 106
-------------------------------------
558 Bouygues 111
-------------------------------------
893 Canal Plus 172
-------------------------------------
1,659 Cap Gemini Sogeti 242
-------------------------------------
946 Carrefour SA 594
-------------------------------------
2,278 Casino Guichard Perrachon 191
-------------------------------------
3,999 Cie Paribas 439
-------------------------------------
192 Credit Com France 17
-------------------------------------
2,086 De St. Gobain 365
-------------------------------------
98 Dexia France 14
-------------------------------------
804 Eridania Beghin-Say SA 167
-------------------------------------
179 Essilor International 75
-------------------------------------
134 Eurafrance 78
-------------------------------------
18,220 France Telecom SA (b) 1,242
-------------------------------------
3,255 Generale Des Eaux 7
-------------------------------------
1,820 Groupe Danone 549
-------------------------------------
474 Imetal 63
-------------------------------------
1,208 Klepierre 249
-------------------------------------
1,662 L'OREAL 978
-------------------------------------
2,260 La Farge-Coppee 223
-------------------------------------
3,201 La Gardere Groupe Sca 146
-------------------------------------
664 Le Grand SA 175
-------------------------------------
2,290 Lvmh Moet Vuitton Hennessy Lous 457
-------------------------------------
3,323 Lyonnaise Des Eaux SA 613
-------------------------------------
3,485 Michelin Class B, Registered 192
-------------------------------------
283 Pathe SA 52
-------------------------------------
1,769 Pernod Ricard 125
-------------------------------------
-- Continued --
37
<PAGE>
Fountain Square International Equity Fund
- --------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ----------- -------------------------------------- -----------
Common Stocks -- Continued
- --------------------------------------------------
1,242 Peugeot SA $ 245
-------------------------------------
2,253 Pinaukt Printemps Redo 344
-------------------------------------
467 Promodes 289
-------------------------------------
9,321 Rhone Poulenc SA 511
-------------------------------------
165 Sagem SA 128
-------------------------------------
2,848 Sanofi SA 343
-------------------------------------
3,542 Schneider SA 232
-------------------------------------
709 Silic 133
-------------------------------------
3,136 Simco-Union SA, Registered 250
-------------------------------------
6,828 Societe Elf Aquitane SA 886
-------------------------------------
2,653 Societe Generale 639
-------------------------------------
743 Sodexho SA 131
-------------------------------------
3,052 Sophia SA 136
-------------------------------------
3,074 Thomson CSF 121
-------------------------------------
6,073 Total SA, Class B 694
-------------------------------------
1,905 Unibail Union Du Credit Bail 245
-------------------------------------
5,715 Unisor Sacilor SA 80
-------------------------------------
1,582 Valeo SA 151
-------------------------------------
3,796 Vivendi SA 831
------------------------------------- -----------
Total 17,063
------------------------------------- -----------
Germany 9.3%
-------------------------------------
1,183 Adidas 176
-------------------------------------
717 Agiva AG (b) 19
-------------------------------------
4,703 Allianz AG 1,692
-------------------------------------
800 Amb Aachener Muenchner 112
-------------------------------------
500 Bankgesellschaft Berlin 10
-------------------------------------
12,567 BASF AG 592
-------------------------------------
14,267 Bayer AG 679
-------------------------------------
5,533 Bayerisch Hypotheken & Wechsek 395
Bank AG
-------------------------------------
6,833 Bayerische Vereins AG 647
-------------------------------------
200 BHF Bank AG 9
-------------------------------------
950 Bilfinger & Berger 27
-------------------------------------
167 Brau & Brunnen (b) 22
-------------------------------------
483 CKAG Konzern AG 66
-------------------------------------
1,000 Commerzbank AG 39
-------------------------------------
1,750 Continental Gummiwerke AG 61
-------------------------------------
9,950 Dailmer Benz AG 1,036
-------------------------------------
2,033 Degussa AG 127
-------------------------------------
11,183 Deutsche Bank AG 907
-------------------------------------
40,863 Deutsche Telekom 1,262
-------------------------------------
9,967 Dresdner Bank AG 608
-------------------------------------
307 Heidelberger Zement 25
-------------------------------------
1,600 Hochtief AG 73
-------------------------------------
200 Ikb Deutsche Industrieban 4
-------------------------------------
217 Karstadt AG 101
-------------------------------------
1,050 Kloeckner Humboldt Deutz AG (b) 14
-------------------------------------
2,517 Kugelfischer Georg Schaefer 37
-------------------------------------
267 Linde AG 183
-------------------------------------
7,733 Lufthansa AG 215
-------------------------------------
283 Man AG 108
-------------------------------------
7,870 Mannesmann AG 855
-------------------------------------
3,967 Merck KGaA 185
-------------------------------------
4,313 Metro AG 259
-------------------------------------
1,517 Muenchener Rueckver 714
-------------------------------------
383 Preussag AG 148
-------------------------------------
6,459 RWE AG 354
-------------------------------------
1,075 SAP AG 740
-------------------------------------
1,450 Schering AG 167
-------------------------------------
10,667 Siemens AG 781
-------------------------------------
67 STRABAG AG (b) 5
-------------------------------------
767 Thyssen AG 187
-------------------------------------
9,867 VEBA AG 602
-------------------------------------
550 Viag AG 390
-------------------------------------
5,730 Volkswagen AG 541
------------------------------------- -----------
Total 15,174
------------------------------------- -----------
Great Britain 20.0%
-------------------------------------
32,800 Abbey National PLC 597
-------------------------------------
12,000 Allied Irish Bank 182
-------------------------------------
16,350 Arjo Wiggins Appleton PLC 46
-------------------------------------
11,675 Associated British Foods PLC 110
-------------------------------------
72,615 B.A.T. Industries PLC 807
-------------------------------------
1,200 Bank Of Scotland 13
-------------------------------------
41,395 Barclays PLC 1,185
-------------------------------------
25,536 Bass PLC 415
-------------------------------------
16,386 BICC Group PLC, Registered 33
-------------------------------------
31,277 Blue Circle Industries PLC 171
-------------------------------------
16,419 BOC Group PLC 211
-------------------------------------
25,800 Boots Co. PLC 428
-------------------------------------
16,350 BPB Industries PLC 89
-------------------------------------
46,760 British Aerospace PLC 361
-------------------------------------
28,099 British Airways PLC 288
-------------------------------------
90,907 British Gas 551
-------------------------------------
27,460 British Land Co. 241
-------------------------------------
134,971 British Petroleum Co. PLC 1,785
-------------------------------------
37,500 British Sky Broadcasting Group PLC 268
-------------------------------------
46,825 British Steel PLC 97
-------------------------------------
135,800 British Telecommunications PLC 1,991
-------------------------------------
79,845 BTR PLC, A Shares 198
-------------------------------------
6,985 Burmah Castrol PLC 124
-------------------------------------
58,572 Cable & Wireless PLC 760
-------------------------------------
25,798 Cadbury Schweppes PLC 357
-------------------------------------
28,940 Capital Shopping Centres 170
-------------------------------------
18,745 Caradon PLC 52
-------------------------------------
102,975 Centrica PLC (b) 165
-------------------------------------
21,044 Coats Viyella PLC 24
-------------------------------------
16,392 Commercial Union PLC 320
-------------------------------------
2,311 De La Rue, LTD. 10
-------------------------------------
78,976 Diageo PLC 941
-------------------------------------
18,285 Elementis PLC 38
-------------------------------------
11,887 EMI Group PLC 93
-------------------------------------
67,850 General Electric Co. PLC 526
-------------------------------------
28,060 GKN PLC 337
-------------------------------------
83,250 Glaxo Holdings PLC 2,574
-------------------------------------
16,433 Granada Group PLC 260
-------------------------------------
102,700 Grant Chester Holdings 223
-------------------------------------
55,000 Great Portland Estates 201
-------------------------------------
28,125 Great Universal Stores PLC 332
-------------------------------------
17,835 Guardian Royal Exchange PLC 97
-------------------------------------
14,029 Hanson PLC 72
-------------------------------------
900 HSBC Holdings 22
-------------------------------------
53,344 HSBC Holdings PLC 1,262
-------------------------------------
21,025 Imperial Chemical Industries PLC 271
-------------------------------------
28,109 Ladbroke Group PLC 130
-------------------------------------
-- Continued --
38
<PAGE>
Fountain Square International Equity Fund
- --------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ----------- -------------------------------------- -----------
Common Stocks-- Continued
- --------------------------------------------------
5,120 Land Securities $ 71
-------------------------------------
13,580 Land Securities PLC 188
-------------------------------------
18,700 LASMO PLC 65
-------------------------------------
28,125 Legal & General Group PLC 345
-------------------------------------
134,275 Lloyds TSB Group PLC 1,824
-------------------------------------
4,683 Lonrho Africa Plc 5
-------------------------------------
4,683 Lonrho PLC 21
-------------------------------------
81,950 Marks & Spencer PLC 681
-------------------------------------
39,225 MEPC PLC, Registered 305
-------------------------------------
32,800 National Power PLC 281
-------------------------------------
1,700 National Westminster Bank 29
-------------------------------------
19,512 Peninsular & Oriental Steam 306
Navigation Co.
-------------------------------------
35,142 Pilkington PLC 58
-------------------------------------
46,863 Prudential Corp. PLC 644
-------------------------------------
21,779 Rank Group PLC 120
-------------------------------------
32,800 Reed International PLC 316
-------------------------------------
34,515 Reuters Group 345
-------------------------------------
14,025 Rexam PLC 54
-------------------------------------
28,115 Rio Tinto PLC, Registered 320
-------------------------------------
7,000 RMC Group PLC 98
-------------------------------------
32,807 Royal & Sun Alliance Insurance 357
Group PLC
-------------------------------------
12,547 Royal Bank of Scotland Group PLC 204
-------------------------------------
21,112 Safeway PLC 125
-------------------------------------
37,412 Sainsbury (J) PLC 328
-------------------------------------
7,012 Schroder PLC 179
-------------------------------------
23,410 Scottish Power PLC 228
-------------------------------------
4,682 Sears PLC 18
-------------------------------------
14,014 Sedgwick Group PLC 36
-------------------------------------
4,682 Selfridges PLC 16
-------------------------------------
11,675 Slough Estates PLC 57
-------------------------------------
137,910 SmithCline Beecham 1,604
-------------------------------------
11,690 Southern Electric PLC 106
-------------------------------------
1,000 Standard Charter 11
-------------------------------------
11,703 T.I. Group PLC 84
-------------------------------------
32,789 Tarmac PLC 49
-------------------------------------
18,680 Taylor Woodrow PLC 51
-------------------------------------
133,353 Tesco PLC 413
-------------------------------------
16,393 Thames Water PLC 298
-------------------------------------
11,689 Thorn PLC 47
-------------------------------------
68,150 Unilever 671
-------------------------------------
16,345 United Utilities Group PLC 238
-------------------------------------
77,239 Vodafone Group PLC 1,072
-------------------------------------
143,250 Wates City Of London Properties 199
-------------------------------------
21,025 Zeneca Group PLC 807
------------------------------------- -----------
Total 32,702
------------------------------------- -----------
Indonesia 0.0%
-------------------------------------
19,000 Mulia Industrindo -
-------------------------------------
Italy 6.5%
-------------------------------------
30,238 Assicurazioni Generali SpA 1,156
-------------------------------------
56,100 Banca Commerciale Italiana 424
-------------------------------------
5,000 Banca Fideuram SpA 32
-------------------------------------
2,000 Banca Intesta Milano SpA 6
-------------------------------------
500 Banca Popolare Di Bergamo 12
-------------------------------------
7,000 Banca Popolare Di Milano 61
-------------------------------------
58,200 Banco Ambrosiano Veneto 346
-------------------------------------
20,000 Banco Di Roma SpA 47
-------------------------------------
10,000 Banco Dinapoli SpA 15
-------------------------------------
51,760 Benetton Group SpA 104
-------------------------------------
3,400 Burgo (Cartiere) SpA 25
-------------------------------------
161,250 Ciga 187
-------------------------------------
94,500 Credito Italiano (b) 540
-------------------------------------
20,000 Edison SpA 182
-------------------------------------
220,000 Ente Nazional Indrocarburi SpA 1,432
-------------------------------------
4,500 Falck, Accia & Ferriere Lombarde 33
-------------------------------------
106,830 Fiat SpA 441
-------------------------------------
24,720 Fiat SpA, di risp 59
-------------------------------------
25,900 Immonbilara Metanopoli 32
-------------------------------------
11,000 Impregilo SpA 9
-------------------------------------
26,600 Istituto Bancario san Paolo di Torina 465
-------------------------------------
19,450 Istituto Mobiliare Italiano 356
-------------------------------------
186,300 Istituto Nazionale delle 592
Assicurazioni
-------------------------------------
3,650 Italcementi SpA 35
-------------------------------------
5,350 Italcementi SpA, di risp 24
-------------------------------------
19,300 Italgas SpA 80
-------------------------------------
12,400 Magneti Marelli SpA 28
-------------------------------------
33,500 Mediaset SpA 211
-------------------------------------
18,300 Mediobanca Banca SpA 266
-------------------------------------
99,154 Montedison SpA 126
-------------------------------------
31,500 Montedison SpA, di risp 26
-------------------------------------
107,680 Olivetti Ing & Co. SpA (b) 226
-------------------------------------
47,480 Parmalat Finanziaria SpA 94
-------------------------------------
55,000 Pirelli SpA 185
-------------------------------------
880 R.A.S. 9
-------------------------------------
11,125 RAS Italian 171
-------------------------------------
1,600 Reno (Saffa) (b) 6
-------------------------------------
7,600 Rinascente 73
-------------------------------------
250 SAI STA Asscuriatric 2
-------------------------------------
6,800 Sirti SpA 38
-------------------------------------
24,000 Snia BPD SpA 33
-------------------------------------
3,700 Societa Asscuriatrice Industriale 47
-------------------------------------
42,500 Telecom Italia Mobile (b) 162
-------------------------------------
180,000 Telecom Italia Mobile SpA 1,201
-------------------------------------
22,151 Telecom Italia SpA 131
-------------------------------------
95,833 Telecom Italia SpA (b) 827
------------------------------------- -----------
Total 10,557
------------------------------------- -----------
Japan 8.6%
-------------------------------------
14,400 Ajinomoto Co., Inc. 123
-------------------------------------
15,600 Aoki Corp. (b) 6
-------------------------------------
7,900 Asahi Bank, Ltd. 28
-------------------------------------
8,000 Asahi Breweries, Ltd. 100
-------------------------------------
27,000 Asahi Chemical Industry Co., Ltd. 95
-------------------------------------
24,800 Asahi Glass Co., Ltd. 130
-------------------------------------
43,000 Bank of Tokyo-Mitsubishi, Ltd. 430
-------------------------------------
4,400 Bank of Yokohama, Ltd. 9
-------------------------------------
8,000 Bridgestone Corp. 194
-------------------------------------
11,400 Canon, Inc. 261
-------------------------------------
5,800 Casio Computer Co., Ltd. 50
-------------------------------------
4,400 Chiba Bank 14
-------------------------------------
8,600 Chugai Pharmaceutical Co., Ltd. 59
-------------------------------------
17,000 Credit Bank of Tokyo 6
-------------------------------------
11,600 Dai Nippon Printing Co., Ltd. 185
-------------------------------------
10,600 Daiei, Inc. 30
-------------------------------------
8,600 Daikin Industries, Ltd. 55
-------------------------------------
-- Continued --
39
<PAGE>
Fountain Square International Equity Fund
- --------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ----------- -------------------------------------- -----------
Common Stocks-- Continued
- --------------------------------------------------
8,600 Daiwa House Industry Co. Ltd. $ 71
-------------------------------------
6,000 Daiwa Securities, Ltd. 26
-------------------------------------
50 East Japan Railway Co. 241
-------------------------------------
6,800 Ebara Corp. 58
-------------------------------------
3,500 Fanuc Co., Ltd. 123
-------------------------------------
8,000 Fuji Bank 28
-------------------------------------
6,000 Fuji Photo Film Co., Ltd. 222
-------------------------------------
20,000 Fujitsu, Ltd. 219
-------------------------------------
7,800 Furukawa Electric Co. 26
-------------------------------------
12,000 Hankyu Corp. 47
-------------------------------------
8,000 Hazama Corp. 4
-------------------------------------
43,000 Hitachi, Ltd. 269
-------------------------------------
12,000 Honda Motor Co., Ltd. 448
-------------------------------------
6,000 ITO-Yokado Co., Ltd. 290
-------------------------------------
27,000 Japan Airlines (b) 75
-------------------------------------
20,000 Japan Energy Corp. (Nikko Kyodo 22
Co., Ltd.)
-------------------------------------
4,600 Joyo Bank 17
-------------------------------------
4,800 JUSCO, Ltd. 85
-------------------------------------
17,400 Kajima Corp. 42
-------------------------------------
11,100 Kansai Electric Power, Inc. 187
-------------------------------------
12,000 Kao Corp. 198
-------------------------------------
14,400 Kawasaki Steel Corp. 24
-------------------------------------
20,000 Kinki Nippon Railway 90
-------------------------------------
18,400 Kirin Brewery Co., Ltd. 164
-------------------------------------
16,400 Komatsu, Ltd. 82
-------------------------------------
24,000 Kubota Corp. 52
-------------------------------------
27,400 Kumagai Gumi Co., Ltd. 20
-------------------------------------
2,500 Kyocera Corp. 125
-------------------------------------
8,600 Kyowa Hakko Kogyo Co., Ltd. 35
-------------------------------------
23,800 Marubenii Corp. 49
-------------------------------------
4,000 Marui Co., Ltd. 59
-------------------------------------
24,000 Matsushita Electric Industrial 384
Co., Ltd.
-------------------------------------
27,000 Mitsubishi Chemical Corp. 52
-------------------------------------
23,000 Mitsubishi Corp. 143
-------------------------------------
30,800 Mitsubishi Electric Corp. 66
-------------------------------------
4,000 Mitsubishi Estate Co., Ltd. 35
-------------------------------------
46,000 Mitsubishi Heavy Industries, Ltd. 171
-------------------------------------
16,200 Mitsubishi Material Corp. 33
-------------------------------------
13,000 Mitsubishi Trust & Banking Co. 95
-------------------------------------
23,800 Mitsui & Co. 134
-------------------------------------
17,400 Mitsui Engineering & Shipbuilding 15
Co., Ltd. (b)
-------------------------------------
4,400 Mitsui Fudosan 35
-------------------------------------
200 Mitsui Trust & Bankings Co. -
-------------------------------------
9,600 Mitsukoshi, Ltd. 25
-------------------------------------
1,000 Murata Manufacturing Co., Ltd. 34
-------------------------------------
5,800 Mycal Corp. 40
-------------------------------------
16,200 NEC Corp. 150
-------------------------------------
18,400 New Oji Paper Co. 77
-------------------------------------
8,600 NGK Insulators, Ltd. 77
-------------------------------------
10,600 Nippon Denso, Ltd. 176
-------------------------------------
8,600 Nippon Express Co., Ltd. 47
-------------------------------------
8,600 Nippon Fire & Marine Insurance 34
-------------------------------------
49,800 Nippon Kokan 50
-------------------------------------
8,600 Nippon Light Metal Co. 10
-------------------------------------
8,600 Nippon Meat Packers, Inc. 102
-------------------------------------
24,800 Nippon Oil Co., Ltd. 77
-------------------------------------
94,800 Nippon Steel Corp. 165
-------------------------------------
126 Nippon Telegraph & Telephone 1,092
Corp.
-------------------------------------
24,000 Nippon Yusen Kabushiki Kaisha 73
-------------------------------------
31,600 Nissan Motors Co., Ltd. 105
-------------------------------------
6,000 Nomura Securities Co., Ltd. 70
-------------------------------------
10,400 Odakyu Electric Railway 31
-------------------------------------
37,200 Osaka Gas Co., Ltd. 86
-------------------------------------
8,600 Penta-Ocean Construction Co., Ltd. 18
-------------------------------------
4,000 Pioneer Electronic Corp. 72
-------------------------------------
2,000 Rohm Co. 216
-------------------------------------
31,000 Sakura Bank 72
-------------------------------------
7,800 Sankyo Co., Ltd. 175
-------------------------------------
23,000 Sanwa Bank, Ltd. 196
-------------------------------------
24,000 Sanyo Electric Co. 71
-------------------------------------
3,800 Secom Co., Ltd. 222
-------------------------------------
1,800 Sega Enterprise, Ltd. 30
-------------------------------------
8,600 Sekisui House, Ltd. 66
-------------------------------------
16,200 Sharp Corp. 119
-------------------------------------
4,000 Shimano, Inc. 98
-------------------------------------
12,600 Shimizu Construction 35
-------------------------------------
4,800 Shin-Etsu Chemical Co. 80
-------------------------------------
4,800 Shiseido Co., Ltd. 52
-------------------------------------
4,400 Shizuoka Bank 43
-------------------------------------
16,400 Shon Denko KK 17
-------------------------------------
4,300 Sony Corp. 366
-------------------------------------
7,000 Sumitomo Bank, Ltd. 66
-------------------------------------
31,600 Sumitomo Chemical Co., Ltd. 95
-------------------------------------
17,200 Sumitomo Corp. 87
-------------------------------------
12,400 Sumitomo Electric Industries 124
-------------------------------------
1,000 Sumitomo Forestry Co., Ltd. 5
-------------------------------------
8,600 Sumitomo Metal & Mining 35
-------------------------------------
31,600 Sumitomo Metal Industries 47
-------------------------------------
8,600 Sumitomo Osaka Cement Co. 12
-------------------------------------
18,400 Taisei Construction 36
-------------------------------------
5,800 Taisho Pharmaceutical Co. 117
-------------------------------------
11,000 Taiyo Yuden Co., Ltd. 121
-------------------------------------
11,400 Takeda Chemical Industries 293
-------------------------------------
18,400 Teijin, Ltd. 52
-------------------------------------
11,600 Tobu Railway Co., Ltd. 29
-------------------------------------
5,800 Tohoku Electric Power Co., Inc. 82
-------------------------------------
800 Tokai Bank 4
-------------------------------------
27,000 Tokio Marine Fire Insurance Co. 273
-------------------------------------
14,200 Tokyo Electric Power 267
-------------------------------------
3,000 Tokyo Electron, Ltd. 83
-------------------------------------
34,600 Tokyo Gas, Ltd. 73
-------------------------------------
14,400 Tokyu Corp. 40
-------------------------------------
11,600 Toppan Printing Co., Ltd. 134
-------------------------------------
27,100 Toray Industries, Inc. 131
-------------------------------------
8,600 Toto, Ltd. 52
-------------------------------------
18,400 Toyobo, Ltd. 23
-------------------------------------
35,000 Toyota Motor Corp. 861
-------------------------------------
16,400 Ube Industries, Inc. 22
-------------------------------------
10,000 Yokogawa Electric 54
------------------------------------- -----------
Total 14,023
------------------------------------- -----------
-- Continued --
40
<PAGE>
Fountain Square International Equity Fund
- --------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ----------- ------------------------------------- -----------
Common Stocks-- Continued
- --------------------------------------------------
Netherlands 5.4%
-------------------------------------
30,663 ABN Amro Holdings NV $ 804
-------------------------------------
6,200 Akzo NV 316
-------------------------------------
11,600 Elsevier NV 184
-------------------------------------
1,505 Getronics 84
-------------------------------------
6,250 Heineken NV 284
-------------------------------------
20,809 ING Groep NV 1,574
-------------------------------------
1,493 KLM Royal Dutch Airlines NV 64
-------------------------------------
10,016 Koninklijke Ahold NV 309
-------------------------------------
427 Koninklijke Hoogovens NV 19
-------------------------------------
2,100 Koninklijke KNP BT NV 51
-------------------------------------
14,002 Konninklijke KNP NV 615
-------------------------------------
500 Nedlloyd Groep NV 10
-------------------------------------
1,308 Oce Van Grinten 58
-------------------------------------
6,800 Philips Electronics NV 551
-------------------------------------
6,140 Rodamco 159
-------------------------------------
41,400 Royal Dutch Petroleum Co. 2,115
-------------------------------------
14,002 Tnt Post Group 335
-------------------------------------
8,420 Uni-Invest 131
-------------------------------------
12,300 Unilever NV 880
-------------------------------------
888 Verenigde Machinefabrieken Stork NV 28
-------------------------------------
1,467 Wolters Kluwer NV CVA 220
------------------------------------- -----------
Total 8,791
------------------------------------- -----------
Norway 0.3%
-------------------------------------
42,700 Choice Hotels 130
-------------------------------------
16,400 Christiania Bank 104
-------------------------------------
19,000 Den Norske Bank AS 80
-------------------------------------
20,270 Linstow, Series A 140
-------------------------------------
55 NCL Holding, Series A (b) -
------------------------------------- -----------
Total 454
------------------------------------- -----------
Portugal 1.8%
-------------------------------------
12,879 Banco Commercial 415
-------------------------------------
5,700 Banco Espirito Santo 206
-------------------------------------
6,560 Banco Pinto Sotto 149
-------------------------------------
5,400 Banco Portugues Investmento 213
-------------------------------------
500 Cie De Seguros Tranquilidad 19
-------------------------------------
4,800 Cimpor Cimentos 174
-------------------------------------
200 Corporacao Industrial Do Norte 15
-------------------------------------
1,100 Cortileira Amorin SA 22
-------------------------------------
21,000 Electricidade De Portugal 494
-------------------------------------
400 Engil Sociedade Gestora 4
-------------------------------------
900 Inapa 11
-------------------------------------
6,050 Jeronimo Martins 319
--------------------------------------
5,100 Portucel Industrial 39
--------------------------------------
11,000 Portugal Telecom 632
--------------------------------------
700 Sociedade De Construcoes Soares 6
DaCosta SA (b)
--------------------------------------
2,400 Sonae 130
--------------------------------------
700 Unicer 15
------------------------------------- -----------
Total 2,863
------------------------------------- -----------
Singapore 0.0%
-------------------------------------
4,000 Inchcape Marketing Services (b) 1
-------------------------------------
960 OCBC - Foreign (b) 3
-------------------------------------
200 Robinson & Co. -
-------------------------------------
100 Shangri-La Hotel, Ltd. -
-------------------------------------
510 Singapore Press Holdings 4
------------------------------------- -----------
Total 8
------------------------------------- -----------
Spain 5.4%
-------------------------------------
1,285 Acerinox SA 29
-------------------------------------
8,698 Acesa Autopista 125
-------------------------------------
400 Alba 48
-------------------------------------
19,200 Argentaria Corporation 467
-------------------------------------
1,200 Azucarera Ebro 33
-------------------------------------
77,400 Banco Bilbao Vizcaya 1,461
-------------------------------------
300 Banco Popular 24
-------------------------------------
200 Bankinter SA 7
-------------------------------------
13,900 Bco Cent Hispanoamer 524
-------------------------------------
1,800 Bco Espanol De Credito 29
-------------------------------------
40,000 Bco Santander SA 1,131
-------------------------------------
1,580 Corporacion Mapfre 57
-------------------------------------
1,400 Dragados & Construcciones SA 43
-------------------------------------
550 Empresa Nacional de Celulosas SA 10
-------------------------------------
37,300 Endesa-Empresa Nac Elec. 822
-------------------------------------
4,100 Ercros SA (b) 5
-------------------------------------
1,600 Fomento De Construction 78
-------------------------------------
5,400 Gas Natural SDG SA 435
-------------------------------------
32,400 Iberdrola SA 513
-------------------------------------
1,124 Inmobiliaria Metro 31
-------------------------------------
10,600 Repsol SA 577
-------------------------------------
1,631 Sociedade General De Aguas 93
D'Barcelona SA
-------------------------------------
4,500 Tabacalera 99
-------------------------------------
36,327 Telefonica De Espana 1,774
-------------------------------------
7,100 Union Electrica Fenosa SA 102
-------------------------------------
2,300 Uralita SA 30
-------------------------------------
15,027 Vallehermoso SA 177
-------------------------------------
500 Viscofan Envolturas Celulosicas 24
-------------------------------------
2,164 Zardoya Otis 67
------------------------------------- -----------
Total 8,815
------------------------------------- -----------
Sweden 3.4%
-------------------------------------
13,900 ABB AB, Series A 194
-------------------------------------
5,800 ABB AB, Series B 81
-------------------------------------
3,300 AGA AB, Series A 53
-------------------------------------
17,120 Asticus AB 192
-------------------------------------
27,566 Astra AB, Series A 532
-------------------------------------
6,600 Astra, Series B 121
-------------------------------------
2,700 Atlas Copco AB, Series A 69
-------------------------------------
1,400 Atlas Copco, Series B 36
-------------------------------------
16,550 Castellum Intl. Ltd. 192
-------------------------------------
19,900 Diligentia AB 169
-------------------------------------
6,400 Electrolux AB, Series B 102
-------------------------------------
39,700 Ericsson LM, Series B 1,117
-------------------------------------
9,800 Foereningssparbanken 293
-------------------------------------
4,300 Hennes & Mauritz AB, Series B 308
-------------------------------------
2,200 Netcom, Series B 100
-------------------------------------
9,500 Nordbanken Holding AB 68
-------------------------------------
1,800 OM Gruppen AB 36
-------------------------------------
5,900 Piren AB 54
-------------------------------------
1,700 Sandvik 45
-------------------------------------
4,100 Sandvik, Series A 108
-------------------------------------
-- Continued --
41
<PAGE>
Fountain Square International Equity Fund
- --------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ------------ ------------------------------------- -----------
Common Stocks-- Continued
- --------------------------------------------------
50 Scancem AB, Series A $ 2
-------------------------------------
1,700 Securitas AB, Series B 90
-------------------------------------
10,700 Skandia Forsakring 183
-------------------------------------
16,900 Skandinaviska Enskilda Banken, 293
Class A
-------------------------------------
2,600 Skanska AB, Series B 120
-------------------------------------
1,800 SKF AB, Series B 29
-------------------------------------
2,500 SSAB Swedish Steel 37
-------------------------------------
6,400 Stora Kopparbergs Bergslag 90
Aktiebolag, Series A
-------------------------------------
4,600 Svenska Cellulosa AB, Series B 118
-------------------------------------
6,100 Svenska Handelsbanken, Class A 294
-------------------------------------
200 Svenska Handelsbanken, Series B 9
-------------------------------------
6,150 Tornet Fastighets AB 98
-------------------------------------
3,100 Trelleborg AB, Series B 38
-------------------------------------
3,100 Volvo AB, Series A 93
-------------------------------------
6,400 Volvo AB, Series B 198
-------------------------------------
1,500 Wm Data Nordik, Series B 54
------------------------------------- -----------
Total 5,616
------------------------------------- -----------
Switzerland 8.2%
-------------------------------------
220 ABB AB, Bearer 326
-------------------------------------
420 Addecco SA 222
-------------------------------------
135 Alusuisse-Lonza Holding, Registered 165
-------------------------------------
20 Banca Del Gottardo 18
-------------------------------------
10 Banque Cantonale 4
-------------------------------------
6,200 Credit Suisse Group, Registered 1,562
-------------------------------------
75 George Fischer, Registered 30
-------------------------------------
160 Holderbank Financiere Glarus AG 207
-------------------------------------
890 Nestle SA, Registered 1,849
-------------------------------------
1,450 Novartis AG, Registered 2,446
-------------------------------------
37 Roche Holdings AG 590
-------------------------------------
157 Roche Holdings AG, Genuss 1,691
-------------------------------------
375 Sairgroup 117
-------------------------------------
115 SMH Swiss Corp. 85
-------------------------------------
43 Societe Generale 75
-------------------------------------
85 Sulzer AG, Registered 66
-------------------------------------
330 Swiss Reinsurance Co., Registered 894
-------------------------------------
4,838 UBS AG, Registered 2,100
-------------------------------------
150 Valora Holding AG, Registered 47
-------------------------------------
10 Vontobel Holdings 17
-------------------------------------
1,075 Zurich Allied AG 844
------------------------------------- -----------
Total 13,355
------------------------------------- -----------
Thailand 0.0%
-------------------------------------
8,700 CMIC Finance & Securities Co., Ltd. -
-------------------------------------
13,300 Finance One PLC (b) -
-------------------------------------
14,500 General Finance & Securities Co., -
Ltd.
-------------------------------------
12,469 Land & House 2
-------------------------------------
25,200 TPI Polene Co., Ltd. 2
-------------------------------------
9,100 Univest Land Public Co., Ltd. (b) -
------------------------------------- -----------
Total 4
------------------------------------- -----------
United States 0.0%
-------------------------------------
26,666 Asia Food & Property (b) 4
------------------------------------- -----------
Total Common Stocks 132,927
------------------------------------- -----------
Preferred Stocks 0.5%
- --------------------------------------------------
Australia 0.1%
-------------------------------------
20,951 News Corp., Ltd. 133
-------------------------------------
Germany 0.3%
-------------------------------------
725 SAP AG 537
-------------------------------------
1,550 Volkswagen 103
------------------------------------- -----------
Total 640
------------------------------------- -----------
Italy 0.1%
-------------------------------------
37,750 Fiat SpA (b) 92
------------------------------------- -----------
Total Preferred Stocks 865
------------------------------------- -----------
Warrants and Rights 0.0%
- --------------------------------------------------
France 0.0%
-------------------------------------
3,255 Cie Generale Des Eaux Warrants (b) 6
-------------------------------------
8 Sodexho SA Warrants (b) 3
------------------------------------- -----------
Total 9
------------------------------------- -----------
Germany 0.0%
-------------------------------------
1,367 Muenchener Ruekver AG Right (b) 10
-------------------------------------
Hong Kong 0.0%
-------------------------------------
5,750 Hong Kong & China Gas Warrants (b) -
-------------------------------------
3,200 Hysan Development Company Warrants (b) -
--------------------------------------
Italy 0.0%
--------------------------------------
2,400 Mediobanca/Rinascenter Warrants (b) 5
--------------------------------------
1,600 Mediobanca/Rinascenter Warrants (b) 2
------------------------------------- -----------
Total 7
------------------------------------- -----------
Portugal 0.0%
--------------------------------------
6,560 Banco Pinto Sotto Right (b) 2
--------------------------------------
400 Engil-Sgps Bond Right (b) -
--------------------------------------
400 Engil-Sgps Equity Right (b) -
------------------------------------- -----------
Total 2
------------------------------------- -----------
Singapore 0.0%
--------------------------------------
6,250 Straight Steamship Warrants (b) -
--------------------------------------
Spain 0.0%
--------------------------------------
40,000 Bco Santander SA Right (b) 2
--------------------------------------
Thailand 0.0%
--------------------------------------
1,290 National Finance & Security Warrants -
(b)
-------------------------------------
United States 0.0%
-------------------------------------
2,000 Asia Food & Property Warrants (b) -
------------------------------------- -----------
Total Warrants and Rights 30
------------------------------------- -----------
Convertible Securities 0.0%
- --------------------------------------------------
France 0.0%
-------------------------------------
325 Sanofia, Convertible Bond, 4.00%, -
1/1/00
-------------------------------------
277 Simco, Convertible Bond, 3.25%,1/1/06 1
------------------------------------- -----------
Total 1
------------------------------------- -----------
Portugal 0.0%
-------------------------------------
960 Jeronimo Martins, Convertible Bond,
12/30/04 5
------------------------------------- -----------
Total Convertible Securities 6
------------------------------------- -----------
Corporate Bonds 0.0%
- --------------------------------------------------
France 0.0%
-------------------------------------
426 Casino Guichard, 4.50%, 7/12/01 -
-------------------------------------
40,000 Sodexho SA, 6.00%, 6/7/04 7
-------------------------------------
Italy 0.0%
-------------------------------------
12,800,000 Mediobanca, 4.50%, 1/1/00 8
------------------------------------- -----------
Total Corporate Bonds 15
------------------------------------- -----------
-- Continued --
42
<PAGE>
Fountain Square International Equity Fund
- --------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ----------- -------------------------------------- -----------
Repurchase Agreements 7.2%
- --------------------------------------------------
United States 7.2%
-------------------------------------
$11,836,000 Warburg/Dillion, 5.55%, dated
7/31/98, due 8/3/98 (at amortized
cost) collaterized by U.S. Treasury
Bond, 8.00% due 11/15/21 with a
value of $12,093,000. $ 11,836
------------------------------------- -----------
Total Repurchase Agreements 11,836
------------------------------------- -----------
Total Investments (Cost $110,708)
(a) - 89.1% 145,679
-------------------------------------
Other assets in excess of
liabilities -- 10.9% 17,909
------------------------------------- -----------
TOTAL NET ASSETS - 100.0% $163,588
------------------------------------- -----------
Percentages indicated are based on net assets of $163,588.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for financial
reporting purposes in excess of federal income tax purposes of $2,774 and by the
amount of market to market adjustments for passive foreign investment companies
of $1,532. The net unrealized appreciation of investments on federal tax basis
amounts to $30,665 which is composed of $36,337 appreciation and $5,672
depreciation at July 31, 1998.
(b) Non-income producing security.
At July 31, 1998, International Equity Fund's investment concentration, by
industry, were as follows:
Automotive 3.0%
Business & Financial Services 20.3%
Chemicals 1.6%
Electrical 2.3%
Food 3.6%
Insurance 9.6%
Oil & Gas Producers 7.8%
Pharmaceuticals 7.5%
Real Estate 2.0%
Retail 1.3%
Telecommunications 10.7%
Other 30.3%
(See Notes which are an integral part of the Financial Statements)
43
<PAGE>
Fountain Square Bond Fund For Income
Schedule of Portfolio Investments
July 31, 1998
(Amounts in thousands except share amounts)
- --------------------------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ------------ ------------------------------------ -----------
Asset Backed Securities -- 2.7%
- --------------------------------------------------
Financial -- 2.7%
- --------------------------------------------------
$5,000 GE Capital Management, 6.94%,
3/25/27 $5,060
------------------------------------- -----------
Total Asset Backed Securities 5,060
------------------------------------- -----------
Corporate Bonds -- 39.2%
- --------------------------------------------------
Chemicals -- 2.7%
-------------------------------------
5,000 Engelhard Corp., 7.00%, 8/1/01 5,127
-------------------------------------
Financial -- 26.0%
-------------------------------------
5,000 American General Finance Corp.,
7.25%, 4/15/00 5,099
-------------------------------------
5,000 Chrysler Corp., Medium Term Note,
6.37%, 6/21/99 5,018
-------------------------------------
5,000 DLJ, Medium Term Note, 6.38%,
5/26/00 5,032
-------------------------------------
5,000 First Data Corp., 6.38%, 12/15/07 5,051
-------------------------------------
5,000 Ford Motor Credit Corp., 7.75%,
10/1/99 5,092
-------------------------------------
5,000 Lehman Brothers, Inc., 6.63%,
2/15/08 5,024
-------------------------------------
8,000 Reliastar Financial, 7.13%, 3/1/03 8,297
-------------------------------------
5,000 Shawmut National, 7.20%, 4/15/03 5,211
-------------------------------------
5,000 Southern National Corp., 7.05%,
5/23/03 5,166
------------------------------------- -----------
Total 48,990
------------------------------------- -----------
Food -- 2.7%
-------------------------------------
5,000 Supervalue, Medium Term Note,
6.64%, 6/9/06 5,017
-------------------------------------
Manufacturing -- 2.7%
-------------------------------------
5,000 Tyco International, Ltd., 6.38%,
1/15/04 5,045
-------------------------------------
Telecommunications -- 2.7%
-------------------------------------
5,000 British Telecommunications, Inc.,
9.38%, 2/15/99 5,089
-------------------------------------
Utilities -- 2.4%
-------------------------------------
3,500 Arizona Public Service, 5.75%,
9/15/00 3,486
------------------------------------- -----------
1,000 Southern New England, 8.00%, 1,062
11/20/01
------------------------------------- -----------
Total 4,548
------------------------------------- -----------
Total Corporate Bonds 73,816
------------------------------------- -----------
U.S. Government Securities -- 52.6%
- --------------------------------------------------
U.S. Government Agencies -- 6.9%
-------------------------------------
8,000 FHLB, 6.06%, 3/25/02 8,009
------------------------------------- -----------
5,000 FNMA, 6.32%, 5/21/03 4,995
------------------------------------- -----------
Total 13,004
------------------------------------- -----------
U.S. Treasury Notes -- 45.7%
-------------------------------------
5,000 5.88%, 1/31/99 5,011
-------------------------------------
8,500 5.63%, 11/30/99 8,511
-------------------------------------
2,500 6.13%, 7/31/00 2,530
-------------------------------------
4,000 5.38%, 2/15/01 (b) 3,988
-------------------------------------
4,000 7.75%, 2/15/01 4,210
-------------------------------------
11,500 6.13%, 12/31/01 11,701
-------------------------------------
13,000 5.88%, 9/30/02 13,142
-------------------------------------
15,000 5.75%, 8/15/03 (b) 15,136
-------------------------------------
21,000 6.13%, 8/15/07 (b) 21,781
------------------------------------- -----------
Total 86,010
------------------------------------- -----------
Total U.S. Government Securities 99,014
------------------------------------- -----------
Repurchase Agreement -- 3.7%
- --------------------------------------------------
7,056 Warburg/Dillion, 5.55%, dated 7,056
7/31/98, due 8/3/98 (at amortized
cost), collateralized by U.S. Treasury
Bond, 8.00%, due 11/15/21 with a
value of $7,210.
-------------------------------------
Short Term Securities Purchased with Collateral -- 0.1%
- --------------------------------------------------
Repurchase Agreements -- 0.1%
-------------------------------------
152 Morgan Stanley, 5.63%, dated 152
7/31/98, due 8/3/98 (at amortized
cost), collateralized by U.S. Treasury
Bills, due 1/21/99 with a value
of $157.
------------------------------------- -----------
Total Short Term Securities 152
Purchased with Collateral
------------------------------------- -----------
Total Investments (Cost $183,903)
(a) -- 98.3% 185,098
-------------------------------------
Other assets in excess of
liabilities -- 1.7% 3,203
------------------------------------- -----------
TOTAL NET ASSETS -- 100.0% $188,301
------------------------------------- -----------
Percentages indicated are based on net assets of $188,301.
(a) Represents cost for financial reporting and federal tax purposes. The net
unrealized appreciation of investments on federal tax basis amounts to $1,195,
which is composed of $1,326 appreciation and $131 depreciation at July 31, 1998.
(b) All or part of this security has been loaned at July 31, 1998.
(See Notes which are an integral part of the Financial Statements)
44
<PAGE>
Fountain Square Quality Bond Fund
Schedule of Portfolio Investments
July 31, 1998
(Amounts in thousands except share amounts)
- --------------------------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
---------------------------------------------------------------- -------------
Asset Backed Securities -- 1.9%
- ------------------------------------------------------------------
Financial -- 1.9%
-----------------------------------------------------
$ 2,000 GE Capital Management, 6.94%, 3/25/27 $ 2,024
----------------------------------------------------- -------------
Total Asset Backed Securities 2,024
----------------------------------------------------- -------------
Corporate Bonds -- 28.2%
- ------------------------------------------------------------------
Entertainment & Leisure -- 3.6%
-----------------------------------------------------
4,000 Carnival Cruise, 6.15%, 4/15/08 3,942
-----------------------------------------------------
Financial -- 7.0%
-----------------------------------------------------
1,000 Ford Motor Credit Corp., Floating Rate Note,
11/9/98, (5.66%, 8/10/98) (b) 1,000
-----------------------------------------------------
4,000 Provident Cos, Inc., 6.38%, 7/15/05 3,954
-----------------------------------------------------
2,500 Shawmut National, 7.20%, 4/15/03 2,605
----------------------------------------------------- -------------
Total 7,559
----------------------------------------------------- -------------
Manufacturing -- 14.6%
-----------------------------------------------------
4,000 General Motors, 6.25%, 5/1/05 4,011
-----------------------------------------------------
5,000 Hasbro, 6.15%, 7/15/08 4,969
-----------------------------------------------------
5,000 Honeywell, 7.00%, 3/15/07 5,252
-----------------------------------------------------
1,500 IBP, Inc., Debenture, 6.13%, 2/1/06 1,498
----------------------------------------------------- -------------
Total 15,730
----------------------------------------------------- -------------
Utility -- 3.0%
-----------------------------------------------------
3,250 Arizona Public Service, 5.75%, 9/15/00 3,237
----------------------------------------------------- -------------
Total Corporate Bonds 30,468
----------------------------------------------------- -------------
Mortgage Backed Securities -- 30.4%
- ------------------------------------------------------------------
U.S. Government Agencies -- 30.4%
-----------------------------------------------------
5 FHLMC, 9.50%, 10/1/02, Pool #38-0009, CMO 5
-----------------------------------------------------
12 FHLMC, 8.00%, 8/1/08, Pool #27-2525, CMO 12
-----------------------------------------------------
11,902 FNCL, 6.50%, 2/1/28, Pool #417392 11,841
-----------------------------------------------------
3,721 FNMA, 7.00%, 7/18/27 3,640
-----------------------------------------------------
1,349 GNMA, 7.50%, 8/15/27, Pool #449006 1,388
-----------------------------------------------------
11,688 GNMA, 7.50%, 9/15/27, Pool #451459 12,029
-----------------------------------------------------
3,992 GNMA, 6.50%, 5/15/28, Pool #449546 3,980
----------------------------------------------------- -------------
Total Mortgage Backed Securities 32,895
----------------------------------------------------- -------------
U.S. Government Securities -- 32.2%
- ------------------------------------------------------------------
U.S. Government Agencies -- 4.3%
-----------------------------------------------------
4,500 FHLMC, 6.28%, 3/6/06 4,629
-----------------------------------------------------
U.S. Treasury Bonds -- 11.3%
-----------------------------------------------------
11,000 6.63%, 2/15/27 (c) 12,289
-----------------------------------------------------
U.S. Treasury Notes -- 16.6%
-----------------------------------------------------
11,000 5.63%, 11/30/99 11,013
-----------------------------------------------------
4,000 5.50%, 2/28/03 3,990
-----------------------------------------------------
3,000 5.75%, 8/15/03 (c) 3,027
----------------------------------------------------- -------------
Total 18,030
----------------------------------------------------- -------------
Total U.S. Government Securities 34,948
----------------------------------------------------- -------------
Repurchase Agreement -- 6.0%
- ------------------------------------------------------------------
6,484 Warburg/Dillion, 5.55%, dated 7/31/98, due 8/3/98 6,484
(at amortized cost), collateralized by U.S.
Treasury Bond, 8.00%, due 11/15/21 with a value
of $6,625.
-----------------------------------------------------
Short Term Securities Purchased with Collateral -- 1.9%
- ------------------------------------------------------------------
Repurchase Agreement -- 1.9%
-----------------------------------------------------
2,049 Morgan Stanley, 5.63%, dated 7/31/98, due 8/3/98 2,049
(at amortized cost), collateralized by U.S.
Treasury Bills, due 1/21/99 with a value of $2,101.
----------------------------------------------------- -------------
Total Short Term Securities Purchased with Collateral 2,049
----------------------------------------------------- -------------
Total Investments (Cost $108,408) (a) -- 100.6% 108,868
-----------------------------------------------------
Liabilities in excess of other assets -- (0.6)% (675)
----------------------------------------------------- -------------
TOTAL NET ASSETS - 100.0% $108,193
----------------------------------------------------- -------------
Percentages indicated are based on net assets of $108,193.
(a) Represents cost for financial reporting and federal tax purposes. The net
unrealized appreciation of investments on federal tax basis amounts to $460,
which is composed of $694 appreciation and $234 depreciation at July 31, 1998.
(b) Current rate and next reset date shown.
(c) All or part of this security has been loaned at July 31, 1998.
The following abbreviations are used in this portfolio:
CMO - Collateralized Mortgage Obligation
(See Notes which are an integral part of the Financial Statements)
45
<PAGE>
Fountain Square U.S. Government Securities Fund
Schedule of Portfolio Investments
July 31, 1998
(Amounts in thousands except share amounts)
- --------------------------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
----------------------------------------------------------------- ------------
U.S. Government Securities -- 97.4%
- -------------------------------------------------------------------
Mortgage Backed Securities -- 12.4%
------------------------------------------------------
$1,190 FNMA, 6.00%, 6/1/01 $ 1,188
------------------------------------------------------
3,993 FNMA, 6.00%, 10/1/04 3,983
------------------------------------------------------ -----------
Total 5,171
------------------------------------------------------ -----------
U.S. Government Agencies -- 27.6%
------------------------------------------------------
1,000 FHLB, 6.29%, 12/23/02 (Callable 12/23/99 @ 100) 1,001
------------------------------------------------------
2,000 FHLB, 6.00%, 4/23/04 (Callable 4/23/99 @ 100) 1,985
------------------------------------------------------
500 FHLMC, 6.70%, 10/9/02 (Callable 10/9/98 @ 100) 501
------------------------------------------------------
2,000 FNMA, 5.78%, 2/12/03 (Callable 2/12/01 @ 100) 1,984
------------------------------------------------------
3,000 FNMA, 6.75%, 7/26/04 (Callable 7/26/00 @ 100) 3,041
------------------------------------------------------
2,000 FNMA, 6.29%, 5/9/05 (Callable 5/9/01 @ 100) 2,007
------------------------------------------------------
1,000 FNMA, 6.38%, 7/20/05 (Callable 7/20/99 @ 100) 994
------------------------------------------------------ -----------
Total 11,513
------------------------------------------------------ -----------
U.S. Treasury Notes -- 57.4%
------------------------------------------------------
5,600 5.88%, 11/30/01 5,654
------------------------------------------------------
5,000 6.25%, 1/31/02, (b) 5,108
------------------------------------------------------
5,000 6.25%, 6/30/02 5,117
------------------------------------------------------
7,000 5.75%, 11/30/02 7,046
------------------------------------------------------
1,000 5.50%, 2/28/03 998
------------------------------------------------------ -----------
Total 23,923
------------------------------------------------------ -----------
Total U.S. Government Securities 40,607
------------------------------------------------------ -----------
Repurchase Agreement -- 1.8%
- -------------------------------------------------------------------
734 Warburg/Dillion, 5.55%, dated 7/31/98, due 8/3/98 734
(at amortized cost), collateralized by U.S. Treasury
Bond, 8.00%, due 11/15/21 with a value of $750.
------------------------------------------------------ -----------
Total Investments (Cost $40,930) (a) -- 99.2% 41,341
------------------------------------------------------
Other assets in excess of liabilities -- 0.8% 327
------------------------------------------------------ -----------
TOTAL NET ASSETS-- 100.0% $41,668
------------------------------------------------------ -----------
Percentages indicated are based on net assets of $41,668.
(a) Represents cost for financial reporting and federal tax purposes. The net
unrealized appreciation of investments on federal tax basis amounts to $411,
which is composed of $434 appreciation and $23 depreciation at July 31, 1998.
(b) All or part of this security has been loaned at July 31, 1998.
(See Notes which are an integral part of the Financial Statements)
46
<PAGE>
Fountain Square Municipal Bond Fund
Schedule of Portfolio Investments
July 31, 1998
(Amounts in thousands except share amounts)
- --------------------------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ----------- ------------------------------------- ----------
Municipal Bonds -- 93.9%
- --------------------------------------------------
Arizona -- 4.2%
-------------------------------------
$2,000 Mesa Utility System, Revenue, 4.75%,
7/1/13 (Callable 7/1/08 @ 100) MBIA $ 1,958
-------------------------------------
1,000 Phoenix, GO, 5.80%, 7/1/07
(Callable 7/1/05 @ 102) 1,097
-------------------------------------
2,000 Pima, 4.50%, 7/1/12
(Callable 7/1/08 @ 101) MBIA 1,928
------------------------------------- ----------
Total 4,983
------------------------------------- ----------
California -- 1.6%
-------------------------------------
2,000 Yuba County, Water Agency, Revenue,
4.00%, 3/1/16 (Callable 9/1/98
@ 100), MBIA 1,879
------------------------------------- ----------
Colorado -- 1.7%
-------------------------------------
2,000 South Sub Park Dist Co., 5.00%,
12/15/13 (Callable @ 12/15/08
@ 101) FGIC 2,000
------------------------------------- ----------
Florida -- 3.0%
-------------------------------------
2,455 Escambie County, Revenue, 4.60%,
1/1/07 AMBAC 2,482
-------------------------------------
1,000 Volusia County School District, GO,
5.88%, 8/1/00, FGIC 1,039
------------------------------------- ----------
Total 3,521
------------------------------------- ----------
Illinois -- 5.7%
-------------------------------------
1,000 Chicago, GO, 5.40%, 1/1/09
(Callable 1/1/04 @ 102) FGIC 1,047
-------------------------------------
1,000 Chicago Park, GO, 5.20%, 1/1/09
(Callable 1/1/06 @ 102) FGIC 1,041
-------------------------------------
2,000 Kane, Cook & Dupage, 5.00%,
1/1/14 (Callable 1/1/11 @ 101) 1,983
-------------------------------------
2,500 University of Illinois, Revenue,
5.25%, 8/15/04 MBIA 2,612
------------------------------------- ----------
Total 6,683
------------------------------------- ----------
Indiana -- 6.4%
-------------------------------------
1,000 Bank Board, Revenue, 5.80%, 2/1/08,
(Callable 2/1/05 @ 101) AMBAC 1,077
-------------------------------------
2,000 Marion County, Convention &
Recreational Facilities Authority,
Series A, Excise Tax Revenue, 5.00%,
6/1/12 (Callable 6/1/08 @ 101) MBIA 1,998
-------------------------------------
1,000 Municipal Power Agency Supply,
Revenue, 5.38%, 1/1/03 MBIA 1,047
-------------------------------------
1,275 Munster School Building Corp.,
Revenue, 5.70%, 7/15/10
(Callable 1/15/05 @ 101) MBIA 1,354
-------------------------------------
2,000 South Bend Indiana Community
School Corp., Riley School Building
Corp., Refunding, Revenue, 5.25%,
7/1/12 (Callable 7/1/08 @ 101) 2,052
------------------------------------- ----------
Total 7,528
------------------------------------- ----------
Kansas -- 2.9%
-------------------------------------
2,000 Douglas County Union School
District #497, 5.00%, 9/1/07 2,076
-------------------------------------
$1,250 Douglas County, Union School
District, GO, 6.00%, 9/1/09
(Prerefunded 9/1/03 @ 100) 1,350
------------------------------------- ----------
Total 3,426
------------------------------------- ----------
Kentucky -- 3.5%
-------------------------------------
1,000 State, Property & Buildings
Commission, Revenue, 5.30%,11/1/07
(Callable 11/1/05 @ 102) AMBAC 1,061
-------------------------------------
3,000 State, Property and Buildings
Commission, Revenue, 4.50%,
10/1/99 3,027
------------------------------------- ----------
Total 4,088
------------------------------------- ----------
Massachusetts -- 7.0%
-------------------------------------
4,000 State, 7.00%, 12/1/10 (Prerefunded
12/1/00 @ 100) 4,276
-------------------------------------
4,000 State, Industrial Financial Agency,
Bradford College, Revenue, 5.25%,
11/1/18 (Callable 11/1/08 @ 102) 3,951
------------------------------------- ----------
Total 8,227
------------------------------------- ----------
Minnesota -- 2.6%
-------------------------------------
3,000 Public Facilities Authority, Water
Pollution Control, Revenue, 4.88%,
3/1/12 (Callable 3/1/06 @ 100) 3,003
-------------------------------------
Missouri -- 0.8%
-------------------------------------
900 State, Health Facilities, St. Anthonys
Medical Center, Series A, Revenue,
3.50%, 12/1/19 (b) 900
-------------------------------------
Nebraska -- 2.5%
-------------------------------------
700 Lincoln Water Revenue, Revenue,
6.85%, 11/1/03 (Prerefunded 11/1/00
@ 101) 749
-------------------------------------
2,000 Omaha, 5.90%, 2/1/06 2,197
------------------------------------- ----------
Total 2,946
------------------------------------- ----------
New York -- 3.6%
-------------------------------------
2,000 New York Transitional Financial
Authority, Revenue, 4.38%, 5/1/07 1,975
-------------------------------------
2,000 Westchester, GO, 6.70%, 11/1/05 2,299
------------------------------------- ----------
Total 4,274
------------------------------------- ----------
North Carolina -- 5.2%
-------------------------------------
3,000 Charlotte, GO, 4.75%, 2/1/07 3,074
-------------------------------------
3,000 Wake County, GO, 4.50%, 3/1/10
(Callable 3/1/08 @ 101) 2,976
------------------------------------- ----------
Total 6,050
------------------------------------- ----------
Ohio -- 7.4%
-------------------------------------
1,000 Columbus, GO, 6.88%, 9/15/05
(Callable 9/15/01 @ 100) 1,079
-------------------------------------
1,000 Columbus Sewer Improvement
No 26-E-U, GO, 6.50%, 9/15/01 1,073
-------------------------------------
4,000 State, Building Authority, Revenue,
4.75%, 10/1/17 (Callable 10/1/08
@ 101) 3,816
-------------------------------------
750 University Of Cincinnati, Series R9,
Revenue, 5.60%, 6/1/07 (Callable
6/1/03 @ 100) 785
-------------------------------------
-- Continued --
47
<PAGE>
Fountain Square Municipal Bond Fund
- --------------------------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- -------------------------------------------------- ----------
Municipal Bonds --Continued
$ 2,000 Youngstown, Revenue, 4.75%,
12/15/16 (Callable 12/15/07 @ 101)
AMBAC $ 1,917
------------------------------------- ----------
Total 8,670
------------------------------------- ----------
Oklahoma -- 1.8%
-------------------------------------
2,000 Oklahoma City, GO, 5.00%, 2/1/08
(Callable 2/1/07 @ 100) 2,063
------------------------------------- ----------
Pennsylvania -- 6.7%
-------------------------------------
3,500 State, GO, 5.30%, 5/1/04 3,680
-------------------------------------
2,000 State, Higher Eduction Facilities
Authority Health Services, Revenue,
5.10%, 1/1/05 2,080
-------------------------------------
2,000 Trinity Area School District, GO,
6.63%, 11/1/11 (Callable 11/1/01
@ 100) FGIC 2,158
------------------------------------- ----------
Total 7,918
------------------------------------- ----------
Texas -- 11.6%
-------------------------------------
2,000 Del Valle, GO, 5.00%, 2/1/11
(Callable 2/1/07 @ 100) 2,021
-------------------------------------
2,000 Garland, GO, 4.75%, 2/15/15
(Callable 2/15/08 @ 100) 1,925
-------------------------------------
1,000 State, GO, 7.00%, 10/1/03
(Prerefunded 10/1/99 @ 100) 1,038
-------------------------------------
2,000 Travis County, GO, 4.63%, 3/1/13
(Callable 3/1/08 @ 100) 1,923
-------------------------------------
2,000 Travis County, GO, 4.50%, 3/1/15
(Callable 3/1/08 @ 100) 1,860
-------------------------------------
5,000 University of Texas, Revenue, 4.75%,
7/1/18 (Callable 7/1/08 @ 100) 4,788
------------------------------------- ----------
Total 13,555
------------------------------------- ----------
Utah -- 1.4%
-------------------------------------
1,530 St. George, Water Revenue, 5.60%,
6/1/10 (Callable 6/1/05 @ 101) 1,621
------------------------------------- ----------
Virginia -- 2.7%
-------------------------------------
2,000 State, Public Building Authority,
Pub Facilities Revenue, 5.00%,
8/1/10 (Callable 8/1/08 @ 100) 2,042
-------------------------------------
1,000 Virginia Beach, GO, 5.70%, 11/1/07
(Callable 11/1/04 @ 1,083
------------------------------------- ----------
Total 3,125
------------------------------------- ----------
Washington -- 7.3%
-------------------------------------
2,000 King County, School District No. 411,
GO, 6.50%, 12/1/09 (Prerefunded
12/1/02 @ 100) AMBAC 2,187
-------------------------------------
2,000 Seattle Water System, Revenue, 5.10%,
6/1/04 (Callable 6/1/03 @ 102) 2,080
-------------------------------------
1,000 Spokane, Regional Solid Waste,
Revenue, 5.50%, 12/1/10 (Callable
12/1/05 @ 102) AMBAC 1,058
-------------------------------------
1,000 State, Public Power Supply System,
Revenue, 7.50%, 7/1/03
(Callable 1/1/01 @ 102) 1,096
-------------------------------------
2,000 State, Public Power Supply System,
Revenue, 5.60%, 7/1/07 2,127
------------------------------------- ----------
Total 8,548
------------------------------------- ----------
West Virginia -- 2.6%
-------------------------------------
3,000 State, Revenue, 5.00%, 7/1/02 3,092
-------------------------------------
Wisconsin -- 1.7%
-------------------------------------
1,000 Milwaukee, GO, 5.30%, 6/15/07
(Prerefunded 6/15/02 @ 100) 1,041
-------------------------------------
1,000 Milwaukee County, GO, 6.00%,
12/1/99 (Prerefunded 12/1/98
@ 100) 1,008
------------------------------------- ----------
Total 2,049
------------------------------------- ----------
Total Municipal Bonds 110,149
------------------------------------- ----------
Registered Investment Companies -- 4.8%
- --------------------------------------------------
Stifs/Money Markets -- 4.8%
-------------------------------------
2,879 Federated Tax Free Trust 2,879
-------------------------------------
2,734 SEI Institutional Tax Free Fund 2,734
------------------------------------- ----------
Total Registered Investment Companies 5,613
------------------------------------- ----------
Total Investments (Cost $113,964)
(a) - 98.7% 115,762
------------------------------------- ----------
Other assets in excess of liabilities
- 1.3% 1,571
------------------------------------- ----------
TOTAL NET ASSETS - 100.0% $117,333
------------------------------------- ----------
Percentages indicated are based on net assets of $117,333.
(a) Represents cost for financial reporting and federal tax purposes. The net
unrealized appreciation of investments on federal tax basis amounts to $1,798,
which is composed of $1,895 appreciation and $97 depreciation at July 31, 1998.
(b) Current rate shown.
The following abbreviations are used in this portfolio:
AMBAC - American Municipal Bond Assurance Corporation
GO - General Obligation
FGIC - Financial Guaranty Insurance Corporation
MBIA - Municipal Bond Investors Assurance Corporation
(See Notes which are an integral part of the Financial Statements)
48
<PAGE>
Fountain Square Ohio Tax Free Bond Fund
Schedule of Portfolio Investments
July 31, 1998
(Amounts in thousands except share amounts)
- --------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ------------- ------------------------------------ -----------
Municipal Bonds -- 95.3%
- --------------------------------------------------
Guam -- 1.4%
-------------------------------------
$2,500 Guam Government, Revenue, 5.00%,
11/1/02 $ 2,591
------------------------------------- -----------
Ohio -- 93.9%
-------------------------------------
500 Akron, Various Purpose
Improvement, GO, 5.60%, 12/1/06
(Callable 12/1/04 @102) 540
-------------------------------------
1,510 Bowling Green State University,
Revenue, 5.55%, 6/1/10
(Callable 6/1/06 @101) 1,609
-------------------------------------
5,000 Butler County, Revenue, 5.00%,
4/1/02 5,150
-------------------------------------
2,000 Butler County, Revenue, 4.70%,
12/1/11 (Callable 12/1/08 @ 101) 1,971
-------------------------------------
4,000 Butler County, Revenue, 5.13%,
4/1/17 (Callable 4/1/08 @ 102) 3,993
-------------------------------------
600 Cincinnati, GO, 7.00%, 10/1/00 638
-------------------------------------
5,000 Cincinnati, GO, 4.38%, 12/1/01 5,062
-------------------------------------
5,000 Cincinnati, GO, 4.38%, 12/1/02 5,059
-------------------------------------
7,500 Cleveland, GO, 5.30%, 9/1/08 7,950
-------------------------------------
4,000 Cleveland CSD, Revenue, 5.00%,
6/1/01 4,101
-------------------------------------
5,000 Cleveland CSD, Revenue, 4.80%,
6/1/03 5,130
-------------------------------------
3,000 Cleveland Water, Revenue, 5.63%,
1/1/13 (Callable 1/1/06 @102) 3,172
-------------------------------------
5,000 Cleveland, Public Power, Revenue,
5.25%, 11/15/16 (Callable 11/15/06
@102) 5,067
-------------------------------------
500 Cleveland, Waterworks Refunding,
First Mortgage, Series G, Revenue,
5.40%, 1/1/06 530
-------------------------------------
4,000 Columbus, GO, 5.00%, 5/15/04 4,156
-------------------------------------
5,000 Columbus, GO, 6.00%, 6/15/07 5,566
-------------------------------------
1,000 Columbus, Refunding LT, Series A,
GO, 5.30%, 7/1/09 (Callable 7/1/03
@101.5) 1,045
-------------------------------------
1,350 Columbus, Service, GO, 5.50%,
5/15/08 (Callable 5/15/04 @102) 1,440
-------------------------------------
500 Columbus, Water Systems Refunding,
Revenue, 5.75%, 11/1/00 520
-------------------------------------
3,435 Cuyahoga County, GO, 5.60%,
5/15/13 3,720
-------------------------------------
4,000 Cuyahoga County Hospital,
Revenue, 5.63%, 1/15/13
(Callable 1/15/06 @ 102) 4,202
-------------------------------------
3,000 Cuyahoga County, Revenue, 5.13%,
2/15/18 2,983
-------------------------------------
1,000 Delaware County, Sewer, GO, 5.50%,
12/1/01 1,044
-------------------------------------
4,000 Dublin School Bonds, 4.65%,
12/1/08 (Callable 12/1/07 @ 101) 4,040
-------------------------------------
1,000 Euclid CSD, GO, 5.20%, 12/1/10
(Callable 12/1/05 @102) 1,039
-------------------------------------
1,500 Euclid CSD, GO, 5.13%, 12/1/11
(Callable 12/1/05 @102) 1,539
-------------------------------------
500 Euclid CSD, Improvement, GO,
6.70%, 12/1/02 (Callable 12/1/01
@ 102) 550
-------------------------------------
1,000 Franklin County, GO, 6.80%,
12/1/02 (Prerefunded 12/1/00 @ 102) 1,081
-------------------------------------
1,030 Franklin County, Hospital Revenue
Refunding, 6.50%, 5/1/07
(Callable 11/1/02 @102) 1,137
-------------------------------------
1,500 Hamilton County, Building
Improvement, GO, 5.90%, 12/1/99 1,542
-------------------------------------
8,000 Hamilton County, GO, 4.75%,
12/1/27 (Callable 12/1/07 @ 101) 7,517
-------------------------------------
1,000 Hamilton County, Hospital Facilities,
Revenue, 6.10%, 1,031
-------------------------------------
1,000 Hamilton County, Hospital Facilities,
Revenue, 6.50%, 1/1/02
(Callable 1/1/01 @100) 1,053
-------------------------------------
500 Hamilton County, Hospital Facilities,
Revenue, 7.00%, 1/1/09
(Callable 1/1/99 @101) 506
-------------------------------------
2,000 Hamilton County, Revenue, 5.40%,
12/1/08 2,142
-------------------------------------
1,000 Hamilton County, Sewer System,
Revenue, 5.60%, 12/1/08
(Callable 12/1/05 @102) 1,082
-------------------------------------
1,000 Lakota Local School District,
GO, 6.40%, 12/1/01 1,073
-------------------------------------
250 Mahoning County, Hospital Facilities,
Revenue, 6.80%, 12/1/98
(Callable 8/17/98 @100) 253
-------------------------------------
1,000 Montgomery County, Revenue,
6.50%, 5/15/08 (Callable 5/15/01
@ 102) 1,081
-------------------------------------
1,750 Montgomery County, Solid Waste,
Revenue, 5.25%, 11/1/04 1,844
-------------------------------------
3,000 Montgomery County, Solid Waste,
Revenue, 5.40%, 11/1/08
(Callable 11/1/05 @ 102) 3,193
-------------------------------------
5,000 State, GO, 5.10%, 8/1/09
(Callable 8/1/07 @ 101) 5,214
-------------------------------------
1,250 State Building Authority State
Facilities, Adult Correctional,
Series A, Revenue, 5.65%, 10/1/07
(Callable 10/1/04 @101) 1,337
-------------------------------------
1,000 State Building Authority State
Facilities, Revenue, 5.40%, 10/1/00 1,030
-------------------------------------
1,000 State Building Authority State
Facilities, Revenue, 5.40%, 10/1/04 1,059
-------------------------------------
1,000 State Building Authority, Revenue,
6.20%, 10/1/07 (Callable 10/1/02
@102) 1,090
-------------------------------------
1,000 State Building Correctional, Revenue,
5.75%, 10/1/05 1,085
-------------------------------------
1,000 State Higher Education, Revenue,
5.15%, 11/1/08 (Callable 11/1/06
@ 101) 1,043
-------------------------------------
6,000 State Higher Education Facilities,
Revenue, 4.50%, 12/1/01 6,084
-------------------------------------
1,500 State Higher Education, Revenue,
5.00%, 11/1/05 1,561
-------------------------------------
-- Continued --
49
<PAGE>
Fountain Square Ohio Tax Free Bond Fund
- --------------------------------------------------------------
Shares
or
Principal Security Market
Amount Description Value
- ------------- ------------------------------------ -----------
Municipal Bonds--Continued
$ 500 State Higher Educational Facilities,
Revenue, 6.70%, 5/1/01
(Callable 5/1/00 @102) $ 533
-------------------------------------
5,000 State Highway, GO, 4.80%, 5/15/04 5,145
-------------------------------------
500 State Public Facilities Commission,
Higher Education Capital Facilities,
Series II-A, FSA, CR, Revenue, 5.50%,
12/1/03 (Callable 12/1/01 @102) 529
-------------------------------------
2,000 State Public Facilities Common
Higher Education, Revenue, 5.75%,
11/1/04 2,160
-------------------------------------
2,000 State Public Facilities Common
Higher Education, Revenue, 5.75%,
11/1/05 (Callable 11/1/04 @ 100) 2,153
-------------------------------------
5,000 State Public Facilities Common
Higher Education, Revenue, 4.50%,
12/1/08 (Callable 12/1/07 @ 100) 4,983
-------------------------------------
2,500 State Special Obligation, Elementary
& Secondary Education Capital
Facilities, Series B, 5.00%, 12/1/06 2,596
-------------------------------------
1,000 State Special Obligations, Revenue,
5.80%, 6/1/03 1,071
-------------------------------------
5,000 State Turnpike, Revenue, 5.75%,
2/15/14 (Callable 2/15/06 @ 102) 5,343
-------------------------------------
1,500 State University Refunding, Revenue,
5.15%, 12/1/00 1,541
-------------------------------------
5,000 State Water, Revenue, 5.13%, 12/1/08
(Callable 6/1/05 @ 101) 5,213
-------------------------------------
5,000 State Water Development Authority,
Revenue, 5.30%, 12/1/10
(Callable 6/1/05 @101) 5,214
-------------------------------------
555 Tiffin, GO, 6.60%, 12/1/03
(Callable 12/1/01 @101) 601
-------------------------------------
400 Toledo, Improvement, GO, 5.05%,
12/1/99 407
-------------------------------------
500 University of Cincinnati, 6.30%,
12/1/00 527
-------------------------------------
3,000 University of Cincinnati, 5.00%,
6/1/10 3,108
-------------------------------------
4,945 University of Cincinnati, Revenue,
5.00%, 6/1/18 (Callable 6/1/08 @ 101) 4,829
-------------------------------------
2,000 Wauseon Village School District,
GO, 5.45%, 12/1/14
(Callable 6/1/07 @ 101) 2,090
-------------------------------------
1,000 West Geauga, Local School District,
GO, 5.55%, 11/1/05
(Callable 11/1/04 @ 102) 1,076
-------------------------------------
1,000 West Geauga, Local School District,
GO, 5.65%, 11/1/06 (Callable
11/1/04 @102) 1,082
-------------------------------------
2,000 Westlake CSD, GO, 5.05%, 12/1/04 2,087
------------------------------------- -----------
Total 178,142
------------------------------------- -----------
Total Municipal Bonds 180,733
------------------------------------- -----------
Registered Investment Companies -- 4.7%
- --------------------------------------------------
STIFS/Money Markets -- 4.7%
-------------------------------------
6,896 Countrywide Ohio Tax Free
Money Fund 6,896
-------------------------------------
2,000 Vanguard Ohio Tax Free Money
Market Fund 2,000
------------------------------------- -----------
Total Registered Investment Companies 8,896
------------------------------------- -----------
Total Investments (Cost $184,567)
(a) - 100.0% 189,629
------------------------------------- -----------
Liabilities in excess of other assets
- 0.0% (79)
------------------------------------- -----------
TOTAL NET ASSETS - 100.0% $ 189,550
------------------------------------- -----------
Percentages indicated are based on net assets of $189,549.
(a) Represents cost for financial reporting and federal tax purposes. The net
unrealized appreciation of investments on federal tax basis amounts to $5,062,
which is composed of $5,244 appreciation and $182 depreciation at July 31, 1998.
(b) Current rate and next reset date shown.
The following abbreviations are used in this portfolio:
CSD - City School District
GO - General Obligation
LT - Limited Tax
(See Notes which are an integral part of the Financial Statements)
50
<PAGE>
Fountain Square Funds
Statements of Assets and Liabilities
July 31, 1998
(Amounts in thousands except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Quality Equity International
Growth Pinnacle Income Balanced Mid Cap Equity
Fund Fund Fund Fund Fund Fund
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Assets:
- ----------------------------------------------
Investments, at value (Cost $472,278;
$27,084; $127,413; $169,097; $235,960;
and $98,872, respectively) $620,039 $ 37,520 $172,824 $194,093 $273,260 $133,843
- ----------------------------------------------
Repurchase agreements (Cost $42,726; $4,843;
$4,766; $9,794; $16,605; and $11,836,
respectively) 42,726 4,843 4,766 9,794 16,605 11,836
- ---------------------------------------------- --------- --------- --------- --------- --------- ---------
Total Investments 662,765 42,363 177,590 203,887 289,865 145,679
- ----------------------------------------------
Cash - - 1 1 1 19,199
- ----------------------------------------------
Foreign currency(cost $318) - - - - - 314
- ----------------------------------------------
Interest and dividends receivable 353 31 369 914 50 268
- ----------------------------------------------
Receivable for investments sold 10,092 - - 1,296 3,726 804
- ----------------------------------------------
Receivable for Fund shares sold 225 282 154 111 101 108
- ----------------------------------------------
Net unrealized gains on foreign
currency contracts - - - - - 605
- ----------------------------------------------
Net unrealized gains on futures - - - - - 75
- ----------------------------------------------
Reclaim Receivables - - - - - 204
- ----------------------------------------------
Unamortized organizational costs - - 7 - - 10
- ----------------------------------------------
Prepaid expenses and other assets 28 6 6 - 6 33
- ---------------------------------------------- --------- --------- --------- --------- --------- ---------
Total Assets 673,463 42,682 178,127 206,209 293,749 167,299
- ---------------------------------------------- --------- --------- --------- --------- --------- ---------
Liabilities:
- ----------------------------------------------
Payable for investments purchased 27,762 630 - 4,065 11,271 3,483
- ----------------------------------------------
Payable for Fund shares redeemed 135 2 4 9 6 2
- ----------------------------------------------
Payable for return of collateral received for
securities on loan 116,680 5,535 26,589 23,974 63,660 -
- ----------------------------------------------
Accrued expenses and other payables:
- ----------------------------------------------
Investment advisory fees 372 24 107 123 155 139
- ----------------------------------------------
Administration fees 9 - 3 2 3 20
- ----------------------------------------------
Distribution Services - Investment C Shares 32 1 2 14 4 1
- ----------------------------------------------
Shareholder Servicing - Investment C Shares 16 - 1 7 2 1
- ----------------------------------------------
Accounting and transfer agent fees 10 7 8 9 10 -
- ----------------------------------------------
Custodian fees 3 3 3 5 3 22
- ----------------------------------------------
Other 19 9 38 28 39 43
- ---------------------------------------------- --------- --------- --------- --------- --------- ---------
Total Liabilities 145,038 6,211 26,755 28,236 75,153 3,711
- ---------------------------------------------- --------- --------- --------- --------- --------- ---------
Net Assets:
- ----------------------------------------------
Paid-in capital 327,810 25,068 92,977 142,997 161,142 130,730
- ----------------------------------------------
Net unrealized appreciation on investments
and foreign currency 147,761 10,436 45,411 24,996 37,300 35,644
- ----------------------------------------------
Accumulated undistributed net realized
gain (losses) on investment and foreign
currency transactions 52,854 967 12,905 9,733 20,154 1,081
- ----------------------------------------------
Accumulated undistributed net investment
income (loss) - - 79 247 - (3,867)
- ---------------------------------------------- --------- --------- --------- --------- --------- ---------
Net Assets $528,425 $ 36,471 $151,372 $177,973 $218,596 $163,588
- ---------------------------------------------- ========= ========= ========= ========= ========= =========
Net Assets
- ----------------------------------------------
Investment A Shares $520,068 $ 35,549 $150,404 $173,177 $217,547 $163,297
- ----------------------------------------------
Investment C Shares 8,357 922 968 4,796 1,049 291
- ---------------------------------------------- --------- --------- --------- --------- --------- ---------
Total $528,425 $ 36,471 $151,372 $177,973 $218,596 $163,588
- ---------------------------------------------- ========= ========= ========= ========= ========= =========
Outstanding units of beneficial interest (shares)
- ----------------------------------------------
Investment A Shares 25,666 1,099 9,781 11,557 13,439 12,998
- ----------------------------------------------
Investment C Shares 416 29 63 319 66 23
- ---------------------------------------------- --------- --------- --------- --------- --------- ---------
Total 26,082 1,128 9,844 11,876 13,505 13,021
- ---------------------------------------------- ========= ========= ========= ========= ========= =========
Net asset value
- ----------------------------------------------
Redemption price per share - Investment A
Shares $ 20.26 $ 32.35 $ 15.38 $ 14.99 $ 16.19 $ 12.56
- ---------------------------------------------- ========= ========= ========= ========= ========= =========
Offering price per share - Investment C
Shares* $ 20.10 $ 32.28 $ 15.39 $ 15.01 $ 15.98 $ 12.51
- ---------------------------------------------- ========= ========= ========= ========= ========= =========
Maximum Sales Charge 4.50% 4.50% 4.50% 4.50% 4.50% 4.50%
- ----------------------------------------------
Maximum Offering Price
(100%/(100%-Maximum Sales Charge)
of net asset value adjusted to nearest cent)
per share (Investment A Shares) $ 21.21 $ 33.87 $ 16.10 $ 15.70 $ 16.95 $ 13.15
- ---------------------------------------------- ========= ========= ========= ========= ========= =========
</TABLE>
*Redemption price per share varies by length of time shares are held.
(See Notes which are an integral part of the Financial Statements)
51
<PAGE>
Fountain Square Funds
Statements of Assets and Liabilities
July 31, 1998
(Amounts in thousands except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bond U.S. Ohio
Fund Quality Govt. Municipal Tax Free
For Bond Securities Bond Bond
Income Fund* Fund Fund Fund
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Assets:
- ----------------------------------------------
Investments, at value (Cost $176,695;
$99,875; $40,196; $113,964; and
$184,567, respectively) $177,890 $100,335 $ 40,607 $115,762 $189,629
- ----------------------------------------------
Repurchase agreements (Cost $7,208; $8,533;
$734; $0; and $0, respectively) 7,208 8,533 734 - -
- ---------------------------------------------- --------- --------- --------- --------- ---------
Total Investments 185,098 108,868 41,341 115,762 189,629
- ----------------------------------------------
Cash - 1 - - -
- ----------------------------------------------
Interest receivable 3,467 1,447 342 1,640 2,149
- ----------------------------------------------
Receivable for investments sold - - - 5,266 2,045
- ----------------------------------------------
Receivable for Fund shares sold 4 13 3 - -
- ----------------------------------------------
Unamortized organizational costs 6 - - 5 0
- ----------------------------------------------
Prepaid expenses and other assets 6 11 16 10 9
- ---------------------------------------------- --------- --------- --------- --------- ---------
Total Assets 188,581 110,340 41,702 122,683 193,832
- ---------------------------------------------- --------- --------- --------- --------- ---------
Liabilities:
- ----------------------------------------------
Payable for investments purchased - - - 5,150 4,113
- ----------------------------------------------
Payable for Fund shares redeemed - 20 9 - 7
- ----------------------------------------------
Payable for return of collateral received for
securities on loan 152 2,049 - - -
- ----------------------------------------------
Interest Payable - - - 117 58
- ----------------------------------------------
Accrued expenses and other payables:
- ----------------------------------------------
Investment advisory fees 87 51 14 54 89
- ----------------------------------------------
Administration fees 2 - - 1 1
- ----------------------------------------------
Distribution Services - Investment C Shares 1 1 - - 1
- ----------------------------------------------
Shareholder Servicing - Investment C Shares - 1 - - -
- ----------------------------------------------
Accounting and transfer agent fees 9 6 2 9 3
- ----------------------------------------------
Custodian fees 3 3 1 2 1
- ----------------------------------------------
Other 26 16 8 17 9
- ---------------------------------------------- --------- --------- --------- --------- ---------
Total Liabilities 280 2,147 34 5,350 4,282
- ---------------------------------------------- --------- --------- --------- --------- ---------
Net Assets:
- ----------------------------------------------
Paid-in capital 185,076 108,329 42,548 114,024 183,395
- ----------------------------------------------
Net unrealized appreciation (depreciation)
on investments 1,195 460 411 1,798 5,062
- ----------------------------------------------
Accumulated undistributed net realized gains
(losses) on investment transactions 2,019 (640) (1,367) 1,501 1,092
- ----------------------------------------------
Accumulated undistributed net investment
income (loss) 11 44 76 10 1
- ---------------------------------------------- --------- --------- --------- --------- ---------
Total Net Assets $188,301 $108,193 $ 41,668 $117,333 $189,550
- ---------------------------------------------- ========= ========= ========= ========= =========
Net Assets
- ----------------------------------------------
Investment A Shares $188,071 $107,794 $ 41,550 $117,333 $188,966
- ----------------------------------------------
Investment C Shares 230 399 118 - 584
- ---------------------------------------------- --------- --------- --------- --------- ---------
Total $188,301 $108,193 $ 41,668 $117,333 $189,550
- ---------------------------------------------- ========= ========= ========= ========= =========
Outstanding units of beneficial interest (shares)
- ----------------------------------------------
Investment A Shares 15,432 10,827 4,230 9,586 18,372
- ----------------------------------------------
Investment C Shares 19 40 12 - 57
- ---------------------------------------------- --------- --------- --------- --------- ---------
Total 15,451 10,867 4,242 9,586 18,429
- ---------------------------------------------- ========= ========= ========= ========= =========
Net asset value
- ----------------------------------------------
Redemption price per share - Investment A
Shares $ 12.19 $ 9.96 $ 9.82 $ 12.24 $ 10.29
- ---------------------------------------------- ========= ========= ========= ========= =========
Offering price per share - Investment C
Shares* $ 12.19 $ 9.95 $ 9.80 $ 12.24** $ 10.28
- ---------------------------------------------- ========= ========= ========= ========= =========
Maximum Sales Charge 4.50% 4.50% 4.50% 4.50% 4.50%
- ----------------------------------------------
Maximum Offering Price
(100%/(100%-Maximum Sales Charge)
of net asset value adjusted to nearest cent)
per share (Investment A Shares) $ 12.76 $ 10.43 $ 10.28 $ 12.82 $ 10.77
- ---------------------------------------------- ========= ========= ========= ========= =========
</TABLE>
*Redemption price per share varies by length of time shares are held.
**As of July 31, 1998, no shares or assets existed in the Municipal Bond Fund
Investment C Shares. The Municipal Bond Fund Investment C Shares continue to be
open for investment with an offering price equal to the Municipal Bond Fund
Investment A Shares.
(See Notes which are an integral part of the Financial Statements)
52
<PAGE>
Fountain Square Funds
Statements of Operations
For the period ended July 31, 1998
(Amounts in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Quality Equity
Growth Pinnacle Pinnacle Income Balanced Mid Cap
Fund Fund* Fund** Fund Fund Fund
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------
Interest income $ 799 $ 29 $ 72 $ 256 $ 3,539 $ 373
- ---------------------------------------------
Dividend income 4,412 157 192 3,462 774 1,374
- ---------------------------------------------
Securities lending income 22 1 - 5 14 26
- ---------------------------------------------
Other - - 41 - - -
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
Total Income 5,233 187 305 3,723 4,327 1,773
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
EXPENSES:
- ---------------------------------------------
Investment advisory fees 3,810 129 157 1,088 1,217 1,725
- ---------------------------------------------
Administrative fees 865 22 - 247 277 383
- ---------------------------------------------
Distribution and service fees - Investment A 1,646 40 - 474 523 752
- ---------------------------------------------
Distribution and service fees - Investment C 47 1 - 4 21 6
- ---------------------------------------------
Shareholder Servicing - Investment C 16 - - 1 7 2
- ---------------------------------------------
Organization costs - - - 2 - -
- ---------------------------------------------
Custodian fees 16 5 24 12 18 17
- ---------------------------------------------
Portfolio accounting fees 69 10 - 40 45 54
- ---------------------------------------------
Transfer agent fees 25 10 - 24 14 36
- ---------------------------------------------
Trustees' fees 3 3 - 3 3 3
- ---------------------------------------------
Audit fees 10 3 5 10 10 10
- ---------------------------------------------
Legal fees 6 6 14 6 6 6
- ---------------------------------------------
Fund share registration fees 21 11 - 36 35 38
- ---------------------------------------------
Printing fees 23 4 2 6 8 10
- ---------------------------------------------
Insurance fees 3 - - 3 3 4
- ---------------------------------------------
Other 8 14 14 5 4 7
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
Total Expenses 6,568 258 216 1,961 2,191 3,053
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
Less fees voluntarily reduced (1,769) (51) - (590) (650) (871)
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
Net Expenses 4,799 207 216 1,371 1,541 2,182
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
Net Investment Income (Loss) 434 (20) 89 2,352 2,786 (409)
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
Realized and Unrealized Gains (Losses) from
Investments and Foreign Currency Transactions:
- ---------------------------------------------
Net realized gains (losses) from investments
and foreign currency transactions 59,514 1,357 3,106 15,497 13,331 29,257
- ---------------------------------------------
Net change in unrealized appreciation
(depreciation) from investments and
translation of assets and liabilities in
foreign securities 4,293 2,924 2,647 5,045 (4,158) (19,322)
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
Net realized and unrealized gains (losses)
from investments and foreign currency 63,807 4,281 5,753 20,542 9,173 9,935
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
Change in net assets resulting
from operations $ 64,241 $ 4,261 $ 5,842 $ 22,894 $ 11,959 $ 9,526
- --------------------------------------------- ========= ========= ========= ========= ========= =========
</TABLE>
*Reflects the time period of operations for January 1, 1998 through July 31,
1998, which includes operations of the Fountain Square Pinnacle Fund's
predecessor fund, the Pinnacle Fund.
**For the year ended December 31, 1997.
(See Notes which are an integral part of the Financial Statements)
53
<PAGE>
Fountain Square Funds
Statements of Operations
For the year ended July 31, 1998
(Amounts in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bond U.S. Ohio
International Fund Quality Govt. Municipal Tax Free
Equity For Bond Securities Bond Bond
Fund Income Fund Fund Fund Fund
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------
Interest income $ 793 $ 10,551 $ 6,184 $ 2,510 $ 5,213 $ 8,619
- ---------------------------------------------
Dividend income 2,512 157 - - - -
- ---------------------------------------------
Securities lending income - 17 8 3 - -
- ---------------------------------------------
Foreign tax withholding (176) - - - - -
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
Total Income 3,129 10,725 6,192 2,513 5,213 8,619
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
EXPENSES:
- ---------------------------------------------
Investment advisory fees 1,471 938 545 228 591 980
- ---------------------------------------------
Administrative fees 265 310 180 76 196 324
- ---------------------------------------------
Distribution and service fees - Investment A 514 597 346 145 376 623
- ---------------------------------------------
Distribution and service fees - Investment C 1 1 1 - - 2
- ---------------------------------------------
Shareholder Servicing - Investment C 2 - 1 - - 1
- ---------------------------------------------
Organization costs 9 2 - - 2 -
- ---------------------------------------------
Custodian fees 190 13 9 6 8 13
- ---------------------------------------------
Portfolio accounting fees 108 46 36 26 46 54
- ---------------------------------------------
Transfer agent fees 51 22 19 12 23 28
- ---------------------------------------------
Trustees' fees 3 3 3 3 3 3
- ---------------------------------------------
Audit fees 11 10 10 10 10 10
- ---------------------------------------------
Legal fees 6 6 6 6 6 6
- ---------------------------------------------
Fund share registration fees 31 28 22 16 29 34
- ---------------------------------------------
Printing fees 11 8 5 3 5 9
- ---------------------------------------------
Insurance fees 4 4 3 1 1 1
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
Total Expenses 2,677 1,988 1,186 532 1,296 2,088
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
Less fees voluntarily reduced (515) (708) (445) (220) (484) (765)
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
Net Expenses 2,162 1,280 741 312 812 1,323
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
Net Investment Income (Loss) 967 9,445 5,451 2,201 4,401 7,296
- --------------------------------------------- --------- --------- --------- --------- --------- ---------
Realized and Unrealized Gains (Losses) from
Investments and Foreign Currency Transactions:
- ---------------------------------------------
Net realized gains (losses) from investments
and foreign currency transactions 1,150 2,652 2,228 359 1,788 1,120
- ---------------------------------------------
Net change in unrealized appreciation
(depreciation) from investments and
translation of assets and liabilities in
foreign securities 15,840 (1,872) (1,186) (51) (1,726) (935)
- ---------------------------------------------- --------- --------- --------- --------- --------- ---------
Net realized and unrealized gains (losses)
from investments and foreign currency 16,990 780 1,042 308 62 185
- ---------------------------------------------- --------- --------- --------- --------- --------- ---------
Change in net assets resulting
from operations $ 17,957 $ 10,225 $ 6,493 $ 2,509 $ 4,463 $ 7,481
- ---------------------------------------------- ========= ========= ========= ========= ========= =========
</TABLE>
(See Notes which are an integral part of the Financial Statements)
54
<PAGE>
Fountain Square Funds
Statements of Changes in Net Assets
(Amounts in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Quality Growth Fund Pinnacle Fund***
---------------------------- -------------------------------------------
For
Year Period Period Year Year
Ended Ended Jan. 1, 1998 Ended Ended
July 31, 1998 July 31, 1997 July 31, 1998 Dec. 31, 1997 Dec. 31, 1996
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
- ---------------------------------------
Operations--
- ---------------------------------------
Net investment income (loss) $ 434 $ 1,308 $ (20) $ 89 $ 28
- ---------------------------------------
Net realized gains on
investment transactions 59,514 29,035 1,357 3,106 2,141
- ---------------------------------------
Change in unrealized appreciation
(depreciation) on investments 4,293 94,223 2,924 2,647 969
- --------------------------------------- ------------- ------------- ------------- ------------- -------------
Change in net assets resulting
from operations 64,241 124,566 4,261 5,842 3,138
- --------------------------------------- ------------- ------------- ------------- ------------- -------------
Distributions to Shareholders--
- ---------------------------------------
Distributions from net investment
income:
- ---------------------------------------
Investment A Shares (469) (1,443) - (89) (31)
- ---------------------------------------
Investment C Shares - - - - -
- --------------------------------------- ------------- ------------- ------------- ------------- -------------
Distributions in excess of net
investment income:
- ---------------------------------------
Investment A Shares (98) - - - -
- ---------------------------------------
Investment C Shares - - - - -
- --------------------------------------- ------------- ------------- ------------- ------------- -------------
Distributions from net realized gains
- ---------------------------------------
Investment A Shares (33,264) (7,460) (389) (3,104) (2,139)
- ---------------------------------------
Investment C Shares (424) (29) - - -
- --------------------------------------- ------------- ------------- ------------- ------------- -------------
Change in net assets from
distributions (34,255) (8,932) (389) (3,193) (2,170)
- --------------------------------------- ------------- ------------- ------------- ------------- -------------
Fund Share (Principal) Transactions--
- ---------------------------------------
Proceeds from shares issued 155,883 187,618** 12,728 2,808 1,010
- ---------------------------------------
Dividends reinvested 33,981 6,311 372 3,056 2,076
- ---------------------------------------
Cost of shares redeemed (94,255) (41,622) (2,773) (2,732) (2,236)
- --------------------------------------- ------------- ------------- ------------- ------------- -------------
Change in net assets from
share transactions 95,609 152,307 10,327 3,132 850
- --------------------------------------- ------------- ------------- ------------- ------------- -------------
Change in net assets 125,595 267,941 14,199 5,781 1,818
- ---------------------------------------
Net Assets:
- ---------------------------------------
Beginning of period 402,830 134,889 22,272 16,491 14,673
- --------------------------------------- ------------- ------------- ------------- ------------- -------------
End of period $528,425 $402,830 $ 36,471 $ 22,272 $ 16,491
- --------------------------------------- ============= ============= ============= ============= =============
<CAPTION>
Equity Income Fund
-----------------------------
Year Period
Ended Ended
July 31, 1998 July 31, 1997*
------------- --------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
- ----------------------------------------
Operations--
- ----------------------------------------
Net investment income (loss) $ 2,352 $ 1,292
- ----------------------------------------
Net realized gains on
investment transactions 15,497 9,529
- ----------------------------------------
Change in unrealized appreciation
(depreciation) on investments 5,045 10,892
- ---------------------------------------- ------------- --------------
Change in net assets resulting
from operations 22,894 21,713
- ---------------------------------------- ------------- --------------
Distributions to Shareholders--
- ----------------------------------------
Distributions from net investment
income:
- ----------------------------------------
Investment A Shares (2,377) (1,182)
- ----------------------------------------
Investment C Shares (5) -
- ---------------------------------------- ------------- --------------
Distributions in excess of net
investment income:
- ----------------------------------------
Investment A Shares - -
- ----------------------------------------
Investment C Shares - -
- ---------------------------------------- ------------- --------------
Distributions from net
realized gains
- ----------------------------------------
Investment A Shares (12,092) -
- ----------------------------------------
Investment C Shares (29) -
- ---------------------------------------- ------------- --------------
Change in net assets from
distributions (14,503) (1,182)
- ---------------------------------------- ------------- --------------
Fund Share (Principal) Transactions--
- ----------------------------------------
Proceeds from shares issued 22,229 106,179**
- ----------------------------------------
Dividends reinvested 12,237 7
- ----------------------------------------
Cost of shares redeemed (11,901) (6,301)
- ---------------------------------------- ------------- --------------
Change in net assets from
share transactions 22,565 99,885
- ---------------------------------------- ------------- --------------
Change in net assets 30,956 120,416
- ----------------------------------------
Net Assets:
- ----------------------------------------
Beginning of period 120,416 -
- ---------------------------------------- ------------- --------------
End of period $151,372 $120,416
- ---------------------------------------- ============= ==============
</TABLE>
*Commencement of operations on January 27, 1997.
**Includes acquired capital from Trust conversion in fiscal year end July 31,
1997.
***Information for periods prior to March 9, 1998 is for the Pinnacle Fund, the
predecessor fund of Fountain Square Pinnacle Fund.
(See Notes which are an integral part of the Financial Statements)
55
<PAGE>
Fountain Square Funds
Statements of Changes in Net Assets
(Amounts in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International
Balanced Fund Mid Cap Fund Equity Fund
---------------------------- ---------------------------- ----------------------------
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
July 31, 1998 July 31, 1997 July 31, 1998 July 31, 1997 July 31, 1998 July 31, 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
- -----------------------------------------
Operations--
- -----------------------------------------
Net investment income (loss) $ 2,786 $ 2,204 $ (409) $ 135 $ 967 $ 529
- -----------------------------------------
Net realized gains on
investment transactions 13,331 8,349 29,257 12,065 1,150 9,857
- -----------------------------------------
Change in unrealized appreciation
(depreciation) on investments (4,158) 24,552 (19,322) 40,394 15,840 16,764
- ----------------------------------------- ---------- ----------- ----------- ----------- ----------- -----------
Change in net assets resulting from
operations 11,959 35,105 9,526 52,594 17,957 27,150
- ----------------------------------------- ---------- ----------- ----------- ----------- ----------- -----------
Distributions to Shareholders--
- -----------------------------------------
Distributions from net investment income:
- -----------------------------------------
Investment A Shares (2,794) (2,116) - (137) (7,328) (8,372)
- -----------------------------------------
Investment C Shares (31) (6) - - (12) (3)
- -----------------------------------------
Distributions in excess of net
investment income:
- -----------------------------------------
Investment A Shares - - - (216) - (1,977)
- -----------------------------------------
Investment C Shares - - - - - (2)
- -----------------------------------------
Distributions from net realized gains
- -----------------------------------------
Investment A Shares (11,108) (3,942) (19,805) (6,692) (3,565) (695)
- -----------------------------------------
Investment C Shares (183) (12) (77) (22) (6) -
- --------------------------------------- ---------- ----------- ----------- ----------- ----------- -----------
Change in net assets from
distributions (14,116) (6,076) (19,882) (7,067) (10,911) (11,049)
- --------------------------------------- ---------- ----------- ----------- ----------- ----------- -----------
Fund Share (Principal) Transactions--
- ---------------------------------------
Proceeds from shares issued 67,400 27,077 50,559 84,402** 17,767 32,814
- ---------------------------------------
Dividends reinvested 13,909 5,683 19,882 5,620 8,420 7,090
- ---------------------------------------
Cost of shares redeemed (25,100) (30,941) (27,993) (21,937) (21,583) (24,474)
- --------------------------------------- ---------- ----------- ----------- ----------- ----------- -----------
Change in net assets from
share transactions 56,209 1,819 42,448 68,085 4,604 15,430
- --------------------------------------- ---------- ----------- ----------- ----------- ----------- -----------
Change in net assets 54,052 30,848 32,092 113,612 11,650 31,531
- ---------------------------------------
Net Assets:
- ---------------------------------------
Beginning of period 123,921 93,073 186,504 72,892 151,938 120,407
- --------------------------------------- ---------- ----------- ----------- ----------- ----------- -----------
End of period $177,973 $123,921 $218,596 $186,504 $163,588 $151,938
- --------------------------------------- ========== =========== =========== =========== =========== ===========
</TABLE>
**Includes acquired capital from Trust conversion in fiscal year end July 31,
1997.
(See Notes which are an integral part of the Financial Statements)
56
<PAGE>
Fountain Square Funds
Statements of Changes in Net Assets
(Amounts in thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Bond Fund Quality U.S. Government
For Income Bond Fund Securities Fund
---------------------------- ---------------------------- -----------------------------
Year Period Year Year Year Year
Ended Ended Ended Ended Ended Ended
July 31, 1998 July 31, 1997* July 31, 1998 July 31, 1997 July 31, 1998 July 31, 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
- -----------------------------------------
Operations--
- -----------------------------------------
Net investment income (loss) $ 9,445 $ 4,538 $ 5,451 $ 5,024 $ 2,201 $ 2,364
- -----------------------------------------
Net realized gains (losses) on
investment transactions 2,652 56 2,228 (493) 359 385
- -----------------------------------------
Change in unrealized appreciation
(depreciation) on investments (1,872) 2,305 (1,186) 3,472 (51) 401
- ----------------------------------------- -------- -------- -------- -------- -------- --------
Change in net assets resulting from
operations 10,225 6,899 6,493 8,003 2,509 3,150
- ----------------------------------------- -------- -------- -------- -------- -------- --------
Distributions to Shareholders--
- -----------------------------------------
Distributions from net investment income:
- -----------------------------------------
Investment A Shares (9,598) (4,368) (5,493) (4,926) (2,189) (2,322)
- -----------------------------------------
Investment C Shares (6) - (11) (10) (3) (3)
- -----------------------------------------
Distributions in excess of net
investment income:
- -----------------------------------------
Investment A Shares - - - _ _ _
- -----------------------------------------
Investment C Shares - - - - - -
- -----------------------------------------
Distributions from net realized gains
- -----------------------------------------
Investment A Shares (688) - - - - -
- -----------------------------------------
Investment C Shares (1) - - - - -
- ----------------------------------------- -------- -------- -------- -------- -------- --------
Change in net assets from
distributions (10,293) (4,368) (5,504) (4,936) (2,192) (2,325)
- ----------------------------------------- -------- -------- -------- -------- -------- --------
Fund Share (Principal) Transactions--
- -----------------------------------------
Proceeds from shares issued 47,089 161,008** 29,415 25,473 7,520 25,917**
- -----------------------------------------
Dividends reinvested 942 32 3,177 2,847 1,061 1,239
- -----------------------------------------
Cost of shares redeemed (16,776) (6,457) (17,380) (22,979) (9,720) (16,293)
- ----------------------------------------- -------- -------- -------- -------- -------- --------
Change in net assets from
share transactions 31,255 154,583 15,212 5,341 (1,139) 10,863
- ----------------------------------------- -------- -------- -------- -------- -------- --------
Change in net assets 31,187 157,114 16,201 8,408 (822) 11,688
- -----------------------------------------
Net Assets:
- -----------------------------------------
Beginning of period 157,114 - 91,992 83,584 42,490 30,802
- ----------------------------------------- -------- -------- -------- -------- -------- --------
End of period $188,301 $157,114 $108,193 $ 91,992 $ 41,668 $ 42,490
- ----------------------------------------- ======== ======== ======== ======== ======== ========
</TABLE>
*Commencement of operations on January 27, 1997.
**Includes acquired capital from Trust conversion in fiscal year end July 31,
1997.
(See Notes which are an integral part of the Financial Statements)
57
<PAGE>
Fountain Square Funds
Statements of Changes in Net Assets
(Amounts in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Municipal Ohio Tax Free
Bond Fund Bond Fund
----------------------------- ----------------------------
Year Period Year Year
Ended Ended Ended Ended
July 31, 1998 July 31, 1997* July 31, 1998 July 31, 1997
------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
- -----------------------------------------
Operations--
- -----------------------------------------
Net investment income (loss) $ 4,401 $ 2,288 $ 7,296 $ 6,324
- -----------------------------------------
Net realized gains (losses) on
investment transactions 1,788 515 1,120 960
- -----------------------------------------
Change in unrealized appreciation
(depreciation) on investments (1,726) 2,083 (935) 4,315
- ----------------------------------------- ------------- -------------- ------------- -------------
Change in net assets resulting from
operations 4,463 4,886 7,481 11,599
- ----------------------------------------- ------------- -------------- ------------- -------------
Distributions to Shareholders--
- -----------------------------------------
Distributions from net investment income:
- -----------------------------------------
Investment A Shares (4,470) (2,218) (7,297) (6,310)
- -----------------------------------------
Investment C Shares - (1) (14) (2)
- -----------------------------------------
Distributions in excess of net investment
income:
- -----------------------------------------
Investment A Shares (12) - (2) -
- -----------------------------------------
Investment C Shares - - - -
- -----------------------------------------
Distributions from net realized gains
- -----------------------------------------
Investment A Shares (780) - (664) -
- -----------------------------------------
Investment C Shares - - (2) -
- ----------------------------------------- ------------- -------------- ------------- -------------
Change in net assets from
distributions (5,262) (2,219) (7,979) (6,312)
- ----------------------------------------- ------------- -------------- ------------- -------------
Fund Share (Principal) Transactions--
- -----------------------------------------
Proceeds from shares issued 33,225 111,499** 42,650 158,886**
- -----------------------------------------
Dividends reinvested 792 5 1,647 810
- -----------------------------------------
Cost of shares redeemed (17,512) (12,544) (23,297) (31,437)
- ----------------------------------------- ------------- -------------- ------------- -------------
Change in net assets from
share transactions 16,505 98,960 21,000 128,259
- ----------------------------------------- ------------- -------------- ------------- -------------
Change in net assets 15,706 101,627 20,502 133,546
- -----------------------------------------
Net Assets:
- -----------------------------------------
Beginning of period 101,627 - 169,048 35,502
- ----------------------------------------- ------------- -------------- ------------- -------------
End of period $ 117,333 $ 101,627 $ 189,550 $ 169,048
========================================= ============= ============== ============= =============
</TABLE>
* Commencement of operations on January 27, 1997.
** Includes acquired capital from Trust conversion in fiscal year end July 31,
1997.
(See Notes which are an integral part of the Financial Statements)
58
<PAGE>
Fountain Square Funds
Statements of Cash Flows
For the year ending July 31, 1998 (Amounts in thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Quality Equity
Growth Pinnacle Income Balanced
Fund Fund* Fund Fund
- ------------------------------------------------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Total investment income $ 5,233 $ 187 $ 3,723 $ 4,327
Net expenses (4,799) (207) (1,371) (1,541)
- ------------------------------------------------------ ------------ ------------ ------------ ------------
Net Investment Income (Loss) 434 (20) 2,352 2,786
- ------------------------------------------------------ ------------ ------------ ------------ ------------
Adjustments to reconcile net investment income to net
cash provided (used) by operating activities:
Amortization of discount/premium - - 11 39
Change in interest and dividends receivable (39) (9) (40) (280)
Change in accrued expenses, other payables, prepaid
expenses, and other assets (16) (10) 18 48
- ------------------------------------------------------ ------------ ------------ ------------ ------------
Total adjustments (55) (19) (11) (193)
- ------------------------------------------------------ ------------ ------------ ------------ ------------
Net cash provided (used) by operating
activities 379 (39) 2,341 2,593
- ------------------------------------------------------
Cash flows from investing activities:
Proceeds from sales of investments 3,863,232 116,386 827,090 2,940,923
Purchases of investments (3,925,245) (126,005) (837,385) (2,985,692)
Net purchases of short-term investments with cash
received as collateral from securities lending (116,680) (5,535) (26,589) (23,974)
- ------------------------------------------------------ ------------ ------------ ------------ ------------
Net cash provided (used) by investing
activities (178,693) (15,154) (36,884) (68,743)
- ------------------------------------------------------
Cash flows from financing activities:
Proceeds from shares issued 156,052 12,446 22,117 67,484
Cost of shares redeemed (94,144) (2,771) (11,897) (25,100)
Distributions paid to shareholders (34,255) (389) (14,503) (14,116)
Dividends reinvested 33,981 372 12,237 13,909
Net collateral received from securities lending 116,680 5,535 26,589 23,974
- ------------------------------------------------------ ------------ ------------ ------------ ------------
Net cash provided (used) by financing
activities 178,314 15,193 34,543 66,151
- ------------------------------------------------------
Net increase (decrease) in cash - - - 1
- ------------------------------------------------------
Cash at beginning of period - - 1 -
- ------------------------------------------------------ ------------ ------------ ------------ ------------
Cash at end of period $ - $ - $ 1 $ 1
- ------------------------------------------------------ ============ ============ ============ ============
</TABLE>
*Reflects the time period of operations for January 1, 1998 through July 31,
1998. Information for periods prior to March 9, 1998 is for the Pinnacle Fund,
the predecessor fund of Fountain Square Pinnacle Fund.
(See Notes which are an integral part of the Financial Statements)
59
<PAGE>
Fountain Square Funds
Statements of Cash Flows
For the year ending July 31, 1998 (Amounts in thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
U.S.
Bond Fund Quality Government
Mid Cap For Bond Securities
Fund Income Fund Fund
- ------------------------------------------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Total investment income $ 1,773 $ 10,725 $ 6,192 $ 2,513
Net expenses (2,182) (1,280) (741) (312)
- ------------------------------------------------------ ------------ ------------ ------------ ------------
Net Investment Income (Loss) (409) 9,445 5,451 2,201
- ------------------------------------------------------ ------------ ------------ ------------ ------------
Adjustments to reconcile net investment income to net
cash provided (used) by operating activities:
Amortization of discount/premium - 275 73 36
Change in interest and dividends receivable (3) (1,157) (206) 233
Change in accrued expenses, other payables, prepaid
expenses, and other assets 11 (23) (15) (37)
- ------------------------------------------------------ ------------ ------------ ------------ ------------
Total adjustments 8 (905) (148) 232
- ------------------------------------------------------ ------------ ------------ ------------ ------------
Net cash provided (used) by operating
activities (401) 8,540 5,303 2,433
- ------------------------------------------------------
Cash flows from investing activities:
Proceeds from sales of investments 1,744,002 2,540,000 3,013,994 400,766
Purchases of investments (1,766,067) (2,569,498) (3,029,012) (399,875)
Net purchases of short-term investments with cash
received as collateral from securities lending (63,660) (152) (2,049) -
- ------------------------------------------------------ ------------ ------------ ------------ ------------
Net cash provided (used) by investing
activities (85,725) (29,650) (17,067) 891
- ------------------------------------------------------
Cash flows from financing activities:
Proceeds from shares issued 50,468 47,085 29,406 7,517
Cost of shares redeemed (27,996) (16,776) (17,363) (9,711)
Distributions paid to shareholders (19,882) (10,293) (5,504) (2,191)
Dividends reinvested 19,882 942 3,177 1,061
Net collateral received from securities lending 63,660 152 2,049 -
- ------------------------------------------------------ ------------ ------------ ------------ ------------
Net cash provided (used) by financing
activities 86,132 21,110 11,765 (3,324)
- ------------------------------------------------------
Net increase (decrease) in cash 6 - 1 -
- ------------------------------------------------------
Cash at beginning of period (5) - - -
- ------------------------------------------------------ ------------ ------------ ------------ ------------
Cash at end of period $ 1 $ - $ 1 $ -
- ------------------------------------------------------ ============ ============ ============ ============
</TABLE>
(See Notes which are an integral part of the Financial Statements)
60
<PAGE>
Fountain Square Funds
Notes to Financial Statements
July 31, 1998
- --------------------------------------------------------------------------------
(1) Organization
Fountain Square Funds (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end management investment
company. At July 31, 1998, the Trust consisted of fourteen separate investment
portfolios.
The accompanying financial statements relate to the following Funds:
Portfolio Name
- --------------------------------------------------------------------------------
Fountain Square Quality Growth Fund ("Quality Growth Fund") Fountain Square
Pinnacle Fund ("Pinnacle Fund") Fountain Square Equity Income Fund ("Equity
Income Fund") Fountain Square Balanced Fund ("Balanced Fund") Fountain Square
Mid Cap Fund ("Mid Cap Fund") Fountain Square International Equity Fund
("International Equity Fund") Fountain Square Bond Fund For Income ("Bond Fund
For Income") Fountain Square Quality Bond Fund ("Quality Bond Fund")
Fountain Square U.S. Government Securities Fund ("Government Securities Fund")
Fountain Square Municipal Bond Fund ("Municipal Bond Fund")
Fountain Square Ohio Tax Free Bond Fund ("Ohio Tax Free Fund")
The Funds each issue two classes of shares: Investment A Shares and Investment C
Shares. The Investment A Shares are subject to initial sales charges imposed at
the time of purchase, in accordance with the Funds' prospectuses. Certain
redemptions of Investment C Shares made within one year of purchase are subject
to contingent deferred sales charges in accordance with the Funds' prospectus.
Each class of shares for each Fund has identical rights and privileges except
with respect to Administrative Services fees paid by Investment C Shares, voting
rights on matters affecting a single class of shares and the exchange privileges
of each class of shares. As of January 8, 1998, all shares were redeemed from
the Municipal Bond Fund Investment C Shares. Municipal Bond Fund Investment C
Shares continue to be available for investment with an offering price equal to
Municipal Bond Fund Investment A Shares. As of the date of this report there are
no assets or shareholders in the Municipal Bond Fund Investment C Shares.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles. The
preparation of financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of income and expenses
for the period. Actual results could differ from those estimates.
A. Securities Valuations--Investments in equity securities are determined on the
basis of the mean between the latest available bid and asked prices in the
principal market (last sales price on a national securities exchange). For
unlisted securities, value is determine on the basis of the latest bid prices.
Investments in other open-end investment companies are valued at net asset
value. Bonds and other fixed income securities are valued at prices provided by
an independent pricing service approved by the board of trustees. Value of all
other securities is determined at fair value in good faith in accordance with
procedures adopted by the Board of Trustees.
B. Repurchase Agreements--Each of the Funds will only enter into repurchase
agreements with banks and other recognized financial institutions, such as
broker/dealers, which are deemed by its Advisor to
61
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- --------------------------------------------------------------------------------
be creditworthy pursuant to guidelines and/or standards reviewed or established
by the Board of Trustees (the "Trustees"). It is the policy of the Trust to
require the custodian or sub-custodian bank to take possession, to have legally
segregated in the Federal Reserve Book Entry System, or to have segregated
within the custodian bank's vault, all securities held as collateral under
repurchase agreement transactions. Additionally, procedures have been
established by the Trust to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement
transaction. Risks may arise from the potential inability of counterparties to
honor the terms of the repurchase agreement. Accordingly, a Fund could receive
less than the repurchase price on the sale of collateral securities.
C. Securities Transactions and Related Income--Securities transactions are
accounted for on the date the security is purchased or sold (trade date).
Interest income is recognized on the accrual basis and includes, where
applicable, the pro rata amortization of premium or discount. Dividend income is
recorded on the ex-dividend date. Gains or losses realized on sales of
securities are determined by comparing the identified cost of the security lot
sold with the net sales proceeds.
D. Foreign Currency Translation--The accounting records of the International
Equity Fund are maintained in U.S. dollars. All assets and liabilities
denominated in foreign currencies are translated into U.S. dollars based on the
rate of exchange of such currencies against the U.S. dollar on the date of
valuation. Purchases and sales of securities, income and expenses are translated
at the rate of exchange quoted on the respective date that such transactions are
recorded. Differences between income and expenses are translated at the rate of
exchange quoted on the respective date that such transactions are recorded.
Differences between income and expense are translated at the rate of exchange
quoted on the respective date that such transactions are recorded. Differences
between income and expense amounts recorded and collected or paid are adjusted
when reported by the custodian bank. The International Equity Fund does not
isolate that portion of the results of operations resulting from changes in
foreign exchange rates on investments from the fluctuations arising from changes
in market prices of securities held. Such fluctuations are included with the net
realized and unrealized gains or losses from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency gains
or losses realized between the trade and settlement dates on securities
transactions, the difference between the amount of dividends, interest, and
foreign withholding taxes recorded on the International Equity Fund's books, and
the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains and losses arise from changes in the value of
assets and liabilities other than investments in securities at fiscal year end,
resulting from changes in the exchange rate.
E. Forward Commitments--The International Equity Fund may enter into forward
commitments for forward foreign currency exchange contracts which are based upon
financial indices at an exchange rate at a future date. Risks may arise upon
entering into these contracts from the potential inability of counterparties to
meet the terms of their contracts and from unanticipated movements in foreign
exchange rates. The forward foreign currency exchange contracts are adjusted by
the daily exchange rate of the underlying currency and any gains or losses are
recorded for financial statement purposes as unrealized until the contract
settlement date.
At July 31, 1998, the International Equity Fund had outstanding forward foreign
currency exchange contracts as set forth below (Amounts in thousands except
unrealized appreciation (depreciation)).
62
<PAGE>
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- --------------------------------------------------------------------------------
Contracts Unrealized
Delivery To Deliver In Exchange Appreciation
Date (Local Currency) For (Depreciation)
- --------------------------------------------------------------------------------
Australian Schilling
Short Contracts
8/3/98 139 $ 11 $ (23)
Australian Dollar
Short Contracts
8/4/98 28 17 104
Belgian Franc
Short Contracts
8/3/98 115 3 -
British Sterling Pound
Long Contracts
8/3/98 10 16 (134)
8/17/98 1,587 2,578 11,408
Short Contracts
8/3/98 43 70 184
8/4/98 69 113 494
German Deutsche Mark
Long Contracts
8/14/98 4,381 2,448 17,554
9/18/98 5,525 3,094 21,702
10/2/98 5,522 3,097 19,874
10/16/98 10,556 5,873 89,918
Short Contracts
8/3/98 14 8 (12)
8/14/98 4,381 2,459 (6,354)
9/18/98 5,525 3,088 (27,656)
10/2/98 5,522 3,088 (28,723)
10/16/98 5,492 3,088 (13,956)
French Franc
Long Contracts
8/4/98 11,040 1,802 50,535
9/16/98 20,409 3,341 89,834
Short Contracts
8/3/98 364 61 (120)
8/4/98 11,040 1,846 (6,487)
9/16/98 20,409 3,412 (19,655)
Japanese Yen
Long Contracts
8/19/98 202,197 1,540 (136,683)
11/4/98 169,310 1,187 294
Short Contracts
8/3/98 25 - -
8/26/98 270,947 2,208 147,009
9/10/98 60,941 443 18,968
9/21/98 443,833 3,260 167,522
63
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- --------------------------------------------------------------------------------
Contracts Unrealized
Delivery To Deliver In Exchange Appreciation
Date (Local Currency) For (Depreciation)
- --------------------------------------------------------------------------------
9/28/98 707,846 $ 5,106 $168,897
10/19/98 369,867 2,608 20,364
Hong Kong Dollar
Long Contracts
8/12/98 11,894 1,529 4,659
Short Contracts
8/3/98 368 48 (15)
8/12/98 11,894 1,531 (2,416)
Italian Lira
Short Contracts
8/3/98 72,934 41 (83)
Netherland Guilder
Short Contracts
8/3/98 33 16 (25)
Singapore Dollar
Short Contracts
8/3/98 1 1 -
Spanish Peseta
Long Contracts
8/12/98 197,600 1,295 13,953
Short Contracts
8/3/98 4,494 30 (47)
Swedish Krona
Long Contracts
9/4/98 2,158 273 (1,024)
Short Contracts
8/3/98 103 13 (40)
9/4/98 2,158 277 5,444
Swiss Franc
Short Contracts
8/3/98 14 10 (20)
F. Foreign Currency Commitments--The International Equity Fund may enter into
foreign currency commitments for the delayed delivery of securities of foreign
currency exchange transactions. Risks may arise upon entering into these
transactions from the potential inability of counterparties to meet the terms of
their commitments and from unanticipated movements in security prices or foreign
exchange rates. The foreign currency transactions are adjusted by the daily
exchange rate of the underlying currency and any gains or losses are recorded
for financial statement purposes as unrealized until the settlement date.
G. Future Contracts--The fund may engage in futures contracts for the purpose of
hedging against changes in the value of its portfolio securities and in the
value of securities it intends to purchase. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash or
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- --------------------------------------------------------------------------------
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin". Subsequent payments ("variation margin") are made
or received by the Fund each day depending on the daily fluctuation of the value
of the contract. The daily changes in the contract are included in unrealized
gains or losses. The Fund recognizes a realized gain or loss when the contract
is closed.
At July 31, 1998, the International Equity Fund open futures contracts were as
follows: (amounts in thousands, except number of contracts)
Number of Opening Current Market
Contracts Contract Type Position Value
------------ ---------------------- ---------- --------
19 IBEX 35 Plus, 8/21/98 $1,351 $1,325
28 FTSE 100, 9/18/98 2,723 2,687
8 DAX 30, 9/18/98 2,512 2,648
H. Option Contracts--The Quality Growth Fund, the Equity Income Fund, the
Balanced Fund, the Mid Cap Fund, and the International Equity Fund may write or
purchase option contracts. When the Funds write an option, an amount equal to
the premium received by the Funds is recorded as a liability and is subsequently
adjusted to the current fair value of the option written. Premiums received from
writing options that expire unexercised are treated by the Funds on the
expiration date as realized gains from investments. The difference between the
premium and the amount paid on effecting a closing purchase transaction,
including brokerage commissions, is also treated as a realized gain, or if the
premium is less than the amount paid for the closing purchase transaction, as a
realized loss. If a call option is exercised, the premium is added to the
proceeds from the sale of the underlying security or currency in determining
whether the Funds has realized a gain or loss. If a put option is exercised, the
premium reduces the cost basis of the securities purchased by the Funds. The
Funds, as writer of an option, bears the market risk of an unfavorable change in
the price of the security underlying the written option. The Equity Income Fund
and the International Equity Fund had no option contract transactions for the
year ended July 31, 1998.
The following is a summary of written option activity for the year ended July
31, 1998 for the Quality Growth Fund, the Balanced Fund, and the Mid Cap Fund:
<TABLE>
<CAPTION>
Quality Growth Fund Balanced Fund Mid Cap Fund
------------------------ ------------------------ ------------------------
Value Value Value
When When When
Number Written Number Written Number Written
----------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contracts outstanding 7/31/97 - $0 - $0 - $0
Contracts written 3,008 752,181 629 160,822 200 67,837
Contracts expired (2,669) (680,398) (629) (160,822) (200) (67,837)
Contracts exercised (339) (71,783) - - - -
----------- ---------- ---------- ---------- ----------- ----------
Contracts outstanding 7/31/98 - - - - - -
=========== ========== ========== ========== =========== ==========
</TABLE>
I. When-Issued and Delayed Delivery Transactions--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis are
valued daily and begin earning interest on the settlement date.
J. Dividends to Shareholders--Dividends from net investment income are declared
and paid monthly for the Equity Income Fund, the Bond Fund For Income, the
Quality Bond Fund, Government Securities Fund, the Municipal Bond Fund, and the
Ohio Tax Free Fund. Dividends from net investment income are declared and paid
quarterly for the Quality Growth Fund, the Mid Cap Fund, the Balanced Fund and
the Pinnacle Fund. Dividends from net investment income are declared and paid
annually for International Equity Fund. Distributable net realized gains, if
any, are declared and distributed at least annually.
Dividends from net investment income and from net realized capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These
65
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Fountain Square Funds
- --------------------------------------------------------------------------------
"book/tax" differences are either considered temporary or permanent in nature.
To the extent these differences are permanent in nature, such amounts are
reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require reclassifications.
Dividends and distributions to shareholders which exceed net investment income
and net realized gains for financial reporting purposes but not for tax purposes
are reported as dividends in excess of net investment income or distributions in
excess of net realized gains. To the extent they exceed net investment income
and net realized gains for tax purposes, they are reported as distribution of
capital. During the current fiscal year, differences were primarily due to
differing treatments for mortgage-backed securities, foreign currency
transactions and different book/tax accretion of certain income items.
As of July 31, 1998, the following reclassifications have been made to increase
(decrease) such accounts with offsetting adjustments made to paid-in-capital
(amounts in thousands):
Accumulated Accumulated Net
Undistributed Net Realized Gain/(Loss)
Investment Income on Investments
-------------------- ---------------------
Quality Growth Fund $ 137 $ (136)
Pinnacle Fund 22 9
Balanced Fund 31 (31)
Mid Cap Fund 627 (627)
International Equity Fund 3,930 (3,928)
Quality Bond Fund 34 (1)
U.S. Government Securities Fund 38 (29)
Municipal Bond Fund 22 (22)
Ohio Tax Free Bond Fund 4 (6)
K. Federal Taxes--It is the Funds' policy to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year substantially all of their income.
Accordingly, no provision for federal income tax is necessary. However, federal
taxes may be imposed on the International Equity Fund upon the disposition of
certain investments in passive foreign investment companies. Withholding taxes
on foreign dividends have been provided for in accordance with the International
Equity Fund's understanding of the applicable country's tax rules and rates.
L. Deferred Expenses--The costs incurred by each Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering their shares, have been deferred and are being amortized
using the straight-line method not to exceed a period of five years from each
Fund's commencement date.
M. Lending Portfolio Securities--To generate additional income, the Funds may
lend up to 33% of securities in which they are invested pursuant to agreements
requiring that the loan be continuously secured by cash, U.S. Government or U.S.
Government Agency securities, shares of an investment trust or mutual fund, or
any contribution of cash and such securities as collateral equal at all times to
at least 100% of the market value plus accrued interest on the securities lent.
The Funds continue to earn interest and dividends on securities lent while
simutaneously seeking to earn interest on the investment of collateral.
When cash is received as collateral for securities loaned, the Funds may invest
such cash in short-term U.S. Government Securities, Repurchase Agreements, or
other short-term corporate securities. The cash or subsequent short-term
investments are recorded as assets of the Funds, offset by a corresponding
liability to repay the cash at the termination of the loan. In addition, the
short-term securities purchased with the cash collateral are included in the
accompanying schedules of portfolio investments. Fixed income securities
received as collateral are not recorded as an asset or liability of the Fund
because the Fund does not have effective control of such securities.
There may be risks of delay in recovery of the securities or even loss of rights
in the collateral should the borrower of the securities fail financially.
However, loans will be made only to borrowers deemed by the Advisor to be of
good standing and creditworthy under guidelines established by the Board of
Trustees and when, in the judgment of the Advisor, the consideration which can
be earned currently
66
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- --------------------------------------------------------------------------------
from such securities loans justifies the attendant risks. Loans are subject to
termination by the Funds or the borrower at any time, and are, therefore, not
considered to be illiquid investments. A statement of cash flows is presented
for each Fund that lent out assets during the year. As of July 31, 1998, the
following Funds had securities with the following market values on loan (amounts
in thousands):
Market
Market Value
Value of of Loaned
Collateral Securities
----------------------------------
Quality Growth Fund $116,680 $105,559
Pinnacle Fund 5,535 5,210
Equity Income Fund 26,589 25,105
Balanced Fund 23,974 25,629
Mid Cap Fund 63,660 60,510
Bond Fund For Income 152 41,045
Quality Bond Fund 2,044 4,971
U.S. Government Securities Fund 5,286 5,108
The loaned securities were fully collateralized by cash, U. S. Government
securities as of July 31, 1998.
(3) Shares of Beneficial Interest
Transactions in Fund shares were as follows (amounts in thousands):
<TABLE>
<CAPTION>
Quality Equity
Growth Pinnacle Income
Fund Fund Fund
------------------------ ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount
----------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
For the period ended July 31, 1998:*
- ----------------------------------------
Investment A Shares
- ----------------------------------------
Shares issued 7,816 $150,594 370 $11,774 1,375 $ 21,208
- ----------------------------------------
Dividends reinvested 1,875 33,557 12 372 848 12,203
- ----------------------------------------
Shares redeemed (4,806) (93,341) (87) (2,732) (776) (11,702)
- ---------------------------------------- ----------- ---------- ---------- ---------- ----------- ----------
Investment A Shares 4,885 $ 90,810 295 $ 9,414 1,447 $ 21,709
- ---------------------------------------- =========== ========== ========== ========== =========== ==========
Investment C Shares
- ----------------------------------------
Shares issued 275 $ 5,289 30 $ 954 67 $ 1,021
- ----------------------------------------
Dividends reinvested 24 424 - - 2 34
- ----------------------------------------
Shares redeemed (47) (914) (1) (41) (12) (199)
- ---------------------------------------- ----------- ---------- ---------- ---------- ----------- ----------
Investment C Shares 252 $ 4,799 29 $ 913 57 $ 856
- ---------------------------------------- =========== ========== ========== ========== =========== ==========
<CAPTION>
For the period ended July 31, 1997:**
- ----------------------------------------
Investment A Shares
- ----------------------------------------
Shares issued 12,744*** $185,256*** 102 $ 2,808 8,822*** $106,096***
- ----------------------------------------
Dividends reinvested 451 6,283 113 3,056 - 6
- ----------------------------------------
Shares redeemed (2,633) (41,371) 100 (2,732) (488) (6,300)
- ---------------------------------------- ----------- ---------- ---------- ---------- ----------- ----------
Investment A Shares 10,562 $150,168 315 $ 3,132 8,334 $ 99,802
- ---------------------------------------- =========== ========== ========== ========== =========== ==========
Investment C Shares
- ----------------------------------------
Shares issued 146 $ 2,361 - $ - 6 $ 83
- ----------------------------------------
Dividends reinvested 2 29 - - - -
- ----------------------------------------
Shares redeemed (16) (252) - - - -
- ---------------------------------------- ----------- ---------- ---------- ---------- ----------- ----------
Investment C Shares 132 $ 2,138 - $ - 6 $ 83
- ---------------------------------------- =========== ========== ========== ========== =========== ==========
</TABLE>
*The Pinnacle Fund reflects the time period of operations for January 1, 1998
through July 31, 1998, which includes operations of the Fountain Square
Pinnacle Fund's predecessor fund, the Pinnacle Fund.
**Information for the Pinnacle Fund is for the year ended December 31, 1997.
***Includes acquired capital from Trust conversion in fiscal year end July 31,
1997. Information for the Equity Income Fund is from January 27, 1997
(commencement of operations) to July 31, 1997.
67
<PAGE>
<TABLE>
<CAPTION>
Fountain Square Funds
- --------------------------------------------------------------------------------------------------------------------
International
Balanced Mid Cap Equity
Fund Fund Fund
------------------------ ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount
----------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
For the year ended July 31, 1998:
- ----------------------------------
Investment A Shares
- ----------------------------------
Shares issued 4,237 $ 63,734 2,852 $ 49,749 1,493 $ 17,630
- ----------------------------------
Dividends reinvested 960 13,694 1,234 19,805 798 8,402
- ----------------------------------
Shares redeemed (1,649) (24,887) (1,606) (27,793) (1,886) (21,499)
- ----------------------------------
----------- ---------- ---------- ---------- ----------- ----------
Investment A Shares 3,548 $ 52,541 2,480 $ 41,761 405 $ 4,533
- ---------------------------------- =========== ========== ========== ========== =========== ==========
Investment C Shares
- ----------------------------------
Shares issued 243 $ 3,666 47 $ 810 11 $ 137
- ----------------------------------
Dividends reinvested 15 215 5 77 2 18
- ----------------------------------
Shares redeemed (14) (213) (12) (200) (7) (84)
- ---------------------------------- ----------- ---------- ---------- ---------- ----------- ----------
Investment C Shares 244 $ 3,668 40 $ 687 6 $ 71
- ---------------------------------- =========== ========== ========== ========== =========== ==========
For the year ended July 31, 1997:
- ----------------------------------
Investment A Shares
- ----------------------------------
Shares issued 1,990 $ 26,279 6,315** $ 84,164** 2,956 $ 32,508
- ----------------------------------
Dividends reinvested 455 5,665 438 5,598 688 7,084
- ----------------------------------
Shares redeemed (2,333) (30,860) (1,559) (21,785) (2,258) (24,295)
- ---------------------------------- ----------- ---------- ---------- ---------- ----------- ----------
Investment A Shares 112 $ 1,084 5,194 $ 67,977 1,386 $ 15,297
- ---------------------------------- =========== ========== ========== ========== =========== ==========
Investment C Shares
- ----------------------------------
Shares issued 57 $ 798 17 $ 238 28 $ 306
- ----------------------------------
Dividends reinvested 1 18 2 22 1 6
- ----------------------------------
Shares redeemed (5) (81) (11) (152) (17) (179)
- ---------------------------------- ----------- ---------- ---------- ---------- ----------- ----------
Investment C Shares 53 $ 735 8 $ 108 12 $ 133
- ---------------------------------- =========== ========== ========== ========== =========== ==========
</TABLE>
**Includes acquired capital from Trust conversion in fiscal year end July 31,
1997.
68
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<TABLE>
<CAPTION>
Bond Fund Quality U.S. Government
For Bond Securities
Income Fund Fund
------------------------ ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount
----------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
For the year ended July 31, 1998:
- ----------------------------------
Investment A Shares
- ----------------------------------
Shares issued 3,843 $ 46,834 2,937 $ 29,113 761 $ 7,450
- ----------------------------------
Dividends reinvested 77 936 320 3,166 108 1,058
- ----------------------------------
Shares redeemed (1,372) (16,738) (1,745) (17,260) (990) (9,689)
- ----------------------------------
----------- ---------- ---------- ---------- ----------- ----------
Investment A Shares 2,548 $ 31,032 1,512 $ 15,019 (121) $ (1,181)
- ---------------------------------- =========== ========== ========== ========== =========== ==========
Investment C Shares
- ----------------------------------
Shares issued 21 $ 255 30 $ 302 7 $ 70
- ----------------------------------
Dividends reinvested - 6 1 11 - 3
- ----------------------------------
Shares redeemed (3) (38) (12) (120) (3) (31)
- ---------------------------------- ----------- ---------- ---------- ---------- ----------- ----------
Investment C Shares 18 $ 223 19 $ 193 4 $ 42
- ---------------------------------- =========== ========== ========== ========== =========== ==========
For the year ended July 31, 1997:*
- ----------------------------------
Investment A Shares
- ----------------------------------
Shares issued 13,407** $160,901** 2,642 $ 25,419 2,690** $ 25,866**
- ----------------------------------
Dividends reinvested 3 31 295 2,837 128 1,236
- ----------------------------------
Shares redeemed (526) (6,355) (2,382) (22,952) (1,686) (16,264)
- ---------------------------------- ----------- ---------- ---------- ---------- ----------- ----------
Investment A Shares 12,884 $154,577 555 $ 5,304 1,132 $ 10,838
- ---------------------------------- =========== ========== ========== ========== =========== ==========
Investment C Shares
- ----------------------------------
Shares issued 9 $ 107 6 $ 54 6 $ 52
- ----------------------------------
Dividends reinvested - 1 1 9 - 3
- ----------------------------------
Shares redeemed (8) (102) (3) (27) (3) (29)
- ---------------------------------- ----------- ---------- ---------- ---------- ----------- ----------
Investment C Shares 1 $ 6 4 $ 36 3 $ 26
- ---------------------------------- =========== ========== ========== ========== =========== ==========
</TABLE>
*Information for the Bond Fund For Income is from January 27, 1997
(commencement of operations) to July 31, 1997.
**Includes acquired capital from Trust conversion in fiscal year end July 31,
1997.
69
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Municipal Ohio
Bond Tax Free
Fund Bond Fund
------------------------ ------------------------
Shares Amount Shares Amount
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
For the year ended July 31, 1998:
- --------------------------------------------
Investment A Shares
- --------------------------------------------
Shares issued 2,708 $ 33,225 4,103 $ 42,242
- --------------------------------------------
Dividends reinvested 64 792 159 1,632
- --------------------------------------------
Shares redeemed (1,426) (17,501) (2,256) (23,210)
- -------------------------------------------- ----------- ---------- ---------- ----------
Investment A Shares 1,346 $ 16,516 2,006 $ 20,664
- -------------------------------------------- =========== ========== ========== ==========
Investment C Shares*
- --------------------------------------------
Shares issued - $ - 40 $ 408
- --------------------------------------------
Dividends reinvested - - 1 15
- --------------------------------------------
Shares redeemed (1) (11) (8) (87)
- -------------------------------------------- ----------- ---------- ---------- ----------
Investment C Shares (1) $ (11) 33 $ 336
- -------------------------------------------- =========== ========== ========== ==========
<CAPTION>
For the year ended July 31, 1997:***
- --------------------------------------------
Investment A Shares
- --------------------------------------------
Shares issued 9,251** $111,101** 15,860** $158,672**
- --------------------------------------------
Dividends reinvested - 4 80 807
- --------------------------------------------
Shares redeemed (1,011) (12,156) (3,117) (31,424)
- -------------------------------------------- ----------- ---------- ---------- ----------
Investment A Shares 8,240 $ 98,949 12,823 $128,055
- -------------------------------------------- =========== ========== ========== ==========
Investment C Shares
- --------------------------------------------
Shares issued 33 $ 398 21 $ 215
- --------------------------------------------
Dividends reinvested - 1 - 3
- --------------------------------------------
Shares redeemed (32) (388) (1) (13)
- -------------------------------------------- ----------- ---------- ---------- ----------
Investment C Shares 1 $ 11 20 $ 205
- -------------------------------------------- =========== ========== ========== ==========
</TABLE>
*Information for Municipal Bond Fund Investment C Shares is from August 1,
1997 to January 8, 1998. As of July 31, 1998, no shares or assets existed.
**Includes acquired capital from Trust conversion in fiscal year end July 31,
1997.
***Information for the Municipal Bond Fund is from January 27, 1997
(commencement of operations) to July 31, 1997.
(4) Investment Advisory Fee and Other Transactions with Affiliates
Investment Advisory Fee--Fifth Third Bank, the investment advisor (the
"Advisor"), receives for its services an annual investment advisory fee based on
a percentage of each Fund's average daily net assets.
Heartland Capital Management, Inc., a wholly-owned subsidiary of Fifth Third
Bancorp, is the investment advisor to the Pinnacle Fund (the "Pinnacle Fund
Advisor") and receives for its services an annual investment advisory fee based
on a percentage of that Fund's average daily net assets.
Morgan Stanley Asset Management, Inc. is the International Equity Fund's
sub-advisor (the "Sub-Advisor"). The Advisor compensates the Sub-Advisor at a
rate based on the International Equity Fund's average daily net assets.
Administrative Fee--BISYS Fund Services ("BISYS") serves as the Trust's
administrator. The administrator generally assists in all aspects of the Trust's
administration and operation including providing the Fund with certain
administrative personnel and services necessary to operate the Fund. Pursuant to
a separate agreement with BISYS, Fifth Third Bank performs sub-administrative
services on behalf of the Funds including providing certain administrative
personnel and services necessary to operate the Funds, for which it receives a
fee from BISYS computed daily as a percentage of the daily net assets of the
Funds. Under the terms of the administration agreement, BISYS' fees are computed
70
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- --------------------------------------------------------------------------------
daily as a percentage of the average net assets of the Trust for the period.
Administration fees are computed at 0.20% of first $1 billion of net assets of
the Trust, 0.18% of net assets of the Trust between $1 billion and $2 billion,
and 0.17% of more than $2 billion of net assets of the Trust.
Distribution Services Fee--BISYS serves as the Trust's principal distributor
(the "Distributor"). In accordance with Rule 12b-1 under the 1940 Act, the Trust
entered into a Distribution Plan with the Distributor with respect to Investment
A Shares and Investment C Shares. Under the Distribution Plan, the Funds may pay
a fee to the Distributor. These fees may be used by BISYS to pay banks,
including the investment advisor, broker dealers and other institutions, or to
reimburse BISYS or its affiliates for administration, distribution and
shareholder service assistance in connection with the distribution of Fund.
Administrative Services Fee--Effective April 23, 1996, the Trust entered into an
Administrative Services Agreement with Fifth Third Bank with respect to
Investment C Shares. Under the Plan, the Funds may make payments up to 0.25% of
the average daily net asset value of Investment C Shares in exchange for certain
administrative services for shareholders and for the maintenance of shareholder
accounts.
Transfer and Dividend Disbursing Agent, Accounting and Custody Fees--Fifth Third
Bank serves as transfer and dividend disbursing agent for the Trust for which it
receives a fee. Fifth Third Bank sub-contracts the execution of the transfer and
dividend disbursing agent functions to a non-affiliated entity. Fifth Third Bank
handles the execution of the transfer and dividend disbursing agent functions.
Fifth Third Bank also maintains the Trust's accounting records except with
respect to the International Equity Fund for which it receives a fee. The fee is
based on the level of each Fund's average net assets for the period, plus
out-of-pocket expenses. BISYS Fund Services provides accounting services for the
International Equity Fund for a fee based on average net assets for the period.
Fifth Third Bank is the Trust's custodian for which it receives a fee. The fee
is based on the level of each Fund's average net assets for the period, plus
out-of-pocket expenses.
Certain Officers and Trustees of the Trust are Officers and Trustees of the
above companies but are not paid any fees directly by the Trust for serving as
Officers and Trustees of the Trust.
<TABLE>
<CAPTION>
Quality Equity International
Growth Pinnacle Income Balanced Mid Cap Equity
Fund Fund Fund Fund Fund Fund
----------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
(Amounts in thousands)
Investment Advisory Fees:
- ----------------------------------------------
Annual fee before voluntary fee
reductions (percentage of average
net assets) 0.80% 0.80% 0.80% 0.80% 0.80% 1.00%
- ----------------------------------------------
Administrative Fees:
- ----------------------------------------------
Voluntary fee reductions $ 100 $ 14 $ 113 $ 116 $ 116 $ 0
- ----------------------------------------------
Distribution Services Fees:
- ----------------------------------------------
Annual fee before voluntary fee
reductions (percentage of average
net assets) Investment A Shares 0.35% 0.35% 0.35% 0.35% 0.35% 0.35%
Investment C Shares 0.75% 0.75% 0.75% 0.75% 0.75% 0.75%
- ----------------------------------------------
Voluntary fee reductions - Investment A Shares $ 1,646 $ 37 $ 474 $ 523 $ 752 $ 514
- ----------------------------------------------
Voluntary fee reductions - Investment C Shares 23 -- 3 11 3 1
- ----------------------------------------------
Administrative Services Fees:
- ----------------------------------------------
Annual fee before voluntary fee
reductions (percentage of average
net assets) Investment C Shares 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
- ----------------------------------------------
</TABLE>
71
<PAGE>
Fountain Square Funds
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
Bond Quality Government Municipal Ohio
Fund For Bond Securities Bond Tax-Free
Income Fund Fund Fund Fund
----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
(Amounts in thousands)
Investment Advisory Fees:
- ----------------------------------------------
Annual fee before voluntary fee
reductions (percentage of average
net assets) 0.55% 0.55% 0.55% 0.55% 0.55%
- ----------------------------------------------
Voluntary fee reductions $ 0 $ 0 $ 33 $ 0 $ 0
- ----------------------------------------------
Administrative Fees:
- ----------------------------------------------
Voluntary fee reductions $ 111 $ 99 $ 42 $ 108 $ 142
- ----------------------------------------------
Distribution Services Fees:
- ----------------------------------------------
Annual fee before voluntary fee
reductions (percentage of average
net assets) Investment A Shares 0.35% 0.35% 0.35% 0.35% 0.35%
Investment C Shares 0.75% 0.75% 0.75% 0.75% 0.75%
- ----------------------------------------------
Voluntary fee reductions - Investment A Shares $ 597 $ 346 $ 145 $ 376 $ 623
- ----------------------------------------------
Administrative Services Fees:
- ----------------------------------------------
Annual fee before voluntary fee
reductions (percentage of average
net assets) Investment C Shares 0.25% 0.25% 0.25% 0.25% 0.25%
- ----------------------------------------------
</TABLE>
(5) Investment Transactions
<TABLE>
<CAPTION>
Purchases and sales of investments, excluding short-term securities for the year
ended July 31, 1998, were as follows (amounts in thousands):
Quality Equity Mid International
Growth Pinnacle Income Balanced Cap Equity
Fund Fund Fund Fund Fund Fund
- ----------------- ------------- -------------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Purchases $270,619 $ 13,834 $ 64,985 $222,338 $118,921 $ 50,978
- -----------------
Sales $206,199 $ 5,757 $ 54,735 $189,748 $ 91,393 $ 68,539
- -----------------
<CAPTION>
U.S. Ohio
Bond Fund Quality Government Municipal Tax Free
For Bond Securities Bond Bond
Income Fund Fund Fund Fund
- ----------------- -------------- -------------- ------------- ------------- --------------
Purchases $242,547 $280,978 $ 61,849 $130,713 $ 89,072
- -----------------
Sales $197,205 $245,375 $ 62,609 $121,461 $ 70,880
- -----------------
</TABLE>
(6) Concentration of Credit Risk
The Ohio Tax Free Bond Fund invests a substantial proportion of its assets in
debt obligations issued by the State of Ohio and its political subdivisions,
agencies and public authorities. The Portfolio is more susceptible to factors
adversely affecting issuers of Ohio municipal securities than a fund that is not
concentrated in these issuers to the same extent.
72
<PAGE>
Fountain Square Funds
- --------------------------------------------------------------------------------
The International Equity Fund invests in equity and fixed income securities of
non-U.S. issuers. Although the Fund maintains a diversified investment
portfolio, the political or economic developments within a particular country or
region may have an adverse effect on the ability of domiciled issuers to meet
their obligations. Additionally, political or economic developments may have an
effect on the liquidity and volatility or portfolio securities and currency
holdings. The International Equity Fund has a relatively large concentration of
securities invested in companies domiciled in Great Britain. The Fund may be
more susceptible to the political, social and economic events adversely
affecting the Great Britain companies than funds not so concentrated.
(7) Federal Income Tax Information (unaudited)
For corporate shareholders the following percentage of the total ordinary income
distributions paid during the fiscal year ended July 31, 1998 qualify for the
corporate dividends received deduction for the following funds:
Percentage
----------
Quality Growth Fund 57.75%
Pinnacle Fund 100.00%
Equity Income Fund 100.00%
Balanced Fund 14.69%
During the fiscal year ended July 31, 1998 the Trust declared tax-exempt income
distributions as follows (amounts in thousands):
Tax-Exempt Distributions
------------------------
Municipal Fund $4,463
Ohio Tax Free Bond Fund 7,307
As of July 31, 1998, for federal income purposes, the following Funds have
capital loss carryforwards available to offset future capital gains, if any
(amounts in thousands):
Amount Expires
--------------------
International Equity Fund $466 2006
Quality Bond Fund 450 2002
U.S. Government Securities Fund 369 2003
997 2004
As of July 31, 1998, the Quality Bond Fund had a post October 31 deferral in the
amount of $151 (amount in thousands).
During the fiscal year ended July 31, 1998 the Trust declared mid term capital
gain distributions and long term capital gain distributions as follows (amounts
in thousands):
Mid-Term 28% Long-Term 20%
----------------- ---------------
Quality Growth Fund $19,309 $14,058
Pinnacle Fund - 389
Equity Income Fund 5,232 6,889
Balanced Fund 5,143 4,486
Mid Cap Fund 7,292 12,589
International Equity Fund 2,400 1,171
Bond Fund For Income 222 394
Ohio Tax Free Bond Fund 239 427
Municipal Bond Fund 166 480
73
<PAGE>
Fountain Square Funds
- --------------------------------------------------------------------------------
(8) Reorganization
The Trust entered an Agreement and Plan of Reorganization with the Pinnacle Fund
pursuant to which all of the assets and liabilities of the Pinnacle Fund were
transferred to a new portfolio of the Trust (the Fountain Square Pinnacle Fund).
The reorganization, which qualified as a tax-free exchange for federal income
tax purposes, was completed on March 9, 1998 following approval by shareholders
of the Pinnacle Fund at special shareholder meeting held on February 27, 1998.
Immediately before and after the reorganization the Pinnacle Fund and the
Fountain Square Pinnacle Fund, respectively, had shares outstanding of 809, Net
Assets of $24,714, Net Asset Value of $30.56, and Unrealized Appreciation of
$9,452 (amounts in thousands).
(9) Subsequent Events
The Trust entered an Agreement and Plan of Reorganization with the Cardinal
Funds pursuant to which all the assets and liabilities of each Cardinal
portfolio will transfer to a portfolio of the Trust in exchange for shares of
the corresponding portfolio of the Trust. The reorganization, which qualified as
a tax-free exchange for federal income tax purposes, was completed on September
21, 1998 and was approved by shareholders of the Cardinal Funds at a special
shareholder meeting held on July 24, 1998.
74
<PAGE>
Fountain Square Quality Growth Fund
Financial Highlights
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Quality Growth Fund
----------------------------------------------------------------------------------------
Period Ended July 31,
----------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
--------------------- --------------------- ---------------------- ---------------------
Investor A Investor C Investor A Investor C Investor A Investor C* Investor A Investor A
---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $19.23 $19.18 $13.16 $13.16 $11.79 $13.37 $9.70 $9.54
- ------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Income from investment
operations
- -------------------------------------
Net investment income (loss) 0.03 (0.07) 0.08 (0.03) 0.12 -- 0.14 0.13
- ------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Net realized and unrealized
gains (losses) on investments 2.49 2.45 6.75 6.72 1.37 (0.21) 2.09 0.17
- ------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Total from investment
operations 2.52 2.38 6.83 6.69 1.49 (0.21) 2.23 0.30
- ------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Less distributions
- -------------------------------------
Dividends to shareholders
from net investment income (0.03) -- (0.09) -- (0.12) -- (0.14) (0.13)
- -------------------------------------
Distributions to shareholders
from net realized gains on
investment transactions (1.46) (1.46) (0.67) (0.67) -- -- -- --
- -------------------------------------
Distributions to shareholders
in excess of net investment
income (a) -- -- -- -- -- -- -- (0.01)
- -------------------------------------
Total distributions (1.49) (1.46) (0.76) (0.67) (0.12) -- (0.14) (0.14)
- ------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Net asset value, end of period $20.26 $20.10 $19.23 $19.18 $13.16 $13.16 $11.79 $9.70
- ------------------------------------- ========== ========== ========== ========== ========== =========== ========== ==========
Total return** 14.12% 13.41% 54.02% 52.79% 12.69% 12.50%(d) 23.21% 3.17%
- -------------------------------------
Ratios to Average Net Assets
- -------------------------------------
Expenses 1.00% 1.63% 1.00% 1.75% 0.99% 1.77%(c) 1.00% 1.00%
- -------------------------------------
Net investment income (loss) 0.10% (0.54%) 0.45% (0.32%) 0.98% 0.26%(c) 1.44% 1.42%
- -------------------------------------
Expense waiver/
reimbursement (b) 0.37% 0.39% 0.36% 0.26% 0.03% 0.06%(c) 0.05% 0.03%
- -------------------------------------
Supplemental data
- -------------------------------------
Net assets, end of period
(000 omitted) $520,068 $8,357 $399,683 $3,146 $134,469 $420 $82,594 $69,648
- -------------------------------------
Portfolio turnover rate (e) 45% 45% 37% 37% 37% 37% 34% 37%
- -------------------------------------
</TABLE>
*Reflects operations for the period from April 25, 1996 (date of commencement
of operations) to July 31, 1996.
**Based on net asset value, which does not reflect the sales load.
(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) Annualized.
(d) Represents total return for Investment A Shares for the period from August
1, 1995 to April 24, 1996 plus the total return for the Investment C Shares
for the period from April 25, 1996 to July 31, 1996.
(e) Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(See Notes which are an integral part of the Financial Statements)
75
<PAGE>
Fountain Square Pinnacle Fund
Financial Highlights
- -------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Pinnacle Fund***
-------------------------------------------------------------------------------------
Period Ended July 31,
-------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---------------------- ---------- ---------- --------------------- ----------
Investor A* Investor C** Investor A Investor A Investor A Investor A Investor A
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $27.71 $30.16 $23.96 $22.47 $18.83 $21.15 $21.83
- ------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from investment
operations
- -------------------------------------
Net investment income (loss) (0.02) (0.04) 0.13 0.05 0.11 0.09 0.10
- -------------------------------------
Net realized and unrealized
gains (losses) on investments 5.13 2.16 8.25 5.04 6.54 (0.34) 0.62
- ------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total from investment
operations 5.11 2.12 8.38 5.09 6.65 (0.25) 0.72
- ------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Less distributions
- -------------------------------------
Dividends to shareholders
from net investment income -- -- (0.13) (0.05) (0.11) (0.09) (0.10)
- -------------------------------------
Distributions to shareholders
from net realized gains on
investment transactions (0.47) -- (4.50) (3.55) (2.90) (1.98) (1.30)
- ------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.47) -- (4.63) (3.60) (3.01) (2.07) (1.40)
- ------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $32.35 $32.28 $27.71 $23.96 $22.47 $18.83 $21.15
- ------------------------------------- ========== ========== ========== ========== ========== ========== ==========
Total return (e) 18.58%(c) 7.07%(c) 35.40% 22.50% 35.40% (1.10%) 3.30%
- -------------------------------------
Ratios to Average Net Assets
- -------------------------------------
Expenses 1.28%(b) 2.17%(b) 1.12% 1.16% 1.14% 1.15% 1.17%
- -------------------------------------
Net investment income (loss) (0.12%)(b) (0.84%)(b) 0.46% 0.18% 0.44% 0.41% 0.46%
- -------------------------------------
Expense waiver/
reimbursement (a) 0.30%(b) 0.42%(b) 0.00% 0.00% 0.00% 0.00% 0.00%
- -------------------------------------
Supplemental data
- -------------------------------------
Net assets, end of period
(000 omitted) $35,549 $922 $22,272 $16,491 $14,673 $13,014 $15,135
- -------------------------------------
Portfolio turnover rate (d) 38%(b) 38%(b) 50% 44% 68% 91% 85%
- -------------------------------------
</TABLE>
***Reflects operations for the period from January 1, 1998 to July 31, 1998.
***Reflects operations for the period from March 9, 1998 (commencement of
operations) to July 31, 1998.
***Information for the period prior to March 9, 1998 is for the Pinnacle Fund,
the predecessor fund of the Fountain Square Pinnacle Fund.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Annualized.
(c) Not annualized.
(d) Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(e) Based on net asset value, which does not reflect the sales load.
(See Notes which are an integral part of the Financial Statements)
76
<PAGE>
Fountain Square Equity Income Fund
Financial Highlights
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Equity Income Fund
-----------------------------------------------
Period Ended July 31,
-----------------------------------------------
1998 1997*
----------------------- -----------------------
Investor A Investor C Investor A Investor C
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $14.44 $14.45 $12.00 $12.00
- -------------------------------------- ----------- ----------- ---------- -----------
Income from investment
operations
- --------------------------------------
Net investment income (loss) 0.26 0.17 0.15 0.10
- --------------------------------------
Net realized and unrealized
gains (losses) on investments 2.43 2.41 2.43 2.45
- -------------------------------------- ----------- ----------- ---------- -----------
Total from investment
operations 2.69 2.58 2.58 2.55
- -------------------------------------- ----------- ----------- ---------- -----------
Less distributions
- --------------------------------------
Dividends to shareholders
from net investment income (0.27) (0.16) (0.14) (0.10)
- --------------------------------------
Distributions to shareholders
from net realized gains on
investment transactions (1.48) (1.48) -- --
- --------------------------------------
Distributions to shareholders
in excess of net investment
income -- -- -- --
- -------------------------------------- ----------- ----------- ---------- -----------
Total distributions (1.75) (1.64) (0.14) (0.10)
- -------------------------------------- ----------- ----------- ---------- -----------
Net asset value, end of period $15.38 $15.39 $14.44 $14.45
- -------------------------------------- =========== =========== ========== ===========
Total return** 19.57% 18.72% 21.64%(c) 21.30%(c)
- --------------------------------------
Ratios to Average Net Assets
- --------------------------------------
Expenses 1.01% 1.57% 1.06%(b) 1.81%(b)
- --------------------------------------
Net investment income (loss) 1.73% 1.21% 2.32%(b) 1.56%(b)
- --------------------------------------
Expense waiver/
reimbursement (a) 0.43% 0.52% 0.42%(b) 0.26%(b)
- --------------------------------------
Supplemental data
- --------------------------------------
Net assets, end of period
(000 omitted) $150,404 $968 $120,324 $92
- --------------------------------------
Portfolio turnover rate (d) 41% 41% 28%(b) 28%(b)
- --------------------------------------
</TABLE>
*Reflects operations for the period from January 27, 1997 (date of commencement
of operations) to July 31, 1997.
**Based on net asset value, which does not reflect the sales load.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Annualized.
(c) Not annualized.
(d) Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(See Notes which are an integral part of the Financial Statements)
77
<PAGE>
Fountain Square Balanced Fund
Financial Highlights
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Balanced Fund
-------------------------------------------------------------------------------------------
Period Ended July 31,
-------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
--------------------- ---------------------- ---------------------- ----------------------
Investor A Investor C Investor A Investor C Investor A Investor C* Investor A Investor A
---------- ---------- ---------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $15.33 $15.34 $11.75 $11.75 $11.28 $12.13 $9.70 $9.78
- ------------------------------------ ---------- ---------- ---------- ----------- ---------- ----------- ---------- -----------
Income from investment
operations
- ------------------------------------
Net investment income (loss) 0.27 0.17 0.27 0.16 0.27 0.05 0.28 0.26
- ------------------------------------
Net realized and unrealized
gains (losses) on investments 0.92 0.92 4.06 4.08 0.47 (0.39) 1.57 (0.06)
- ------------------------------------ ---------- ---------- ---------- ----------- ---------- ----------- ---------- -----------
Total from investment
operations 1.19 1.09 4.33 4.24 0.74 (0.34) 1.85 0.20
- ------------------------------------ ---------- ---------- ---------- ----------- ---------- ----------- ---------- -----------
Less distributions
- ------------------------------------
Dividends to shareholders
from net investment income (0.28) (0.17) (0.26) (0.16) (0.27) (0.04) (0.27) (0.26)
- ------------------------------------
Distributions to shareholders
from net realized gains on
investment transactions (1.25) (1.25) (0.49) (0.49) - - - -
- ------------------------------------
Distributions to shareholders
in excess of net investment
income (a) - - - - - - - (0.02)
- ------------------------------------ ---------- ---------- ---------- ----------- ---------- ----------- ---------- -----------
Total distributions (1.53) (1.42) (0.75) (0.65) (0.27) (0.04) (0.27) (0.28)
- ------------------------------------ ---------- ---------- ---------- ----------- ---------- ----------- ---------- -----------
Net asset value, end of period $14.99 $15.01 $15.33 $15.34 $11.75 $11.75 $11.28 $9.70
- ------------------------------------ ========== ========== ========== =========== ========== =========== ========== ===========
Total return** 8.41% 7.67% 38.45% 37.52% 6.52% 6.32%(f) 19.37% 2.02%
- ------------------------------------
Ratios to Average Net Assets
- ------------------------------------
Expenses 1.00% 1.58% 1.00% 1.75% 1.00% 1.78%(c) 1.00% 1.00%
- ------------------------------------
Net investment income (loss) 1.84% 1.24% 2.05% 1.30% 2.31% 1.60%(c) 2.73% 2.64%
- ------------------------------------
Expense waiver/
reimbursement (b) 0.43% 0.49% 0.40% 0.30% 0.06% 0.07%(c) 0.06% 0.06%
- ------------------------------------
Supplemental data
- ------------------------------------
Net assets, end of period
(000 omitted) $173,177 $4,796 $122,765 $1,155 $92,808 $264 $58,075 $59,363
- ------------------------------------
Portfolio turnover rate (e) 135% 135% 101% 101% 61% 61% 58% 53%
- ------------------------------------
</TABLE>
*Reflects operations for the period from April 25, 1996 (date of commencement
of operations) to July 31, 1996.
**Based on net asset value, which does not reflect the sales load.
(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) Annualized.
(d) Not annualized.
(e) Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(f) Represents total return for Investment A shares for the period from August
1, 1995 to April 24, 1996 plus the total return for Investment C shares for
the period from April 25, 1996 to July 31, 1996.
(See Notes which are an integral part of the Financial Statements)
78
<PAGE>
Fountain Square Mid Cap Fund
Financial Highlights
- ------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Mid Cap Fund
----------------------------------------------------------------------------------------------
Period Ended July 31,
----------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
---------------------- ---------------------- ---------------------- ---------- ----------
Investor A Investor C Investor A Investor C Investor A Investor C* Investor A Investor A
---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 16.98 $ 16.88 $ 12.60 $ 12.59 $ 12.59 $ 13.72 $ 10.10 $ 9.68
- ----------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Income from investment operations
- -----------------------------------
Net investment income (loss) (0.03) (0.05) 0.02 (0.07) 0.06 (0.01) 0.08 0.06
- ----------------------------------- ---------
Net realized and unrealized
gains (losses) on investments 0.98 0.89 5.55 5.51 0.11 (1.12) 2.48 0.43
- ----------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from investment
operations 0.95 0.84 5.57 5.44 0.17 (1.13) 2.56 0.49
- ----------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Less distributions
- -----------------------------------
Dividends to shareholders
from net investment income -- -- (0.02) -- (0.07) -- (0.07) (0.07)
- ----------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Distributions to shareholders
from net realized gains on
investment transactions (1.74) (1.74) (1.15) (1.15) (0.09) -- -- --
- ----------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Distributions to shareholders
in excess of net investment
income -- -- (0.02) -- -- -- -- --
- ----------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Total distributions (1.74) (1.74) (1.19) (1.15) (0.16) -- (0.07) (0.07)
- ----------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of period $ 16.19 $ 15.98 $ 16.98 $ 16.88 $ 12.60 $ 12.59 $ 12.59 $ 10.10
- ----------------------------------- ========= ========= ========= ========= ========= ========= ========= =========
Total return** 5.69% 5.03% 47.17% 46.05% 1.27% 1.11%(c) 25.45% 5.07%
- ----------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Ratios to Average Net Assets
- -----------------------------------
Expenses 1.01% 1.61% 1.00% 1.75% 1.00% 1.78%(b) 1.00% 1.00%
- -----------------------------------
Net investment income (loss) (0.19%) (0.81%) 0.10% (0.62%) 0.42% (0.51%)(b) 0.77% 0.60%
- -----------------------------------
Expense waiver/
reimbursement (a) 0.40% 0.44% 0.37% 0.27% 0.06% 0.06%(b) 0.18% 0.33%
- -----------------------------------
Supplemental data
- -----------------------------------
Net assets, end of period
(000 omitted) $ 217,547 $ 1,049 $ 186,066 $ 439 $ 72,663 $ 229 $ 47,184 $ 30,210
- -----------------------------------
Portfolio turnover rate (d) 44% 44% 52% 52% 54% 54% 23% 44%
- -----------------------------------
</TABLE>
**Reflects operations for the period from April 24, 1996 (date of initial public
investment) to July 31, 1996.
**Based on net asset value, which does not reflect the sales load.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Annualized.
(c) Represents total return for Investment A shares for the period from August
1, 1995 to April 23, 1996 plus the total return for Investment C shares for
the period from April 24, 1996 to July 31, 1996.
(d) Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(See Notes which are an integral part of the Financial Statements)
79
<PAGE>
Fountain Square International Equity Fund
Financial Highlights
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
International Equity Fund
--------------------------------------------------------------------------------------
Period Ended July 31,
--------------------------------------------------------------------------------------
1998 1997 1996 1995
---------------------- ---------------------- ------------------------ -----------
Investor A Investor C Investor A Investor C Investor A Investor C** Investor A*
---------- ---------- ---------- ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $12.05 $12.01 $10.74 $10.71 $9.83 $11.21 $10.00
- -------------------------------------- ---------- ---------- ---------- ---------- ---------- ------------ -----------
Income from investment
operations
- --------------------------------------
Net investment income (loss) 0.09 (0.06) 0.04 (0.02) 0.01 0.01 0.05
- --------------------------------------
Net realized and unrealized
gains (losses) on investments 1.31 1.39 2.15 2.16 0.90 (0.51) (0.22)
- -------------------------------------- ---------- ---------- ---------- ---------- ---------- ------------ -----------
Total from investment
operations 1.40 1.33 2.19 2.14 0.91 (0.50) (0.17)
- -------------------------------------- ---------- ---------- ---------- ---------- ---------- ------------ -----------
Less distributions
- --------------------------------------
Dividends to shareholders
from net investment income (0.59) (0.53) (0.66) (0.46) -- -- --
- --------------------------------------
Distributions to shareholders
from net realized gains on
investment transactions (0.30) (0.30) (0.06) (0.06) -- -- --
- --------------------------------------
Distributions to shareholders
in excess of net investment
income -- -- (0.16) (0.32) -- -- --
- -------------------------------------- ---------- ---------- ---------- ---------- ---------- ------------ -----------
Total distributions (0.89) (0.83) (0.88) (0.84) -- -- --
- -------------------------------------- ---------- ---------- ---------- ---------- ---------- ------------ -----------
Net asset value, end of period $12.56 $12.51 $12.05 $12.01 $10.74 $10.71 $9.83
- -------------------------------------- ========== ========== ========== ========== ========== ============ ===========
Total return*** 13.29% 12.57% 21.78% 21.25% 9.26% 8.95%(c) (1.70%)(c)
- --------------------------------------
Ratios to Average Net Assets
- --------------------------------------
Expenses 1.47% 2.22% 1.38% 2.13% 1.61% 2.34%(b) 1.65%(b)
- --------------------------------------
Net investment income (loss) 0.66% (0.09%) 0.39% (0.28%) 0.32% 0.76%(b) 0.62%(b)
- --------------------------------------
Expense waiver/
reimbursement (a) 0.35% 0.25% 0.35% 0.25% 0.05% -- 0.07%(b)
- --------------------------------------
Supplemental data
- --------------------------------------
Net assets, end of period
(000 omitted) $163,297 $291 $151,728 $210 $120,349 $57 $86,442
- --------------------------------------
Portfolio turnover rate (d) 39% 39% 60% 60% 41% 41% 54%
- --------------------------------------
</TABLE>
*Reflects operations for the period from August 19, 1994 (date of initial
public investment) to July 31, 1995.
**Reflects operations for the period from April 25, 1996 (date of initial
public investment) to July 31, 1996.
***Based on net asset value, which does not reflect the sales load.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Annualized.
(c) Not annualized.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(See Notes which are an integral part of the Financial Statements)
80
<PAGE>
Fountain Square Bond Fund For Income
Financial Highlights
- -------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Bond Fund For Income
--------------------------------------------------------
Period Ended July 31,
--------------------------------------------------------
1998 1997
-------------------------- ---------------------------
Investor A Investor C*** Investor A* Investor C*
---------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $ 12.19 $ 12.18 $ 12.00 $ 12.00
- -------------------------------------- ---------- ----------- ----------- -----------
Income from investment operations
- --------------------------------------
Net investment income (loss) 0.68 0.60 0.37 (0.01)
- --------------------------------------
Net realized and unrealized
gains (losses) on investments 0.06 0.05 0.18 0.50
- -------------------------------------- ---------- ----------- ----------- -----------
Total from investment operations 0.74 0.65 0.55 0.49
- -------------------------------------- ---------- ----------- ----------- -----------
Less distributions
- --------------------------------------
Dividends to shareholders
from net investment income (0.69) (0.59) (0.36) (0.22)
- --------------------------------------
Distributions to shareholders
from net realized gains on
investment transactions (0.05) (0.05) -- --
- --------------------------------------
Distributions to shareholders
in excess of net investment
income -- -- -- (0.09)
- -------------------------------------- ---------- ----------- ----------- -----------
Total distributions (0.74) (0.64) (0.36) (0.31)
- -------------------------------------- ---------- ----------- ----------- -----------
Net asset value, end of period $ 12.19 $ 12.19 $ 12.19 $ 12.18
- -------------------------------------- ========== =========== =========== ===========
Total return** 6.23% 5.50% 4.64%(c) 4.18%(c)
- --------------------------------------
Ratios to Average Net Assets
- --------------------------------------
Expenses 0.75% 1.34% 0.79%(b) 1.54%(b)
- --------------------------------------
Net investment income (loss) 5.54% 4.89% 6.08%(b) 4.20%(b)
- --------------------------------------
Expense waiver/reimbursement (a) 0.42% 0.32% 0.42%(b) 0.26%(b)
- --------------------------------------
Supplemental data
- --------------------------------------
Net assets, end of period
(000 omitted) $ 188,071 $ 230 $ 157,108 $ 6
- --------------------------------------
Portfolio turnover rate (d) 127% 127% 157%(b) 157%(b)
- --------------------------------------
</TABLE>
*Reflects operations for the period from January 27, 1997 (date of
commencement of operations) to July 31, 1997.
**Based on net asset value, which does not reflect the sales load.
***Per share information is calculated using the average share method.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Annualized.
(c) Not annualized.
(d) Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(See Notes which are an integral part of the Financial Statements)
81
<PAGE>
Fountain Square Quality Bond Fund
Financial Highlights
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Quality Bond Fund
-----------------------------------------------------------------------------------------------
Period Ended July 31,
-----------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
---------------------- ---------------------- ----------------------- ----------------------
Investor A Investor C Investor A Investor C Investor A Investor C* Investor A Investor A
---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $9.85 $9.86 $9.52 $9.53 $9.72 $9.62 $9.55 $10.29
- -------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Income from investment
operations
- --------------------------------
Net investment income (loss) 0.54 0.48 0.55 0.49 0.56 0.14 0.64 0.57
- --------------------------------
Net realized and unrealized
gains (losses) on
investments 0.12 0.09 0.32 0.32 (0.19) (0.08) 0.17 (0.69)
- -------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Total from investment
operations 0.66 0.57 0.87 0.81 0.37 0.06 0.81 (0.12)
- -------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Less distributions
- --------------------------------
Dividends to shareholders
from net investment income (0.55) (0.48) (0.54) (0.48) (0.57) (0.15) (0.64) (0.59)
- --------------------------------
Distributions to shareholders
from net realized gains on
investment transactions - - - - - - - (0.03)
- --------------------------------
Distributions to shareholders
in excess of net investment
income - - - - - - - -
- -------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Total distributions (0.55) (0.48) (0.54) (0.48) (0.57) (0.15) (0.64) (0.62)
- -------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Net asset value, end of period $9.96 $9.95 $9.85 $9.86 $9.52 $9.53 $9.72 $9.55
- -------------------------------- ========== ========== ========== ========== ========== =========== ========== ==========
Total return** 6.91% 5.92% 9.43% 8.68% 3.86% 3.71%(c) 8.89% (1.25%)
- --------------------------------
Ratios to Average Net Assets
Expenses 0.75% 1.50% 0.75% 1.50% 0.75% 1.52%(b) 0.75% 0.75%
- --------------------------------
Net investment income (loss) 5.50% 4.76% 5.71% 4.97% 5.80% 5.03%(b) 6.72% 5.76%
Expense waiver/
reimbursement (a) 0.45% 0.35% 0.41% 0.31% 0.06% 0.09%(b) 0.09% 0.11%
- --------------------------------
Supplemental data
- --------------------------------
Net assets, end of period
(000 omitted) $107,794 $399 $91,789 $204 $83,422 $162 $55,767 $47,272
- --------------------------------
Portfolio turnover rate (d) 279% 279% 181% 181% 117% 117% 138% 112%
- --------------------------------
</TABLE>
*Reflects operations for the period from April 25, 1996 (date of commencement
of operations) to July 31, 1996.
**Based on net asset value, which does not reflect the sales load.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Annualized.
(c) Represents total return for Investment A Shares for the period from August
1, 1995 to April 24, 1996 plus the total return for the Investment C Shares
for the period from April 25, 1996 to July 31, 1996.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(See Notes which are an integral part of the Financial Statements)
82
<PAGE>
Fountain Square U.S. Government Securities Fund
Financial Highlights
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
U.S. Government Securities Fund
-----------------------------------------------------------------------------------------------
Period Ended July 31,
-----------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
---------------------- ---------------------- ----------------------- ----------------------
Investor A Investor C Investor A Investor C Investor A Investor C* Investor A Investor A
---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $9.75 $9.75 $9.55 $9.56 $9.77 $9.65 $9.64 $10.21
- ----------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Income from investment
operations
- -----------------------------------
Net investment income (loss) 0.52 0.46 0.54 0.46 0.55 0.16 0.58 0.51
- -----------------------------------
Net realized and unrealized
gains (losses) on investments 0.07 0.04 0.19 0.19 (0.20) (0.10) 0.13 (0.49)
- ----------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Total from investment
operations 0.59 0.50 0.73 0.65 0.35 0.06 0.71 0.02
- ----------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Less distributions
- -----------------------------------
Dividends to shareholders
from net investment income (0.52) (0.45) (0.53) (0.46) (0.57) (0.15) (0.58) (0.57)
- -----------------------------------
Distributions to shareholders
from net realized gains on
investment transactions -- -- -- -- -- -- -- (0.02)
- ----------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Total distributions (0.52) (0.45) (0.53) (0.46) (0.57) (0.15) (0.58) (0.59)
- ----------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Net asset value, end of period $9.82 $9.80 $9.75 $9.75 $9.55 $9.56 $9.77 $9.64
- ----------------------------------- ========== ========== ========== ========== ========== =========== ========== ==========
Total return** 6.17% 5.19% 7.83% 6.92% 3.63% 3.48%(c) 7.66% 0.11%
- -----------------------------------
Ratios to Average Net Assets
- -----------------------------------
Expenses 0.75% 1.50% 0.75% 1.50% 0.75% 1.52%(b) 0.75% 0.75%
- -----------------------------------
Net investment income (loss) 5.30% 4.56% 5.56% 4.82% 5.67% 4.80%(b) 5.98% 5.17%
- -----------------------------------
Expense waiver/
reimbursement (a) 0.53% 0.43% 0.50% 0.40% 0.29% 0.37%(b) 0.39% 0.18%
- -----------------------------------
Supplemental data
- -----------------------------------
Net assets, end of period
(000 omitted) $41,550 $118 $42,414 $75 $30,754 $49 $25,054 $29,107
- -----------------------------------
Portfolio turnover rate (d) 155% 155% 169% 169% 103% 103% 115% 55%
- -----------------------------------
</TABLE>
*Reflects operations for the period from April 24, 1996 (date of commencement
of operations) to July 31, 1996.
**Based on net asset value, which does not reflect the sales load.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Annualized.
(c) Represents total return for Investment A Shares for the period from August
1, 1995 to April 23, 1996 plus the total return for the Investment C Shares
for the period from April 24, 1996 to July 31, 1996.
(d) Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(See Notes which are an integral part of the Financial Statements)
83
<PAGE>
Fountain Square Municipal Bond Fund
Financial Highlights
- -------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Municipal Bond Fund
------------------------------------------------------
Period Ended July 31,
------------------------------------------------------
1998 1997
------------------------- ------------------------
Investor A Investor C*** Investor A* Investor C*
---------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $12.33 $12.33 $12.00 $12.00
- ------------------------------------- ----------- ----------- ----------- -----------
Income from investment
operations
- -------------------------------------
Net investment income (loss) 0.50 0.18 0.28 (0.20)
- -------------------------------------
Net realized and unrealized
gains (losses) on investments 0.01 0.07 0.32 0.75
- ------------------------------------- ----------- ----------- ----------- -----------
Total from investment
operations 0.51 0.25 0.60 0.55
- ------------------------------------- ----------- ----------- ----------- -----------
Less distributions
- -------------------------------------
Dividends to shareholders
from net investment income (0.51) (0.18) (0.27) (0.16)
- -------------------------------------
Distributions to shareholders
from net realized gains on
investment transactions (0.09) (0.09) -- --
- -------------------------------------
Distributions to shareholders
in excess of net investment
income -- -- -- (0.06)
- ------------------------------------- ----------- ----------- ----------- -----------
Total distributions (0.60) (0.27) (0.27) (0.22)
- ------------------------------------- ----------- ----------- ----------- -----------
Net asset value, end of period $12.24 $12.31 $12.33 $12.33
- ------------------------------------- =========== =========== =========== ===========
Total return** 4.28% 2.03%(c) 5.04%(c) 4.65%(c)
- -------------------------------------
Ratios to Average Net Assets
- -------------------------------------
Expenses 0.76% 1.51%(b) 0.81%(b) 1.56%(b)
- -------------------------------------
Net investment income (loss) 4.09% 3.41%(b) 4.44%(b) 3.09%(b)
- -------------------------------------
Expense waiver/
reimbursement (a) 0.45% 0.37%(b) 0.42%(b) 0.26%(b)
- -------------------------------------
Supplemental data
- -------------------------------------
Net assets, end of period
(000 omitted) $117,333 $ -- $101,616 $11
- -------------------------------------
Portfolio turnover rate (d) 121% 121% 63%(b) 63%(b)
- -------------------------------------
</TABLE>
*Reflects operations for the period from January 27, 1997 (date of commencement
of operations) to July 31, 1997.
**Based on net asset value, which does not reflect the sales load.
***Reflects operations for the period from August 1, 1997 to January 8, 1998. As
of July 31, 1998, no shares or assets existed in the Municipal Bond Fund
Investment C Shares. The ending net asset value is the last NAV for a share
redeemed on January 8, 1998. The Municipal Bond Fund Investment C Shares
continue to be open for investment with an offering price equal to the Municipal
Bond Fund Investment A Shares. Per share information is calculated using the
average share method for Investment C Shares.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Annualized.
(c) Not annualized.
(d) Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued. (See Notes which are an
integral part of the Financial Statements)
84
<PAGE>
Fountain Square Ohio Tax Free Bond Fund
Financial Highlights
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Ohio Tax Free Bond Fund
-----------------------------------------------------------------------------------------------
Period Ended July 31,
-----------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
---------------------- ---------------------- ----------------------- ----------------------
Investor A Investor C Investor A Investor C Investor A Investor C* Investor A Investor A
---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $10.31 $10.31 $10.01 $10.00 $9.99 $10.02 $9.75 $9.95
- ----------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Income from investment
operations
- -----------------------------------
Net investment income (loss) 0.42 0.35 0.43 0.36 0.40 0.10 0.42 0.40
- -----------------------------------
Net realized and unrealized
gains (losses) on investments 0.02 0.01 0.30 0.31 0.03 (0.01) 0.24 (0.21)
- ----------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Total from investment
operations 0.44 0.36 0.73 0.67 0.43 0.09 0.66 0.19
- ----------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Less distributions
- -----------------------------------
Dividends to shareholders
from net investment income (0.42) (0.35) (0.43) (0.35) (0.41) (0.11) (0.42) (0.39)
- -----------------------------------
Distributions to shareholders
from net realized gains on
investment transactions (0.04) (0.04) -- -- -- -- -- --
- -----------------------------------
Distributions to shareholders
in excess of net investment
income -- -- -- (0.01) -- -- -- --
- ----------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Total distributions (0.46) (0.39) (0.43) (0.36) (0.41) (0.11) (0.42) (0.39)
- ----------------------------------- ---------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
Net asset value, end of period $10.29 $10.28 $10.31 $10.31 $10.01 $10.00 $9.99 $9.75
- ----------------------------------- ========== ========== ========== ========== ========== =========== ========== ==========
Total return** 4.38% 3.56% 7.49% 6.84% 4.33% 3.98%(c) 7.02% 1.95%
- -----------------------------------
Ratios to Average Net Assets
- -----------------------------------
Expenses 0.74% 1.49% 0.75% 1.50% 0.74% 1.52%(b) 0.35% 0.00%
- -----------------------------------
Net investment income (loss) 4.09% 3.33% 4.27% 3.51% 4.01% 3.41%(b) 4.36% 4.18%
- -----------------------------------
Expense waiver/
reimbursement (a) 0.43% 0.33% 0.37% 0.27% 0.32% 0.28%(b) 0.77% 1.33%
- -----------------------------------
Supplemental data
- -----------------------------------
Net assets, end of period
(000 omitted) $188,966 $584 $168,800 $248 $35,463 $38 $28,315 $23,854
- -----------------------------------
Portfolio turnover rate (d) 42% 42% 49% 49% 30% 30% 27% 94%
- -----------------------------------
</TABLE>
*Reflects operations for the period from April 24, 1996 (date of commencement
of operations) to July 31, 1996.
**Based on net asset value, which does not reflect the sales load.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Annualized.
(c) Represents total return for Investment A Shares for the period from August
1, 1995 to April 23, 1996 plus the total return for the Investment C Shares
for the period from April 24, 1996 to July 31, 1996.
(d) Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(See Notes which are an integral part of the Financial Statements)
85
<PAGE>
Report of Independent Auditors
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders
FOUNTAIN SQUARE FUNDS
We have audited the accompanying statements of assets and liabilities, including
the schedules of portfolio investments, of the Fountain Square Quality Growth
Fund, Fountain Square Equity Income Fund, Fountain Square Balanced Fund,
Fountain Square Mid Cap Fund, Fountain Square International Equity Fund,
Fountain Square Pinnacle Fund, Fountain Square Bond Fund for Income, Fountain
Square Quality Bond Fund, Fountain Square U.S. Government Securities Fund,
Fountain Square Municipal Bond Fund, and Fountain Square Ohio Tax Free Bond Fund
(the Funds) as of July 31, 1998, and the related statements of operations,
statements of changes in net assets, statements of cash flows and financial
highlights for each of the periods indicated therein. These financial statements
and financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial statements and financial
highlights for the Fountain Square Pinnacle Fund for each of the respective
years or periods ended December 31, 1997 were audited by other auditors whose
report dated January 27, 1998 expressed an unqualified opinion.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of July 31, 1998, by correspondence with the custodian and
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Funds as of July 31, 1998, and the results of their operations, the
changes in their net assets, their cash flows and their financial highlights for
each of the periods indicated therein, in conformity with generally accepted
accounting principles.
/s/ Ernest A. Young LLP
Cincinnati, Ohio
September 24, 1998
<PAGE>
<TABLE>
<CAPTION>
Addresses
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Fountain Square Quality Growth Fund Fountain Square Funds
Fountain Square Pinnacle Fund c/o Fifth Third Bank
Fountain Square Equity Income Fund 38 Fountain Square Plaza
Fountain Square Balanced Fund Cincinnati, Ohio 45263
Fountain Square Mid Cap Fund
Fountain Square International Equity Fund
Fountain Square Bond Fund For Income
Fountain Square Quality Bond Fund
Fountain Square U.S. Government Securities Fund
Fountain Square Municipal Bond Fund
Fountain Square Ohio Tax Free Bond 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 and Administrator
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
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[LOGO OF FIFTH THIRD BANK APPEAR HERE]
Fifth Third Bank
Investment Advisor
9/98
