<PAGE>
FOUNTAIN SQUARE(R) FUNDS
[PICTURE APPEARS HERE]
------------------------------
COMMERCIAL PAPER FUND
------------------------------
------------------------------
GOVERNMENT CASH RESERVES FUND
------------------------------
------------------------------
U.S. TREASURY OBLIGATIONS FUND
------------------------------
Annual Report to Shareholders
July 31, 1998
- --------------------[LOGO OF FIFTH THIRD BANK APPEARS HERE]---------------------
<PAGE>
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus, 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 serves as Investment Advisors to the Funds and receives a fee
for its services.
Fountain Square Funds, like all mutual funds:
. are NOT FDIC insured
. have no bank guarantee
. may lose value
<PAGE>
Letter from the Chief Investment Officer
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to present the Fountain Square Money Market 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 Government Cash Reserves Fund (Investment Shares) was among the
top 30% of all money market funds during the 12 months through July 31,
1998, according to Lipper Analytical Services, Inc. In fact, for both
the three year period and the five year period ending July 31, 1998, the
Fountain Square Government Cash Reserves Fund ranked in the top 25% of
all money market funds./2/
This performance reflects our aim of seeking discipline, while having a
long-term approach in investing. We seek to keep our Funds fully
invested, making no attempt to time the market.
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.
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
1
<PAGE>
Letter from the Chief Investment Officer (continued)
- --------------------------------------------------------------------------------
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 Government
Cash Reserves Fund (Investment Shares) ranked 33 out of 112 funds within
the Lipper U.S. Government Money Market Funds category. For the 3-year
period ending July 31, 1998, the Fund ranked 24 out of 101. For the 5-
year period ending July 31, 1998, the Fund ranked 18 out of 83. The
Lipper ranking is based on total return and does not reflect a sales
charge.
2
<PAGE>
- --------------------------------------------------------------------------------
Fountain Square Money Market Funds/+/
An interview with Molly Murphy, portfolio manager.
Q. What conditions affected the Money Market Funds during the 12 months ended
July 31, 1998?
A. In the money markets, we are most affected by Federal Reserve policy and
investors' preferences among issues of different quality. In addition, the
federal budget surplus has reduced the supply of Treasuries entering the
market, which has driven rates down across the yield curve. While the Federal
Reserve Board kept a neutral stance throughout the period, speculation about
potential changes in money supply caused volatility in the money markets.
Investors' opinions about the likely direction of rates shifted dramatically
during the period, in response to conflicting economic data. For example,
investors early in the period were concerned that the Asian financial crisis
could crimp our economy and lead to lower rates. Then signs of strong
economic growth raised fears that the Fed would be forced to increase rates.
But investors late in the period once again saw reason to believe that Asia's
problems would slow our economy and lead to a decline in rates.
Q. How did you manage the Funds' average maturities?
A. We kept the Funds' average maturities neutral throughout most of the
period, while at times positioning the Funds somewhat shorter than their
benchmarks. We did not want to make any large bets on the direction of
interest rates in such an uncertain environment, and shorter-term issues
offered attractive yields relative to the overall market.
Q. How did that strategy work out?
A. Our approach led to strong performance by the Funds. In fact, for both the
three year period and the five year period ending July 31, 1998, the Fountain
Square Government Cash Reserves Fund (Investment Shares) ranked in the top
25% of all money market funds. It was among the top 30% of all money market
funds during the 12 months through July 31, 1998, according to Lipper
Analytical Services, Inc./1/
Q. What is your outlook going forward?
A. We will maintain the Funds' neutral position going forward. The Federal
Reserve will have to deal with the crisis in Asia, the risk of a devaluation
of the Chinese yen, and the Asian exposure of European banks. We believe many
factors will be driving international investors into the U.S. market. That
environment makes it difficult to predict whether the Federal Reserve will
change overnight rates; therefore, we will maintain the Funds' neutral
position.
Fountain Square Commercial Paper Fund is a no-load money market mutual fund
that invests primarily in high-quality commercial paper. Commercial paper
represents very short-term loans made by banks and other corporations.
Fountain Square Government Cash Reserves Fund is a no-load money market
mutual fund that invests in short-term U.S. government securities. The Fund
limits its investments to U.S. government securities paying interest that
generally would be exempt from state personal income tax.
Fountain Square U.S. Treasury Obligations Fund is a no-load money market
mutual fund that invests in short-term U.S. Treasury obligations and
repurchase agreements fully collateralized by such Treasury securities.
- -----------
/+/ Investments in the Funds are neither insured nor guaranteed by the U.S.
government. Yields will fluctuate, and there can be no assurance that the
Funds will be able to maintain a stable NAV of $1.00 per share.
/1/ For the 1-year period ended July 31, 1998, the Fountain Square Government
Cash Reserves Fund (Investment Shares) ranked 33 out of 112 funds within
the Lipper U.S. Government Money Market Funds category. For the 3-year
period ending July 31, 1998, the Fund ranked 24 out of 101. For the 5-year
period ending July 31, 1998, the Fund ranked 18 out of 83. The Lipper
ranking is based on total return and does not reflect a sales charge.
3
<PAGE>
Fountain Square Commercial Paper Fund
Schedule of Portfolio Investments
July 31, 1998
(Amounts in thousands)
- --------------------------------------------------------------
Principal Security Amortized
Amount Description Cost
- ------------ ------------------------------------- -----------
Certificates of Deposits -- 2.5%
- --------------------------------------------------
Banks -- 2.5%
-------------------------------------
$ 5,000 Societe Generale Yankee, 9/4/98 $ 5,003
-------------------------------------
5,000 Societe Generale Yankee, 4/28/99 4,998
------------------------------------- -----------
Total Certificates of Deposits 10,001
------------------------------------- -----------
Commercial Paper -- 72.8%
- --------------------------------------------------
Banks -- 8.1%
-------------------------------------
5,000 Rabobank Nederland N.V., 10/14/98 4,944
-------------------------------------
5,000 Rabobank Nederland N.V., 10/21/98 4,939
-------------------------------------
5,000 Societe Generale, 9/8/98 4,971
-------------------------------------
7,000 Union Bank of Switzerland, 8/4/98 6,997
-------------------------------------
6,000 Union Bank of Switzerland, 9/10/98 5,963
-------------------------------------
5,000 Union Bank of Switzerland, 12/31/98 4,885
------------------------------------- -----------
32,699
------------------------------------- -----------
Basic Materials -- 4.4%
-------------------------------------
13,000 Dupont E.I. Nemour, 8/13/98 12,976
-------------------------------------
5,000 Dupont E.I. Nemour, 8/27/98 4,981
------------------------------------- -----------
17,957
------------------------------------- -----------
Brokerage -- 8.1%
-------------------------------------
7,000 Goldman Sachs Group, 8/10/98 6,990
-------------------------------------
8,000 J.P. Morgan, 9/14/98 7,946
-------------------------------------
6,000 Merrill Lynch, 8/12/98 5,990
-------------------------------------
7,000 Merrill Lynch, 8/26/98 6,974
-------------------------------------
5,000 Merrill Lynch, 11/30/98 4,907
------------------------------------- -----------
32,807
------------------------------------- -----------
Consumer Products -- 1.7%
-------------------------------------
7,000 Procter & Gamble, 8/3/98 6,998
-------------------------------------
Energy -- 4.4%
-------------------------------------
4,000 Florida Power Corp., 8/13/98 3,993
-------------------------------------
5,000 Petrofina Delaware, 8/5/98 4,996
-------------------------------------
5,000 Petrofina Delaware, 9/3/98 4,975
-------------------------------------
4,000 Petrofina Delaware, 9/11/98 3,975
------------------------------------- -----------
17,939
------------------------------------- -----------
Financial -- 44.6%
-------------------------------------
5,000 American General Finance Corp.,
8/26/98 4,981
-------------------------------------
13,000 American General Finance Corp.,
8/31/98 12,940
-------------------------------------
8,000 Associates First Capital Corp.,
8/19/98 7,978
-------------------------------------
5,000 Associates First Capital Corp.,
8/20/98 4,985
-------------------------------------
5,000 Avco Financial Services, 8/27/98 4,980
-------------------------------------
7,000 Avco Financial Services, 9/9/98 6,958
-------------------------------------
5,000 Avco Financial Services, 9/24/98 4,959
-------------------------------------
18,000 Bellsouth Telecommunications,
8/7/98 17,984
-------------------------------------
5,000 CIT Group, 8/31/98 4,977
-------------------------------------
12,000 Deutsche Bank Financial, 8/5/98 11,993
-------------------------------------
9,000 Ford Motor Credit Corp., 8/7/98 8,992
-------------------------------------
5,000 Ford Motor Credit Corp., 8/20/98 4,985
-------------------------------------
6,000 General Electric Capital Corp.,
8/12/98 5,990
-------------------------------------
6,000 General Electric Capital Corp.,
8/21/98 5,982
-------------------------------------
7,000 General Electric Capital Corp.,
12/30/98 6,840
-------------------------------------
10,000 MetLife Funding, 8/6/98 9,992
-------------------------------------
9,000 MetLife Funding, 8/11/98 8,986
-------------------------------------
14,000 Norwest Corp., 8/31/98 13,936
-------------------------------------
11,000 Prudential Funding Corp., 8/28/98 10,954
-------------------------------------
3,000 Prudential Funding Corp., 9/11/98 2,981
-------------------------------------
18,000 Xerox Credit Corp., 8/10/98 17,976
------------------------------------- -----------
180,349
------------------------------------- -----------
Miscellaneous -- 1.5%
-------------------------------------
6,000 Stanford University, 10/14/98 5,933
------------------------------------- -----------
Total Commercial Paper 294,682
------------------------------------- -----------
Corporate Bonds -- 12.1%
- --------------------------------------------------
Financial -- 7.4%
-------------------------------------
5,000 CIT Group Holdings, 6.38%, 5/21/99 5,020
-------------------------------------
5,000 Ford Motor Credit, Floating Rate
Note, 6/1/99 -- (5.94%, 9/1/98)(b) 5,013
-------------------------------------
20,000 General American Life Funding
Agreement, Floating Rate Note,
7/30/99 -- (5.85%, 8/30/98)(b) 20,000
------------------------------------- -----------
30,033
------------------------------------- -----------
Technology -- 4.7%
-------------------------------------
4,020 AT&T Corp., 4.38%, 5/1/99 3,979
-------------------------------------
5,000 IBM Corp., 6.12%, 12/15/98 5,006
-------------------------------------
10,000 IBM Corp., Floating Rate Note
4/1/99 (5.53%, 10/1/98)(b) 9,995
------------------------------------- -----------
18,980
------------------------------------- -----------
Total Corporate Bonds 49,013
------------------------------------- -----------
Repurchase Agreements -- 13.0%
- --------------------------------------------------
19,000 Barclays, 5.62%, dated 7/31/98, due
8/3/98 (at amortized cost), collater-
alized by U.S. Treasury Note, 5.50%,
due 11/15/98 with a value of $19,380. 19,000
-------------------------------------
14,754 J.P. Morgan, 5.62%, dated 7/31/98,
due 8/3/98 (at amortized cost), col-
lateralized by U.S. Treasury Bill due
10/29/98 with a value of $15,050. 14,754
-------------------------------------
19,000 Warburg/Dillion, 5.55%, dated 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
$19,394. 19,000
------------------------------------- -----------
Total Repurchase Agreements 52,754
------------------------------------- -----------
Total Investments (Amortized Cost
$406,450) (a) -- 100.4% 406,450
-------------------------------------
Liabilities in excess of other
assets -- (0.4%) (1,550
-------------------------------------
TOTAL NET ASSETS -- 100.0% $404,900
------------------------------------- -----------
Percentages indicated are based on net assets of $404,900.
(a) Also represents cost for federal tax purposes.
(b) Current rate and next demand date shown.
(See Notes which are an intregal part of the Financial Statements)
4
<PAGE>
Fountain Square Government Cash Reserves Fund
Schedule of Portfolio Investments
July 31, 1998
(Amounts in thousands)
- --------------------------------------------------------------------------------
Principal Security Amortized
Amount Description Cost
- --------- ------------------------------------ -----------
U.S. Government Agencies -- 100.1%
- ------------------------------------------------
Federal Farm Credit Bank -- 6.5%
-----------------------------------
$ 9,000 Discount Note, 8/3/98 $ 9,000
-----------------------------------
5,000 Discount Note, 8/11/98 4,992
-----------------------------------
5,000 Discount Note, 9/15/98 4,966
-----------------------------------
5,000 5.50%, 4/1/99 4,995
----------------------------------- -----------
23,953
----------------------------------- -----------
Federal Home Loan -- 76.0%
-----------------------------------
12,350 Discount Note, 8/3/98 12,346
-----------------------------------
10,000 Discount Note, 8/5/98 9,994
-----------------------------------
18,000 Discount Note, 8/7/98 17,984
-----------------------------------
10,000 Discount Note, 8/12/98 9,984
-----------------------------------
15,000 Discount Note, 8/14/98 14,971
-----------------------------------
4,000 Discount Note, 8/17/98 3,990
-----------------------------------
8,350 Discount Note, 8/18/98 8,328
-----------------------------------
5,000 Discount Note, 8/19/98 4,986
-----------------------------------
6,000 Floating Rate Note, 8/20/98 (5.38%,
8/5/98) (b) 5,997
-----------------------------------
5,000 Discount Note, 8/26/98 4,981
-----------------------------------
22,599 Discount Note, 8/28/98 22,507
-----------------------------------
16,000 Discount Note, 9/4/98 15,918
-----------------------------------
5,000 Discount Note, 9/9/98 4,971
-----------------------------------
5,000 Discount Note, 9/18/98 4,964
-----------------------------------
8,700 Discount Note, 9/23/98 8,632
-----------------------------------
10,000 Discount Note, 9/25/98 9,918
-----------------------------------
6,000 Discount Note, 10/7/98 5,940
-----------------------------------
15,000 Discount Note, 10/9/98 14,845
-----------------------------------
10,000 Discount Note, 10/14/98 9,890
-----------------------------------
32,000 Discount Note, 12/30/98 31,281
-----------------------------------
10,000 5.68%, 3/4/99 (Callable 9/4/98
@ 100) 10,000
-----------------------------------
5,000 Floating Rate Note, 3/10/99 (5.40%,
8/4/98) (b) 4,998
-----------------------------------
20,000 Floating Rate Note, 3/26/99 (5.49%,
8/5/98) (b) 19,991
-----------------------------------
20,000 Floating Rate Note, 4/9/99 (5.55%,
8/5/98) (b) 19,991
-----------------------------------
5,000 5.75%, 5/4/99 (Callable 8/4/98 @ 100) 4,999
----------------------------------- -----------
282,406
----------------------------------- -----------
Student Loan
Marketing Association -- 10.6%
-----------------------------------
2,000 5.60%, 8/11/98 2,000
-----------------------------------
10,000 Floating Rate Note, 8/20/98 (5.24%,
8/4/98) (b) 9,994
-----------------------------------
5,000 Floating Rate Note, 2/8/99 (5.26%,
8/8/98) (b) 4,994
-----------------------------------
22,500 Master Note, 5.40%, 7/1/00 (c) 22,500
----------------------------------- -----------
39,488
----------------------------------- -----------
Tennessee Valley Authority -- 7.0%
-----------------------------------
16,021 Discount Note, 8/26/98 15,962
-----------------------------------
10,000 Discount Note, 10/29/98 9,866
----------------------------------- -----------
25,828
----------------------------------- -----------
Total U.S. Government Agencies 371,675
----------------------------------- -----------
Total Investments (Amortized
Cost $371,675) (a)-- 100.1% 371,675
----------------------------------- -----------
Liabilities in excess of other
assets-- (0.1%) (355)
-----------------------------------
TOTAL NET ASSETS-- 100.0% $371,320
----------------------------------- -----------
Percentages indicated are based on net assets of $371,320.
(a) Also represents cost for federal tax purposes.
(b) Current rate and next demand date shown.
(c) Current rate shown.
(See Notes which are an integral part of the Financial Statements)
5
<PAGE>
Fountain Square U.S. Treasury Obligations Fund
Schedule of Portfolio Investments
July 31, 1998
(Amounts in thousands)
- ---------------------------------------------------------------
Principal Security Amortized
Amount Description Cost
- ------------ --------------------------------------- ----------
U.S. Government Securities -- 18.3%
- ----------------------------------------------------
U.S. Treasury Notes -- 18.3%
---------------------------------------
$ 20,000 6.13%, 8/31/98 $ 20,013
---------------------------------------
20,000 4.75%, 9/30/98 19,977
---------------------------------------
10,000 5.13%, 11/30/98 9,989
---------------------------------------
20,000 5.63%, 11/30/98 20,010
---------------------------------------
30,000 5.88%, 1/31/99 30,049
---------------------------------------
30,000 5.88%, 2/28/99 30,057
---------------------------------------
30,000 6.50%, 4/30/99 30,220
--------------------------------------- ---------
Total U.S. Government Securities 160,315
--------------------------------------- ---------
Repurchase Agreements -- 81.9%
- ----------------------------------------------------
130,000 Barclays Capital, 5.62%, dated 7/31/98,
due 8/3/98 (at amortized cost),
collateralized by U.S. Treasury Notes,
5.50%, due 11/15/98-2/28/99 with a
value of $132,601. 130,000
---------------------------------------
41,000 Bear Stearns & Co., 5.62%, dated
7/31/98, due 8/3/98 (at amortized cost),
collateralized by U.S. Treasury Notes,
5.25%-6.38%, due 4/30/99-1/31/01 with a
value of $41,831. 41,000
---------------------------------------
41,000 BT Securities, 5.60%, dated 7/31/98,
due 8/3/98 (at amortized cost),
collateralized by U.S. Treasury Note,
7.50%, due 11/15/01 with a value of
$41,841. 41,000
---------------------------------------
41,000 Deutsche Bank, 5.62%, dated 7/31/98,
due 8/3/98 (at amortized cost),
collateralized by U.S. Treasury Notes,
5.50%-6.63%, due 2/28/99-3/31/02
with a value of $41,820. 41,000
---------------------------------------
41,000 First Chicago, 5.62%, dated 7/31/98,
due 8/3/98 (at amortized cost),
collateralized by U.S. Treasury Bills,
due 8/6/98-4/1/99 with a value of
$19,786 and U.S. Treasury Bonds,
6.13%-12.00%, due 8/15/13-11/15/27
with a value of $1,273 and U.S.
Treasury Notes, 4.75%-7.75%, due
9/30/98-5/15/08 with a value of
$20,766. 41,000
---------------------------------------
35,000 Goldman Sachs, 5.55%, dated 7/31/98,
due 8/3/98 (at amortized cost),
collateralized by U.S. Treasury Bond,
6.50%, due 11/15/26 with a value of
$35,700. 35,000
---------------------------------------
135,459 JP Morgan, 5.62%, dated 7/31/98, due
8/3/98 (at amortized cost),
collateralized by U.S. Treasury Notes,
5.75%-5.88%, due 3/31/99-10/31/00 with a
value of $128,408 and U.S. Treasury Bill
due 7/22/99 with a value of $9,761. 135,459
---------------------------------------
41,000 Merrill Lynch, 5.60%, dated 7/31/98,
due 8/3/98 (at amortized cost),
collateralized by U.S. Treasury
Bonds, 12.00%-14.00%, due 11/15/11-
8/15/13 with a value of $41,820. 41,000
---------------------------------------
41,000 Nesbitt Burns, 5.60%, dated 7/31/98,
due 8/3/98 (at amortized cost),
collateralized by U.S. Treasury Notes,
5.38%-8.88%, due 10/31/98-11/30/01
with a value of $21,147 and U.S.
Treasury Bonds, 6.00%-10.75%, due
8/15/05-2/15/26 with a value of
$3,706 and U.S. Treasury Bills due
9/3/98-5/27/99 with a value of
$16,635. 41,000
---------------------------------------
41,000 Prudential Securities, 5.60%, dated
7/31/98, due 8/3/98 (at amortized
cost), collateralized by U.S. Treasury
Note, 5.63%, due 11/30/98 with a
value of $38,989 and U.S. Treasury
Bond, 11.88%, due 11/15/03 with a
value of $2,832. 41,000
---------------------------------------
130,000 Warburg/Dillion, 5.55%, dated 7/31/98,
due 8/3/98 (at amortized cost),
collateralized by U.S. Treasury Note,
6.38%, due 5/15/99 with a value of
$132,608. 130,000
--------------------------------------- ---------
Total Repurchase Agreements 717,459
--------------------------------------- ---------
Total Investments (Amortized Cost
$877,774) (a) -- 100.2% 877,774
--------------------------------------- ---------
Liabilities in excess of other
assets-- (0.2)% (1,685)
---------------------------------------
TOTAL NET ASSETS-- 100.0% $876,089
--------------------------------------- ---------
Percentages indicated are based on net assets of $876,089.
(a) Also represents cost for federal tax purposes.
(See Notes which are an intregal part of the Financial Statements)
6
<PAGE>
Fountain Square Funds
Statements of Assets and Liabilities
July 31, 1998 (Amounts in thousands, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Commercial Government U.S. Treasury
Paper Cash Reserves Obligations
Fund Fund Fund
---------- ------------- -------------
<S> <C> <C> <C>
Assets:
- --------------------------------------------------------
Investments, at value (Amortized cost $353,696;
$371,675; and $160,315, respectively) $353,696 $371,675 $160,315
- --------------------------------------------------------
Repurchase agreements (Amortized cost $52,754; $0;
and $717,459, respectively) 52,754 -- 717,459
- -------------------------------------------------------- ----------- ----------- -----------
Total Investments 406,450 371,675 877,774
- --------------------------------------------------------
Cash 11 14 163
- --------------------------------------------------------
Interest receivable 602 1,367 2,458
- -------------------------------------------------------- ----------- ----------- -----------
Total Assets 407,063 373,056 880,395
- -------------------------------------------------------- ----------- ----------- -----------
Liabilities:
- --------------------------------------------------------
Dividends payable 1,909 1,538 3,938
- --------------------------------------------------------
Accrued expenses and other payables:
- --------------------------------------------------------
Investment advisory fees 142 124 199
- --------------------------------------------------------
Administration fees 4 3 5
- --------------------------------------------------------
Accounting and transfer agent fees 13 9 17
- --------------------------------------------------------
Custodian fees 8 5 14
- --------------------------------------------------------
Other 87 57 133
- -------------------------------------------------------- ----------- ----------- -----------
Total Liabilities 2,163 1,736 4,306
- -------------------------------------------------------- ----------- ----------- -----------
Net Assets:
- --------------------------------------------------------
Paid-in capital 404,902 371,314 876,052
- --------------------------------------------------------
Accumulated undistributed net realized gains (losses)
on investment transactions -- (1) (9)
- --------------------------------------------------------
Accumulated undistributed (distributions in excess of)
net investment income (2) 7 46
- -------------------------------------------------------- ----------- ----------- -----------
Net Assets $404,900 $371,320 $876,089
- -------------------------------------------------------- =========== =========== ===========
Net Assets
- --------------------------------------------------------
Trust Shares $368,348 $221,034 $876,089
- --------------------------------------------------------
Investment Shares 36,552 150,286 --
- -------------------------------------------------------- ----------- ----------- -----------
Total $404,900 $371,320 $876,089
- -------------------------------------------------------- =========== =========== ===========
Outstanding units of beneficial interest (shares)
- --------------------------------------------------------
Trust Shares 368,350 221,031 876,053
- --------------------------------------------------------
Investment Shares 36,552 150,283 --
- -------------------------------------------------------- ----------- ----------- -----------
Total 404,902 371,314 876,053
- -------------------------------------------------------- =========== =========== ===========
Net asset value
- --------------------------------------------------------
Offering and redemption price per share - Trust
Shares and Investor Shares $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------- =========== =========== ===========
</TABLE>
(See Notes which are an integral part of the Financial Statements)
7
<PAGE>
Fountain Square Funds
Statements of Operations
For the Year Ended July 31, 1998
(Amounts in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Commercial Government U.S. Treasury
Paper Cash Reserves Obligations
Fund Fund Fund
------------- ------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------
Interest income $24,717 $17,764 $38,933
- --------------------------------------------------
Dividend income 175 _ _
- -------------------------------------------------- ------------- ------------- --------------
Total Income 24,892 17,764 38,933
- -------------------------------------------------- ------------- ------------- --------------
EXPENSES:
- --------------------------------------------------
Investment advisory fees 1,762 1,284 2,795
- --------------------------------------------------
Administrative fees 801 582 1,267
- --------------------------------------------------
Distributions fees - Investment Shares 111 469 --
- --------------------------------------------------
Portfolio accounting fees 98 67 115
- --------------------------------------------------
Transfer Agent fees 28 14 25
- --------------------------------------------------
Trustees' fees 3 3 3
- --------------------------------------------------
Audit fees 10 10 10
- --------------------------------------------------
Custodian fees 37 21 36
- --------------------------------------------------
Legal fees 6 6 6
- --------------------------------------------------
Fund share registration fees 46 41 61
- --------------------------------------------------
Printing fees 19 10 31
- --------------------------------------------------
Insurance fees 10 7 11
- -------------------------------------------------- ------------- ------------- --------------
Total Expenses 2,931 2,514 4,360
- -------------------------------------------------- ------------- ------------- --------------
Less expenses voluntarily reduced (640) (842) (1,677)
- -------------------------------------------------- ------------- ------------- --------------
Net Expenses 2,291 1,672 2,683
- -------------------------------------------------- ------------- ------------- --------------
Net Investment Income 22,601 16,092 36,250
- -------------------------------------------------- ------------- ------------- --------------
Realized Gains (Losses) from Investments:
- --------------------------------------------------
Net realized gains (losses) from investment
transactions _ 6 (9)
- -------------------------------------------------- ------------- ------------- --------------
Change in net assets resulting
from operations $22,601 $16,098 $36,241
- -------------------------------------------------- ============= ============= ==============
</TABLE>
(See Notes which are an integral part of the Financial Statements)
8
<PAGE>
Fountain Square Funds
Statements of Changes in Net Assets
(Amounts in thousands)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Commercial Government U..S. Treasury
Paper Cash Reserves Obligations
Fund Fund Fund
-------------------------- -------------------------- --------------------------
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
July 31, July 31, July 31, July 31, July 31, July 31,
1998 1997 1998 1997 1998 1997
-------------------------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
- -----------------------------------------
Operations--
- -----------------------------------------
Net investment income $ 22,601 $ 16,961 $ 16,092 $ 12,079 $ 36,250 $ 24,602
- -----------------------------------------
Net realized gains (losses) on
investment transactions -- -- 6 1 (9) 46
- ----------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Change in net assets resulting from
operations 22,601 16,961 16,098 12,080 36,241 24,648
- ----------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Distributions to Shareholders--
- -----------------------------------------
Distributions from net investment income:
- -----------------------------------------
Trust Shares (20,971) (15,645) (9,366) (7,339) (36,250) (24,602)
- -----------------------------------------
Investment Shares (1,632) (1,316) (6,726) (4,741) -- --
- ----------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Change in net assets from distributions (22,603) (16,961) (16,092) (12,080) (36,250) (24,602)
- ----------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Fund Share (Principal) Transactions--
- -----------------------------------------
Proceeds from shares issued 1,320,142 1,395,844 421,706 390,115 1,831,037 1,825,126
- -----------------------------------------
Dividends reinvested 495 784 -- -- 7,545 5,305
- -----------------------------------------
Cost of shares redeemed (1,291,001) (1,341,524) (323,513) (318,164) (1,501,571) (1,780,618)
- ----------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Change in net assets from
share transactions 29,636 55,104 98,193 71,951 337,011 49,813
- ----------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Change in net assets 29,634 55,104 98,199 71,951 337,002 49,859
- -----------------------------------------
Net Assets:
- -----------------------------------------
Beginning of period 375,266 320,162 273,121 201,170 539,087 489,228
- ----------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
End of period $ 404,900 $ 375,266 $ 371,320 $ 273,121 $ 876,089 $ 539,087
- ----------------------------------------- =========== =========== =========== =========== =========== ===========
</TABLE>
(See Notes which are an integral part of the Financial Statements)
9
<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 "Act"), as an open-end management investment
company. At July 31, 1998, the Trust consisted of fourteen separate investment
portfolios. The accompanying financial statements and notes relate only to the
Commercial Paper Fund, Government Cash Reserves Fund, and the U.S. Treasury
Obligations Fund (individually the "Fund" and collectively the "Funds").
The Commercial Paper Fund and the Government Cash Reserves Fund offer two
classes of shares: Trust Shares and Investment Shares. Each class of shares has
identical rights and privileges except with respect to distribution (12b-1) fees
paid by the Investment Shares, voting rights on matters affecting a single class
of shares and the exchange privileges of each class of shares. The U.S. Treasury
Obligation Fund offers only one class of shares.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles. 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 of the Funds are valued at either
amortized cost, which approximates market value, or at original cost, which
combined with accrued interest approximates market value. Under the amortized
cost method, discount or premium is accreted or amortized on a constant basis to
the maturity of the security. Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. In addition, the Funds may not (a)
purchase any instruments with a remaining maturity greater than thirteen months
unless such instrument is subject to a demand feature, or (b) maintain a
dollar-weighted average maturity which exceeds 90 days.
B. Repurchase Agreements--The Funds will only enter into repurchase agreements
with banks and other recognized financial institutions, such as broker/dealers,
which are deemed by the Trust's Advisor to be creditworthy pursuant to
guidelines and/or standards reviewed or established by the Board of Trustees
(the "Trustees"). It is the policy of the Funds 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 Funds 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, the Funds 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.
10
<PAGE>
Fountain Square Funds
- --------------------------------------------------------------------------------
D. 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.
E. Dividends to Shareholders--Dividends from net investment income are declared
daily and paid monthly and 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 differences are primarily due to differing treatments for expiring capital
loss carryforwards and deferrals of certain losses.
These "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.
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
----------------- ------------------
Commercial Paper Fund - -
Government Cash Reserves 7 (7)
U.S. Treasury Obligations 41 (47)
F. 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.
(3) Shares of Beneficial Interest
Transactions in Fund shares were as follows (amounts in thousands):
<TABLE>
<CAPTION>
Commercial Government U.S.Treasury
Paper Cash Reserves Obligations
Fund Fund Fund
------------------------ ----------------------- -----------------------
Shares Amounts Shares Amounts Shares Amounts
--------- --------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
For the year ended July 31, 1998:
Trust Shares
Shares issued 1,272,208 $ 1,272,208 284,720 $ 284,720 1,830,875 $ 1,831,037
Dividends reinvested 495 495 -- -- 7,545 7,545
Shares redeemed (1,246,181) (1,246,181) (226,232) (226,232) (1,501,407) (1,501,571)
----------- ----------- ----------- ----------- ----------- -----------
Trust Shares 26,522 $ 26,522 58,488 $ 58,488 337,013 $ 337,011
=========== =========== =========== =========== =========== ===========
Investment Shares
Shares issued 47,934 $ 47,934 136,986 $ 136,986 -- --
Dividends reinvested -- -- -- -- -- --
Shares redeemed (44,820) (44,820) (97,281) (97,281) -- --
----------- ----------- ----------- ----------- ----------- -----------
Investment Shares 3,114 $ 3,114 39,705 $ 39,705 -- --
=========== =========== =========== =========== =========== ===========
</TABLE>
11
<PAGE>
Fountain Square Funds
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Commercial Government U.S.Treasury
Paper Cash Reserves Obligations
Fund Fund Fund
------------------------ ----------------------- -----------------------
Shares Amounts Shares Amounts Shares Amounts
--------- --------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
For the year ended July 31, 1997:
- -----------------------------------
Trust Shares
- -----------------------------------
Shares issued 1,348,424 $ 1,348,424 263,396 $ 263,396 1,825,126 $ 1,825,126
- -----------------------------------
Dividends reinvested 784 784 -- -- 5,305 5,305
- -----------------------------------
Shares redeemed (1,308,202) (1,308,202) (233,180) (233,180) (1,780,619) (1,780,619)
- ----------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Trust Shares 41,006 $ 41,006 30,216 $ 30,216 49,812 $ 49,812
- ----------------------------------- =========== =========== =========== =========== =========== ===========
Investment Shares
- -----------------------------------
Shares issued 47,420 $ 47,420 126,719 $ 126,719 -- --
- -----------------------------------
Dividends reinvested -- -- -- -- -- --
- -----------------------------------
Shares redeemed (33,322) (33,322) (84,984) (84,984) -- --
- ----------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Investment Shares 14,098 $ 14,098 41,735 $ 41,735 -- --
- ----------------------------------- =========== =========== =========== =========== =========== ===========
</TABLE>
(4) Investment Advisory Fee and Other Transactions with Affiliates (amounts in
Thousands)
Investment Advisory Fee--Fifth Third Bank, the Trust's investment Advisor (the
"Advisor"), receives for its services an annual investment advisory fee of
0.40%, which is based on a percentage of each of the Funds' average daily net
assets.
The Advisor may voluntarily choose to waive a portion of its fee and reimburse
certain operating expenses of the Fund. The Advisor can modify or terminate this
voluntary waiver and reimbursement at any time at its sole discretion. For the
year ended July 31, 1998, the Advisor waived $88, $52, $978 in advisory fees for
the Commercial Paper Fund, the Government Cash Reserves Fund, and the U.S.
Treasury Obligations Fund; respectively.
Administrative Fee--Effective December 1, 1995 BISYS Fund Services ("BISYS")
became the Trust's administrator. The administrator generally assists in all
aspects of the Trust's administration and operation including providing the
Funds with certain administrative personnel and services necessary to operate
the Funds. Also effective December 1, 1995, 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 each of the Funds. Under the
terms of the administration agreement, fees payable to BISYS are computed daily
as a percentage of the average net assets of the Trust for the period. The
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. For the year ended
July 31, 1998, the administrator waived $441, $321, and $699 in administration
fees for the Commercial Paper Fund, Government Cash Reserves Fund, and the U.S.
Treasury Obligations Fund; respectively.
Distribution Services Fee--The Commercial Paper Fund and the Government Cash
Reserves Fund have adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the Act. Effective December 1, 1995, BISYS serves as the Trust's
principal distributor. Under the terms of the Plan, the Funds will compensate
the principal distributor from the net assets of the Funds' Investment Shares to
finance activities intended to result in the sales of each Funds' Investment
Shares. The Plan provides that the Funds may incur distribution expenses up to
0.35% of the average daily net assets of the Investment Shares, annually, to
compensate the distributor. The distributor may voluntarily choose to waive all
or a portion of its fee. The distributor can modify or terminate this voluntary
waiver at any time at its sole
12
<PAGE>
Fountain Square Funds
- --------------------------------------------------------------------------------
discretion. For the year ended July 31, 1998, the distributor waived $111 and
$469 in distribution fees, respectively.
Transfer and Dividend Disbursing Agent, Accounting and Custody Fees--Fifth Third
Bank serves as transfer and dividend disbursing agent for the Funds 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. The fee is based
on the level of each Fund's average net assets for the period, plus
out-of-pocket expenses. For the year ended July 31, 1998, Fifth Third Bank
received transfer agent fees of $13, $9, and $17 for the Commercial Paper Fund,
Government Cash Reserves Fund, and the U.S. Treasury Obligations Fund;
respectively.
Fifth Third Bank is the Funds' custodian & accountant 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. Fifth Third Bank received custodian and
fund accounting services fees of $135, $88, and $151, for the Commercial Paper
Fund, Government Cash Reserves Fund, and the U.S. Treasury Obligations Fund;
respectively.
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
Officer and Trustees of the Trust.
13
<PAGE>
Fountain Square Commercial Paper Fund
Financial Highlights
- --------------------------------------------------------------------------------
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Commercial Paper Fund
----------------------------------------------------------------------------------------
Year Ended July 31,
----------------------------------------------------------------------------------------
1998 1997 1996
-------------------------- -------------------------- --------------------------
Investment Trust Investment Trust Investment Trust
-------------------------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Income from investment
operations
Net investment income 0.05 0.05 0.05 0.05 0.05 0.05
- -------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 0.05 0.05 0.05 0.05 0.05 0.05
- -------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Less distributions
Distributions to shareholders
from net investment income (0.05) (0.05) (0.05) (0.05) (0.05) (0.05)
- -------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Total distributions (0.05) (0.05) (0.05) (0.05) (0.05) (0.05)
- -------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------- =========== =========== =========== =========== =========== ===========
Total return 5.25% 5.25% 5.11% 5.11% 5.20% 5.20%
- --------------------------------
Ratios to Average Net Assets
- --------------------------------
Expenses 0.52% 0.52% 0.52% 0.52% 0.49% 0.49%
- --------------------------------
Net investment income 5.13% 5.13% 4.99% 4.99% 5.06% 5.07%
- --------------------------------
Expense waiver/
reimbursement (a) 0.47% 0.12% 0.44% 0.09% 0.40% 0.08%
- --------------------------------
Supplemental data
- --------------------------------
Net assets, end of period
(000 omitted) $36,552 $368,348 $33,438 $341,827 $19,341 $300,821
- --------------------------------
</TABLE>
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
14
<PAGE>
Fountain Square Commercial Paper Fund
Financial Highlights
- --------------------------------------------------------------------------------
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Commercial Paper Fund
--------------------------------------------------------
Year Ended July 31,
--------------------------------------------------------
1995 1994
-------------------------- ---------------------------
Investment Trust Investment Trust
-------------------------- ---------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of year $1.00 $1.00 $1.00 $1.00
- -------------------------------- ----------- ----------- ----------- -----------
Income from investment
operations
Net investment income 0.05 0.05 0.03 0.03
- -------------------------------- ----------- ----------- ----------- -----------
Total from investment
operations 0.05 0.05 0.03 0.03
- -------------------------------- ----------- ----------- ----------- -----------
Less distributions
- --------------------------------
Distributions to shareholders
from net investment income (0.05) (0.05) (0.03) (0.03)
- -------------------------------- ----------- ----------- ----------- -----------
Total distributions (0.05) (0.05) (0.03) (0.03)
- -------------------------------- ----------- ----------- ----------- -----------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00
- -------------------------------- =========== =========== =========== ===========
Total return 5.25% 5.25% 3.02% 3.02%
- --------------------------------
Ratios to Average Net Assets
- --------------------------------
Expenses 0.49% 0.49% 0.49% 0.49%
- --------------------------------
Net investment income 5.12% 5.12% 2.97% 2.97%
- --------------------------------
Expense waiver/
reimbursement (a) 0.44% 0.09% 0.45% 0.10%
- --------------------------------
Supplemental data
- --------------------------------
Net assets, end of period
(000 omitted) $10,169 $223,640 $6,147 $213,126
- --------------------------------
</TABLE>
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
15
<PAGE>
Fountain Square Government Cash Reserves Fund
Financial Highlights
- --------------------------------------------------------------------------------
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Government Cash Reserves Fund
------------------------------------------------------------------------------------------
Year Ended July 31,
------------------------------------------------------------------------------------------
1998 1997 1996
--------------------------- --------------------------- --------------------------
Investment Trust Investment Trust Investment Trust
--------------------------- --------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------- ----------- ----------- ----------- ----------- ----------- ----------
Income from investment
operations
- --------------------------------
Net investment income 0.05 0.05 0.05 0.05 0.05 0.05
- -------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 0.05 0.05 0.05 0.05 0.05 0.05
- -------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Less distributions
- --------------------------------
Distributions to shareholders
from net investment income (0.05) (0.05) (0.05) (0.05) (0.05) (0.05)
- -------------------------------- ----------- ----------- ----------- ----------- ----------- ----------
Total distributions (0.05) (0.05) (0.05) (0.05) (0.05) (0.05)
- -------------------------------- ----------- ----------- ----------- ----------- ----------- ----------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------- =========== =========== =========== =========== =========== ==========
Total return 5.13% 5.13% 5.00% 5.01% 5.11% 5.11%
- --------------------------------
Ratios to Average Net Assets
- --------------------------------
Expenses 0.52% 0.52% 0.51% 0.51% 0.51% 0.50%
- --------------------------------
Net investment income 5.02% 5.02% 4.90% 4.90% 4.97% 4.99%
- --------------------------------
Expense waiver/
reimbursement (a) 0.47% 0.12% 0.44% 0.09% 0.42% 0.07%
- --------------------------------
Supplemental data
- --------------------------------
Net assets, end of period
(000 omitted) $150,286 $221,034 $110,543 $162,543 $68,884 $132,326
- --------------------------------
</TABLE>
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
16
<PAGE>
Fountain Square Government Cash Reserves Fund
Financial Highlights
- --------------------------------------------------------------------------------
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Government Cash Reserves Fund
---------------------------------------------------------
Year Ended July 31,
---------------------------------------------------------
1995 1994
-------------------------- --------------------------
Investment Trust Investment Trust
-------------------------- --------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of year $1.00 $1.00 $1.00 $1.00
------------------------------- ----------- ----------- ----------- -----------
Income from investment
operations
- --------------------------------
Net investment income 0.05 0.05 0.03 0.03
- -------------------------------- ----------- ----------- ----------- -----------
Total from investment
operations 0.05 0.05 0.03 0.03
- -------------------------------- ----------- ----------- ----------- -----------
Less distributions
- --------------------------------
Distributions to shareholders
from net investment income (0.05) (0.05) (0.03) (0.03)
- -------------------------------- ----------- ----------- ----------- -----------
Total distributions (0.05) (0.05) (0.03) (0.03)
- -------------------------------- ----------- ----------- ----------- -----------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00
- -------------------------------- =========== =========== =========== ===========
Total return 5.22% 5.22% 3.03% 3.03%
- --------------------------------
Ratios to Average Net Assets
- --------------------------------
Expenses 0.50% 0.50% 0.50% 0.50%
- --------------------------------
Net investment income 5.17% 5.17% 2.96% 3.01%
- --------------------------------
Expense waiver/
reimbursement (a) 0.45% 0.20% 0.48% 0.13%
- --------------------------------
Supplemental data
- --------------------------------
Net assets, end of period
(000 omitted) $45,726 $129,603 $11,073 $106,632
- --------------------------------
</TABLE>
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
17
<PAGE>
Fountain Square U.S. Treasury Obligations Fund
Financial Highlights
- --------------------------------------------------------------------------------
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
U.S. Treasury Obligations
---------------------------------------------------------------------------
Year Ended July 31,
---------------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------- ----------- ----------- ----------- ----------- -----------
Income from investment
operations
- ---------------------------------
Net investment income 0.05 0.05 0.05 0.05 0.03
- --------------------------------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations 0.05 0.05 0.05 0.05 0.03
- --------------------------------- ----------- ----------- ----------- ----------- -----------
Less distributions
- ---------------------------------
Distributions to shareholders
from net investment income (0.05) (0.05) (0.05) (0.05) (0.03)
- --------------------------------- ----------- ----------- ----------- ----------- -----------
Total distributions (0.05) (0.05) (0.05) (0.05) (0.03)
- --------------------------------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------- =========== =========== =========== =========== ===========
Total return 5.31% 5.11% 5.24% 5.18% 3.02%
- ---------------------------------
Ratios to Average Net Assets
- ---------------------------------
Expenses 0.38% 0.42% 0.43% 0.44% 0.44%
- ---------------------------------
Net investment income 5.19% 5.00% 5.10% 5.07% 2.99%
- ---------------------------------
Expense waiver/
reimbursement (a) 0.24% 0.17% 0.12% 0.11% 0.14%
- ---------------------------------
Supplemental data
- ---------------------------------
Net assets, end of period
(000 omitted) $876,089 $539,087 $489,228 $321,640 $336,229
- ---------------------------------
</TABLE>
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
18
<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 Commercial Paper
Fund, Fountain Square Government Cash Reserves Fund, and Fountain Square U.S.
Treasury Obligations Fund (the Funds) as of July 31, 1998, and the related
statements of operations for the year then ended, statements of changes in net
assets for each of the two years in the period then ended and the 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.
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, the results of their operations for the year
then ended, the changes in their net assets for each of the two years in the
period then ended and their financial highlights for each of the periods
indicated therein, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Cincinnati, Ohio
September 24, 1998
<PAGE>
<TABLE>
<CAPTION>
Addresses
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Fountain Square Commercial Paper Fund Fountain Square Funds
Fountain Square Government Cash Reserves Fund c/o Fifth Third Bank
Fountain Square U.S. Treasury Obligations Fund 38 Fountain Square Plaza
Cincinnati, Ohio 45263
- ---------------------------------------------------------------------------------------------------------------------------
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
