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[LOGO of 5/3 APPEARS HERE] Fifth Third Funds
[GRAPHIC APPEARS HERE]
Fifth Third Funds
Money Market Mutual Funds
Annual Report to Shareholders
July 31, 1999
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PRIME MONEY MARKET FUND
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GOVERNMENT MONEY MARKET FUND
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U.S. TREASURY MONEY MARKET FUND
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TAX EXEMPT MONEY MARKET FUND
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<PAGE>
NOTICE OF DELIVERY OF PROSPECTUSES,
SEMI-ANNUAL REPORTS AND ANNUAL REPORTS
In order to reduce expenses of the Fifth Third Funds incurred in connection with
the mailing of prospectuses, prospectus supplements, semi-annual reports and
annual reports to multiple shareholders at the same address, Fifth Third Funds
may in the future deliver one copy of a prospectus, prospectus supplement,
semi-annual report or annual report to a single investor sharing a street
address or post office box with other investors, provided that all such
investors have the same last name or are believed to be members of the same
family. If you share an address with another investor and wish to receive your
own prospectus, prospectus supplements, semi-annual reports and annual reports,
please call the Trust toll-free at (888) 799-5353.
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 Fifth Third 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 Fifth Third Funds are
distributed by BISYS Fund Services, L.P.
Fifth Third Bank and its affiliate Heartland Capital Management, Inc. serve as
Investment Advisors to the Funds and receive a fee for their services.
Fifth Third Funds, like all mutual funds:
. are NOT FDIC insured
. have no bank guarantee
. may lose value
YEAR 2000 RISK
Investors should be aware that, like other mutual funds and financial and
business organizations around the world, each of the Funds offered by this
Prospectus could be adversely impacted if the computer systems used by Fifth
Third Bank, BISYS Fund Services L.P. (OBISYSO) or other service providers and
entities with computer systems that are linked to Fund records do not properly
process and calculate date-related information and data from and after January
1, 2000. This is commonly known as OYear 2000 Risk.O Fifth Third Bank and BISYS
are taking steps that they believe are reasonably designed to address Year 2000
Risk with respect to their computer systems and to obtain satisfactory
assurances that comparable steps are being taken by each of the TrustOs other
service providers. There can be no assurance, however, that these steps will be
sufficient to avoid any adverse impact on the Funds.
<PAGE>
Letter from the Chief Investment Officer
Dear Shareholder:
We are pleased to present the Fifth Third Money Market Funds' annual report to
Shareholders for the 12-month period ended July 31, 1999. This letter includes
an explanation of the principles that guide our investment strategy, comments on
recent economic and market conditions and a discussion of our outlook for the
coming period.
Financial markets face volatility
The stock market performed well during the 12-month period ended July 31, 1999.
That performance was driven by strong economic growth, low inflation and
relatively low interest rates. The Standard and Poor's 500 Stock Index(1) posted
a 20.20% total return for the 12 month period ended July 31, 1999.
However, investors experienced significant volatility. Stock prices dropped
early in the period as investors worried that severe economic problems in
overseas markets such as Asia, Russia and Latin America would hurt U.S.
corporate earnings. For example, the S&P 500 declined 14% in August 1999 to a
low of 957.28.
The Federal Reserve Board (the Fed) subsequently lowered short-term interest
rates three times to increase liquidity. That action boosted investor confidence
in the stock market. During the second half of the period, however, investors
began to worry that stronger-than-expected economic growth would fuel a rise in
inflation and force the Fed to increase rates in order to slow down the economy.
In fact, despite continued low inflation, the Fed opted to raise rates in late
June. Stocks rallied during this time due to strong economic growth that helped
corporations post solid earnings.
Large-company stocks continued to outperform shares of smaller firms during much
of the period, due to the superior earnings growth of larger firms. In
particular, technology stocks were strong performers, as were shares of
economically sensitive companies, which benefited from strong economic growth in
the second half of the period.
Conditions in the fixed-income market were also volatile. Treasury bonds
performed well early on, as the overseas financial crisis motivated investors to
favor Treasuries over more risky corporate issues. However, concerns about
inflation and rising interest rates dampened Treasury bonds' performance later
in the period. A heavy supply of high-quality corporate bonds adversely affected
such issues during the second half of the period, although lower-quality
corporate securities performed well due to their attractive yields.
Looking Ahead
The economy will likely continue to grow during the coming months, and corporate
profit growth is expected to remain quite healthy well into the year 2000. So
high quality corporate bonds should remain attractive.
1
<PAGE>
Letter from the Chief Investment Officer (continued)
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Meanwhile, however, there are several conflicting signs regarding inflation.
Signs that indicate we may see rising inflation ahead include a sharp rise in
labor costs during the second quarter of 1999, coupled with a slowdown in the
growth of worker productivity. However, manufacturing and housing activity as
well as consumer credit increases have slowed recently, indicating that
inflationary fears may ease soon. We will watch for evidence that should help
to create a clearer picture of the economy and inflation. Whatever happens,
the Fifth Third Funds will not be overly influenced by short-term conditions
in the financial markets. No investor consistently can predict short-term
movements in the markets. Instead, our managers will continue to do what they
do best. Our fund managers will continue to emphasize high-quality issues and
avoid large commitments regarding the direction of interest rates, while
pursuing opportunities to deliver returns and yields to shareholders.
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
<PAGE>
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Fifth Third Money Market Funds+
An interview with Melissa Casto, portfolio manager of the Fifth Third Prime
Money Market Fund, Fifth Third U.S. Treasury Money Market Fund and the Fifth
Third Government Money Market Fund.
Q. What were conditions like in the market during the 12-month period ended July
31, 1999?
A. Investors at the start of the period worried that economic turmoil in Asia,
Russia and Brazil would affect the U.S. economy. The Federal Reserve Board (the
Fed) cut the federal funds rate three times during the fall, however, flooding
the economy with liquidity and erasing some negative investor sentiment. More
recently, the U.S. has experienced a strong domestic economy characterized by
low inflation, low interest rates, and strong corporate profits; meanwhile, the
global economy seems poised for recovery. In late June, the Fed became concerned
that the economy was too strong and raised the federal funds rate by 0.25
percentage points.
Q. How did you manage the Funds in that environment?
A. We took a conservative approach with all three funds throughout the period.
The Fifth Third Commercial Paper Fund changed its name to the Fifth Third Prime
Fund and adopted a new strategy on July 15. The Fund formerly was required to
invest at least 65% in commercial paper with relatively short maturities. Now
the Fund has no such restriction, and we plan to maintain a more neutral stance
relative to the Fund's peer group.
The average maturity of the U.S. Treasury Money Market Fund formerly known as
the Fifth Third U.S. Treasury Obligations Fund ranged from 30 to 55 days
throughout the period, which was in line with its peers. The Fund benefited from
its increased exposure to repurchase agreements, which offered yields that were
attractive compared to yields on more popular Treasuries.
The average maturity of the Government Money Market Fund formerly known as the
U.S. Government Cash Reserves Fund ranged from 35 to 50 days. The Fund
maintained a neutral average maturity during most of the period.
Q. What is your outlook for the taxable money markets, and how will you mange
the Funds in the environment?
A. We expect volatility in the money markets as speculation rises about how the
Fed will manage interest rates. However, we believe that the domestic economy
will continue to be strong due to low inflation and a continued recovery in the
global economy. We will maintain the Fund's neutral average maturities, since we
anticipate a small rise in interest rates.
+An investment in any of the funds is not insured or guaranteed by the FDIC or
any government agency. Although each money market fund seeks to preserve the
value of your investment at $1.00 per share, it is possible to lose money by
investing in a money market fund.
3
<PAGE>
Fifth Third Money Market Funds(continued)+
An interview with Kim Burford, portfolio manager of the Fifth Third Tax-Exempt
Money Market Fund++.
Q. What were the conditions in the market during the 12-month period ended
July 31, 1999?
A. Investors were concerned at the beginning of the period that economic turmoil
in overseas markets such as Asia, Russia and Brazil would hurt the U.S. economy.
The Federal Reserve Board (the Fed) cut the federal funds rate three times for a
total reduction of 0.75 percentage points, which helped ease investors' worries
and restore liquidity to the global financial system. More recently, the U.S.
has experienced a strong domestic economy characterized by low inflation, low
interest rates, and strong corporate profits. In June, however, the Fed became
concerned that the strong economy would cause inflation to rise, and raised the
federal funds rate by 0.25 percentage points. Meanwhile, global economies seem
poised for recovery.
Q. How did you manage the Fund in that environment?
A. We began the period with an average maturity of 75 days for the portfolio,
and lowered it to 36 days by the end of the period. A steep yield curve at
beginning of the year made securities with longer maturities attractive. But the
yield advantage provided by longer-term securities dwindled,and we reduced the
Fund's average maturity to increase its liquidity and reduce shareholder risk.
Q. How did you manage the Fund's credit quality?
A. We primarily held issues with high credit ratings, while devoting significant
resources to credit analysis that let us include a wider array of issues in
the portfolio. For example, some unrated issues helped boost the Fund's yield
without adding greatly to its risk.
Q. What is your outlook for the tax-exempt markets, and how will you
manage the Fund in that environment?
We expect volatility in the tax-exempt money markets as investors speculate
about how the Fed will manage interest rates. However, we believe that the U.S.
economy will continue to be characterized by low inflation and strong economic
growth. Given that outlook, we will maintain the Fund's neutral average maturity
in anticipation of rising interest rates.
- --------
+ An investment in any of the funds is not insured or guaranteed by the FDIC or
any government agency. Although each money market fund seeks to preserve the
value of your investment at $1.00 per share, it is possible to lose money by
investing in a money market fund.
++ The Fund's income may be subject to certain state and local taxes and,
depending on your tax status, the federal alternative minimum tax.
4
<PAGE>
Fifth Third Prime Money Market Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands)
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Principal Security Amortized
Amount Description Cost
- --------------- --------------------------------------------- ------------
Commercial Paper - 71.1%
- ---------------------------------------------------------------
Banks - 12.8%
---------------------------------------------
$7,000 Bank One Corp., 8/3/99 $ 6,997
---------------------------------------------
6,000 J.P. Morgan, 9/23/99 5,957
---------------------------------------------
5,000 J.P. Morgan, 12/10/99 4,913
---------------------------------------------
6,000 J.P. Morgan, 2/7/00 5,845
---------------------------------------------
7,000 Rabobank Nederland, 12/1/99 6,882
---------------------------------------------
6,000 Societe Generale, 8/25/99 5,981
---------------------------------------------
5,000 Societe Generale, 10/6/99 4,956
---------------------------------------------
6,000 Societe Generale, 3/1/00 5,811
---------------------------------------------
7,000 Wells Fargo & Co., 8/24/99 6,978
--------------------------------------------- ------------
Total 54,320
--------------------------------------------- ------------
Brokerage - 9.5%
---------------------------------------------
7,000 Goldman Sachs, 11/1/99 6,912
---------------------------------------------
10,000 Goldman Sachs, 11/5/99 9,868
---------------------------------------------
7,000 Merrill Lynch, 2/23/00 6,785
---------------------------------------------
7,000 Salomon Smith Barney Holdings, 8/18/99 6,983
---------------------------------------------
5,000 Salomon Smith Barney Holdings, 2/1/00 4,861
---------------------------------------------
5,000 Salomon Smith Barney Holdings, 2/2/00 4,860
--------------------------------------------- ------------
Total 40,269
--------------------------------------------- ------------
Consumer Products - 5.1%
---------------------------------------------
6,000 Coca-Cola Co., 9/7/99 5,968
---------------------------------------------
6,000 Coca-Cola Co., 9/9/99 5,967
---------------------------------------------
5,000 Coca-Cola Co., 2/8/00 4,860
---------------------------------------------
5,000 Procter & Gamble, 8/27/99 4,982
--------------------------------------------- ------------
Total 21,777
--------------------------------------------- ------------
Energy - 2.3%
---------------------------------------------
10,000 Petrofina Delaware, 10/26/99 9,877
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Financial - 33.1%
---------------------------------------------
5,000 A.I. Credit Corp., 8/2/99 4,999
---------------------------------------------
12,000 AIG Funding, 9/17/99 11,921
---------------------------------------------
5,000 American Express Credit Corp., 9/30/99 4,960
---------------------------------------------
7,000 American Express Credit Corp., 9/15/99 6,955
---------------------------------------------
5,000 American Express Credit Corp., 12/15/99 4,909
---------------------------------------------
7,000 American General Corp., 8/9/99 6,993
---------------------------------------------
6,000 Associates First Capital Corp., 8/17/99 5,987
---------------------------------------------
6,000 Associates First Capital Corp., 8/19/99 5,985
---------------------------------------------
5,000 Associates First Capital Corp., 11/26/99 4,920
---------------------------------------------
6,000 CIT Group, 8/2/99 5,999
---------------------------------------------
6,000 CIT Group, 8/20/99 5,985
---------------------------------------------
10,000 Deutsche Bank Financial, 8/5/99 9,994
---------------------------------------------
10,000 Deutsche Bank Financial, 11/19/99 9,843
---------------------------------------------
5,000 Ford Motor Credit Corp., 8/13/99 4,992
---------------------------------------------
7,000 General Electric Capital Corp., 8/4/99 6,997
---------------------------------------------
5,000 General Electric Capital Corp., 8/25/99 4,984
---------------------------------------------
5,000 General Electric Capital Corp., 9/8/99 4,975
---------------------------------------------
6,000 Prudential Funding, 9/30/99 5,952
---------------------------------------------
6,000 Prudential Funding, 10/6/99 5,944
---------------------------------------------
7,000 U.B.S Finance, 10/20/99 6,921
---------------------------------------------
10,000 U.B.S Finance, 12/20/99 9,813
--------------------------------------------- ------------
Total 140,028
--------------------------------------------- ------------
Industrial - 4.0%
---------------------------------------------
7,000 Daimler-Chrysler, 8/23/99 6,978
---------------------------------------------
5,000 Daimler-Chrysler, 8/25/99 4,984
---------------------------------------------
5,000 Daimler-Chrysler, 10/28/99 4,937
--------------------------------------------- ------------
Total 16,899
--------------------------------------------- ------------
Technology - 4.2%
---------------------------------------------
6,000 AT&T Corp., 8/23/99 5,982
---------------------------------------------
6,000 Bellsouth Telecommunications, 8/12/99 5,991
---------------------------------------------
6,000 Bellsouth Telecommunications, 8/16/99 5,987
--------------------------------------------- ------------
Total 17,960
--------------------------------------------- ------------
Total Commercial Paper
(Amortized Cost $301,130) 301,130
--------------------------------------------- ------------
Corporate Bonds - 8.8%
- ---------------------------------------------------------------
Financial - 8.8%
---------------------------------------------
5,000 First National Bank Chicago, 5.51%, 2/9/00* 5,000
---------------------------------------------
5,000 Ford Motor Credit Co., 6.84%, 6/5/00 5,045
---------------------------------------------
20,000 General American Life, 5.37%, 7/30/00* 20,000
---------------------------------------------
7,000 General Motors Acceptance Corp.,
5.65%, 1/13/00 7,017
--------------------------------------------- ------------
Total Corporate Bonds
(Amortized Cost $37,062) 37,062
--------------------------------------------- ------------
Repurchase Agreements - 20.5%
- ---------------------------------------------------------------
17,000 Barclays, 5.04%, dated 7/30/99, due
8/2/99, collateralized by U.S.
Treasury Notes, 7.875%, due
02/15/21 with a value of $17,340. 17,000
---------------------------------------------
17,000 SG Cowen,5.06%,dated 7/30/99,due
8/2/99, collateralized by U.S.
Treasury Bills due 9/2/99-6/22/00
with a value of $17,350. 17,000
---------------------------------------------
52,651 Warburg/Dillon, 5.06%, dated 7/30/99,
due 8/2/99, collateralized by U.S.
Treasury Notes, 5.75%-7.75%, due
9/30/99-10/31/02 with a value of $53,708. 52,651
--------------------------------------------- ------------
Total Repurchase Agreements
(Amortized Cost $86,651) 86,651
--------------------------------------------- ------------
Total Investments (Amortized Cost
$424,843) (a) - 100.3% 424,843
---------------------------------------------
Liabilities in excess of other
assets - (0.3)% (1,453)
--------------------------------------------- ------------
TOTAL NET ASSETS - 100.0% $ 423,390
--------------------------------------------- ------------
*Floating rate note
(a) Also represents cost for federal tax purposes.
(See Notes which are an integral part of the Financial Statements)
5
<PAGE>
Fifth Third Government Money Market Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands)
- --------------------------------------------------------------------------------
Principal Security Amortized
Amount Description Cost
- --------- ----------- ---------
U.S. Government Agencies -- 100.1%
- ----------------------------------
Federal Farm Credit Bank - 21.7%
--------------------------------
$10,000 Discount Note, 8/9/99 $ 9,988
--------------------------------
10,000 Discount Note, 8/10/99 9,987
--------------------------------
10,000 Discount Note, 8/12/99 9,984
--------------------------------
10,000 Discount Note, 8/16/99 9,978
--------------------------------
4,000 Discount Note, 9/17/99 3,975
--------------------------------
10,000 Discount Note, 9/29/99 9,917
--------------------------------
20,000 Discount Note, 10/26/99 19,780
--------------------------------
10,000 Discount Note, 11/1/99 9,876
--------------------------------
25,000 4.85%, 9/1/99 (b) 25,000
--------------------------------
14,850 Discount Note, 12/13/99 14,594
--------------------------------
15,000 Discount Note, 3/29/00 14,527
-------------------------------- --------------
Total 137,606
-------------------------------- --------------
Federal Home Loan Bank -- N 48.9%
---------------------------------
40,000 Discount Note, 8/2/99 39,988
--------------------------------
10,000 Discount Note, 8/3/99 9,996
--------------------------------
10,000 Discount Note, 8/4/99 9,995
--------------------------------
10,000 Discount Note, 8/11/99 9,985
--------------------------------
10,000 Discount Note, 8/13/99 9,982
--------------------------------
10,000 Discount Note, 8/18/99 9,975
--------------------------------
10,000 Discount Note, 8/20/99 9,973
--------------------------------
10,000 Discount Note, 8/25/99 9,967
--------------------------------
10,000 Discount Note, 8/27/99 9,963
--------------------------------
10,000 Discount Note, 9/8/99 9,946
--------------------------------
8,386 Discount Note, 9/10/99 8,339
--------------------------------
10,000 Discount Note, 9/14/99 9,938
--------------------------------
10,000 Discount Note, 9/15/99 9,936
--------------------------------
10,000 Discount Note, 9/16/99 9,935
--------------------------------
10,000 Discount Note, 9/17/99 9,934
--------------------------------
10,000 Discount Note, 9/21/99 9,928
--------------------------------
10,000 Discount Note, 9/24/99 9,926
--------------------------------
10,000 Discount Note, 10/13/99 9,897
--------------------------------
10,000 Discount Note, 10/15/99 9,894
--------------------------------
10,000 Discount Note, 10/20/99 9,887
--------------------------------
10,000 Discount Note, 10/27/99 9,878
--------------------------------
10,000 Discount Note, 10/29/99 9,875
--------------------------------
9,000 5.83%, 11/26/99 9,025
--------------------------------
9,000 5.83%, 12/24/99 9,032
--------------------------------
10,000 5.16%, 3/8/00 9,998
--------------------------------
7,000 4.98%, 4/14/00 7,000
--------------------------------
10,000 4.97%, 4/20/00 9,997
--------------------------------
8,000 5.05%, 4/26/00 7,998
--------------------------------
10,000 5.35%, 6/8/00 9,993
--------------------------------
Total 310,180
--------------------------------
Student Loan Marketing
Association -- 17.5%
--------------------------------
30,000 4.94%, 8/3/99 (b)* 30,000
--------------------------------
81,250 Master Note, 4.86%, 7/1/00 (c) 81,250
--------------------------------
Total 111,250
--------------------------------
Tennessee Valley
Authority -- 12.0%
--------------------------------
$10,000 Discount Note, 8/2/99 9,998
--------------------------------
10,000 Discount Note, 8/6/99 9,992
--------------------------------
10,000 Discount Note, 8/17/99 9,977
--------------------------------
10,000 Discount Note, 8/19/99 9,975
--------------------------------
10,000 Discount Note, 8/30/99 9,959
--------------------------------
10,000 Discount Note, 9/3/99 9,953
--------------------------------
10,000 Discount Note, 9/9/99 9,945
--------------------------------
6,000 8.375%, 10/1/99 6,034
-------------------------------- -------------
Total 75,833
-------------------------------- -------------
Total U.S. Government Agencies 634,869
-------------------------------- -------------
Total Investments (Amortized Cost
$634,869) (a) -- 100.1% 634,869
--------------------------------
Liabilities in excess of other
assets -- (0.1)% (777)
-------------------------------- -------------
TOTAL NET ASSETS -- 100.0% $ 634,092
-------------------------------- ---------
*Floating rate note
(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)
<PAGE>
Fifth Third U.S. Treasury Money Market Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands)
- ------------------------------------------------------------------------------
Principal Security Amorization
Amount Description Cost
- ----------------- ------------------------------------------- -------------
U.S. Government Securities -- 18.9%
- --------------------------------------------------------------
U.S. Treasury Notes -- 18.9%
-------------------------------------------
$ 15,000 5.38%, 1/31/00 $ 15,039
-------------------------------------------
10,000 5.38%, 6/30/00 10,005
-------------------------------------------
15,000 5.50%, 3/31/00 15,054
-------------------------------------------
20,000 5.88%, 6/30/00 20,109
-------------------------------------------
20,000 6.38%, 5/15/00 20,160
-------------------------------------------
30,000 6.88%, 3/31/00 30,397
-------------------------------------------
30,000 7.13%, 2/29/00 30,384
-------------------------------------------
20,000 7.75%, 1/31/00 20,286
------------------------------------------- --------------
Total U.S. Government Securities 161,434
------------------------------------------- --------------
Repurchase Agreements -- 81.1%
- --------------------------------------------------------------
Repurchase Agreements N 81.1%
-------------------------------------------
39,000 Banc One, 5.03%, dated 7/30/99, due 8/2/99,
collateralized by U.S. Treasury Bonds,
9.125%-11.75%, due 11/15/04-2/15/10 with
a value of $31,441 and U.S. Treasury Bills
due 8/5/99-7/20/00 with a value of $8,342. 39,000
-------------------------------------------
125,000 Barclays Capital, 5.04%, dated 7/30/99, due
8/2/99, collateralized by U.S. Treasury
Notes, 3.625%-5.50%, due 7/15/02-3/31/03
with a value of $127,501. 125,000
-------------------------------------------
39,000 Bear Stearns, 5.05%, dated 7/30/99, due
8/2/99, collateralized by U.S. Treasury
Bonds, 6.25%-12.75%, due 2/15/10-8/15/27
with a value of $36,121 and U.S. Treasury
Notes, 5.25%-6.125%, due 12/31/99-8/15/07
with a value of $6,082. 39,000
-------------------------------------------
39,000 Chase Securities, 5.02%, dated 7/30/99,
due 8/2/99, collateralized by U.S. Treasury
Bill due 6/22/00 with a value of $39,783. 39,000
-------------------------------------------
39,000 Deutsche Bank, 5.03%, dated 7/30/99, due
8/2/99, collateralized by U.S. Treasury
Bonds, 6.625%-7.875%, due 11/15/07-2/15/27
with a value of $37,155 and U.S. Treasury
Bills due 8/5/99 with a value of $2,625. 39,000
-------------------------------------------
39,000 J.P. Morgan, 5.05%, dated 7/30/99, due
8/2/99, collateralized by U.S. Treasury
Notes, 6.625%, due 5/15/07 with a value of
$39,781. 39,000
-------------------------------------------
39,000 Nesbitt Burns, 5.05%, dated 7/30/99, due
8/2/99, collateralized by U.S. Treasury
Notes, 5.75%, due 11/15/00 with a value of
$537 and U.S. Treasury Bills due 12/9/99
with a value of $39,243. 39,000
-------------------------------------------
39,000 Prudential Securities, 5.04%, dated
7/30/99, due 8/2/99, collateralized by U.S.
Treasury Bills due 7/20/00 with a value of
$39,781. 39,000
-------------------------------------------
39,000 Salomon Smith Barney, 5.00%, dated 7/30/99,
due 8/2/99, collateralized by U.S. Treasury
Notes, 5.875%-7.50%, due 2/15/00-2/15/05
with a value of $39,802. 39,000
-------------------------------------------
125,000 SG Cowen, 5.06%, dated 7/30/99, due 8/2/99,
collateralized by U.S. Treasury Bills due
10/28/99 with a value of $127,507. 125,000
-------------------------------------------
133,023 Warburg/Dillon, 5.06%, dated 7/30/99, due
8/2/99, collateralized by U.S. Treasury
Notes, 5.00%-8.50%, due 12/31/99-4/30/01
with a value of $135,684. 133,023
------------------------------------------- --------------
Total Repurchase Agreements 695,023
------------------------------------------- --------------
Total Investments (Amortized
Cost $856,457) (a) -- 100.0% 856,457
------------------------------------------- --------------
Liabilities in excess of
other assets -- (0.0)% (171)
------------------------------------------- --------------
TOTAL NET ASSETS -- 100.0% $856,286
------------------------------------------- --------------
(a) Also represents cost for federal tax purposes.
7
(See Notes which are an integral part of the Financial Statements)
<PAGE>
Fifth Third Tax Exempt Money Market Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands)
- --------------------------------------------------------------------------------
Principal Security Amortized
Amount Description Cost
- --------- --------------------------------------------------------- ---------
Money Market 7.8%
- --------------------------------------------------------------------
$3,452 SEI Institutional Tax Free Fund $3,452
----------------------------------------------------------- ---------
Total Money Market 3,452
----------------------------------------------------------- ---------
Commercial Paper 11.3%
- --------------------------------------------------------------------
900 Illinois Health Facility, 3.10%, 8/4/99 900
-----------------------------------------------------------
1,100 Illinois Health Facility, 3.25%,
10/13/99 1,100
-----------------------------------------------------------
1,000 Intermountain Power Agency Utah,
3.10%, 8/31/99 1,000
-----------------------------------------------------------
2,000 Ohio State University, 3.125%, 9/1/99 2,000
----------------------------------------------------------- ---------
Total Commercial Paper 5,000
----------------------------------------------------------- ---------
Municipal Bonds 79.4%
- --------------------------------------------------------------------
General Obligation 12.7%
-----------------------------------------------------------
100 Bentworth, Pennsylvania, School
District, 5.60%, due 3/15/07 101
-----------------------------------------------------------
495 Brecksville, Ohio, 3.40%,
due 12/15/99* 495
-----------------------------------------------------------
995 Brown City, Michigan, School
District, 4.10%, due 8/20/99* 995
-----------------------------------------------------------
1,000 Hancock County, Ohio, 3.42%,
due 12/1/99 1,002
-----------------------------------------------------------
300 Hilliard, Ohio, 3.85%, due 9/9/99* 300
-----------------------------------------------------------
360 Meadville, Pennsylvania, 3.10%,
due 10/1/99* 360
-----------------------------------------------------------
800 Milan Michigan Area Schools Bond,
4.00%, due 4/3/00 803
-----------------------------------------------------------
565 Neenah Wisconsin Promissary Notes
Series A, 3.10%, due 3/1/00* 565
-----------------------------------------------------------
300 New York State, Tollway Authority,
Floating Rate Note, 3.40%, 8/2/99 (b) 300
-----------------------------------------------------------
62 Powell Village, Ohio, 3.20%,
due 12/1/99* 62
-----------------------------------------------------------
400 Shaker Heights, Ohio, 3.20%,
due 9/8/99* 400
-----------------------------------------------------------
250 Worthington, Ohio, City School
District, 7.45%, due 12/1/12
(Prerefunded 12/1/99 @ 102) 258
----------------------------------------------------------- ---------
Total 5,641
----------------------------------------------------------- ---------
Revenue Bonds 66.7%
-----------------------------------------------------------
140 Akron Ohio Pension Revenue,
3.30% Due 12/1/99* 140
-----------------------------------------------------------
1,700 Burke County, Georgia,
Development Authority, Floating
Rate Note, 3.40%, 8/2/99 (b) 1,700
-----------------------------------------------------------
1,250 Chicago Illinois O'Hare International
Airport, Floating Rate Note, 3.00%,
8/4/99 (b) 1,250
-----------------------------------------------------------
590 Columbus, Indiana, Floating Rate
Note, 3.37%, 8/4/99 (b) 590
-----------------------------------------------------------
650 Columbus, Ohio Adjustable Series 1,
Floating Rate Note, 3.05%, 8/7/99 (b) 650
-----------------------------------------------------------
1,700 Delaware County, Pennsylvania,
Floating Rate Note, 3.35%, 8/2/99 (b) 1,700
-----------------------------------------------------------
1,300 Farmington, New Mexico, Pollution
Control, Floating Rate Note, 3.40%,
8/2/99 (b) 1,300
-----------------------------------------------------------
$ 500 Franklin County Ohio Hospital,
Floating Rate Note, 3.20%, 8/4/99 (b) 500
-----------------------------------------------------------
550 Grand Rapids, Michigan, Water
Supply, Floating Rate Note, 3.10%,
8/3/99 (b) 550
-----------------------------------------------------------
1,700 Harris County, Texas, Health
Facilities Development Corp.,
Floating Rate Note, 3.40%, 8/2/99 (b) 1,700
-----------------------------------------------------------
700 Kansas City, Missouri, Floating Rate
Note, 3.40%, 8/2/99 (b) 700
-----------------------------------------------------------
1,000 Kansas City, Missouri, Floating Rate
Note, 3.40%, 8/2/99 (b) 1,000
-----------------------------------------------------------
500 Lincoln County, Wyoming, Floating
Rate Note, 3.35%, 8/2/99 (b) 500
-----------------------------------------------------------
1,700 Los Angeles, California, Regional
Airports, Floating Rate Note, 3.40%,
8/2/99 (b) 1,700
-----------------------------------------------------------
1,000 Louisiana State Offshore, Floating
Rate Note, 3.10%, 8/3/99 (b) 1,000
-----------------------------------------------------------
400 Lower Neches Valley Authority,
Texas, Floating Rate Note, 2.75%,
8/16/99 (b) 400
-----------------------------------------------------------
1,200 Maryland State Health & Higher
Education, Floating Rate Note,
3.20%, 8/4/99 (b) 1,200
-----------------------------------------------------------
960 Michigan State Hospital Finance
Authority, Floating Rate Note, 3.08%,
8/4/99 (b) 960
-----------------------------------------------------------
600 Michigan State Hospitial, Floating
Rate Note, 3.08%, 8/4/99 600
-----------------------------------------------------------
1,700 Montgomery County Ohio Health
Care, Floating Rate Note, 3.20%,
8/4/99 (b) 1,700
-----------------------------------------------------------
1,700 New York State Energy Research & Development Authority,
Floating Rate Note, 3.30%, 8/2/99 (b) 1,700
-----------------------------------------------------------
500 Ocean City, New Jersey, Utility
Authority Waste Water, 4.75%, due 1/1/00 503
-----------------------------------------------------------
100 Ohio State Building Authority, 7.15%,
due 10/1/99 101
-----------------------------------------------------------
100 Ohio State Water Development
Authority, Environmental Mead Corp,
Floating Rate Note, 3.35%, 8/2/99 (b) 100
-----------------------------------------------------------
500 Plaquemines, Louisiana Port Harbor
& Terminal District Port Facilities,
Floating Rate Note, 3.00%,
9/15/99 (b) 500
-----------------------------------------------------------
800 Stevenson Alabama Industrial
Development Board, Floating Rate
Note, 3.35%, 8/2/99 (b) 800
-----------------------------------------------------------
1,400 Syracuse New York, 3.75%,
due 5/19/00 1,404
-----------------------------------------------------------
1,700 Uinta County, Wyoming, Pollution
Control, Floating Rate Note, 3.40%,
8/2/99 (b) 1,700
-----------------------------------------------------------
300 Washington State Health Care
Facilities Authority, Floating Rate
Note, 3.40%, 8/2/99 (b) 300
-----------------------------------------------------------
1,000 Washington State Health Care
Facilities Authority, Floating Rate
Note, 3.40%, 8/2/99 (b) 1,000
-----------------------------------------------------------
(See Notes which are an integral part of the Financial Statements)
8
<PAGE>
Fifth Third Tax Exempt Money Market Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands)
- --------------------------------------------------------------------------------
Principal Security Amortized
Amount Description Cost
- --------- ---------------------------------------------------------- ---------
$1,700 York County, Pennsylvania
Industrial Development, Floating
Rate Note, 2.95%, 8/4/99 (b) $ 1,700
---------------------------------------------------------- ---------
Total 29,648
---------------------------------------------------------- ---------
Total Municipal Bonds 35,289
---------------------------------------------------------- ---------
Total Investments (Amortized
Cost $43,741) (a)--98.5% 43,741
----------------------------------------------------------
Other assets in excess of
liabilities -- 1.5% 656
---------------------------------------------------------- ---------
TOTAL NET ASSETS -- 100.0% $44,397
---------------------------------------------------------- ---------
*Floating rate note
(a) Also represents cost for federal tax purposes.
(b) Current rate and next reset date shown.
(See notes which are an integral part of the Finacial Statements)
9
<PAGE>
Fifth Third Funds
Statements of Assets and Liabilities
July 31, 1999
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Prime Government U.S. Treasury Tax Exempt
Money Market Money Market Money Market Money Market
Fund Fund Fund Fund
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Assets:
- ------------------------------------------------------------------
Investments, at amortized cost (Cost $338,192; $634,869;
$161,434 and $43,741 respectively) $ 338,192 $ 634,869 $ 161,434 $ 43,741
- ------------------------------------------------------------------
Repurchase agreements, at amortized cost (Cost $86,651; $0;
$695,023 and $0 respectively) 86,651 -- 695,023 --
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
Total Investments 424,843 634,869 856,457 43,741
- ------------------------------------------------------------------
Cash 84 -- 1,193 --
- ------------------------------------------------------------------
Interest receivable 309 1,947 2,487 266
- ------------------------------------------------------------------
Receivable for investments sold -- -- -- 600
- ------------------------------------------------------------------
Prepaid expenses and other assets 21 121 15 31
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
Total Assets 425,257 636,937 860,152 44,638
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
Liabilities:
- ------------------------------------------------------------------
Dividends payable 1,653 2,319 3,613 102
- ------------------------------------------------------------------
Payable to Custodian -- 64 -- 120
- ------------------------------------------------------------------
Accrued expenses and other payables:
- ------------------------------------------------------------------
Investment advisory fees 140 219 206 --
- ------------------------------------------------------------------
Administration fees 4 6 8 --
- ------------------------------------------------------------------
Distribution fees 15 66 -- 1
- ------------------------------------------------------------------
Other 55 171 39 18
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
Total Liabilities 1,867 2,845 3,866 241
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
Net Assets:
- ------------------------------------------------------------------
Paid-in capital 423,390 634,066 856,039 44,407
- ------------------------------------------------------------------
Accumulated undistributed net realized gains
(losses) on investment transactions -- (389) 227 (10)
- ------------------------------------------------------------------
Undistributed net investment income -- 415 20 --
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
Net Assets $ 423,390 $ 634,092 $ 856,286 $ 44,397
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
Net Assets
- ------------------------------------------------------------------
Institutional Shares 348,366 252,987 856,286 17,682
- ------------------------------------------------------------------
Investment A Shares 75,024 381,105 NA 26,715
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
Total $ 423,390 $ 634,092 $ 856,286 $ 44,397
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
Outstanding units of beneficial interest (shares)
- ------------------------------------------------------------------
Institutional Shares 348,368 252,960 856,036 17,683
- ------------------------------------------------------------------
Investment A Shares 75,024 381,137 NA 26,725
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
Total 423,392 634,097 856,036 44,408
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
Net asset value
- ------------------------------------------------------------------
Offering and redemption price per share -
Institutional and Investment A Shares $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------ ------------ ------------ ------------ ------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
10
<PAGE>
Fifth Third Funds
Statements of Operations
For the Year Ended July 31, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Prime Government U.S. Treasury Tax Exempt Tax Exempt
Money Market Money Market Money Market Money Market Money Market
Fund Fund Fund Fund* Fund**
------------ ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------
Interest income $21,296 $35,113 $45,875 $1,243 $2,187
- ------------------------------------------------
Dividend income 118 -- -- -- 3
- ------------------------------------------------ ----------- ----------- ------------- ----------- -----------
Total Income 21,414 35,113 45,875 1,243 2,190
- ------------------------------------------------ ----------- ----------- ------------- ----------- -----------
EXPENSES:
- ------------------------------------------------
Investment advisory fees 1,657 2,789 3,707 185 304
- ------------------------------------------------
Administrative fees 741 1,245 1,659 66 1
- ------------------------------------------------
Distribution fees -- Investment A Shares 135 1,054 -- 75 --
- ------------------------------------------------
Fund accounting fees 103 162 177 14 20
- ------------------------------------------------
Transfer agency fees 23 285 35 52 53
- ------------------------------------------------
Trustees' fees 2 5 4 1 2
- ------------------------------------------------
Audit and legal fees 15 18 28 10 6
- ------------------------------------------------
Custodian fees 30 43 65 11 7
- ------------------------------------------------
Miscellaneous fees 34 114 104 42 42
- ------------------------------------------------ ----------- ----------- ------------- ----------- -----------
Total Expenses 2,740 5,715 5,779 456 435
- ------------------------------------------------ ----------- ----------- ------------- ----------- -----------
Less expenses voluntarily reduced/reimbursed (466) (1,006) (2,257) (181) (1)
- ------------------------------------------------ ----------- ----------- ------------- ----------- -----------
Net Expenses 2,274 4,709 3,522 275 434
- ------------------------------------------------ ----------- ----------- ------------- ----------- -----------
Net Investment Income 19,140 30,404 42,353 968 1,756
- ------------------------------------------------ ----------- ----------- ------------- ----------- -----------
Realized/Unrealized Gains from Investments:
- ------------------------------------------------
Net realized gains (losses) from
investment transactions 3 27 236 (8) (2)
- ------------------------------------------------ ----------- ----------- ------------- ----------- -----------
Change in net assets resulting from operations $19,143 $30,431 $42,589 $960 $1,754
- ------------------------------------------------ =========== =========== ============= =========== ===========
</TABLE>
* Reflects operations for the period October 1, 1998 through July 31, 1999.
** Reflects operations for the year ended September 30, 1998.
(See Notes which are an integral part of the Financial Statements)
11
<PAGE>
Fifth Third Funds
Statements of Changes in Net Assets
(Amounts in thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Prime Government
Money Market Fund Money Market Fund
-------------------------------- ---------------------------------
Year Ended Year Ended Year Ended Year Ended
July 31, 1999 July 31, 1998 July 31, 1999 July 31, 1998
-------------------------------- ---------------------------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
- ---------------------------------------------------------
Operations-
- ---------------------------------------------------------
Net investment income $ 19,140 $ 22,601 $ 30,404 $ 16,092
- ---------------------------------------------------------
Net realized gains on investment transactions 3 -- 27 6
- --------------------------------------------------------- ------------- ------------- ---------------- -------------
Change in net assets resulting from
operations 19,143 22,601 30,431 16,098
- --------------------------------------------------------- ------------- ------------- ---------------- -------------
Distributions to Institutional Shareholders:
- ---------------------------------------------------------
From net investment income (16,776) (20,971) (12,423) (9,366)
- ---------------------------------------------------------
Distributions to Investment A Shareholders:
- ---------------------------------------------------------
From net investment income (2,365) (1,632) (17,952) (6,726)
- --------------------------------------------------------- ------------- ------------- ---------------- -------------
Change in net assets from shareholder
distributions (19,141) (22,603) (30,375) (16,092)
- --------------------------------------------------------- ------------- ------------- ---------------- -------------
Fund Share (Principal) Transactions--
- ---------------------------------------------------------
Proceeds from shares issued 1,164,194 1,320,142 683,747 421,706
- ---------------------------------------------------------
Assets acquired from reorganization -- -- 445,341 --
- ---------------------------------------------------------
Dividends reinvested 440 495 7,325 --
- ---------------------------------------------------------
Cost of shares redeemed (1,146,146) (1,291,001) (873,697) (323,513)
- --------------------------------------------------------- ------------- ------------- ---------------- -------------
Change in net assets from share transactions 18,488 29,636 262,716 98,193
- --------------------------------------------------------- ------------- ------------- ---------------- -------------
Change in net assets 18,490 29,634 262,772 98,199
- ---------------------------------------------------------
Net Assets:
- ---------------------------------------------------------
Beginning of period 404,900 375,266 371,320 273,121
- --------------------------------------------------------- ------------- ------------- ---------------- -------------
End of period $ 423,390 $ 404,900 $ 634,092 $ 371,320
- --------------------------------------------------------- ============= ============= ================ =============
</TABLE>
(See Notes which are an integral part of the Financial Statements)
12
<PAGE>
<TABLE>
<CAPTION>
Fifth Third Funds
Statements of Changes in Net Assets
(Amounts in thousands)
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Tax Exempt
Money Market Fund Money Market Fund
----------------------------- ------------------------------------------------
Year Ended Year Ended Period Ended Year Ended Year Ended
July 31, 1999 July 31, 1998 July 31, 1999(a) Sept. 30, 1998 Sept. 30, 1997
----------------------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
- -------------------------------------------------
Operations
- -------------------------------------------------
Net investment income $ 42,353 $ 36,250 $ 968 $ 1,756 $ 1,783
- -------------------------------------------------
Net realized gains (lossess) on
investment transactions 236 (9) (8) (2) --
- ------------------------------------------------- ----------- --------------- ---------------- -------------- --------------
Change in net assets resulting from
operations 42,589 36,241 960 1,754 1,783
- ------------------------------------------------- ----------- --------------- ---------------- -------------- --------------
Distributions to Institutional Shareholders*:
From net investment income (42,379) (36,250) (188) (6) --
- ------------------------------------------------- ----------- --------------- ---------------- -------------- --------------
Distributions to Investment A Shareholders:
- -------------------------------------------------
From net investment income -- -- (780) (1,750) (1,783)
- ------------------------------------------------- ----------- --------------- ---------------- -------------- --------------
Change in net assets from shareholder
distributions (42,379) (36,250) (968) (1,756) (1,783)
- ------------------------------------------------- ----------- --------------- ---------------- -------------- --------------
Fund Share (Principal) Transactions--
- -------------------------------------------------
Proceeds from shares issued 2,079,693 1,831,037 97,644 182,537 155,053
- -------------------------------------------------
Dividends reinvested 7,299 7,545 267 1,648 1,668
- -------------------------------------------------
Cost of shares redeemed (2,107,005) (1,501,571) (105,953) (192,020) (156,352)
- ------------------------------------------------- ----------- --------------- ---------------- -------------- --------------
Change in net assets from share transactions (20,013) 337,011 (8,042) (7,835) 369
- ------------------------------------------------- ----------- --------------- ---------------- -------------- --------------
Change in net assets (19,803) 337,002 (8,050) (7,837) 369
- -------------------------------------------------
Net Assets:
- -------------------------------------------------
Beginning of period 876,089 539,087 52,447 60,284 59,915
- ------------------------------------------------- ----------- --------------- ---------------- -------------- --------------
End of period $ 856,286 $ 876,089 $ 44,397 $ 52,447 $ 60,284
- ------------------------------------------------- =========== =============== ================ ============== ==============
</TABLE>
(a) Reflects operations for the period October 1, 1998 through July 31, 1999.
*The Tax Exempt Money Market Institutional Shares commenced operations on
September 21, 1998. (See Notes which are an integral part of the Financial
Statements)
13
<PAGE>
Fifth Third Funds
Notes to Financial Statements
July 31, 1999
- --------------------------------------------------------------------------------
(1) Organization
Fifth Third Funds, formerly known as the 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, 1999, the Trust consisted
of sixteen separate investment portfolios. The accompanying financial statements
and notes relate only to the Prime Money Market Fund (formerly known as the
Commercial Paper Fund), Government Money Market Fund (formerly known as the
Government Cash Reserves Fund), U.S. Treasury Money Market Fund (formerly known
as the U.S. Treasury Obligations Fund), and the Tax Exempt Money Market Fund
(individually the "Fund" and collectively the "Funds").
The Prime Money Market Fund, Government Money Market Fund, and the Tax Exempt
Money Market Fund offer two classes of shares: Institutional Shares (formerly
known as Trust Shares) and Investment A Shares (formerly known as Investment
Shares). Each class of shares has identical rights and privileges except with
respect to distribution (12b-1) fees paid by the Investment A Shares, voting
rights on matters affecting a single class of shares and the exchange privileges
of each class of shares. The U.S. Treasury Money Market Fund offers only one
class of shares.
(2) Reorganization
The Trust entered into an Agreement and Plan of Reorganization and Liquidation
with The Cardinal Group pursuant to which all of the assets and liabilities of
each Cardinal Group Portfolio transferred to a portfolio of the Trust in
exchange for shares of the corresponding portfolio of the Trust. The Cardinal
Government Securities Money Market Fund transferred its assets and liabilities
to the Fifth Third Government Cash Reserves Fund. The Cardinal Tax Exempt Money
Market Fund transferred its assets and liabilities to the Fifth Third Tax Exempt
Money Market Fund. The reorganization, which qualified as a tax-free exchange
for federal income purposes, was completed on September 21, 1998 and was
approved by shareholders of The Cardinal Group at a special shareholder meeting
held on July 24, 1998. The following is a summary of shares outstanding, net
assets, net asset value per share and unrealized appreciation immediately before
and after the reorganization for the Government Cash Reserves Fund and the Tax
Exempt Fund:
<TABLE>
<CAPTION>
After
Before Reorganization Reorganization
---------------------------------- ----------------
Cardinal Fifth Third Fifth Third
Tax Exempt Tax Exempt Tax Exempt
Money Market Money Market Money Market
Fund Fund Fund
---------------------------------- ----------------
<S> <C> <C> <C>
Shares (000) 54,034 0 54,034
Net Assets (000) $ 54,032 $ 0 $ 54,032
Net Asset Value $ 1.00 $ 0 $ 1.00
Unrealized Appreciation (000) $ 0 $ 0 $ 0
<CAPTION>
After
Before Reorganization Reorganization
---------------------------------- ----------------
Cardinal Fifth Third Fifth Third
Government Government Government
Securities Cash Reserves Cash Reserves
Fund Fund Fund
---------------------------------- ----------------
Shares (000) 445,357 420,417 865,774
Net Assets (000) $445,341 $420,397 $865,738
Net Asset Value $ 1.00 $ 1.00 $ 1.00
Unrealized Appreciation (000) $ 0 $ 0 $ 0
</TABLE>
14
<PAGE>
Fifth Third Funds
Notes to Financial Statements
July 31, 1999
- --------------------------------------------------------------------------------
(3) 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 397 days 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 or accretion of the 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. 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.
Dividends and distributions to shareholders which exceed net investment income
and net realized capital gains for financial reporting purposes but not for tax
purposes are reported as distributions 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
distributions of capital.
15
<PAGE>
Fifth Third Funds
Notes to Financial Statements(continued)
July 31, 1999
- --------------------------------------------------------------------------------
As of July 31, 1999, the following reclassifications have been made to
increase/(decrease) such accounts with offsetting adjustments made to paid-in
capital (amounts in thousands):
Accumulated Accumulated
Undistributed Net Undistributed Net
Investment Realized Gain/(Loss)
Income/(Loss) on Investment
-----------------------------------------
Prime Money Market Fund $3 $(3)
Government Money Market Fund 379 (415)
(4) Shares of Beneficial Interest
Transactions in Fund shares were as follows (amounts in thousands):
<TABLE>
<CAPTION>
Prime Government
Money Market Fund Money Market Fund
----------------------------- ------------------------------
Year Year Year Year
Ended Ended Ended Ended
July 31, July 31, July 31, July 31,
SHARE TRANSACTIONS: 1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Institutional Shares
Shares issued 1,076,548 1,272,208 451,018 284,720
Dividends reinvested 440 495 -- --
Shares redeemed (1,096,970) (1,246,181) (419,089) (226,232)
- --------------------------------- ----------- ----------- ---------- ----------
Institutional Shares (19,982) 26,522 31,929 58,488
- --------------------------------- =========== =========== ========== ==========
Investment A Shares
Shares issued 87,646 47,934 232,666 136,986
Shares issued for
reorganization -- -- 445,357 --
Dividends reinvested -- -- 7,325 --
Shares redeemed (49,174) (44,820) (454,494) (97,281)
- --------------------------------- ----------- ----------- ---------- ----------
Investment A Shares 38,472 3,114 230,854 39,705
- --------------------------------- ----------- ----------- ---------- ----------
Total net increase from
share transactions 18,490 29,636 262,783 98,193
- --------------------------------- =========== =========== ========== ==========
CAPITAL TRANSACTIONS:
Institutional Shares
Shares issued $ 1,076,548 $ 1,272,208 $ 451,018 $ 284,720
Dividends reinvested 440 495 -- --
Shares redeemed (1,096,972) (1,246,181) (419,089) (226,232)
- --------------------------------- ----------- ----------- ---------- ----------
Institutional Shares $ (19,984) $ 26,522 $ 31,929 $ 58,488
- --------------------------------- =========== =========== ========== ==========
Investment A Shares
Shares issued $ 87,646 $ 47,934 $ 232,729 $ 136,986
Shares issued for
reorganization -- -- 445,341 --
Dividends reinvested -- -- 7,325 --
Shares redeemed (49,174) (44,820) (454,608) (97,281)
- --------------------------------- ----------- ----------- ---------- ----------
Investment A Shares 38,472 3,114 230,787 39,705
- --------------------------------- ----------- ----------- ---------- ----------
Total net increase/(decrease)
from capital transactions $ 18,488 $ 29,636 $ 262,716 $ 98,193
- --------------------------------- =========== =========== ========== ==========
</TABLE>
16
<PAGE>
Fifth Third Funds
Notes to Financial Statements (continued)
July 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Treasury Tax Exempt
Money Market Fund Money Market Fund
------------------------------ -------------------------------
Year Year Period Year
Ended Ended Ended Ended
July 31, July 31, July 31, July 31,
SHARE TRANSACTIONS: 1999 1998 1999* 1998(a)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Institutional Shares
Shares issued 2,079,689 1,830,875 87,092 12,864
Dividends reinvested 7,299 7,545 -- --
Shares redeemed (2,107,005) (1,501,407) (77,363) (4,910)
- --------------------------------- ----------- ----------- ---------- ----------
Institutional Shares (20,017) 337,013 9,729 7,954
- --------------------------------- =========== =========== ========== ==========
Investment A Shares
Shares issued -- -- 10,552 169,674
Dividends reinvested -- -- 266 1,648
Shares redeemed -- -- (28,589) (187,110)
- --------------------------------- ----------- ----------- ---------- ----------
Investment A Shares -- -- (17,771) (15,788)
- --------------------------------- ----------- ----------- ---------- ----------
Total net increase/ (decrease)
from share transactions (20,017) 337,013 (8,042) (7,834)
- --------------------------------- =========== =========== ========== ==========
CAPITAL TRANSACTIONS:
Institutional Shares
Shares issued $ 2,079,693 $ 1,831,037 $ 87,092 $ 12,864
Dividends reinvested 7,299 7,545 -- --
Shares redeemed (2,107,005) (1,501,571) (77,363) (4,910)
- --------------------------------- ----------- ----------- ---------- ----------
Institutional Shares $ (20,013) $ 337,011 $ 9,729 $ 7,954
- --------------------------------- =========== =========== ========== ==========
Investment A Shares
Shares issued $ -- $- $ 10,552 $ 169,673
Dividends reinvested -- -- 267 1,648
Shares redeemed -- -- (28,590) (187,110)
- --------------------------------- ----------- ----------- ---------- ----------
Investment A Shares -- -- (17,771) (15,789)
- --------------------------------- ----------- ----------- ---------- ----------
Total net increase/(decrease)
from capital transactions $ (20,013) $ 337,011 $ (8,042) $ (7,835)
- --------------------------------- =========== =========== ========== ==========
* Reflects operations for the period October 1, 1998 through July 31, 1999.
</TABLE>
(a) The Tax Exempt Money Market Fund Institutional Shares commenced operations
on September 21, 1998.
(5) 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 investment advisory fee at annual rates
equal to the percentages of the relevant Fund's average daily net assets as
follows: Government Cash Reserves Fund, Commercial Paper Fund and U.S. Treasury
Obligations Fund - 0.40%; and Tax Exempt Money Market Fund - 0.50%.
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
fiscal year-ended July 31, 1999, the Advisor waived $83 and $1,298 in advisory
fees for the Prime Money Market Fund and the U.S. Treasury Money Market Fund,
respectively. For the fiscal year ended July 31, 1999, the Advisor reimbursed
certain operating expenses of $63 and $32 for the Government Money Market Fund
and the U.S. Treasury Money Market Fund, respectively. For the ten months ended
July 31, 1999, the Advisor waived $60 in advisory fees and
17
<PAGE>
Fifth Third Funds
Notes to Financial Statements (continued)
July 31, 1999
- --------------------------------------------------------------------------------
reimbursed certain operating expenses of $27 for the Tax Exempt Money Market
Fund.
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 Fund including providing certain administrative
personnel and services necessary to operate the Fund, for which it receives a
fee from BISYS computed daily as a percentage of the daily net assets of the
Fund. Under the terms of the administration agreement, BISYS' fees are computed
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. For the fiscal
year-ended ended July 31, 1999, the administrator waived $372, $697, and $927 in
administration fees for the Prime Money Market Fund, the Government Money Market
Fund and the U.S. Treasury Money Market Fund, respectively. For the ten months
ended July 31, 1999, the administrator waived $37 in administration fees for the
Tax Exempt Money Market Fund.
Distribution Services Fee-The Prime Money Market Fund, the Government Money
Market Fund, and the Tax Exempt Money Market 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 A Shares to finance activities intended to result in the
sales of each Funds' Investment A Shares. The Plan provides that the Funds may
incur distribution expenses up to 0.25% 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 discretion.
For the fiscal year-ended July 31, 1999, the distributor waived $11 and $246 in
distribution fees, respectively for the Prime Money Market Fund and the
Government Money Market Fund. For the ten month period ended July 31, 1999 the
distributor waived $57 in distribution fees for the Tax Exempt Money Market
Fund.
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. 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 is the Funds' custodian and 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.
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.
(6) Other Assets
Fidelity Bond and Errors / Omissions insurance coverage for the Funds and its
Officers and Trustees had been obtained through ICI Mutual Insurance Company
(ICI Mutual), an industry-sponsored mutual insurance company. The Funds include,
in other assets, deposits made for the initial capital and certificates of
deposit that collateralized standby letters of credit sponsoring potential
capital needs of ICI Mutual. In addition, these portfolios are also committed to
provide additional capital should ICI Mutual experience unusual losses arising
from its insurance underwriting. The following table details the deposits and
certificates of deposit of the Funds:
Certificates
Deposits of Deposit
------------------------------
Government Money Market Fund $28,588 $175,000
Tax Exempt Money Market Fund $13,291 $27,000
18
<PAGE>
Fifth Third Funds
Notes to Financial Statements (continued)
July 31, 1999
- --------------------------------------------------------------------------------
(7) Federal Income Taxes (unaudited)
It is the policy of each Fund to qualify or continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies, as defined in applicable sections of the Internal Revenue
Code, and to make distributions of net investment income and net realized
capital gains sufficient to relieve it from all, or substantially all, federal
income taxes.
At July 31, 1999, the following funds had net capital loss carryforwards to
offset future net capital gains, if any, to the extent provided by the Treasury
regulations (amounts in thousands):
Amount Expires
---------------------------
Government Money Market Fund $293 2002
92 2004
Tax Exempt Money Market Fund (2) 2007
Capital losses incurred after October 31, within a Fund's fiscal year are deemed
to arise on the first business day of the following fiscal year for tax
purposes. The following Funds have incurred and will elect to defer such capital
losses (amounts in thousands):
Post-October
Capital Losses
----------------
Government Money Market Fund $2
Tax Exempt Money Market Fund 8
During the fiscal year ended July 31, 1999 the Tax Exempt Money Market Fund
declared tax-exempt income distributions of $912.
19
<PAGE>
Fifth Third Prime Money Market Fund
Financial Highlights
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
(For a share of beneficial interest throughout each period)
Year Ended July 31,
-------------------------------------------------------------------
Institutional Shares 1999 1998 1997 1996 1995
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 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
- ------------------------------------ --------- --------- --------- --------- ---------
Total from investment operations 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)
- ------------------------------------ --------- --------- --------- --------- ---------
Total distributions (0.05) (0.05) (0.05) (0.05) (0.05)
- ------------------------------------ --------- --------- --------- --------- ---------
Net asset value, end of the period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------ ========= ========= ========= ========= =========
Total return 4.76% 5.25% 5.11% 5.20% 5.25%
- ------------------------------------
Ratios to Average Net Assets
- ------------------------------------
Expenses 0.52% 0.52% 0.52% 0.49% 0.49%
- ------------------------------------
Net investment income 4.66% 5.13% 4.99% 5.07% 5.12%
- ------------------------------------
Expense waiver/reimbursement (a) 0.11% 0.12% 0.09% 0.08% 0.09%
- ------------------------------------
Supplemental data
- ------------------------------------
Net assets, end of period
(000 omitted) $ 348,366 $ 368,348 $ 341,827 $ 300,821 $ 223,640
- ------------------------------------
<CAPTION>
Year Ended July 31,
-------------------------------------------------------------------
Investment A Shares 1999 1998 1997 1996 1995
------------ ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------
Income from investment operations
- ------------------------------------
Net investment income 0.04 0.05 0.05 0.05 0.05
- ------------------------------------ --------- --------- --------- --------- ---------
Total from investment operations 0.04 0.05 0.05 0.05 0.05
- ------------------------------------ --------- --------- --------- --------- ---------
Less distributions
- ------------------------------------
Distributions to shareholders
from net investment income (0.04) (0.05) (0.05) (0.05) (0.05)
- ------------------------------------ --------- --------- --------- --------- ---------
Total distributions (0.04) (0.05) (0.05) (0.05) (0.05)
- ------------------------------------ --------- --------- --------- --------- ---------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------ ========= ========= ========= ========= =========
Total return 4.53% 5.25% 5.11% 5.20% 5.25%
- ------------------------------------
Ratios to Average Net Assets
- ------------------------------------
Expenses 0.75% 0.52% 0.52% 0.49% 0.49%
- ------------------------------------
Net investment income 4.39% 5.13% 4.99% 5.06% 5.12%
- ------------------------------------
Expense waiver/reimbursement (a) 0.13% 0.47% 0.44% 0.40% 0.44%
- ------------------------------------
Supplemental data
- ------------------------------------
Net assets, end of period
(000 omitted) $ 75,024 $ 36,552 $ 33,438 $ 19,341 $ 10,169
- ------------------------------------
</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)
20
<PAGE>
Fifth Third Government Money Market Fund
Financial Highlights
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
(For a share of beneficial interest throughout each period)
Year Ended July 31,
----------------------------------------------------------------
Institutional Shares 1999 1998 1997 1996 1995
------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 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
- ------------------------------------ -------- -------- -------- -------- --------
Total from investment operations 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)
- ------------------------------------ -------- -------- -------- -------- --------
Total distributions (0.05) (0.05) (0.05) (0.05) (0.05)
- ------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of the period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------ ======== ======== ======== ======== ========
Total return 4.60% 5.13% 5.01% 5.11% 5.22%
- ------------------------------------
Ratios to Average Net Assets
- ------------------------------------
Expenses 0.56% 0.52% 0.51% 0.50% 0.50%
- ------------------------------------
Net investment income 4.52% 5.02% 4.90% 4.99% 5.17%
- ------------------------------------
Expense waiver/reimbursement (a) 0.11% 0.12% 0.09% 0.07% 0.20%
- ------------------------------------
Supplemental data
- ------------------------------------
Net assets, end of period
(000 omitted) $252,987 $221,034 $162,543 $132,326 $129,603
- ------------------------------------
<CAPTION>
Year Ended July 31,
--------------------------------------------------------------
Investment A Shares 1999 1998 1997 1996 1995
---------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------
Income from investment operations
- ------------------------------------
Net investment income 0.04 0.05 0.05 0.05 0.05
- ------------------------------------ -------- -------- -------- -------- --------
Total from investment operations 0.04 0.05 0.05 0.05 0.05
- ------------------------------------ -------- -------- -------- -------- --------
Less distributions
- ------------------------------------
Distributions to shareholders
from net investment income (0.04) (0.05) (0.05) (0.05) (0.05)
- ------------------------------------ -------- -------- -------- -------- --------
Total distributions (0.04) (0.05) (0.05) (0.05) (0.05)
- ------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------ ======== ======== ======== ======== ========
Total return 4.41% 5.13% 5.00% 5.11% 5.22%
- ------------------------------------
Ratios to Average Net Assets
- ------------------------------------
Expenses 0.75% 0.52% 0.51% 0.51% 0.50%
- -----------------------------------
Net investment income 4.26% 5.02% 4.90% 4.97% 5.17%
- ------------------------------------
Expense waiver/reimbursement (a) 0.17% 0.47% 0.44% 0.42% 0.45%
- ------------------------------------
Supplemental data
- ------------------------------------
Net assets, end of period
(000 omitted) $381,105 $150,286 $110,543 $ 68,884 $ 45,726
- ------------------------------------
</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)
21
<PAGE>
Fifth Third U.S. Treasury Money Market Fund
Financial Highlights
- ---------------------------------------------------------------
(For a share of beneficial interest throughout each period)
<TABLE>
<CAPTION>
Year Ended July 31,
-------------------------------------------------------------------
Institutional Shares 1999 1998 1997 1996 1995
--------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 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
- ------------------------------------ --------- -------- -------- -------- --------
Total from investment operations 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)
- ------------------------------------ --------- -------- -------- -------- --------
Total distributions (0.05) (0.05) (0.05) (0.05) (0.05)
- ------------------------------------ --------- -------- -------- -------- --------
Net asset value, end of the period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------ ========= ========= ========= ========= =========
Total return 4.68% 5.31% 5.11% 5.24% 5.18%
- ------------------------------------
Ratios to Average Net Assets
- ------------------------------------
Expenses 0.38% 0.38% 0.42% 0.43% 0.44%
- ------------------------------------
Net investment income 4.57% 5.19% 5.00% 5.10% 5.07%
- ------------------------------------
Expense waiver/reimbursement (a) 0.24% 0.24% 0.17% 0.12% 0.11%
- ------------------------------------
Supplemental data
- ------------------------------------
Net assets, end of period
(000 omitted) $ 856,286 $ 876,089 $ 539,087 $ 489,228 $ 321,640
- ------------------------------------
</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)
22
<PAGE>
Fifth Third Tax Exempt Money Market Fund
Financial Highlights
- ------------------------------------------------------------------------------
(For a share of beneficial interest throughout each period)
Period Ended Period Ended
July 31, September 30,
Institutional Shares 1999* 1998**
------------- ---------------
Net asset value, beginning of period $ 1.00 $ 1.00
- ------------------------------------
Income from investment operations
- ------------------------------------
Net investment income 0.03 --
- ------------------------------------ ---------- ---------
Total from investment operations 0.03 --
- ------------------------------------ ---------- ---------
Less distributions
- ------------------------------------
Distributions to shareholders
from net investment income (0.03) --
- ------------------------------------ ------------ ---------
Total distributions (0.03) --
- ------------------------------------ ------------ ---------
Net asset value, end of the period $ 1.00 $ 1.00
- ------------------------------------ ========== =========
Total return 2.24%(d) 2.74%(b)
- ------------------------------------
Ratios to Average Net Assets
- ------------------------------------
Expenses 0.61%(c) 0.63%(c)
- ------------------------------------
Net investment income 2.66%(c) 3.09%(c)
- ------------------------------------
Expense waiver/reimbursement (a) 0.33%(c) -- (c)
- ------------------------------------
Supplemental data
- ------------------------------------
Net assets, end of period
(000 omitted) $ 17,682 $ 7,953
- ------------------------------------
<TABLE>
<CAPTION>
Period Ended Year Ended Sept. 30,
July 31, ------------------------------------------------------------
Investment A Shares*** 1999* 1998 1997 1996 1995 1994
--------- ------ -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------
Income from investment operations
- ------------------------------------
Net investment income 0.03 0.03 0.03 0.03 0.03 0.02
- ------------------------------------ -------- -------- -------- ------- ------- -------
Total from investment operations 0.03 0.03 0.03 0.03 0.03 0.02
- ------------------------------------ -------- -------- -------- ------- ------- -------
Less distributions
- ------------------------------------
Distributions to shareholders
from net investment income (0.03) (0.03) (0.03) (0.03) (0.03) (0.02)
- ------------------------------------ -------- -------- -------- ------- ------- -------
Total distributions (0.03) (0.03) (0.03) (0.03) (0.03) (0.02)
- ------------------------------------ -------- -------- -------- ------- ------- -------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------ ======== ======== ======== ======== ======== =======
Total return 2.18%(d) 2.74% 2.72% 2.67% 3.02% 1.78%
- ------------------------------------
Ratios to Average Net Assets
- ------------------------------------
Expenses 0.75%(c) 0.71% 0.80% 0.89% 0.81% 0.76%
- ------------------------------------
Net investment income 2.60%(c) 2.88% 2.79% 2.66% 2.99% 1.78%
- ------------------------------------
Expense waiver/reimbursement (a) 0.44%(c) - - - - -
- ------------------------------------
Supplemental data
- ------------------------------------
Net assets, end of period
(000 omitted) $ 26,715 $ 44,494 $ 60,284 $ 59,915 $ 64,780 $ 80,531
- ------------------------------------
* Reflects operations for the period from October 1, 1998 through July 31,
1999.
** Reflects operations for the period from September 21, 1998 (commencement of
operations) through September 30, 1998.
*** Information for the period prior to September 21, 1998 is for the Tax Exempt
Money Market Fund, the predecessor fund of the Fifth Third Tax Exempt Money
Market Fund.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Represents total return based on the activity of Investment A Shares for the
period from October 1, 1997 to September 20, 1998 and the activity of the
Institutional Shares for the period from September 21, 1998 to September
30,1998. Total return for the Institutional Shares for the period from
September 21, 1998 (commencement of operations) to September 30, 1998 was
3.16% annualized.
(c) Annualized
(d) Not annualized
</TABLE>
(See Notes which are an integral part of the Financial Statements)
23
<PAGE>
Report of Independent Auditors
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders
Fifth Third Funds
We have audited the accompanying statements of assets and liabilities, including
the schedules of portfolio investments, of Fifth Third Prime Money Market Fund,
Fifth Third Government Money Market Fund, Fifth Third U.S. Treasury Money Market
Fund, and Fifth Third Tax Exempt Money Market Fund (the Funds) as of July 31,
1999, and the related statements of operations, statements of changes 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 Fifth Third Tax Exempt Money Market Fund
for each of the respective years or periods ended September 30, 1997 were
audited by other auditors whose report dated November 14, 1997 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, 1999, 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, 1999, and the results of their operations, the
changes in their net assets and their financial highlights for each of the
periods indicated therein, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Cincinnati, Ohio
September 22, 1999
<PAGE>
Addresses
- --------------------------------------------------------------------------------
Fifth Third Prime Money Market Fund Fifth Third Funds
Fifth Third Government Money Market Fund c/o Fifth Third Bank
Fifth Third U.S. Treasury Money Market Fund 38 Fountain Square Plaza
Fifth Third Tax Exempt Money Market Fund 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
- --------------------------------------------------------------------------------
<PAGE>
[LOGO OF FIFTH THIRD BANK APPEARS HERE]
Investment Advisor
