<PAGE>
[LOGO] Fifth Third Funds
[ARTWORK]
Fifth Third Funds
Money Market Mutual Funds
Stock and Bond Mutual Funds
Investment A Shares
Investment B Shares
Investment C Shares
Working hard to
build your wealth!
-------------------
Prospectus
November 30, 2000
The Securities and Exchange Commission has not approved or disapproved the
shares described in this prospectus or determined whether this prospectus is
accurate or complete. Any representation to the contrary is a criminal
offense.
<PAGE>
Fifth Third Funds
Money Market Mutual Funds
Stock and Bond Mutual Funds
Investment A Shares
Investment B Shares
Table of Contents
Investment C Shares
Overview
This section provides important information about each of the money market,
stock and bond funds (the "Funds"), each a separate series of Fifth Third
Funds, including:
. the investment objective
. principal investment strategies
. principle risks, and
. volatility and performance information
All funds except Fifth Third Pinnacle Fund are managed by Fifth Third Bank.
Fifth Third Pinnacle Fund is managed by Heartland Capital Management, Inc.
("Heartland"). Morgan Stanley Dean Witter Investment Management Inc. ("MSDW")
acts as investment subadvisor to Fifth Third International Equity Fund.
Like all mutual funds (other than money market and stable value funds), share
prices of the Funds may rise and fall in value and you could lose money. There
is no guarantee that any Fund will achieve its objective.
This prospectus has been arranged into different sections so that you can
easily review this important information. For more detailed information about
each Fund, please see:
<TABLE>
<CAPTION>
Objectives, Strategies and Risks
------------------------------------------
<S> <C>
Government Money Market Fund 2
Prime Money Market Fund 4
Tax Exempt Money Market Fund 6
Quality Growth Fund 8
Equity Income Fund 10
Pinnacle Fund 12
Balanced Fund 14
Mid Cap Fund 16
International Equity Fund 18
Technology Fund 20
Bond Fund For Income 22
Quality Bond Fund 24
U.S. Government Securities Fund 26
Municipal Bond Fund 28
Ohio Tax Free Bond Fund 30
<CAPTION>
Shareholder Fees and Fund Expenses
------------------------------------------
<S> <C>
Fee Tables 32
Expense Examples 36
<CAPTION>
Additional Information About the
Funds' Investments
------------------------------------------
<S> <C>
40
<CAPTION>
Fund Management
------------------------------------------
<S> <C>
Investment Advisors and Subadvisor 47
Portfolio Managers 48
Fund Administration 49
<CAPTION>
Shareholder Information
------------------------------------------
<S> <C>
Purchasing and Selling Fund Shares 50
Purchasing and Adding to Your Shares 50
Selling Your Shares 53
Exchanging Your Shares 56
Distribution Arrangements/Sales
Charges 57
Dividends and Capital Gains 63
Taxation 63
<CAPTION>
Financial Highlights
------------------------------------------
<S> <C>
67
<CAPTION>
Back Cover
------------------------------------------
<S> <C>
Where to learn more about Fifth Third
Funds
</TABLE>
<PAGE>
Fifth Third Government Money Market Fund
[LOGO]
Fundamental High current income consistent with stability of principal
Objective and liquidity.
Principal The Fund manages its portfolio subject to strict SEC
Investment guidelines, which are designed so that the Fund may
Strategies maintain a stable $1.00 per share price, although there is
no guarantee that it will do so. All of the Fund's
investments are expected to mature in the short-term (397
days or less) and the dollar-weighted average portfolio
maturity of the Fund may not exceed 90 days.
The Fund invests at least 95% of total assets in high-
quality securities called "first tier" securities or
unrated securities that are considered equivalent by the
Fund's investment manager. These generally will be
securities issued or guaranteed as to principal or
interest by the U.S. Treasury or another U.S. government
agency or instrumentality, that at the time of purchase
are rated by such firms as Standard & Poor's and Moody's
in their highest short-term major rating categories, or
unrated securities that are considered equivalent by the
Fund's investment manager.
The Fund reserves the right to invest up to 5% of its
portfolio in "second tier" securities, which generally are
corporate securities that, at the time of purchase, are
rated by such firms as Standard & Poor's and Moody's in
their second highest short-term major rating categories,
or unrated securities that are considered equivalent by
the Fund's investment manager. Some corporate securities
purchased by the Fund may be restricted securities, that
is, they may be subject to limited resale rights.
The Fund may also invest in repurchase agreements
collateralized by the securities mentioned above.
Principal The Fund's principal risks include interest rate risk, net
Investment Risks asset value risk, and credit risk. Interest rate risk
involves the possibility that the Fund's yield will
decrease due to a decrease in interest rates or that the
value of the Fund's investments will decline due to an
increase in interest rates. Net asset value risk involves
the possibility that the Fund will be unable to meet its
goal of a constant $1.00 per share. Credit risk involves
the risk that an issuer cannot make timely interest and
principal payments on its debt securities.
An investment in the Fund is not a deposit of Fifth Third Bank or any other
bank and is not insured or guaranteed by the FDIC or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in this Fund.
2
<PAGE>
Fifth Third Government Money Market Fund
[LOGO]
Volatility and Performance Information
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and over time.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Investment A Shares
1992 3.36%
1993 2.69%
1994 3.84%
1995 5.51%
1996 4.96%
1997 5.10%
1998 4.92%
1999 4.40%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
<TABLE>
<S> <C> <C>
Best quarter: Q2 1995 1.38%
Worst quarter: Q2 1993 0.65%
Year to Date Return (1/1/00 to 9/30/00) 4.13%
</TABLE>
-------------------------
Average Annual Total Returns
(for the periods ended December
31,1999)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment A Shares 11/25/91 4.40% 4.98% N/A 4.35%
</TABLE>
--------------------------------------------------------------------------------
To obtain current yield information, call 1-888-799-5353.
3
<PAGE>
Fifth Third Prime Money Market Fund
[LOGO]
Fundamental Current income consistent with stability of principal.
Objective
Principal The Fund manages its portfolio subject to strict SEC
Investment guidelines, which are designed so that the Fund may
Strategies maintain a stable $1.00 per share price, although there is
no guarantee that it will do so. All of the Fund's
investments are expected to mature in the short-term (397
days or less) and the dollar-weighted average portfolio
maturity of the Fund may not exceed 90 days.
The Fund invests at least 95% of its total assets in high-
quality securities called "first tier" securities or
unrated securities that are considered equivalent by the
Fund's investment manager. These generally will be
corporate securities, including commercial paper, that at
the time of purchase are rated by such firms as Standard &
Poor's and Moody's in their highest short-term major
rating categories, or are unrated securities that are
considered equivalent by the Fund's investment manager.
They also may include securities issued or guaranteed as
to principal or interest by the U.S. Treasury or any U.S.
government agency or instrumentality.
The Fund reserves the right to invest up to 5% of its
portfolio in "second tier" securities, which generally are
corporate securities that, at the time of purchase, are
rated by such firms as Standard & Poor's and Moody's in
their second highest short-term major rating categories,
or unrated securities that are considered equivalent by
the Fund's investment manager. Some corporate securities
purchased by the Fund may be restricted securities, that
is, they may be subject to limited resale rights.
The Fund may also invest in repurchase agreements
collateralized by the securities mentioned above.
Principal The Fund's principal risks include interest rate risk, net
Investment Risks asset value risk, and credit risk. Interest rate risk
involves the possibility that the Fund's yield will
decrease due to a decrease in interest rates or that the
value of the Fund's investments will decline due to an
increase in interest rates. Net asset value risk involves
the possibility that the Fund will be unable to meet its
goal of a constant $1.00 per share. Credit risk involves
the risk that an issuer cannot make timely interest and
principal payments on its debt securities.
An investment in the Fund is not a deposit of Fifth Third Bank or any other
bank and is not insured or guaranteed by the FDIC or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in this Fund.
4
<PAGE>
Fifth Third Prime Money Market Fund
[LOGO]
Volatility and Performance Information
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and over time. The
returns assume that Fund distributions have been reinvested. Past
performance does not indicate how the Fund will perform in the future.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Investment A Shares
1993 2.69%
1994 3.83%
1995 5.60%
1996 5.04%
1997 5.21%
1998 5.05%
1999 4.53%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
<TABLE>
<S> <C> <C>
Best quarter: Q2 1995 1.41%
Worst quarter: Q2 1993 0.65%
Year to Date Return (1/1/00 to
9/30/00) 4.24%
</TABLE>
-----------------------------------------------
Average Annual Total Returns
(for the periods ended December
31, 1999)
----------
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment A Shares 8/11/92 4.53% 5.09% N/A 4.47%
------------------------------------------------------------------
Investment B Shares/1/ -0.99% 4.04% 4.15% 4.34%
(with applicable
Contingent Deferred
Sales Charge)
</TABLE>
--------------------------------------------------------------------------------
------
/1/Because Investment B shares commenced operations on 10/11/00 and therefore
do not have a performance history, the performance for Investment B shares
is based on the performance for Investment A shares, adjusted to reflect the
expenses and sales charges for Investment B shares.
To obtain current yield information, call 1-888-799-5353.
5
<PAGE>
Fifth Third Tax Exempt
Money Market Fund
[LOGO]
Fundamental Maximize current income, exempt from federal income tax,
Objective while preserving capital and maintaining liquidity.
Principal The Fund manages its portfolio subject to strict SEC
Investment guidelines, which are designed so that the Fund may
Strategies maintain a stable $1.00 per share price, although there is
no guarantee that it will do so. All of the Fund's
investments are expected to mature in the short-term (397
days or less) and the dollar-weighted average portfolio
maturity of the Fund may not exceed 90 days.
The Fund invests at least 95% of its total assets in high-
quality securities called "first tier" securities, which
generally are securities that, at the time of purchase,
are rated by such firms as Standard & Poor's and Moody's
in their highest short-term major rating categories, or
unrated securities that are considered equivalent by the
Fund's investment manager
At least 80% of its total assets are invested in municipal
securities, which include fixed and variable rate debt
obligations issued by various states, their counties,
towns and public authorities. Those securities tend to be:
. general obligation bonds where principal and interest
are paid from general tax revenues received by the
issuer;
. revenue bonds, where principal and interest are paid
only from the revenues received from one or more public
projects or special excise taxes. These bonds tend to
be issued in connection with the financing of
infrastructure projects, such as toll roads and housing
projects, and they are not general obligations of the
issuer;
. industrial development bonds, where principal and
interest are paid only from revenues received from
privately-operated facilities. Generally, these bonds
are issued in the name of a public finance authority to
finance infrastructure to be used by a private entity.
However, they are general obligations of the private
entity, not the issuer.
The Fund reserves the right to invest up to 5% of its
portfolio in "second tier" securities, which generally are
corporate securities that, at the time of purchase, are
rated by such firms as Standard & Poor's and Moody's in
their second highest short-term major rating categories,
or unrated securities that are considered equivalent by
the Fund's investment manager. Some corporate securities
purchased by the Fund may be restricted securities, that
is, they may be subject to limited resale rights.
The Fund may also invest in repurchase agreements
collateralized by U.S. Treasury securities.
Principal The Fund's principal risks include interest rate risk, net
Investment Risks asset value risk, credit risk, and tax risk. Interest rate
risk involves the possibility that the Fund's yield will
decrease due to a decrease in interest rates or that the
value of the Fund's investments will decline due to an
increase in interest rates. Net asset value risk involves
the possibility that the Fund will be unable to meet its
goal of a constant $1.00 per share. Credit risk involves
the risk that an issuer cannot make timely interest and
principal payments on its debt securities. Tax risk
involves the possibility that the issuer of securities
will fail to comply with certain requirements of the
Internal Revenue Code, which would create adverse tax
consequences.
An investment in the Fund is not a deposit of Fifth Third Bank or any other
bank and is not insured or guaranteed by the FDIC or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in this Fund.
6
<PAGE>
Fifth Third Tax Exempt
Money Market Fund
[LOGO]
Volatility and Performance Information
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and over time.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
[GRAPH]
Year-by-Year Total Returns as of 12/31 for Investment A Shares/1/
1990 5.14%
1991 3.95%
1992 2.42%
1993 1.81%
1994 2.10%
1995 2.95%
1996 2.72%
1997 2.75%
1998 2.68%
1999 2.79%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
<TABLE>
<S> <C> <C>
Best quarter: Q3 1990 1.32%
Worst quarter: Q3 1994 0.45%
Year to Date Return (1/1/00 to
9/30/00) 2.78%
</TABLE>
-----------------------------------------------
Average Annual Total Returns
(for the periods ended
December 31, 1999)
----------------------------
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment A Shares/1/ 9/7/83 2.79% 2.78% 2.93% 3.66%
</TABLE>
--------------------------------------------------------------------------------
To obtain current yield information, call 1-888-799-5353.
------
/1/For the period prior to September 21, 1998, the quoted performance of the
Fund reflects the performance of the Investor Shares of the Cardinal Tax
Exempt Money Market Fund. On September 21, 1998, that Fund, a registered
open-end investment company managed by The Ohio Company, was merged into
Fifth Third Tax Exempt Money Market Fund.
7
<PAGE>
Fifth Third Quality Growth Fund
[LOGO]
Fundamental Growth of capital. Income is a secondary objective.
Objective
Principal Under normal market conditions, the Fund invests at least
Investment 65% of total assets in common stocks of high quality
Strategies growth companies.
High quality growth companies are companies, in the
opinion of Fifth Third Bank, that offer excellent
prospects for consistent, above-average revenue and
earnings growth. To determine whether a company is of high
quality, the Fund generally looks for a strong record of
earnings growth, as well as its current ratio of debt to
capital and the quality of its management. Most of the
companies in which the Fund invests are U.S. companies
with a market capitalization greater than $100 million.
To achieve its secondary objective of income, the Fund may
rely on dividend income that it receives from common
stocks and interest income it receives from other
investments, including convertible securities. The Fund
reserves the right to invest up to 35% of total assets in
those securities. At the time of investment, those
securities are rated investment grade, that is, in the BBB
major rating category or higher by Standard & Poor's(R) or
in the Baa major rating category or higher by Moody's, or
their unrated equivalents.
Principal The principal risks of investing in the Fund include the
Investment Risks risks of investing in equity securities, such as the risk
of sudden and unpredictable drops in value and the
potential for extended periods of lackluster performance.
An investment in the Fund is not a deposit of Fifth Third
Bank or any other bank and is not insured or guaranteed by
the FDIC or any other government agency.
Stocks that pay regular dividends tend to be less volatile
than stocks that do not. A regular dividend provides
investors some return of their investment, to an extent,
supporting the stock's price, even during periods when the
prices of equity securities generally are falling.
However, dividend-paying stocks, especially those that pay
significant dividends, also tend to appreciate less
quickly than stocks of companies in emerging markets,
which tend to reinvest most profits into research,
development, plant and equipment to accommodate expansion.
Generally, growth oriented stocks may be sensitive to
market movements. The prices of growth stocks tend to
reflect future expectations, and when those expectations
change or are not met, share prices generally fall. Stocks
of smaller companies tend to be volatile and more
sensitive to long-term market declines than stocks of
larger companies, in part because they generally do not
have the financial resources that larger companies have.
Prices of convertible securities, which include bonds and
preferred stocks, may be affected by the prices of the
underlying security, which generally is common stock.
8
<PAGE>
Fifth Third Quality Growth Fund
[LOGO]
Volatility and Performance Information
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and over time, as well as
compared to a broad-based securities index. The Standard and Poor's 500
Composite Stock Price Index (the "S&P 500") is an unmanaged index of 500
selected common stocks, most of which are listed on the New York Stock Exchange.
The returns assume that Fund distributions have been reinvested. The returns for
Investment B and C shares will differ from the returns for Investment A shares
(which are shown in the bar chart) because of differences in expenses of each
class. The table assumes that shareholders redeem their fund shares at the end
of the period indicated.
Past performance does not indicate how the Fund will perform in the future.
Year-by-Year Total Returns as of 12/31 For Investment A Shares
[GRAPH]
1990 5.12%
1991 34.38%
1992 8.03%
1993 -1.06%
1994 0.07%
1995 31.59%
1996 23.68%
1997 32.70%
1998 30.05%
1999 23.51%
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
<TABLE>
<S> <C> <C>
Best quarter: Q4 1998 28.18%
Worst quarter: Q3 1990 -11.19%
Year to Date Return (1/1/00 to
9/30/00) 3.25%
---------------------------------
</TABLE>
Average Annual
Total Returns (for
the periods ended
December 31, 1999)
------------------
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment A Shares 1/1/83 17.95% 27.06% 17.48% 17.58%
(with 4.50% sales
charge)
---------------------------------------------------------------------------
Investment B Shares/1/ 1/1/83 17.59% 27.12% 17.14% 17.01%
(with applicable
Contingent
Deferred Sales Charge)
---------------------------------------------------------------------------
Investment C Shares/2/ 1/1/83 22.99% 27.41% 17.19% 17.04%
(with applicable
Contingent
Deferred Sales Charge)
---------------------------------------------------------------------------
(Since 12/31/82)
S&P 500(R) Index 21.04% 28.55% 18.20% 18.35%
--------------------------------------------------------------------------------------------------
</TABLE>
-------------
/1/ Because Investment B shares commenced operations on 10/11/00 and therefore
do not have a performance history, the performance for Investment B shares
is based on the performance for Investment A shares, adjusted to reflect the
expenses and sales charges for Investment B shares.
/2/ The performance of Investment C shares is based on the performance for
Investment A shares, adjusted to reflect the expenses and sales charges for
Investment C shares, for the period prior to the commencement of operations
of Investment C shares on April 25, 1996.
9
<PAGE>
Fifth Third Equity Income Fund
[LOGO]
Fundamental High level of current income consistent with capital
Objective appreciation.
Principal Under normal market conditions, the Fund invests at least
Investment 65% of total assets in common stocks of U.S. companies
Strategies with a weighted average market capitalization similar to
that of the Standard & Poor's 500 Composite Stock Price
Index ("S&P 500 Index") focusing on stocks that pay an
increasing dividend. As of the date of this Prospectus,
the S&P 500 Index statistics were as follows: the smallest
company had a market capitalization of $116 million, the
largest company a market capitalization of $543 billion,
the mean market capitalization was $25.2 billion, and the
weighted average market capitalization was $131 billion.
The Fund's investment approach generally is to purchase
stocks of companies, which demonstrate industry
leadership, sound management and long-term earnings
growth, and which have attractive dividend yields or the
prospects of increasing dividend rates. At the time of
investment, those convertible debt securities in which the
Fund invests are rated investment grade (that is, in the
BBB major rating category or higher by Standard & Poor's
or the Baa major rating category or higher by Moody's, or
their unrated equivalents).
The Fund reserves the right to invest up to 35% of total
assets in other securities, such as government and
corporate bonds, which at the time of investment, are
rated investment grade, that is, in the BBB major rating
category or higher by Standard & Poor's or the Baa major
rating category or higher by Moody's, or their unrated
equivalents.
Principal The principal risks of investing in the Fund include the
Investment Risks risks of investing in equities and in debt. The risks of
investing in equity securities include the risk of sudden
and unpredictable drops in value or periods of lackluster
performance. The risks of investing in debt securities
include the tendency of bond prices to fall as interest
rates rise.
An investment in the Fund is not a deposit of Fifth Third Bank or any other
bank and is not insured or guaranteed by the FDIC or any other government
agency.
Significant investment in large companies also creates
various risks for the Fund. For instance, larger, more
established companies tend to operate in mature markets,
which often are very competitive. Larger companies also do
not tend to respond quickly to competitive challenges,
especially to challenges caused by technology and consumer
preferences.
Stocks that pay regular dividends tend to be less volatile
than stocks that do not. A regular dividend provides
investors some return of their investment, to an extent,
supporting the stock's price, even during periods when the
prices of equity securities generally are falling.
However, dividend-paying stocks, especially those that pay
significant dividends, also tend to appreciate less
quickly than stocks of companies in emerging markets,
which tend to reinvest profits into research, development,
plant and equipment to accommodate expansion.
The tendency of bond prices to fall when interest rates
rise becomes more significant as the average maturity of
the Fund's bond portfolio increases. A less significant
risk of bond investing is that an issuer could default on
principal or interest payments. Prices of convertible
securities, which include bonds and preferred stocks, may
be affected by the prices of the underlying security,
which generally is common stock.
10
<PAGE>
Fifth Third Equity Income Fund
[LOGO]
Volatility and Performance Information
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and over time, as well as
compared to a broad-based securities index. The Standard and Poor's 500
Composite Stock Price Index (the "S&P 500") is an unmanaged index of 500
selected common stocks, most of which are listed on the New York Stock Exchange.
The returns assume that Fund distributions have been reinvested. The returns for
Investment B and C shares will differ from the returns for Investment A shares
(which are shown in the bar chart) because of differences in expenses of each
class. The table assumes that shareholders redeem their fund shares at the end
of the period indicated.
Past performance does not indicate how the Fund will perform in the future.
Year-by-Year Total Returns as of 12/31 For Investment A Shares
[GRAPH]
1990 -1.21%
1991 29.07%
1992 4.61%
1993 0.26%
1994 -0.65%
1995 30.73%
1996 16.83%
1997 38.15%
1998 17.82%
1999 -4.87%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
<TABLE>
<S> <C> <C>
Best quarter: Q2 1997 15.29%
Worst quarter: Q3 1999 -11.45%
Year to Date Return (1/1/00 to 9/30/00) 6.52%
</TABLE>
-------------------------
Average Annual Total Returns
(for the periods ended
December 31, 1999)
----------------------------
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment A Shares 1/1/83 -9.17% 17.70% 11.62% 14.03%
(with 4.50% sales
charge)
----------------------------------------------------------------------
Investment B Shares/1/ 1/1/83 -10.35% 17.68% 11.29% 13.49%
(with applicable
Contingent Deferred
Sales Charge)
----------------------------------------------------------------------
Investment C Shares/2/ 1/1/83 -5.37% 17.89% 11.17% 13.32%
(with applicable
Contingent Deferred
Sales Charge)
----------------------------------------------------------------------
(Since 12/31/82)
S&P 500(R) Index 21.04% 28.55% 18.20% 18.35%
</TABLE>
--------------------------------------------------------------------------------
------
/1/Because Investment B shares commenced operations on 10/11/00 and therefore
do not have a performance history, the performance for Investment B shares
is based on the performance for Investment A shares, adjusted to reflect the
expenses and sales charges for Investment B shares.
/2/The performance of Investment C shares is based on the performance for
Investment A shares, adjusted to reflect the expenses and sales charges for
Investment C shares, for the period prior to the commencement of operations
of Investment C shares on January 27, 1997.
11
<PAGE>
Fifth Third Pinnacle Fund
[LOGO]
Fundamental Long-term capital appreciation.
Objective
Principal Under normal market conditions, the Fund invests at least
Investment 65% of total assets in common stocks and convertible
Strategies securities that have the potential for long-term growth.
In selecting stocks, the Fund looks primarily at companies
that have historically reported better corporate earnings
than the earnings that market analysts have predicted.
Generally, those companies are expected to grow faster
than the economy as a whole. Those companies also tend to
be established companies that appear to be capable of
sustained growth. Although most of those companies are
large, the Fund may invest in stocks of companies of any
size. Current income is not a factor in stock selection.
The Fund reserves the right to invest up to 35% of total
assets in other securities, such as government and
corporate bonds.
Principal The principal risks of investing in the Fund include the
Investment Risks risks of investing in equity securities, such as the risk
of sudden and unpredictable drops in value or periods of
lackluster performance.
An investment in the Fund is not a deposit of Fifth Third Bank or any other
bank and is not insured or guaranteed by the FDIC or any other government
agency.
Generally, growth oriented stocks may be sensitive to
market movements. The prices of growth stocks tend to
reflect future expectations, and when those expectations
are not met, prices generally fall.
Significant investment in large companies also creates
various risks for the Fund. For instance, larger, more
established companies tend to operate in mature markets,
which often are very competitive. Larger companies also do
not tend to respond quickly to competitive challenges,
especially to changes caused by technology or consumer
preferences.
12
<PAGE>
Fifth Third Pinnacle Fund
[LOGO]
Volatility and Performance Information
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and over time, as well as
compared to a broad-based securities index. The Standard and Poor's 500
Composite Stock Price Index (the "S&P 500") is an unmanaged index of 500
selected common stocks, most of which are listed on the New York Stock Exchange.
The returns assume that Fund distributions have been reinvested. The returns for
Investment B and C shares will differ from the returns for Investment A shares
(which are shown in the bar chart) because of differences in expenses of each
class. The table assumes that shareholders redeem their fund shares at the end
of the period indicated.
Past performance does not indicate how the Fund will perform in the future.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Investment A Shares/1/
1990 -3.14%
1991 39.87%
1992 -0.73%
1993 3.31%
1994 -1.12%
1995 35.40%
1996 22.44%
1997 35.43%
1998 32.83%
1999 11.37%
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
<TABLE>
<S> <C> <C>
Best quarter: Q4 1998 24.87%
Worst quarter: Q3 1990 -15.34%
Year to Date Return (1/1/00 to 9/30/00) -4.82%
</TABLE>
Average Annual Total Returns (for the periods ended December 31, 1999)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment A Shares/1/ 3/4/85 6.34% 25.97% 15.86% 16.41%
(with 4.50% sales charge)
---------------------------------------------------------
Investment B Shares/2/ 3/4/85 5.50% 26.04% 15.53% 15.90%
(with applicable
Contingent Deferred
Sales Charge)
---------------------------------------------------------
Investment C Shares/3/ 3/4/85 10.80% 25.91% 15.40% 15.82%
(with applicable
Contingent Deferred
Sales Charge)
---------------------------------------------------------
(Since
2/28/85)
S&P 500(R) Index 21.04% 28.55% 18.20% 18.46%
</TABLE>
--------------------------------------------------------------------------------
--------
/1/For the period prior to March 6, 1998, the quoted performance of the Fund
reflects the performance of the Investment A Shares of The Pinnacle Fund. On
March 6, 1998, The Pinnacle Fund, a registered open-end investment company
managed by Heartland Capital Management, Inc., was merged into Fifth Third
Pinnacle Fund.
/2/Because Investment B shares commenced operations on 10/11/00 and therefore
do not have a performance history, the performance for Investment B shares
is based on the performance for Investment A shares, adjusted to reflect the
expenses and sales charges for Investment B shares.
/3/The performance of Investment C shares is based on the performance for
Investment A shares, adjusted to reflect the expenses and sales charges for
Investment C shares, for the period prior to the commencement of operations
of Investment C shares on March 9, 1998.
13
<PAGE>
Fifth Third Balanced Fund
[LOGO]
Fundamental Capital appreciation and income.
Objective
Principal Under normal market conditions, the Fund uses an asset
Investment allocation strategy, investing in three primary categories
Strategies of securities: stocks, bonds and money market instruments.
The Fund intends to invest between 50% to 75% of total
assets in common stocks and convertible preferred stocks
and convertible corporate bonds, 25% to 40% of total
assets in U.S. Treasury bills, notes and bonds, securities
of U.S. Government agencies and instrumentalities and
corporate debt securities, including mortgage-backed
securities, and 0% to 25% in money market instruments. By
analyzing financial trends and market conditions, the Fund
may adjust its allocations from time to time. However, the
Fund takes a moderate to long-term view of changing market
conditions, and tends to avoid large, sudden shifts in the
composition of its portfolio.
The equity position of the Fund tends to be invested in
high quality growth companies that are either large or
mid-sized. While greater emphasis will be placed on larger
companies, that is, companies with market capitalizations
comparable to the market capitalization of those companies
in the S&P 500 Index, the Fund may favor smaller
companies, that is, companies with market capitalization
comparable to the market capitalizations of those
companies in the S&P 400 Index, when Fifth Third Bank
believes that market conditions favor securities of
smaller companies.
The fixed income portion of the Fund tends to be invested
in high quality bonds with maturities ranging from
overnight to thirty years in length. The Fund will attempt
to maintain the average maturity of the bond portion of
the Fund from between 5 and 9 years. At the time of
investment, the corporate bonds and convertible securities
in which the Fund invests are rated investment grade, that
is, in the BBB major rating category or higher by Standard
& Poor's or in the Baa major rating category or higher by
Moody's, or their unrated equivalents.
Principal The principal risks of investing in the Fund include the
Investment Risks risks associated with following an asset allocation
strategy, such as the risk that the Fund will not
correctly anticipate the relative performance of the
different asset classes in which it may invest.
An investment in the Fund is not a deposit of Fifth Third Bank or any other
bank and is not insured or guaranteed by the FDIC or any other government
agency.
To the extent the Fund invests in stocks and convertible
securities, it assumes the risks of equity investing,
including sudden and unpredictable drops in value and
periods of lackluster performance.
Significant investments in large companies also create
various risks for the Fund. For instance, larger, more
established companies tend to operate in mature markets,
which often are very competitive. Larger companies also do
not tend to respond quickly to competitive challenges,
especially to changes caused by technology or consumer
preferences.
Generally, growth oriented stocks may be sensitive to
market movements. The prices of growth stocks tend to
reflect future expectations, and when those expectations
change or are not met, share prices generally fall. Stocks
of smaller companies tend to be volatile and more
sensitive to long-term market declines than stocks of
larger companies, in part because they generally do not
have the financial resources that larger companies have.
To the extent the Fund invests in bonds, it assumes the
risks of bond investing, including the tendency of prices
to fall as interest rates rise. That risk is greater for
bonds with longer maturities. Less significant is the risk
that a bond issuer will default on principal or interest
payments. Prices of convertible securities, which include
bonds and preferred stocks, may be affected by the prices
of the underlying security, which generally is common
stock.
14
<PAGE>
Fifth Third Balanced Fund
[LOGO]
Volatility and Performance Information
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and over time, as well as
compared to two broad-based securities indices. The Standard and Poor's 500
Composite Stock Price Index (the "S&P 500") is an unmanaged index of 500
selected common stocks, most of which are listed on the New York Stock Exchange.
The Lehman Brothers Aggregate Bond Index (the "LBAB Index") is an unmanaged
index generally representative of the performance of the bond market as a whole.
The returns assume that Fund distributions have been reinvested. The returns for
Investment B and C shares will differ from the returns for Investment A shares
(which are shown in the bar chart) because of differences in expenses of each
class. The table assumes that shareholders redeem their fund shares at the end
of the period indicated.
Past performance does not indicate how the Fund will perform in the future.
Year-by-Year Total Returns as of 12/31 For Investment A Shares
[GRAPH]
1990 9.95%
1991 30.13%
1992 9.88%
1993 1.74%
1994 -1.03%
1995 26.53%
1996 14.23%
1997 24.08%
1998 17.87%
1999 15.30%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
<TABLE>
<S> <C> <C>
Best quarter: Q4 1998 17.81%
Worst quarter: Q3 1998 -6.36%
Year to Date Return (1/1/00 to 9/30/00) 7.46%
</TABLE>
-------------------------
Average Annual Total Returns
(for the periods ended
December 31, 1999)
----------------------------
<TABLE>
<CAPTION>
Since
Inception Date Past Year Past 5 Years Past 10 Years Inception
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment A Shares 1/1/83 10.12% 18.41% 13.94% 15.97%
(with 4.50% sales
charge)
-------------------------------------------------------------------
Investment B Shares/1 1/1/83 9.38% 18.40% 13.59% 15.40%
/ (with applicable
Contingent Deferred
Sales Charge)
-------------------------------------------------------------------
Investment C Shares/2 1/1/83 14.82% 18.73% 13.66% 15.46%
/ (with applicable
Contingent Deferred
Sales Charge)
-------------------------------------------------------------------
(Since 12/31/82)
S&P 500(R) Index 21.04% 28.55% 18.20% 18.35%
(Since 12/31/82)
LBAB Index -0.83% 7.73% 7.69% 9.50%
</TABLE>
--------------------------------------------------------------------------------
------
/1/Because Investment B shares commenced operations on 10/11/00 and therefore
do not have a performance history, the performance for Investment B shares
is based on the performance for Investment A shares, adjusted to reflect the
expenses and sales charges for Investment B shares.
/2/The performance of Investment C shares is based on the performance for
Investment A shares, adjusted to reflect the expenses and sales charges for
Investment C shares, for the period prior to the commencement of operations
of Investment C shares on April 25, 1996.
15
<PAGE>
Fifth Third Mid Cap Fund
[LOGO]
Fundamental
Objective Growth of capital. Income is a secondary objective.
Principal
Investment Under normal market conditions, the Fund expects to invest
Strategies at least 65% of total assets in common stocks of mid cap
companies. Mid cap companies are companies with market
capitalizations no larger than 110%, and no smaller than
90%, of the average market capitalizations of the
companies in the Standard & Poor's MidCap 400 Index
(generally, between $500 million and $10 billion).
The Fund intends to invest in companies that have the
potential for long-term revenue and earnings growth, solid
balance sheets and which may have the potential to pay
dividends. The Fund generally selects its investments
using traditional research techniques, which include
projections of earnings and dividend growth and the
expected volatility of the markets in which the companies
do business.
To achieve its secondary objective of income, the Fund
relies on dividend and interest income. The Fund may
invest in up to 35% of total assets in common stocks of
large cap companies, many of which pay dividends, as well
as convertible securities which pay interest. At the time
of investment, those convertible securities are rated
investment grade, that is, in the BBB major rating
category or higher by Standard & Poor's, or in the Baa
major rating category or higher by Moody's, or their
unrated equivalents. The Fund may also invest in small cap
stocks.
Principal The principal risks of investing in the Fund include the
Investment Risks risks of investing in equity securities, such as the risk
of sudden and unpredictable drops in value or periods of
lackluster performance.
An investment in the Fund is not a deposit of Fifth Third Bank or any other
bank and is not insured or guaranteed by the FDIC or any other government
agency.
Stocks of medium-sized companies can be more sensitive to
long market declines than larger companies, in part
because they generally do not have the financial resources
that larger companies have. Generally, growth oriented
stocks are sensitive to market movements. The prices of
growth stocks tend to reflect future expectations, and
when those expectations change or are not met, share
prices generally fall.
Stocks that pay regular dividends tend to be less volatile
than stocks that do not. A regular dividend provides
investors some return on their investment, to an extent,
supporting a stock's price, even during periods when
prices of equity securities are falling. However, dividend
paying stocks, especially those that pay significant
dividends, also tend to appreciate less quickly than
stocks of companies in emerging markets, which tend to
reinvest profits into research, development, plant and
equipment to accommodate expansion.
To the extent the Fund invests in bonds, it assumes the
risks of bond investing, including the tendency of prices
to fall as interest rates rise. That risk is greater for
bonds with longer maturities. Less significant is the risk
that a bond issuer will default on principal or interest
payments, which may cause a loss for the Fund. Prices of
convertible securities, which include bonds and preferred
stocks, may be affected by the prices of the underlying
security, which generally is common stock.
16
<PAGE>
Fifth Third Mid Cap Fund
[LOGO]
Volatility and Performance Information
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and over time, as well as
compared to a broad-based securities index. The Standard and Poor's MidCap 400
Index (the "S&P 400") is an unmanaged index generally representative of the mid-
cap sector of the U.S. stock market.
The returns assume that Fund distributions have been reinvested. The returns for
Investment B and C shares will differ from the returns for Investment A shares
(which are shown in the bar chart) because of differences in expenses of each
class. The table assumes that shareholders redeem their fund shares at the end
of the period indicated.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Investment A Shares
1990 1.84%
1991 46.01%
1992 5.05%
1993 1.38%
1994 1.54%
1995 26.03%
1996 17.59%
1997 32.64%
1998 3.29%
1999 16.77%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
Past performance does not indicate how the Fund will perform in the future.
<TABLE>
<S> <C> <C>
Best quarter: Q4 1999 23.18%
Worst quarter: Q3 1990 -16.52%
Year to Date Return (1/1/00 to 9/30/00) 17.81%
</TABLE>
-------------------------
Average Annual Total Returns
(for the periods ended December
31, 1999)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment A Shares 1/1/85 11.54% 17.75% 13.79% 15.23%
(with 4.50% sales
charge)
-----------------------------------------------------------------------
Investment B Shares/1/ 1/1/85 10.88% 17.74% 13.48% 14.72%
(with applicable
Contingent Deferred
Sales Charge)
-----------------------------------------------------------------------
Investment C Shares/2 1/1/85 16.27% 18.09% 13.53% 14.76%
/ (with applicable
Contingent Deferred
Sales Charge)
-----------------------------------------------------------------------
(Since 12/31/84)
S&P Mid Cap 400(R) Index 14.72% 23.05% 17.32% 18.33%
</TABLE>
--------------------------------------------------------------------------------
------
/1/Because Investment B shares commenced operations on 10/11/00 and therefore
do not have a performance history, the performance for Investment B shares
is based on the performance for Investment A shares, adjusted to reflect the
expenses and sales charges for Investment B shares.
/2/The performance of Investment C shares is based on the performance for
Investment A shares, adjusted to reflect the expenses and sales charges for
Investment C shares, for the period prior to the commencement of operations
of Investment C shares on April 24, 1996.
17
<PAGE>
Fifth Third International Equity Fund
[LOGO]
Fundamental Long-term capital appreciation.
Objective
Principal Under normal market conditions, the Fund invests at least
Investment 65% of total assets in equity securities of non-U.S.
Strategies companies. The companies whose securities are represented
in the Fund's portfolio are located in at least three
countries other than the U.S.
The Fund uses a top-down strategy of selecting securities
in its portfolio. It allocates assets among geographic
regions and individual countries and sectors, rather than
emphasizing individual stock selection. The Fund
capitalizes on the significance of country and sector
selection in international equity portfolio returns by
over and underweighting countries and/or sectors based on
three factors: (i) valuation, (ii) fundamental change, and
(iii) market momentum/technicals.
The Fund's investment subadvisor analyzes both the global
economic environment and the economies of countries
throughout the world, focusing mainly on the
industrialized countries comprising the MSCI EAFE Index.
Although the Fund invests primarily in established foreign
securities markets, from time to time, it may also invest
in emerging market countries and, with regard to such
investments, may make global and regional allocations to
emerging markets, as well as allocations to specific
emerging market countries. In selecting stocks in a
specific country, the Fund generally attempts to replicate
a broad market index (which usually is the Morgan Stanley
Capital International Index for that country) by investing
in "baskets" of common stocks and other equity securities.
The Fund reserves the right to invest up to 35% of total
assets in other securities, such as equity securities of
U.S. companies.
Principal
Investment Risks The principal risks of investing in the Fund include the
risks of investing in equity securities, such as the risk
of sudden and unpredictable drops in value or periods of
lackluster performance.
An investment in the Fund is not a deposit of Fifth Third Bank or any other
bank and is not insured or guaranteed by the FDIC or any other government
agency.
Stocks of foreign companies present additional risks for
U.S. investors. Stocks of foreign companies tend to be
less liquid and more volatile than their U.S.
counterparts, in part because accounting standards and
market regulations tend to be less standardized, and
economic and political climates less stable. Fluctuations
in exchange rates also may reduce or eliminate gains or
create losses. These risks usually are higher in emerging
markets, such as most countries in Africa, Asia, Latin
America and the Middle East. To the extent that the Fund
invests in those kinds of stocks or in those areas, it
will be exposed to the risks associated with those kinds
of investments.
18
<PAGE>
Fifth Third International Equity Fund
[LOGO]
Volatility and Performance Information
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and over time, as well as
compared to a broad-based securities index. The Morgan Stanley Capital
International EAFE Index (the "EAFE Index") is an unmanaged index of common
stocks in Europe, Australasia and the Far East.
The returns assume that Fund distributions have been reinvested. The returns for
Investment B and C shares will differ from the returns for Investment A shares
(which are shown in the bar chart) because of differences in expenses of each
class. The table assumes that shareholders redeem their fund shares at the end
of the period indicated.
Past performance does not indicate how the Fund will perform in the future.
Year-by-Year Total Returns as of 12/31 For Investment A Shares
[GRAPH]
1995 11.29%
1996 8.54%
1997 7.96%
1998 19.34%
1999 25.74%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
<TABLE>
<S> <C> <C>
Best quarter: Q4 1999 17.70%
Worst quarter: Q3 1998 -11.88%
Year to Date Return (1/1/00 to 9/30/00) -12.00%
</TABLE>
-------------------------
Average Annual Total Returns
(for the periods ended
December 31, 1999)
----------------------------
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment A Shares
(with 4.50% sales
charge) 8/18/94 20.10% 13.33% N/A 11.04%
-------------------------------------------------------------------
Investment B Shares/1/
(with applicable
Contingent Deferred
Sales Charge) 8/18/94 19.78% 13.28% N/A 11.03%
-------------------------------------------------------------------
Investment C Shares/2/
(with applicable
Contingent Deferred
Sales Charge) 8/18/94 25.10% 13.90% N/A 11.57%
-------------------------------------------------------------------
(Since 8/31/94)
EAFE Index 27.30% 13.15% N/A 11.41%
</TABLE>
--------------------------------------------------------------------------------
------
/1/Because Investment B shares commenced operations on 10/11/00 and therefore
do not have a performance history, the performance for Investment B shares
is based on the performance for Investment A shares, adjusted to reflect the
expenses and sales charges for Investment B shares.
/2/The performance of Investment C shares is based on the performance for
Investment A shares, adjusted to reflect the expenses and sales charges for
Investment C shares, for the period prior to the commencement of operations
of Investment C shares on April 25, 1996.
19
<PAGE>
Fifth Third Technology Fund
[LOGO]
Fundamental Long-term capital appreciation.
Objective
Principal Under normal market conditions, the Fund invests at least
Investment 65% of total assets in the equity securities of U.S. and,
Strategies to a lesser extent, foreign technology companies.
Technology companies are those that are substantially
engaged in developing products, processes or services that
provide technological advances. Those companies may be in
any of a variety of industries, such as computer hardware,
software, electronic components and systems,
telecommunications, Internet, and media and information
services companies. They also may include companies in
more traditional industries, such as certain securities
brokers and consumer products retailers, that have
extensively used technological advances to develop new or
to improve products or processes.
The Fund generally takes a growth approach to selecting
stocks, looking for established companies that appear
poised to grow because of new products, technology or
management, as well as new companies that are in the
developmental stage. Factors in identifying these
companies may include the quality of management, financial
strength, a strong position relative to competitors and a
stock price that appears reasonable relative to its
expected growth rate. The Fund may invest in companies of
any size, including small, high growth companies. The Fund
also may invest in companies whose shares are being, or
recently have been, offered to the public for the first
time.
The Fund reserves the right to invest up to 35% of total
assets in other securities, such as, corporate bonds and
government securities.
Principal The principal risks of investing in the Fund include the
Investment Risks risks of investing in equity securities, such as the risk
of sudden and unpredictable drops in value or periods of
lackluster performance.
An investment in the Fund is not a deposit of Fifth Third Bank or any other
bank and is not insured or guaranteed by the FDIC or any other government
agency.
The Fund, by concentrating in technology stocks, assumes
the risks of holding technology stocks. For example,
technology stocks tend to:
. fluctuate in price more widely and rapidly than the
market as a whole
. underperform other types of stocks or be difficult to
sell when the economy is not robust, during market
downturns, or when technology stocks are out of favor
. decline in price due to sector specific developments
. be more vulnerable than most stocks to the obsolescence
of existing technology, expired patents, short product
cycles, price competition, market saturation and new
market entrants.
To the extent that the Fund invests in mid cap and small
cap stocks, it takes on additional risks. For instance,
mid cap and small cap stocks tend to be less liquid and
more volatile than large cap stocks. Smaller companies
tend to be unseasoned issuers with new products and less
experienced management.
The prices of most growth stocks are based on future
expectations. As a result, those stocks tend to be more
sensitive than value stocks to negative earnings surprises
and changes in internal growth rates. Growth stocks in
particular may underperform during periods when the market
favors value stocks. The Fund's performance may also
suffer if certain stocks do not perform as the portfolio
management team expected.
Through active trading, the Fund may have a high portfolio
turnover rate, which can mean higher taxable distributions
and lower performance due to increased brokerage costs.
20
<PAGE>
Fifth Third Technology Fund
[LOGO]
Volatility and Performance Information
This section would normally include a bar chart and a table showing how the
Technology Fund has performed and how its performance has varied from year to
year. Because the Fund has not yet been in operation for a full calendar year,
the bar chart and table are not shown.
21
<PAGE>
Fifth Third Bond Fund For Income
[LOGO]
Fundamental High level of current income.
Objective
Principal
Investment Under normal market conditions, the Fund invests at least
Strategies 65% of total assets in the following types of investment
grade securities: corporate securities, mortgage-backed
securities, and securities of the U.S. Treasury and U.S.
Government agencies and instrumentalities. At the time of
investment, each of those securities has a remaining
maturity or average life of 10 years or less and is rated
as investment grade. Investment grade securities are
securities rated in the BBB major rating category or
higher by Standard & Poor's, or in the Baa major rating
category or higher by Moody's, or their unrated
equivalents.
From time to time, the Fund will invest in mortgage-backed
securities, which generally offer higher interest rates
than many types of debt securities. Mortgage-backed
securities represent interests in the revenue generated
from pools of mortgages.
The Fund strives to manage its portfolio so that it
receives a fairly consistent level of income regardless of
fluctuations in interest rates. Additionally, the Fund may
seek some capital appreciation, especially when bond
prices are rising, if Fifth Third Bank believes that the
Fund can realize such appreciation without foregoing its
objective of high current income.
The Fund reserves the right to invest up to 35% of total
assets in other securities, such as money market
instruments.
Principal
Investment Risks The principal risks of investing in the Fund include the
risks of investing in debt securities, such as, the
tendency of bond prices to fall when interest rates rise
and the risk of an issuer defaulting on its obligations of
paying principal and interest.
An investment in the Fund is not a deposit of Fifth Third Bank or any other bank
and is not insured or guaranteed by the FDIC or any other government agency.
Generally, the price of a bond moves in the opposite
direction from interest rates. New bonds issued after a
rise in rates offer higher yields to investors. An
existing bond with a lower yield can appear attractive to
investors by selling it at a lower price. This process
works in reverse as well; as interest rates fall, the
price of a bond tends to increase.
The prices of mortgage-backed securities also are affected
by changes in interest rates. Although mortgage-backed
securities tend to pay higher interest rates, they also
carry additional risk. For instance, their prices and
yields typically assume that the securities will be
redeemed at a given time before maturity. When interest
rates fall substantially, they usually are redeemed early
because the underlying mortgages often are prepaid. The
Fund would then have to reinvest the proceeds it receives
because of those redemptions at a lower rate. The price or
yield of mortgage-backed securities also may fall if they
are redeemed after that date.
22
<PAGE>
Fifth Third Bond Fund For Income
[LOGO]
Volatility and Performance Information
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and over time, as well as
compared to a broad-based securities index. The Lehman Brothers Intermediate
Government/Corporate Index ("LBIGC") is an unmanaged index generally
representative of the performance of the bond market as a whole.
The returns assume that Fund distributions have been reinvested. The returns for
Investment C shares will differ from the returns for Investment A shares (which
are shown in the bar chart) because of differences in expenses of each class.
The table assumes that shareholders redeem their fund shares at the end of the
period indicated.
Past performance does not indicate how the Fund will perform in the future.
Year-by-Year Total Returns as of 12/31 For Investment A Shares
[GRAPH]
1990 8.24%
1991 14.62%
1992 6.32%
1993 8.67%
1994 -6.40%
1995 16.95%
1996 1.86%
1997 7.27%
1998 7.40%
1999 -0.80%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
<TABLE>
<S> <C> <C>
Best quarter: Q2 1995 5.95%
Worst quarter: Q2 1994 -3.55%
Year to Date Return (1/1/00 to 9/30/00) 5.20%
-----------------------------------------------------
</TABLE>
Average Annual
Total Returns (for
the periods ended
December 31, 1999)
-------------------
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment A Shares 1/1/83 -5.23% 5.38% 5.73% 7.72%
(with 4.50% sales
charge)
--------------------------------------------------------------------
Investment C Shares/1/ 1/1/83 -1.20% 5.56% 5.28% 7.01%
(with applicable
Contingent Deferred
Sales Charge)
--------------------------------------------------------------------
(Since 12/31/82)
LBIGC 0.39% 7.09% 7.25% 8.76%
</TABLE>
--------------------------------------------------------------------------------
/1/ The performance of Investment C shares is based on the performance for
Investment A shares, adjusted to reflect the expenses and sales charges for
Investment C shares, for the period prior to the commencement of operations of
Investment C shares on January 27, 1997.
23
<PAGE>
Fifth Third Quality Bond Fund
[LOGO]
Fundamental High current income. Capital growth is a secondary
Objective objective.
Principal Under normal market conditions, the Fund invests at least
Investment 65% of total assets in U.S. Treasury bills, notes and
Strategies bonds, securities of U.S. Government agencies and
instrumentalities and corporate debt securities, including
mortgage-backed securities. Mortgage-backed securities
generally offer higher interest rates than many types of
debt securities. At the time of investment, each of those
securities has a remaining maturity or average life of 30
years or less. Corporate bonds are rated as investment
grade. Investment grade securities are securities rated in
the BBB major rating category or higher by Standard &
Poor's, or in the Baa major rating category by Moody's, or
unrated equivalents as determined by the Fund's investment
manager.
The Fund is managed for growth of capital but with less
volatility than a bond fund investing in lower quality
securities. In selecting portfolio securities, the Fund
generally considers, among other things, remaining
maturity, stated interest rates, the price of the
security, as well as the financial condition of the issuer
and its prospects for long-term growth of earnings and
revenues.
The Fund reserves the right to invest up to 35% of total
assets in other securities, such as money market
instruments.
Principal The principal risks of investing in the Fund include the
Investment Risks risks of investing in debt securities, such as the
tendency of bond prices to fall when interest rates rise
and the risk of an issuer defaulting on its obligations of
paying principal and interest. The prices of long-term
bonds (bonds with a remaining maturity of at least 10
years) tend to be more volatile than the prices of bonds
with a shorter remaining maturity.
An investment in the Fund is not a deposit of Fifth Third Bank or any other
bank and is not insured or guaranteed by the FDIC or any other government
agency.
Generally, the price of a bond moves in the opposite
direction from interest rates. New bonds issued after a
rise in rates offer higher yields to investors. An
existing bond with a lower yield can appear attractive to
investors by selling it at a lower price. This process
works in reverse as well, as interest rates fall, the
price of a bond tends to increase.
The prices of mortgage-backed securities also are affected
by changes in interest rates. Although mortgage-backed
securities tend to pay higher interest rates, they also
carry additional risk. For instance, their prices and
yields typically assume that the securities will be
redeemed at a given time before maturity. When interest
rates fall substantially, they usually are redeemed early
because the underlying mortgages often are prepaid. The
Fund would then have to reinvest the proceeds it receives
because of those redemptions at a lower rate. The price or
yield of mortgage-backed securities also may fall if they
are redeemed after that date.
From time to time, the Fund's portfolio could be
significantly invested in some of the highest quality debt
securities, which tend not to provide the same opportunity
for current income or capital growth as lower grade
securities, or in BBB/Baa rated debt securities, which
generally have more speculative investment characteristics
than higher grade debt securities.
24
<PAGE>
Fifth Third Quality Bond Fund
[LOGO]
Volatility and Performance Information
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and over time, as well as
compared to a broad-based securities index. The Lehman Brothers Aggregate Bond
Index ("LBAB") is an unmanaged index generally representative of the performance
of the bond market as a whole.
The returns assume that Fund distributions have been reinvested. The returns for
Investment B and C shares will differ from the returns for Investment A shares
(which are shown in the bar chart) because of differences in expenses of each
class. The table assumes that shareholders redeem their fund shares at the end
of the period indicated.
Past performance does not indicate how the Fund will perform in the future.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Investment A Shares
1990 8.04%
1991 14.65%
1992 6.00%
1993 7.52%
1994 -3.90%
1995 17.18%
1996 1.85%
1997 8.20%
1998 8.45%
1999 -2.34%
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
<TABLE>
<S> <C> <C>
Best quarter: Q2 1995 5.76%
Worst quarter: Q1 1994 -3.16%
Year to Date Return (1/1/00 to 9/30/00) 5.35%
</TABLE>
Average Annual Total Returns (for the periods ended December 31, 1999)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment A Shares
(with 4.50% sales 1/1/83 -6.77% 5.39% 5.84% 7.52%
charge)
--------------------------------------------------------------------
Investment B Shares/1/
(with applicable 1/1/83 -7.96% 5.22% 5.53% 7.01%
Contingent Deferred
Sales Charge)
--------------------------------------------------------------------
Investment C Shares/2/
(with applicable 1/1/83 -2.72% 5.65% 5.56% 7.03%
Contingent Deferred
Sales Charge)
--------------------------------------------------------------------
(Since 12/31/82)
LBAB -0.83% 7.73% 7.69% 9.50%
</TABLE>
--------------------------------------------------------------------------------
/1/Because Investment B shares commenced operations on 10/11/00 and therefore
do not have a performance history, the performance for Investment B shares is
based on the performance for Investment A shares, adjusted to reflect the
expenses and sales charges for Investment B shares.
/2/The performance of Investment C shares is based on the performance for
Investment A shares, adjusted to reflect the expenses and sales charges for
Investment C shares, for the period prior to the commencement of operations of
Investment C shares on April 25, 1996.
25
<PAGE>
Fifth Third
U.S. Government Securities Fund
[LOGO]
Fundamental High level of current income. Capital growth is a
Objective secondary objective.
Principal Under normal market conditions, the Fund invests at least
Investment 65% of total assets in U.S. government securities. At the
Strategies time of investment each of those securities has a
remaining maturity or average life of 7 years or less,
although the Fund attempts to minimize fluctuations in the
value of its shares.
U.S. government securities are debt securities issued or
guaranteed as to payment of principal and interest by the
full faith and credit of the U.S. government and
obligations issued by the agencies or instrumentalities of
the U.S. government, but not supported by such full faith
and credit. They may include securities issued or
sponsored by Government National Mortgage Association
(Ginnie Mae), Federal National Mortgage Association
(Fannie Mae) and Federal Home Loan Mortgage Corporation
(Freddie Mac).
U.S. Treasury securities are debt obligations of the U.S.
government, and are backed by the U.S. government's full
faith and credit of the U.S. government. While there are
different degrees of credit quality, all U.S. government
securities generally are considered highly credit worthy.
In selecting portfolio securities, the Fund generally
considers, among other things, stated interest rates and
the price of a security. The Fund attempts to limit
volatility of Fund share prices by managing the average
life of the Fund's investment portfolio.
The Fund reserves the right to invest up to 35% of total
assets in other securities, such as money market
instruments.
Principal
Investment Risks The principal risks of investing in the Fund include the
risks of investing in debt securities, such as the
An investment in tendency of bond prices to fall when interest rates rise
the Fund is not and the risk of an issuer defaulting on its obligations of
a deposit of paying principal and interest.
Fifth Third Bank
or any other Generally, the price of a bond moves in the opposite
bank and is not direction from interest rates. New bonds issued after a
insured or rise in rates offer higher yields to investors. An
guaranteed by existing bond with a lower yield can appear attractive to
the FDIC or any investors by selling it at a lower price. This process
other government works in reverse as well; as interest rates fall, the
agency. price of a bond tends to increase.
26
<PAGE>
Fifth Third
U.S. Government Securities Fund
[LOGO]
Volatility and Performance Information
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and over time, as well as
compared to a broad-based securities index. The Lehman Brothers Intermediate
Government Bond Index ("LBIGBI") is an unmanaged index generally representative
of intermediate-term government bonds.
The returns assume that Fund distributions have been reinvested. The returns for
Investment C shares will differ from the returns for Investment A shares (which
are shown in the bar chart) because of differences in expenses of each class.
The table assumes that shareholders redeem their fund shares at the end of the
period indicated.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Investment A Shares
1990 8.45%
1991 9.51%
1992 5.27%
1993 6.19%
1994 -2.18%
1995 13.01%
1996 2.45%
1997 7.14%
1998 7.38%
1999 0.02%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
<TABLE>
Past performance <S> <C> <C>
does not indicate Best quarter: Q2 1995 4.49%
how the Fund will Worst quarter: Q1 1994 -1.99%
perform in the Year to Date Return (1/1/00 to 9/30/00) 5.43%
future. </TABLE>
Average Annual Total Returns
(for the periods ended December
31, 1999)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment A Shares
(with 4.50% sales 1/1/86 -4.47% 4.94% 5.15% 5.47%
charge)
----------------------------------------------------------------------
Investment C Shares/1/
(with applicable 1/1/86 -0.57% 5.11% 4.85% 5.02%
Contingent Deferred
Sales Charge)
----------------------------------------------------------------------
(Since 12/31/85)
LBIGBI 0.50% 6.93% 7.10% 7.60%
</TABLE>
--------------------------------------------------------------------------------
/1/The performance of Investment C shares is based on the performance for
Investment A shares, adjusted to reflect the expenses and sales charges for
Investment C shares, for the period prior to the commencement of operations
of Investment C shares on April 24, 1996.
27
<PAGE>
Fifth Third Municipal Bond Fund
[LOGO]
Fundamental High level of current income that is exempt from federal
Objective regular income taxes.
Principal Under normal market conditions, the Fund invests at least
Investment 80% of total assets in municipal securities, which pay
Strategies interest that is exempt from federal income tax. The
securities generally are issued by U.S. states, counties,
cities, towns, territories and public authorities. At the
time of investment, they are rated as investment grade.
Investment grade securities are securities rated in the
BBB major rating category or higher by Standard & Poor's
or in the Baa major rating category by Moody's, or unrated
equivalents as determined by the Fund's investment
manager.
Among the securities in which the Fund may invest are
participation agreements, that is, interests in loans made
to municipalities, and general obligation and revenue
bonds of tax-exempt municipalities. The Fund also may
invest in limited obligation securities, from which
interest and principal payments are dependent on payments
from specific sources rather than the general obligations
of the government issuer. Limited obligation securities
include: lease obligations and installment contracts
(issued by government entities to obtain funds to lease or
acquire equipment and other property), project finance
obligations (issued in connection with the financing of
infrastructure projects) and industrial revenue bonds
(issued in the name of a public authority to finance
infrastructure used by a private entity).
In selecting portfolio securities, the Fund generally
considers, among other things, remaining maturity or
average life, stated interest rates and the price of a
security. The Fund attempts to manage volatility by
maintaining a portfolio with an intermediate average life.
The Fund reserves the right to invest up to 20% of total
assets in other securities, such as money market
instruments.
Principal
Investment Risks The principal risks of investing in the Fund include the
risks of investing in debt securities, such as the
tendency of bond prices to fall when interest rates rise
and the risk of an issuer defaulting on its obligations of
paying principal and interest.
An investment in the Fund is not a deposit of Fifth Third Bank or any other
bank and is not insured or guaranteed by the FDIC or any other government
agency.
Generally, the price of a bond moves in the opposite
direction from interest rates. New bonds issued after a
rise in rates offer higher yields to investors. An
existing bond with a lower yield can appear attractive to
investors by selling it at a lower price. This process
works in reverse as well; as interest rates fall, the
price of a bond tends to increase.
The Fund's performance may be affected by political and
economic factors at the state, regional or national level.
Those factors may include budgetary problems and declining
tax bases. Actual or proposed changes in tax rates also
may affect your net return. Limited obligation securities
are not general obligations of the issuers. As a result,
in the event of a default or termination, the security
holders may have limited recourse.
28
<PAGE>
Fifth Third Municipal Bond Fund
[LOGO]
Volatility and Performance Information
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and over time, as well as
compared to a broad-based securities index. The Lehman Brothers Municipal Bond
Index ("LBMBI") is an unmanaged index that generally is representative of
municipal bonds with intermediate maturities.
The returns assume that Fund distributions have been reinvested. The returns for
Investment C shares will differ from the returns for Investment A shares (which
are shown in the bar chart) because of differences in expenses of each class.
The table assumes that shareholders redeem their fund shares at the end of the
period indicated.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Investment A Shares
1990 6.89%
1991 8.60%
1992 6.25%
1993 6.76%
1994 -2.30%
1995 9.68%
1996 3.26%
1997 6.88%
1998 5.57%
1999 -3.58%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
Past performance
does not indicate
how the Fund will <TABLE>
perform in the <S> <C> <C>
future. Best quarter: Q4 1990 4.25%
Worst quarter: Q1 1994 -3.12%
Year to Date Return (1/1/00 to 9/30/00) 4.62%
</TABLE>
Average Annual Total Returns
(for the periods ended December
31, 1999)*
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment A Shares
(with 4.50% sales 1/1/83 -7.94% 3.31% 4.23% 6.21%
charge)
--------------------------------------------------------------------
(Since 12/31/82)
LBMBI -2.07% 6.91% 6.89% 8.69%
</TABLE>
--------------------------------------------------------------------------------
* Performance information is not shown for Investment C shares because, as of
the date of this Prospectus, no assets were invested in Investment C shares.
29
<PAGE>
Fifth Third Ohio Tax Free Bond Fund
[LOGO]
Fundamental Current income exempt from federal income tax and the
Objective personal income taxes imposed by the State of Ohio and
Ohio municipalities.
Principal
Investment Under normal market conditions, the Fund invests at least
Strategies 80% of net assets in municipal securities which pay
interest that is exempt from personal income taxes imposed
by Ohio and its municipalities. The securities generally
are issued by the State of Ohio, as well as counties,
cities, towns, territories and public authorities in Ohio.
At the time of investment, they are rated as investment
grade. Investment grade securities are securities rated in
the BBB major rating category or higher by Standard &
Poor's or in the Baa major rating category by Moody's, or
unrated equivalents as determined by the Fund's investment
manager.
Among the securities in which the Fund may invest are
participation agreements, that is, interests in loans made
to municipalities, and general obligation and revenue
bonds of tax-exempt municipalities. The Fund also may
invest in limited obligation securities, from which
interest and principal payments are dependent on payments
from specific sources rather than the general obligations
of the government issuer. Limited obligation securities
include: lease obligations and installment contracts
(issued by government entities to obtain funds to lease or
acquire equipment and other property), project finance
obligations (issued in connection with the financing of
infrastructure projects) and industrial revenue bonds
(issued in the name of a public authority to finance
infrastructure used by a private entity).
In selecting portfolio securities, the Fund considers,
among other things, remaining maturity or average life,
stated interest rates and the price of a security. The
Fund attempts to manage volatility by maintaining a
portfolio with an intermediate average life.
Principal
Investment Risks The principal risks of investing in the Fund include the
risks of investing in debt securities, such as the
tendency of bond prices to fall when interest rates rise
and the risk of an issuer defaulting on its obligations of
paying principal and interest.
An investment in the Fund is not a deposit of Fifth Third Bank or any other
bank and is not insured or guaranteed by the FDIC or any other government
agency.
Generally, the price of a bond moves in the opposite
direction from interest rates. New bonds issued after a
rise in rates offer higher yields to investors. An
existing bond with a lower yield can appear attractive to
investors by selling it at a lower price. This process
works in reverse as well; as interest rates fall, the
price of a bond tends to increase.
This Fund is a non-diversified fund with regard to issuers
of securities. As a result, it does not have to invest in
as many issuers as a diversified fund and thus, could be
significantly affected by the performance of one or a
small number of issuers.
Because the Fund is non-diversified and because it
concentrates its investments in the securities of issuers
in Ohio, certain factors including economic conditions,
constitutional amendments, legislative and executive
measures, and voter initiatives may have a
disproportionately negative effect on the Fund's
investments. For example, the Ohio economy relies to a
significant degree on manufacturing. As a result, economic
activity in Ohio tends to be cyclical, which may affect
the market value of Ohio municipal securities or the
ability of issuers to make timely payments of interest and
principal.
In addition, because limited obligation securities are not
general obligations of the issuers, the Fund will have
limited recourse in the event of a default or termination
of these securities.
30
<PAGE>
Fifth Third Ohio Tax Free Bond Fund
[LOGO]
Volatility and Performance Information
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and over time, as well as
compared to a broad-based securities index. The Lehman Brothers Municipal Bond
Index ("LBMBI") is an unmanaged index that generally is representative of
municipal bonds with intermediate maturities.
The returns assume that Fund distributions have been reinvested. The returns for
Investment B and C shares will differ from the returns for Investment A shares
(which are shown in the bar chart) because of differences in expenses of each
class. The table assumes that shareholders redeem their fund shares at the end
of the period indicated.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Investment A Shares
1990 5.70%
1991 9.46%
1992 6.24%
1993 6.71%
1994 -4.01%
1995 13.72%
1996 3.48%
1997 6.92%
1998 5.50%
1999 -3.17%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
Past performance
does not indicate
how the Fund will <TABLE>
perform in the <S> <C> <C>
future. Best quarter: Q1 1995 5.53%
Worst quarter: Q1 1994 -3.78%
Year to Date Return (1/1/00 to 9/30/00) 5.18%
</TABLE>
Average Annual Total Returns
(for the periods ended December
31, 1999)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment A Shares
(with 4.50% sales 1/1/87 -7.52% 4.18% 4.45% 4.30%
charge)
--------------------------------------------------------------------
Investment B Shares/1/
(with applicable 1/1/87 -8.66% 4.04% 4.15% 3.88%
Contingent Deferred
Sales Charge)
--------------------------------------------------------------------
Investment C Shares/2/
(with applicable 1/1/87 -3.55% 4.44% 4.19% 3.90%
Contingent Deferred
Sales Charge)
--------------------------------------------------------------------
<CAPTION>
(Since 12/31/86)
<S> <C> <C> <C> <C> <C>
LBMBI -2.07% 6.91% 6.89% 7.01%
</TABLE>
--------------------------------------------------------------------------------
/1/Because Investment B shares commenced operations on 10/11/00 and therefore
do not have a performance history, the performance for Investment B shares
is based on the performance for Investment A shares, adjusted to reflect the
expenses and sales charges for Investment B shares.
/2/The performance of Investment C shares is based on the performance for
Investment A shares, adjusted to reflect the expenses and sales charges for
Investment C shares, for the period prior to the commencement of operations
of Investment C shares on April 24, 1996.
31
<PAGE>
Shareholder Fees and Fund Expenses
Fee Tables
These tables describe the fees and expenses that you may pay if you buy and
hold Investment A Shares or Investment B Shares of the Money Market Funds.
Shareholder fees are paid by you at the time you purchase or sell your shares.
Annual Fund operating expenses are paid out of Fund assets, and are reflected
in the share price. Each Fund's fees and expenses are based upon the Fund's
operating expenses for the fiscal year ended July 31, 2000.
Shareholder Fees
<TABLE>
<CAPTION>
Money Market Funds--Fee Table
Fifth Third Fifth Third Fifth Third
Government Prime Money Tax Exempt
Money Market Market Money Market
Fund Fund Fund
A A B A
<S> <C> <C> <C> <C>
Maximum Sales Charge
(Load) Imposed on
Purchases None None None None
----------------------------------------------------------------------
Maximum Sales Charge
(Load) Imposed on
Reinvested Dividends None None None None
----------------------------------------------------------------------
Maximum Deferred Sales
Load/1/ None None 5.00% None
----------------------------------------------------------------------
Annual Fund Operating
Expenses
(as a percentage of
average net assets)
Management fees 0.40% 0.40% 0.40% 0.50%
----------------------------------------------------------------------
Distribution/Service
(12b-1) fees 0.25% 0.25% 1.00% 0.25%
----------------------------------------------------------------------
Other expenses 0.24% 0.22% 0.23%/2/ 0.33%
----------------------------------------------------------------------
Total Annual Fund
Operating Expenses/3/ 0.89% 0.87% 1.63% 1.08%
----------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
/1/ 5% the first year after purchase, declining to 4% in the second year, 3% in
the third and fourth years, 2% in the fifth year, 1% in the sixth year and
eliminated thereafter. Approximately eight years after purchase, Investment B
shares automatically convert to Investment A shares.
/2/ Other expenses are based on estimated amounts for the current fiscal year.
/3/ During the last fiscal year Fifth Third Bank waived the following
Management Fees for the Investment A shares: 0.02% for the Prime Money Market
Fund and 0.50% for the Tax Exempt Money Market Fund. BISYS waived the following
Distribution (12b-1) Fees and/or Administration Fees for the Investment A
shares: 0.12% for the Government Money Market Fund, 0.08% Prime Money Market
Fund, and 0.20% for the Tax Exempt Money Market Fund. Therefore, Total Annual
Fund Operating Expenses for Investment A shares after fee waivers were as
follows: 0.77% for the Government Money Market Fund, 0.77% for the Prime Money
Market Fund, and 0.38% for the Tax Exempt Money Market Fund. These waivers may
be discontinued at any time.
32
<PAGE>
Shareholder Fees and Fund Expenses
Fee Tables
These tables describe the fees and expenses that you may pay if you buy and
hold shares of the Funds.
Shareholder Fees
<TABLE>
<CAPTION>
Stock Funds--Fee Table
Fifth Third Fifth Third Fifth Third Fifth Third
Quality Growth Equity Income Pinnacle Balanced
Fund Fund Fund Fund
A B C A B C A B C A B C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge
(Load) Imposed on
Purchases 4.50% None None 4.50% None None 4.50% None None 4.50% None None
-----------------------------------------------------------------------------------------------------------
Maximum Sales Charge
(Load) Imposed on
Reinvested Dividends None None None None None None None None None None None None
-----------------------------------------------------------------------------------------------------------
Maximum Deferred Sales
Load/1/ None 5.00% 1.00% None 5.00% 1.00% None 5.00% 1.00% None 5.00% 1.00%
-----------------------------------------------------------------------------------------------------------
Annual Fund Operating
Expenses (as a
percentage of average
net assets)
Management fees 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80% 0.80%
-----------------------------------------------------------------------------------------------------------
Distribution/Service
(12b-1) fees 0.25% 1.00% 0.75% 0.25% 1.00% 0.75% 0.25% 1.00% 0.75% 0.25% 1.00% 0.75%
-----------------------------------------------------------------------------------------------------------
Other expenses 0.23% 0.24%/2/ 0.48% 0.28% 0.32%/2/ 0.53% 0.27% 0.38%/2/ 0.52% 0.26% 0.29%/2/ 0.51%
-----------------------------------------------------------------------------------------------------------
Total Annual Fund
Operating Expenses/3/ 1.28% 2.04% 2.03% 1.33% 2.12% 2.08% 1.32% 2.18% 2.07% 1.31% 2.09% 2.06%
-----------------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
/1/ 5% in the first year after purchase, declining to 4% in the second year, 3%
in the third and fourth years, 2% in the fifth year, 1% in the sixth year and
eliminated thereafter. Approximately eight years after purchase, Investment B
shares automatically convert to Investment A shares.
/2/ Other expenses are based on estimated amounts for the current fiscal year.
/3/ During the last fiscal year BISYS waived the following Distribution (12b-1)
Fees and/or Administration Fees for the Investment A shares: 0.03% for the
Quality Growth Fund, 0.06% for the Equity Income Fund, and 0.06% for the
Balanced Fund. BISYS also waived the following Distribution (12b-1) Fees and/or
Administration Fees for the Investment C shares: 0.28% for the Quality Growth
Fund, 0.31% for the Equity Income Fund, 0.25% for the Pinnacle Fund, and 0.31%
for the Balanced Fund. Therefore, Total Annual Fund Operating Expenses for
Investment A shares after fee waivers were as follows: 1.25% for the Quality
Growth Fund, 1.27% for the Equity Income Fund, 1.32% for the Pinnacle Fund, and
1.25% for the Balanced Fund. Total Annual Fund Operating Expenses for
Investment C shares after fee waivers were as follows: 1.75% for the Quality
Growth Fund, 1.77% for the Equity Income Fund, 1.82% for the Pinnacle Fund, and
1.75% for the Balanced Fund. These waivers may be discontinued at any time.
33
<PAGE>
Shareholder Fees and Fund Expenses
<TABLE>
<CAPTION>
Stock Funds--Fee Table
Fifth Third Fifth Third
Fifth Third International Technology
Mid Cap Fund Equity Fund Fund
A B C A B C A B C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge
(Load) Imposed on
Purchases 4.50% None None 4.50% None None 4.50% None None
--------------------------------------------------------------------------------------------
Maximum Sales Charge
(Load) Imposed on
Reinvested Dividends None None None None None None None None None
--------------------------------------------------------------------------------------------
Maximum Deferred Sales
Load/1/ None 5.00% 1.00% None 5.00% 1.00% None 5.00% 1.00%
--------------------------------------------------------------------------------------------
Annual Fund Operating
Expenses (as a
percentage of average
net assets)
Management fees 0.80% 0.80% 0.80% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
--------------------------------------------------------------------------------------------
Distribution/Service
(12b-1) fees 0.25% 1.00% 0.75% 0.25% 1.00% 0.75% 0.25% 1.00% 0.75%
--------------------------------------------------------------------------------------------
Other expenses 0.24% 0.34%/2/ 0.49% 0.45% 0.45%/2/ 0.70% 0.46%/2/ 0.46%/2/ 0.71%/2/
--------------------------------------------------------------------------------------------
Total Annual Fund
Operating Expenses/3/ 1.29% 2.14% 2.04% 1.70% 2.45% 2.45% 1.71% 2.46% 2.46%
--------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
/1/ 5% in the first year after purchase, declining to 4% in the second year, 3%
in the third and fourth years, 2% in the fifth year, 1% in the sixth year and
eliminated thereafter. Approximately eight years after purchase, Investment B
shares automatically convert to Investment A shares.
/2/ Other expenses are based on estimated amounts for the current fiscal year.
/3/ During the last fiscal year BISYS waived the following Distribution (12b-1)
Fees and/or Administration Fees for the Investment A shares: 0.05% for the Mid
Cap Fund. BISYS also waived the following Distribution (12b-1) Fees and/or
Administration Fees for the Investment C shares: 0.30% for the Mid Cap Fund,
and 0.23% for the International Equity Fund. Therefore, Total Annual Fund
Operating Expenses for Investment A shares after fee waivers were as follows:
1.24% for the Mid Cap Fund, 1.70% for the International Equity Fund, and 1.71%
for the Technology Fund. Total Annual Fund Operating Expenses for Investment C
shares after fee waivers were as follows: 1.74% for the Mid Cap Fund, 2.22% for
the International Equity Fund, and 2.46% for the Technology Fund. These waivers
may be discontinued at any time.
34
<PAGE>
Shareholder Fees and Fund Expenses
<TABLE>
<CAPTION>
Bond Funds--Fee Table
Fifth Third Fifth Third
Bond Fund Fifth Third Fifth Third Fifth Third Ohio Tax
for Quality Bond U.S. Government Municipal Bond Free
Income Fund Securities Fund Fund Bond Fund
A C A B C A C A C A B C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge
(Load) Imposed on
Purchases 4.50% None 4.50% None None 4.50% None 4.50% None 4.50% None None
------------------------------------------------------------------------------------------------------------
Maximum Sales Charge
(Load) Imposed on
Reinvested Dividends None None None None None None None None None None None None
------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales
Load/1/ None 1.00% None 5.00% 1.00% None 1.00% None 1.00% None 5.00% 1.00%
------------------------------------------------------------------------------------------------------------
Annual Fund Operating
Expenses (as a
percentage of average
net assets)
Management fees 0.55% 0.55% 0.55% 0.55% 0.55% 0.55% 0.55% 0.55% 0.55% 0.55% 0.55% 0.55%
------------------------------------------------------------------------------------------------------------
Distribution/Service
(12b-1) fees 0.25% 0.75% 0.25% 1.00% 0.75% 0.25% 0.75% 0.25% 0.75% 0.25% 1.00% 0.75%
------------------------------------------------------------------------------------------------------------
Other expenses 0.25% 0.47% 0.29% 0.29%/2/ 0.53% 0.39% 0.62% 0.31% 0.56%/2/ 0.25% 0.41%/2/ 0.51%
------------------------------------------------------------------------------------------------------------
Total Annual Fund
Operating Expenses/3/ 1.05% 1.77% 1.09% 1.84% 1.83% 1.19% 1.92% 1.11% 1.86% 1.05% 1.96% 1.81%
------------------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
/1/ 5% in the first year after purchase, declining to 4% in the second year, 3%
in the third and fourth years, 2% in the fifth year, 1% in the sixth year and
eliminated thereafter. Approximately eight years after purchase, Investment B
shares automatically convert to Investment A shares.
/2/ Other expenses are based on estimated amounts for the current fiscal year.
/3/ During the last fiscal year Fifth Third Bank waived the following
Management Fees: 0.12% for the U.S. Government Securities Fund Investment A
shares and 0.12% for the U.S. Government Securities Fund Investment C shares.
BISYS waived the following Distribution (12b-1) Fees and/or Administration Fees
for Investment A shares: 0.04% for the Bond Fund for Income, 0.09% for the
Quality Bond Fund, 0.09% for the U.S. Government Securities Fund, 0.11% for the
Municipal Bond Fund, and 0.04% for the Ohio Tax Free Bond Fund. BISYS also
waived the following Distribution (12b-1) Fees and/or Administration Fees for
the Investment C shares: 0.26% for the Bond Fund for Income, 0.33% for the
Quality Bond Fund, 0.32% for the U.S. Government Securities Fund, 0.36% for the
Municipal Bond Fund, and 0.29% for the Ohio Tax Free Bond Fund. Therefore,
Total Annual Fund Operating Expenses for Investment A shares after fee waivers
were as follows: 1.01% for the Bond Fund for Income, 1.00% for the Quality Bond
Fund, 0.98% for the U.S. Government Securities Fund, 1.00% for the Municipal
Bond Fund, and 1.01% for the Ohio Tax Free Bond Fund. Total Annual Fund
Operating Expenses for Investment C shares after fee waivers were as follows:
1.51% for the Bond Fund for Income, 1.50% for the Quality Bond Fund, 1.48% for
the U.S. Government Securities Fund, 1.50% for the Municipal Bond Fund, and
1.52% for the Ohio Tax Free Bond Fund. These waivers may be discontinued at any
time.
35
<PAGE>
Shareholder Fees and Fund Expenses
Expense Examples
Use the tables below to compare fees and expenses with the fees and expenses of
other mutual funds. The tables illustrate the amount of fees and expenses you
and the Fund would pay, assuming a $10,000 initial investment, 5% annual
return, payment of maximum sales charges, and no changes in the Fund's
operating expenses. Amounts are presented assuming redemption at the end of
each period. Because these examples are hypothetical and for comparison only,
your actual costs may be different.
Money Market Funds
<TABLE>
<CAPTION>
Fifth Third Government 1 3 5 10
Money Market Fund Year Years Years Years
----------------------------------------------
<S> <C> <C> <C> <C>
Investment A Shares $ 91 $284 $ 493 $1,096
----------------------------------------------
<CAPTION>
Fifth Third Prime 1 3 5 10
Money Market Fund Year Years Years Years
----------------------------------------------
<S> <C> <C> <C> <C>
Investment A Shares $ 89 $278 $ 482 $1,073
----------------------------------------------
Investment B Shares
Assuming Redemption $666 $814 $1,087 $1,730
Assuming no Redemption $166 $514 $ 887 $1,730
----------------------------------------------
<CAPTION>
Fifth Third Tax Exempt 1 3 5 10
Money Market Fund Year Years Years Years
----------------------------------------------
<S> <C> <C> <C> <C>
Investment A Shares $110 $343 $ 595 $1,317
----------------------------------------------
Stock Funds
<CAPTION>
Fifth Third Quality 1 3 5 10
Growth Fund Year Years Years Years
----------------------------------------------
<S> <C> <C> <C> <C>
Investment A Shares $575 $838 $1,121 $1,926
----------------------------------------------
Investment B Shares
Assuming Redemption $707 $940 $1,298 $2,174
Assuming no Redemption $207 $640 $1,098 $2,174
----------------------------------------------
Investment C Shares
Assuming Redemption $306 $637 $1,093 $2,358
Assuming no Redemption $206 $637 $1,093 $2,358
----------------------------------------------
<CAPTION>
Fifth Third Equity 1 3 5 10
Income Fund Year Years Years Years
----------------------------------------------
<S> <C> <C> <C> <C>
Investment A Shares $579 $852 $1,146 $1,979
----------------------------------------------
Investment B Shares
Assuming Redemption $715 $964 $1,339 $2,250
Assuming no Redemption $215 $664 $1,139 $2,250
----------------------------------------------
Investment C Shares
Assuming Redemption $311 $652 $1,119 $2,410
Assuming no Redemption $211 $652 $1,119 $2,410
----------------------------------------------
</TABLE>
36
<PAGE>
Shareholder Fees and Fund Expenses
<TABLE>
<CAPTION>
Fifth Third Pinnacle 1 3 5 10
Fund Year Years Years Years
----------------------------------------------
<S> <C> <C> <C> <C>
Investment A Shares $578 $ 849 $1,141 $1,969
----------------------------------------------
Investment B Shares
Assuming Redemption $721 $ 982 $1,369 $2,295
Assuming no Redemption $221 $ 682 $1,169 $2,295
----------------------------------------------
Investment C Shares
Assuming Redemption $310 $ 649 $1,114 $2,400
Assuming no Redemption $210 $ 649 $1,114 $2,400
----------------------------------------------
<CAPTION>
Fifth Third Balanced 1 3 5 10
Fund Year Years Years Years
----------------------------------------------
<S> <C> <C> <C> <C>
Investment A Shares $577 $ 847 $1,136 $1,958
----------------------------------------------
Investment B Shares
Assuming Redemption $712 $ 955 $1,324 $2,221
Assuming no Redemption $212 $ 655 $1,124 $2,221
----------------------------------------------
Investment C Shares
Assuming Redemption $309 $ 646 $1,108 $2,390
Assuming no Redemption $209 $ 646 $1,108 $2,390
----------------------------------------------
<CAPTION>
Fifth Third Mid Cap 1 3 5 10
Fund Year Years Years Years
----------------------------------------------
<S> <C> <C> <C> <C>
Investment A Shares $575 $ 841 $1,126 $1,936
----------------------------------------------
Investment B Shares
Assuming Redemption $717 $ 970 $1,349 $2,256
Assuming no Redemption $217 $ 670 $1,149 $2,256
----------------------------------------------
Investment C Shares
Assuming Redemption $307 $ 640 $1,098 $2,369
Assuming no Redemption $207 $ 640 $1,098 $2,369
----------------------------------------------
<CAPTION>
Fifth Third
International 1 3 5 10
Equity Fund Year Years Years Years
----------------------------------------------
<S> <C> <C> <C> <C>
Investment A Shares $615 $ 962 $1,331 $2,368
----------------------------------------------
Investment B Shares
Assuming Redemption $748 $1,064 $1,506 $2,601
Assuming no Redemption $248 $ 764 $1,306 $2,601
----------------------------------------------
Investment C Shares
Assuming Redemption $348 $ 764 $1,306 $2,786
Assuming no Redemption $248 $ 764 $1,306 $2,786
----------------------------------------------
</TABLE>
37
<PAGE>
Shareholder Fees and Fund Expenses
<TABLE>
<CAPTION>
Fifth Third Technology 1 3
Fund Year Years
-----------------------------------------------
<S> <C> <C> <C> <C>
Investment A Shares $616 $ 965
-----------------------------------------------
Investment B Shares
Assuming Redemption $749 $1,067
Assuming no Redemption $249 $ 767
-----------------------------------------------
Investment C Shares
Assuming Redemption $349 $ 767
Assuming no Redemption $249 $ 767
-----------------------------------------------
Bond Funds
<CAPTION>
Fifth Third Bond Fund 1 3 5 10
For Income Year Years Years Years
-----------------------------------------------
<S> <C> <C> <C> <C>
Investment A Shares $552 $ 769 $1,003 $1,675
-----------------------------------------------
Investment C Shares
Assuming Redemption $280 $ 557 $ 959 $2,084
Assuming no Redemption $180 $ 557 $ 959 $2,084
-----------------------------------------------
<CAPTION>
Fifth Third Quality
Bond 1 3 5 10
Fund Year Years Years Years
-----------------------------------------------
<S> <C> <C> <C> <C>
Investment A Shares $556 $ 781 $1,024 $1,719
-----------------------------------------------
Investment B Shares
Assuming Redemption $687 $ 879 $1,195 $1,962
Assuming no Redemption $187 $ 579 $ 995 $1,962
-----------------------------------------------
Investment C Shares
Assuming Redemption $286 $ 576 $ 990 $2,148
Assuming no Redemption $186 $ 576 $ 990 $2,148
-----------------------------------------------
<CAPTION>
Fifth Third U.S.
Government 1 3 5 10
Securities Fund Year Years Years Years
-----------------------------------------------
<S> <C> <C> <C> <C>
Investment A Shares $566 $ 811 $1,075 $1,828
-----------------------------------------------
Investment C Shares
Assuming Redemption $295 $ 603 $1,037 $2,243
Assuming no Redemption $195 $ 603 $1,037 $2,243
-----------------------------------------------
<CAPTION>
Fifth Third Municipal
Bond 1 3 5 10
Fund Year Years Years Years
-----------------------------------------------
<S> <C> <C> <C> <C>
Investment A Shares $558 $ 787 $1,034 $1,741
-----------------------------------------------
Investment C Shares
Assuming Redemption $289 $ 585 $1,006 $2,180
Assuming no Redemption $189 $ 585 $1,006 $2,180
-----------------------------------------------
</TABLE>
38
<PAGE>
Shareholder Fees and Fund Expenses
<TABLE>
<CAPTION>
Fifth Third Ohio Tax
Free 1 3 5 10
Bond Fund Year Years Years Years
---------------------------------------------
<S> <C> <C> <C> <C>
Investment A Shares $552 $769 $1,003 $1,675
---------------------------------------------
Investment B Shares
Assuming Redemption $699 $915 $1,257 $2,049
Assuming no Redemption $199 $615 $1,057 $2,049
---------------------------------------------
Investment C Shares
Assuming Redemption $284 $569 $ 980 $2,127
Assuming no Redemption $184 $569 $ 980 $2,127
---------------------------------------------
</TABLE>
39
<PAGE>
Additional Information About the Funds' Investments
Investment Practices
The Funds invest in a variety of securities and employ a number of investment
techniques. Each security and technique involves certain risks. The following
table describes the securities and techniques the Funds use, as well as the
main risks they pose. Equity securities are subject mainly to market risk.
Fixed income securities are primarily influenced by market, credit and
prepayment risks, although certain securities may be subject to additional
risks. Following the table is a more complete discussion of risk. You may also
consult the Statement of Additional Information for additional details
regarding these and other permissible investments.
<TABLE>
<CAPTION>
FUND NAME FUND CODE
--------- --------------------
<S> <C>
Government Money Market Fund 1
Prime Money Market Fund 2
Tax Exempt Money Market Fund 3
Quality Growth Fund 4
Equity Income Fund 5
Pinnacle Fund 6
Balanced Fund 7
Mid Cap Fund 8
International Equity Fund 9
Technology Fund 10
Bond Fund for Income 11
Quality Bond Fund 12
U.S. Government Securities Fund 13
Municipal Bond Fund 14
Ohio Tax Free Bond Fund 15
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
---------- -------------------- ------------------
<S> <C> <C>
American Depositary Receipts (ADRs): 4, 6-10 Market
ADRs are foreign shares of a company Political
held by a U.S. bank that issues a Foreign Investment
receipt evidencing ownership.
Asset-Backed Securities: Securities 4, 7, 8, 11, 12 Pre-payment
secured by company receivables, home Market
equity loans, truck and auto loans, Credit
leases, credit card receivables and Interest Rate
other securities backed by other Regulatory
types of receivables or other Liquidity
assets.
Bankers' Acceptances: Bills of 2-5, 7, 8, 10-12, 14 Credit
exchange or time drafts drawn on and Liquidity
accepted by a commercial bank. Market
Maturities are generally six months Interest Rate
or less.
Bonds: Interest-bearing or discounted Market
securities that obligate the issuer Credit
to pay the bondholder a specified Interest Rate
sum of money, usually at specific Political
intervals, and to repay the
principal amount of the loan at
maturity.
Corporate: 2, 4-14
Government: 1-4, 5, 6-9, 11-15
</TABLE>
40
<PAGE>
Additional Information About the Funds' Investments
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
---------- ----------------------- ------------------
<S> <C> <C>
Call and Put Options: A call option 4-13 Management
gives the buyer the right to buy, Liquidity
and obligates the seller of the Credit
option to sell, a security at a Market
specified price. A put option Leverage
gives the buyer the right to sell,
and obligates the seller of the
option to buy a security at a
specified price.
Certificates of Deposit: Negotiable 2-5, 7, 8, 10-14 Market
instruments with a stated Credit
maturity. Liquidity
Interest Rate
Collateralized Mortgage 7, 11-13 Pre-Payment
Obligations: Mortgage-backed bonds Interest
that separate mortgage pools into
different maturity classes.
Commercial Paper: Secured and 2-4, 6-8, 10-12, 14, 15 Credit
unsecured short-term promissory Liquidity
notes issued by corporations and Market
other entities. Maturities Interest Rate
generally vary from a few days to
nine months.
Common Stock: Shares of ownership 4-10 Market
of a company.
Convertible Securities: Bonds or 4-10 Market
preferred stock that convert to Credit
common stock.
Derivatives: Instruments whose 1-15 Management
value is derived from an Market
underlying contract, index or Credit
security, or any combination Liquidity
thereof, including futures, Leverage
options (e.g., put and calls), Interest Rate
options on futures, swap
agreements, and some mortgage-
backed securities.
Foreign Currency Transactions: 9 Foreign Investment
Foreign currency transactions Market
include forward foreign currency Political
exchange contracts, foreign
currency options, and foreign
currency futures transactions.
Foreign Securities: Stocks issued 4, 5, 7-12, 14 Market
by foreign companies, as well as Political
commercial paper of foreign Liquidity
issuers and obligations of foreign Foreign Investment
banks, overseas branches of U.S.
banks and supranational entities.
Futures and Related Options: A 1, 4-15 Management
contract providing for the future Market
sale and purchase of a specified Credit
amount of a specified security, Liquidity
class of securities, or an index Leverage
at a specified time in the future
and at a specified price.
</TABLE>
41
<PAGE>
Additional Information About the Funds' Investments
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
---------- -------------------- -------------
<S> <C> <C>
High-Yield/High-Risk/Debt Securities: High- 11, 12, 14, 15 Credit
yield/high-risk/debt securities are Market
securities that are rated below investment Liquidity
grade by the primary rating agencies Interest Rate
(e.g., BB or lower by Standard & Poor's
and Ba or lower by Moody's). These
securities are considered speculative and
involve greater risk of loss than
investment grade debt securities. Other
terms commonly used to describe such
securities include "lower rated bonds,"
"non-investment grade bonds" and "junk
bonds."
Illiquid Securities: Securities which may 1-15 Liquidity
be difficult to sell at an acceptable Market
price.
Investment Company Securities: Shares of 1- 4, 7-9, 11-15 Market
investment companies. These investment
companies may include money market funds
of Fifth Third Funds and shares of other
registered investment companies for which
the Adviser to a Fund or any of their
affiliates serves as investment adviser,
administrator or distributor.
Investment Grade Bonds: Interest-bearing or 1-4, 8, 11, 12-15 Market
discounted government or corporate Credit
securities that obligate the issuer to pay
the bondholder a specified sum of money,
usually at specific intervals, and to
repay the principal amount of the loan at
maturity. Investment grade bonds are those
rated BBB or better by S&P or Baa or
better by Moody's or similarly rated by
other nationally recognized statistical
rating organizations, or, if not rated,
determined to be of comparable quality by
the Adviser.
Money Market Instruments: Investment-grade, 1-15 Market
U.S. dollar denominated debt securities Credit
that have remaining maturities of one year
or less. These securities may include U.S.
government obligations, commercial paper
and other short-term corporate
obligations, repurchase agreements
collateralized with U.S. government
securities, certificates of deposit,
bankers' acceptances, and other financial
institution obligations. These securities
may carry fixed or variable interest
rates.
Mortgage-Backed Securities: Debt 4, 7, 8, 11-13 Pre-payment
obligations secured by real estate loans Market
and pools of loans. These include Credit
collateralized mortgage obligations and Regulatory
real estate mortgage investment conduits.
</TABLE>
42
<PAGE>
Additional Information About the Funds' Investments
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
---------- -------------------- -------------
<S> <C> <C>
Municipal Securities: Securities issued by 2, 3, 14, 15 Market
a state or political subdivision to obtain Credit
funds for various public purposes. Political
Municipal securities include (a) Tax
governmental lease certificates of Regulatory
participation issued by state or municipal
authorities where payment is secured by
installment payments for equipment,
buildings, or other facilities being
leased by the state or municipality; (b)
government lease certificates purchased by
the Fund will not contain nonappropriation
clauses; (c) municipal notes and tax-
exempt commercial paper; (d) serial bonds;
(e) tax anticipation notes sold to finance
working capital needs of municipalities in
anticipation of receiving taxes at a later
date; (f) bond anticipation notes sold in
anticipation of the issuance of long-term
bonds in the future; (g) pre-refunded
municipal bonds whose timely payment of
interest and principal is ensured by an
escrow of U.S. government obligations; and
(h) general obligation bonds.
Participation Interests: Interests in bank 3, 14, 15 Interest Rate
loans made to corporations. Credit
Liquidity
Preferred Stocks: Preferred stocks are 7, 9, 10 Market
equity securities that generally pay
dividends at a specified rate and have
preference over common stock in the
payment of dividends and liquidation.
Preferred stock generally does not carry
voting rights.
Repurchase Agreements: The purchase of a 1-15 Market
security and the simultaneous commitment Leverage
to return the security to the seller at an
agreed upon price on an agreed upon date.
This is treated as a loan.
Restricted Securities: Securities not 1-15 Liquidity
registered under the Securities Act of Market
1933, such as privately placed commercial
paper and Rule 144A securities.
Reverse Repurchase Agreements: The sale of 1-15 Market
a security and the simultaneous commitment Leverage
to buy the security back at an agreed upon
price on an agreed upon date. This is
treated as a borrowing by a Fund.
Securities Lending: The lending of up to 33 1-15 Market
1/3% of the Fund's total assets. In return Leverage
the Fund will receive cash, other Liquidity
securities, and/or letters of credit. Credit
Short-Term Trading: The sale of a security 4-15 Market
soon after its purchase. A portfolio
engaging in such trading will have higher
turnover and transaction expenses.
</TABLE>
43
<PAGE>
Additional Information About the Funds' Investments
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
---------- ----------------------- ------------------
<S> <C> <C>
Stock-Index Options: A security 4-15 Management
that combines features of options Market
with securities trading using Credit
composite stock indices. Liquidity
Leverage
Time Deposits: Non-negotiable 2-5, 7, 8, 10-12, 14 Liquidity
receipts issued by a bank in Credit
exchange for the deposit of funds. Market
U.S. Government Agency Securities: 1-15 Interest Rate
Securities issued by agencies and Credit
instrumentalities of the U.S.
government. These include Ginnie
Mae, Fannie Mae, and Freddie Mac.
U.S. Treasury Obligations: Bills, 1-15 Interest Rate
notes, bonds, separately traded
registered interest and principal
securities, and coupons under bank
entry safekeeping.
Variable and Floating Rate 2, 3, 7, 11, 12, 14, 15 Credit
Instruments: Obligations with Liquidity
interest rates which are reset Market
daily, weekly, quarterly or some
other period and which may be
payable to the Fund on demand.
Warrants: Securities, typically 4-6, 8-10 Market
issued with preferred stock or Credit
bonds, that give the holder the
right to buy a proportionate
amount of common stock at a
specified price.
When-Issued and Delayed Delivery 1-15 Market
Transactions: Purchase or contract Leverage
to purchase securities at a fixed Liquidity
price for delivery at a future Credit
date. Under normal market
conditions, when-issued purchases
and forward commitments will not
exceed 20% of the value of a
Fund's total assets.
Yankee Bonds and Similar Debt 1-3, 10 Market
Obligations: U.S. dollar Credit
denominated bonds issued by Interest Rate
foreign corporations or Political
governments. Sovereign bonds are Foreign Investment
those issued by the government of
a foreign country. Supranational
bonds are those issued by
supranational entities, such as
the World Bank and European
Investment Bank. Canadian bonds
are those issued by Canadian
provinces.
Zero-Coupon Debt Obligations: Bonds 1-3, 10 Credit
and other debt obligations that Market
pay no interest, but are issued at Interest
a discount from their value at Rate
maturity. When held to maturity,
their entire return equals the
difference between their issue
price and their maturity value.
</TABLE>
44
<PAGE>
Additional Information About the Funds' Investments
Investment Risks
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above as well as those risks
discussed in "Principal Investment Risks." Because of these risks, the value of
the securities held by the Funds may fluctuate, as will the value of your
investment in the Funds. Certain investments and Funds are more susceptible to
these risks than others.
Credit Risk. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade
securities. The price of a security can be adversely affected prior to actual
default as its credit status deteriorates and the probability of default rises.
Foreign Investment Risk. The risk associated with higher transaction costs,
delayed settlements, currency controls and adverse economic developments. This
also includes the risk that fluctuations in the exchange rates between the U.S.
dollar and foreign currencies may negatively affect an investment. Adverse
changes in exchange rates may erode or reverse any gains produced by foreign
currency denominated investments and may widen any losses. Exchange rate
volatility also may affect the ability of an issuer to repay U.S. dollar
denominated debt, thereby increasing credit risk. Foreign securities may also
be affected by incomplete or inaccurate financial information on companies,
social upheavals or political actions ranging from tax code changes to
governmental collapse. These risks are more significant in emerging markets.
Interest Rate Risk. The risk that debt prices overall will decline over short
or even long periods due to rising interest rates. A rise in interest rates
typically causes a fall in values, while a fall in rates typically causes a
rise in values. Interest rate risk should be modest for shorter-term
securities, moderate for intermediate-term securities, and high for longer-term
securities. Generally, an increase in the average maturity of the Fund will
make it more sensitive to interest rate risk. The market prices of securities
structured as zero coupon are generally affected to a greater extent by
interest rate changes. These securities tend to be more volatile than
securities which pay interest periodically.
Investment Style Risk. The risk that returns from a particular class or group
of stocks (e.g., value, growth, small cap, large cap) will trail returns from
other asset classes or the overall stock market. Groups or asset classes of
stocks tend to go through cycles of doing better--or worse--than common stocks
in general. These periods can last for periods as long as several years.
Additionally, a particular asset class or group of stocks could fall out of
favor with the market, causing the Fund to underperform funds that focus on
other types of stocks.
Leverage Risk. The risk associated with securities or practices that multiply
small index or market movements into large changes in value. Leverage is often
associated with investments in derivatives, but also may be embedded directly
in the characteristics of other securities.
Hedged. When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position that the
Fund also holds, any loss generated by the derivative should be
substantially offset by gains on the hedged investment, and vice versa.
Hedges are sometimes subject to imperfect matching between the derivative
and underlying security, and there can be no assurance that a Fund's hedging
transactions will be effective.
Speculative. To the extent that a derivative is not used as a hedge, the
Fund is directly exposed to the risks of that derivative. Gains or losses
from speculative positions in a derivative may be substantially greater than
the derivatives original cost.
Liquidity Risk. The risk that certain securities may be difficult or impossible
to sell at the time and the price that would normally prevail in the market.
The seller may have to lower the price, sell other securities instead or forego
an investment opportunity, any of which could have a negative effect on
investment management or performance. This includes the risk of missing out on
an investment opportunity because the assets necessary to take advantage of it
are tied up in less advantageous investments.
45
<PAGE>
Additional Information About the Funds' Investments
Management Risk. The risk that a strategy used by a Fund's portfolio manager
may fail to produce the intended result. This includes the risk that changes in
the value of a hedging instrument will not match those of the asset being
hedged. Incomplete matching can result in unanticipated risks.
Market Risk. The risk that the market value of a security may move up and down,
sometimes rapidly and unpredictably. These fluctuations may cause a security to
be worth less than the price originally paid for it, or less than it was worth
at an earlier time. Market risk may affect a single issuer, industrial sector
of the economy or the market as a whole. There is also the risk that the
current interest rate may not accurately reflect existing market rates. For
fixed income securities, market risk is largely, but not exclusively,
influenced by changes in interest rates. A rise in interest rates typically
causes a fall in values, while a fall in rates typically causes a rise in
values. Finally, key information about a security or market may be inaccurate
or unavailable. This is particularly relevant to investments in foreign
securities.
Political Risk. The risk of losses attributable to unfavorable governmental or
political actions, seizure of foreign deposits, changes in tax or trade
statutes, and governmental collapse and war.
Pre-Payment/Call Risk. The risk that the principal repayment of a security will
occur at an unexpected time. Prepayment risk is the chance that the repayment
of a mortgage will occur sooner than expected. Call risk is the possibility
that, during times of declining interest rates, a bond issuer will "call"--or
repay--higher yielding bonds before their stated maturity. Changes in pre-
payment rates can result in greater price and yield volatility. Pre-payments
and calls generally accelerate when interest rates decline. When mortgage and
other obligations are pre-paid or called, a Fund may have to reinvest in
securities with a lower yield. In this event, the Fund would experience a
decline in income--and the potential for taxable capital gains. Further, with
early prepayment, a Fund may fail to recover any premium paid, resulting in an
unexpected capital loss. Prepayment/call risk is generally low for securities
with a short-term maturity, moderate for securities with an intermediate-term
maturity, and high for securities with a long-term maturity.
Regulatory Risk. The risk associated with Federal and state laws which may
restrict the remedies that a lender has when a borrower defaults on loans.
These laws include restrictions on foreclosures, redemption rights after
foreclosure, Federal and state bankruptcy and debtor relief laws, restrictions
on "due on sale" clauses, and state usury laws.
Tax Risk. The risk that the issuer of the securities will fail to comply with
certain requirements of the Internal Revenue Code, which would cause adverse
tax consequences.
46
<PAGE>
Fund Management
Investment Advisors and Subadvisor
Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, serves as
investment advisor to all Funds other than Fifth Third Pinnacle Fund. Heartland
Capital Management, Inc., 251 North Illinois Street, Suite 300, Indianapolis,
Indiana 46204, serves as investment advisor to Fifth Third Pinnacle Fund. Each
of those two advisors is a subsidiary of Fifth Third Bancorp. Morgan Stanley
Dean Witter Investment Management Inc. ("MSDW"), 1221 Avenue of the Americas,
New York, New York 10020, serves as investment subadvisor to Fifth Third
International Equity Fund.
As of September 30, 2000, Fifth Third Bank had approximately $22.2 billion of
assets under management, including approximately $5.3 billion of assets of
Fifth Third Funds. As of September 30, 2000, Heartland had approximately $1.9
billion of assets under management, including approximately $98 million of
assets held by mutual funds. As of September 30, 2000, MSDW, together with its
affiliated institutional asset management companies, had approximately $177.5
billion of assets under management, including approximately $58.8 billion of
assets held by mutual funds (including sub-advisory relationships).
The management and subadvisory fees, after voluntary fee waivers, paid by the
Funds for the fiscal year ended July 31, 2000 are as follows:
<TABLE>
<CAPTION>
As a percentage of
Average net assets
---------------------------------------------------------------
<S> <C>
Fifth Third Government Money Market Fund 0.40%
---------------------------------------------------------------
Fifth Third Prime Money Market Fund 0.38%
---------------------------------------------------------------
Fifth Third Tax Exempt Money Market Fund 0.00%
---------------------------------------------------------------
Fifth Third Quality Growth Fund 0.80%
---------------------------------------------------------------
Fifth Third Equity Income Fund 0.80%
---------------------------------------------------------------
Fifth Third Pinnacle Fund 0.80%
---------------------------------------------------------------
Fifth Third Balanced Fund 0.80%
---------------------------------------------------------------
Fifth Third Mid Cap Fund 0.80%
---------------------------------------------------------------
Fifth Third International Equity Fund 1.00%*
---------------------------------------------------------------
Fifth Third Technology Fund 1.00%
---------------------------------------------------------------
Fifth Third Bond Fund For Income 0.55%
---------------------------------------------------------------
Fifth Third Quality Bond Fund 0.55%
---------------------------------------------------------------
Fifth Third U.S. Government Securities Fund 0.43%
---------------------------------------------------------------
Fifth Third Municipal Bond Fund 0.55%
---------------------------------------------------------------
Fifth Third Ohio Tax Free Bond Fund 0.55%
---------------------------------------------------------------
</TABLE>
* Fifth Third Bank paid 0.45% of this fee to MSDW for its services as
investment subadvisor.
47
<PAGE>
Fund Management
Portfolio Managers
Fifth Third Bank
Equity Funds
Steven E. Folker has been the portfolio manager for Fifth Third Quality Growth
Fund, Fifth Third Balanced Fund and Fifth Third Mid Cap Fund since 1993.
Currently, he is the Chief Equity Strategist for Fifth Third Investment
Advisors and is Vice President and Trust Officer of Fifth Third Bank. He is
also a Chartered Financial Analyst, has over 16 years of investment experience
and is a member of the Cincinnati Society of Financial Analysts. He earned a
B.B.A. in Finance & Accounting and an M.S. in Finance, Investments & Banking
from the University of Wisconsin.
John B. Schmitz has managed Fifth Third International Equity Fund since 1994,
and Fifth Third Equity Income Fund since 1997. He is a Vice President and Trust
Officer of Fifth Third Bank, a Chartered Financial Analyst and has over 12
years of experience. He is also a member of the Cincinnati Society of Financial
Analysts. Mr. Schmitz graduated with a B.B.A. in Finance & Real Estate from the
University of Cincinnati.
Steven J. Mygrant has been the co-portfolio manager for the Fifth Third
Technology Fund since 2000. Since 1996, he has been the Director of Equity
Analysis at Fifth Third Bank. Prior to 1996, he was the Director of Equity
Research at a large mid-western bank. He is a member of the Association for
Investment Management and Research and the Cincinnati Society of Security
Analysts. He has over 15 years of investment experience and is a Certified
Financial Analyst. Steven earned a B.S. and MBA from The Ohio State University.
Sunil M. Reddy has been the co-portfolio manager for the Fifth Third Technology
Fund since 2000. Since 1997, he has been an Equity Analyst covering
semiconductor, semiconductor equipment, enterprise hardware and software
sectors at Fifth Third Bank. Prior to 1997, he was a portfolio manager at a
large mid-western bank. He is a Chartered Financial Analyst with over 10 years
of investment experience and is a member of the Cincinnati Society of Financial
Analysts. Sunil earned a B.S. in Electrical Engineering from The Ohio State
University and a MBA from Case Western Reserve University.
Bond Funds
Investment decisions for all of the Fifth Third bond funds as well as the bond
portion of Fifth Third Balanced Fund are made by a team of investment
professionals, all of whom are employees of Fifth Third Bank.
Heartland Capital Management, Inc.
Robert D. Markley, President and Chief Executive Officer of Heartland and
Thomas F. Maurath, Executive Vice President of Heartland, have been primarily
responsible for management of Fifth Third Pinnacle Fund and management of its
predecessor fund since 1985. Mr. Markley is a Chartered Financial Analyst and
holds a B.A. in Marketing from Michigan State University and an M.B.A. from
Northwestern University. Mr. Maurath also is a Chartered Financial Analyst who
earned a B.B.A. in Accounting from the University of Notre Dame and a M.B.A.
from Indiana University.
Morgan Stanley Dean Witter Investment Management Inc.
Barton M. Biggs has served as portfolio manager of the Fifth Third
International Equity Fund since 1994. He has been Chairman and a Director of
MSDW since 1980 and Managing Director of Morgan Stanley & Co. Incorporated
since 1975. He is also a Director and Chairman of various registered investment
companies to which MSDW and certain of its affiliates provide investment
advisory services. Mr. Biggs holds a B.A. from Yale University and an M.B.A.
from New York University.
Ann Thivierge joined MSDW in 1986 and is a Managing Director. She has been a
member of MSDW's Asset Allocation Committee for eight years. She received a
B.A. from James Madison College, Michigan State University in International
Relations and received her M.B.A from New York University in Finance.
48
<PAGE>
Fund Management
Fund Administration
BISYS Fund Services Limited Partnership ("BISYS") serves as the administrator
of the Funds. The administrator generally assists in all aspects of the Funds'
administration and operation, including providing the Funds with certain
administrative personnel and services necessary to operate the Funds, such as
legal and accounting services. BISYS provides these at an annual rate as
specified below:
<TABLE>
<CAPTION>
Maximum
Administrative Average Aggregate Daily
Fee Net Assets of the Trust
<S> <C>
0.20% of the first $1 billion
0.18% of the next $1 billion
0.17% in excess of $2 billion
</TABLE>
BISYS may periodically waive all or a portion of its administrative fee which
will cause the yield of a Fund to be higher than it would otherwise be in the
absence of such a waiver.
Pursuant to a separate agreement with BISYS, Fifth Third Bank performs sub-
administrative services on behalf of each Fund, including providing certain
administrative personnel and services necessary to operate the Funds, Fifth
Third Bank receives a fee from BISYS for providing sub-administrative services
at an annual rate of 0.035% of the average aggregate daily net assets of all
the Funds.
49
<PAGE>
Shareholder Information
Purchasing And Selling Fund Shares
Pricing Money Market Fund Shares
The Fund's Net Asset Value (NAV) is calculated by dividing the Fund's net
assets by the number of its shares outstanding. The Fund attempts to maintain a
NAV of $1 per share. The value of each portfolio instrument held by the Funds
is determined by using amortized cost.
Fifth Third Tax Exempt Money Market Fund calculates its NAV at 9 a.m. Fifth
Third Government Money Market calculates its NAV at 11 a.m. Fifth Third Prime
Money Market Fund calculates its NAV at 1 p.m. All times are Cincinnati time.
Each Fund's NAV is calculated each day the New York Stock Exchange is open for
regular trading and the Federal Reserve Bank of Cleveland is open for business.
The Funds will be closed on those days that Fifth Third Bank is closed and on
the following holidays: New Year's Day, Martin Luther King Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans' Day, Thanksgiving Day and Christmas.
Pricing Stock and Bond Fund Shares
The price of Fund shares is based on the Fund's Net Asset Value (NAV). The
value of each portfolio instrument held by the Funds is determined by using
market prices. Under special circumstances, such as when an event occurs after
the close of the exchange on which a Fund's portfolio securities are
principally traded, which, in the investment manager's opinion has materially
affected the price of those securities, the Fund may use fair value pricing.
Each Fund's NAV is calculated at 4:00 p.m. Cincinnati time each day the New
York Stock Exchange is open for regular trading and the Federal Reserve Bank of
Cleveland is open for business. Each Fund's NAV may change on days when
shareholders will not be able to purchase or redeem Fund shares. The Funds will
be closed on those days that Fifth Third Bank is closed and on the following
holidays: New Year's Day, Martin Luther King Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving Day and Christmas.
Purchasing And Adding To Your Shares
You may purchase shares on days when the New York Stock Exchange is open for
regular trading and the Federal Reserve Bank of Cleveland is open for business.
Your purchase price will be the next NAV after your purchase order, completed
application and full payment have been received by the Funds or its transfer
agent. All orders for the Stock Funds or for the Bond Funds must be received by
the Funds or its transfer agent prior to 4:00 p.m. Cincinnati time in order to
receive that day's NAV. All orders for the Money Market Funds must be received
by the Funds or its transfer agent on the following schedule (Cincinnati time)
in order to receive that day's NAV: Fifth Third Tax Exempt Money Market Fund--9
a.m.; Fifth Third Government Money Market--11 a.m.; and Fifth Third Prime Money
Market Fund--1 p.m.
You may purchase Investment A, Investment B, and Investment C shares through
Fifth Third Securities, Inc. as well as broker-dealers and financial
institutions which have a sales agreement with the distributor of Fund shares.
(Special rules apply for former Investment A and C shareholders of the Cardinal
Funds and The Pinnacle Fund. See below.) In order to purchase Investment A
shares through Fifth Third Securities, Inc. or another financial institution,
you must open an account with that institution. That account will be governed
by its own rules and regulations, which may be more stringent than the rules
and regulations governing an investment in the Funds, and you should consult
your account documents for full details. Your shares in the Funds will be held
in an omnibus account in the name of that institution.
The entity through which you are purchasing your shares is responsible for
transmitting orders to the Funds by 4:00 p.m. Cincinnati time and it may have
an earlier cut-off time for purchase requests. Consult that entity for specific
information.
50
<PAGE>
Shareholder Information
Minimum
Investments The minimum initial investment in Investment A shares,
Investment B shares, or Investment C shares of the Funds
offered by this Prospectus is $1,000. Subsequent
investments must be in amounts of at least $50. The
maximum investment is $250,000 for total purchases of
Investment B shares of a Fund offered by this Prospectus.
All purchases must be in U.S. dollars. A fee may be
charged for any checks that do not clear. Third-party
checks are not accepted.
For details, contact the Trust toll-free at 1-888-799-5353
or write to: Fifth Third Funds, c/o Fifth Third Bank, 38
Fountain Square Plaza, Cincinnati, Ohio 45263.
The Funds may reject a purchase order for any reason.
Systematic You may make monthly systematic investments in Investment
Investment A shares or Investment B shares of the Funds from your
Program bank account. There is no minimum amount required for
initial amounts invested into the Funds. You may elect to
make systematic investments on the 1st or the 15th of each
month, or both. If the 1st or the 15th of the month is not
a day on which the Funds are open for business, the
purchase will be made on the previous day the Funds are
open for business. Please contact Fifth Third Securities,
Inc. or your financial institution for more information.
51
<PAGE>
Shareholder Information
Avoid 31% Tax Withholding
Each Fund is required to withhold 31% of taxable dividends, capital gains
distributions and redemptions paid to any shareholder who has not provided the
Fund with his or her certified Taxpayer Identification Number (your Social
Security Number for individual investors) in compliance with IRS rules. To
avoid this withholding, make sure you provide your correct Tax Identification
Number.
Instructions for Purchases by Former Cardinal Funds and The Pinnacle Fund
Shareholders
If you held in your name (rather than through a brokerage account) shares of
any of the Cardinal Funds or the Pinnacle Fund at the time those funds were
merged into one of the Fifth Third Funds, and you continue to hold in your name
the shares of the Fifth Third Fund that you received in the merger or by way of
a subsequent exchange, you may purchase additional shares of that Fifth Third
Fund directly from the Funds rather than through Fifth Third Securities, Inc.
or another financial institution. The Funds reserve the right to change or
eliminate these privileges at any time.
By Mail For Subsequent Investments:
1. Use the investment slip attached to your account statement.
Or, if unavailable, provide the following information:
. Fund name
. Share class
. Amount invested
. Account name and account number
2. Make check, bank draft or money order payable to "Fifth
Third Funds" and include your account number on the check.
3. Mail or deliver investment slip and full payment to the
following address:
By Regular Mail: By Express Mail:
Fifth Third Funds Fifth Third Funds
P.O. Box 182706 c/o BISYS Fund Services
Columbus, OH 3435 Stelzer Road
43218-2706 Columbus, OH 43219-3035
By Wire Transfer
For Subsequent Investments:
Instruct your bank to wire transfer your investment to:
Fifth Third Bank
Cincinnati, OH
A/C #99944318
ABA #042000314
Reference: Fifth Third Funds
FFC: Shareholder name, Fund name, and Account number
Note: Your bank may charge a wire transfer fee.
52
<PAGE>
Shareholder Information
Systematic To begin making systematic investments
Investment or to increase the amounts you already
Program are investing:
.Write a letter of instruction indicating:
. Your bank name, address, account number, and ABA routing
number
. The amount you wish to invest automatically
.Attach a voided personal check.
.Mail To:
Fifth Third Funds
P.O. Box 182706
Columbus, OH 43218-2706
Selling Your Shares
You may sell your shares on days when the New York Stock Exchange is open for
regular trading and the Federal Reserve Bank of Cleveland is open for business.
Your sales price will be the next NAV after your sell order is received by the
Funds, its transfer agent, or your investment representative. All orders must
be received by the Funds or its transfer agent prior to the time the Fund
calculates its NAV in order to receive that day's NAV. If your order has been
received by the Fund prior to the time the Fund calculates its NAV, and your
shares have been sold you will not receive the dividend, if any, declared for
that day. Normally you will receive your proceeds within a week after your
request is received.
You may sell Investment A shares, Investment B shares, or Investment C shares
through Fifth Third Securities, Inc. or the financial institution through which
you purchased them. (Special rules apply for certain former shareholders of the
Cardinal Funds and the Pinnacle Fund. See below.)
The entity through which you are selling your shares is responsible for
transmitting the order to the Funds, and it may have an earlier cut-off for
sale requests. Consult that entity for specific information. If your sell order
has been received by the Funds prior to the time designated by the Funds for
receiving orders on a specific day, you will not receive the dividend, if any,
declared for that day.
Systematic Withdrawal Plan
You may make automatic withdrawals on a monthly, quarterly or annual basis on
the first day of that period that the Funds are open for business. Please
contact Fifth Third Securities, Inc. or your financial institution for more
information.
Postponement of Redemption Payments
Any Fund may delay sending to you redemption proceeds for up to 7 days, or
during any period when (a) trading on the NYSE is restricted by applicable
rules and regulations of the SEC, (b) the NYSE is closed for other then
customary weekend and holiday closings, (c) the SEC has by order permitted such
suspension, or (d) an emergency exists as determined by the SEC. If you
experience difficulty making a telephone redemption during periods of drastic
economic or market change, you can send your request by regular mail to: Fifth
Third Funds, P.O. Box 182706, Columbus, Ohio 43218-2706, or by express mail to:
Fifth Third Funds, c/o BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
43219-3035.
53
<PAGE>
Shareholder Information
--------------------------------------------------------------------------------
Instructions for Sales by Former Cardinal Fund or The Pinnacle Fund
Shareholders
If you held in your name (rather than through a brokerage account) shares of
any of the Cardinal Funds or The Pinnacle Fund at the time those funds were
merged into one of the Funds, and you continue to hold in your name the shares
of the Fifth Third Fund you received in the merger or by way of a subsequent
exchange, you may sell your Fifth Third Fund shares directly by contacting the
Funds rather than through Fifth Third Securities, Inc. or another financial
institution.
By telephone Call 1-800-282-5706 with
instructions as to how you wish to
receive your funds (mail, wire).
The Funds make every effort to
insure that telephone redemptions
are only made by authorized
traders. All telephone calls are
recorded for your protection and
you will be asked for information
to verify your identity.
By mail 1. Write a letter of instruction indicating:
. your Fund and account number
. amount you wish to redeem
. address where your check should be sent
. account owner(s) signature
2. Mail to:
Fifth Third Funds
P.O. Box 182706
Columbus, OH 43218-2706
By overnight 1. Write a letter of instruction indicating:
service . your fund and account number
. amount you wish to redeem
. address where you want check to be sent
. account owner(s) signature
2. Send to:
Fifth Third Funds
c/o BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219-3035
By wire transfer Call 1-800-282-5706 to request a
(Option available wire transfer.
only if
previously set up If you call by the time designated
on account.) by the Funds, your payment will
normally be wired to your bank on
the next business day.
The Fund may charge a wire
transfer fee of $8. Note: Your
financial institution may also
charge a separate fee.
Systematic To activate this feature call 1-
Withdrawal Plan 800-282-5706.
When Written Redemption Requests are Required
You must request redemptions in writing in the following situations:
1. Redemptions from Individual Retirement Accounts ("IRAs").
2. Redemption requests requiring a signature guarantee, which include each of
the following.
. Your account address has changed within the last 10 business days
. The check is not being mailed to the address on your account
. The check is not being made payable to the owner of the account
. The redemption proceeds are being transferred to another Fund account with
a different registration
. The redemption proceeds are being wired to instructions currently not on
your account
54
<PAGE>
Shareholder Information
Signature guarantees may be obtained from a U.S. stock
exchange member, a U.S. commercial bank or trust
company, or any other financial institution that is a
member of the STAMP (Securities Transfer Agents
Medallion Program), MSP (New York Stock Exchange
Medallion Signature Program) or SEMP (Stock Exchanges
Medallion Program). Members are subject to dollar
limitations, which must be considered when requesting
their guarantee. The Transfer Agent may reject any
signature guarantee if it believes the transaction
would otherwise be improper.
The Trust does not accept signatures guaranteed by a notary public.
Redemptions Within 15 Days of Initial Investment
When you have made your initial investment by check, you cannot redeem any
portion of it until the Transfer Agent is satisfied that the check has cleared
(which may require up to 15 business days). You can avoid this delay by
purchasing shares with a certified check, or by wire.
Closing of Small Accounts
If your account falls below $1,000 because of redemptions, a Fund may ask you
to increase your balance. If it is still below the minimum after 30 days, the
Fund may close your account and send you the proceeds at the current NAV.
--------------------------------------------------------------------------------
55
<PAGE>
Shareholder Information
Exchanging Your Shares
You may exchange your Fund shares for the same class of shares of any other
Fifth Third Fund. No transaction fees are charged for exchanges. Be sure to read
the Prospectus carefully of any Fund into which you wish to exchange shares.
If exchanging shares through Fifth Third Securities, Inc.
or your financial institution, ask it for exchange
procedures or call 1-888-799-5353. (Special rules apply
for former shareholders of The Cardinal Group. See
below.)
Notes on exchanges
To prevent disruption in the management of the Funds,
market timing strategies and frequent exchange activity
may be limited by the Funds. Although not anticipated,
the Funds may reject exchanges, or change or terminate
rights to exchange shares at any time.
When exchanging from a Fund that has no sales charge or a
lower sales charge to a Fund with a higher sales charge,
you will pay the difference.
You must meet the minimum investment requirements for the Fund into which you
are exchanging. Exchanges from one Fund to another are taxable for investors
subject to federal or state income taxation. These procedures apply only to
exchanges between existing accounts.
Shares of the new Fund must be held in the same account
name, with the same registration and tax identification
numbers, as the shares of the old Fund.
The Exchange Privilege may be changed or eliminated at
any time.
The Exchange Privilege is available only in states where
shares of the Funds may be sold.
All exchanges are based on the relative net asset value
next determined after the exchange order is received by
the Funds.
Automatic Exchanges
You can use the Funds' Automatic Exchange feature to purchase shares of the
Funds at regular intervals through regular, automatic redemptions from a Fund.
To participate in the Automatic Exchange Program or to change the Automatic
Exchange instructions on an existing account, contact Fifth Third Securities,
Inc. or your financial institution.
Automatic Exchange Program-Prime Money Market Fund's Investment B shares only
You can use the Funds' Automatic Exchange feature to purchase Investment B
shares of the Funds at regular intervals through regular, automatic redemptions
from your Fifth Third Fund account. Shareholders investing directly in
Investment B shares of the Fund, as opposed to Shareholders obtaining
Investment B shares of the Fund upon exchange of Investment B shares of any of
the other Funds will be requested to participate in the Automatic Exchange
Program and to set the time and amount of their regular, automatic withdrawal
in such a way that all of the Investment B shares have been withdrawn from the
Fund within two years of purchase. To participate in the Automatic Exchange
Program invest a minimum of $10,000 in the Fund and $1,000 in the Fund whose
shares you are buying. To add the Automatic Exchange Program to your account or
to change or terminate the Automatic Exchange instructions on an existing
account, contact Fifth Third Securities, Inc. or your financial institution.
56
<PAGE>
Shareholder Information
Instructions for Exchanges by Former Cardinal Funds and The Pinnacle Fund
Shareholders
If you held in your name (rather than through a
brokerage account) shares of any of the Cardinal Funds
or The Pinnacle Fund at the time those funds were
merged into one of the Funds, and you continue to hold
in your name the shares of the Fifth Third Fund you
received in the merger or by way of a subsequent
exchange, you may exchange your Fifth Third Fund shares
for Investment A shares of any other Fifth Third Fund
directly by contacting the Funds rather than going
through Fifth Third Securities, Inc. or another
financial institution.
To make an exchange, send a written request to Fifth
Third Funds, P.O. Box 182706, Columbus, OH 43218-2706,
or by call 1-800-282-5706. Please provide the following
information:
. Your name and telephone number
. The exact name on your account and account number
. Taxpayer identification number (usually your Social Security number)
. Dollar value or number of shares to be exchanged
. The name of the Fund from which the exchange is to be made
. The name of the Fund into which the exchange is being made
Automatic Exchanges
To participate in the Automatic Exchange or to change
the Automatic Exchange instructions on an existing
account or to discontinue the feature, write to: Fifth
Third Funds, P.O. Box 182706, Columbus, Ohio 43218-
2706.
If shares of a Fund are purchased by check, those
shares cannot be exchanged until your check has been
collected. This could take 15 days or more.
Distribution This section describes the sales charges and fees you
Arrangements/ will pay as an investor in different share classes
Sales Charges For offered by the Funds and ways to qualify for reduced
Money Market sales charges.
Funds
<TABLE>
<CAPTION>
Investment A Investment B
<S> <C> <C>
Sales Charge (Load) None A contingent
deferred sales
charge (CDSC)
will be
imposed on
shares
redeemed
within 6 years
after
purchase.
Distribution/Service (12b-1) Subject to Subject to
Fee annual annual
distribution distribution
and fees of up to
shareholder 1.00% of the
servicing fees Fund's assets.
of up to 0.25%
of the Fund's
assets.
Conversion None Converts to
Investment A
shares after 8
years.
</TABLE>
Calculation of
Sales Charges
Investment A Investment A shares are sold at their public offering
Shares price. There is no sales charge associated with the
purchase of those shares. There also is no sales charge
on reinvested dividends and capital gains.
57
<PAGE>
Shareholder Information
Investment B Investment B shares are offered at NAV, without any up-
Shares front sales charge. Therefore, all of the money that you
invest in the Fund is used to purchase Fund shares. If
you sell your Investment B shares before the end of the
6th year after purchase, you will pay a contingent
deferred sale charge, or CDSC, at the time of redemption.
The CDSC will be based upon the lower of the NAV at the
time of purchase and the NAV at the time of redemption.
In any sale, certain shares not subject to the CDSC, such
as shares purchased with reinvested dividends and
distributions, will be redeemed first, followed by shares
subject to the lowest CDSC.
Investment B shares are subject to the following CDSC
schedule:
<TABLE>
<CAPTION>
% of NAV
(at time of
purchase or
sale if
lower)
deducted
Year of Redemption After Purchase from proceeds
<S> <C>
During the first year 5%
----------------------------------------------
During the second year 4%
----------------------------------------------
During the third or fourth years 3%
----------------------------------------------
During the fifth year 2%
----------------------------------------------
During the sixth year 1%
----------------------------------------------
During the seventh or eight years 0%
----------------------------------------------
</TABLE>
The CDSC will be waived under certain circumstances,
including the following:
. Minimum required distributions from an IRA or other
qualifying retirement plan to a shareholder who has
attained age 70 1/2.
. Redemptions from accounts following the death or
disability of the shareholder.
. Investors who purchased through a participant directed
defined benefit plan.
. Returns of excess contributions to certain retirement
plans.
. Distributions of less than 12% of the annual account
value under the Systematic Withdrawal Plan.
. Shares issued in a plan of reorganization sponsored by
Fifth Third Bank, or shares redeemed involuntarily in a
similar situation.
This section describes the sales charges and fees you
Distribution will pay as an investor in different share classes
Arrangements/ offered by the Funds and ways to qualify for reduced
Sales Charges for sales charges.
Stock and Bond
Funds
<TABLE>
<CAPTION>
Investment A Investment B Investment C
<S> <C> <C> <C>
Sales Front-end No front-end No front-end sales
Charge sales sales charge. A contingent
(Load) charge (not charge. A deferred sales
applicable contingent charge (CDSC) will
to deferred be imposed on shares
money market sales charge redeemed within 12
funds); (CDSC) will months after
reduced be imposed purchase.
sales on shares
charges redeemed
available. within 6
years after
purchase.
</TABLE>
58
<PAGE>
Shareholder Information
<TABLE>
<CAPTION>
Investment A Investment B Investment C
<S> <C> <C> <C>
Distribution/ Subject to Subject to Subject to
Service annual annual annual
(12b-1) Fee distribution distribution distribution
and and and
shareholder shareholder shareholder
servicing servicing servicing
fees fees of fees of
of up to up to 1.00% up to 0.75%
0.25% of the of of
Fund's the Fund's the Fund's
assets. assets. assets.
(Also
subject to a
non-12-b1
fee for
shareholder
servicing of
up to 0.25%
of the
Fund's
assets.)
Fund Expenses Lower annual Higher Higher
expenses annual annual
than expenses expenses
Investment B than than
and C Investment A Investment A
shares. shares. shares.
Conversion None Converts to None
Investment
A shares
after
8 years.
</TABLE>
Calculation of Sales Charges
Investment A Shares
Investment A shares are sold at their public offering
price. This price includes the initial sales charge.
Therefore, part of the money you send to the Funds will
be used to pay the sales charge. The remainder is
invested in Fund shares. The sales charge decreases with
larger purchases. There is no sales charge on reinvested
dividends and distributions.
The current sales charge rates are as follows:
<TABLE>
<CAPTION>
Sales Charge Sales Charge
as a % of as a % of
Your Investment Offering Price Your Investment
<S> <C> <C>
Less than $50,000 4.50% 4.71%
-----------------------------------------------------------
$50,000 but less than $100,000 4.00% 4.17%
-----------------------------------------------------------
$100,000 but less than
$150,000 3.00% 3.09%
-----------------------------------------------------------
$150,000 but less than
$250,000 2.00% 2.04%
-----------------------------------------------------------
$250,000 but less than
$500,000 1.00% 1.01%
-----------------------------------------------------------
$500,000 or more 0.00% 0.00%
-----------------------------------------------------------
</TABLE>
59
<PAGE>
Shareholder Information
If you have a Club 53 Account, One Account Advantage or
Platinum One Account through Fifth Third Bank, you are
eligible for the following reduced sales charges:
<TABLE>
<CAPTION>
Sales Charge Sales Charge
as a % of as a % of
Your Investment Offering Price Your Investment
<S> <C> <C>
Less than $50,000 3.97% 4.13%
-----------------------------------------------------------
$50,000 but less than $100,000 3.47% 3.59%
-----------------------------------------------------------
$100,000 but less than
$150,000 2.47% 2.53%
-----------------------------------------------------------
$150,000 but less than
$250,000 1.47% 1.49%
-----------------------------------------------------------
$250,000 but less than
$500,000 0.47% 0.47%
-----------------------------------------------------------
$500,000 and above 0.00% 0.00%
-----------------------------------------------------------
</TABLE>
If you purchase $500,000 or more of Investment A shares
and do not pay a sales charge, and you sell any of those
shares before the first anniversary of purchase, you will
pay a 1% contingent deferred sales charge, or CDSC, on
the portion redeemed at the time of redemption. The CDSC
will be based upon the lowest of the NAV at the time of
purchase and the NAV at the time of redemption. In any
sales, certain shares not subject to the CDSC (i.e.,
shares purchased with reinvested dividends or
distributions) will be redeemed first followed by shares
subject to the lowest CDSC (typically shares held for the
longest time).
Sales Charge You may qualify for reduced sales charges under the
Reductions following circumstances.
. Letter of Intent. You inform the Fund in writing that
you intend to purchase at least $50,000 of Investment A
shares over a 13-month period to qualify for a reduced
sales charge. You must include up to 4.5% of the total
amount you intend to purchase with your letter of
intent. Shares purchased under the non-binding Letter
of Intent will be held in escrow until the total
investment has been completed. In the event the Letter
of Intent is not completed, sufficient escrowed shares
will be redeemed to pay any applicable front-end sales
charges.
. Rights of Accumulation. When the value of shares you
already own plus the amount you intend to invest
reaches the amount needed to qualify for reduced sales
charges, your added investment will qualify for the
reduced sales charge.
. Combination Privilege. Combine accounts of multiple
Funds (excluding the Money Market Funds) or accounts of
immediate family household members (spouse and children
under 21) to achieve reduced sales charges.
Investment B
Shares Investment B shares are offered at NAV, without any up-
front sales charge. Therefore, all of the money that you
send to the Funds is used to purchase Fund shares. If you
sell your Investment B shares before the end of the sixth
year after purchase, however, you will pay a contingent
deferred sales charge, or CDSC, at the time of
redemption. The CDSC will be based upon the lower of the
NAV at the time of purchase and the NAV at the time of
redemption. In any sale, certain shares not subject to
the CDSC (i.e., shares purchased with reinvested
dividends or distributions) will be redeemed first,
60
<PAGE>
Shareholder Information
followed by shares subject to the lowest CDSC (typically
shares held for the longest time).
Investment B shares are subject to the following CDSC
schedule:
<TABLE>
<CAPTION>
Year of Redemption % of NAV (at time of purchase or sale
After Purchase if lower) deducted from proceeds
<S> <C>
During the first year 5%
-------------------------------------------------------------
During the second year 4%
-------------------------------------------------------------
During the third or
fourth years 3%
-------------------------------------------------------------
During the fifth year 2%
-------------------------------------------------------------
During the sixth year 1%
-------------------------------------------------------------
During the seventh or
eight years 0%
-------------------------------------------------------------
</TABLE>
Sales Charge
Waivers
Investment A The following transactions qualify for waivers of sales
Shares charges that apply to Investment A shares:
. Shares purchased by investment representatives through
fee-based investment products or accounts.
. Reinvestment of distributions from a deferred
compensation plan, agency, trust, or custody account
that was maintained by the advisor or its affiliates or
invested in any Fifth Third Fund.
. Shares purchased for trust or other advisory accounts
established with the Advisor or its affiliates.
. Shares purchased by directors, trustees, employees, and
family members of the Advisor and its affiliates and
any organization that provides services to the Funds;
retired Fund trustees; dealers who have an agreement
with the Distributor; and any trade organization to
which the Advisor or the Administrator belongs.
. Shares purchased in connection with 401(k) plans,
403(b) plans and other employer-sponsored qualified
retirement plans, "wrap" type programs non-
transactional fee fund programs, and programs offered
by fee-based financial planners and other types of
financial institutions (including omnibus service
providers).
. Distributions from Qualified Retirement Plans. There
also is no sales charge for Fund shares purchased with
distributions from qualified retirement plans or other
trusts administered by Fifth Third Bank.
The CDSC will be waived under certain circumstances,
Investment B including the following:
Shares
. Minimum required distributions from an IRA or other
qualifying retirement plan to a shareholder who has
attained age 70 1/2.
. Redemptions from accounts following the death or
disability of the shareholder.
. Investors who purchased through a participant directed
defined benefit plan.
. Returns of excess contributions to certain retirement
plans.
. Distributions of less than 12% of the annual account
value under the Systematic Withdrawal Plan.
. Shares issued in a plan of reorganization sponsored by
Fifth Third Bank, or shares redeemed involuntarily in a
similar situation.
61
<PAGE>
Shareholder Information
Investment C Class C shares are offered at NAV, without any up-front
Shares sales charge. Therefore, all the money you send to the
Funds is used to purchase Fund shares. If you sell your
Investment C shares before the first anniversary of
purchase, however, you will pay a 1% contingent deferred
sales charge or CDSC, at the time of redemption. The CDSC
will be based upon the lower of the NAV at the time of
purchase and the NAV at the time of redemption. In any
sale, certain shares not subject to the CDSC (i.e.,
shares purchased with reinvested dividends or
distributions) will be redeemed first, followed by shares
subject to the lowest CDSC (typically shares held for the
longest time).
Reinstatement If you have sold Investment A or C shares and decide to
Privilege reinvest in the Fund within a 90 day period, you will not
be charged the applicable sales load on amounts up to the
value of the shares you sold. You must provide a written
reinstatement request and payment within 90 days of the
date your instructions to sell were processed.
12b-1 fees compensate the Distributor and other dealers
Distribution/Service and investment representatives for services and expenses
(12b-1) Fees for related to the sale and distribution of the Fund's shares
All Funds and/or for providing shareholder services.
In particular, these fees help to defray the
Distributor's costs of advancing brokerage commissions to
investment representatives.
12b-1 fees are paid from Fund assets on an ongoing basis,
and will increase the cost of your investment.
12b-1 fees may cost you more than paying other types of
sales charges.
The 12b-1 fees vary by share class as follows:
. Investment A shares may pay a 12b-1 fee of up to 0.25%
of the average daily net assets of a Fund which the
Distributor may use for shareholder servicing and
distribution.
. Investment B shares pay a 12b-1 fee at an annual rate
of up to 1.00% of the average daily net assets of the
applicable Fund. The Distributor may use up to 0.25% of
the 12b-1 fee for shareholder servicing and up to 0.75%
for distribution.
. Investment C shares pay a 12b-1 fee of up to 0.75% of
the average daily net assets of the applicable Fund
which the Distributor may use for distribution. This
will cause expenses for Investment C shares to be
higher and dividends to be lower than for Investment A
shares. The higher 12b-1 fee on Investment C shares,
together with the CDSC, help the Distributor sell
Investment C shares without an "up-front" sales charge.
In particular, these fees help to defray the
Distributor's costs of advancing brokerage commissions
to investment representatives.
Please note that Investment C shares pay a non-12b-1
shareholder servicing fee of up to 0.25% of the average
daily net assets of the applicable Fund.
Over time shareholders will pay more than the equivalent
of the maximum permitted front-end sales charge because
12b-1 distribution and service fees are paid out of the
Fund's assets on an on-going basis.
62
<PAGE>
Shareholder Information
Conversion to Investment B shares convert automatically to Investment A
Investment A shares 8 years after purchase. After conversion, the 12b-
Shares 1 fees applicable to your shares are reduced from 1.00%
to 0.25% of the average daily net assets.
Dealers BISYS, the distributor of Fund shares, in its discretion,
Incentives may pay all dealers selling Investment A shares or
Investment B shares all or a portion of the sales charges
it normally retains.
All dividends and capital gains will be automatically
reinvested unless you request otherwise. You can receive
Dividends And them in cash or by electronic funds transfer to your bank
Capital Gains account if you are not a participant in an IRA account or
in a tax qualified plan. There are no sales charges for
reinvested distributions. Dividends are higher for
Investment A shares than for Investment B shares which
are higher than for Investment C shares, because
Investment A shares have lower operating expenses than
Investment B shares which have lower operating expenses
than Investment C shares.
Distributions are made on a per share basis regardless of
how long you've owned your shares. Therefore, if you
invest shortly before the distribution date, some of your
investment will be returned to you in the form of a
taxable distribution.
Dividends, if any, are declared daily and paid monthly by
the following funds: Fifth Third Government Money Market
Fund, Fifth Third Prime Money Market Fund, and Fifth
Third Tax Exempt Money Market Fund. Dividends, if any,
are declared and paid monthly by the following funds:
Fifth Third Quality Growth Fund, Fifth Third Equity
Income Fund, Fifth Third Bond Fund for Income, Fifth
Third Quality Bond Fund, Fifth Third Government
Securities Fund, Fifth Third Municipal Bond Fund and
Fifth Third Ohio Tax Free Bond Fund. Dividends, if any,
are declared and paid quarterly by the following funds:
Fifth Third Technology Fund, Fifth Third Pinnacle Fund,
Fifth Third Balanced Fund and Fifth Third Mid Cap Fund.
Dividends, if any, are declared and paid annually by the
following Fund: Fifth Third International Equity Fund.
Capital gains, if any, are distributed at least annually.
Taxation
Federal Income Tax
Each Fund expects to distribute substantially all of its investment income
(including net capital gains and tax-exempt interest income, if any) to its
shareholders. Unless otherwise exempt or as discussed below, shareholders are
required to pay federal income tax on any dividends and other distributions,
including capital gains distributions received. This applies whether dividends
and other distributions are received in cash or as additional shares.
Distributions representing long-term capital gains, if any, will be taxable to
shareholders as long-term capital gains no matter how long the shareholders
have held the shares.
Distributions are taxable to shareholders even if they are paid from income or
gains earned by a Fund before a shareholder's investment (and thus were
included in the price paid).
Any gain from the sale or exchange of Fund shares will generally also be
subject to tax.
This is a brief summary of certain federal income tax consequences relating to
an investment in the Funds, and shareholders are urged to consult their own tax
advisors regarding the taxation of their investments under federal, state and
local laws.
63
<PAGE>
Shareholder Information
Additional Tax Information for Fifth Third Tax Exempt Money Market Fund
Dividends derived from interest earned on municipal securities, the interest on
which is excluded from gross income for federal income tax purposes, including
insurance proceeds representing maturing interest on defaulted municipal
securities the interest on which would be so excluded, constitute "exempt-
interest dividends" when designated as such by Fifth Third Tax Exempt Money
Market Fund and will be excluded from gross income for federal income tax
purposes. However, interest excluded from gross income for federal income tax
purposes that is received by individuals and corporations on certain municipal
obligations issued on or after August 8, 1986, to finance certain private
activities will be treated as tax preference items in computing the alternative
minimum tax. Exempt interest dividends received by shareholders from Fifth
Third Tax Exempt Money Market Fund will also be treated as tax preference items
in computing the alternative minimum tax to the extent, if any, that
distributions by the Fund are attributable to interest it earned on such
obligations. Also, a portion of all other interest excluded from gross income
for federal income purposes earned by a corporation may be subject to the
alternative minimum tax.
Distributions, if any, derived from capital gains will generally be taxable to
shareholders as capital gains for federal income tax purposes to the extent so
designated by Fifth Third Tax Exempt Money Market Fund. Dividends, if any,
derived from sources other than interest excluded from gross income for federal
income tax purposes and capital gains will be taxable to shareholders as
ordinary income for federal income tax purposes whether or not reinvested in
additional shares. Fifth Third Tax Exempt Money Market Fund anticipates that
substantially all of its dividends will be excluded from gross income for
federal income tax purposes and will not be a preference item for individuals
for the purposes of the federal alternative minimum tax.
If a shareholder receives an exempt-interest dividend with respect to any share
and such share is held by the shareholder for six months or less, any loss on
the sale or exchange of such share will be disallowed to the extent of the
amount of such exempt-interest dividend. In certain limited instances, the
portion of Social Security or Railroad Retirement benefits that may be subject
to federal income taxation may be affected by the amount of tax-exempt interest
income, including exempt-interest dividends, received by a shareholder.
Under state or local law, distributions of investment income may be taxable to
shareholders as dividend income even though a substantial portion of such
distribution may be derived from interest excluded from gross income for
federal income tax purposes that, if received directly, would be exempt from
such income taxes. Fifth Third Tax Exempt Money Market Fund will report to its
shareholders annually after the close of its taxable year the percentage and
source, on a state-by-state basis, of interest income earned on municipal
securities held by the Fund during the preceding year. State laws differ on
this issue, and shareholders are urged to consult their own tax advisors
regarding the taxation of their investments under state and local tax laws.
Additional Tax Information for Fifth Third Ohio Tax Free Bond Fund
Dividends from Fifth Third Ohio Tax Free Bond Fund representing interest from
obligations held by that Fund which are issued by the State of Ohio or its
subdivisions, which interest is exempt from federal income tax when received by
a shareholder, should also be exempt from Ohio individual income tax as well as
any Ohio municipal income tax even if the municipality is permitted under
current Ohio Law to levy a tax on intangible income. Income from the Fund is
not necessarily free from state income taxes in states other than Ohio or from
personal property taxes.
Additional Tax Information for Fifth Third Municipal Bond Fund
Dividends from Fifth Third Municipal Bond Fund representing net interest income
earned on some temporary investments and any realized net short-term gains are
taxed as ordinary income. Distributions representing net long-term capital
gains realized by Fifth Third Municipal Bond Fund, if any, will be taxable as
long-term capital gains regardless of the length of time shareholders have held
their Shares.
64
<PAGE>
Shareholder Information
Additional Tax Information for Fifth Third Municipal Bond Fund and Fifth Third
Ohio Tax Free Bond Fund
If a shareholder receives an exempt-interest dividend with respect to any share
and such share is held by the shareholder for six months or less, any loss on
the sale or exchange of such share will be disallowed to the extent of the
amount of such exempt-interest dividend. In certain limited instances, the
portion of social security benefits that may be subject to federal income
taxation may be affected by the amount of tax-exempt interest income, include
exempt-interest dividends, received by a shareholder.
Under state or local law, distributions of investment income may be taxable to
shareholders as dividend income even though a substantial portion of such
distribution may be derived from interest excluded from gross income for
federal income tax purposes that, if received directly, would be exempt from
such income taxes. State laws differ on this issue, and shareholders are urged
to consult their own tax advisors regarding the taxation of their investments
under state and local tax laws.
Interest income from certain types of municipal securities may be subject to
federal alternative minimum tax. To the extent either Fund invests in those
securities, individual shareholders, depending on their own tax status, may be
subject to alternative minimum tax on that part of the Fund's distributions
derived from those securities.
Additional Tax Information for Fifth Third International Equity Fund
Fifth Third International Equity Fund may invest in the stock of certain
foreign corporations that would constitute a passive foreign investment company
(PFIC). Federal income taxes at ordinary net income rates may be imposed on the
Fund upon disposition of PFIC investments.
Investment income received by the Fund from sources within foreign countries
may be subject to foreign taxes withheld at the source. The United States has
entered into tax treaties with many foreign countries that entitle the Fund to
reduced tax rates or exemption on this income. The effective rate of foreign
tax cannot be predicted since the amount of the Fund assets to be invested
within various countries is unknown. However, the Fund intends to operate so as
to qualify for treaty-reduced tax rates where applicable.
The Fund intends to qualify so as to allow shareholders to claim a foreign tax
credit or deduction on their federal income tax returns. Shareholders, however,
may be limited in their ability to claim a foreign tax credit. Shareholders who
elect to deduct their portion of the Fund's foreign taxes rather than take the
foreign tax credit must itemize deductions on their federal income tax returns.
65
<PAGE>
[This Page Intentionally Left Blank]
66
<PAGE>
Financial Highlights
The financial highlights table is intended to help you understand the Funds'
financial performance for the past five years or the period of each Fund's
operations, if shorter. Certain information reflects financial results for a
single Fund share. The total returns in the tables represent the rate that an
investor would have earned or lost on an investment in a Fund (assuming
reinvestment of all dividends and distributions). The information for the
period ended July 31, 2000 has been audited by Arthur Andersen LLP, whose
report, along with the Funds' financial statements, are included in the Funds'
annual report, which is available upon request. The information for periods
ended prior to July 31, 2000 has been audited by Ernst & Young LLP (except for
the Tax Exempt Money Market Fund for the period prior to September 30, 1998 and
for the Pinnacle Fund for the period prior to July 31, 1998, which were audited
by other independent accountants).
Fifth Third Government Money Market Fund
Investment A Shares
<TABLE>
<CAPTION>
Year Ended July 31,
-----------------------------------------------
2000 1999 1998 1997 1996
Per Share Data -------- -------- -------- -------- -------
<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 0.04 0.05 0.05 0.05
--------------------------------------------------------------------------------
Total from Investment
Operations 0.05 0.04 0.05 0.05 0.05
--------------------------------------------------------------------------------
Less distributions
Distributions to shareholders
from net investment income (0.05) (0.04) (0.05) (0.05) (0.05)
--------------------------------------------------------------------------------
Total Distributions (0.05) (0.04) (0.05) (0.05) (0.05)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total Return 5.10% 4.41% 5.13% 5.00% 5.11%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 0.77% 0.75% 0.52% 0.51% 0.51%
Net investment income 4.93% 4.26% 5.02% 4.90% 4.97%
Expense
waiver/reimbursement(a) 0.12% 0.17% 0.47% 0.44% 0.42%
--------------------------------------------------------------------------------
Supplemental data
Net assets, end of period
(000s) $264,393 $381,105 $150,286 $110,543 $68,884
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
(a) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
67
<PAGE>
Financial Highlights
Fifth Third Prime Money Market Fund
Investment A Shares
<TABLE>
<CAPTION>
Year Ended July 31,
--------------------------------------------
2000 1999 1998 1997 1996
Per Share Data -------- ------- ------- ------- -------
<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 0.04 0.05 0.05 0.05
--------------------------------------------------------------------------------
Total from Investment Operations 0.05 0.04 0.05 0.05 0.05
--------------------------------------------------------------------------------
Less distributions
Distributions to shareholders
from net investment income (0.05) (0.04) (0.05) (0.05) (0.05)
--------------------------------------------------------------------------------
Total Distributions (0.05) (0.04) (0.05) (0.05) (0.05)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total Return 5.27% 4.53% 5.25% 5.11% 5.20%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 0.77% 0.75% 0.52% 0.52% 0.49%
Net investment income 5.29% 4.39% 5.13% 4.99% 5.06%
Expense waiver/reimbursement(a) 0.10% 0.13% 0.47% 0.44% 0.40%
--------------------------------------------------------------------------------
Supplemental data
Net assets, end of period (000s) $215,082 $75,024 $36,552 $33,438 $19,341
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
(a) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
68
<PAGE>
Financial Highlights
Fifth Third Tax Exempt Money Market Fund
Investment A Shares*
<TABLE>
<CAPTION>
Year Ended September
Year Ended Period Ended 30,
July 31, July 31, -------------------------
2000 1999** 1998 1997 1996
Per Share Data ---------- ------------ ------- ------- -------
<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 0.03 0.03 0.03 0.03 0.03
--------------------------------------------------------------------------------
Total from Investment
Operations 0.03 0.03 0.03 0.03 0.03
--------------------------------------------------------------------------------
Less distributions
Distributions to
shareholders from net
investment income (0.03) (0.03) (0.03) (0.03) (0.03)
--------------------------------------------------------------------------------
Total Distributions (0.03) (0.03) (0.03) (0.03) (0.03)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net Asset Value, End of
Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total Return 3.40% 2.18%(a) 2.74% 2.72% 2.67%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C>
Ratios to Average Net
Assets:
Net Expenses 0.38% 0.75%(b) 0.71% 0.80% 0.89%
Net investment income 3.33% 2.60%(b) 2.88% 2.79% 2.66%
Expense
waiver/reimbursement(c) 0.70% 0.44%(b) -- -- --
--------------------------------------------------------------------------------
Supplemental data
Net assets, end of period
(000s) $29,693 $26,715 $44,494 $60,284 $59,915
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
* 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.
** Reflects operations for the period from October 1, 1998 through July 31,
1999.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
69
<PAGE>
Financial Highlights
Fifth Third Quality Growth Fund
Investment A Shares
<TABLE>
<CAPTION>
Year Ended July 31,
--------------------------------------------------
2000 1999 1998 1997 1996
Per Share Data -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $ 23.31 $ 20.26 $ 19.23 $ 13.16 $ 11.79
-------------------------------------------------------------------------------
Income from Investment
Operations:
Net investment
income/(loss) (0.07) (0.06) 0.03 0.08 0.12
Net realized and
unrealized gains/(losses)
from investments 4.05 5.06 2.49 6.75 1.37
-------------------------------------------------------------------------------
Total from Investment
Operations 3.98 5.00 2.52 6.83 1.49
-------------------------------------------------------------------------------
Distributions to
shareholders from:
Net investment income -- -- (0.03) (0.09) (0.12)
Net realized gains on
investments (1.17) (1.95) (1.46) (0.67) --
-------------------------------------------------------------------------------
Total Distributions (1.17) (1.95) (1.49) (0.76) (0.12)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net Asset Value, End of
Period $ 26.12 $ 23.31 $ 20.26 $ 19.23 $ 13.16
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Return (excludes
sales charge) 17.60% 26.48% 14.12% 54.02% 12.69%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratios to Average Net
Assets:
Net Expenses 1.25% 1.21% 1.00% 1.00% 0.99%
Net investment
income/(loss) (0.35%) (0.29%) 0.10% 0.45% 0.98%
Expense
waiver/reimbursement(c) 0.03% 0.08% 0.37% 0.36% 0.03%
-------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of
period (000s) $208,342 $116,963 $520,068 $399,683 $134,469
Portfolio turnover(d) 21% 34% 45% 37% 37%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
</TABLE>
70
<PAGE>
Financial Highlights
Fifth Third Quality Growth Fund
Investment C Shares
<TABLE>
<CAPTION>
Year Ended July 31,
-------------------------------------------
2000 1999 1998 1997 1996*
Per Share Data ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 22.97 $20.10 $19.18 $13.16 $13.37
-------------------------------------------------------------------------------
Income from Investment
Operations:
Net investment income/(loss) (0.19) (0.18) (0.07) (0.03) --
Net realized and unrealized
gains/(losses) from
investments 3.98 5.00 2.45 6.72 (0.21)
-------------------------------------------------------------------------------
Total from Investment
Operations 3.79 4.82 2.38 6.69 (0.21)
-------------------------------------------------------------------------------
Distributions to shareholders
from:
Net investment income -- -- -- -- --
Net realized gain on
investment (1.17) (1.95) (1.46) (0.67) --
-------------------------------------------------------------------------------
Total Distributions (1.17) (1.95) (1.46) (0.67) 0.00
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net Asset Value, End of
Period $ 25.59 $22.97 $20.10 $19.18 $13.16
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Return (excludes sales
charge) 17.01% 25.76% 13.41% 52.79% (1.57)%(a)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratios to Average Net Assets:
Net Expenses 2.00% 1.80% 1.63% 1.75% 1.77%(b)
Net investment income/(loss) (0.85%) (0.89%) (0.54%) (0.32%) 0.26%(b)
Expense
waiver/reimbursement(c) 0.28% 0.30% 0.39% 0.26% 0.06%(b)
-------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period
(000s) $13,791 $9,775 $8,357 $3,146 $ 420
Portfolio turnover(d) 21% 34% 45% 37% 37%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from April 25, 1996 (date of commencement
of operations) to July 31, 1996.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
71
<PAGE>
Financial Highlights
Fifth Third Equity Income Fund
Investment A Shares
<TABLE>
<CAPTION>
Year Ended July 31,
-------------------------------------
2000 1999 1998 1997*
Per Share Data ------- ------- -------- --------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 15.18 $ 15.38 $ 14.44 $ 12.00
-------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) 0.17 0.29 0.26 0.15
Net realized and unrealized gains
from investments (1.10) 1.19 2.43 2.43
-------------------------------------------------------------------------------
Total from Investment Operations (0.93) 1.48 2.69 2.58
-------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (0.17) (0.23) (0.27) (0.14)
In excess of net investment income -- -- -- --
Net realized gain on investments (0.86) (1.45) (1.48) --
-------------------------------------------------------------------------------
Total Distributions (1.03) (1.68) (1.75) (0.14)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net Asset Value, End of Period $ 13.22 $ 15.18 $ 15.38 $ 14.44
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Return (excludes sales charge) (6.16%) 9.90% 19.57% 21.64%(a)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 1.27% 1.27% 1.01% 1.06%(b)
Net investment income 1.29% 1.58% 1.73% 2.32%(b)
Expense waiver/reimbursement(c) 0.06% 0.10% 0.43% 0.42%(b)
-------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period (000s) $12,777 $20,268 $150,404 $120,324
Portfolio turnover(d) 37% 69% 41% 28%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
</TABLE>
72
<PAGE>
Financial Highlights
Fifth Third Equity Income Fund
Investment C Shares
<TABLE>
<CAPTION>
Year Ended July 31,
-------------------------------
2000 1999 1998 1997*
Per Share Data ------ ------ ------ ------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $15.19 $15.39 $14.45 $12.00
-------------------------------------------------------------
Income from Investment
Operations
Net investment income 0.10 0.14 0.17 0.10
Net realized and
unrealized
gains/(losses)
from investments (1.10) 1.26 2.41 2.45
-------------------------------------------------------------
Total from Investment
Operations (1.00) 1.40 2.58 2.55
-------------------------------------------------------------
Distributions to
shareholders from:
Net investment income (0.10) (0.15) (0.16) (0.10)
In excess of net
investment income -- -- -- --
Net realized gain on
investments (0.86) (1.45) (1.48) --
-------------------------------------------------------------
Total Distributions (0.96) (1.60) (1.64) (0.10)
-------------------------------------------------------------
-------------------------------------------------------------
Net Asset Value, End of
Period $13.23 $15.19 $15.39 $14.45
-------------------------------------------------------------
-------------------------------------------------------------
Total Return (excludes
sales charge) (6.65%) 9.34% 18.72% 21.30%(a)
-------------------------------------------------------------
-------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C>
Ratios to Average Net
Assets:
Net Expenses 1.77% 1.83% 1.57% 1.81%(b)
Net investment income 0.80% 0.88% 1.21% 1.56%(b)
Expense
waiver/reimbursement(c) 0.31% 0.30% 0.52% 0.26%(b)
-------------------------------------------------------------
Supplemental data:
Net Assets at end of
period (000s) $ 679 $1,433 $ 968 $ 92
Portfolio turnover(d) 37% 69% 41% 28%
-------------------------------------------------------------
-------------------------------------------------------------
</TABLE>
* Reflects operations for the period from January 27, 1997 (date of
commencement of operations) to July 31, 1997.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
73
<PAGE>
Financial Highlights
Fifth Third Pinnacle Fund*
Investment A Shares
<TABLE>
<CAPTION>
Year Ended
Year ended Year ended Period ended December 31,
July 31, July 31, July 31, ----------------
2000 1999 1998** 1997 1996
Per Share Data ---------- ---------- ------------ ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 37.20 $ 32.35 $ 27.71 $ 23.96 $ 22.47
-----------------------------------------------------------------------------------
Income from Investment
Operations:
Net investment
income/(loss) (0.21) (0.09) (0.02) 0.13 0.05
Net realized and
unrealized gain from
investments 1.61 5.57 5.13 8.25 5.04
-----------------------------------------------------------------------------------
Total from Investment
Operations 1.40 5.48 5.11 8.38 5.09
-----------------------------------------------------------------------------------
Distributions to
shareholders from:
Net investment income -- -- -- (0.13) (0.05)
Net realized gain on
investments (0.55) (0.63) (0.47) (4.50) (3.55)
-----------------------------------------------------------------------------------
Total Distributions (0.55) (0.63) (0.47) (4.63) (3.60)
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Net Asset Value, End of
Period $ 38.05 $ 37.20 $ 32.35 $ 27.71 $ 23.96
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Total Return (excludes
sales charge) 3.81% 17.18% 18.58% (a) 35.40% 22.50%
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C>
Ratios to Average Net
Assets:
Net Expenses 1.32% 1.41% 1.28% (b) 1.12% 1.16%
Net investment
income/(loss) (0.47%) (0.47%) (0.12%)(b) 0.46% 0.18%
Expense
waiver/reimbursement(c) 0.00% 0.02% 0.30% (b) 0.00% 0.00%
-----------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of
period (000s) $42,842 $49,936 $35,549 $22,272 $16,461
Portfolio turnover(d) 53% 51% 38% 50% 44%
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
</TABLE>
74
<PAGE>
Financial Highlights
Fifth Third Pinnacle Fund*
Investment C Shares
<TABLE>
<CAPTION>
Year ended Year ended Period ended
July 31, July 31, July 31,
2000 1999 1998***
Per Share Data ---------- ---------- ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $36.92 $32.28 $30.16
---------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) (0.47) (0.23) (0.04)
Net realized and unrealized gain from
investments 1.66 5.50 2.16
---------------------------------------------------------------------------
Total from Investment Operations 1.19 5.27 2.12
---------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income -- -- --
Net realized gain on investments (0.55) (0.63) --
---------------------------------------------------------------------------
Total Distributions (0.55) (0.63) 0.00
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Net Asset Value, End of Period $37.56 $36.92 $32.28
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Total Return (excludes sales charge) 3.26% 16.56% 7.07% (a)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 1.82% 1.95% 2.17% (b)
Net investment income/(loss) (0.97%) (1.00%) (0.84%)(b)
Expense waiver/reimbursement(c) 0.25% 0.26% 0.42% (b)
---------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period (000s) $4,171 $6,653 $ 922
Portfolio turnover(d) 53% 51% 38%
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>
* Information prior to the period March 9, 1998 is for the Pinnacle Fund, the
predecessor Fund of the Fifth Third Pinnacle Fund.
** Reflects the period of operations from January 1, 1998 to July 31, 1998.
*** Reflects the period of operations for the period March 9, 1998 (date of
commencement of operations) to July 31, 1998.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
75
<PAGE>
Financial Highlights
Fifth Third Balanced Fund
Investment A Shares
<TABLE>
<CAPTION>
Year Ended July 31,
----------------------------------------------
2000 1999 1998 1997 1996
Per Share Data -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 16.12 $ 14.99 $ 15.33 $ 11.75 $ 11.28
-------------------------------------------------------------------------------
Income from Investment
Operations:
Net investment income 0.17 0.20 0.27 0.27 0.27
Net realized and unrealized
gains from investments 2.62 1.86 0.92 4.06 0.47
-------------------------------------------------------------------------------
Total from Investment
Operations 2.79 2.06 1.19 4.33 0.74
-------------------------------------------------------------------------------
Distributions to shareholders
from:
Net investment income (0.20) (0.19) (0.28) (0.26) (0.27)
Net realized gain on
investments (1.34) (0.74) (1.25) (0.49) --
-------------------------------------------------------------------------------
Total Distributions (1.54) (0.93) (1.53) (0.75) (0.27)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net Asset Value, End of Period $ 17.37 $ 16.12 $ 14.99 $ 15.33 $ 11.75
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Return (excludes sales
charge) 18.28% 14.30% 8.41% 38.45% 6.52%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 1.25% 1.28% 1.00% 1.00% 1.00%
Net investment income/(loss) 1.30% 1.22% 1.84% 2.05% 2.31%
Expense
waiver/reimbursement(c) 0.06% 0.06% 0.43% 0.40% 0.06%
-------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period
(000s) $104,750 $79,686 $173,177 $122,765 $92,808
Portfolio turnover(d) 122% 128% 135% 101% 61%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
</TABLE>
76
<PAGE>
Financial Highlights
Fifth Third Balanced Fund
Investment C Shares
<TABLE>
<CAPTION>
Year ended July 31, Period Ended
------------------------------ July 31,
2000 1999 1998 1997 1996*
Per Share Data ------ ------ ------ ------ ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $16.13 $15.01 $15.34 $11.75 $12.13
-------------------------------------------------------------------------------
Income from Investment
Operations:
Net investment income 0.12 0.11 0.17 0.16 0.05
Net realized and unrealized
gains from investments 2.57 1.88 0.92 4.08 (0.39)
-------------------------------------------------------------------------------
Total from Investment Operations 2.69 1.99 1.09 4.24 (0.34)
-------------------------------------------------------------------------------
Distributions to shareholders
from:
Net investment income (0.13) (0.13) (0.17) (0.16) (0.04)
Net realized gain on investments (1.34) (0.74) (1.25) (0.49) --
-------------------------------------------------------------------------------
Total Distributions (1.47) (0.87) (1.42) (0.65) (0.04)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net Asset Value, End of Period $17.35 $16.13 $15.01 $15.34 $11.75
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Return (excludes sales
charge) 17.66% 13.78% 7.67% 37.52% (2.80)(a)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 1.75% 1.76% 1.58% 1.75% 1.78%(b)
Net investment income/(loss) 0.80% 0.78% 1.24% 1.30% 1.60%(b)
Expense waiver/reimbursement(c) 0.31% 0.29% 0.49% 0.30% 0.07%(b)
-------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period
(000s) $7,815 $6,692 $4,796 $1,155 $ 264
Portfolio turnover(d) 122% 128% 135% 101% 61%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from April 25, 1996 (date of commencement
of operations) to July 31, 1996.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
77
<PAGE>
Financial Highlights
Fifth Third Mid Cap Fund
Investment A Shares
<TABLE>
<CAPTION>
Year ended July 31,
------------------------------------------------
2000 1999 1998 1997 1996
Per Share Data ------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 15.82 $ 16.19 $ 16.98 $ 12.60 $ 12.59
--------------------------------------------------------------------------------
Income from Investment
Operations:
Net investment income/(loss) (0.08) (0.10) (0.03) 0.02 0.06
Net realized and unrealized
gains/(losses) from
investments 4.60 1.17 0.98 5.55 0.11
--------------------------------------------------------------------------------
Total from Investment
Operations 4.52 1.07 0.95 5.57 0.17
--------------------------------------------------------------------------------
Distributions to shareholders
from:
Net investment income -- -- -- (0.02) (0.07)
In excess of net investment
income -- -- -- (0.02) --
Net realized gains (1.18) (1.44) (1.74) (1.15) (0.09)
--------------------------------------------------------------------------------
Total Distributions (1.18) (1.44) (1.74) (1.19) (0.16)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net Asset Value, End of
Period $ 19.16 $ 15.82 $ 16.19 $ 16.98 $ 12.60
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total Return (excludes sales
charge) 30.22% 7.29% 5.69% 47.17% 1.27%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 1.24% 1.28% 1.01% 1.00% 1.00%
Net investment income/(loss) (0.51%) (0.59%) (0.19%) 0.10% 0.42%
Expense
waiver/reimbursement(c) 0.05% 0.11% 0.40% 0.37% 0.06%
--------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period
(000s) $36,430 $27,966 $217,547 $186,066 $72,663
Portfolio turnover(d) 42% 49% 44% 52% 54%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
78
<PAGE>
Financial Highlights
Fifth Third Mid Cap Fund
Investment C Shares
<TABLE>
<CAPTION>
Year ended July 31, Period Ended
--------------------------------- July 31,
2000 1999 1998 1997 1996*
Per Share Data ------ ------ ------ ------ ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $15.52 $15.98 $16.88 $12.59 $13.72
-------------------------------------------------------------------------------
Income from Investment
Operations:
Net investment
income/(loss) (0.16) (0.18) (0.05) (0.07) (0.01)
Net realized and
unrealized gains/(losses)
from investments 4.47 1.16 0.89 5.51 (1.12)
-------------------------------------------------------------------------------
Total from Investment
Operations 4.31 0.98 0.84 5.44 (1.13)
-------------------------------------------------------------------------------
Distributions to
shareholders from:
Net investment income -- -- -- -- --
In excess of net
investment income -- -- -- -- --
Net realized gain on
investment (1.18) (1.44) (1.74) (1.15) --
-------------------------------------------------------------------------------
Total Distributions (1.18) (1.44) (1.74) (1.15) 0.00
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net Asset Value, End of
Period $18.65 $15.52 $15.98 $16.88 $12.59
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Return (excludes
sales charge) 29.48% 6.79% 5.03% 46.05% (8.24)% (a)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C>
Ratios to Average Net
Assets:
Net expenses 1.74% 1.85% 1.61% 1.75% 1.78% (b)
Net investment loss (1.01%) (1.07%) (0.81%) (0.62%) (0.51%)(b)
Expense
waiver/reimbursement(c) 0.30% 0.32% 0.44% 0.27% 0.06% (b)
-------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of
period (000s) $ 979 $ 794 $1,049 $ 439 $ 229
Portfolio turnover(d) 42% 49% 44% 52% 54%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from April 24, 1996 (date of commencement
of operations) to July 31, 1996.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
79
<PAGE>
Financial Highlights
Fifth Third International Equity Fund
Investment A Shares
<TABLE>
<CAPTION>
Year ended July 31,
--------------------------------------------
2000 1999 1998 1997 1996
Per Share Data ------ ------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $12.84 $12.56 $ 12.05 $ 10.74 $ 9.83
--------------------------------------------------------------------------------
Income from Investment Operations
Net investment income/(loss) 0.04 0.03 0.09 0.04 0.01
Net realized and unrealized
gains/(losses) from investments 1.01 0.49 1.31 2.15 0.90
--------------------------------------------------------------------------------
Total from Investment Operations 1.05 0.52 1.40 2.19 0.91
--------------------------------------------------------------------------------
Distributions to shareholders
from:
Net investment income -- (0.08) (0.59) (0.66) --
In excess of net investment
income -- (0.09) -- (0.16) --
Net realized gains (1.18) (0.07) (0.30) (0.06) --
--------------------------------------------------------------------------------
Total Distributions (1.18) (0.24) (0.89) (0.88) 0.00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net Asset Value, End of Period $12.71 $12.84 $ 12.56 $ 12.05 $ 10.74
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total Return (excludes sales
charge) 8.02% 4.23% 13.29% 21.78% 9.26%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 1.70% 1.52% 1.47% 1.38% 1.61%
Net investment income/(loss) 0.32% 0.03% 0.66% 0.39% 0.32%
Expense waiver/reimbursement(c) 0.00% 0.18% 0.35% 0.35% 0.05%
--------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period
(000s) $7,901 $5,821 $163,297 $151,728 $120,349
Portfolio turnover(d) 86% 42% 39% 60% 41%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
80
<PAGE>
Financial Highlights
Fifth Third International Equity Fund
Investment C Shares
<TABLE>
<CAPTION>
Year ended July 31, Period Ended
--------------------------------- July 31,
2000 1999 1998 1997 1996*
Per Share Data ------ ------ ------ ------ ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $12.76 $12.51 $12.01 $10.71 $11.21
--------------------------------------------------------------------------------
Income from Investment
Operations
Net investment income/(loss) (0.03) -- (0.06) (0.02) 0.01
Net realized and unrealized
gains/(losses) from
investments 0.99 0.46 1.39 2.16 (0.51)
--------------------------------------------------------------------------------
Total from Investment
Operations 0.96 0.46 1.33 2.14 (0.50)
--------------------------------------------------------------------------------
Distributions to shareholders
from:
Net investment income -- (0.14) (0.53) (0.46) --
In excess of net investment
income -- -- -- (0.32) --
Net realized gains (1.18) (0.07) (0.30) (0.06) --
--------------------------------------------------------------------------------
Total Distributions (1.18) (0.21) (0.83) (0.84) 0.00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net Asset Value, End of
Period $12.54 $12.76 $12.51 $12.01 $10.71
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total Return (excludes sales
charge) 7.25% 3.79% 12.57% 21.25% 8.95%(a)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 2.22% $ 2.25% 2.22% 2.13% 2.34%(b)
Net investment income/(loss) (0.20%) (0.08%) (0.09%) (0.28%) 0.76%(b)
Expense
waiver/reimbursement(c) 0.00% 0.25% 0.25% 0.25% 0.00%(b)
--------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period
(000s) $ 276 $ 235 $ 291 $ 210 $ 57
Portfolio turnover(d) 86% 42% 39% 60% 41%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from April 25, 1996 (date of commencement
of operations) to July 31, 1996.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
81
<PAGE>
Financial Highlights
Fifth Third Technology Fund
Investment A Shares
<TABLE>
<CAPTION>
Period ended
July 31,
2000*
Per Share Data ------------
<S> <C>
Net Asset Value, Beginning of Period $20.00
---------------------------------------------------------------
Income from Investment Operations: (0.03)
Net investment income
Net realized and unrealized gains/(losses) from
investments (0.76)
---------------------------------------------------------------
Total from Investment Operations (0.79)
---------------------------------------------------------------
Distributions to shareholders from:
Net investment income --
In excess of net investment income --
Net realized gains --
---------------------------------------------------------------
Total Distributions --
---------------------------------------------------------------
---------------------------------------------------------------
Net Asset Value, End of Period $19.21
---------------------------------------------------------------
---------------------------------------------------------------
Total Return (excludes sales charge) (5.69%)(a)
---------------------------------------------------------------
---------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C>
Ratios to Average Net Assets:
Net Expenses 1.70% (b)
Net investment income/(loss) (1.27%)(b)
---------------------------------------------------------------
Supplemental data:
Net Assets at end of period (000s) $4,560
Portfolio turnover(c) 11%
---------------------------------------------------------------
---------------------------------------------------------------
</TABLE>
82
<PAGE>
Financial Highlights
Fifth Third Technology Fund
Investment C Shares
<TABLE>
<CAPTION>
Period Ended
July 31,
2000*
Per Share Data ------------
<S> <C>
Net Asset Value, Beginning of Period $20.00
---------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (0.03)
Net realized and unrealized gains/(losses) from investments (0.77)
---------------------------------------------------------------------------
Total from Investment Operations (0.80)
---------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income --
In excess of net investment income --
Net realized gains --
---------------------------------------------------------------------------
Total Distributions --
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Net Asset Value, End of Period $19.20
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Total Return (excludes sales charge) (5.65%)(a)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C>
Ratios to Average Net Assets: 2.42% (b)
Net Expenses (1.89%)(b)
Net investment income/(loss) --
---------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period (000s) $ 105
Portfolio turnover(c) 11%
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from June 5, 2000 (date of commencement
of operations) to July 31, 2000.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
83
<PAGE>
Financial Highlights
Fifth Third Bond Fund For Income
Investment A Shares
<TABLE>
<CAPTION>
Year Ended July 31,
------------------------------------
2000 1999 1998 1997*
Per Share Data ------- ------- -------- --------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 11.69 $ 12.19 $ 12.19 $ 12.00
------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) 0.66 0.71 0.68 0.37
Net realized and unrealized
gains/(losses) from investments (0.22) (0.41) 0.06 0.18
------------------------------------------------------------------------------
Total from Investment Operations 0.44 0.30 0.74 0.55
------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (0.65) (0.59) (0.69) (0.36)
In excess from net investments -- -- -- --
Net realized gains -- (0.21) (0.05) --
------------------------------------------------------------------------------
Total Distributions (0.65) (0.80) (0.74) (0.36)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Net Asset Value, End of Period $ 11.48 $ 11.69 $ 12.19 $ 12.19
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Total Return (excludes sales charge) 3.90% 2.42% 6.23% 4.64%(a)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 1.01% 0.97% 0.75% 0.79%(b)
Net investment income/(loss) 5.59% 4.80% 5.54% 6.08%(b)
Expense waiver/reimbursement(c) 0.04% 0.05% 0.42% 0.42%(b)
------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period (000s) $27,319 $40,508 $188,071 $157,108
Portfolio turnover(d) 185% 104% 127% 157%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
</TABLE>
84
<PAGE>
Financial Highlights
Fifth Third Bond Fund For Income
Investment C Shares
<TABLE>
<CAPTION>
Year Ended July 31,
------------------------------
2000 1999 1998** 1997*
Per Share Data ------ ------ ------ ------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $11.69 $12.19 $12.18 $12.00
------------------------------------------------------------------------------
Income from Investment Operations
Net investment income/(loss) 0.60 0.53 0.60 (0.01)
Net realized and unrealized gains/(losses)
from investments (0.21) (0.29) 0.05 0.50
------------------------------------------------------------------------------
Total from Investment Operations 0.39 0.24 0.65 0.49
------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (0.59) (0.53) (0.59) (0.22)
In excess of net investment income -- -- -- (0.09)
Net realized gains -- (0.21) (0.05) --
------------------------------------------------------------------------------
Total Distributions (0.59) (0.74) (0.64) (0.31)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Net Asset Value, End of Period $11.49 $11.69 $12.19 $12.18
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Total Return (excludes sales charge) 3.43% 1.92% 5.50% 4.18%(a)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 1.51% 1.54% 1.34% 1.54%(b)
Net investment income/(loss) 5.10% 3.40% 4.89% 4.20%(b)
Expense waiver/reimbursement(c) 0.26% 0.28% 0.32% 0.26%(b)
------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period (000s) $ 365 $ 567 $ 230 $ 6
Portfolio turnover(d) 185% 104% 127% 157%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from January 27, 1997 (date of
commencement of operations) to July 31, 1997.
** Per share information is calculated using the average share method.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
85
<PAGE>
Financial Highlights
Fifth Third Quality Bond Fund
Investment A Shares
<TABLE>
<CAPTION>
Year ended July 31,
------------------------------------------
2000 1999 1998 1997 1996
Per Share Data ------ ------ -------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 9.52 $ 9.96 $ 9.85 $ 9.52 $ 9.72
--------------------------------------------------------------------------------
Investment Operations
Net investment income/(loss) 0.54 0.65 0.54 0.55 0.56
Net realized and unrealized
gains/(losses) from investments (0.14) (0.51) 0.12 0.32 (0.19)
--------------------------------------------------------------------------------
Total from Investment Operations 0.40 0.14 0.66 0.87 0.37
--------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (0.54) (0.47) (0.55) (0.54) (0.57)
In excess of net investment income -- -- -- -- --
Net realized gains -- (0.11) -- -- --
--------------------------------------------------------------------------------
Total Distributions (0.54) (0.58) (0.55) (0.54) (0.57)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net Asset Value, End of Period $ 9.38 $ 9.52 $ 9.96 $ 9.85 $ 9.52
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total Return (excludes sales
charge) 4.41% 1.26% 6.91% 9.43% 3.86%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 1.00% 0.92% 0.75% 0.75% 0.75%
Net investment income/(loss) 5.82% 4.85% 5.50% 5.71% 5.80%
Expense waiver/reimbursement(c) 0.09% 0.17% 0.45% 0.41% 0.06%
--------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period (000s) $9,494 $9,826 $107,794 $91,789 $83,422
Portfolio turnover(d) 368% 349% 279% 181% 117%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
86
<PAGE>
Financial Highlights
Fifth Third Quality Bond Fund
Investment C Shares
<TABLE>
<CAPTION>
Year ended July 31,
--------------------------------------
2000 1999 1998 1997 1996*
Per Share Data ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 9.51 $ 9.95 $ 9.86 $ 9.53 $ 9.62
-------------------------------------------------------------------------------
Income from Investment Operations
Net investment income/(loss) 0.53 0.43 0.48 0.49 0.14
Net realized and unrealized
gains/(losses) from investments (0.16) (0.33) 0.09 0.32 (0.08)
-------------------------------------------------------------------------------
Total from Investment Operations 0.37 0.10 0.57 0.81 0.06
-------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (0.50) (0.43) (0.48) (0.48) (0.15)
In excess of net investment income -- -- -- -- --
Net realized gains -- (0.11) -- -- --
-------------------------------------------------------------------------------
Total Distributions (0.50) (0.54) (0.48) (0.48) (0.15)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net Asset Value, End of Period $ 9.38 $ 9.51 $ 9.95 $ 9.86 $ 9.53
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Return (excludes sales
charge) 3.98% 0.75% 5.92% 8.68% 0.62%(a)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 1.50% 1.43% 1.50% 1.50% 1.52%(b)
Net investment income/(loss) 5.31% 4.23% 4.76% 4.97% 5.03%(b)
Expense waiver/reimbursement(c) 0.33% 0.36% 0.35% 0.31% 0.09%(b)
-------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period (000s) $ 697 $ 811 $ 399 $ 204 $ 162
Portfolio turnover(d) 368% 349% 279% 181% 117%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from April 25, 1996 (date of commencement
of operations) to July 31, 1996.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
87
<PAGE>
Financial Highlights
Fifth Third U.S. Government Securities Fund
Investment A Shares
<TABLE>
<CAPTION>
Year ended July 31,
-----------------------------------------
2000 1999 1998 1997 1996
Per Share Data ------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 9.64 $ 9.82 $ 9.75 $ 9.55 $ 9.77
-------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) 0.48 0.55 0.52 0.54 0.55
Net realized and unrealized
gains/(losses) from investments (0.09) (0.26) 0.07 0.19 (0.20)
-------------------------------------------------------------------------------
Total from Investment Operations 0.39 0.29 0.59 0.73 0.35
-------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (0.48) (0.47) (0.52) (0.53) (0.57)
-------------------------------------------------------------------------------
Total Distributions (0.48) (0.47) (0.52) (0.53) (0.57)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net Asset Value, End of Period $ 9.55 $ 9.64 $ 9.82 $ 9.75 $ 9.55
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Return (excludes sales
charge) 4.20% 2.89% 6.17% 7.83% 3.63%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 0.98% 0.95% 0.75% 0.75% 0.75%
Net investment income/(loss) 4.95% 4.62% 5.30% 5.56% 5.67%
Expense waiver/reimbursement(c) 0.21% 0.33% 0.53% 0.50% 0.29%
-------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period (000s) $2,818 $5,192 $41,550 $42,414 $30,754
Portfolio turnover(d) 46% 93% 155% 169% 103%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
</TABLE>
88
<PAGE>
Financial Highlights
Fifth Third U.S. Government Securities Fund
Investment C Shares
<TABLE>
<CAPTION>
Year ended July 31,
--------------------------------------
2000 1999 1998 1997 1996*
Per Share Data ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 9.61 $ 9.80 $ 9.75 $ 9.56 $ 9.65
-------------------------------------------------------------------------------
Income from Investment Operations
Net investment income/(loss) 0.43 0.41 0.46 0.46 0.16
Net realized and unrealized
gains/(losses) from investments (0.09) (0.18) 0.04 0.19 (0.10)
-------------------------------------------------------------------------------
Total from Investment Operations 0.34 0.23 0.50 0.65 0.06
-------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (0.43) (0.42) (0.45) (0.46) (0.15)
-------------------------------------------------------------------------------
Total Distributions (0.43) (0.42) (0.45) (0.46) (0.15)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net Asset Value, End of Period $ 9.52 $ 9.61 $ 9.80 $ 9.75 $ 9.56
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Return (excludes sales
charge) 3.65% 2.31% 5.19% 6.92% 0.60%(a)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 1.48% 1.40% 1.50% 1.50% 1.52%(b)
Net investment income/(loss) 4.41% 4.20% 4.56% 4.82% 4.80%(b)
Expense waiver/reimbursement(c) 0.44% 0.54% 0.43% 0.40% 0.37%(b)
-------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period (000s) $ 198 $ 431 $ 118 $ 75 $ 49
Portfolio turnover(d) 46% 93% 155% 169% 103%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from April 24, 1996 (date of commencement
of operations) to July 31, 1996.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
89
<PAGE>
Financial Highlights
Fifth Third Municipal Bond Fund
Investment A Shares
<TABLE>
<CAPTION>
Year Ended July 31,
-------------------------------------
2000 1999 1998 1997*
Per Share Data ------ ------ -------- --------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $11.79 $12.24 $ 12.33 $ 12.00
-------------------------------------------------------------------------------
Income from Investment Operations
Net investment income/(loss) 0.45 0.45 0.50 0.28
Net realized and unrealized
gains/(losses) from investments (0.22) (0.25) 0.01 0.32
-------------------------------------------------------------------------------
Total from Investment Operations 0.23 0.20 0.51 0.60
-------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (0.45) (0.44) (0.51) (0.27)
In excess of net investment
income/(loss) -- -- -- --
Net realized gains (0.11) (0.21) (0.09) --
-------------------------------------------------------------------------------
Total Distributions (0.59) (0.65) (0.60) (0.27)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net Asset Value, End of Period $11.46 $11.79 $ 12.24 $ 12.33
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Return (excludes sales charge) 2.07%(a) 1.56% 4.28% 5.04%(a)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 1.00%(b) 0.81% 0.76% 0.81%(b)
Net investment income/(loss) 3.91%(b) 3.99% 4.09% 4.44%(b)
Expense waiver/reimbursement(c) 0.11%(b) 0.31% 0.45% 0.42%(b)
-------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period (000s) $ 207 $ 386 $117,333 $101,616
Portfolio turnover(d) 84% 110% 121% 63%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
</TABLE>
90
<PAGE>
Financial Highlights
Fifth Third Municipal Bond Fund
Investment C Shares
<TABLE>
<CAPTION>
Year ended July 31,
---------------------------
2000 1999 1998** 1997*
Per Share Data ---- ---- ------ ------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $-- $-- $12.33 $12.00
---------------------------------------------------------------------------
Investment Operations
Net investment income/(loss) 0.18 (0.20)
Net realized and unrealized gains/(losses)
from investments -- -- 0.07 0.75
---------------------------------------------------------------------------
Total from Investment Operations -- -- 0.25 0.55
---------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (0.18) (0.16)
In excess of net investment income -- -- -- (0.06)
Net realized gains (0.09) --
---------------------------------------------------------------------------
Total Distributions -- -- (0.27) (0.22)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Net Asset Value, End of Period -- -- $12.31 $12.33
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Total Return (excludes sales charge) N/A N/A 2.03%(a) 4.65%(a)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses N/A N/A 1.51%(b) 1.56%(b)
Net investment income/(loss) N/A N/A 3.41%(b) 3.09%(b)
Expense waiver/reimbursement(c) N/A N/A 0.37%(b) 0.26%(b)
---------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period (000s) $-- $-- $ -- $ 11
Portfolio turnover(d) N/A N/A 121% 63%
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from January 27, 1997 (date of
commencement of operations) to July 31, 1997.
** Reflects operations for the period from August 1, 1997 (date of commencement
of operations) to January 8, 1998. As of July 31, 1998, no shares or assets
existed in the Investment C Shares. The ending net asset value is the last
NAV for a share redeemed on January 8, 1998. Per share information is
calculated using the average share method for Investment C Shares.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
91
<PAGE>
Financial Highlights
Fifth Third Ohio Tax Free Bond Fund
Investment A Shares
<TABLE>
<CAPTION>
Year Ended July 31,
---------------------------------------------
2000 1999 1998 1997 1996
Per Share Data ------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 10.02 $ 10.29 $ 10.31 $ 10.01 $ 9.99
-------------------------------------------------------------------------------
Income from Investment
Operations:
Net investment income 0.39 0.46 0.42 0.43 0.40
Net realized and unrealized
gains/(losses) from
investments (0.11) (0.29) 0.02 0.30 0.03
-------------------------------------------------------------------------------
Total from Investment
Operations 0.28 0.17 0.44 0.73 0.43
-------------------------------------------------------------------------------
Distributions to shareholders
from:
Net investment income (0.39) (0.38) (0.42) (0.43) (0.41)
In excess of net investment
income -- -- -- -- --
Net realized gains (0.02) (0.06) (0.04) -- --
-------------------------------------------------------------------------------
Total Distributions (0.41) (0.44) (0.46) (0.43) (0.41)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net Asset Value, End of Period $ 9.89 $ 10.02 $ 10.29 $ 10.31 $ 10.01
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Return (excludes sales
charge) 2.85% 1.63% 4.38% 7.49% 4.33%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 1.01% 1.00% 0.74% 0.75% 0.74%
Net investment income/(loss) 3.88% 3.68% 4.09% 4.27% 4.01%
Expense waiver/reimbursement(c) 0.04% 0.21% 0.43% 0.37% 0.32%
-------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period
(000s) $13,257 $22,008 $188,966 $168,800 $35,463
Portfolio turnover(d) 26% 47% 42% 49% 30%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
</TABLE>
92
<PAGE>
Financial Highlights
Fifth Third Ohio Tax Free Bond Fund
Investment C Shares
<TABLE>
<CAPTION>
Year ended July 31,
--------------------------------------
2000 1999 1998 1997 1996*
Per Share Data ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $10.01 $10.28 $10.31 $10.00 $10.02
-------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income 0.34 0.33 0.35 0.36 0.10
Net realized and unrealized
gains/(losses) from investments (0.12) (0.21) 0.01 0.31 (0.01)
-------------------------------------------------------------------------------
Total from Investment Operations 0.22 0.12 0.36 0.67 0.09
-------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (0.34) (0.33) (0.35) (0.35) (0.11)
In excess of net investment income -- -- -- (0.01) --
Net realized gains (0.02) (0.06) (0.04) -- --
-------------------------------------------------------------------------------
Total Distributions (0.36) (0.39) (0.39) (0.36) (0.11)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net Asset Value, End of Period $ 9.87 $10.01 $10.28 $10.31 $10.00
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Return (excludes sales
charge) 2.25% 1.13% 3.56% 6.84% 0.91%(a)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C>
Ratios to Average Net Assets:
Net Expenses 1.52% 1.55% 1.49% 1.50% 1.52%(b)
Net investment income/(loss) 3.30% 3.05% 3.33% 3.51% 3.41%(b)
Expense waiver/reimbursement(c) 0.29% 0.38% 0.33% 0.27% 0.28%(b)
-------------------------------------------------------------------------------
Supplemental data:
Net Assets at end of period (000s) $ 990 $1,071 $ 584 $ 248 $ 38
Portfolio turnover(d) 26% 47% 42% 49% 30%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from April 24, 1996 (date of commencement
of operations) to July 31, 1996.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
93
<PAGE>
Addresses
[CAPTION]
<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Fifth Third Government Money Market Fund Fifth Third Funds
Fifth Third Prime Money Market Fund c/o Fifth Third Bank
Fifth Third Tax Exempt Money Market Fund 38 Fountain Square Plaza
Fifth Third Quality Growth Fund Cincinnati, Ohio 45263
Fifth Third Equity Income Fund
Fifth Third Pinnacle Fund
Fifth Third Balanced Fund
Fifth Third Mid Cap Fund
Fifth Third International Equity Fund
Fifth Third Technology Fund
Fifth Third Bond Fund For Income
Fifth Third Quality Bond Fund
Fifth Third U.S. Government Securities Fund
Fifth Third Municipal Bond Fund
Fifth Third Ohio Tax Free Bond Fund
------------------------------------------------------------------------------------------------------------------------------------
Investment Advisor Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
------------------------------------------------------------------------------------------------------------------------------------
Investment Advisor (Pinnacle Fund only) Heartland Capital Management, Inc.
251 North Illinois Street
Suite 300
Indianapolis, Indiana 46204
------------------------------------------------------------------------------------------------------------------------------------
Sub-Advisor (International Equity Fund only) Morgan Stanley Dean Witter Investment
Management Inc.
1221 Avenue of the Americas
New York, New York 10020
------------------------------------------------------------------------------------------------------------------------------------
Custodian, Transfer Agent, Dividend Disbursing Agent,
and Sub-Administrator Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
------------------------------------------------------------------------------------------------------------------------------------
Distributor, Administrator, and Sub-Transfer Agent BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219
------------------------------------------------------------------------------------------------------------------------------------
Independent Auditors Arthur Andersen LLP
Suite 1500
425 Walnut Street
Cincinnati, Ohio 45202
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
The following additonal information is available to you upon request and without
charge.
Annual/Semiannual Reports (Reports):
The Funds' annual and semi-annual reports to shareholders contain additional
information on the Funds' investments.
Statement of Additional Information (SAI): The SAI provides more detailed
information about the Funds, including their operations and investment
policies. It is incorporated by reference and is legally considered a part of
this prospectus.
You can get free copies of Annual and Semi-Annual Reports, the SAI, prospectuses
of other Fifth Third Funds, or request other information and discuss your
questions about the Funds by contacting a broker or other financial institution
that sells the Funds. In addition, you may contact the Funds at:
Fifth Third Funds
c/o Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Telephone: 1-888-799-5353
Internet: http://www.53.com*
-----------------
*The Funds' website is not part of this Prospectus.
You can review the Annual and Semi-Annual Reports and the SAI at the Public
Reference Room of the Securities and Exchange Commission. You can get copies:
. For a fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-0102 or calling 1-202-942-8090, or by electronic
request, by e-mailing the SEC at the following address: [email protected].
. At no charge from the Commission's Website at http://www.sec.gov.
[LOGO] Fifth Third Funds
PROSP-ABC 11/00 Investment Company Act file no. 811-5669
<PAGE>
[LOGO] Fifth Third Funds
[ARTWORK]
QUALITY GROWTH FUND
EQUITY INCOME FUND
PINNACLE FUND
BALANCED FUND
MID CAP FUND
INTERNATIONAL EQUITY FUND
TECHNOLOGY FUND
BOND FUND FOR INCOME
QUALITY BOND FUND
U.S. GOVERNMENT SECURITIES FUND
MUNICIPAL BOND FUND
OHIO TAX FREE BOND FUND
Fifth Third Funds
Stock and Bond Mutual Funds
Institutional Shares
Working hard to
build your wealth!
--------------
Prospectus
November 30, 2000
The Securities and Exchange Commission has not approved or disapproved the
shares described in this prospectus or determined whether this prospectus is
accurate or complete. Any representation to the contrary is a criminal
offense.
<PAGE>
Fifth Third Funds
Stock and Bond Mutual Funds
Institutional Shares________________Table of Contents
Overview
This section provides important information about each of the stock and bonds
funds (the "Funds"), each a separate series of Fifth Third Funds, including:
. the investment objective
. principal investment strategies
. principle risks, and
. volatility and performance information
All funds except Fifth Third Pinnacle Fund are managed by Fifth Third Bank.
Fifth Third Pinnacle Fund is managed by Heartland Capital Management, Inc.
("Heartland"). Morgan Stanley Dean Witter Investment Management Inc. ("MSDW")
acts as investment subadvisor to Fifth Third International Equity Fund.
Like all mutual funds (other than money market and stable value funds), share
prices of the Funds may rise and fall in value and you could lose money. There
is no guarantee that any Fund will achieve its objective.
This prospectus has been arranged into different sections so that you can
easily review this important information. For more detailed information about
each Fund, please see:
<TABLE>
<CAPTION>
Objectives, Strategies and Risks Page
---------------------------------------------------------
<S> <C>
Quality Growth Fund 2
Equity Income Fund 4
Pinnacle Fund 6
Balanced Fund 8
Mid Cap Fund 10
International Equity Fund 12
Technology Fund 14
Bond Fund For Income 16
Quality Bond Fund 18
U.S. Government Securities Fund 20
Municipal Bond Fund 22
Ohio Tax Free Bond Fund 24
Shareholder Fees and Fund Expenses
---------------------------------------------------------
Fee Tables 26
Expense Examples 28
Additional Information About the Funds' Investments
---------------------------------------------------------
29
Fund Management
---------------------------------------------------------
Investment Advisors and Subadvisor 35
Portfolio Managers 35
Fund Administration 37
Shareholder Information
---------------------------------------------------------
Purchasing and Selling Fund Shares 38
Purchasing and Adding to Your Shares 38
Selling Your Shares 39
Exchanging Your Shares 40
Dividends and Capital Gains 40
Taxation 41
Financial Highlights
---------------------------------------------------------
43
Back Cover
---------------------------------------------------------
Where to learn more about Fifth Third Funds
</TABLE>
1
<PAGE>
Fifth Third Quality Growth Fund
[LOGO]
Growth of capital. Income is a secondary objective.
Fundamental
Objective
Principal
Investment Under normal market conditions, the Fund invests at least
Strategies 65% of total assets in common stocks of high quality
growth companies.
High quality growth companies are companies, in the
opinion of Fifth Third Bank, that offer excellent
prospects for consistent, above-average revenue and
earnings growth. To determine whether a company is of high
quality, the Fund generally looks for a strong record of
earnings growth, as well as its current ratio of debt to
capital and the quality of its management. Most of the
companies in which the Fund invests are U.S. companies
with a market capitalization greater than $100 million.
To achieve its secondary objective of income, the Fund may
rely on dividend income that it receives from common
stocks and interest income it receives from other
investments, including convertible securities. The Fund
reserves the right to invest up to 35% of total assets in
those securities. At the time of investment, those
securities are rated investment grade, that is, in the BBB
major rating category or higher by Standard & Poor's(R) or
in the Baa major rating category or higher by Moody's, or
their equivalents as determined by the Fund's investment
manager.
Principal Investment Risks
The principal risks of investing in the Fund include the
risks of investing in equity securities, such as the risk
of sudden and unpredictable drops in value and the
potential for extended periods of lackluster performance.
An investment in
the Fund is not
a deposit of
Fifth Third Bank
or any other
bank and is not
insured or
guaranteed by
the FDIC or any
other government
agency.
Stocks that pay regular dividends tend to be less volatile
than stocks that do not. A regular dividend provides
investors some return of their investment, to an extent,
supporting the stock's price, even during periods when the
prices of equity securities generally are falling.
However, dividend-paying stocks, especially those that pay
significant dividends, also tend to appreciate less
quickly than stocks of companies in emerging markets,
which tend to reinvest most profits into research,
development, plant and equipment to accommodate expansion.
Generally, growth oriented stocks may be sensitive to
market movements. The prices of growth stocks tend to
reflect future expectations, and when those expectations
change or are not met, share prices generally fall. Stocks
of smaller companies tend to be volatile and more
sensitive to long-term market declines than stocks of
larger companies, in part because they generally do not
have the financial resources that larger companies have.
Prices of convertible securities, which include bonds and
preferred stocks, may be affected by the prices of the
underlying security, which generally is common stock.
2
<PAGE>
Fifth Third Quality Growth Fund
[LOGO]
Volatility and Performance Information
The bar chart and
table provide an
indication of the
risks of an
investment in the
Fund by showing
its performance
from year to year
and over time, as
well as compared
to a broad-based
securities index.
The Standard and
Poor's 500
Composite Stock
Price Index (the
"S&P 500") is an
unmanaged index
of 500 selected
common stocks,
most of which are
listed on the New
York Stock
Exchange.
The returns
assume that Fund
distributions
have been
reinvested.
Past performance
does not indicate
how the Fund will
perform in the
future.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Institutional Shares*
1990 5.12%
1991 34.38%
1992 8.03%
1993 -1.06%
1994 0.07%
1995 31.59%
1996 23.68%
1997 32.70%
1998 30.16%
1999 23.86%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
-------------------------
<TABLE>
<S> <C> <C>
Best quarter: Q4 1998 28.21%
Worst quarter: Q3 1990 -11.19%
Year to Date Return (1/1/00 to 9/30/00) 3.40%
</TABLE>
----------
Average
Annual
Total
Returns
(for the
periods
ended
December 31, 1999)
<TABLE>
<CAPTION>
Past 5
Inception Date Past Year Years Past 10 Years Since Inception
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Shares* 1/1/83 23.86% 28.34% 18.06% 17.92%
-------------------------------------------------------------
(Since 12/31/82)
S&P 500(R) Index 21.04% 28.55% 18.20% 18.35%
</TABLE>
--------------------------------------------------------------------------------
* The Fund first offered Institutional shares on 8/11/98. The quoted
performance of the Fund for the period prior to 8/11/98 reflects the
performance for Investment A shares, a class of shares of the Fund not
offered by this Prospectus. Investment A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not have
the same expenses.
3
<PAGE>
Fifth Third Equity Income Fund
[LOGO]
High level of current income consistent with capital
appreciation.
Fundamental
Objective
Principal
Investment
Strategies Under normal market conditions, the Fund invests at least
65% of total assets in common stocks of U.S. companies
with a weighted average market capitalization similar to
that of the Standard & Poor's 500 Composite Stock Price
Index ("S&P 500 Index") focusing on stocks that pay an
increasing dividend. As of the date of this Prospectus,
the S&P 500 Index statistics were as follows: the smallest
company had a market capitalization of $116 million, the
largest company a market capitalization of $543 billion,
the mean market capitalization was $25.2 billion, and the
weighted average market capitalization was $131 billion.
The Fund's investment approach generally is to purchase
stocks of companies, which demonstrate industry
leadership, sound management and long-term earnings
growth, and which have attractive dividend yields or the
prospects of increasing dividend rates. At the time of
investment, those convertible debt securities in which the
Fund invests are rated investment grade (that is, in the
BBB major rating category or higher by Standard & Poor's
or the Baa major rating category or higher by Moody's, or
their unrated equivalents).
The Fund reserves the right to invest up to 35% of total
assets in other securities, such as government and
corporate bonds, which at the time of investment, are
rated investment grade, that is, in the BBB major rating
category or higher by Standard & Poor's or the Baa major
rating category or higher by Moody's, or their unrated
equivalents.
Principal The principal risks of investing in the Fund include the
Investment Risks risks of investing in equities and in debt. The risks of
investing in equity securities include the risk of sudden
and unpredictable drops in value or periods of lackluster
performance. The risks of investing in debt securities
include the tendency of bond prices to fall as interest
rates rise.
An investment in
the Fund is not
a deposit of
Fifth Third Bank
or any other
bank and is not
insured or
guaranteed by
the FDIC or any
other government
agency.
Significant investment in large companies also creates
various risks for the Fund. For instance, larger, more
established companies tend to operate in mature markets,
which often are very competitive. Larger companies also do
not tend to respond quickly to competitive challenges,
especially to challenges caused by technology and consumer
preferences.
Stocks that pay regular dividends tend to be less volatile
than stocks that do not. A regular dividend provides
investors some return of their investment, to an extent,
supporting the stock's price, even during periods when the
prices of equity securities generally are falling.
However, dividend-paying stocks, especially those that pay
significant dividends, also tend to appreciate less
quickly than stocks of companies in emerging markets,
which tend to reinvest profits into research, development,
plant and equipment to accommodate expansion.
The tendency of bond prices to fall when interest rates
rise becomes more significant as the average maturity of
the Fund's bond portfolio increases. A less significant
risk of bond investing is that an issuer could default on
principal or interest payments. Prices of convertible
securities, which include bonds and preferred stocks, may
be affected by the prices of the underlying security,
which generally is common stock.
4
<PAGE>
Fifth Third Equity Income Fund
[LOGO]
Volatility and Performance Information
The bar chart and
table provide an
indication of the
risks of an
investment in the
Fund by showing
its performance
from year to year
and over time, as
well as compared
to a broad-based
securities index.
The Standard and
Poor's 500
Composite Stock
Price Index (the
"S&P 500") is an
unmanaged index
of 500 selected
common stocks,
most of which are
listed on the New
York Stock
Exchange.
The returns
assume that Fund
distributions
have been
reinvested.
Past performance
does not indicate
how the Fund will
perform in the
future.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Institutional Shares*
1990 -1.21%
1991 29.07%
1992 4.61%
1993 0.26%
1994 -0.65%
1995 30.73%
1996 16.83%
1997 38.15%
1998 18.03%
1999 -4.71%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
-------------------------
<TABLE>
<S> <C> <C>
Best quarter: Q2 1997 15.29%
Worst quarter: Q3 1999 -11.39%
Year to Date Return (1/1/00 to 9/30/00) 6.76%
</TABLE>
----------
Average
Annual
Total
Returns
(for the
periods
ended
December
31,
1999)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Shares* 1/1/83 -4.71% 18.87% 12.17% 14.37%
-------------------------------------------------------------------
(Since 12/31/82)
S&P 500(R) Index 21.04% 28.55% 18.20% 18.35%
</TABLE>
--------------------------------------------------------------------------------
* The Fund first offered Institutional shares on 8/11/98. The quoted
performance of the Fund for the period prior to 8/11/98 reflects the
performance for Investment A shares, a class of shares of the Fund not
offered by this Prospectus. Investment A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not have
the same expenses.
5
<PAGE>
Fifth Third Pinnacle Fund
[LOGO]
Fundamental Long-term capital appreciation.
Objective
Principal Under normal market conditions, the Fund invests at least
Investment 65% of total assets in common stocks and convertible
Strategies securities that have the potential for long-term growth.
In selecting stocks, the Fund looks primarily at companies
that have historically reported better corporate earnings
than the earnings that market analysts have predicted.
Generally, those companies are expected to grow faster
than the economy as a whole. Those companies also tend to
be established companies that appear to be capable of
sustained growth. Although most of those companies are
large, the Fund may invest in stocks of companies of any
size. Current income is not a factor in stock selection.
The Fund reserves the right to invest up to 35% of total
assets in other securities, such as government and
corporate bonds.
Principal The principal risks of investing in the Fund include the
Investment Risks risks of investing in equity securities, such as the risk
of sudden and unpredictable drops in value or periods of
lackluster performance.
An investment in
the Fund is not
a deposit of
Fifth Third Bank
or any other
bank and is not
insured or
guaranteed by
the FDIC or any
other government
agency.
Generally, growth oriented stocks may be sensitive to
market movements. The prices of growth stocks tend to
reflect future expectations, and when those expectations
are not met, prices generally fall.
Significant investment in large companies also creates
various risks for the Fund. For instance, larger, more
established companies tend to operate in mature markets,
which often are very competitive. Larger companies also do
not tend to respond quickly to competitive challenges,
especially to changes caused by technology or consumer
preferences.
6
<PAGE>
Fifth Third Pinnacle Fund
[LOGO]
Volatility and Performance Information
The bar chart and
table provide an
indication of the
risks of an
investment in the
Fund by showing
its performance
from year to year
and over time, as
well as compared
to a broad-based
securities index.
The Standard and
Poor's 500
Composite Stock
Price Index (the
"S&P 500") is an
unmanaged index
of 500 selected
common stocks,
most of which are
listed on the New
York Stock
Exchange.
The returns
assume that Fund
distributions
have been
reinvested.
Past performance
does not indicate
how the Fund will
perform in the
future.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Institutional Shares*
1990 -3.14%
1991 39.87%
1992 -0.73%
1993 3.31%
1994 -1.12%
1995 35.40%
1996 22.44%
1997 35.43%
1998 32.94%
1999 11.64%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
<TABLE>
<S> <C> <C>
Best quarter: Q4 1998 24.93%
Worst quarter: Q3 1990 -15.34%
Year to Date Return (1/1/00 to 9/30/00) -4.62%
</TABLE>
-------------------------
Average
Annual
Total
Returns
(for the
periods
ended
December
31,
1999)
----------
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Shares* 3/4/85 11.64% 27.22% 16.43% 16.80%
------------------------------------------------------------------
(Since 2/28/85)
S&P 500(R) Index 21.04% 28.55% 18.20% 18.46%
</TABLE>
--------------------------------------------------------------------------------
* The Fund first offered Institutional shares on 8/11/98. The quoted
performance of the Fund for the period prior to 8/11/98 reflects the
performance for Investment A shares, a class of shares of the Fund not offered
by this Prospectus. Investment A shares of the Fund would have substantially
similar annual returns as Institutional shares because the shares represent
interests in the same portfolio of investments and the annual returns would
differ only to the extent that the classes do not have the same expenses.
7
<PAGE>
Fifth Third Balanced Fund
[LOGO]
Capital appreciation and income.
Fundamental
Objective
Principal Under normal market conditions, the Fund uses an asset
Investment allocation strategy, investing in three primary categories
Strategies of securities: stocks, bonds and money market instruments.
The Fund intends to invest between 50% to 75% of total
assets in common stocks and convertible preferred stocks
and convertible corporate bonds, 25% to 40% of total
assets in U.S. Treasury bills, notes and bonds, securities
of U.S. Government agencies and instrumentalities and
corporate debt securities, including mortgage-backed
securities, and 0% to 25% in money market instruments. By
analyzing financial trends and market conditions, the Fund
may adjust its allocations from time to time. However, the
Fund takes a moderate to long-term view of changing market
conditions, and tends to avoid large, sudden shifts in the
composition of its portfolio.
The equity position of the Fund tends to be invested in
high quality growth companies that are either large or
mid-sized. While greater emphasis will be placed on larger
companies, that is, companies with market capitalizations
comparable to the market capitalization of those companies
in the S&P 500 Index, the Fund may favor smaller
companies, that is, companies with market capitalization
comparable to the market capitalizations of those
companies in the S&P 400 Index, when Fifth Third Bank
believes that market conditions favor securities of
smaller companies.
The fixed income portion of the Fund tends to be invested
in high quality bonds with maturities ranging from
overnight to thirty years in length. The Fund will attempt
to maintain the average maturity of the bond portion of
the Fund from between 5 and 9 years. At the time of
investment, the corporate bonds and convertible securities
in which the Fund invests are rated investment grade, that
is, in the BBB major rating category or higher by Standard
& Poor's or in the Baa major rating category or higher by
Moody's, or their unrated equivalents.
Principal The principal risks of investing in the Fund include the
Investment Risks risks associated with following an asset allocation
strategy, such as the risk that the Fund will not
correctly anticipate the relative performance of the
different asset classes in which it may invest.
An investment in
the Fund is not
a deposit of
Fifth Third Bank
or any other
bank and is not
insured or
guaranteed by
the FDIC or any
other government
agency.
To the extent the Fund invests in stocks and convertible
securities, it assumes the risks of equity investing,
including sudden and unpredictable drops in value and
periods of lackluster performance.
Significant investments in large companies also creates
various risks for the Fund. For instance, larger, more
established companies tend to operate in mature markets,
which often are very competitive. Larger companies also do
not tend to respond quickly to competitive challenges,
especially to changes caused by technology or consumer
preferences.
Generally, growth oriented stocks may be sensitive to
market movements. The prices of growth stocks tend to
reflect future expectations, and when those expectations
change or are not met, share prices generally fall. Stocks
of smaller companies tend to be volatile and more
sensitive to long-term market declines than stocks of
larger companies, in part because they generally do not
have the financial resources that larger companies have.
To the extent the Fund invests in bonds, it assumes the
risks of bond investing, including the tendency of prices
to fall as interest rates rise. That risk is greater for
bonds with longer maturities. Less significant is the risk
that a bond issuer will default on principal or interest
payments. Prices of convertible securities, which include
bonds and preferred stocks, may be affected by the prices
of the underlying security, which generally is common
stock.
8
<PAGE>
Fifth Third Balanced Fund
[LOGO]
Volatility and Performance Information
The bar chart and
table provide an
indication of the
risks of an
investment in the
Fund by showing
its performance
from year to year
and over time, as
well as compared
to two broad-
based securities
indices. The
Standard and
Poor's 500
Composite Stock
Price Index (the
"S&P 500") is an
unmanaged index
of 500 selected
common stocks,
most of which are
listed on the New
York Stock
Exchange. The
Lehman Brothers
Aggregate Bond
Index (the "LBAB
Index") is an
unmanaged index
generally
representative of
the performance
of the bond
market as a
whole.
The returns
assume that Fund
distributions
have been
reinvested.
Past performance
does not indicate
how the Fund will
perform in the
future.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Institutional Shares*
1990 9.95%
1991 30.13%
1992 9.88%
1993 1.74%
1994 -1.03%
1995 26.53%
1996 14.23%
1997 24.08%
1998 17.93%
1999 15.64%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
-------------------------
<TABLE>
<S> <C> <C>
Best quarter: Q4 1998 17.83%
Worst quarter: Q3 1998 -6.33%
Year to Date Return (1/1/00 to 9/30/00) 7.66%
</TABLE>
----------
Average
Annual
Total
Returns
(for the
periods
ended
December
31,
1999)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Shares* 1/1/83 15.64% 19.59% 14.50% 16.31%
-------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C>
S&P 500(R) Index 21.04% 28.55% 18.20% 18.35%
-------------------------------------------------------------------
(Since 12/31/82)
LBAB Index -0.83% 7.73% 7.69% 9.50%
</TABLE>
--------------------------------------------------------------------------------
* The Fund first offered Institutional shares on 8/11/98. The quoted
performance of the Fund for the period prior to 8/11/98 reflects the
performance for Investment A shares, a class of shares of the Fund not
offered by this Prospectus. Investment A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not have
the same expenses.
9
<PAGE>
Fifth Third Mid Cap Fund
[LOGO]
Growth of Capital. Income is a secondary objective.
Fundamental
Objective
Principal
Investment Under normal market conditions, the Fund expects to invest
Strategies at least 65% of total assets in common stocks of mid cap
companies. Mid cap companies are companies with market
capitalizations no larger than 110%, and no smaller than
90%, of the market capitalizations of the companies in the
Standard & Poor's MidCap 400 Index (generally, between
$500 million and $10 billion).
The Fund intends to invest in companies that have the
potential for long-term revenue and earnings growth, solid
balance sheets and which may have the potential to pay
dividends. The Fund generally selects its investments
using traditional research techniques, which include
projections of earnings and dividend growth and the
expected volatility of the markets in which the companies
do business.
To achieve its secondary objective of income, the Fund
relies on dividend and interest income. The Fund may
invest up to 35% of total assets in common stocks of large
cap companies, many of which pay dividends, as well as
convertible securities which pay interest. At the time of
investment, those convertible securities are rated
investment grade, that is, in the BBB major rating
category or higher by Standard & Poor's, or in the Baa
major rating category or higher by Moody's, or their
unrated equivalents. The Fund also may invest in small cap
stocks.
Principal The principal risks of investing in the Fund include the
Investment Risks risks of investing in equity securities, such as the risk
of sudden and unpredictable drops in value or periods of
lackluster performance.
An investment in
the Fund is not
a deposit of
Fifth Third Bank
or any other
bank and is not
insured or
guaranteed by
the FDIC or any
other government
agency.
Stocks of medium-sized companies can be more sensitive to
long market declines than larger companies, in part
because they generally do not have the financial resources
that larger companies have. Generally, growth oriented
stocks are sensitive to market movements. The prices of
growth stocks tend to reflect future expectations, and
when those expectations change or are not met, share
prices generally fall.
Stocks that pay regular dividends tend to be less volatile
than stocks that do not. A regular dividend provides
investors some return on their investment, to an extent,
supporting a stock's price, even during periods when
prices of equity securities are falling. However, dividend
paying stocks, especially those that pay significant
dividends, also tend to appreciate less quickly than
stocks of companies in emerging markets, which tend to
reinvest profits into research, development, plant and
equipment to accommodate expansion.
To the extent the Fund invests in bonds, it assumes the
risks of bond investing, including the tendency of prices
to fall as interest rates rise. That risk is greater for
bonds with longer maturities. Less significant is the risk
that a bond issuer will default on principal or interest
payments, which may cause a loss for the Fund. Prices of
convertible securities, which include bonds and preferred
stocks, may be affected by the prices of the underlying
security, which generally is common stock.
10
<PAGE>
Fifth Third Mid Cap Fund
[LOGO]
Volatility and Performance Information
The bar chart and
table provide an
indication of the
risks of an
investment in the
Fund by showing
its performance
from year to year
and over time, as
well as compared
to a broad-based
securities index.
The Standard and
Poor's MidCap 400
Index (the "S&P
400") is an
unmanaged index
generally
representative of
the mid-cap
sector of the
U.S. stock
market.
The returns
assume that Fund
distributions
have been
reinvested.
Past performance
does not indicate
how the Fund will
perform in the
future.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Institutional Shares*
1990 1.84%
1991 46.01%
1992 5.05%
1993 1.38%
1994 1.54%
1995 26.03%
1996 17.59%
1997 32.64%
1998 3.41%
1999 17.06%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
-------------------------
<TABLE>
<S> <C> <C>
Best quarter: Q4 1999 23.15%
Worst quarter: Q3 1990 -16.52%
Year to Date Return (1/1/00 to 9/30/00) 18.15%
</TABLE>
----------
Average
Annual
Total
Returns
(for the
periods
ended
December
31,
1999)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Shares* 1/1/85 17.06% 18.93% 14.36% 15.60%
----------------------------------------------------------------------
(Since 12/31/84)
S&P Mid Cap 400(R) Index 14.72% 23.05% 17.32% 18.33%
</TABLE>
--------------------------------------------------------------------------------
* The Fund first offered Institutional shares on 8/11/98. The quoted
performance of the Fund for the period prior to 8/11/98 reflects the
performance for Investment A shares, a class of shares of the Fund not
offered by this Prospectus. Investment A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not have
the same expenses.
11
<PAGE>
Fifth Third International Equity Fund
[LOGO]
Long-term capital appreciation.
Fundamental
Objective
Principal
Investment Under normal market conditions, the Fund invests at least
Strategies 65% of total assets in equity securities of non-U.S.
companies. The companies whose securities are represented
in the Fund's portfolio are located in at least three
countries other than the U.S.
The Fund uses a top-down, bottom-up strategy of selecting
its portfolio. It allocates assets among geographic
regions and individual countries and sectors, rather than
emphasizing individual stock selection. The Fund
capitalizes on the significance of country and sector
selection in international equity portfolio returns by
over and underweighting countries and/or sectors based on
three factors: (i) valuation, (ii) fundamental change, and
(iii) market momentum/technicals.
The Fund's investment subadvisor analyzes both the global
economic environment and the economies of countries
throughout the world, focusing mainly on the
industrialized countries comprising the MSCI EAFE Index.
Although the Fund invests primarily in established foreign
securities markets, from time to time, it may also invest
in emerging market countries and, with regard to such
investments, may make global and regional allocations to
emerging markets, as well as allocations to specific
emerging market countries. In selecting stocks in a
specific country, the Fund generally attempts to replicate
a broad market index (which usually is the Morgan Stanley
Capital International Index for that country) by investing
in "baskets" of common stocks and other equity securities.
The Fund reserves the right to invest up to 35% of total
assets in other securities, such as equity securities of
U.S. companies.
Principal The principal risks of investing in the Fund include the
Investment Risks risks of investing in equity securities, such as, the risk
of sudden and unpredictable drops in value or periods of
lackluster performance.
An investment in
the Fund is not
a deposit of
Fifth Third Bank
or any other
bank and is not
insured or
guaranteed by
the FDIC or any
other government
agency.
Stocks of foreign companies present additional risks for
U.S. investors. Stocks of foreign companies tend to be
less liquid and more volatile than their U.S.
counterparts, in part because accounting standards and
market regulations tend to be less standardized and
economic and political climates less stable. Fluctuations
in exchange rates also may reduce or eliminate gains or
create losses. These risks usually are higher in emerging
markets, such as most countries in Africa, Asia, Latin
America and the Middle East. To the extent that the Fund
invests in those kinds of stocks or in those areas, it
will be exposed to the risks associated with those kinds
of investments.
12
<PAGE>
Fifth Third International Equity Fund
[LOGO]
Volatility and Performance Information
The bar chart and
table provide an
indication of the
risks of an
investment in the
Fund by showing
its performance
from year to year
and over time, as
well as compared
to a broad-based
securities index.
The Morgan
Stanley Capital
International
EAFE Index (the
"EAFE Index") is
an unmanaged
index of common
stocks in Europe,
Australasia, and
the Far East.
The returns
assume that Fund
distributions
have been
reinvested.
Past performance
does not indicate
how the Fund will
perform in the
future.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Institutional Shares*
1995 11.29%
1996 8.54%
1997 7.96%
1998 19.45%
1999 26.11%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
-------------------------
<TABLE>
<S> <C> <C>
Best quarter: Q4 1999 17.74%
Worst quarter: Q3 1998 -11.88%
Year to Date Return (1/1/00 to 9/30/00) -11.88%
</TABLE>
----------
Average
Annual
Total
Returns
(for the
periods
ended
December 31, 1999)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Shares* 8/18/94 26.11% 14.46% N/A 12.08%
------------------------------------------------------------------
(Since 8/31/94)
EAFE Index 27.30% 13.15% N/A 11.41%
</TABLE>
--------------------------------------------------------------------------------
* The Fund first offered Institutional shares on 8/11/98. The quoted
performance of the Fund for the period prior to 8/11/98 reflects the
performance for Investment A shares, a class of shares of the Fund not
offered by this Prospectus. Investment A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not have
the same expenses.
13
<PAGE>
Fifth Third Technology Fund
[LOGO]
Fundamental Long-term capital appreciation.
Objective
Principal Under normal market conditions, the Fund invests at least
Investment 65% of total assets in the equity securities of U.S. and,
Strategies to a lesser extent, foreign technology companies.
Technology companies are those that are substantially
engaged in developing products, processes or services that
provide technological advances. Those companies may be in
any of a variety of industries, such as computer hardware,
software, electronic components and systems,
telecommunications, Internet, and media and information
services companies. They also may include companies in
more traditional industries, such as certain securities
brokers and consumer products retailers that have
extensively used technological advances to develop new or
to improve products or processes.
The Fund generally takes a growth approach to selecting
stocks, looking for established companies that appear
poised to grow because of new products, technology or
management, as well as new companies that are in the
developmental stage. Factors in identifying these
companies may include the quality of management, financial
strength, a strong position relative to competitors and a
stock price that appears reasonable relative to its
expected growth rate. The Fund may invest in companies of
any size, including small, high growth companies. The Fund
also may invest in companies whose shares are being, or
recently have been, offered to the public for the first
time.
The Fund reserves the right to invest up to 35% of total
assets in other securities, such as, corporate bonds and
government securities.
Principal The principal risks of investing in the Fund include the
Investment Risks risks of investing in equity securities, such as the risk
of sudden and unpredictable drops in value or periods of
lackluster performance.
An investment in The Fund, by concentrating in technology stocks, assumes
the Fund is not the risks of holding technology stocks. For example,
a deposit of technology stocks tend to:
Fifth Third Bank
or any other . fluctuate in price more widely and rapidly than the
bank and is not market as a whole
insured or
guaranteed by . underperform other types of stocks or be difficult to
the FDIC or any sell when the economy is not robust, during market
other government downturns, or when technology stocks are out of favor
agency.
. decline in price due to sector specific developments
. be more vulnerable than most stocks to the obsolescence
of existing technology, expired patents, short product
cycles, price competition, market saturation and new
market entrants.
To the extent that the Fund invests in mid cap and small
cap stocks, it takes on additional risks. For instance,
mid cap and small cap stocks tend to be less liquid and
more volatile than large cap stocks. Smaller companies
tend to be unseasoned issuers with new products and less
experienced management.
The prices of most growth stocks are based on future
expectations. As a result, those stocks tend to be more
sensitive than value stocks to negative earnings surprises
and changes in internal growth rates. Growth stocks in
particular may underperform during periods when the market
favors value stocks. The Fund's performance may also
suffer if certain stocks do not perform as the portfolio
management team expected.
Through active trading, the Fund may have a high portfolio
turnover rate, which can mean higher taxable distributions
and lower performance due to increased brokerage costs.
14
<PAGE>
Fifth Third Technology Fund
[LOGO]
Volatility and Performance Information
This section would normally include a bar chart and a table showing how the
Technology Fund has performed and how its performance has varied from year to
year. Because the Fund has not been in operation for a full calendar year, the
bar chart and table are not shown.
15
<PAGE>
Fifth Third Bond Fund For Income
[LOGO]
High level of current income.
Fundamental
Objective
Principal
Investment
Strategies Under normal market conditions, the Fund invests at least
65% of total assets in the following types of investment
grade securities: corporate securities, mortgage-backed
securities, and securities of the U.S. Treasury and U.S.
Government agencies and instrumentalities. Investment
grade securities are securities rated in the BBB major
rating category or higher by Standard & Poor's, or in the
Baa major rating category or higher by Moody's, or their
unrated equivalents.
From time to time, the Fund will invest in mortgage-backed
securities, which generally offer higher interest rates
than many types of debt securities. Mortgage-backed
securities represent interests in the revenue generated
from pools of mortgages.
The Fund strives to manage its portfolio so that it
receives a fairly consistent level of income regardless of
fluctuations in interest rates. Additionally, the Fund may
seek some capital appreciation, especially when bond
prices are rising, if Fifth Third Bank believes that the
Fund can realize such appreciation without foregoing its
objective of high current income.
The Fund reserves the right to invest up to 35% of total
assets in other securities, such as money market
instruments.
Principal The principal risks of investing in the Fund include the
Investment Risks risks of investing in debt securities, such as, the
tendency of bond prices to fall when interest rates rise
and the risk of an issuer defaulting on its obligations of
paying principal and interest.
An investment in
the Fund is not
a deposit of
Fifth Third Bank
or any other
bank and is not
insured or
guaranteed by
the FDIC or any
other government
agency.
Generally, the price of a bond moves in the opposite
direction from interest rates. New bonds issued after a
rise in rates offer higher yields to investors. An
existing bond with a lower yield can appear attractive to
investors by selling it at a lower price. This process
works in reverse as well; as interest rates fall, the
price of a bond tends to increase.
The prices of mortgage-backed securities also are affected
by changes in interest rates. Although mortgage-backed
securities tend to pay higher interest rates, they also
carry additional risk. For instance, their prices and
yields typically assume that the securities will be
redeemed at a given time before maturity. When interest
rates fall substantially, they usually are redeemed early
because the underlying mortgages often are prepaid. The
Fund would then have to reinvest the proceeds it receives
because of those redemptions at a lower rate. The price or
yield of mortgage-backed securities also may fall if they
are redeemed after that date.
16
<PAGE>
Fifth Third Bond Fund For Income
[LOGO]
Volatility and Performance Information
The bar chart and
table provide an
indication of the
risks of an
investment in the
Fund by showing
its performance
from year to year
and over time, as
well as compared
to a broad-based
securities index.
The Lehman
Brothers
Intermediate
Government/Corporate
Index ("LBIGC")
is an unmanaged
index generally
representative of
the performance
of the bond
market as a
whole.
The returns
assume that Fund
distributions
have been
reinvested.
Past performance
does not indicate
how the Fund will
perform in the
future.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Institutional Shares*
1990 8.24%
1991 14.62%
1992 6.32%
1993 8.67%
1994 -6.40%
1995 16.95%
1996 1.86%
1997 7.27%
1998 7.62%
1999 -0.55%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
-------------------------
<TABLE>
<S> <C> <C>
Best quarter: Q2 1995 5.95%
Worst quarter: Q2 1994 -3.55%
Year to Date Return
(1/1/00 to 9/30/00) 5.43%
</TABLE>
----------
Average
Annual
Total
Returns
(for the
periods
ended
December
31,
1999)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Shares* 1/1/83 -0.55% 6.46% 6.26% 8.03%
-------------------------------------------------------------------
(Since 12/31/82)
LBIGC 0.39% 7.09% 7.25% 8.76%
</TABLE>
--------------------------------------------------------------------------------
* The Fund first offered Institutional shares on 8/11/98. The quoted
performance of the Fund for the period prior to 8/11/98 reflects the
performance for Investment A shares, a class of shares of the Fund not
offered by this Prospectus. Investment A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not have
the same expenses.
17
<PAGE>
Fifth Third Quality Bond Fund
[LOGO]
High current income. Capital growth is a secondary
objective.
Fundamental
Objective
Principal
Investment Under normal market conditions, the Fund invests at least
Strategies 65% of total assets in U.S. Treasury bills, notes and
bonds, securities of U.S. Government agencies and
instrumentalities and corporate debt securities, including
mortgage-backed securities. Mortgage-backed securities
generally offer higher interest rates than many types of
debt securities. At the time of investment, each of those
securities has a remaining maturity or average life of 30
years or less; and each corporate bond is rated as
investment grade. Investment grade securities are
securities rated in the BBB major rating category or
higher by Standard & Poor's, or in the Baa major rating
category by Moody's, or their unrated equivalents.
The Fund is managed for growth of capital but with less
volatility than a bond fund investing in lower quality
securities. In selecting portfolio securities, the Fund
generally considers, among other things, remaining
maturity, stated interest rates, the price of the
security, as well as the financial condition of the issuer
and its prospects for long-term growth of earnings and
revenues.
The Fund reserves the right to invest up to 35% of total
assets in other securities, such as money market
instruments.
Principal
Investment Risks The principal risks of investing in the Fund include the
risks of investing in debt securities, such as the
tendency of bond prices to fall when interest rates rise
and the risk of an issuer defaulting on its obligations of
paying principal and interest. The prices of long-term
bonds (bonds with a remaining maturity of at least 10
years) tend to be more volatile than the prices of bonds
with a shorter remaining maturity.
An investment in
the Fund is not
a deposit of
Fifth Third Bank
or any other
bank and is not
insured or
guaranteed by
the FDIC or any
other government
agency.
Generally, the price of a bond moves in the opposite
direction from interest rates. New bonds issued after a
rise in rates offer higher yields to investors. An
existing bond with a lower yield can appear attractive to
investors by selling it at a lower price. This process
works in reverse as well; as interest rates fall, the
price of a bond tends to increase.
The prices of mortgage-backed securities also are affected
by changes in interest rates. Although mortgage-backed
securities tend to pay higher interest rates, they also
carry additional risk. For instance, their prices and
yields typically assume that the securities will be
redeemed at a given time before maturity. When interest
rates fall substantially, they usually are redeemed early
because the underlying mortgages often are prepaid. The
Fund would then have to reinvest the proceeds it receives
because of those redemptions at a lower rate. The price or
yield of mortgage-backed securities also may fall if they
are redeemed after that date.
From time to time, the Fund's portfolio could be
significantly invested in some of the highest quality debt
securities, which tend not to provide the same opportunity
for current income or capital growth as lower grade
securities, or in BBB/Baa rated debt securities, which
generally have more speculative investment characteristics
than higher grade debt securities.
18
<PAGE>
Fifth Third Quality Bond Fund
[LOGO]
Volatility and Performance Information
The bar chart and
table provide an
indication of the
risks of an
investment in the
Fund by showing
its performance
from year to year
and over time, as
well as compared
to a broad-based
securities index.
The Lehman
Brothers
Aggregate Bond
Index ("LBAB") is
an unmanaged
index generally
representative of
the performance
of the bond
market as a
whole.
The returns
assume that Fund
distributions
have been
reinvested.
Past performance
does not indicate
how the Fund will
perform in the
future.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Institutional Shares*
1990 8.04%
1991 14.65%
1992 6.00%
1993 7.52%
1994 -3.90%
1995 17.18%
1996 1.85%
1997 8.20%
1998 8.54%
1999 -2.10%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
<TABLE>
<S> <C> <C> <C> <C>
Best quarter: Q2 1995 5.76%
Worst quarter: Q1 1994 -3.16%
Year to Date Return
(1/1/00 to 9/30/00) 5.54%
</TABLE>
-------------------------
Average
Annual
Total
Returns
(for the
periods
ended
December
31,
1999)
----------
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Shares* 1/1/83 -2.10% 6.53% 6.41% 7.87%
-------------------------------------------------------------------
(Since 12/31/82)
LBAB -0.83% 7.73% 7.69% 9.50%
</TABLE>
--------------------------------------------------------------------------------
* The Fund first offered Institutional shares on 8/11/98. The quoted
performance of the Fund for the period prior to 8/11/98 reflects the
performance for Investment A shares, a class of shares of the Fund not
offered by this Prospectus. Investment A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not have
the same expenses.
19
<PAGE>
Fifth Third U.S. Government Securities Fund
[LOGO]
Fundamental High level of current income. Capital growth is a
Objective secondary objective.
Principal Under normal market conditions, the Fund invests at least
Investment 65% of total assets in U.S. government securities. At the
Strategies time of investment each of those securities has a
remaining maturity or average life of 7 years or less,
although the Fund attempts to minimize fluctuations in the
value of its shares.
U.S. government securities are debt securities issued or
guaranteed as to principal and interest by the full faith
and credit of the U.S. government and obligations issued
by the agencies or instrumentalities of the U.S.
government but not supported by such full faith and credit
. They may include securities issued or sponsored by
Government National Mortgage Association (Ginnie Mae),
Federal National Mortgage Association (Fannie Mae) and
Federal Home Loan Mortgage Corporation (Freddie Mac).
U.S. Treasury securities are debt obligations of the U.S.
government and are backed by the full faith and credit of
the U.S. government. While there are different degrees of
credit quality, all U.S. government securities generally
are considered highly credit worthy.
In selecting portfolio securities, the Fund generally
considers, among other things, stated interest rates and
the price of a security. The Fund attempts to limit
volatility of Fund share prices by managing the average
life of the Fund's investment portfolio.
The Fund reserves the right to invest up to 35% of total
assets in other securities, such as money market
instruments.
Principal The principal risks of investing in the Fund include the
Investment Risks risks of investing in debt securities, such as, the
tendency of bond prices to fall when interest rates rise
and the risk of an issuer defaulting on its obligations of
paying principal and interest.
An investment in
the Fund is not
a deposit of
Fifth Third Bank
or any other
bank and is not
insured or
guaranteed by
the FDIC or any
other government
agency.
Generally, the price of a bond moves in the opposite
direction from interest rates. New bonds issued after a
rise in rates offer higher yields to investors. An
existing bond with a lower yield can appear attractive to
investors by selling it at a lower price. This process
works in reverse as well; as interest rates fall, the
price of a bond tends to increase.
20
<PAGE>
Fifth Third U.S. Government Securities Fund
[LOGO]
Volatility and Performance Information
The bar chart and
table provide an
indication of the
risks of an
investment in the
Fund by showing
its performance
from year to year
and over time, as
well as compared
to a broad-based
securities index.
The Lehman
Brothers
Intermediate
Government Bond
Index ("LBIGBI")
is an unmanaged
index generally
representative of
intermediate-term
government bonds.
The returns
assume that Fund
distributions
have been
reinvested.
Past performance
does not indicate
how the Fund will
perform in the
future.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Institutional Shares*
1990 8.45%
1991 9.51%
1992 5.27%
1993 6.19%
1994 -2.18%
1995 13.01%
1996 2.45%
1997 7.14%
1998 7.50%
1999 0.18%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
-------------------------
<TABLE>
<S> <C> <C>
Best quarter: Q2 1995 4.49%
Worst quarter: Q1 1994 -1.99%
Year to Date Return
(1/1/00 to 9/30/00) 5.63%
</TABLE>
----------
Average
Annual
Total
Returns
(for the
periods
ended
December
31,
1999)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Shares* 1/1/86 0.18% 5.96% 5.66% 5.84%
-------------------------------------------------------------------------
(Since 12/31/85)
LBIGBI 0.50% 6.93% 7.10% 7.60%
</TABLE>
--------------------------------------------------------------------------------
* The Fund first offered Institutional shares on 8/11/98. The quoted
performance of the Fund for the period prior to 8/11/98 reflects the
performance for Investment A shares, a class of shares of the Fund not
offered by this Prospectus. Investment A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not have
the same expenses.
21
<PAGE>
Fifth Third Municipal Bond Fund
[LOGO]
High level of current income that is exempt from federal
Fundamental regular income taxes.
Objective
Principal Under normal market conditions, the Fund invests at least
Investment 80% of total assets in municipal securities, which pay
Strategies interest that is exempt from federal income tax. The
securities generally are issued by U.S. states, counties,
cities, towns, territories and public authorities. At the
time of investment, they are rated as investment grade.
Investment grade securities are securities rated in the
BBB major rating category or higher by Standard & Poor's
or in the Baa major rating category by Moody's, or their
unrated equivalents.
Among the securities in which the Fund may invest are
participation agreements, that is, interests in loans made
to municipalities, and general obligation and revenue
bonds of tax-exempt municipalities. The Fund also may
invest in limited obligation securities, from which
interest and principal payments are dependent on payments
from specific sources rather than the general obligations
of the government issuer. Limited obligation securities
include: lease obligations and installment contracts
(issued by government entities to obtain funds to lease or
acquire equipment and other property), project finance
obligations (issued in connection with the financing of
infrastructure projects) and industrial revenue bonds
(issued in the name of a public authority to finance
infrastructure used by a private entity).
In selecting portfolio securities the Fund generally
considers, among other things, remaining maturity or
average life, stated interest rates and the price of a
security. The Fund attempts to manage volatility by
maintaining a portfolio with an intermediate average life.
The Fund reserves the right to invest up to 20% of total
assets in other securities, such as money market
instruments.
Principal The principal risks of investing in the Fund include the
Investment Risks risks of investing in debt securities, such as, the
tendency of bond prices to fall when interest rates rise
and the risk of an issuer defaulting on its obligations of
paying principal and interest.
An investment in
the Fund is not
a deposit of
Fifth Third Bank
or any other
bank and is not
insured or
guaranteed by
the FDIC or any
other government
agency.
Generally, the price of a bond moves in the opposite
direction from interest rates. New bonds issued after a
rise in rates offer higher yields to investors. An
existing bond with a lower yield can appear attractive to
investors by selling it at a lower price. This process
works in reverse as well; as interest rates fall, the
price of a bond tends to increase.
The Fund's performance may be affected by political and
economic factors at the state, regional or national level.
Those factors may include budgetary problems and declining
tax bases. Actual or proposed changes in tax rates also
may affect your net return. Limited obligation securities
are not general obligations of the issuers. As a result,
in the event of a default or termination, the security
holders may have limited recourse.
22
<PAGE>
Fifth Third Municipal Bond Fund
[LOGO]
Volatility and Performance Information
The bar chart and
table provide an
indication of the
risks of an
investment in the
Fund by showing
its performance
from year to year
and over time, as
well as compared
to a broad-based
securities index.
The Lehman
Brothers
Municipal Bond
Index ("LBMBI")
is an unmanaged
index that
generally is
representative of
municipal bonds
with intermediate
maturities.
The returns
assume that Fund
distributions
have been
reinvested.
Past performance
does not indicate
how the Fund will
perform in the
future.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Institutional Shares*
1990 6.89%
1991 8.60%
1992 6.25%
1993 6.76%
1994 -2.30%
1995 9.68%
1996 3.26%
1997 6.88%
1998 5.61%
1999 -3.33%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
-------------------------
<TABLE>
<S> <C> <C>
Best quarter: Q4 1990 4.25%
Worst quarter: Q1 1994 -3.12%
Year to Date Return
(1/1/00 to 9/30/00) 4.80%
</TABLE>
----------
Average
Annual
Total
Returns
(for the
periods
ended
December
31,
1999)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Shares* 1/1/83 -3.33% 4.32% 4.75% 6.51%
-------------------------------------------------------------------
(Since 12/31/82)
LBMBI -2.07 6.91% 6.89% 8.69%
</TABLE>
--------------------------------------------------------------------------------
* The Fund first offered Institutional shares on 8/11/98. The quoted
performance of the Fund for the period prior to 8/11/98 reflects the
performance for Investment A shares, a class of shares of the Fund not
offered by this Prospectus. Investment A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not have
the same expenses.
23
<PAGE>
Fifth Third Ohio Tax Free Bond Fund
[LOGO]
Current income exempt from federal income tax and the
Fundamental personal income taxes imposed by the State of Ohio and
Objective Ohio municipalities.
Principal Under normal market conditions, the Fund invests at least
Investment 80% of net assets in municipal securities which pay
Strategies interest that is exempt from personal income taxes imposed
by Ohio and its municipalities. The securities generally
are issued by the State of Ohio, as well as counties,
cities, towns, territories and public authorities in Ohio.
At the time of investment, they are rated as investment
grade. Investment grade securities are securities rated in
the BBB major rating category or higher by Standard &
Poor's or in the Baa major rating category by Moody's, or
their unrated equivalents.
Among the securities in which the Fund may invest are
participation agreements, that is, interests in loans made
to municipalities, and general obligation and revenue
bonds of tax-exempt municipalities. The Fund also may
invest in limited obligation securities, from which
interest and principal payments are dependent on payments
from specific sources rather than the general obligations
of the government issuer. Limited obligation securities
include: lease obligations and installment contracts
(issued by government entities to obtain funds to lease or
acquire equipment and other property), project finance
obligations (issued in connection with the financing of
infrastructure projects) and industrial revenue bonds
(issued in the name of a public authority to finance
infrastructure used by a private entity).
In selecting portfolio securities, the Fund considers,
among other things, remaining maturity or average life,
stated interest rates and the price of a security. The
Fund attempts to manage volatility by maintaining a
portfolio with an intermediate average life.
Principal The principal risks of investing in the Fund include the
Investment Risks risks of investing in debt securities, such as, the
tendency of bond prices to fall when interest rates rise
and the risk of an issuer defaulting on its obligations of
paying principal and interest.
An investment in
the Fund is not
a deposit of
Fifth Third Bank
or any other
bank and is not
insured or
guaranteed by
the FDIC or any
other government
agency.
Generally, the price of a bond moves in the opposite
direction from interest rates. New bonds issued after a
rise in rates offer higher yields to investors. An
existing bond with a lower yield can appear attractive to
investors by selling it at a lower price. This process
works in reverse as well; as interest rates fall, the
price of a bond tends to increase.
This Fund is a non-diversified fund with regard to issuers
of securities. As a result, it does not have to invest in
as many issuers as a diversified fund and thus, could be
significantly affected by the performance of one or a
small number of issuers.
Because the Fund is non-diversified and because it
concentrates its investments in the securities of issuers
in Ohio, certain factors including economic conditions,
constitutional amendments, legislative and executive
measures, and voter initiatives may have a
disproportionately negative effect on the Fund's
investments. For example, the Ohio economy relies to a
significant degree on manufacturing. As a result, economic
activity in Ohio tends to be cyclical, which may affect
the market value of Ohio municipal securities or the
ability of issuers to make timely payments of interest and
principal.
In addition, because limited obligation securities are not
general obligations of the issuers, the Fund will have
limited recourse in the event of a default or termination
of these securities.
24
<PAGE>
Fifth Third Ohio Tax Free Bond Fund
[LOGO]
Volatility and Performance Information
The bar chart and
table provide an
indication of the
risks of an
investment in the
Fund by showing
its performance
from year to year
and over time, as
well as compared
to a broad-based
securities index.
The Lehman
Brothers
Municipal Bond
Index ("LBMBI")
is an unmanaged
index that
generally is
representative of
municipal bonds
with intermediate
maturities.
The returns
assume that Fund
distributions
have been
reinvested.
Past performance
does not indicate
how the Fund will
perform in the
future.
[GRAPH]
Year-by-Year Total Returns as of 12/31 For Institutional Shares*
1990 5.70%
1991 9.46%
1992 6.24%
1993 6.71%
1994 -4.01%
1995 13.72%
1996 3.48%
1997 6.92%
1998 5.61%
1999 -2.94%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
-------------------------
<TABLE>
<S> <C> <C>
Best quarter: Q1 1995 5.53%
Worst quarter: Q1 1994 -3.78%
Year to Date Return (1/1/00 to
9/30/00) 5.28%
</TABLE>
----------
Average
Annual
Total
Returns
(for the
periods
ended
December
31,
1999)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Shares* 1/1/87 -2.94% 5.22% 4.97% 4.69%
-------------------------------------------------------------------
(Since 12/31/86)
LBMBI -2.07% 6.91% 6.89% 7.01%
</TABLE>
--------------------------------------------------------------------------------
* The Fund first offered Institutional shares on 8/11/98. The quoted
performance of the Fund for the period prior to 8/11/98 reflects the
performance for Investment A shares, a class of shares of the Fund not
offered by this Prospectus. Investment A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not have
the same expenses.
25
<PAGE>
Shareholder Fees and Fund Expenses
Fee Tables
These tables describe the fees and expenses that you may pay if you buy and
hold shares of the Funds.
Shareholder fees are paid by you at the time you purchase or sell your shares.
Annual Fund operating expenses are paid out of Fund assets, and are reflected
in the share price. Each Fund's fees and expenses are based upon the Fund's
operating expenses for the fiscal year ended July 31, 2000.
Shareholder Fees
<TABLE>
<CAPTION>
Stock Funds--Fee Table
Fifth Third Fifth
Fifth Third Fifth Third Fifth Third Fifth Third Fifth Third International Third
Quality Growth Equity Income Pinnacle Balanced Mid Cap Equity Technology
Fund Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge
(Load) Imposed on
Purchases None None None None None None None
----------------------------------------------------------------------------------------------
Maximum Sales Charge
(Load) Imposed on
Reinvested Dividends None None None None None None None
----------------------------------------------------------------------------------------------
Maximum Deferred Sales
Load None None None None None None None
----------------------------------------------------------------------------------------------
Annual Fund Operating
Expenses
(as a percentage of
average
net assets)
Management fees 0.80% 0.80% 0.80% 0.80% 0.80% 1.00% 1.00%
----------------------------------------------------------------------------------------------
Distribution (12b-1)
fees None None None None None None None
----------------------------------------------------------------------------------------------
Other expenses 0.23% 0.28% 0.27% 0.26% 0.24% 0.45% 0.46%/1/
----------------------------------------------------------------------------------------------
Total Annual Fund/2/
Operating Expenses 1.03% 1.08% 1.07% 1.06% 1.04% 1.45% 1.46%
</TABLE>
---------------------------------------------------------
---------------------------------------------------------
/1/Other expenses are based on estimated amounts for the current fiscal year.
/2/During the last fiscal year, BISYS waived the following Distribution (12b-1)
Fees and/or Administration Fees: 0.03% for the Quality Growth Fund, 0.06% for
the Equity Income Fund, 0.06% for the Balanced Fund, and 0.05% for the Mid Cap
Fund. Therefore, Total Annual Fund Operating Expenses after fee waivers were
as follows: 1.00% for the Quality Growth Fund, 1.02% for the Equity Income
Fund, 1.07% for the Pinnacle Fund, 1.00% for the Balanced Fund, 0.99% for the
Mid Cap Fund, 1.45% for the International Equity Fund, and 1.46% for the
Technology Fund. These waivers may be discontinued at any time.
26
<PAGE>
Shareholder Fees and Fund Expenses
Shareholder Fees
<TABLE>
<CAPTION>
Bond Funds--Fee Table
Fifth Third Fifth Third Fifth Third Fifth Third
Bond Fund for Fifth Third U.S. Government Municipal Bond Ohio Tax Free
Income Quality Bond Fund Securities Fund Fund Bond Fund
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge
(Load) Imposed on
Purchases None None None None None
----------------------------------------------------------------------------------------------
Maximum Sales Charge
(Load) Imposed on
Reinvested Dividends None None None None None
----------------------------------------------------------------------------------------------
Maximum Deferred Sales
Load None None None None None
----------------------------------------------------------------------------------------------
Annual Fund Operating
Expenses
(as a percentage of
average
net assets)
Management fees 0.55% 0.55% 0.55% 0.55% 0.55%
----------------------------------------------------------------------------------------------
Distribution (12b-1)
fees None None None None None
----------------------------------------------------------------------------------------------
Other expenses 0.25% 0.29% 0.39% 0.30% 0.25%
----------------------------------------------------------------------------------------------
Total Annual Fund
Operating Expenses 0.80% 0.84% 0.94% 0.85% 0.80%
----------------------------------------------------------------------------------------------
</TABLE>
---------------------------------------------------------
/1/During the last fiscal year Fifth Third Bank waived the following Management
Fees: 0.12% for the U.S. Government Securities Fund. BISYS waived the
following Distribution (12b-1) Fees and/or Administration Fees: 0.04% for the
Bond Fund for Income, 0.09% for the Quality Bond Fund, 0.10% for the U.S.
Government Securities Fund, 0.10% for the Municipal Bond Fund, and 0.04% for
the Ohio Tax Free Bond Fund. Therefore, Total Annual Fund Operating Expenses
after fee waivers were as follows: 0.76% for the Bond Fund for Income, 0.75%
for the Quality Bond Fund, 0.63% for the U.S. Government Securities Fund,
0.75% for the Municipal Bond Fund, and 0.76% for the Ohio Tax Free Bond Fund.
These waivers may be discontinued at any time.
27
<PAGE>
Shareholder Fees and Fund Expenses
Expense Examples
Use the tables below to compare fees and expenses with the fees and expenses of
other mutual funds. The tables illustrate the amount of fees and expenses you
and the Fund would pay, assuming a $10,000 initial investment, 5% annual
return, payment of maximum sales charges, and no changes in the Fund's
operating expenses. Because these examples are hypothetical and for comparison
only, your actual costs may be different.
Stock Funds
<TABLE>
<CAPTION>
Fifth Third 1 3 5 10
Quality Growth Fund Year Years Years Years
-------------------------------------------
<S> <C> <C> <C> <C>
Institutional Shares $105 $328 $569 $1,259
-------------------------------------------
<CAPTION>
Fifth Third Equity 1 3 5 10
Income Fund Year Years Years Years
-------------------------------------------
<S> <C> <C> <C> <C>
Institutional Shares $110 $343 $595 $1,317
-------------------------------------------
<CAPTION>
Fifth Third Pinnacle 1 3 5 10
Fund Year Years Years Years
-------------------------------------------
<S> <C> <C> <C> <C>
Institutional Shares $109 $340 $590 $1,306
-------------------------------------------
<CAPTION>
Fifth Third Balanced 1 3 5 10
Fund Year Years Years Years
-------------------------------------------
<S> <C> <C> <C> <C>
Institutional Shares $108 $337 $585 $1,294
-------------------------------------------
<CAPTION>
Fifth Third Mid Cap 1 3 5 10
Fund Year Years Years Years
-------------------------------------------
<S> <C> <C> <C> <C>
Institutional Shares $106 $331 $574 $1,271
-------------------------------------------
<CAPTION>
Fifth Third
International Equity 1 3 5 10
Fund Year Years Years Years
-------------------------------------------
<S> <C> <C> <C> <C>
Institutional Shares $148 $459 $792 $1,735
-------------------------------------------
<CAPTION>
Fifth Third 1 3
Technology Fund Year Years
-------------------------------------------
<S> <C> <C> <C> <C>
Institutional Shares $149 $462
-------------------------------------------
Bond Funds
<CAPTION>
Fifth Third Bond 1 3 5 10
Fund For Income Year Years Years Years
-------------------------------------------
<S> <C> <C> <C> <C>
Institutional Shares $82 $255 $444 $990
-------------------------------------------
<CAPTION>
Fifth Third Quality 1 3 5 10
Bond Fund Year Years Years Years
-------------------------------------------
<S> <C> <C> <C> <C>
Institutional Shares $86 $268 $466 $1,037
-------------------------------------------
<CAPTION>
Fifth Third U.S.
Government 1 3 5 10
Securities Fund Year Years Years Years
-------------------------------------------
<S> <C> <C> <C> <C>
Institutional Shares $96 $300 $520 $1,155
-------------------------------------------
<CAPTION>
Fifth Third 1 3 5 10
Municipal Bond Fund Year Years Years Years
-------------------------------------------
<S> <C> <C> <C> <C>
Institutional Shares $87 $271 $471 $1,049
-------------------------------------------
<CAPTION>
Fifth Third Ohio Tax 1 3 5 10
Free Bond Fund Year Years Years Years
-------------------------------------------
<S> <C> <C> <C> <C>
Institutional Shares $82 $255 $444 $990
-------------------------------------------
</TABLE>
28
<PAGE>
Additional Information About the Funds' Investments
A
Investment Practices
The Funds invest in a variety of securities and employ a number of investment
techniques. Each security and technique involves certain risks. The following
table describes the securities and techniques the Funds use, as well as the
main risks they pose. Equity securities are subject mainly to market risk.
Fixed income securities are primarily influenced by market, credit and
prepayment risks, although certain securities may be subject to additional
risks. Following the table is a more complete discussion of risk. You may also
consult the Statement of Additional Information for additional details
regarding these and other permissible investments.
<TABLE>
<CAPTION>
FUND NAME FUND CODE
--------- ---------
<S> <C>
Quality Growth Fund 1
Equity Income Fund 2
Pinnacle Fund 3
Balanced Fund 4
Mid Cap Fund 5
International Equity Fund 6
Technology Fund 7
Bond Fund for Income 8
Quality Bond Fund 9
U.S. Government Securities Fund 10
Municipal Bond Fund 11
Ohio Tax Free Bond Fund 12
</TABLE>
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
---------- --------- ---------
<S> <C> <C>
American Depositary Receipts (ADRs): 1, 3-7 Market
ADRs are foreign shares of a company Political
held by a U.S. bank that issues a Foreign Investment
receipt evidencing ownership.
Asset-Backed Securities: Securities 1, 4, 5, 8, 9 Pre-payment
secured by company receivables, home Market
equity loans, truck and auto loans, Credit
leases, credit card receivables and Interest Rate
other securities backed by other types Regulatory
of receivables or other assets. Liquidity
Bankers' Acceptances: Bills of exchange 1, 2, 4, 5, 7-9, 11 Credit
or time drafts drawn on and accepted by Liquidity
a commercial bank. Maturities are Market
generally six months or less. Interest Rate
Bonds: Interest-bearing or discounted Market
securities that obligate the issuer to Credit
pay the bondholder a specified sum of Interest Rate
money, usually at specific intervals,
and to repay the principal amount of
the loan at maturity.
Corporate: 1-11
Government: 1, 2-6, 8-11
Call and Put Options: A call option 1-10 Management
gives the buyer the right to buy, and Liquidity
obligates the seller of the option to Credit
sell, a security at a specified price. Market
A put option gives the buyer the right Leverage
to sell, and obligates the seller of
the option to buy a security at a
specified price.
Certificates of Deposit: Negotiable 1, 2, 4, 5, 7-11 Market
instruments with a stated maturity. Credit
Liquidity
Interest Rate
Collateralized Mortgage Obligations: 4, 8-10 Pre-Payment/Call
Mortgage-backed bonds that separate Interest Rate
mortgage pools into different maturity
classes.
</TABLE>
29
<PAGE>
Additional Information About the Funds' Investments
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
---------- --------- ---------
<S> <C> <C>
Commercial Paper: Secured and unsecured 1, 6-9, 11, 12 Credit
short-term promissory notes issued by Liquidity
corporations and other entities. Market
Maturities generally vary from a few Interest Rate
days to nine months.
Common Stock: Shares of ownership of a 1-7 Market
company.
Convertible Securities: Bonds or 1-7 Market
preferred stock that convert to common Credit
stock.
Derivatives: Instruments whose value is 1-12 Management
derived from an underlying contract, Market
index or security, or any combination Credit
thereof, including futures, options Liquidity
(e.g., put and calls), options on Leverage
futures, swap agreements, and some Interest Rate
mortgage-backed securities.
Foreign Currency Transactions: Foreign 6 Foreign Investment
currency transactions include forward Market
foreign currency exchange contracts, Political
foreign currency options, and foreign
currency futures transactions.
Foreign Securities: Stocks issued by 1, 2, 4-9, 11 Market
foreign companies, as well as commercial Political
paper of foreign issuers and obligations Liquidity
of foreign banks, overseas branches of Foreign Investment
U.S. banks and supranational entities.
Futures and Related Options: A contract 1-12 Management
providing for the future sale and Market
purchase of a specified amount of a Credit
specified security, class of securities, Liquidity
or an index at a specified time in the Leverage
future and at a specified price.
High-Yield/High-Risk/Debt Securities: 8-11 Credit
High-yield/ high-risk/debt securities Market
are securities that are rated below Liquidity
investment grade by the primary rating Interest Rate
agencies (e.g., BB or lower by Standard
& Poor's and Ba or lower by Moody's).
These securities are considered
speculative and involve greater risk of
loss than investment grade debt
securities. Other terms commonly used to
describe such securities include "lower
rated bonds," "non-investment grade
bonds" and "junk bonds."
Illiquid Securities: Securities which 1-12 Liquidity
may be difficult to sell at an Market
acceptable price.
Investment Company Securities: Shares of 1, 4-12 Market
investment companies. These investment
companies may include money market funds
of Fifth Third Funds and shares of other
registered investment companies for
which the Adviser to a Fund or any of
their affiliates serves as investment
adviser, administrator or distributor.
Investment Grade Bonds: Interest-bearing 1, 5, 8, 9, 11, 12 Market
or discounted government or corporate Credit
securities that obligate the issuer to
pay the bondholder a specified sum of
money, usually at specific intervals,
and to repay the principal amount of the
loan at maturity. Investment grade bonds
are those rated BBB or better by S&P or
Baa or better by Moody's or similarly
rated by other nationally recognized
statistical rating organizations, or, if
not rated, determined to be of
comparable quality by the Adviser.
</TABLE>
30
<PAGE>
Additional Information About the Funds' Investments
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
---------- --------- ---------
<S> <C> <C>
Money Market Instruments: Investment-grade, U.S. 1, 3-12 Market
dollar denominated debt securities that have Credit
remaining maturities of one year or less. These
securities may include U.S. government
obligations, commercial paper and other short-term
corporate obligations, repurchase agreements
collateralized with U.S. government securities,
certificates of deposit, bankers' acceptances, and
other financial institution obligations. These
securities may carry fixed or variable interest
rates.
Mortgage-Backed Securities: Debt obligations 1, 4, 5, 8-10 Pre-payment
secured by real estate loans and pools of loans. Market
These include collateralized mortgage obligations Credit
and real estate mortgage investment conduits. Regulatory
Municipal Securities: Securities issued by a state 11, 12 Market
or political subdivision to obtain funds for Credit
various public purposes. Municipal securities Political
include (a) governmental lease certificates of Tax
participation issued by state or municipal Regulatory
authorities where payment is secured by
installment payments for equipment, buildings, or
other facilities being leased by the state or
municipality; (b) government lease certificates
purchased by the Fund will not contain
nonappropriation clauses; (c) municipal notes and
tax-exempt commercial paper; (d) serial bonds; (e)
tax anticipation notes sold to finance working
capital needs of municipalities in anticipation of
receiving taxes at a later date; (f) bond
anticipation notes sold in anticipation of the
issuance of long-term bonds in the future; (g)
pre-refunded municipal bonds whose timely payment
of interest and principal is ensured by an escrow
of U.S. government obligations; and (h) general
obligation bonds.
Participation Interests: Interests in bank loans 11, 12 Interest Rate
made to corporations. Credit
Liquidity
Preferred Stocks: Preferred Stocks are equity 4, 6, 7 Market
securities that generally pay dividends at a
specified rate and have preference over common
stock in the payment of dividends and liquidation.
Preferred stock generally does not carry voting
rights.
Repurchase Agreements: The purchase of a security 1-12 Market
and the simultaneous commitment to return the Leverage
security to the seller at an agreed upon price on
an agreed upon date. This is treated as a loan.
Restricted Securities: Securities not registered 1-12 Liquidity
under the Securities Act of 1933, such as Market
privately placed commercial paper and Rule 144A
securities.
Reverse Repurchase Agreement: The sale of a 1-12 Market
security and the simultaneous commitment to buy Leverage
the security back at an agreed upon price on an
agreed upon date. This is treated as a borrowing
by a Fund.
Securities Lending: The lending of up to 33 1/3% 1-12 Market
of the Fund's total assets. In return the Fund Leverage
will receive cash, other securities, and/or Liquidity
letters of credit. Credit
Short-Term Trading: The sale of a security soon 1-12 Market
after its purchase. A portfolio engaging in such
trading will have higher turnover and transaction
expenses.
</TABLE>
31
<PAGE>
Additional Information About the Funds' Investments
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
---------- --------- ---------
<S> <C> <C>
Stock-Index Options: A security that 1-12 Management
combines features of options with securities Market
trading using composite stock indices. Credit
Time Deposits: Non-negotiable receipts 1, 2, 4, 5, 7-9, 11 Liquidity
issued by a bank in exchange for the deposit Credit
of funds. Market
U.S. Government Agency Securities: 1-12 Interest Rate
Securities issued by agencies and Credit
instrumentalities of the U.S. government.
These include Ginnie Mae, Fannie Mae, and
Freddie Mac.
U.S. Treasury Obligations: Bills, notes, 1-12 Interest Rate
bonds, separately traded registered interest
and principal securities, and coupons under
bank entry safekeeping.
Variable and Floating Rate Instruments: 4, 8, 9, 11, 12 Credit
Obligations with interest rates which are Liquidity
reset daily, weekly, quarterly or some other Market
period and which may be payable to the Fund
on demand.
Warrants: Securities, typically issued with 1, 2, 4-7 Market
preferred stock or bonds, that give the Credit
holder the right to buy a proportionate
amount of common stock at a specified price.
When-Issued and Delayed Delivery 1-12 Market
Transactions: Purchase or contract to Leverage
purchase securities at a fixed price for Liquidity
delivery at a future date. Under normal Credit
market conditions, when-issued purchases and
forward commitments will not exceed 20% of
the value of a Fund's total assets.
Yankee Bonds and Similar Debt Obligations: 7 Market
U.S. dollar denominated bonds issued by Credit
foreign corporations or governments. Interest Rate
Sovereign bonds are those issued by the
government of a foreign country.
Supranational bonds are those issued by
supranational entities, such as the World
Bank and European Investment Bank. Canadian
bonds are those issued by Canadian
provinces.
</TABLE>
Investment Risks
A
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above as well as those risks
discussed in "Principal Investment Risks." Because of these risks, the value of
the securities held by the Funds may fluctuate, as will the value of your
investment in the Funds. Certain investments and Funds are more susceptible to
these risks than others.
Credit Risk. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade
securities. The price of a security can be adversely affected prior to actual
default as its credit status deteriorates and the probability of default rises.
Foreign Investment Risk. The risk associated with higher transaction costs,
delayed settlements, currency controls and adverse economic developments. This
also includes the risk that fluctuations in the exchange rates between the U.S.
dollar and foreign currencies may negatively affect an investment. Adverse
changes in exchange rates may erode or reverse any gains produced by foreign
currency denominated investments and may widen any losses. Exchange rate
volatility also may affect the ability of an issuer to repay U.S. dollar
denominated debt, thereby increasing credit risk. Foreign securities may also
be affected by incomplete or inaccurate financial information on companies,
social upheavals or political actions ranging from tax code changes to
governmental collapse. These risks are more significant in emerging markets.
32
<PAGE>
Additional Information About the Funds' Investments
Interest Rate Risk. The risk that debt prices overall will decline over short
or even long periods due to rising interest rates. A rise in interest rates
typically causes a fall in values, while a fall in rates typically causes a
rise in values. Interest rate risk should be modest for shorter-term
securities, moderate for intermediate-term securities, and high for longer-term
securities. Generally, an increase in the average maturity of the Fund will
make it more sensitive to interest rate risk. The market prices of securities
structured as zero coupon are generally affected to a greater extent by
interest rate changes. These securities tend to be more volatile than
securities which pay interest periodically.
Investment Style Risk. The risk that returns from a particular class or group
of stocks (e.g., value, growth, small cap, large cap) will trail returns from
other asset classes or the overall stock market. Groups or asset classes of
stocks tend to go through cycles of doing better--or worse--than common stocks
in general. These periods can last for periods as long as several years.
Additionally, a particular asset class or group of stocks could fall out of
favor with the market, causing the Fund to underperform funds that focus on
other types of stocks.
Leverage Risk. The risk associated with securities or practices that multiply
small index or market movements into large changes in value. Leverage is often
associated with investments in derivatives, but also may be embedded directly
in the characteristics of other securities.
Hedged. When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position that the
Fund also holds, any loss generated by the derivative should be
substantially offset by gains on the hedged investment, and vice versa.
Hedges are sometimes subject to imperfect matching between the derivative
and underlying security, and there can be no assurance that a Fund's hedging
transactions will be effective.
Speculative. To the extent that a derivative is not used as a hedge, the
Fund is directly exposed to the risks of that derivative. Gains or losses
from speculative positions in a derivative may be substantially greater than
the derivatives original cost.
Liquidity Risk. The risk that certain securities may be difficult or impossible
to sell at the time and the price that would normally prevail in the market.
The seller may have to lower the price, sell other securities instead or forego
an investment opportunity, any of which could have a negative effect on Fund
management or performance. This includes the risk of missing out on an
investment opportunity because the assets necessary to take advantage of it are
tied up in less advantageous investments.
Management Risk. The risk that a strategy used by a Fund's portfolio manager
may fail to produce the intended result. This includes the risk that changes in
the value of a hedging instrument will not match those of the asset being
hedged. Incomplete matching can result in unanticipated risks.
Market Risk. The risk that the market value of a security may move up and down,
sometimes rapidly and unpredictably. These fluctuations may cause a security to
be worth less than the price originally paid for it, or less than it was worth
at an earlier time. Market risk may affect a single issuer, industrial sector
of the economy or the market as a whole. There is also the risk that the
current interest rate may not accurately reflect existing market rates. For
fixed income securities, market risk is largely, but not exclusively,
influenced by changes in interest rates. A rise in interest rates typically
causes a fall in values, while a fall in rates typically causes a rise in
values. Finally, key information about a security or market may be inaccurate
or unavailable. This is particularly relevant to investments in foreign
securities.
Political Risk. The risk of losses attributable to unfavorable governmental or
political actions, seizure of foreign deposits, changes in tax or trade
statutes, and governmental collapse and war.
33
<PAGE>
Additional Information About the Funds' Investments
Pre-Payment/Call Risk. The risk that the principal repayment of a security will
occur at an unexpected time. Prepayment risk is the chance that the repayment
of a mortgage will occur sooner than expected. Call risk is the possibility
that, during times of declining interest rates, a bond issuer will "call"--or
repay--higher yielding bonds before their stated maturity. Changes in pre-
payment rates can result in greater price and yield volatility. Pre-payments
and calls generally accelerate when interest rates decline. When mortgage and
other obligations are pre-paid or called, a Fund may have to reinvest in
securities with a lower yield. In this event, the Fund would experience a
decline in income--and the potential for taxable capital gains. Further, with
early prepayment, a Fund may fail to recover any premium paid, resulting in an
unexpected capital loss. Prepayment/call risk is generally low for securities
with a short-term maturity, moderate for securities with an intermediate-term
maturity, and high for securities with a long-term maturity.
Regulatory Risk. The risk associated with Federal and state laws which may
restrict the remedies that a lender has when a borrower defaults on loans.
These laws include restrictions on foreclosures, redemption rights after
foreclosure, Federal and state bankruptcy and debtor relief laws, restrictions
on "due on sale" clauses, and state usury laws.
Tax Risk. The risk that the issuer of the securities will fail to comply with
certain requirements of the Internal Revenue Code, which would cause adverse
tax consequences.
34
<PAGE>
Fund Management
Investment Advisors and Subadvisor
Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, serves as
investment advisor to all Funds other than Fifth Third Pinnacle Fund. Heartland
Capital Management, Inc., 251 North Illinois Street, Suite 300, Indianapolis,
Indiana 46204, serves as investment advisor to Fifth Third Pinnacle Fund. Each
of those two advisors is a subsidiary of Fifth Third Bancorp. Morgan Stanley
Dean Witter Investment Management Inc. ("MSDW"), 1221 Avenue of the Americas,
New York, New York 10020, serves as investment subadvisor to Fifth Third
International Equity Fund.
As of September 30, 2000, Fifth Third Bank had approximately $22.2 billion of
assets under management, including approximately $5.3 billion of assets of
Fifth Third Funds. As of September 30, 2000, Heartland had approximately $1.9
billion of assets under management, including approximately $98 million of
assets held by mutual funds. As of September 30, 2000, MSDW, together with its
affiliated institutional asset management companies, had approximately $177.5
billion of assets under management, including approximately $58.8 billion of
assets held by mutual funds (including sub-advisory relationships).
The management and subadvisory fees, after voluntary fee waivers, paid by the
Funds for the fiscal year ended July 31, 2000 are as follows:
<TABLE>
<CAPTION>
As a percentage of
average net assets
---------------------------------------------------------------
<S> <C>
Fifth Third Quality Growth Fund 0.80%
---------------------------------------------------------------
Fifth Third Equity Income Fund 0.80%
---------------------------------------------------------------
Fifth Third Pinnacle Fund 0.80%
---------------------------------------------------------------
Fifth Third Balanced Fund 0.80%
---------------------------------------------------------------
Fifth Third Mid Cap Fund 0.80%
---------------------------------------------------------------
Fifth Third International Equity Fund 1.00%*
---------------------------------------------------------------
Fifth Third Technology Fund 1.00%
---------------------------------------------------------------
Fifth Third Bond Fund For Income 0.55%
---------------------------------------------------------------
Fifth Third Quality Bond Fund 0.55%
---------------------------------------------------------------
Fifth Third U.S. Government Securities Fund 0.43%
---------------------------------------------------------------
Fifth Third Municipal Bond Fund 0.55%
---------------------------------------------------------------
Fifth Third Ohio Tax Free Bond Fund 0.55%
---------------------------------------------------------------
</TABLE>
* Fifth Third Bank paid 0.45% of this fee to MSDW for its services as
investment subadvisor.
Portfolio Managers
Fifth Third Bank
Equity Funds
Steven E. Folker has been the portfolio manager for Fifth Third Quality Growth
Fund, Fifth Third Balanced Fund and Fifth Third Mid Cap Fund since 1993.
Currently, he is the Chief Equity Strategist for Fifth Third Investment
Advisors and is Vice President and Trust Officer of Fifth Third Bank. He is
also a Chartered Financial Analyst, has over 16 years of investment experience
and is a member of the Cincinnati Society of
35
<PAGE>
Fund Management
Financial Analysts. He earned a B.B.A. in Finance & Accounting and an M.S. in
Finance, Investments & Banking from the University of Wisconsin.
John B. Schmitz has managed Fifth Third International Equity Fund since 1994,
and Fifth Third Equity Income Fund since 1997. He is a Vice President and Trust
Officer of Fifth Third Bank, a Chartered Financial Analyst and has over 12
years of experience. He is also a member of the Cincinnati Society of Financial
Analysts. Mr. Schmitz graduated with a B.B.A. in Finance & Real Estate from the
University of Cincinnati.
Steven J. Mygrant has been the co-portfolio manager for the Fifth Third
Technology Fund since 2000. Since 1996, he has been the Director of Equity
Analysis at Fifth Third Bank. Prior to 1996, he was the Director of Equity
Research at a large mid-western bank. He is a member of the Association for
Investment Management and Research and the Cincinnati Society of Security
Analysts. He has over 15 years of investment experience and is a Certified
Financial Analyst. Steven earned a B.S. and MBA from The Ohio State University.
Sunil M. Reddy has been the co-portfolio manager for the Fifth Third Technology
Fund since 2000. Since 1997, he has been an Equity Analyst covering
semiconductor, semiconductor equipment, enterprise hardware and software
sectors at Fifth Third Bank. Prior to 1997, he was a portfolio manager at a
large mid-western bank. He is a Chartered Financial Analyst with over 10 years
of investment experience and is a member of the Cincinnati Society of Financial
Analysts. Sunil earned a B.S. in Electrical Engineering from The Ohio State
University and a MBA from Case Western Reserve University.
Bond Funds
Investment decisions for all of the Fifth Third bond funds as well as the bond
portion of Fifth Third Balanced Fund are made by a team of investment
professionals, all of whom are employees of Fifth Third Bank.
Heartland Capital Management, Inc.
Robert D. Markley, President and Chief Executive Officer of Heartland and
Thomas F. Maurath, Executive Vice President of Heartland, have been primarily
responsible for management of Fifth Third Pinnacle Fund and management of its
predecessor fund since 1985. Mr. Markley is a Chartered Financial Analyst and
holds a B.A. in Marketing form Michigan State University and an M.B.A. from
Northwestern University. Mr. Maurath also is a Chartered Financial Analyst who
earned a B.B.A. in Accounting from the University of Notre Dame and a M.B.A.
from Indiana University.
Morgan Stanley Dean Witter Investment Management Inc.
Barton M. Biggs has served as portfolio manager of the Fifth Third
International Equity Fund since 1994. He has been Chairman and a Director of
MSDW since 1980 and Managing Director of Morgan Stanley & Co. Incorporated
since 1975. He is also a Director and Chairman of various registered investment
companies to which MSDW and certain of its affiliates provide investment
advisory services. Mr. Biggs holds a B.A. from Yale University and an M.B.A.
from New York University.
Ann Thivierge joined MSDW in 1986 and is a Managing Director. She has been a
member of MSDW's asset allocation Committee for eight years. She received a
B.A. from James Madison College, Michigan State University in International
Relations and received her M.B.A. from New York University in Finance.
36
<PAGE>
Fund Management
Fund Administration
BISYS Fund Services Limited Partnership ("BISYS") serves as the administrator
of the Funds. The administrator generally assists in all aspects of the Funds'
administration and operation, including providing the Funds with certain
administrative personnel and services necessary to operate the Funds, such as
legal and accounting services. BISYS provides these at an annual rate as
specified below:
<TABLE>
<CAPTION>
Maximum Average Aggregate Daily
Administrative Fee Net Assets of the Trust
------------------ -----------------------
<S> <C>
0.20% of the first $1 billion
0.18% of the next $1 billion
0.17% in excess of $2 billion
</TABLE>
BISYS may periodically waive all or a portion of its administrative fee which
will cause the yield of a Fund to be higher than it would otherwise be in the
absence of such a waiver.
Pursuant to a separate agreement with BISYS, Fifth Third Bank performs sub-
administrative services on behalf of each Fund, including providing certain
administrative personnel and services necessary to operate the Funds. Fifth
Third Bank receives a fee from BISYS for providing sub-administrative services,
at an annual rate of 0.035% of the average aggregate daily net assets of all
the Funds.
37
<PAGE>
Shareholder Information
Purchasing and Selling Fund Shares
Pricing Fund Shares
The price of Fund shares is based on the Fund's Net Asset Value (NAV). The
value of each portfolio instrument held by the Funds usually is determined
using market prices. Under special circumstances, such as when an event occurs
after the close of the exchange on which a Fund's portfolio securities are
principally traded, which, in the investment manager's opinion has materially
affected the price of those securities, the Fund may use fair value pricing.
Each Fund's NAV is calculated at 4:00 p.m. Cincinnati time each day the New
York Stock Exchange is open for regular trading and the Federal Reserve Bank of
Cleveland is open for business. Each Fund's NAV may change on days when
shareholders will not be able to purchase or redeem Fund shares. The Funds will
be closed on those days that Fifth Third Bank is closed and on the following
holidays: New Year's Day, Martin Luther King Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving Day and Christmas.
Purchasing and Adding to Your Shares
You may purchase shares on days when the New York Stock Exchange is open for
regular trading and the Federal Reserve Bank of Cleveland is open for business.
Your purchase price will be the next NAV after your purchase order, completed
application and full payment have been received by the Funds or its transfer
agent. All orders must be received by the Funds or its transfer agent prior to
4:00 p.m. Cincinnati time in order to receive that day's NAV.
Institutional Shares only may be purchased through the Trust and Investment
Department of Fifth Third Bank, Fifth Third Securities, Inc.--Institutional
Investment Division, qualified employee retirement plans subject to minimum
requirements that may be established by the distributor of Fund shares, or
broker-dealers, investment advisers, financial planners or other financial
institutions which have an agreement with Fifth Third Bank to place trades for
themselves or their clients for a fee. In order to purchase Institutional
shares through one of those entities, you must have an account with it. That
account will be governed by its own rules and regulations, which may be more
stringent than the rules and regulations governing an investment in the Funds,
and you should consult your account documents for full details. Your shares in
the Funds may be held in an omnibus account in the name of that institution.
The entity through which you are purchasing your shares is responsible for
transmitting the order to the Funds, and it may have an earlier cut-off time
for purchase requests. Consult that entity for specific information. If your
purchase order has been received by the Funds prior to the time designated by
the Funds for receiving orders, you will receive the dividend, if any, declared
for that day.
Minimum
Investments
The minimum initial investment in Institutional shares of
the Funds offered by this Prospectus is $1,000. Subsequent
investments must be in amounts of at least $50. An
institutional investor's minimum investment will be
calculated by combining all accounts it maintains with the
Fifth Third Funds.
All purchases must be in U.S. dollars. A fee may be
charged for any checks that do not clear. Third-party
checks are not accepted.
For details, call 1-888-799-5353 or write to: Fifth Third
Funds, c/o Fifth Third Bank, 38 Fountain Square Plaza,
Cincinnati, Ohio 45263.
The Funds may reject a purchase order for any reason.
38
<PAGE>
Shareholder Information
Avoid 31% Tax Withholding
Each Fund is required to withhold 31% of taxable dividends, capital gains
distributions and redemptions paid to any shareholder who has not provided the
Fund with his or her certified Taxpayer Identification Number (your Social
Security Number for individual investors) in compliance with IRS rules. To
avoid this withholding, make sure you provide your correct Tax Identification
Number.
Selling Your Shares
You may sell your shares on days when the New York Stock Exchange is open for
regular trading and the Federal Reserve Bank of Cleveland is open for business.
Your sales price will be the next NAV after your sell order is received by the
Funds, its transfer agent, or your investment representative. All orders must
be received by the Fund or its transfer agent prior to the time the Fund
calculates its NAV in order to receive that day's NAV. If your order has been
received by the Fund prior to the time the Fund calculates its NAV, and your
shares have been sold you will not receive the dividend, if any, declared for
that day. Normally you will receive your proceeds within a week after your
request is received.
In order to sell your shares, call the Trust and Investment Department at Fifth
Third Bank, Fifth Third Securities, Inc.--Institutional Investment Division,
the sponsor of your qualified employee retirement plan or the broker-dealer,
investment adviser, financial planner or other institution through which you
purchased your shares.
Postponement of Redemption Payments
Any Fund may delay sending to you redemption proceeds for up to 7 days, or
longer if permitted by the SEC. If you experience difficulty making a telephone
redemption during periods of drastic economic or market change, you can send
your request to: Fifth Third Funds, 38 Fountain Square Plaza, Cincinnati, Ohio
45263.
Closing of Small Accounts
If your account falls below $1,000 because of redemptions, a Fund may ask you
to increase your balance. If it is still below the minimum after 30 days, the
Fund may close your account and send you the proceeds at the current NAV.
39
<PAGE>
Shareholder Information
Exchanging Your Shares
You may exchange Instructions for Exchanging Shares
your Fund shares
for Institutional
shares of any
other Fifth Third
Fund. No
transaction fees
are charged for
exchanges. Be
sure to read the
Prospectus
carefully of any
Fund into which
you wish to
exchange shares.
To exchange your shares, call the Trust and Investment
Department at Fifth Third Bank, Fifth Third Securities,
Inc.--Institutional Investment Division, the sponsor of
your qualified employee retirement plan or the broker-
dealer, investment adviser, financial planner or other
institution through which you purchased your shares for
exchange procedures or call 1-888-799-5353.
Notes on Exchanges
To prevent disruption in the management of the Funds,
market timing strategies and frequent exchange activity
may be limited by the Funds. Although not anticipated,
the Funds may reject exchanges, or change or terminate
rights to exchange shares at any time.
You must meet the
minimum
investment
requirements for
the Fund into
which you are
exchanging.
Exchanges from
one Fund to
another are
taxable for
investors subject
to federal or
state income
taxation.
Shares of the new Fund must be held under the same
account name, with the same registration and tax
identification numbers, as shares of the old Fund.
The Exchange Privilege may be changed or eliminated at
any time.
The exchange privilege is available only in states where
shares of the Funds may be sold.
All exchanges are based on the relative net asset value
next determined after the exchange order is received by
the Funds.
Dividends and Capital Gains
All dividends and capital gains will be automatically reinvested unless you
request otherwise. You can receive them in cash or by electronic funds transfer
to your bank account if you are not a participant in an IRA account or in a tax
qualified plan. There are no sales charges for reinvested distributions.
Distributions are made on a per share basis regardless of how long you've owned
your shares. Therefore, if you invest shortly before the distribution date,
some of your investment will be returned to you in the form of a taxable
distribution.
Dividends, if any, are declared and paid monthly by the following funds: Fifth
Third Quality Growth Fund, Fifth Third Equity Income Fund, Fifth Third Bond
Fund for Income, Fifth Third Quality Bond Fund, Fifth Third Government
Securities Fund, Fifth Third Municipal Bond Fund and Fifth Third Ohio Tax Free
Bond Fund. Dividends, if any, are declared and paid quarterly by the following
funds: Fifth Third Technology Fund, Fifth Third Pinnacle Fund, Fifth Third
Balanced Fund and Fifth Third Mid Cap Fund. Dividends, if any, are declared and
paid annually by the following Fund: Fifth Third International Equity Fund.
Capital gains, if any, are distributed at least annually.
40
<PAGE>
Shareholder Information
Taxation
Federal Income Tax
Each Fund expects to distribute substantially all of its investment income
(including net capital gains and tax-exempt interest income, if any) to its
shareholders. Unless otherwise exempt or as discussed below, shareholders are
required to pay federal income tax on any dividends and other distributions,
including capital gains distributions received. This applies whether dividends
and other distributions are received in cash or as additional shares.
Distributions representing long-term capital gains, if any, will be taxable to
shareholders as long-term capital gains no matter how long the shareholders
have held the shares.
Distributions are taxable to shareholders even if they are paid from income or
gains earned by a Fund before a shareholder's investment (and thus were
included in the price paid).
Any gain from the sale or exchange of Fund shares will generally also be
subject to tax.
This is a brief summary of certain federal income tax consequences relating to
an investment in the Funds, and shareholders are urged to consult their own tax
advisors regarding the taxation of their investments under federal, state and
local laws.
Additional Tax Information for Fifth Third Ohio Tax Free Bond Fund
Dividends from Fifth Third Ohio Tax Free Bond Fund representing interest from
obligations held by that Fund which are issued by the State of Ohio or its
subdivisions, which interest is exempt from federal income tax when received by
a shareholder, should also be exempt from Ohio individual income tax as well as
any Ohio municipal income tax even if the municipality is permitted under
current Ohio Law to levy a tax on intangible income. Income from the Fund is
not necessarily free from state income taxes in states other than Ohio or from
personal property taxes.
Additional Tax Information for Fifth Third Municipal Bond Fund
Dividends from Fifth Third Municipal Bond Fund representing net interest income
earned on some temporary investments and any realized net short-term gains are
taxed as ordinary income. Distributions representing net long-term capital
gains realized by Fifth Third Municipal Bond Fund, if any, will be taxable as
long-term capital gains regardless of the length of time shareholders have held
their Shares.
Additional Tax Information for Fifth Third Municipal Bond Fund and Fifth Third
Ohio Tax Free Bond Fund
If a shareholder receives an exempt-interest dividend with respect to any share
and such share is held by the shareholder for six months or less, any loss on
the sale or exchange of such share will be disallowed to the extent of the
amount of such exempt-interest dividend. In certain limited instances, the
portion of social security benefits that may be subject to federal income
taxation may be affected by the amount of tax-exempt interest income, include
exempt-interest dividends, received by a shareholder.
Under state or local law, distributions of investment income may be taxable to
shareholders as dividend income even though a substantial portion of such
distribution may be derived from interest excluded from gross income for
federal income tax purposes that, if received directly, would be exempt from
such income taxes. State laws differ on this issue, and shareholders are urged
to consult their own tax advisors regarding the taxation of their investments
under state and local tax laws.
Interest income from certain types of municipal securities may be subject to
federal alternative minimum tax. To the extent either Fund invests in those
securities, individual shareholders, depending on their own tax status, may be
subject to alternative minimum tax on that part of the Fund's distributions
derived from those securities.
41
<PAGE>
Shareholder Information
Additional Tax Information for Fifth Third International Equity Fund
Fifth Third International Equity Fund may invest in the stock of certain
foreign corporations that would constitute a passive foreign investment company
(PFIC). Federal income taxes at ordinary net income rates may be imposed on the
Fund upon disposition of PFIC investments.
Investment income received by the Fund from sources within foreign countries
may be subject to foreign taxes withheld at the source. The United States has
entered into tax treaties with many foreign countries that entitle the Fund to
reduced tax rates or exemption on this income. The effective rate of foreign
tax cannot be predicted since the amount of the Fund assets to be invested
within various countries is unknown. However, the Fund intends to operate so as
to qualify for treaty-reduced tax rates where applicable.
The Fund intends to qualify so as to allow shareholders to claim a foreign tax
credit or deduction on their federal income tax returns. Shareholders, however,
may be limited in their ability to claim a foreign tax credit. Shareholders who
elect to deduct their portion of the Fund's foreign taxes rather than take the
foreign tax credit must itemize deductions on their federal income tax returns.
42
<PAGE>
Financial Highlights
The financial highlights table is intended to help you understand the Funds'
financial performance for the past five years or the period of each Fund's
operations, if shorter. Certain information reflects financial results for a
single Fund share. The total returns in the tables represent the rate that an
investor would have earned or lost on an investment in a Fund (assuming
reinvestment of all dividends and distributions). The information for the
period ended July 31, 2000 has been audited by Arthur Andersen LLP, whose
report, along with the Funds' financial statements, are included in the Funds'
annual report, which is available upon request. The information for periods
ended prior to July 31, 2000 has been audited by Ernst & Young LLP (except for
the Pinnacle Fund for the period prior to July 31, 1998, which was audited by
other independent accountants).
Fifth Third Quality Growth Fund
Institutional Shares
<TABLE>
<CAPTION>
Year Ended Period Ended
July 31, 2000 July 31, 1999*
Per share data ------------- --------------
<S> <C> <C>
Net asset value, beginning of period $ 23.37 $ 19.45
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income/(loss) (0.02) (0.02)
Net realized and unrealized gains/(losses) from
investments 4.06 5.89
-------------------------------------------------------------------------------
Total from investment operations 4.04 5.87
-------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income - -
Net realized gain on investments (1.17) (1.95)
-------------------------------------------------------------------------------
Total distributions (1.17) (1.95)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net asset value, end of period $ 26.24 $ 23.37
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total return (excludes sales charge) 17.82% 32.08% (a)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratios to Average Net Assets:
Net expenses 1.00% 1.00% (b)
Net investment income/(loss) (0.10%) (0.10%)(b)
Expense waiver/reimbursement(c) 0.03% 0.05% (b)
-------------------------------------------------------------------------------
Supplemental data:
Net assets at end of period (000s) $814,820 $583,753
Portfolio turnover(d) 21% 34%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from August 11, 1998 (date of
commencement of operations) to July 31, 1999.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
43
<PAGE>
Financial Highlights
Fifth Third Equity Income Fund
Institutional Shares
<TABLE>
<CAPTION>
Year Ended Period Ended
July 31, 2000 July 31, 1999*
Per share data ------------- --------------
<S> <C> <C>
Net asset value, beginning of period $ 15.19 $ 14.79
---------------------------------------------------------------------
Income from investment operations:
Net investment income/(loss) 0.21 0.25
Net realized and unrealized gains from
investments (1.11) 1.86
---------------------------------------------------------------------
Total from investment operations (0.90) 2.11
---------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (0.21) (0.26)
In excess of net investment income - -
Net realized gain on investments (0.86) (1.45)
---------------------------------------------------------------------
Total distributions (1.07) (1.71)
---------------------------------------------------------------------
---------------------------------------------------------------------
Net asset value, end of period $ 13.22 $ 15.19
---------------------------------------------------------------------
---------------------------------------------------------------------
Total return (excludes sales charge) (5.96%) 14.63%(a)
---------------------------------------------------------------------
---------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C>
Ratios to Average Net Assets:
Net expenses 1.02% 1.07%(b)
Net investment income 1.54% 1.63%(b)
Expense waiver/reimbursement(c) 0.06% 0.05%(b)
---------------------------------------------------------------------
Supplemental data:
Net assets at end of period (000s) $100,007 $148,525
Portfolio turnover(d) 37% 69%
---------------------------------------------------------------------
---------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from August 11, 1998 (date of
commencement of operations) to July 31, 1999.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
44
<PAGE>
Financial Highlights
Fifth Third Pinnacle Fund
Institutional Shares
<TABLE>
<CAPTION>
Year Ended Period Ended
July 31, 2000 July 31, 1999*
Per share data ------------- --------------
<S> <C> <C>
Net asset value, beginning of period $ 37.28 $ 31.26
---------------------------------------------------------------------
Income from investment operations:
Net investment income/(loss) (0.09) (0.06)
Net realized and unrealized gains from
investments 1.59 6.71
---------------------------------------------------------------------
Total from investment operations 1.50 6.65
---------------------------------------------------------------------
Distributions to shareholders from:
Net investment income - -
Net realized gain on investments (0.55) (0.63)
---------------------------------------------------------------------
Total distributions (0.55) (0.63)
---------------------------------------------------------------------
---------------------------------------------------------------------
Net asset value, end of period $ 38.23 $ 37.28
---------------------------------------------------------------------
---------------------------------------------------------------------
Total return (excludes sales charge) 4.07% 21.53% (a)
---------------------------------------------------------------------
---------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C>
Ratios to Average Net Assets:
Net expenses 1.07% 1.21% (b)
Net investment income/(loss) (0.23%) (0.24%)(b)
Expense waiver/reimbursement(c) 0.00% 0.01% (b)
---------------------------------------------------------------------
Supplemental data:
Net assets at end of period (000s) $58,939 $61,943
Portfolio turnover(d) 53% 51%
---------------------------------------------------------------------
---------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from August 11, 1998 (date of commencement
of operations) to July 31, 1999.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
45
<PAGE>
Financial Highlights
Fifth Third Balanced Fund
Institutional Shares
<TABLE>
<CAPTION>
Year Ended Period Ended
July 31, 2000 July 31, 1999*
Per share data ------------- --------------
<S> <C> <C>
Net asset value, beginning of period $ 16.13 $ 14.60
---------------------------------------------------------------------
Income from investment operations:
Net investment income 0.23 0.22
Net realized and unrealized gains from
investments 2.60 2.27
---------------------------------------------------------------------
Total from investment operations 2.83 2.49
---------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (0.23) (0.22)
Net realized gain on investments (1.34) (0.74)
---------------------------------------------------------------------
Total distributions (1.57) (0.96)
---------------------------------------------------------------------
---------------------------------------------------------------------
Net asset value, end of period $ 17.39 $ 16.13
---------------------------------------------------------------------
---------------------------------------------------------------------
Total return (excludes sales charge) 18.60% 17.63%(a)
---------------------------------------------------------------------
---------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C>
Ratios to Average Net Assets:
Net expenses 1.00% 1.00%(b)
Net investment income/(loss) 1.55% 1.54%(b)
Expense waiver/reimbursement(c) 0.06% 0.04%(b)
---------------------------------------------------------------------
Supplemental data:
Net assets at end of period (000s) $171,923 $139,616
Portfolio turnover(d) 122% 128%
---------------------------------------------------------------------
---------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from August 11, 1998 (date of commencement
of operations) to July 31, 1999.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
46
<PAGE>
Financial Highlights
Fifth Third Mid Cap Fund
Institutional Shares
<TABLE>
<CAPTION>
Year Ended Period Ended
July 31, 2000 July 31, 1999*
Per share data ------------- --------------
<S> <C> <C>
Net asset value, beginning of period $ 15.87 $ 15.40
----------------------------------------------------------------------------
Income from investment operations:
Net investment income/(loss) (0.04) (0.04)
Net realized and unrealized gains/(losses)
from investments 4.63 1.95
----------------------------------------------------------------------------
Total from investment operations 4.59 1.91
----------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income - -
In excess of net investment income - -
Net realized gains (1.18) (1.44)
----------------------------------------------------------------------------
Total distributions (1.18) (1.44)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net asset value, end of period $ 19.28 $ 15.87
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total return (excludes sales charge) 30.65% 13.13% (a)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Ratios/Supplemental Data
Ratios to Average Net Assets:
Net expenses 0.99% 0.97% (b)
Net investment income/(loss) (0.26%) (0.26%)(b)
Expense waiver/reimbursement(c) 0.05% 0.07% (b)
----------------------------------------------------------------------------
Supplemental data:
Net assets at end of period (000s) $242,641 $191,987
Portfolio turnover(d) 42% 49%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from August 11, 1998 (date of
commencement of operations) to July 31, 1999.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
47
<PAGE>
Financial Highlights
Fifth Third International Equity Fund
Institutional Shares
<TABLE>
<CAPTION>
Year Ended Period Ended
July 31, 2000 July 31, 1999*
Per share data ------------- --------------
<S> <C> <C>
Net asset value, beginning of period $ 12.80 $ 10.50
------------------------------------------------------------------------------
Income from investment operations:
Net investment income/(loss) 0.07 0.09
Net realized and unrealized gains/(losses) from
investments 1.01 2.52
------------------------------------------------------------------------------
Total from investment operations 1.08 2.61
------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income - (0.14)
In excess of net investment income - (0.10)
Net realized gains (1.18) (0.07)
------------------------------------------------------------------------------
Total distributions (1.18) (0.31)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Net asset value, end of period $ 12.70 $ 12.80
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Total return (excludes sales charge) 8.29% 25.02%(a)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratios to Average Net Assets:
Net expenses 1.45% 1.50%(b)
Net investment income/(loss) 0.55% 0.67%(b)
Expense waiver/reimbursement(c) 0.00% 0.00%(b)
------------------------------------------------------------------------------
Supplemental data:
Net assets at end of period (000s) $208,383 $172,388
Portfolio turnover(d) 86% 42%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from October 9, 1998 (date of commencement
of operations) to July 31, 1999.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
48
<PAGE>
Financial Highlights
Fifth Third Technology Fund
Institutional Shares
<TABLE>
<CAPTION>
Period Ended
July 31, 2000*
Per share data --------------
<S> <C>
Net asset value, beginning of period $ 20.00
----------------------------------------------------------------------------
Income from investment operations:
Net investment income (0.03)
Net realized and unrealized gains/(losses) from investments (0.76)
----------------------------------------------------------------------------
Total from investment operations (0.79)
----------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income -
In excess of net investment income -
Net realized gain on investments -
----------------------------------------------------------------------------
Total distributions -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net asset value, end of period $ 19.21
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total return (excludes sales charge) (5.96%)(a)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Ratios/Supplemental Data
Ratios to Average Net Assets:
Net expenses 1.46%(b)
Net investment income/(loss) (0.79%)(b)
----------------------------------------------------------------------------
Supplemental data:
Net assets at end of period (000s) $55,188
Portfolio turnover(c) 11%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from June 5, 2000 (date of commencement of
operations) to July 31, 2000.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the fund as whole without
distinguishing between the classes of shares issued.
49
<PAGE>
Financial Highlights
A
Fifth Third Bond Fund For Income
Institutional Shares
<TABLE>
<CAPTION>
Year Ended Period Ended
July 31, 2000 July 31, 1999*
Per share data ------------- --------------
<S> <C> <C>
Net asset value, beginning of period $ 11.70 $ 12.27
------------------------------------------------------------------------------
Income from investment operations:
Net investment income/(loss) 0.68 0.56
Net realized and unrealized gains/(losses) from
investments (0.21) (0.30)
------------------------------------------------------------------------------
Total from investment operations 0.47 0.26
------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (0.67) (0.62)
In excess of net investments - -
Net realized gains - (0.21)
------------------------------------------------------------------------------
Total distributions (0.67) (0.83)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Net asset value, end of period $ 11.50 $ 11.70
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Total return (excludes sales charge) 4.09% 2.12%(a)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C>
Ratios to Average Net Assets:
Net expenses 0.76% 0.75%(b)
Net investment income/(loss) 5.87% 5.12%(b)
Expense waiver/reimbursement(c) 0.04% 0.03%(b)
------------------------------------------------------------------------------
Supplemental data:
Net assets at end of period (000s) $190,293 $198,212
Portfolio turnover(d) 185% 104%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from August 11, 1998 (date of
commencement of operations) to July 31, 1999.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
50
<PAGE>
Financial Highlights
Fifth Third Quality Bond Fund
Institutional Shares
<TABLE>
<CAPTION>
Year Ended Period Ended
July 31, 2000 July 31, 1999*
Per share data ------------- --------------
<S> <C> <C>
Net asset value, beginning of period $ 9.52 $ 10.02
------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.57 0.48
Net realized and unrealized gains/(losses) from
investments (0.14) (0.38)
------------------------------------------------------------------------------
Total from investment operations 0.43 0.10
------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (0.57) (0.49)
In excess of net investments - -
Net realized gains - (0.11)
------------------------------------------------------------------------------
Total distributions (0.57) (0.60)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Net asset value, end of period $ 9.38 $ 9.52
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Total return (excludes sales charge) 4.66% 0.88%(a)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C>
Ratios to Average Net Assets:
Net expenses 0.75% 0.75%(b)
Net investment income/(loss) 6.09% 4.95%(b)
Expense waiver/reimbursement(c) 0.09% 0.11%(b)
------------------------------------------------------------------------------
Supplemental data:
Net assets at end of period (000s) $200,882 $133,537
Portfolio turnover(d) 368% 349%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from August 11, 1998 (date of
commencement of operations) to July 31, 1999.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
51
<PAGE>
Financial Highlights
Fifth Third U.S. Government Securities Fund
Institutional Shares
<TABLE>
<CAPTION>
Year Ended Period Ended
July 31, 2000 July 31, 1999*
Per share data ------------- --------------
<S> <C> <C>
Net asset value, beginning of period $ 9.64 $ 9.89
-----------------------------------------------------------------------------
Income from investment operations:
Net investment income/(loss) 0.51 0.46
Net realized and unrealized gains/(losses) from
investments (0.10) (0.22)
-----------------------------------------------------------------------------
Total from investment operations 0.41 0.24
-----------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (0.51) (0.49)
-----------------------------------------------------------------------------
Total distributions (0.51) (0.49)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Net asset value, end of period $ 9.54 $ 9.64
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Total return (excludes sales charge) 4.34% 2.43%(a)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C>
Ratios to Average Net Assets:
Net expenses 0.72% 0.75%(b)
Net investment income/(loss) 5.24% 4.80%(b)
Expense waiver/reimbursement(c) 0.22% 0.28%(b)
-----------------------------------------------------------------------------
Supplemental data:
Net assets at end of period (000s) $45,139 $42,239
Portfolio turnover(d) 46% 93%
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from August 11, 1998 (date of
commencement of operations) to July 31, 1999.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
52
<PAGE>
Financial Highlights
Fifth Third Municipal Bond Fund
Institutional Shares
<TABLE>
<CAPTION>
Year Ended Period Ended
July 31, 2000 July 31, 1999*
Per share data ------------- --------------
<S> <C> <C>
Net asset value, beginning of period $ 11.77 $ 12.30
---------------------------------------------------------------------------
Income from investment operations:
Net investment income/(loss) 0.48 0.47
Net realized and unrealized gains/(losses)
from investments (0.22) (0.32)
---------------------------------------------------------------------------
Total from investment operations 0.26 0.15
---------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (0.48) (0.47)
In excess of net investment income - -
Net realized gains (0.11) (0.21)
---------------------------------------------------------------------------
Total distributions (0.59) (0.68)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Net asset value, end of period $ 11.44 $ 11.77
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Total return (excludes sales charge) 2.37%(a) 1.18%(a)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Ratios/Supplemental Data
Ratios to Average Net Assets:
Net expenses 0.75%(b) 0.75%(b)
Net investment income/(loss) 4.25%(b) 3.79%(b)
Expense waiver/reimbursement(c) 0.10%(b) 0.11%(b)
---------------------------------------------------------------------------
Supplemental data:
Net assets at end of period (000s) $141,407 $114,923
Portfolio turnover(d) 84% 110%
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from August 11, 1998 (date of
commencement of operations) to July 31, 1999.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
53
<PAGE>
Financial Highlights
Fifth Third Ohio Tax Free Bond Fund
Institutional Shares
<TABLE>
<CAPTION>
Year Ended Period Ended
July 31, 2000 July 31, 1999*
Per share data ------------- --------------
<S> <C> <C>
Net asset value, beginning of period $ 10.02 $ 10.33
------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.41 0.40
Net realized and unrealized gains/(losses) from
investments (0.12) (0.24)
------------------------------------------------------------------------------
Total from investment operations 0.29 0.16
------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (0.41) (0.40)
In excess of net investment income - (0.01)
Net realized gains (0.02) (0.06)
------------------------------------------------------------------------------
Total distributions (0.43) (0.47)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Net asset value, end of period $ 9.88 $ 10.02
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Total return (excludes sales charge) 3.01% 1.48%(a)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratios to Average Net Assets:
Net expenses 0.76% 0.82%(b)
Net investment income/(loss) 4.15% 3.81%(b)
Expense waiver/reimbursement(c) 0.04% 0.05%(b)
------------------------------------------------------------------------------
Supplemental data:
Net assets at end of period (000s) $166,623 $182,679
Portfolio turnover(d) 26% 47%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from August 11, 1998 (date of
commencement of operations) to July 31, 1999.
(a) Not annualized.
(b) Annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
54
<PAGE>
Addresses
[CAPTION]
<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Fifth Third Quality Growth Fund Fifth Third Funds
Fifth Third Equity Income Fund c/o Fifth Third Bank
Fifth Third Pinnacle Fund 38 Fountain Square Plaza
Fifth Third Balanced Fund Cincinnati, Ohio 45263
Fifth Third Mid Cap Fund
Fifth Third International Equity Fund
Fifth Third Technology Fund
Fifth Third Bond Fund For Income
Fifth Third Quality Bond Fund
Fifth Third U.S. Government Securities Fund
Fifth Third Municipal Bond Fund
Fifth Third Ohio Tax Free Bond Fund
------------------------------------------------------------------------------------------------------------------------------------
Investment Advisor (all Funds except Pinnacle Fund) Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
------------------------------------------------------------------------------------------------------------------------------------
Investment Advisor (Pinnacle Fund Only) Heartland Capital Management, Inc.
251 North Illinois Street
Suite 300
Indianapolis, Indiana 46204
------------------------------------------------------------------------------------------------------------------------------------
Sub-Advisor (International Equity Fund only) Morgan Stanley Dean Witter Investment
Management Inc.
1221 Avenue of the Americas
New York, New York 10020
------------------------------------------------------------------------------------------------------------------------------------
Custodian, Transfer Agent, Dividend Disbursing Agent,
and Sub-Administrator Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
------------------------------------------------------------------------------------------------------------------------------------
Distributor, Administrator, and Sub-Transfer Agent BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219
------------------------------------------------------------------------------------------------------------------------------------
Independent Auditors Authur Andersen LLP
Suite 1500
425 Walnut Street
Cincinnati, Ohio 45202
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
The following additional information is available to you upon request and
without charge.
Annual/Semiannual Reports (Reports):
The Funds' annual and semi-annual reports to shareholders contain additional
information on the Funds' investments.
Statement of Additional Information (SAI): The SAI provides more detailed
information about the Funds, including their operations and investment policies.
It is incorporated by reference and is legally considered a part of this
prospectus.
You can get free copies of Annual and Semi-Annual Reports, the SAI, prospectuses
of other Fifth Third Funds, or request other information and discuss your
questions about the Funds by contacting a broker or other financial institution
that sells the Funds. In addition, you may contact the Funds at:
Fifth Third Funds
c/o Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Telephone: 1-888-799-5353
Internet: http://www.53.com*
*The Funds' website is not part of this Prospectus.
You can review the Annual and Semi-Annual Reports and the SAI at the Public
Reference Room of the Securities and Exchange Commission. You can get copies:
. For a fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-0102 or calling 1-202-942-8090, or by electronic
request, by e-mailing the SEC at the following address: [email protected]
. At no charge from the Commission's Website at http://www.sec.gov.
[LOGO] Fifth Third Funds
PROSP-IS&B 11/00 Investment Company Act file no. 811-5669.
<PAGE>
[LOGO] Fifth Third Funds
[ARTWORK]
GOVERNMENT MONEY MARKET FUND
PRIME MONEY MARKET FUND
TAX EXEMPT MONEY MARKET FUND
U.S. TREASURY MONEY MARKET FUND
Fifth Third Funds
Money Market Mutual Funds
Institutional Shares
Working hard to
build your wealth!
-------------------
Prospectus
November 30, 2000
The Securities and Exchange Commission has not approved or disapproved the
shares described in this prospectus or determined whether this prospectus is
accurate or complete. Any representation to the contrary is a criminal
offense.
<PAGE>
Fifth Third Funds
Money Market Mutual Funds
Institutional Shares Table of Contents
Overview
This section provides important information about each of the money market
funds (the "Funds"), each a separate series of Fifth Third Funds, including:
. the investment objective
. principal investment strategies
. principal risks, and
. volatility and performance information
All funds are managed by Fifth Third Bank.
This prospectus has been arranged into different sections so that you can
easily review this important information. For more detailed information about
each Fund, please see:
<TABLE>
<S> <C>
Objectives, Strategies and Risks
--------------------------------------------------------
Government Money Market Fund 2
Prime Money Market Fund 4
Tax Exempt Money Market Fund 6
U.S. Treasury Money Market Fund 8
Shareholder Fees and Fund Expenses
--------------------------------------------------------
Fee Tables 10
Expense Examples 11
Additional Information About the Funds' Investments
--------------------------------------------------------
12
Fund Management
--------------------------------------------------------
Investment Advisor 17
Fund Administration 17
Shareholder Information
--------------------------------------------------------
Purchasing and Selling Fund Shares 18
Purchasing and Adding to Your Shares 18
Selling Your Shares 19
Exchanging Your Shares 20
Dividends and Capital Gains 20
Taxation 21
Financial Highlights
--------------------------------------------------------
22
Back Cover
--------------------------------------------------------
Where to learn more about Fifth Third Funds
</TABLE>
1
<PAGE>
Fifth Third Government Money Market Fund
[LOGO]
Fundamental High current income consistent with stability of principal
Objective and liquidity.
Principal The Fund manages its portfolio subject to strict SEC
Investment guidelines, which are designed so that the Fund may
Strategies maintain a stable $1.00 per share price, although there is
no guarantee that it will do so. All of the Fund's
investments are expected to mature in the short-term (397
days or less) and the dollar-weighted average portfolio
maturity of the Fund may not exceed 90 days.
The Fund invests at least 95% of total assets in high-
quality securities called "first tier" securities or
unrated securities that are considered equivalent by the
Fund's investment manager. These generally will be
securities issued or guaranteed as to principal or
interest by the U.S. Treasury or another U.S. government
agency or instrumentality, that at the time of purchase
are rated by such firms as Standard & Poor's and Moody's
in their highest short-term major rating categories, or
unrated securities that are considered equivalent by the
Fund's investment manager.
The Fund reserves the right to invest up to 5% of its
portfolio in "second tier" securities, which generally are
corporate securities that, at the time of purchase, are
rated by such firms as Standard & Poor's and Moody's in
their second highest short-term major rating categories,
or unrated securities that are considered equivalent by
the Fund's investment manager. Some corporate securities
purchased by the Fund may be restricted securities, that
is, they may be subject to limited resale rights.
The Fund may also invest in repurchase agreements
collateralized by the securities mentioned above.
Principal The Fund's principal risks include interest rate risk, net
Investment Risks asset value risk, and credit risk. Interest rate risk
involves the possibility that the Fund's yield will
decrease due to a decrease in interest rates or that the
value of the Fund's investments will decline due to an
increase in interest rates. Net asset value risk involves
the possibility that the Fund will be unable to meet its
goal of a constant $1.00 per share. Credit risk involves
the risk that an issuer cannot make timely interest and
principal payments on its debt securities.
An investment in
the Fund is not
a deposit of
Fifth Third Bank
or any other
bank and is not
insured or
guaranteed by
the FDIC or any
other government
agency. Although
the Fund seeks
to preserve the
value of your
investment at
$1.00 per share,
it is possible
to lose money by
investing in
this Fund.
2
<PAGE>
Fifth Third Government Money Market Fund
[LOGO]
Volatility and Performance Information
The bar chart and
table provide an
indication of the
risks of an
investment in the
Fund by showing
its performance
from year to year
and over time.
The returns
assume that Fund
distributions
have been
reinvested.
Past performance
does not indicate
how the Fund will
perform in the
future.
[GRAPH]
Year-by-Year Total Returns as of 12/31
For Institutional Shares
1992 3.36%
1993 2.69%
1994 3.84%
1995 5.51%
1996 4.96%
1997 5.10%
1998 4.98%
1999 4.61%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
<TABLE>
<S> <C> <C>
Best quarter: Q2 1995 1.38%
Worst quarter: Q2 1993 0.65%
Year to Date Return (1/1/00 to 9/30/00): 4.28%
</TABLE>
-------------------------
Average
Annual
Total
Returns
(for the
periods
ended
December
31,
1999)
----------
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Shares 7/10/91 4.61% 5.03% N/A 4.41%
</TABLE>
--------------------------------------------------------------------------------
To obtain current yield information, call 1-888-799-5353.
3
<PAGE>
Fifth Third Prime Money Market Fund
[LOGO]
Fundamental Current income consistent with stability of principal.
Objective
Principal The Fund manages its portfolio subject to strict SEC
Investment guidelines, which are designed so that the Fund may
Strategies maintain a stable $1.00 per share price, although there is
no guarantee that it will do so. All of the Fund's
investments are expected to mature in the short-term (397
days or less) and the dollar-weighted average portfolio
maturity of the Fund may not exceed 90 days.
The Fund invests at least 95% of its total assets in high-
quality securities called "first tier" securities or
unrated securities that are considered equivalent by the
Fund's investment manager. These generally will be
corporate securities, including commercial paper, that at
the time of purchase are rated by such firms as Standard &
Poor's and Moody's in their highest short-term major
rating categories, or are unrated securities that are
considered equivalent by the Fund's investment manager.
They also may include securities issued or guaranteed as
to principal or interest by the U.S. Treasury or any U.S.
government agency or instrumentality.
The Fund reserves the right to invest up to 5% of its
portfolio in "second tier" securities, which generally are
corporate securities that, at the time of purchase, are
rated by such firms as Standard & Poor's and Moody's in
their second highest short-term major rating categories,
or unrated securities that are considered equivalent by
the Fund's investment manager. Some corporate securities
purchased by the Fund may be restricted securities, that
is, they may be subject to limited resale rights.
The Fund may also invest in repurchase agreements
collateralized by the securities mentioned above.
The Fund's principal risks include interest rate risk, net
Principal asset value risk, and credit risk. Interest rate risk
Investment Risks involves the possibility that the Fund's yield will
decrease due to a decrease in interest rates or that the
value of the Fund's investments will decline due to an
increase in interest rates. Net asset value risk involves
the possibility that the Fund will be unable to meet its
goal of a constant $1.00 per share. Credit risk involves
the risk that an issuer cannot make timely interest and
principal payments on its debt securities.
An investment in
the Fund is not
a deposit of
Fifth Third Bank
or any other
bank and is not
insured or
guaranteed by
the FDIC or any
other government
agency. Although
the Fund seeks
to preserve the
value of your
investment at
$1.00 per share,
it is possible
to lose money by
investing in
this Fund.
4
<PAGE>
Fifth Third Prime Money Market Fund
[LOGO]
Volatility and Performance Information
The bar chart and
table provide an
indication of the
risks of an
investment in the
Fund by showing
its performance
from year to year
and over time.
The returns
assume that Fund
distributions
have been
reinvested.
Past performance
does not indicate
how the Fund will
perform in the
future.
[GRAPH]
Year-by-Year Total Returns as of 12/31
For Institutional Shares
1990 7.92%
1991 5.76%
1992 3.37%
1993 2.69%
1994 3.83%
1995 5.60%
1996 5.04%
1997 5.21%
1998 5.13%
1999 4.79%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
<TABLE>
<S> <C> <C>
Best quarter: Q2 1990 1.95%
Worst quarter: Q2 1993 0.65%
Year to Date Return (1/1/00 to 9/30/00): 4.44%
</TABLE>
-------------------------
Average
Annual
Total
Returns
(for the
periods
ended
December
31,
1999)
----------
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Shares 6/14/89 4.79% 5.16% 4.93% 5.12%
</TABLE>
--------------------------------------------------------------------------------
To obtain current yield information, call 1-888-799-5353.
5
<PAGE>
Fifth Third Tax Exempt Money Market Fund
[LOGO]
Fundamental Maximize current income, exempt from federal income tax,
Objective while preserving capital and maintaining liquidity.
Principal The Fund manages its portfolio subject to strict SEC
Investment guidelines, which are designed so that the Fund may
Strategies maintain a stable $1.00 per share price, although there is
no guarantee that it will do so. All of the Fund's
investments are expected to mature in the short-term (397
days or less) and the dollar-weighted average portfolio
maturity of the Fund may not exceed 90 days.
The Fund invests at least 95% of its total assets in high-
quality securities called "first tier" securities, which
generally are securities that, at the time of purchase,
are rated by such firms as Standard & Poor's and Moody's
in their highest short-term major rating categories, or
unrated securities that are considered equivalent by the
Fund's investment manager.
At least 80% of its total assets are invested in municipal
securities, which include fixed and variable rate debt
obligations issued by various states, their counties,
towns and public authorities. Those securities tend to be:
. general obligation bonds where principal and interest
are paid from general tax revenues received by the
issuer;
. revenue bonds, where principal and interest are paid
only from the revenues received from one or more public
projects or special excise taxes. These bonds tend to
be issued in connection with the financing of
infrastructure projects, such as toll roads and housing
projects, and they are not general obligations of the
issuer;
. industrial development bonds, where principal and
interest are paid only from revenues received from
privately-operated facilities. Generally, these bonds
are issued in the name of a public finance authority to
finance infrastructure to be used by a private entity.
However, they are general obligations of the private
entity, not the issuer.
The Fund reserves the right to invest up to 5% of its
portfolio in "second tier" securities, which generally are
corporate securities that, at the time of purchase, are
rated by such firms as Standard & Poor's and Moody's in
their second highest short-term major rating categories,
or unrated securities that are considered equivalent by
the Fund's investment manager. Some corporate securities
purchased by the Fund may be restricted securities, that
is, they may be subject to limited resale rights.
The Fund may also invest in repurchase agreements
collateralized by U.S. Treasury securities.
Principal The Fund's principal risks include interest rate risk, net
Investment Risks asset value risk, credit risk, and tax risk. Interest rate
risk involves the possibility that the Fund's yield will
decrease due to a decrease in interest rates or that the
value of the Fund's investments will decline due to an
increase in interest rates. Net asset value risk involves
the possibility that the Fund will be unable to meet its
goal of a constant $1.00 per share. Credit risk involves
the risk that an issuer cannot make timely interest and
principal payments on its debt securities. Tax risk
involves the possibility that the issuer of securities
will fail to comply with certain requirements of the
Internal Revenue Code, which would create adverse tax
consequences.
An investment in
the Fund is not
a deposit of
Fifth Third Bank
or any other
bank and is not
insured or
guaranteed by
the FDIC or any
other government
agency. Although
the Fund seeks
to preserve the
value of your
investment at
$1.00 per share,
it is possible
to lose money by
investing in
this Fund.
6
<PAGE>
Fifth Third Tax Exempt Money Market Fund
[LOGO]
Volatility and Performance Information
The bar chart and
table provide an
indication of the
risks of an
investment in the
Fund by showing
its performance
from year to year
and over time.
The returns
assume that Fund
distributions
have been
reinvested.
Past performance
does not indicate
how the Fund will
perform in the
future.
[GRAPH]
Year-by-Year Total Returns as of 12/31
For Investment A Shares*
1990 5.14%
1991 3.95%
1992 2.42%
1993 1.81%
1994 2.10%
1995 2.95%
1996 2.72%
1997 2.75%
1998 2.60%
1999 2.86%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
<TABLE>
<S> <C> <C>
Best quarter: Q1 1990 1.32%
Worst quarter: Q3 1994 0.45%
Year to Date Return (1/1/00 to 9/30/00): 2.84%
</TABLE>
-------------------------
Average
Annual
Total
Returns
(for the
periods
ended
December
31,
1999)
----------
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Shares* 9/7/83 2.86% 2.77% 2.92% 3.66%
</TABLE>
--------------------------------------------------------------------------------
To obtain current yield information, call 1-888-799-5353.
* The Fund first offered Institutional shares on 9/21/98. The quoted
performance of the Fund for the period prior to 9/21/98 reflects the
performance for Investment A shares, a class of shares of the Fund not
offered by this Prospectus. Investment A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes have
different expenses.
7
<PAGE>
Fifth Third U.S. Treasury Money Market Fund
[LOGO]
Fundamental Stability of principal and current income consistent with
Objective stability of principal.
Principal The Fund manages its portfolio subject to strict SEC
Investment guidelines, which are designed so that the Fund may
Strategies maintain a stable $1.00 per share price, although there is
no guarantee that it will do so. All of the Fund's
investments are expected to mature in the short-term (397
days or less) and the dollar-weighted average portfolio
maturity of the Fund may not exceed 90 days.
The Fund invests at least 95% of its total assets in high-
quality, short-term obligations issued by the U.S.
Treasury, which are guaranteed as to principal and
interest by the U.S. government, and repurchase agreements
collateralized by U.S. Treasury securities.
The Fund reserves the right to invest up to 5% of its
portfolio in "second tier" securities, which generally are
corporate securities that, at the time of purchase, are
rated by such firms as Standard & Poor's and Moody's in
their second highest short-term major rating categories,
or unrated securities that are considered equivalent by
the Fund's investment manager.
Principal The Fund's principal risks include interest rate risk and
Investment Risks net asset value risk. Interest rate risk involves the
possibility that the Fund's yield will decrease due to a
decrease in interest rates or that the value of the Fund's
investments will decline due to an increase in interest
rates. Net asset value risk involves the possibility that
the Fund will be unable to meet its goal of a constant
$1.00 per share.
An investment in
the Fund is not
a deposit of
Fifth Third Bank
or any other
bank and is not
insured or
guaranteed by
the FDIC or any
other government
agency. Although
the Fund seeks
to preserve the
value of your
investment at
$1.00 per share,
it is possible
to lose money by
investing in
this Fund.
8
<PAGE>
Fifth Third U.S. Treasury Money Market Fund
[LOGO]
Volatility and Performance Information
The bar chart and
table provide an
indication of the
risks of an
investment in the
Fund by showing
its performance
from year to year
and over time.
The returns
assume that Fund
distributions
have been
reinvested.
Past performance
does not indicate
how the Fund will
perform in the
future.
[GRAPH]
Year-by-Year Total Returns as of 12/31
For Institutional Shares
1990 7.84%
1991 5.67%
1992 3.39%
1993 2.74%
1994 3.79%
1995 5.57%
1996 5.05%
1997 5.25%
1998 5.12%
1999 4.70%
The bar chart above does not reflect the
impact of any applicable sales charges or
account fees, which would reduce returns.
<TABLE>
<S> <C> <C>
Best quarter: Q3 1990 1.93%
Worst quarter: Q4 1993 0.67%
Year to Date Return (1/1/00 to 9/30/00): 4.36%
</TABLE>
-------------------------
Average
Annual
Total
Returns
(for the
periods
ended
December
31,
1999)
----------
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Past 10 Years Since Inception
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Shares 12/12/88 4.70% 5.14% 4.90% 5.27%
</TABLE>
--------------------------------------------------------------------------------
To obtain current yield information, call 1-888-799-5353.
9
<PAGE>
Shareholder Fees and Fund Expenses
Fee Tables
These tables describe the fees and expenses that you may pay if you buy and
hold Institutional shares of the Funds.
Shareholder fees are paid by you at the time you purchase or sell your shares.
Annual Fund operating expenses are paid out of Fund assets, and are reflected
in the share price. Each Fund's fees and expenses are based upon the Fund's
operating expenses for the fiscal year ended July 31, 2000.
Shareholder Fees
<TABLE>
<CAPTION>
Money Market Funds--Fee Table
Fifth Third Fifth Third Fifth Third Fifth Third
Government Prime Money Tax Exempt U.S. Treasury
Money Market Market Money Market Money Market
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
Maximum Sales Charge
(Load) Imposed
on Purchases None None None None
------------------------------------------------------------------------------
Maximum Sales Charge
(Load) Imposed
on Reinvested Dividends None None None None
------------------------------------------------------------------------------
Maximum Deferred Sales
Load None None None None
------------------------------------------------------------------------------
Annual Fund Operating
Expenses
(as a percentage of
average net assets)
Management fees 0.40% 0.40% 0.50% 0.40%
------------------------------------------------------------------------------
Distribution (12b-1) fees None None None None
------------------------------------------------------------------------------
Other expenses 0.24% 0.22% 0.33% 0.22%
------------------------------------------------------------------------------
Total Annual Fund
Operating Expenses/1/ 0.64% 0.62% 0.83% 0.62%
</TABLE>
---------------------------------------------------------
---------------------------------------------------------
/1/During the last fiscal year Fifth Third Bank waived the following Management
Fees: 0.08% for the Prime Money Market Fund, 0.50% for the Tax Exempt Money
Market Fund, and 0.14% for the U.S. Treasury Money Market Fund. BISYS waived
the following Distribution (12b-1) Fees and/or Administration Fees: 0.07% for
the Government Money Market Fund, 0.02% for the Prime Money Market Fund,
0.02% for the Tax Exempt Money Market Fund, and 0.10% for the U.S. Treasury
Money Market Fund. Therefore, Total Annual Fund Operating Expenses after fee
waivers were as follows: 0.57% for the Government Money Market Fund, 0.52%
for the Prime Money Market Fund, 0.31% for the Tax Exempt Money Market Fund,
and 0.38% for the U.S. Treasury Money Market Fund. These waivers may be
discontinued at any time.
10
<PAGE>
Shareholder Fees and Fund Expenses
Expense Examples
Use the tables below to compare fees and expenses with the fees and expenses of
other mutual funds. The tables illustrate the amount of fees and expenses you
and the Fund would pay, assuming a $10,000 initial investment, 5% annual
return, payment of maximum sales charges, and no changes in the Fund's
operating expenses. Amounts are presented assuming redemption at the end of
each period. Because these examples are hypothetical and for comparison only,
your actual costs may be different.
Money Market Funds
<TABLE>
<CAPTION>
Fifth Third Government 1 3 5 10
Money Market Fund Year Years Years Years
------------------------------------------------
<S> <C> <C> <C> <C>
Institutional Shares $ 65 $ 205 $ 357 $798
------------------------------------------------
Fifth Third Prime 1 3 5 10
Money Market Fund Year Years Years Years
------------------------------------------------
Institutional Shares $ 63 $ 199 $ 346 $774
------------------------------------------------
Fifth Third Tax Exempt 1 3 5 10
Money Market Fund Year Years Years Years
------------------------------------------------
Institutional Shares $ 85 $ 265 $ 460 $1,025
------------------------------------------------
Fifth Third U.S. Treasury 1 3 5 10
Money Market Fund Year Years Years Years
------------------------------------------------
Institutional Shares $ 63 $ 199 $ 346 $774
------------------------------------------------
</TABLE>
11
<PAGE>
Additional Information About the Funds' Investments
Investment Practices
The Funds invest in a variety of securities and employ a number of investment
techniques. Each security and technique involves certain risks. The following
table describes the securities and techniques the Funds use, as well as the
main risks they pose. Equity securities are subject mainly to market risk.
Fixed income securities are primarily influenced by market, credit and
prepayment risks, although certain securities may be subject to additional
risks. Following the table is a more complete discussion of risk. You may also
consult the Statement of Additional Information for additional details
regarding these and other permissible investments.
<TABLE>
<CAPTION>
FUND NAME FUND CODE
--------- ---------
<S> <C> <C>
Government Money Market
Fund................... 1
Prime Money Market
Fund................... 2
Tax Exempt Money Market
Fund................... 3
U.S. Treasury Money
Market Fund............ 4
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
---------- --------- ---------
<S> <C> <C>
Bankers' Acceptances: 2, 3 Credit
Bills of exchange or Liquidity
time drafts drawn on Market
and accepted by a Interest Rate
commercial bank.
Maturities are
generally six months or
less.
Bonds: Interest-bearing Market Credit Interest
or discounted Rate
securities that
obligate the issuer to
pay the bondholder a
specified sum of money,
usually at specific
intervals, and to repay
the principal amount of
the loan at maturity.
Corporate: 2
Government: 1-3
Certificates of Deposit: 2, 3 Market
Negotiable instruments Credit
with a stated maturity. Liquidity
Interest Rate
Commercial Paper: 2, 3 Credit
Secured and unsecured Liquidity
short-term promissory Market
notes issued by Interest Rate
corporations and other
entities. Maturities
generally vary from a
few days to nine
months.
Derivatives: Instruments 1, 2-4 Management
whose value is derived Market
from an underlying Credit
contract, index or Liquidity
security, or any Leverage
combination thereof, Interest Rate
including futures,
options (e.g., put and
calls), options on
futures, swap
agreements, and some
mortgage-backed
securities.
Futures and Related 1 Management
Options: A contract Market
providing for the Credit
future sale and Liquidity
purchase of a specified Leverage
amount of a specified
security, class of
securities, or an index
at a specified time in
the future and at a
specified price.
</TABLE>
12
<PAGE>
Additional Information About the Funds' Investments
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
---------- --------- ---------
<S> <C> <C>
Illiquid Securities: Securities which may be 1, 2-4 Liquidity
difficult to sell at an acceptable price. Market
Investment Company Securities: Shares of 2-4 Market
investment companies. These investment companies
may include money market funds of Fifth Third
Funds and shares of other registered investment
companies for which the Adviser to a Fund or any
of their affiliates serves as investment adviser,
administrator or distributor.
Investment Grade Bonds: Interest-bearing or 1-3 Market
discounted government or corporate securities Credit
that obligate the issuer to pay the bondholder a
specified sum of money, usually at specific
intervals, and to repay the principal amount of
the loan at maturity. Investment grade bonds are
those rated BBB or better by S&P or Baa or better
by Moody's or similarly rated by other nationally
recognized statistical rating organizations, or,
if not rated, determined to be of comparable
quality by the Adviser.
Money Market Instruments: Investment-grade, U.S. 1, 2-4 Market
dollar denominated debt securities that have Credit
remaining maturities of one year or less. These
securities may include U.S. government
obligations, commercial paper and other short-
term corporate obligations, repurchase agreements
collateralized with U.S. government securities,
certificates of deposit, bankers' acceptances,
and other financial institution obligations.These
securities may carry fixed or variable interest
rates.
Municipal Securities: Securities issued by a state 3 Market
or political subdivision to obtain funds for Credit
various public purposes. Municipal securities Political
include (a) governmental lease certificates of Tax
participation issued by state or municipal Regulatory
authorities where payment is secured by
installment payments for equipment, buildings, or
other facilities being leased by the state or
municipality; (b) government lease certificates
purchased by the Fund will not contain
nonappropriation clauses; (c) municipal notes and
tax-exempt commercial paper; (d) serial bonds;
(e) tax anticipation notes sold to finance
working capital needs of municipalities in
anticipation of receiving taxes at a later date;
(f) bond anticipation notes sold in anticipation
of the issuance of long-term bonds in the future;
(g) pre-refunded municipal bonds whose timely
payment of interest and principal is ensured by
an escrow of U.S. government obligations; and (h)
general obligation bonds.
</TABLE>
13
<PAGE>
Additional Information About the Funds' Investments
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
---------- --------- ---------
<S> <C> <C>
Participation Interests: Interests in bank loans 3 Interest Rate
made to corporations. Credit
Liquidity
Repurchase Agreements: The purchase of a security 1, 2-4 Market
and the simultaneous commitment to return the Leverage
security to the seller at an agreed upon price
on an agreed upon date. This is treated as a
loan.
Restricted Securities: Securities not registered 1, 2-4 Liquidity
under the Securities Act of 1933, such as Market
privately placed commercial paper and Rule 144A
securities.
Reverse Repurchase Agreement: The sale of a 1, 2-4 Market
security and the simultaneous commitment to buy Leverage
the security back at an agreed upon price on an
agreed upon date. This is treated as a borrowing
by a Fund.
Securities Lending: The lending of up to 33 1/3% 1, 2, 3 Market
of the Fund's total assets. In return the Fund Leverage
will receive cash, other securities, and/or Liquidity
letters of credit. Credit
Time Deposits: Non-negotiable receipts issued by 2, 3 Liquidity
a bank in exchange for the deposit of funds. Credit
Market
U.S. Government Agency Securities: Securities 1, 2-4 Interest Rate
issued by agencies and instrumentalities of the Credit
U.S. government. These include Ginnie Mae,
Fannie Mae, and Freddie Mac.
U.S. Treasury Obligations: Bills, notes, bonds, 1, 2-4 Interest Rate
separately traded registered interest and
principal securities, and coupons under bank
entry safekeeping.
Variable and Floating Rate Instruments: 2, 3 Credit
Obligations with interest rates which are reset Liquidity
daily, weekly, quarterly or some other period Market
and which may be payable to the Fund on demand.
When-Issued and Delayed Delivery Transactions: 1, 2-4 Market
Purchase or contract to purchase securities at a Leverage
fixed price for delivery at a future date. Under Liquidity
normal market conditions, when-issued purchases Credit
and forward commitments will not exceed 20% of
the value of a Fund's total assets.
</TABLE>
14
<PAGE>
Additional Information About the Funds' Investments
<TABLE>
<CAPTION>
INSTRUMENT FUND CODE RISK TYPE
---------- --------- ---------
<S> <C> <C>
Yankee Bonds and Similar Debt Obligations: U.S. 1, 2-4 Market
dollar denominated bonds issued by foreign Credit
corporations or governments. Sovereign bonds Interest Rate
are those issued by the government of a foreign
country. Supranational bonds are those issued
by supranational entities, such as the World
Bank and European Investment Bank. Canadian
bonds are those issued by Canadian provinces.
Zero-Coupon Debt Obligations: Bonds and other 1-3 Credit
debt that pay no interest, but are issued at a Market
discount from their value at maturity. When Interest Rate
held to maturity, their entire return equals
the difference between their issue price and
their maturity value.
</TABLE>
Investment Risks
Below is a more complete discussion of the types of risks inherent in the
securities and investment techniques listed above as well as those risks
discussed in "Principal Investment Risks." Because of these risks, the value of
the securities held by the Funds may fluctuate, as will the value of your
investment in the Funds. Certain investments and Funds are more susceptible to
these risks than others.
Credit Risk. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade
securities. The price of a security can be adversely affected prior to actual
default as its credit status deteriorates and the probability of default rises.
Interest Rate Risk. The risk that debt prices overall will decline over short
or even long periods due to rising interest rates. A rise in interest rates
typically causes a fall in values, while a fall in rates typically causes a
rise in values. Interest rate risk should be modest for shorter-term
securities, moderate for intermediate-term securities, and high for longer-term
securities. Generally, an increase in the average maturity of the Fund will
make it more sensitive to interest rate risk. The market prices of securities
structured as zero coupon are generally affected to a greater extent by
interest rate changes. These securities tend to be more volatile than
securities which pay interest periodically.
Leverage Risk. The risk associated with securities or practices that multiply
small index or market movements into large changes in value. Leverage is often
associated with investments in derivatives, but also may be embedded directly
in the characteristics of other securities.
Hedged. When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position that the
Fund also holds, any loss generated by the derivative should be
substantially offset by gains on the hedged investment, and vice versa.
Hedges are sometimes subject to imperfect matching between the derivative
and underlying security, and there can be no assurance that a Fund's hedging
transactions will be effective.
Speculative. To the extent that a derivative is not used as a hedge, the
Fund is directly exposed to the risks of that derivative. Gains or losses
from speculative positions in a derivative may be substantially greater than
the derivatives original cost.
Liquidity Risk. The risk that certain securities may be difficult or impossible
to sell at the time and the price that would normally prevail in the market.
The seller may have to lower the price, sell other securities instead or forego
an investment opportunity, any of which could have a negative effect on Fund
management or performance. This includes the risk of missing out on an
investment opportunity because the assets necessary to take advantage of it are
tied up in less advantageous investments.
15
<PAGE>
Additional Information About the Funds' Investments
Management Risk. The risk that a strategy used by a Fund's portfolio manager
may fail to produce the intended result. This includes the risk that changes in
the value of a hedging instrument will not match those of the asset being
hedged. Incomplete matching can result in unanticipated risks.
Market Risk. The risk that the market value of a security may move up and down,
sometimes rapidly and unpredictably. These fluctuations may cause a security to
be worth less than the price originally paid for it, or less than it was worth
at an earlier time. Market risk may affect a single issuer, industrial sector
of the economy or the market as a whole. There is also the risk that the
current interest rate may not accurately reflect existing market rates. For
fixed income securities, market risk is largely, but not exclusively,
influenced by changes in interest rates. A rise in interest rates typically
causes a fall in values, while a fall in rates typically causes a rise in
values. Finally, key information about a security or market may be inaccurate
or unavailable. This is particularly relevant to investments in foreign
securities.
Political Risk. The risk of losses attributable to unfavorable governmental or
political actions, seizure of foreign deposits, changes in tax or trade
statutes, and governmental collapse and war.
Regulatory Risk. The risk associated with Federal and state laws which may
restrict the remedies that a lender has when a borrower defaults on loans.
These laws include restrictions on foreclosures, redemption rights after
foreclosure, Federal and state bankruptcy and debtor relief laws, restrictions
on "due on sale" clauses, and state usury laws.
Tax Risk.The risk that the issuer of the securities will fail to comply with
certain requirements of the Internal Revenue Code, which would cause adverse
tax consequences.
16
<PAGE>
Fund Management
Investment Advisor
Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, serves as
investment advisor to all Funds.
As of September 30, 2000, Fifth Third Bank had approximately $22.2 billion of
assets under management, including approximately $5.3 billion of assets of
Fifth Third Funds.
The management fees paid by the Funds, after voluntary fee waivers, for the
fiscal year ended July 31, 2000 were as follows:
<TABLE>
<CAPTION>
As a percentage of
average net assets
---------------------------------------------------------------
<S> <C>
Fifth Third Government Money Market Fund 0.40%
---------------------------------------------------------------
Fifth Third Prime Money Market Fund 0.38%
---------------------------------------------------------------
Fifth Third Tax Exempt Money Market Fund 0.00%
---------------------------------------------------------------
Fifth Third U.S. Treasury Money Market Fund 0.26%
---------------------------------------------------------------
</TABLE>
Fund Administration
BISYS Fund Services Limited Partnership ("BISYS") serves as the administrator
of the Funds. The administrator generally assists in all aspects of the Funds'
administration and operation, including providing the Funds with certain
administrative personnel and services necessary to operate the Funds, such as
legal and accounting services. BISYS provides these at an annual rate as
specified below.
<TABLE>
<CAPTION>
Maximum Average Aggregate Daily
Administrative Fee Net Assets of the Trust
------------------ -----------------------
<S> <C>
0.20% of the first $1 billion
0.18% of the next $1 billion
0.17% in excess of $2 billion
</TABLE>
BISYS may periodically waive all or a portion of its administrative fee which
will cause the yield of a Fund to be higher than it would otherwise be in the
absence of such a waiver.
Pursuant to a separate agreement with BISYS, Fifth Third Bank performs sub-
administrative services on behalf of each Fund, including providing certain
administrative personnel and services necessary to operate the Funds. Fifth
Third Bank receives a fee from BISYS for providing sub-administrative services
at an annual rate of 0.035% of the average aggregate daily net assets of the
Funds.
17
<PAGE>
Shareholder Information
Purchasing and Selling Fund Shares
Pricing Fund Shares
The price of a Fund's shares is based on the Fund's Net Asset Value (NAV). The
value of each portfolio instrument held by the Funds is determined by using
amortized cost.
Fifth Third Tax Exempt Money Market Fund calculates its NAV at 9 a.m. Fifth
Third Government Money Market Fund calculates its NAV at 11:00 a.m. Each of
Fifth Third Prime Money Market Fund and Fifth Third U.S. Treasury Money Market
Fund calculates its NAV at 1 p.m. All times are Cincinnati time. Each Fund's
NAV is calculated each day the New York Stock Exchange is open for regular
trading and the Federal Reserve Bank of Cleveland is open for business. The
Funds will be closed on those days that Fifth Third Bank is closed and on the
following holidays: New Year's Day, Martin Luther King Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans'
Day, Thanksgiving Day and Christmas.
Purchasing and Adding to Your Shares
You may purchase shares on days when the New York Stock Exchange is open for
regular trading and the Federal Reserve Bank of Cleveland is open for business.
Your purchase price will be the next NAV after your purchase order, completed
application and full payment have been received by the Funds or its transfer
agent. All orders must be received by the Funds or its transfer agent on the
following schedule (Cincinnati time) in order to receive that day's NAV: Fifth
Third Tax Exempt Money Market Fund--9 a.m.; Fifth Third Government Money Market
Fund--11 a.m.; Fifth Third Prime Money Market Fund and Fifth Third U.S.
Treasury Money Market Fund--1 p.m.
Institutional Shares only may be purchased through the Trust and Investment
Department of Fifth Third Bank, Fifth Third Securities, Inc.--Institutional
Investment Division, qualified employee retirement plans subject to minimum
requirements that may be established by the distributor of Fund shares, or
broker-dealers, investment advisers, financial planners or other financial
institutions which have an agreement with Fifth Third Bank to place trades for
themselves or their clients for a fee. In order to purchase Institutional
shares through one of those entities, you must have an account with it. That
account will be governed by its own rules and regulations, which may be more
stringent than the rules and regulations governing an investment in the Funds,
and you should consult your account documents for full details. Your shares in
the Funds may be held in an omnibus account in the name of that institution.
The entity through which you are purchasing your shares is responsible for
transmitting the order to the Funds, and it may have an earlier cut-off time
for purchase requests. Consult that entity for specific information. If your
purchase order has been received by the Funds prior to the time designated by
the Funds for receiving orders, you will receive the dividend declared for that
day.
Minimum
Investments
The minimum initial investment in Institutional Shares of
the Funds offered by this Prospectus is $1,000. Subsequent
investments must be in amounts of at least $50. An
institutional investor's minimum investment will be
calculated by combining all accounts it maintains with the
Fifth Third Funds.
All purchases must be in U.S. dollars. A fee may be
charged for any checks that do not clear. Third-party
checks are not accepted.
For details, call 1-888-799-5353 or write to: Fifth Third
Funds, c/o Fifth Third Bank, 38 Fountain Square Plaza,
Cincinnati, Ohio 45263.
The Funds may reject a purchase order for any reason.
18
<PAGE>
Shareholder Information
Avoid 31% Tax Withholding
Each Fund is required to withhold 31% of taxable dividends, capital gains
distributions and redemptions paid to any shareholder who has not provided the
Fund with his or her certified Taxpayer Identification Number (your Social
Security Number for individual investors) in compliance with IRS rules. To
avoid this withholding, make sure you provide your correct Tax Identification
Number.
Selling Your Shares
You may sell your shares on days when the New York Stock Exchange is open for
regular trading and the Federal Reserve Bank of Cleveland is open for business.
Your sales price will be the next NAV after your sell order is received by the
Funds, its transfer agent, or your investment representative. All orders must
be received by the Fund or its transfer agent prior to the time the Fund
calculates its NAV in order to receive that day's NAV. If your order has been
received by the Fund prior to the time the Fund calculates its NAV, and your
shares have been sold you will not receive the dividend declared for that day.
Normally you will receive your proceeds within a week after your request is
received.
In order to sell your shares, call the Trust and Investment Department at Fifth
Third Bank, Fifth Third Securities, Inc.--Institutional Investment Division,
the sponsor of your qualified employee retirement plan or the broker-dealer,
investment adviser, financial planner or other institution through which you
purchased your shares.
Postponement of Redemption Payments
Any Fund may delay sending to you redemption proceeds for up to 7 days, or
longer if permitted by the SEC. If you experience difficulty making a telephone
redemption during periods of drastic economic or market change, you can send
your request to: Fifth Third Funds, 38 Fountain Square Plaza, Cincinnati, Ohio
45263.
Closing of Small Accounts
If your account falls below $1,000 because of redemptions, a Fund may ask you
to increase your balance. If it is still below the minimum after 30 days, the
Fund may close your account and send you the proceeds at the current NAV.
19
<PAGE>
Shareholder Information
Exchanging Your Shares
You may exchange Instructions for Exchanging Shares
your Fund shares
for Institutional
shares of any
other Fifth Third
Fund. No
transaction fees
are charged for
exchanges. Be
sure to read the
Prospectus
carefully of any
Fund into which
you wish to
exchange shares.
To exchange your shares, call the Trust and Investment
Department at Fifth Third Bank, Fifth Third Securities,
Inc.--Institutional Investment Division, the sponsor of
your qualified employee retirement plan or the broker-
dealer, investment adviser, financial planner or other
institution through which you purchased your shares for
exchange procedures or call 1-888-799-5353.
Notes on Exchanges
To prevent disruption in the management of the Funds,
market timing strategies and frequent exchange activity
may be limited by the Funds. Although not anticipated,
the Funds may reject exchanges, or change or terminate
rights to exchange shares at any time.
You must meet the
minimum
investment
requirements for
the Fund into
which you are
exchanging.
Exchanges from
one Fund to
another are
taxable for
investors subject
to federal or
state income
taxation.
Shares of the new Fund must be held under the same
account names with the same registration and tax
identification numbers, as the shares of the old Fund.
The Exchange Privilege may be changed or eliminated at
any time.
The exchange privilege is available only in states where
shares of the Funds may be sold.
All exchanges are based on the relative net asset value
next determined after the exchange order is received by
the Funds.
Dividends and Capital Gains
All dividends and capital gains will be automatically reinvested unless you
request otherwise. You can receive them in cash or by electronic funds transfer
to your bank account if you are not a participant in an IRA account or in a tax
qualified plan. There are no sales charges for reinvested distributions.
Dividends, if any, are declared daily and paid monthly. Capital gains, if any,
are distributed at least annually. No Fund expects to pay any capital gains.
20
<PAGE>
Shareholder Information
Taxation
Federal Income Tax
Each Fund expects to distribute substantially all of its investment income
(including net capital gains and tax-exempt interest income, if any) to its
shareholders. Unless otherwise exempt or as discussed below in the case of
Fifth Third Tax Exempt Money Market Fund, shareholders are required to pay
federal income tax on any dividends and other distributions, including capital
gains distributions received. This requirement applies whether dividends and
other distributions are received in cash or as additional shares. Distributions
are taxable to shareholders even if they are paid from income or gains earned
by a Fund before a shareholder's investment (and thus were included in the
price paid).
Any gain from the sale or exchange of Fund shares will generally also be
subject to tax.
This is a brief summary of certain federal income tax consequences relating to
an investment in the Funds, and shareholders are urged to consult their own tax
advisors regarding the taxation of their investments under federal, state and
local laws.
Additional Tax Information for Fifth Third Tax Exempt Money Market Fund
Dividends derived from interest earned on municipal securities, the interest on
which is excluded from gross income for federal income tax purposes, including
insurance proceeds representing maturing interest on defaulted municipal
securities the interest on which would be so excluded, constitute "exempt-
interest dividends" when designated as such by Fifth Third Tax Exempt Money
Market Fund and will be excluded from gross income for federal income tax
purposes. However, interest excluded from gross income for federal income tax
purposes that is received by individuals and corporations on certain municipal
obligations issued on or after August 8, 1986, to finance certain private
activities will be treated as tax preference items in computing the alternative
minimum tax. Exempt interest dividends received by shareholders from Fifth
Third Tax Exempt Money Market Fund will also be treated as tax preference items
in computing the alternative minimum tax to the extent, if any, that
distributions by the Fund are attributable to interest it earned on such
obligations. Also, a portion of all other interest excluded from gross income
for federal income purposes earned by a corporation may be subject to the
alternative minimum tax.
Distributions, if any, derived from capital gains will generally be taxable to
shareholders as capital gains for federal income tax purposes to the extent so
designated by Fifth Third Tax Exempt Money Market Fund. Dividends, if any,
derived from sources other than interest excluded from gross income for federal
income tax purposes and capital gains will be taxable to shareholders as
ordinary income for federal income tax purposes whether or not reinvested in
additional shares. Fifth Third Tax Exempt Money Market Fund anticipates that
substantially all of its dividends will be excluded from gross income for
federal income tax purposes and will not be a preference item for individuals
for the purposes of the federal alternative minimum tax.
If a shareholder receives an exempt-interest dividend with respect to any share
and such share is held by the shareholder for six months or less, any loss on
the sale or exchange of such share will be disallowed to the extent of the
amount of such exempt-interest dividend. In certain limited instances, the
portion of Social Security or Railroad Retirement benefits that may be subject
to federal income taxation may be affected by the amount of tax-exempt interest
income, including exempt-interest dividends, received by a shareholder.
Under state or local law, distributions of investment income may be taxable to
shareholders as dividend income even though a substantial portion of such
distribution may be derived from interest excluded from gross income for
federal income tax purposes that, if received directly, would be exempt from
such income taxes. Fifth Third Tax Exempt Money Market Fund will report to its
shareholders annually after the close of its taxable year the percentage and
source, on a state-by-state basis, of interest income earned on municipal
securities held by the Fund during the preceding year. State laws differ on
this issue, and shareholders are urged to consult their own tax advisors
regarding the taxation of their investments under state and local tax laws.
21
<PAGE>
Financial Highlights
The financial highlights table is intended to help you understand the Funds'
financial performance for the past five years or the period of each Fund's
operations, if shorter. Certain information reflects financial results for a
single Fund share. The total returns in the tables represent the rate that an
investor would have earned or lost on an investment in a Fund (assuming
reinvestment of all dividends and distributions). The information for the
period ended July 31, 2000 has been audited by Arthur Andersen LLP, whose
report, along with the Funds' financial statements, are included in the Funds'
annual report, which is available upon request. The information for periods
ended prior to July 31, 2000 has been audited by Ernst & Young LLP (except for
the Tax Exempt Money Market Fund for the period prior to September 30, 1998,
which was audited by other independent accountants).
Fifth Third Government Money Market Fund
Institutional Shares
<TABLE>
<CAPTION>
Year Ended July 31,
------------------------------------------------
2000 1999 1998 1997 1996
Per share data -------- -------- -------- -------- --------
<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 5.31% 4.60% 5.13% 5.01% 5.11%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratios to Average Net Assets:
Net Expenses 0.57% 0.56% 0.52% 0.51% 0.50%
Net investment income 5.17% 4.52% 5.02% 4.90% 4.99%
Expense waiver/reimbursement
(a) 0.07% 0.11% 0.12% 0.09% 0.07%
--------------------------------------------------------------------------------
Supplemental data
Net assets, end of period
(000s) $211,790 $252,987 $221,034 $162,543 $132,326
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
(a) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
22
<PAGE>
Financial Highlights
Institutional Shares
Fifth Third Prime Money Market Fund
<TABLE>
<CAPTION>
Year Ended July 31,
------------------------------------------------
2000 1999 1998 1997 1996
Per share data -------- -------- -------- -------- --------
<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 5.53% 4.76% 5.25% 5.11% 5.20%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratios to Average Net Assets:
Net Expenses 0.52% 0.52% 0.52% 0.52% 0.49%
Net investment income 5.44% 4.66% 5.13% 4.99% 5.07%
Expense waiver/reimbursement
(a) 0.10% 0.11% 0.12% 0.09% 0.08%
--------------------------------------------------------------------------------
Supplemental data
Net assets, end of period
(000s) $508,414 $348,366 $368,348 $341,827 $300,821
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
(a) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
23
<PAGE>
Financial Highlights
Fifth Third Tax Exempt Money Market Fund
Institutional Shares
<TABLE>
<CAPTION>
Year Ended Period Ended Period Ended
July 31, July 31, September 30,
2000 1999* 1998**
Per share data ---------- ------------ -------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
-------------------------------------------------------------------------------
Income from investment operations
Net investment income 0.04 0.03 --
-------------------------------------------------------------------------------
Total from investment operations 0.04 0.03 --
-------------------------------------------------------------------------------
Less distributions
Distributions to shareholders from net
investment income (0.04) (0.03) --
-------------------------------------------------------------------------------
Total distributions (0.04) (0.03) --
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net asset value, end of the period $ 1.00 $ 1.00 $ 1.00
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total return 3.46% 2.24%(b) 2.74%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratios to Average Net Assets:
Net Expenses 0.31% 0.61%(a) 0.63%(a)
Net investment income 3.51% 2.66%(a) 3.09%(a)
Expense waiver/reimbursement (c) 0.52% 0.33%(a) -- (a)
-------------------------------------------------------------------------------
Supplemental data
Net assets, end of period (000s) $100,995 $17,682 $7,953
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
</TABLE>
* 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.
(a) Annualized.
(b) Not annualized.
(c) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
24
<PAGE>
Financial Highlights
Fifth Third U.S. Treasury Money Market Fund
Institutional Shares
<TABLE>
<CAPTION>
Year Ended July 31,
------------------------------------------------
2000 1999 1998 1997 1996
Per share data -------- -------- -------- -------- --------
<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 0.06 0.05 0.05 0.05 0.05
--------------------------------------------------------------------------------
Total from investment
operations 0.06 0.05 0.05 0.05 0.05
--------------------------------------------------------------------------------
Less distributions
Distributions to shareholders
from net investment income (0.06) (0.05) (0.05) (0.05) (0.05)
--------------------------------------------------------------------------------
Total distributions (0.06) (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 5.40% 4.68% 5.31% 5.11% 5.24%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratios to Average Net Assets:
Net Expenses 0.38% 0.38% 0.38% 0.42% 0.43%
Net investment income 5.26% 4.57% 5.19% 5.00% 5.10%
Expense waiver/reimbursement
(a) 0.24% 0.24% 0.24% 0.17% 0.12%
--------------------------------------------------------------------------------
Supplemental data
Net assets, end of period
(000s) $871,657 $856,286 $876,089 $539,087 $489,228
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
(a) This voluntary expense decrease is reflected in both the net expense and
net investment income ratios shown above.
25
<PAGE>
Addresses
[CAPTION]
<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Fifth Third Government Money Market Fund Fifth Third Funds
Fifth Third Prime Money Market Fund c/o Fifth Third Bank
Fifth Third Tax Exempt Money Market Fund 38 Fountain Square Plaza
Fifth Third U.S. Treasury 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, Administrator, and Sub-Transfer Agent BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219
------------------------------------------------------------------------------------------------------------------------------------
Independent Auditors Arthur Andersen LLP
Suite 1500
425 Walnut Street
Cincinnati, Ohio 45202
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
The following additional information is available to you upon request and
without charge.
Annual/Semiannual Reports (Reports):
The Funds' annual and semi-annual reports to shareholders contain additional
information on the Funds' investments.
Statement of Additional Information (SAI): The SAI provides more detailed
information about the Funds, including their operations and investment policies.
It is incorporated by reference and is legally considered a part of this
prospectus.
You can get free copies of Annual and Semi-Annual Reports, the SAI, prospectuses
of other Fifth Third Funds, or request other information and discuss your
questions about the Funds by contacting a broker or other financial institution
that sells the Funds. In addition, you may contact the Funds at:
Fifth Third Funds
c/o Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Telephone: 1-888-799-5353
Internet: http://www.53.com*
*The Funds' website is not part of this Prospectus.
You can review the Annual and Semi-Annual Reports and the SAI at the Public
Reference Room of the Securities and Exchange Commission. You can get copies:
. For a fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-0102 or calling 1-202-942-8090, or by electronic
request, by e-mailing the SEC at the following address: [email protected].
. At no charge from the Commission's Website at http://www.sec.gov.
[LOGO] Fifth Third Funds
PROSP-IMM 11/00 Investment Company Act file no. 811-5669.
<PAGE>
FIFTH THIRD FUNDS
(formerly Fountain Square Funds)
Combined Statement of Additional Information
November 30, 2000
This Combined Statement of Additional Information (the "SAI") relates to
the Prospectuses following portfolios (the "Funds") of Fifth Third Funds (the
"Trust") dated November 30, 2000:
. Fifth Third Quality Growth Fund
. Fifth Third Pinnacle Fund
. Fifth Third Equity Income Fund
. Fifth Third Balanced Fund
. Fifth Third Mid Cap Fund
. Fifth Third International Equity Fund
. Fifth Third Technology Fund
. Fifth Third Bond Fund For Income
. Fifth Third Quality Bond Fund
. Fifth Third U.S. Government Securities Fund
. Fifth Third Municipal Bond Fund
. Fifth Third Ohio Tax Free Bond Fund
. Fifth Third Government Money Market Fund
. Fifth Third Ohio Tax Exempt Money Market Fund
. Fifth Third Prime Money Market Fund
. Fifth Third Tax Exempt Money Market Fund
. Fifth Third U.S. Treasury Money Market Fund
This Statement of Additional Information is incorporated in its entirety
into these Prospectuses. This SAI should be read with the Prospectuses of the
Funds.
To receive a copy of any Prospectus, you may write the Trust or call toll-free
(888) 799-5353. This SAI is not a prospectus.
Fifth Third Funds
c/o Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
GENERAL INFORMATION ABOUT THE TRUST........................................ 1
INVESTMENT OBJECTIVE AND POLICIES OF THE FUNDS............................. 3
Investment Objectives..................................................... 3
Investment Limitations.................................................... 3
Fundamental Limitations................................................... 3
Non-fundamental Limitations............................................... 5
Fundamental Limitations................................................... 6
Non-Fundamental Limitations............................................... 8
All Funds except Stock and Bond Funds..................................... 9
ADDITIONAL RISKS AND INFORMATION CONCERNING CERTAIN INVESTMENT TECHNIQUES.. 9
Types of Investments...................................................... 9
Portfolio Turnover........................................................ 21
Investment Risks (Ohio Tax Free Fund and Ohio Money Market Fund).......... 21
Special Restriction on Fifth Third Government Money Market Fund........... 22
Special Restriction on Fifth Third U.S. Treasury Money Market Fund........ 22
FIFTH THIRD FUNDS MANAGEMENT............................................... 23
Officers and Trustees..................................................... 23
Trust Ownership........................................................... 23
Trustee Liability......................................................... 32
Codes of Ethics........................................................... 32
INVESTMENT ADVISORY SERVICES............................................... 32
Investment Advisors to the Trust........................................... 32
Advisory Fees............................................................. 34
Sub-advisor............................................................... 34
Sub-advisory Fees......................................................... 34
Administrative Services................................................... 34
Custody of Fund Assets.................................................... 35
Transfer Agent and Dividend Disbursing Agent.............................. 36
BROKERAGE TRANSACTIONS..................................................... 37
PURCHASING SHARES.......................................................... 39
Distribution Plan and Administrative Services Agreement
(Investment C Shares Only)........................................... 39
Purchases with Proceeds from Redemptions of Unaffiliated Mutual Fund
Shares................................................................ 40
Conversion of Investment B Shares to Investment A Shares.................. 41
Conversion to Federal Funds............................................... 41
Exchanging Securities for Fund Shares..................................... 41
Payments to Dealers....................................................... 41
REDEEMING SHARES........................................................... 42
Redemption in Kind........................................................ 42
Postponement of Redemptions............................................... 43
DETERMINING ASSET VALUE.................................................... 43
Determining Market Value of Security...................................... 43
Valuing Municipal Bonds................................................... 44
Use of Amortized Cost..................................................... 44
Monitoring Procedures..................................................... 44
Investment Restrictions................................................... 44
Trading in Foreign Securities............................................. 45
TAX STATUS................................................................. 45
Foreign Taxes............................................................. 50
PERFORMANCE INFORMATION.................................................... 50
Total Return.............................................................. 50
Tax-Equivalent Yield...................................................... 53
Tax Equivalency Table..................................................... 53
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
PERFORMANCE COMPARISONS..................................................... 54
FINANCIAL STATEMENTS........................................................ 57
APPENDIX.................................................................... 59
</TABLE>
ii
<PAGE>
GENERAL INFORMATION ABOUT THE TRUST
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated September 15, 1988.
The Trust's Declaration of Trust permits the Trust to offer separate series
of shares of beneficial interest representing interests in separate portfolios
of securities, and it permits the Trust to offer separate classes of each such
series. Currently, the Trust offers shares of the following Funds and shares of
the following classes of each Fund:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Funds Classes
-------------------------------------------------------------------------------------------------------------------------
Investment A Investment B Investment C Institutional
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fifth Third Quality Growth Fund ("Quality X X X X
Growth Fund")
-------------------------------------------------------------------------------------------------------------------------
Fifth Third Equity Income Fund ("Equity X X X X
Income Fund")
-------------------------------------------------------------------------------------------------------------------------
Fifth Third Pinnacle Fund ("Pinnacle Fund") X X X X
-------------------------------------------------------------------------------------------------------------------------
Fifth Third Balanced Fund ("Balanced Fund") X X X X
-------------------------------------------------------------------------------------------------------------------------
Fifth Third Mid Cap Fund ("Mid Cap Fund") X X X X
-------------------------------------------------------------------------------------------------------------------------
Fifth Third International Equity Fund X X X X
("International Equity Fund")
-------------------------------------------------------------------------------------------------------------------------
Fifth Third Bond Fund For Income ("Bond X X* X X
Fund Income")
-------------------------------------------------------------------------------------------------------------------------
Fifth Third Quality Bond Fund ("Quality X X X X
Bond Fund")
-------------------------------------------------------------------------------------------------------------------------
Fifth Third U.S. Government Securities Fund X X* X X
("Government Securities Fund")
-------------------------------------------------------------------------------------------------------------------------
Fifth Third Municipal Bond Fund ("Municipal X X* X X
Bond Fund")
-------------------------------------------------------------------------------------------------------------------------
Fifth Third Ohio Tax Free Bond Fund ("Ohio X X X X
Tax Free Fund")
-------------------------------------------------------------------------------------------------------------------------
Fifth Third Technology Fund ("Technology X X X X
Fund")
-------------------------------------------------------------------------------------------------------------------------
Fifth Third Ohio Tax Exempt Money Market X* X*
Fund ("Ohio Money Market Fund")
-------------------------------------------------------------------------------------------------------------------------
Fifth Third Government Money Market Fund X X
("Government Money Market Fund")
-------------------------------------------------------------------------------------------------------------------------
Fifth Third Prime Money Market Fund ("Prime X X X
Money Market Fund")
-------------------------------------------------------------------------------------------------------------------------
Fifth Third Tax Exempt Money Market Fund X X
("Tax Exempt Fund")
-------------------------------------------------------------------------------------------------------------------------
Fifth Third U.S. Treasury Money Market Fund X
("U.S. Treasury Money Market Fund")
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
*These shares are currently not available to the public.
Each Fund, is an "open-end" management investment company, and other than
the Ohio Tax Free Fund, is a "diversified" company, as those terms are defined
in the Investment Company Act of 1940, as amended (the "1940 Act"). Among other
things, a diversified fund must, with respect to 75% of its total assets, not
invest more than 5% of its total assets in any one issuer. A non-diversified
Fund, such as the Ohio Tax Free Fund, may, with respect to 75% of its total
assets, invest more than 5% of its total assets in any one issuer.
On October 30, 2000, the Fifth Third Cardinal Fund transferred all of its
assets and liabilities to the Quality Fund in exchange for shares of the
Quality Growth Fund. Therefore, the Fifth Third Cardinal Fund is no longer in
existence.
The Trustees are responsible for managing the business and affairs of the
Trust. All Funds are advised by Fifth Third Bank (the "Advisor"), except for
the Pinnacle Fund, which is advised by Heartland Capital Management, Inc.
("Heartland"). Fifth Third Bank and Heartland are wholly-owned subsidiaries of
Fifth Third Bancorp. Morgan Stanley Dean Witter Investment Management Inc.
serves as investment sub-advisor to the International Equity Fund. Fort
Washington Investment Advisors, Inc. serves as investment sub-advisor to the
Ohio Money Market Fund (collectively, the "Sub-advisors").
2
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
The prospectuses state the investment objective of each Fund and discuss
certain investment policies employed to achieve those objectives. The following
discussion supplements the description of the Funds' investment policies in the
prospectus.
Investment Objectives
Each Fund's investment objective is fundamental and may not be changed
without shareholder approval.
Investment Limitations
Fundamental Limitations
Stock and Bond Funds
Except as provided below, each Fund has adopted the following fundamental
investment limitations. As fundamental investment limitations, they cannot be
changed with respect to a Fund without approval of the holders or a majority of
that Fund's Shares.
Issuing Senior Securities and Borrowing Money. None of the Funds described
---------------------------------------------
herein will issue senior securities, except that a Fund may borrow money
directly or through reverse repurchase agreements in amounts up to one- third of
the value of its total assets, including the amount borrowed; and except to the
extent that a Fund (with the exception of Ohio Tax Free Fund, Municipal Bond
Fund and Pinnacle Fund) may enter into futures contracts, as applicable.
The Funds described herein will not borrow money or engage in reverse
repurchase agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate management of the portfolio
by enabling a Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous. None of the Funds
described herein will purchase any securities while any borrowings in excess of
5% of its total assets are outstanding. Currently, none of the Funds described
herein intend to borrow money.
Selling Short and Buying on Margin. None of the Funds described herein
----------------------------------
will sell any securities short or purchase any securities on margin, but may
obtain such short-term credits as are necessary for clearance of purchases and
sales of securities. The deposit or payment by a Fund described herein (with
the exception of Ohio Tax Free Fund, Municipal Bond Fund and Pinnacle Fund) of
initial or variation margin in connection with futures contracts or related
options transactions is not considered the purchase of a security on margin.
Pledging Assets. The Funds described herein will not mortgage, pledge, or
---------------
hypothecate any assets, except to secure permitted borrowings. In these cases,
a Fund may pledge assets as necessary to secure such borrowings. For purposes
of this limitation, where applicable, (a) the deposit of assets in escrow in
connection with the writing of covered put or call options and the purchase of
securities on a when-issued basis and (b) collateral arrangements with respect
to: (i)
3
<PAGE>
the purchase and sale of stock options (and options on stock indices) and (ii)
initial or variation margin for futures contracts, will not be deemed to be
pledges of a Fund's assets.
Lending Cash or Securities. The Funds described herein will not lend any
--------------------------
of their respective assets except portfolio securities up to one-third of the
value of total assets. This shall not prevent a Fund from purchasing or holding
U.S. government obligations, money market instruments, publicly or non-publicly
issued municipal bonds, variable rate demand notes, bonds, debentures, notes,
certificates of indebtedness, or other debt securities, entering into repurchase
agreements, or engaging in other transactions where permitted by a Fund's
investment objectives, policies and limitations or the Trust's Declaration of
Trust.
Investing in Commodities. None of the Funds described herein will purchase
------------------------
or sell commodities or commodity contracts except to the extent that the Funds
described herein (with the exception of Ohio Tax Free Fund, Government
Securities Fund, Municipal Bond Fund and Pinnacle Fund) may engage in
transactions involving commodity futures contracts or options on commodity
futures contracts.
Investing in Real Estate. None of the Funds described herein will purchase
------------------------
or sell real estate, including limited partnership interests, although each of
these Funds may invest in securities of issuers whose business involves the
purchase or sale of real estate or in securities which are secured by real
estate or interests in real estate.
Diversification of Investments. With respect to 75% of the value of their
------------------------------
respective total assets, none of the Funds described herein (with the exception
of Ohio Tax Free Fund) will purchase securities issued by any one issuer (other
than cash, cash items or securities issued or guaranteed by the government of
the United States or its agencies or instrumentalities and repurchase agreements
collateralized by such securities), if as a result more than 5% of the value of
its total assets would be invested in the securities of that issuer. None of
the Funds described herein will acquire more than 10% of the outstanding voting
securities of any one issuer.
Dealing in Puts and Calls. The Pinnacle Fund, Municipal Bond Fund and Ohio
-------------------------
Tax Free Fund will not buy or sell puts, calls, straddles, spreads, or any
combination of these.
Concentration of Investments. The Quality Growth Fund, Cardinal Fund,
----------------------------
Pinnacle Fund, Balanced Fund, Mid Cap Fund, Technology Fund and International
Equity Fund will not invest 25% or more of the values of their respective total
assets in any one industry, except that these Funds may invest more than 25% of
the value of its total assets in securities issued or guaranteed by the U.S.
government, its agencies, or instrumentalities and repurchase agreements
collateralized by such securities.
Neither the Ohio Tax Free Fund or the Municipal Bond Fund will purchase
securities if, as a result of such purchase, 25% or more of the value of its
respective total assets would be invested in any one industry or in industrial
development bonds or other securities, the interest upon which is paid from
revenues of similar types of projects. However, their Funds described herein
may invest as temporary investments more than 25% of the value of its total
assets in cash or cash items, securities issued or guaranteed by the U.S.
government, its agencies or
4
<PAGE>
instrumentalities, or instruments secured by these money market instruments,
i.e., repurchase agreements.
Underwriting. None of the Funds described herein will underwrite any issue
------------
of securities, except as a Fund may be deemed to be an underwriter under the
Securities Act of 1933 in connection with the sale of securities in accordance
with its investment objective, policies, and limitations.
Non-Fundamental Limitations
Stock and Bond Funds
Except as provided below, each Fund has adopted the following non-
fundamental investment limitations. As non-fundamental investment limitations,
they may be changed by the Trustees without shareholder approval.
Investing in Restricted Securities. The Funds described herein will not
----------------------------------
invest more than 10% of the value of their respective net assets in securities
that are subject to restrictions on resale under federal securities law.
Investing in Illiquid Securities. The Funds described herein will not
--------------------------------
invest more than 15% of the value of their respective net assets in illiquid
securities, including, as applicable, repurchase agreements providing for
settlement more than seven days after notice, over-the-counter options, certain
restricted securities not determined by the Trustees to be liquid, and non-
negotiable time deposits with maturities over seven days.
Investing in Securities of Other Investment Companies. The Funds described
-----------------------------------------------------
herein will limit their respective investments in other investment companies to
no more than 3% of the total outstanding voting stock of any investment company,
invest no more than 5% of their respective total assets in any one investment
company, and will invest no more than 10% of their respective total assets in
investment companies in general. The Funds described herein will purchase
securities of closed-end investment companies only in open market transactions
involving only customary broker's commissions. However, these limitations are
not applicable if the securities are acquired in a merger, consolidation,
reorganization, or acquisition of assets. It should be noted that investment
companies incur certain expenses such as management fees and, therefore, any
investment by a Fund in shares of another investment company would be subject to
such expenses.
Investing in Warrants. None of the Quality Growth Fund, Equity Income
---------------------
Fund, Cardinal Fund, Balanced Fund, Mid Cap Fund, or International Equity Fund
may invest more than 5% of its net assets in warrants, including those acquired
in units or attached to other securities. For purposes of this investment
restriction, warrants will be valued at the lower of cost or market, except that
warrants acquired by a Fund in units with or attached to securities may be
deemed to be without value.
Investing in Put Options. The International Equity Fund will not purchase
------------------------
put options on securities or futures contracts, unless the securities or futures
contracts are held in the Fund's
5
<PAGE>
portfolio or unless the Fund is entitled to them in deliverable form without
further payment or after segregating cash in the amount of any further payment.
Writing Covered Call Options. The International Equity Fund will not write
----------------------------
call options on securities or futures contracts unless the securities of futures
contracts are held in the Fund's portfolio or unless the Fund is entitled to
them in deliverable form without further payment or after segregating cash in
the amount of any further payment.
Except with respect to a Fund's policy relating to borrowing money, if a
percentage limitation is adhered to at the time of investment, a later increase
or decrease in percentage resulting from any change in value or net assets will
not result in a violation of such restriction. For purposes of its policies and
limitations, the Trust considers certificates of deposit and demand and time
deposits issued by a U.S. branch of a domestic bank or savings and loan having
capital, surplus, and undivided profits in excess of $100,000,000 at the time of
investment to be "cash items."
The Ohio Tax Free Fund and the Municipal Bond Fund do not expect to borrow
money or pledge securities in excess of 5% of the value of their respective net
assets during the coming fiscal year.
Fundamental Limitations
Money Market Funds
Except as provided below, each Fund has adopted the following fundamental
investment limitations. As fundamental investment limitations, they cannot be
changed with respect to a Fund without approval of the holders or a majority of
that Fund's Shares.
Selling Short and Buying on Margin. None of the Funds described herein
----------------------------------
will sell any securities short or purchase any securities on margin, but each
may obtain such short-term credit as may be necessary for clearance of purchases
and sales.
Issuing Senior Securities and Borrowing Money. None of the Funds described
---------------------------------------------
herein will issue senior securities, except that a Fund may borrow money
directly or through reverse repurchase agreements as a temporary measure for
extraordinary or emergency purposes and then only in amounts not in excess of 5%
of the value of its total assets (except for the Government Money Market Fund)
or in an amount up to one-third of the value of its total assets, including the
amount borrowed, in order to meet redemption requests without immediately
selling portfolio instruments. Any direct borrowings need not be
collateralized. None of the Funds described herein considers the issuance of
separate classes of shares to involve the issuance of "senior securities" within
the meaning of this investment limitation.
Neither the Government Money Market Fund, Ohio Money Market Fund nor the
Tax Exempt Money Market Fund will purchase any securities while borrowings in
excess of 5% of its total assets are outstanding. The U.S. Treasury Money
Market Fund will not borrow money or engage in reverse repurchase agreements for
investment leverage purposes. None of the Funds described herein has any
present intention to borrow money.
6
<PAGE>
Pledging Securities or Assets. The Prime Money Market Fund will not pledge
-----------------------------
securities. None of the Government Money Market Fund, Tax Exempt Money Market
Fund, Ohio Money Market Fund or U.S. Treasury Money Market Fund will mortgage,
pledge, or hypothecate any assets except to secure permitted borrowings. In
those cases, it may pledge assets having a market value not exceeding the lesser
of the dollar amounts borrowed or 10% of the value of total assets at the time
of the pledge.
Investing in Commodities, Commodity Contracts, or Real Estate. Prime Money
-------------------------------------------------------------
Market Fund will not invest in commodities, commodity contracts, or real estate,
except that it may purchase money market instruments issued by companies that
invest in real estate or sponsor such interests. The Tax Exempt Money Market
Fund will not purchase or sell commodities, commodity contracts, commodity
futures contracts or real estate, including limited partnership interests,
although the Tax Exempt Money Market Fund may invest in the securities of
issuers whose business involves the purchase or sale of real estate or in
securities which are secured by real estate or interests in real estate.
Underwriting. The Prime Money Market Fund will not engage in underwriting
------------
of securities issued by others.
Lending Cash or Securities. None of the Funds described herein will lend
--------------------------
any of its assets, except that the Government Money Market Fund may purchase or
hold U.S. government securities permitted by its investment objective, policies
and limitations, the Prime Money Market Fund may purchase or hold money market
instruments, including repurchase agreements and variable rate demand notes,
permitted by its investment objective and policies, the Tax Exempt Money Market
Fund may purchase or hold U.S. government securities permitted by its investment
objective, policies and limitations, and the U.S. Treasury Money Market Fund may
purchase or hold U.S. Treasury obligations, including repurchase agreements
permitted by its investment objective and policies.
Acquiring Voting Securities. The Prime Money Market Fund will not acquire
---------------------------
the voting securities of any issuer. It will not invest in securities of a
company for the purpose of exercising control or management.
The Tax Exempt Money Market Fund will not acquire more than 10% of the
outstanding voting securities of any one issuer. For purposes of this
limitation, non-governmental users of facilities financed by industrial
development or pollution control revenue bonds and banks issuing letters of
credit or comparable guarantees supporting variable rate demand municipal
securities are considered to be issuers.
Diversification of Investments. With respect to 75% of the value of its
------------------------------
total assets, the Prime Money Market Fund will not purchase securities issued by
any one issuer having a value of more than 5% of the value of its total assets
except repurchase agreements and U.S. government obligations. The total amount
of the remaining 25% of the value of the Prime Money Market Fund's total assets
may be invested in a single issuer if the Advisor believes such a strategy to be
prudent.
7
<PAGE>
The Prime Money Market Fund considers the type of bank obligations it
purchases to be cash items.
With respect to 75% of the value of its total assets, the Tax Money Market
Fund will not purchase securities issued by any one issuer (other than cash,
cash items or securities issued or guaranteed by the government of the United
States or its agencies or instrumentalities and repurchase agreements
collateralized by such securities), if as a result more than 5% of the value of
its total assets would be invested in the securities of that issuer. For
purposes of this limitation, non-governmental users of facilities financed by
industrial development or pollution control revenue bonds and banks issuing
letters of credit or comparable guarantees supporting variable rate demand
municipal securities are considered to be issuers.
Concentration of Investments. The Prime Money Market Fund will not invest
----------------------------
more than 25% of the value of its total assets in any one industry except
commercial paper of finance companies. However, the Prime Money Market Fund
reserves the right to invest more than 25% of its net assets in domestic bank
instruments (such as time and demand deposits and certificates of deposit), U.S.
government obligations or instruments secured by these money market instruments,
such as repurchase agreements. The Prime Money Market Fund will not invest more
than 25% of its net assets in instruments of foreign banks.
The Tax Exempt Money Market Fund will not purchase securities if, as a
result of such purchase, 25% or more of the value of its total assets would be
invested in any one industry; provided that, this limitation shall not apply to
industrial development bonds or other securities, the interest upon which is
paid from revenues of similar types of projects, securities issued or guaranteed
by the U.S. government, its agencies or instrumentalities, or variable rate
demand municipal securities supported by letters of credit or guarantees.
Dealing in Puts and Calls. The Tax Exempt Money Market Fund will not buy
-------------------------
or sell puts, calls, straddles, spreads, or any combination of these.
Investing in Securities of Other Investment Companies. Each of the Prime
-----------------------------------------------------
Money Market Fund and the U.S. Treasury Money Market Fund acquire up to 3% of
the total outstanding securities of other investment companies. Each of these
Funds will limit its investments in the securities of other investment companies
to those of having investment objectives and policies similar to its own. Each
of these Funds will purchase securities of other investment companies only in
open-market transactions involving no more than customary broker's commissions.
However, there is no limitation applicable to securities of any investment
company acquired in a merger, consolidation, or acquisition of assets.
It should be noted that investment companies incur certain expenses such as
management fees, and, therefore, any investment by a Fund in such shares would
be subject to such customary expenses.
Non-Fundamental Limitations
8
<PAGE>
Money Market Funds
Except as provided below, each Fund has adopted the following non-
fundamental investment limitations. As non-fundamental investment limitations,
they may be changed by the Trustees without shareholder approval.
Investing in Securities of Other Investment Companies. Each of the
-----------------------------------------------------
Government Money Market Fund, the Tax Exempt Money Market Fund and Ohio Money
Market Fund can acquire up to 3% of the total outstanding securities of other
investment companies. Each of these Funds will limit its investments in the
securities of other investment companies to those of having investment
objectives and policies similar to its own. Each of these Funds will purchase
securities of other investment companies only in open-market transactions
involving no more than customary broker's commissions. However, there is on
limitation applicable to securities of any investment company acquired in a
merger, consolidation, or acquisition of assets.
It should be noted that investment companies incur certain expenses such as
management fees, and, therefore, any investment by a Fund in such shares would
be subject to such customary expenses.
Investing in Illiquid Securities. None of the Funds described herein will
--------------------------------
invest more than 10% of the value of its net assets in illiquid securities.
Investing in Restricted Securities. Neither the Prime Money Market nor the
----------------------------------
Tax Exempt Money Market Fund will invest more than 10% of the value of its net
assets in securities which are subject to restrictions on resale under federal
securities laws.
Except with respect to the Fund's policy of borrowing money, if a
percentage limitation is adhered to at the time of investment, a later increase
or decrease in percentage resulting from any change in value or net assets will
not result in a violation of such restriction.
For the purposes of its policies and limitations, each of the Funds
described herein considers certificates of deposit and demand and time deposits
issued by a U.S. branch of a domestic bank or savings and loan having capital,
surplus, and undivided profits in excess of $100,000,000 at the time of
investment to be "cash items."
ADDITIONAL RISKS AND INFORMATION CONCERNING CERTAIN INVESTMENT
TECHNIQUES
Types of Investments
Bank Instruments. The Prime Money Market Fund, the Tax Exempt Money
----------------
Market Fund, the Ohio Money Market Fund, the Quality Bond Fund, the Quality
Growth Fund, the Technology Fund, the Mid Cap Fund, the Balanced Fund, the
Equity Income Fund, the Bond Fund For Income, the Pinnacle Fund and the
Municipal Bond
9
<PAGE>
Fund may invest in the instruments of banks and savings and loans whose deposits
are insured by the Bank Insurance Fund or the Savings Association Insurance
Fund, both of which are administered by the Federal Deposit Insurance
Corporation, such as certificates of deposit, demand and time deposits, savings
shares, and bankers' acceptances. However, these instruments are not necessarily
guaranteed by those organizations.
In addition to domestic bank obligations such as certificates of deposit;
demand and time deposits, and bankers' acceptances, the Prime Money Market Fund
may invest in: (a) Eurodollar Certificates of Deposit issued by foreign branches
of U.S. or foreign banks; (b) Eurodollar Time Deposits, which are U.S. dollar-
denominated deposits in foreign branches of U.S. or foreign banks; and (c)
Yankee Certificates of Deposit, which are U.S. dollar-denominated certificates
of deposit issued by U.S. branches of foreign banks and held in the United
States.
Futures and Options Transactions. All of the Funds except the Money Market
--------------------------------
may engage in futures and options transactions as described below to the extent
consistent with their investment objectives and policies.
As a means of reducing fluctuations in the net asset value of Shares of the
Funds, the Funds may attempt to hedge all or a portion of their portfolio
through the purchase of put options on portfolio securities and put options on
financial futures contracts for portfolio securities. The Funds may attempt to
hedge all or a portion of their portfolio by buying and selling financial
futures contracts and writing call options on futures contracts. The Funds may
also write covered call options on portfolio securities to attempt to increase
current income.
The Funds will maintain their position in securities, options, and
segregated cash subject to puts and calls until the options are exercised,
closed, or have expired. An option position may be closed out over-the-counter
or on an exchange which provides a secondary market for options of the same
series.
Futures Contracts. The Funds except the Money Market Funds, the Ohio Tax
-----------------
Free Fund, the Municipal Bond Fund and the Pinnacle Fund, may enter into futures
contracts. A futures contract is a firm commitment by, the seller who agrees to
make delivery of the specific type of security called for in the contract
("going short") and the buyer who agrees to take delivery of the security
("going long") at a certain time in the future. However, a securities index
futures contract is an agreement pursuant to which two parties agree to take or
make delivery of an amount of cash equal to the difference between the value of
the index at the close of the last trading day of the contract and the price at
which the index was originally written. No physical delivery of the underlying
security in the index is made.
Financial futures contracts call for the delivery of particular debt
instruments issued or guaranteed by the U.S. Treasury or by specified agencies
or instrumentalities of the U.S. government at a certain time in the future.
The purpose of the acquisition or sale of a futures contract by a Fund is
to protect it from fluctuations in the value of securities caused by
unanticipated changes in interest rates or stock prices without necessarily
buying or selling securities. For example, in the fixed income
10
<PAGE>
securities market, price moves inversely to interest rates. A rise in rates
means a drop in price. Conversely, a drop in rates means a rise in price. In
order to hedge its holdings of fixed income securities against a rise in market
interest rates, a Fund could enter into contracts to "go short" to protect
itself against the possibility that the prices of its fixed income securities
may decline during the Fund's anticipated holding period. The Fund would "go
long" to hedge against a decline in market interest rates. The International
Equity Fund may also invest in securities index futures contracts when the Sub-
advisor believes such investment is more efficient, liquid or cost-effective
than investing directly in the securities underlying the index.
Stock Index Options. The Funds other than Money Market Funds, the Ohio Tax
-------------------
Free Fund, the Municipal Bond Fund and the Pinnacle Fund, may purchase put
options on stock indices listed on national securities exchanges or traded in
the over-the-counter market. A stock index fluctuates with changes in the market
values of the stocks included in the index.
The effectiveness of purchasing stock index options will depend upon the
extent to which price movements in the Funds' portfolio correlate with price
movements of the stock index selected. Because the value of an index option
depends upon movements in the level of the index rather than the price of a
particular stock, whether the Funds will realize a gain or loss from the
purchase of options on an index depends upon movements in the level of stock
prices in the stock market generally or, in the case of certain indices, in an
industry or market segment, rather than movements in the price of a particular
stock. Accordingly, successful use by the Funds of options on stock indices will
be subject to the ability of the Advisors to predict correctly movements in the
direction of the stock market generally or of a particular industry. This
requires different skills and techniques than predicting changes in the price of
individual stocks.
Put Options on Financial Futures Contracts. The Funds other than Money
------------------------------------------
Market Funds, the Ohio Tax Free Fund, the Municipal Bond Fund and the Pinnacle
Fund, may purchase listed (and, in the case of International Equity Fund, over-
the-counter) put options on financial futures contracts. The Funds would use
these options only to protect portfolio securities against decreases in value
resulting from market factors such as anticipated increase in interest rates, or
in the case of the International Equity Fund when the Sub-advisor believes such
investment is more efficient, liquid or cost-effective than investing directly
in the futures contract or the underlying securities or when such futures
contracts or securities are unavailable for investment upon favorable terms.
Unlike entering directly into a futures contract, which requires the
purchaser to buy a financial instrument on a set date at a specified price, the
purchase of a put option on a futures contract entitles (but does not obligate)
its purchaser to decide on or before a future date whether to assume a short
position at the specified price. Generally, if the hedged portfolio securities
decrease in value during the term of an option, the related futures contracts
will also decrease in value and the option will increase in value. In such an
event, a Fund will normally close out its option by selling an identical option.
If the hedge is successful, the proceeds received by a Fund upon the sale of the
second option will be large enough to offset both the premium paid by a Fund for
the original option plus the realized decrease in value of the hedged
securities.
11
<PAGE>
Alternatively, a Fund may exercise its put option to close out the
position. To do so, it would simultaneously enter into a futures contract of the
type underlying the option (for a price less than the strike price of the
option) and exercise the option. A Fund would then deliver the futures contract
in return for payment of the strike price. If a Fund neither closes out nor
exercises an option, the option will expire on the date provided in the option
contract, and only the premium paid for the contract will be lost.
The International Equity Fund may write listed put options on financial
futures contracts to hedge its portfolio or when the Sub-advisor believes such
investment is more efficient, liquid or cost-effective than investing directly
in the futures contract or the underlying securities or when such futures
contracts or securities are unavailable for investment upon favorable terms.
When the Fund writes a put option on a futures contract, it receives a premium
for undertaking the obligation to assume a long futures position (buying a
futures contract) at a fixed price at any time during the life of the option.
Call Options on Financial Futures Contracts. The Funds other than the Money
-------------------------------------------
Market Funds, the Ohio Tax Free Fund, the Municipal Bond Fund and the Pinnacle
Fund, may write listed call options or over-the-counter call options on futures
contracts, to hedge their portfolios against an increase in market interest
rates, or in the case of International Equity Fund, when the Sub-advisor
believes such investment is more efficient, liquid or cost-effective than
investing directly in the futures contract or the underlying securities or when
such futures contracts or securities are unavailable for investment upon
favorable terms. When a Fund writes a call option on a futures contract, it is
undertaking the obligation of assuming a short futures position (selling a
futures contract) at the fixed strike price at any time during the life of the
option if the option is exercised. As market interest rates rise and cause the
price of futures to decrease, a Fund's obligation under a call option on a
future (to sell a futures contract) costs less to fulfill, causing the value of
a Fund's call option position to increase. In other words, as the underlying
future's price goes down below the strike price, the buyer of the option has no
reason to exercise the call, so that a Fund keeps the premium received for the
option. This premium can help substantially offset the drop in value of a Fund's
portfolio securities.
Prior to the expiration of a call written by a Fund, or exercise of it by
the buyer, a Fund may close out the option by buying an identical option. If the
hedge is successful, the cost of the second option will be less than the premium
received by a Fund for the initial option. The net premium income of a Fund will
then substantially offset the realized decrease in value of the hedged
securities.
The International Equity Fund may buy listed call options on financial
futures contracts to hedge its portfolio. When the Fund purchases a call option
on a futures contract, it is purchasing the right (not the obligation) to assume
a long futures position (buy a futures contract) at a fixed price at any time
during the life of the option.
Limitation on Open Futures Positions. No Fund will maintain open positions
------------------------------------
in futures contracts it has sold or options it has written on futures contracts
if, in the aggregate, the value of the open positions (marked to market) exceeds
the current market value of its securities portfolio plus or minus the
unrealized gain or loss on those open positions, adjusted for the correlation of
12
<PAGE>
volatility between the securities or securities index underlying the futures
contract and the futures contracts. If a Fund exceeds this limitation at any
time, it will take prompt action to close out a sufficient number of open
contracts to bring its open futures and options positions within this
limitation.
"Margin" in Futures Transactions. Unlike the purchase or sale of a
--------------------------------
security, the Funds do not pay or receive money upon the purchase or sale of a
futures contract. Rather, the Funds are required to deposit an amount of
"initial margin" in cash or U.S. Treasury bills with its custodian (or the
broker, if legally permitted). The nature of initial margin in futures
transactions is different from that of margin in securities transactions in that
a futures contract's initial margin does not involve the borrowing by a Fund to
finance the transactions. Initial margin is in the nature of a performance bond
or good faith deposit on the contract which is returned to a Fund upon
termination of the futures contract, assuming all contractual obligations have
been satisfied.
A futures contract held by a Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day a Fund pays or
receives cash, called "variation margin, "equal to the daily change in value of
the futures contract. This process is known as "marking to market." Variation
margin does not represent a borrowing or loan by a Fund but is instead
settlement between a Fund and the broker of the amount one would owe the other
if the futures contract expired. In computing its daily net asset value, a Fund
will mark to market its open futures positions. The Funds are also required to
deposit and maintain margin when they write call options on futures contracts.
Purchasing Put Options on Portfolio Securities. The Funds other than the
----------------------------------------------
Money Market Funds, Ohio Tax Free Fund, Municipal Bond Fund and Pinnacle Fund,
may purchase put options on portfolio securities to protect against price
movements in particular securities in their respective portfolios. A put option
gives a Fund, in return for a premium, the right to sell the underlying security
to the writer (seller) at a specified price during the term of the option.
Writing Covered Call Options on Portfolio Securities. The Funds other than
----------------------------------------------------
the Money Market Funds, Ohio Tax Free Fund, Municipal Bond Fund and Pinnacle
Fund, may also write covered call options to generate income. As the writer of a
call option, a Fund has the obligation, upon exercise of the option during the
option period, to deliver the underlying security upon payment of the exercise
price. A Fund may sell call options either on securities held in its portfolio
or on securities which it has the right to obtain without payment of further
consideration (or securities for which it has segregated cash in the amount of
any additional consideration).
Over-the-Counter Options. The Funds other than the Fifth Third Money Market
------------------------
Funds, Ohio Tax Free Fund, Municipal Bond Fund and the Pinnacle Fund, may
purchase and write over-the-counter options on portfolio securities in
negotiated transactions with the buyers or writers of the options for those
options on portfolio securities held by a Fund and not traded on an
exchange.
Collateralized Mortgage Obligations ("CMOs"). The U.S. Government
--------------------------------------------
Securities Fund, the Quality Bond Fund, the Balanced Fund and the Bond Fund For
Income may invest in CMOs.
13
<PAGE>
Privately issued CMOs generally represent an ownership interest in a pool of
federal agency mortgage pass-through securities such as those issued by the
Government National Mortgage Association. The terms and characteristics of the
mortgage instruments may vary among pass-through mortgage loan pools.
The market for such CMOs has expanded considerably since its inception. The
size of the primary issuance market and the active participation in the
secondary market by securities dealers and other investors make government-
related pools highly liquid.
Certain debt securities such as, but not limited to, mortgage-related
securities, collateralized mortgage obligations (CMO's), asset backed securities
and securitized loan receivables, as well as securities subject to prepayment of
principal prior to the stated maturity date, are expected to be repaid prior to
their stated maturity dates. As a result, the effective maturity of these
securities is expected to be shorter than the stated maturity. For purposes of
compliance with stated maturity policies and calculation of the Quality Bond
Fund's weighted average maturity, the effective maturity of such securities will
be used.
Convertible Securities. The Quality Growth Fund, the Technology Fund, the
----------------------
Mid Cap Fund, the Balanced Fund, the International Equity Fund, the Cardinal
Fund, the Pinnacle Fund and the Equity Income Fund may invest in convertible
securities. Convertible securities include fixed-income securities that may be
exchanged or converted into a predetermined number of shares of the issuer's
underlying common stock at the option of the holder during a specified period.
Convertible securities may take the form of convertible preferred stock,
convertible bonds or debentures, units consisting of "usable" bonds and warrants
or a combination of the features of several of these securities. The investment
characteristics of each convertible security vary widely, which allows
convertible securities to be employed for a variety of investment strategies.
Each of these Funds will exchange or convert the convertible securities
held in its portfolio into shares of the underlying common stock when, in the
Advisor's opinion, the investment characteristics of the underlying common
shares will assist the Fund in achieving its investment objectives. Otherwise
the Fund may hold or trade convertible securities.
In selecting convertible securities for the Fund, the Advisor evaluates the
investment characteristics of the convertible security as a fixed income
instrument and the investment potential of the underlying equity security for
capital appreciation. In evaluating these matters with respect to a particular
convertible security, the Advisor considers numerous factors, including the
economic and political outlook, the value of the security relative to other
investment alternatives, trends in the determinants of the issuer's profits, and
the issuer's management capability and practices.
Warrants. The Quality Growth Fund, the Technology Fund, the Mid Cap Fund,
--------
the Balanced Fund, the International Equity Fund, and the Equity Income Fund may
invest in warrants except as limited above. Warrants are basically options to
purchase common stock at a specific price (usually at a premium above the market
value of the optioned common stock at issuance) valid for a specific period of
time. Warrants may have a life ranging from less than a
14
<PAGE>
year to twenty years or may be perpetual. However, most warrants have expiration
dates after which they are worthless. In addition, if the market price of the
common stock does not exceed the warrant's exercise price during the life of the
warrant, the warrant will expire as worthless. Warrants have no voting rights,
pay no dividends, and have no rights with respect to the assets of the
corporation issuing them. The percentage increase or decrease in the market
price of the warrant may tend to be greater than the percentage increase or
decrease in the market price of the optioned common stock.
Municipal Securities. The Ohio Tax Free Fund and the Ohio Money Market Fund
--------------------
may invest in Ohio municipal securities which have the characteristics set forth
in their respective prospectus. The Municipal Bond Fund and the Tax Exempt Money
Market Fund may invest in municipal securities of any state which have the
characteristics set forth in the prospectus of that Fund. Examples of Municipal
Securities are (a) governmental lease certificates of participation issued by
state or municipal authorities where payment is secured by installment payments
for equipment, buildings, or other facilities being leased by the state or
municipality; government lease certificates purchased by the Fund will not
contain nonappropriation clauses; (b) municipal notes and tax-exempt commercial
paper; (c) serial bonds; (e) tax anticipation notes sold to finance working
capital needs of municipalities in anticipation of receiving taxes at a later
date; (f) bond anticipation notes sold in anticipation of the issuance of long-
term bonds in the future; (g) pre-refunded municipal bonds whose timely payment
of interest and principal is ensured by an escrow of U.S. government
obligations; and (h) general obligation bonds.
Participation Interests. The Ohio Tax Free Fund, the Municipal Bond Fund,
-----------------------
the Ohio Money Market Fund and the Tax Exempt Money Market Fund may invest in
participation interests. Participation interests include the underlying
securities and any related guaranty, letter of credit, or collateralization
arrangement which a Fund would be allowed to invest in directly. The financial
institutions from which the Ohio Tax Free Fund, the Municipal Bond Fund, the
Ohio Money Market Fund and the Tax Exempt Money Market Fund may purchase
participation interests frequently provide or secure from another financial
institution irrevocable letters of credit or guarantees and give the Funds the
right to demand payment of the principal amounts of the participation interests
plus accrued interest on short notice (usually within seven days).
Variable Rate Municipal Securities. The Ohio Tax Free Fund, the Municipal
----------------------------------
Bond Fund, the Ohio Money Market Fund and the Tax Exempt Money Market Fund may
invest in variable rate municipal securities. Variable interest rates generally
reduce changes in the market value of municipal securities from their original
purchase prices. Accordingly, as interest rates decrease or increase, the
potential for capital appreciation or depreciation is less for variable rate
municipal securities than for fixed income obligations. Many municipal
securities with variable interest rates purchased by the Funds are subject to
repayment of principal (usually within seven days) on the Funds' demand. The
terms of these variable-rate demand instruments require payment of principal and
accrued interest from the issuer of the municipal obligations, the issuer of the
participation interests, or a guarantor of either issuer.
Municipal Leases. The Ohio Tax Free Fund, the Municipal Bond Fund, the Ohio
----------------
Money Market Fund and the Tax Exempt Money Market Fund may purchase municipal
securities in the form of participation interests which represent undivided
proportional interests in lease payments
15
<PAGE>
by a governmental or non-profit entity. The lease payments and other rights
under the lease provide for and secure the payments on the certificates. Lease
obligations may be limited by municipal charter or the nature of the
appropriation for the lease. In particular, lease obligations may be subject to
periodic appropriation. If the entity does not appropriate funds for future
lease payments, the entity cannot be compelled to make such payments.
Furthermore, a lease may provide that the certificate trustee cannot accelerate
lease obligations upon default. The trustee would only be able to enforce lease
payments as they become due. In the event of a default or failure of
appropriation, it is unlikely that the trustee would be able to obtain an
acceptable substitute source of payment. In determining the liquidity of
municipal lease securities, the Advisor, under the authority delegated by the
Trustees, will base its determination on the following factors: (a) whether the
lease can be terminated by the lessee; (b) the potential recovery, if any, from
a sale of the leased property upon termination of the lease; (c) the lessee's
general credit strength (e.g., its debt, administrative, economic and financial
characteristics and, prospects); (d) the likelihood that the lessee will
discontinue appropriating funding for the leased property because the property
is no longer deemed essential to its operations (e.g., the potential for an
"event of nonappropriation"); and (e) any credit enhancement or legal recourse
provided upon an event of nonappropriation or other termination of the lease.
Cash. From time to time, such as when suitable securities are not
----
available, the Funds may retain a portion of their assets in cash. Any portion
of a Fund's assets retained in cash will reduce the Fund's return and, in the
case of a bond fund and Money Market fund, the Fund's yield.
Foreign Currency Transactions. The International Equity Fund may engage in
-----------------------------
foreign currency transactions.
Currency Risks. The exchange rates between the U.S. dollar and foreign
--------------
currencies are a function of such factors as supply and demand in the currency
exchange markets, international balances of payments, governmental intervention,
speculation and other economic and political conditions. Although the
International Equity Fund values its assets daily in U.S. dollars, the
International Equity Fund may not convert its holdings of foreign currencies to
U.S. dollars daily. The International Equity Fund may incur conversion costs
when it converts its holdings to another currency. Foreign exchange dealers may
realize a profit on the difference between the price at which the Fund buys and
sells currencies.
The International Equity Fund will engage in foreign currency exchange
transactions in connection with its portfolio investments. The International
Equity Fund will conduct its foreign currency exchange transactions either on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market or through forward contracts to purchase or sell foreign
currencies.
Forward Foreign Currency Exchange Contracts. The International Equity Fund
-------------------------------------------
may enter into forward foreign currency exchange contracts in order to protect
against a possible loss resulting from an adverse change in the relationship
between the U.S. dollar and a foreign currency involved in an underlying
transaction. However, forward foreign currency exchange contracts may limit
potential gains which could result from a positive change in such currency
16
<PAGE>
relationships. The Advisors believe that it is important to have the flexibility
to enter into forward foreign currency exchange contracts whenever it determines
that it is in the International Equity Fund's best interest to do so. The
International Equity Fund will not speculate in foreign currency exchange.
The International Equity Fund will not enter into forward foreign currency
exchange contracts or maintain a net exposure in such contracts when it would be
obligated to deliver an amount of foreign currency in excess of the value of its
portfolio securities or other assets denominated in that currency or, in the
case of a "cross-hedge" denominated in a currency or currencies that the
Advisors believe will tend to be closely correlated with that currency with
regard to price movements. Generally, the International Equity Fund will not
enter into a forward foreign currency exchange contract with a term longer than
one year.
Foreign Currency Options. A foreign currency option provides the option
------------------------
buyer with the right to buy or sell a stated amount of foreign currency at the
exercise price on a specified date or during the option period. The owner of a
call option has the right, but not the obligation, to buy the currency.
Conversely, the owner of a put option has the right, but not the obligation, to
sell the currency.
When the option is exercised, the seller (i.e., writer) of the option is
obligated to fulfill the terms of the sold option. However, either the seller or
the buyer may, in the secondary market, close its position during the option
period at any time prior to expiration. A call option on foreign currency
generally rises in value if the underlying currency appreciates in value, and a
put option on foreign currency generally rises in value if the underlying
currency depreciates in value. Although purchasing a foreign currency option can
protect the International Equity Fund against an adverse movement in the value
of a foreign currency, the option will not limit the movement in the value of
such currency. For example, if the International Equity Fund was holding
securities denominated in a foreign currency that was appreciating and had
purchased a foreign currency put to hedge against a decline in the value of the
currency, the International Equity Fund would not have to exercise their put
option. Likewise, if the International Equity Fund were to enter into a contract
to purchase a security denominated in foreign currency and, in conjunction with
that purchase, were to purchase a foreign currency call option to hedge against
a rise in value of the currency, and if the value of the currency instead
depreciated between the date of purchase and the settlement date, the
International Equity Fund would not have to exercise its call. Instead, the
International Equity Fund could acquire in the spot market the amount of foreign
currency needed for settlement.
Special Risks Associated with Foreign Currency Options. Buyers and sellers
------------------------------------------------------
of foreign currency options are subject to the same risks that apply to options
generally. In addition, there are certain additional risks associated with
foreign currency options. The markets in foreign currency options are relatively
new, and the International Equity Fund's ability to establish and close out
positions on such options is subject to the maintenance of a liquid secondary
market. Although the International Equity Fund will not purchase or write such
options unless and until, in the opinion of the Advisors, the market for them
has developed sufficiently to ensure that the risks in connection with such
options are not greater than the risks in connection with the
17
<PAGE>
underlying currency, there can be no assurance that a liquid secondary market
will exist for a particular option at any specific time.
In addition, options on foreign currencies are affected by all of those
factors that influence foreign exchange rates and investments generally.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price of the
option position may vary with changes in the value of either or both currencies
and may have no relationship to the investment merits of a foreign security.
Because foreign currency transactions occurring in the interbank market involve
substantially larger amounts than those that may be involved in the use of
foreign currency options, investors may be disadvantaged by having to deal in an
odd lot market (generally consisting of transactions of less than $1 million)
for the underlying foreign currencies at prices that are less favorable than for
round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis. Available
quotation information is generally representative of very large transactions in
the interbank market and thus may not reflect relatively smaller transactions
(i.e., less than $1 million) where rates may be less favorable. The interbank
market in foreign currencies is a global, around-the-clock market. To the extent
that the U.S. option markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that cannot be reflected in the options markets until
they reopen.
Foreign Currency Futures Transactions. By using foreign currency futures
-------------------------------------
contracts and options on such contracts, the International Equity Fund may be
able to achieve many of the same objectives as it would through the use of
forward foreign currency exchange contracts. The International Equity Fund may
be able to achieve these objectives possibly more effectively and at a lower
cost by using futures transactions instead of forward foreign currency exchange
contracts.
Special Risks Associated with Foreign Currency Futures Contracts and
--------------------------------------------------------------------
Related Options. Buyers and sellers of foreign currency futures contracts are
---------------
subject to the same risks that apply to the use of futures generally. In
addition, there are risks associated with foreign currency futures contracts and
their use as a hedging device similar to those associated with options on
currencies, as described above.
Options on foreign currency futures contracts may involve certain
additional risks. Trading options on foreign currency futures contracts is
relatively new. The ability to establish and close out positions on such options
is subject to the maintenance of a liquid secondary market. To reduce this risk,
the International Equity Fund will not purchase or write options on foreign
currency futures contracts unless and until, in the opinion of the Advisors, the
market for such options has developed sufficiently that the risks in connection
with such options are not greater than the risks in connection with transactions
in the underlying foreign currency futures contracts. Compared to the purchase
or sale of foreign currency futures contracts, the purchase of call or put
options on futures contracts involves less potential risk to the International
Equity
18
<PAGE>
Fund because the maximum amount at risk is the premium paid for the option (plus
transaction costs). However, there may be circumstances when the purchase of a
call or put option on a futures contract would result in a loss, such as when
there is no movement in the price of the underlying currency or futures
contract.
U.S. Government Obligations. The types of U.S. government obligations in
---------------------------
which any of the Funds may invest include direct obligations of the U.S.
Treasury, such as U.S. Treasury bills, notes, and bonds, and obligations issued
or guaranteed by U.S. government agencies or instrumentalities. These securities
are backed by:
. the full faith and credit of the U.S. Treasury;
. the issuer's right to borrow from the U.S. Treasury;
. the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentality issuing the obligations.
Variable Rate U.S. Government Securities. Some of the short-term U.S.
----------------------------------------
government securities that the Money Market Funds may purchase carry variable
interest rates. These securities have a rate of interest subject to adjustment
at least annually. This adjusted interest rate is ordinarily tied to some
objective standard, such as the 91-day U.S. Treasury bill rate. Variable
interest rates will reduce the changes in the market value of such securities
from their original purchase prices. Accordingly, the potential for capital
appreciation or capital depreciation should not be greater than the potential
for capital appreciation or capital depreciation of fixed interest rate U.S.
government securities having maturities equal to the interest rate adjustment
dates of the variable rate U.S. government securities.
When-Issued and Delayed Delivery Transactions. Each Fund may enter into
---------------------------------------------
when-issued and delayed delivery transactions. These transactions are made to
secure what is considered to be an advantageous price or yield for a Fund. No
fees or other expenses, other than normal transaction costs, are incurred.
However, liquid assets of a Fund sufficient to make payment for the securities
to be purchased are segregated on the Fund's records at the trade date. These
assets are marked-to-market daily and are maintained until the transaction has
been settled. The Funds do not intend to engage in when-issued and delayed
delivery transactions to an extent that would cause the segregation of more than
20% of the total value of their assets.
Repurchase Agreements. Each Fund may enter into repurchase agreements. A
---------------------
repurchase agreement is an agreement whereby a fund takes possession of
securities from another party in exchange for cash and agrees to sell the
security back to the party at a specified time and price. To the extent that the
original seller does not repurchase the securities from a Fund, a Fund could
receive less than the repurchase price on any sale of such securities. In the
event that such a defaulting seller filed for bankruptcy or became insolvent,
disposition of such securities by a Fund might be delayed pending court action.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are deemed by the
Advisors to be creditworthy pursuant to guidelines established by the Trustees.
19
<PAGE>
Reverse Repurchase Agreements. Except as provided above, the Funds, other
-----------------------------
than the Government Money Market Fund, may also enter into reverse repurchase
agreements. These transactions are similar to borrowing cash. In a reverse
repurchase agreement, a Fund transfers possession of a portfolio instrument to
another person, such as a financial institution, broker, or dealer, in return
for a percentage of the instrument's market value in cash and agrees that on a
stipulated date in the future it will repurchase the portfolio instrument by
remitting the original consideration plus interest at an agreed upon rate. The
use of reverse repurchase agreements may enable a Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be disadvantageous,
but the ability to enter into reverse repurchase agreements does not ensure that
a Fund will be able to avoid selling portfolio instruments at a disadvantageous
time.
When effecting reverse repurchase agreements, liquid assets of a Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated on a Fund's records at the trade date. These securities are
marked to market daily and maintained until the transaction is settled.
Lending of Portfolio Securities. Each Fund (other than U.S. Treasury Money
-------------------------------
Market Fund) may lend portfolio securities. The collateral received when a Fund
lends portfolio securities must be valued daily and, should the market value of
the loaned securities increase, the borrower must furnish additional collateral
to the Fund. During the time portfolio securities are on loan, the borrower pays
the Fund any dividends or interest paid on such securities. Loans are subject to
termination at the option of a Fund or the borrower. A Fund may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or equivalent collateral
to the borrower or placing broker. A Fund would not have the right to vote
securities on loan, but would terminate the loan and regain the right to vote if
that were considered important with respect to the investment.
Restricted and Illiquid Securities. Each Fund may invest in securities
----------------------------------
issued in reliance on the exemption from registration afforded by Section 4(2)
of the Securities Act of 1933. Section 4(2) securities are restricted as to
disposition under the federal securities laws and are generally sold to
institutional investors, such as the Funds, who agree that they are purchasing
such securities for investment purposes and not with a view to public
distributions. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) securities are normally resold to other institutional investors
like the Funds through or with the assistance of the issuer or investment
dealers who make a market in such securities, thus providing liquidity. The
Funds believe that Section 4(2) securities and possibly certain other restricted
securities which meet the criteria for liquidity established by the Trustees are
quite liquid. The Funds intend, therefore, to treat the restricted securities
which meet the criteria for liquidity established by the Trustees, including
Section 4(2) securities, as determined by the Advisors, as liquid and not
subject to the investment limitation applicable to illiquid securities.
The ability of the Trustees to determine the liquidity of certain
restricted securities is permitted under the Securities and Exchange commission
("SEC") staff position set forth in the adopting release for Rule 144A under the
Securities Act of 1933 (the "Rule"). The Rule is a non-exclusive safe harbor for
certain secondary market transactions involving securities subject to
20
<PAGE>
restrictions on resale under federal securities laws. The Rule provides an
exemption from registration for resales of otherwise restricted securities to
qualified institutional buyers. The Rule was expected to further enhance the
liquidity of the secondary market for securities eligible for resale under Rule
144A. The Fund believes that the Staff of the SEC has left the question of
determining the liquidity of all restricted securities to the Trustees. The
Trustees consider the following criteria in determining the liquidity of certain
restricted securities: the frequency of trades and quotes for the security; the
number of dealers willing to purchase or sell the security and the number of
other potential buyers; dealer undertakings to make a market in the security;
and the nature of the security and the nature of the marketplace trades.
Temporary and Defensive Investments. Each Fund (other than the Money
-----------------------------------
Market Funds) may hold up to 100% of its assets in cash or short-term debt
securities for temporary defensive purposes. A Fund will adopt a temporary
defensive position when, in the opinion of the Advisor, such a position is more
likely to provide protection against adverse market conditions than adherence to
the Fund's other investment policies. The types of short-term instruments in
which the Fund may invest for such purposes include short-term money market
securities, such as repurchase agreements, and securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities, certificates of
deposit, time deposits and bankers' acceptances of certain qualified financial
institutions and corporate commercial paper, which at the time of purchase are
rated at least within the "A" major rating category by Standard & Poor's
Corporation ("S&P") or the "Prime" major rating category by Moody's Investor's
Service, Inc. ("Moody's"), or, if not rated, issued by companies having an
outstanding long-term unsecured debt issued rated at least within the "A"
category by S&P or Moody's.
Portfolio Turnover
The Funds will not attempt to set or meet portfolio turnover rates since
any turnover would be incidental to transactions undertaken in an attempt to
achieve the Funds' investment objectives. The following is a list of the
portfolio turnover rates for the Funds except the Money Market Funds and Funds
in existence for less than one year:
Fiscal year ended Fiscal year ended
July 31, 2000 July 31, 1999
------------- -------------
Government Securities Fund 46% 93%
Quality Bond Fund 368% 349%
Ohio Tax Free Fund 26% 47%
Quality Growth Fund 21% 34%
Mid Cap Fund 42% 49%
Balanced Fund 122% 128%
International Equity Fund 86% 42%
Equity Income Fund 37% 69%
Bond Fund For Income 185% 104%
Municipal Bond Fund 84% 110%
Cardinal Fund 2% 15%*
Pinnacle Fund 53% 51%
Technology Fund 11%(**) n/a
______________
* Reflects the period from October 1, 1998 through July 31, 1999.
** Reflects the period from June 5, 2000 through July 31, 2000
Investment Risks (Ohio Tax Free Fund and Ohio Money Market Fund)
21
<PAGE>
The State of Ohio's economy is a leading industrial state and exporter of
manufactured goods. During the past two decades, both the number and percentage
of manufacturing jobs, particularly in durable goods, has been declining. Job
growth in the state has been primarily in business services and distribution
sectors. The state is largely concentrated in motor vehicles and equipment,
steel, rubber products and household appliances. Because the State of Ohio and
certain municipalities have large exposure to these industries, trends in these
industries, over the long term, may impact the demographic and financial
position of the State of Ohio and its municipalities. To the degree that
domestic manufacturers in industries to which Ohio municipalities have exposure
fail to make competitive adjustments, employment statistics and disposable
income of residents in Ohio may deteriorate, possibly leading to population
declines and erosion of municipality tax bases.
Both the economic trends above and the political climate in various
municipalities may have contributed to the decisions of various businesses and
individuals to relocate outside the state. A municipality's political climate in
particular may affect its own credit standing. For both the State of Ohio and
underlying Ohio municipalities, adjustment of credit ratings by the ratings
agencies may affect the ability to issue securities and thereby affect the
supply of obligations meeting the quality standards for investment by the Fund.
The state ended fiscal year 1998 with a positive budgetary fund balance of
approximately $953 million. Personal taxes have been cut in recent years, a
result of the strong economy. As of March 1998 the Budget Stabilization Fund had
a balance of $862 million, up from $828 million the end of fiscal year 1997. A
March 24, 1997, Ohio Supreme Court decision requires major changes in Ohio's
school funding arrangements. These changes pose significant but manageable
challenges and should not threaten the overall fiscal stability of the state.
The state has established procedures for municipal fiscal emergencies under
which joint state/local commissions are established to monitor the fiscal
affairs of a financially troubled municipality. The act, established in 1979,
requires the municipality to develop a financial plan to eliminate deficits and
cure any defaults. These procedures have been applied to approximately twenty-
four cities and villages, including the city of Cleveland; in nineteen of these
communities, the fiscal situation has been resolved and the procedures
terminated. This fiscal emergency legislation has been amended to include
counties and townships.
The foregoing discussion only highlights some of the significant financial
trends and problems affecting the State of Ohio and underlying municipalities.
Special Restriction on Fifth Third Government Money Market Fund
The Fund will invest at least 65% of total assets in short-term obligations
issued or guaranteed as to principal or interest by the U.S. Government, its
agencies or instrumentalities.
Special Restriction on Fifth Third U.S. Treasury Money Market Fund
The Fund will invest at least 65% of total assets in short-term obligations
issued by the U.S. Treasury.
22
<PAGE>
FIFTH THIRD FUNDS MANAGEMENT
Officers and Trustees
Officers and Trustees of the Trust are listed with their addresses, principal
occupations, and present positions. The Board of Trustees of the Fifth Third
Funds has overall responsibility for the Funds. There are currently two
Trustees, one of whom is an "interested person" of the Funds, as that term is
defined the 1940 Act.
Albert E. Harris, 5905 Graves Road, Cincinnati, OH 45243. Birthdate: July 2,
1932. Chairman of the Board of Trustees of the Trust, formerly Chairman of
the Board EDB Holdings, Inc. (retired July, 1993).
Edward Burke Carey*, 394 East Town Street, Columbus, OH 43215. Birthdate:
July 2, 1945. Member of the Board of Trustees, President of Carey Leggett
Realty Advisors.
Stephen G. Mintos, 3435 Stelzer Road, Columbus, Ohio 43219-3035. Birthdate:
February 5, 1954. President of the Trust, employee of BISYS Fund Services,
Inc.
Jeffrey C. Cusick, 3435 Stelzer Road, Columbus, Ohio 43219-3035. Birthdate:
May 19, 1959. Vice President of the Trust, and formerly the Secretary and
Treasurer of the Trust, employee of BISYS Fund Services, Inc.; from September
1993 to July 1995, Assistant Vice President, Federated Administrative
Services.
Rodney L. Ruehle, 3435 Stelzer Road, Columbus, Ohio 43219-3035. Birthdate:
April 26, 1968. Secretary of the Trust, and employee of BISYS Fund Services,
Limited Partnership.
Gary R. Tenkman, 3435 Stelzer Road, Columbus, Ohio 43219-3035. Birthdate:
September 16, 1970. Treasurer of the Trust, and employee of BISYS Fund
Services, Limited Partnership.
Karen L. Blair, 3435 Stelzer Road, Columbus, Ohio 43219-3035. Birthdate:
February 26, 1966. Assistant Secretary and Assistance Treasurer of the Trust,
and employee of BISYS Fund Services, Limited Partnership.
*Considered to be an "interested person" of the Funds as defined in the 1940
Act.
Trust Ownership
As of November 10, 2000, the Officers and Trustees owned less than 1% of
any class of any Fund.
23
<PAGE>
The following table indicates the ownership of record of the shareholders
who, to the best knowledge of the Trust, were the owners of 5% or more of the
outstanding shares of the Trust, as of November 10, 2000:
<TABLE>
<CAPTION>
Record Beneficial
Fifth Third Quality Growth Fund-Investment A Shares
---------------------------------------------------
<S> <C> <C>
FISERV Securities Inc. 70.37% 70.37%
Trade House Account Club 53
2005 Market St.
Philadelphia, PA 19103
Fifth Third Quality Growth Fund-Investment B Shares
---------------------------------------------------
FISERV Securities Inc. 9.22% 9.22%
FAO 16090386
2005 Market St., Suite 1200
Philadelphia, PA 19103
FISERV Securities Inc. 5.22% 5.22%
FAO 459343282
2005 Market St., Suite 1200
Philadelphia, PA 19103
Fifth Third Quality Growth Fund-Investment C Shares
---------------------------------------------------
FISERV Securities Inc. 96.12% 96.12%
Trade House Account Club 53
2005 Market St.
Philadelphia, PA 19103
Fifth Third Quality Growth Fund-Institutional Shares
----------------------------------------------------
Fifth Third Bank 52.87% 49.17%
Trust and Investment Services C
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 24.10% 21.45%
Trust and Investment Services R
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 22.92% 15.59%
Expediter
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Pinnacle Fund-Investment A Shares
---------------------------------------------
FISERV Securities Inc. 97.40% 97.40%
Trade House Account Non Club 53
2005 Market St.
Philadelphia, PA 19103
Fifth Third Pinnacle Fund-Investment B Shares
---------------------------------------------
BISYS Fund Services Ohio, Inc. 100.00% 100.00%
3435 Stelzer Road
Columbus, Ohio 43219
Fifth Third Pinnacle Fund-Investment C Shares
---------------------------------------------
FISERV Securities Inc. 97.85% 97.85%
Trade House Account Club 53
2005 Market St.
</TABLE>
24
<PAGE>
<TABLE>
<S> <C> <C>
Philadelphia, PA 19103
Fifth Third Pinnacle Fund-Institutional Shares
----------------------------------------------
Fifth Third Bank 24.22% 21.80%
Trust and Investment Services C
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 9.26% 5.65%
Trust and Investment Services R
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 28.52% 17.40%
Expediter
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Equity Income Fund-Investment A Shares
--------------------------------------------------
FISERV Securities Inc. 98.85% 98.85%
Trade House Account Club 53
2005 Market St.
Philadelphia, PA 19103
Fifth Third Equity Income - Investment B Shares
-----------------------------------------------
FISERV Securities Inc. 12.45% 12.45%
FAO 45860653
2005 Market St.
Philadelphia, PA 19103
FISERV Securities Inc. 9.50% 9.50%
FAO 16758359
2005 Market St.
Philadelphia, PA 19103
FISERV Securities Inc. 10.05% 10.05%
FAO 16656817
2005 Market St.
Philadelphia, PA 19103
FISERV Securities Inc. 9.05% 9.05%
FAO 16146939
2005 Market St.
Philadelphia, PA 19103
FISERV Securities Inc. 15.05% 15.05%
FAO 45914825
2005 Market St.
Philadelphia, PA 19103
FISERV Securities Inc. 19.85% 19.85%
FAO 16734207
2005 Market St.
Philadelphia, PA 19103
FISERV Securities Inc. 21.64% 21.64%
FAO 16612545
2005 Market St.
Philadelphia, PA 19103
Fifth Third Equity Income Fund-Investment C Shares
--------------------------------------------------
FISERV Securities Inc. 97.49% 97.49%
Trade House Account Club 53
2005 Market St.
</TABLE>
25
<PAGE>
<TABLE>
<S> <C> <C>
Philadelphia, PA 19103
Fifth Third Equity Income Fund-Institutional Shares
---------------------------------------------------
Fifth Third Bank 92.12% 91.19%
Trust and Investment Services C
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 5.05% 2.42%
Expediter
38 Foundation Square Plaza
Cincinnati, OH 45263
Fifth Third Balanced Fund-Investment A Shares
---------------------------------------------
FISERV Securities Inc. 95.04% 95.04%
Trade House Account Club 53
2005 Market St.
Philadelphia, PA 19103
Fifth Third Balanced Fund-Investment B Shares
---------------------------------------------
FISERV Securities Inc. 5.72% 5.72%
FAO 44081401
2005 Market St.
Philadelphia, PA 19103
Fifth Third Balanced Fund-Investment C Shares
---------------------------------------------
FISERV Securities Inc. 98.40% 98.40%
Trade House Account Club 53
2005 Market St.
Philadelphia, PA 19103
Fifth Third Balanced Fund-Institutional Shares
----------------------------------------------
Fifth Third Bank 14.38% 12.06%
Trust and Investment Services C
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 44.97% 35.53%
Trust and Investment Services R
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 40.53% 31.61%
Expediter
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Mid Cap Fund-Investment A Shares
--------------------------------------------
FISERV Securities Inc. 92.85% 92.85%
Trade House Account Club 53
2005 Market St.
Philadelphia, PA 19103
Fifth Third Mid Cap Fund-Investment B Shares
--------------------------------------------
FISERV Securities Inc. 10.69% 10.69%
FAO 16070920
2005 Market St.
Philadelphia, PA 19103
FISERV Securities Inc. 8.54% 8.54%
FAO 16657001
2005 Market St.
Philadelphia, PA 19103
</TABLE>
26
<PAGE>
<TABLE>
<S> <C> <C>
FISERV Securities Inc. 5.14% 5.14%
FAO 44075278
2005 Market St.
Philadelphia, PA 19103
Fifth Third Mid Cap Fund-Investment C Shares
--------------------------------------------
FISERV Securities Inc. 99.79% 99.79%
Trade House Account
2005 Market St.
Philadelphia, PA 19103
Fifth Third Mid Cap Fund-Institutional Shares
---------------------------------------------
Fifth Third Bank 50.97% 49.95%
Trust and Investment Services C
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 28.25% 24.01%
Trust and Investment Services R
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 20.74% 15.35%
Expediter
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third International Equity Fund-Investment A Shares
---------------------------------------------------------
FISERV Securities 99.32% 99.32%
Trade House Account
2005 Market Street
Philadelphia, PA 19103
Fifth Third International Equity Fund-Investment B Shares
---------------------------------------------------------
FISERV Securities Inc. 18.84% 18.84%
FAO 16323828
2005 Market St.
Philadelphia, PA 19103
FISERV Securities Inc. 16.37% 16.37%
FAO 16734684
2005 Market St.
Philadelphia, PA 19103
FISERV Securities Inc. 20.32% 20.32%
FAO 16141442
2005 Market St.
Philadelphia, PA 19103
FISERV Securities Inc. 27.07% 27.07%
FAO 45914825
2005 Market St.
Philadelphia, PA 19103
Fifth Third International Equity Fund-Investment C Shares
---------------------------------------------------------
FISERV Securities 87.74% 87.74%
2005 Market St.
Philadelphia, PA 19103
LPL Financial Services 9.76% 9.76%
AC 4091-7318
9785 Towne Centre Drive
</TABLE>
27
<PAGE>
San Diego, CA 92121
Fifth Third International Equity Fund-Institutional Shares
----------------------------------------------------------
Fifth Third Bank & Investment Services 61.37% 60.76%
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank & Investment Services 32.80% 31.82%
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank & Investment Services 5.74% 4.02%
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Quality Growth Fund-Investment A Shares
---------------------------------------------------
FISERV Securities Inc. 99.59% 99.59%
Trade House Account Club 53
2005 Market Street
Philadelphia, PA 19103
Fifth Third Technology Fund-Investment B Shares
-----------------------------------------------
FISERV Securities Inc. 10.98% 10.98%
FAO 16660701
2005 Market Street
Philadelphia, PA 19103
FISERV Securities Inc. 8.33% 8.33%
FAO 45914825
2005 Market Street
Philadelphia, PA 19103
FISERV Securities Inc. 6.62% 6.62%
FAO 16986851
2005 Market Street
Philadelphia, PA 19103
FISERV Securities Inc. 5.99% 5.99%
FAO 16692716
2005 Market Street
Philadelphia, PA 19103
Fifth Third Quality Growth Fund-Investment C Shares
---------------------------------------------------
FISERV Securities Inc. 99.99% 99.99%
Trade House Account Club 53
2005 Market Street
Philadelphia, PA 19103
Fifth Third Quality Growth Fund-Institutional Shares
----------------------------------------------------
Fifth Third Bank 31.84% 31.52%
38 Fountain Square 1090 F2
Cincinnati, OH 45263
Fifth Third Bank 66.61% 66.61%
38 Fountain Square 1090 F2
Cincinnati, OH 45263
Fifth Third Bond Fund for Income-Investment A Shares
----------------------------------------------------
FISERV Securities Inc. 46.02% 46.02%
Trade House Account Non Club 53
2005 Market St.
Philadelphia, PA 19103
28
<PAGE>
Fifth Third Bond Fund for Income-Investment C Shares
----------------------------------------------------
FISERV Securities Inc. 100% 100%
Trade House Account Club 53
2005 Market St.
Philadelphia, PA 19103
Fifth Third Bond Fund for Income-Institutional Shares
-----------------------------------------------------
Fifth Third Bank 95.76% 95.76%
Trust and Investment Services C
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Quality Bond Fund-Investment A Shares
-------------------------------------------------
FISERV Securities Inc. 99.83% 99.83%
Trade House Account Club 53
2005 Market St.
Philadelphia, PA 19103
Fifth Third Quality Fund-Investment B Shares
--------------------------------------------
FISERV Securities Inc. 7.52% 7.52%
FAO 45720380
2005 Market Street
Philadelphia, PA 19103
FISERV Securities Inc. 15.02% 15.02%
FAO 45914825
2005 Market Street
Philadelphia, PA 19103
FISERV Securities Inc. 12.09% 12.09%
FAO 16292431
2005 Market Street
Philadelphia, PA 19103
FISERV Securities Inc. 65.36% 65.36%
FAO 44826279
2005 Market Street
Philadelphia, PA 19103
Fifth Third Quality Bond Fund-Investment C Shares
-------------------------------------------------
FISERV Securities Inc. 100% 100%
Trade House Account Club 53
2005 Market St.
Philadelphia, PA 19103
Fifth Third Quality Bond Fund-Institutional Shares
--------------------------------------------------
Fifth Third Bank 55.02% 52.27%
Trust and Investment Services C
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 37.47% 28.48%
Trust and Investment Services R
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 6.86% 4.87%
Expediter
38 Fountain Square Plaza
Cincinnati, OH 45263
29
<PAGE>
Fifth Third Government Securities Fund-Investment A Shares
----------------------------------------------------------
FISERV Securities Inc. 99.89% 99.89%
Trade House Account Non Club 53
2005 Market St.
Philadelphia, PA 19103
Fifth Third Government Securities Fund-Investment C Shares
----------------------------------------------------------
FISERV Securities Inc. 100% 100%
Trade House Account Club 53
2005 Market St.
Philadelphia, PA 19103
Fifth Third Government Securities Fund-Institutional Shares
-----------------------------------------------------------
Fifth Third Bank 49.75% 48.76%
Trust and Investment Securities C
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 35.60% 32.75%
Trust and Investment Securities R
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 14.47% 10.13%
Expediter
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Municipal Bond Fund-Investment A Shares
---------------------------------------------------
FISERV Securities Inc. 100% 100%
Trade House Account Non Club 53
2005 Market St.
Philadelphia, PA 19103
Fifth Third Municipal Bond Fund-Investment C Shares
---------------------------------------------------
FISERV Securities Inc. 100% 100%
Trade House Account Club 53
2005 Market St.
Philadelphia, PA 19103
Fifth Third Municipal Bond Fund-Institutional Shares
----------------------------------------------------
Fifth Third Bank 99.44% 98.45%
Trust and Investment Securities C
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Ohio Tax Free Fund-Investment A Shares
--------------------------------------------------
FISERV Securities Inc. 99.65% 99.65%
Trade House Account Non Club 53
2005 Market St.
Philadelphia, PA 19103
Fifth Third Ohio Tax Free Fund-Investment B Shares
--------------------------------------------------
BISYS Fund Services Ohio, Inc. 100% 100%
3435 Stelzer Road
Columbus, Ohio 43219
30
<PAGE>
Fifth Third Ohio Tax Free Fund-Investment C Shares
--------------------------------------------------
FISERV Securities Inc. 99.42% 99.42%
Trade House Account Club 53
2005 Market St.
Philadelphia, PA 19103
Fifth Third Ohio Tax Free Fund-Institutional Shares
---------------------------------------------------
Fifth Third Bank 99.08% 96.11%
Trust and Investment Services C
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Government Money Market Fund-Investment A Shares
------------------------------------------------------------
FISERV Securities Inc. 90.30% 90.30%
Attn Cash Sweep Department
2005 Market St., 14/th/ Floor
Philadelphia, PA 19103
Fifth Third Government Money Market Fund-Institutional Shares
-------------------------------------------------------------
Fifth Third Bank Trust Dept 99.13% 99.13%
Fifth Third Mutual Funds Department
PO Box 630074
Cincinnati, OH 45263
Fifth Third Prime Money Market Fund-Investment A Shares
-------------------------------------------------------
FISERV Securities Inc. 100% 100%
Attn Cash Sweep Department
2005 Market St., 14/th/ Floor
Philadelphia, PA 19103
Fifth Third Prime Money Market Fund-Investment B Shares
-------------------------------------------------------
FISERV Securities Inc. 99.91% 99.91%
FAO 16147689
2005 Market St., Suite 1200
Philadelphia, PA 19103
Fifth Third Prime Money Market Fund-Institutional Shares
--------------------------------------------------------
Fifth Third Bank Trust Dept 92.14% 92.14%
38 Fountain Square Plaza
Cincinnati, OH 45202
Fifth Third Tax Exempt Money Market Fund-Investment A Shares
------------------------------------------------------------
FISERV Securities Inc. 92.69% 92.69%
Attn Cash Sweep Department
2005 Market St., 14/th/ Floor
Philadelphia, PA 19103
Fifth Third Tax Exempt Money Market Fund-Institutional Shares
-------------------------------------------------------------
Fifth Third Bank 93.56% 92.62%
Trust and Investment Services C
38 Fountain Square Plaza
Cincinnati, OH 45263
31
<PAGE>
Fifth Third U.S. Treasury Money Market Fund-Institutional Shares
----------------------------------------------------------------
Fifth Third Bank Trust Dept 85.36% 85.36%
Fifth Third Mutual Funds Department
PO Box 630074
Cincinnati, OH 45263
Trustees' Compensation
Aggregate Compensation
Name and Position with Trust from Trust*
---------------------------- -----------
Edward Burke Carey, Trustee $7,800
Lee A. Carter, Trustee $7,800
Albert E. Harris, Trustee, Chairman of the Board $9,800
* Information is furnished for the fiscal year ended July 31, 2000. The Trust
is the only investment company in the Fund complex.
Trustee Liability
The Trust's Declaration of Trust provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
Codes of Ethics
Each of the Trust, Fifth Third Bank, Heartland, Morgan Stanley Dean Witter
Investment Management Inc., and Fort Washington Investment Advisors, Inc. as
investment advisor or investment sub-advisor to one or more Funds, and BISYS,
Fund Services Limited Partnership ("BISYS"), as distributor of Fund shares, has
adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act. Each code
permits personnel subject to the code to invest in securities that may be
purchased or held by the Funds.
INVESTMENT ADVISORY SERVICES
Investment Advisors to the Trust
Fifth Third Bank serves as investment advisor to all Funds other than
Pinnacle Fund. It provides investment advisory services through its Trust and
Investment Division. The Trust's advisor to the Pinnacle Fund is Heartland.
Fifth Third Bank and Heartland are wholly-owned subsidiaries of Fifth Third
Bancorp.
Neither advisor shall be liable to the Trust, a Fund, or any shareholder of
any of the Funds for any losses that may be sustained in the purchase, holding,
or sale of any security or for
32
<PAGE>
anything done or omitted by it, except acts or omissions involving willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
imposed upon it by its contract with the Trust.
Because of the internal controls maintained by Fifth Third Bank and
Heartland to restrict the flow of non-public information, a Fund's investments
are typically made without any knowledge of Fifth Third Bank's, Heartland's or
affiliates' lending relationship with an issuer.
33
<PAGE>
Advisory Fees
For its advisory services, Fifth Third Bank receives an annual investment
advisory fee as described in the prospectus. The following shows all investment
advisory fees incurred by the Funds and the amounts of those fees that were
voluntarily waived or reimbursed by the Advisor for the fiscal years ended July
31, 2000, July 31, 1999, and July 31, 1998 (amounts in thousands):
<TABLE>
<CAPTION>
Year ended Amount Year ended Amount Year ended Amount
Fund Name July 31, 2000 Waived-2000 July 31, 1999 Waived-1999 July 31, 1998 Waived-1998
--------- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Government Securities Fund $ 267 $ 56 $ 261 $ 38 $ 228 $ 33
Quality Bond Fund 929 -- 680 -- 545 --
Ohio Tax Free Bond Fund 1,057 -- 1,122 79 980 --
Quality Growth Fund 7,067 -- 4,920 -- 3,810 --
Mid Cap Fund 1,932 -- 1,753 -- 1,725 --
Balanced Fund 2,036 -- 1,673 -- 1,217 --
International Equity Fund 2,037 -- 1,634 -- 1,471 --
Equity Income Fund 1,081 -- 1,311 -- 1,088 --
Bond Fund For Income 1,252 -- 1,369 -- 938 --
Municipal Bond Fund 662 -- 661 -- 591 --
Cardinal Fund 1,482 12 1,364* -- n/a n/a
Pinnacle Fund 952 -- 586 -- 129 --
Government Money Market Fund 2,274 -- 2,789 -- 1,284 52
Prime Money Market Fund 2,260 113 1,657 83 1,762 88
Tax Exempt Money Market Fund 477 477 185 60* n/a n/a
U.S. Treasury Money Market Fund 3,627 1269 3,707 1,298 2,795 978
Technology Fund 89. --
</TABLE>
_______________
/*/ Reflects the period from October 1, 1998 through July 31, 1999.
. Reflects the period from June 5, 2000 through July 31, 2000.
Sub-advisors
Morgan Stanley is the sub-advisor to International Equity Fund under the
terms of a Sub-advisory Agreement between Fifth Third Bank and Morgan Stanley.
Fort Washington Investment Advisors, Inc. is the Sub-advisor to Ohio Money
Market Fund under the terms of a Sub-advisory Agreement between Fifth Third Bank
and Fort Washington Investment Advisors, Inc. Fort Washington Investment
Advisors, Inc. is a subsidiary of The Western and Southern Life Insurance
Company.
Sub-advisory Fees
For its sub-advisory services, Morgan Stanley receives an annual sub-
advisory fee paid by the Advisor as described in the prospectus.
For the year ended July 31, 1998, Morgan Stanley earned fees from the
Advisor for the International Equity Fund of $777,259. For the year ended July
31, 1999, Morgan Stanley earned fees from International Equity Fund of $735,375.
For the year ended July 31, 2000, Morgan Stanley earned fees of $1,998,111 from
the International Equity Fund.
Administrative Services
34
<PAGE>
BISYS, 3435 Stelzer Road, Columbus, Ohio 43219, provided administrative
personnel and services to the Funds for the fees set forth in the prospectus.
The following shows all fees earned by BISYS for providing administrative
services to the Funds, and the amounts of those fees that were voluntarily
waived, for the years ended July 31, 1998, July 31, 1999, and July 31, 2000
(amounts in thousands):
<TABLE>
<CAPTION>
Year ended Amount Year ended Amount Year ended Amount
Fund Name July 31, 2000 Waived-2000 July 31, 1999 Waived-1999 July 31, 1998 Waived-1998
--------- ------------- ----------- -------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Government Securities Fund $ 80 $ 49 $ 83 $ 46 $ 76 $ 41
Quality Bond Fund 295 143 217 120 180 99
Ohio Tax Free Fund 331 68 358 176 324 142
Quality Growth Fund 1,556 252 1,079 290 865 100
Mid Cap Fund 412 126 385 156 383 116
Balanced Fund 448 151 367 91 277 116
International Equity Fund 355 -- 292 -- 265 --
Equity Income Fund 237 81 288 75 247 113
Bond Fund For Income 401 87 437 70 310 111
Municipal Bond Fund 206 120 211 116 196 108
Cardinal Fund 434 210 400* 25 n/a n/a
Pinnacle Fund 203 -- 129 9 22 11
Government Money Market Fund 1,060 381 1,245 697 582 321
Prime Money Market Fund 958 463 741 372 801 441
Tax Exempt Money Market Fund 167 22 66* 37 n/a n/a
U.S. Treasury Money Market Fund 1,539 907 1,659 927 1,267 699
Technology Fund 14. --
</TABLE>
________________
/*/ Reflects the period from October 1, 1998 through July 31, 1999.
//\/ Reflects the period from June 5, 2000 through July 31, 2000.
Fifth Third Bank performs sub-administration services on behalf of each
Fund (other than Funds in existence for less than one year), for which it
receives compensation from BISYS Fund Services L.P. For the years ended July 31,
1998, July 31, 1999, and July 31, 2000, Fifth Third Bank earned the following
sub-administrative fees (Amounts in Thousands):
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
Fund Name July 31, 2000 July 31, 1999 July 31, 1998
--------- ------------- ------------- -------------
<S> <C> <C> <C>
Government Securities Fund $ 14 $ 12 $ 10
Quality Bond Fund $ 49 $ 31 $ 24
Ohio Tax Free Fund $ 48 $ 51 $ 44
Quality Growth Fund $ 253 $154 $118
Mid Cap Fund $ 82 $ 55 $ 53
Balanced Fund $ 72 $ 52 $ 38
International Equity Fund $ 57 $ 41 $ 36
Equity Income Fund $ 38 $ 41 $ 33
Bond Fund for Income $ 64 $ 62 $ 42
Municipal Bond Fund $ 34 $ 30 $ 27
Cardinal Fund $ 70 $ 68 n/a
Pinnacle Fund $ 33 $ 18 $ 3
Government Money Market Fund $ 159 $174 $ 79
Prime Money Market Fund $ 162 $104 $109
Tax Exempt Money Market Fund $ 27 $ 11 n/a
U.S. Treasury Money Market Fund $ 256 $232 $172
Technology Fund $ 0. n/a n/a
</TABLE>
.Reflects the period from June 5, 2000 through July 31, 2000
Custody of Fund Assets
Under the custodian agreement, Fifth Third Bank holds each Fund's portfolio
securities and keeps all necessary records and documents relating to its duties.
Pursuant to an agreement with Fifth Third Bank, The Bank of New York, acts as
the International Equity Fund's sub-
35
<PAGE>
custodian for foreign assets held outside the United States and employs sub-
custodians. Fees for custody services are based upon the market value of Fund
securities held in custody plus out-of-pocket expenses. For fiscal years ended
July 31, 2000, July 31, 1999, and July 31, 1998, those fees were approximately
$503,000 $510,000 and $449,000, respectively.
Transfer Agent and Dividend Disbursing Agent
Fifth Third Bank serves as transfer agent and dividend disbursing agent for
the Funds. The fee paid to the transfer agent is based upon the size, type and
number of accounts and transactions made by shareholders. Fifth Third Bank also
maintains the Trust's accounting records. The fee paid for this service is based
upon the level of the Funds' average net assets for the period plus out-of-
pocket expenses. The following shows all fees earned by Fifth Third for
providing transfer agency and dividend disbursing agency services, and the
amounts of those fees that were voluntarily waived, for the years ended July 31,
2000, July 31, 1999, and July 31, 1998 (amounts in thousands):
<TABLE>
<CAPTION>
Year Ended July 31, Year Ended July 31, Year Ended July 31,
Fund Name 2000 1999 1998
--------- ---------------------------------------------------------------------
<S> <C> <C> <C>
Government Securities Fund $ 14 $ 16 $ 12
Quality Bond Fund $ 30 $ 28 $ 19
Ohio Tax Free Fund $ 19 $ 44 $ 28
Quality Growth Fund $ 95 $ 90 $ 25
Mid Cap Fund $ 45 $ 51 $ 36
Balanced Fund $ 50 $ 32 $ 14
International Equity Fund $ 115 $ 73 $ 51
Equity Income Fund $ 25 $ 30 $ 24
Bond Fund for Income $ 39 $ 28 $ 22
Municipal Bond Fund $ 22 $ 25 $ 23
Cardinal Fund $ 123 $ 28 n/a
Pinnacle Fund $ 31 $ 38 $ 10
Government Money Market Fund $ 24 $ 285 $ 14
Prime Money Market Fund $ 34 $ 23 $ 28
Tax Exempt Money Market Fund $ 25 $ 52 n/a
U.S. Treasury Money Market Fund $ 43 $ 35 $ 25
Technology Fund $ 3. n/a n/a
</TABLE>
.Reflects the period from June 5, 2000 through July 31, 2000.
BISYS serves as the sub-transfer agent for the Funds. The fee paid for this
service is based upon the level of the Fund's average daily net assets ("asset
based fee") plus out-of-pocket expenses. In the event, the combined net assets
of all of the Funds fall below $3.5 billion at any time during the period, the
fee paid shall be the sum of the asset-based fee and an account-based fee.
LEGAL COUNSEL
-------------
Ropes & Gray, Suite 800 East, One Franklin Square, 1301 K Street, N.W.,
Washington, D.C. 20005 is counsel to the Funds.
36
<PAGE>
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Advisors and Sub-advisors look for prompt execution
of the order at a favorable price. In working with dealers, the Advisors and
Sub-advisors will generally use those who are recognized dealers in specific
portfolio instruments, except when a better price and execution of the order can
be obtained elsewhere. The Advisors and Sub-advisors make decisions on portfolio
transactions and selects brokers and dealers subject to guidelines established
by the Trustees.
The Advisors and Sub-advisors may select brokers and dealers who offer
brokerage and research services. These services may be furnished directly to the
Funds or to the Advisors and Sub-advisors and may include advice as to the
advisability of investing in securities, security analysis and reports, economic
studies, industry studies, receipt of quotations for portfolio evaluations, and
similar services.
The Advisors and Sub-advisors and their affiliates exercise reasonable
business judgment in selecting brokers who offer brokerage and research services
to execute securities transactions. They determine in good faith that
commissions charged by such persons are reasonable in relationship to the value
of the brokerage and research services provided. For the fiscal year ended July
31, 2000, the Funds paid brokerage commissions in exchange for the brokerage and
research services described above in the following amounts: Cardinal, $9,100 of
the $71,894 total brokerage commissions paid; Technology, $7,365 of the $35,245
total brokerage commissions paid; Balanced, $27,012 of the $124,465 total
brokerage commission paid; Equity Income $49,230 of the $171,911 total brokerage
commissions paid; Mid Cap, $69,677 of the $243,226 total brokerage commissions
paid; Municipal, $14,498 of the $14,498 total brokerage commissions paid;
Pinnacle, $105,572 of the $150,161 total brokerage commissions paid; and Quality
Growth, $53,138 of the $347,918 total brokerage commissions paid. For the fiscal
year ended July 31, 1999, the Funds paid brokerage commissions in exchange for
brokerage and research services described above in the following amounts: Ohio
Tax Free Bond, $2,767 of the $2,767 total brokerage commissions paid; Quality
Growth, $87,290 of the $438,887 total brokerage commissions paid; Mid Cap,
$44,181 of the $309,794 total brokerage commissions paid; Balanced, $26,749 of
the $142,315 total brokerage commissions paid; Equity Income, $67,699 of the
$263,461 total brokerage commissions paid; Bond Fund for Income, $700 of the
$700 total brokerage commissions paid; Municipal Bond, $2,740 of the $2,740
total brokerage commissions paid; Cardinal, $196,608 of the $196,608 total
brokerage commissions paid; and Pinnacle, $134,823 of the $134,823 total
brokerage commissions paid. For the fiscal year ended July 31, 1998, the Funds
paid brokerage commissions in exchange for the brokerage and research serviced
described above in the following amounts: U.S Government Securities, $1,250 of
the $1,250 total brokerage commissions paid; Bond Fund for Income, $625 of the
$625 total brokerage commissions paid; Cardinal, $6,600 of the $118,629 total
brokerage commissions paid; Quality Bond, $300 of the $300 total brokerage
commissions paid; Balanced, $18,142 of the $110,392 total brokerage commissions
paid; Equity Income, $20,661 of the $156,975 total brokerage commissions paid;
Mid Cap, $41,903 of the $230,000 total brokerage commissions paid; Municipal,
$2,000 of the $2,000 total brokerage commissions paid; Pinnacle, $12,127 of the
$16,967 total brokerage commissions paid; Quality Growth, $83,964 of the
$489,266 total brokerage commission paid.
Research services provided by brokers may be used by the Advisors and Sub-
advisors in advising the Funds and other accounts. To the extent that receipt of
these services may supplant services for which the Advisors and Sub-advisors or
their affiliates might otherwise have paid, it would tend to reduce their
expenses.
37
<PAGE>
Allocation of transactions, including their frequency, to various dealers
is determined by fifth Third Bank and each Sub-Adviser in its best judgment and
in a manner deemed fair and reasonable to Shareholders. The Major consideration
in allocating brokerage business is the assurance that best execution is being
received on all transactions effected for all accounts. Brokerage will at times
be allocated to firms that supply research, statistical data and other services
when the terms of the transaction and the capabilities of different
broker/dealers are consistent with the guidelines set forth in Section 28(e) of
the Securities Exchange Act of 1934. Information so received is sin addition to
and not in lieu of services required to be performed by Fifth Third Bank and
each Sub-Adviser and does not reduce the advisory fees payable to Fifth Third or
each Sub-Adviser. Such information may be useful to Fifth Third Bank or each
Sub-Adviser in serving both the Funds and other clients and, conversely,
supplemental information obtained by the placement of business of other clients
may be useful to the Fifth Third Bank or each Sub-Adviser in carrying out its
obligations to the Funds.
Although investment decisions for the Funds are made independently from
those of the other accounts managed by the Advisors and Sub-advisors, the
Advisors and Sub-advisors may invest Fund assets in the same securities and at
the same time as they invest assets of other accounts that they manage. When one
of the Funds and one or more other accounts managed by the Advisors and Sub-
advisors are prepared to invest in, or desire to dispose of, the same security,
available investments or opportunities for sales will be allocated in a manner
believed by the Advisors and Sub-advisors to be equitable to each. In some
cases, this procedure may adversely affect the price paid or received by the
Funds or the size of the position obtained or disposed of by the Funds. In other
cases, however, it is believed that coordination and the ability to participate
in volume transactions will be to the benefit of the Funds.
During the fiscal year ended July 31, 2000, the Funds acquired securities
of the Funds' regular brokers or dealers or their parents as follows:
Fund Security Principal/Shares Market Value
---- -------- ---------------- ------------
Balanced Fund A.G.Edwards, Inc. 40,000 $ 2,115,000
International Equity ABN Amro Holdings NV 24,826 $ 602,000
Credit Suisse Group,
Registered 75 $ 22,000
UBS AG, Registered 6,464 $ 932,000
Equity Income Fund A.G.Edwards Inc. 78,000 $ 4,124,000
Pinnacle Fund Merrill Lynch &
Co., Inc. 23,515 $ 3,039,000
Mid Cap Fund A.G.Edwards, Inc. 250,000 $13,219,000
Brokerage commissions paid by the Funds in secondary trading are as follows:
38
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended
July 31, 2000 July 31, 1999 July 31, 1998
------------- ------------- -------------
<S> <C> <C> <C>
Fund Name
---------
Government Securities Fund n/a n/a $ 1,250
Quality Bond Fund n/a n/a $ 300
Ohio Tax Free Fund n/a $ 2,768 n/a
Quality Growth Fund $347,918 $405,487 $495,026
Mid Cap Fund $243,226 $313,878 $230,000
Balanced Fund $124,465 $145,176 $111,172
International Equity Fund $ 34,299 $114,330 $163,055
Equity Income Fund $171,911 $281,046 $156,975
Bond Fund For Income n/a n/a $ 625
Municipal Bond Fund $ 14,498 $ 2,740 $ 2,000
Cardinal Fund $231,463 $231,463 $118,629
Pinnacle Fund $150,161 $141,898 $ 16,967
Government Money Market Fund n/a n/a n/a
Prime Money Market Fund n/a n/a n/a
Tax Exempt Money Market Fund n/a n/a n/a
U.S. Treasury Money Market Fund n/a n/a n/a
Technology Fund $ 35,245 n/a n/a
</TABLE>
Reflects the period from 5, 2000 through July 31, 2000.
PURCHASING SHARES
Shares of the Funds are sold at their net asset value, less any applicable
sales charge on days the New York Stock Exchange and the Federal Reserve Bank of
Cleveland are open for business. The procedure for purchasing Investment A
Shares, Investment B Shares, Investment C Shares or Institutional Class Shares
of the Funds is explained in the prospectus for such Fund and Class under
"Investing in the Funds."
Distribution Plan and Administrative Services Agreement (Investment C Shares
Only)
With respect to Investment A Shares, Investment B Shares and Investment C
Shares of the Funds, the Trust has adopted a Plan pursuant to Rule l2b-1 which
was promulgated by the Securities and Exchange Commission pursuant to the
Investment Company Act of 1940. The Plan provides for payment of fees to the
distributor to finance any activity which is principally intended to result in
the sale of a Fund's Shares subject to the Plan. Such activities may include the
advertising and marketing of Shares; preparing printing, and distributing
prospectuses and sales literature to prospective shareholders, brokers, or
administrators; and implementing and operating the Plan. Pursuant to the Plan,
the distributor may enter into agreements to pay fees to brokers for
distribution and administrative support services and to other participating
financial institutions and persons for distribution assistance and support
services to the Funds and their shareholders. The administrative services are
provided by a representative who has knowledge of the shareholder's particular
circumstances and goals, and include, but are not limited to: communicating
account openings; communicating account closings; entering purchase
transactions; entering redemption transactions; providing or arranging to
provide accounting support for all transactions, wiring funds and receiving
funds for Share purchases and redemptions, confirming and reconciling all
transactions, reviewing the activity in Fund accounts, and providing training
and supervision of broker personnel; posting and reinvesting dividends to Fund
accounts or arranging for this service to be performed by the Funds' transfer
agent; and maintaining and distributing current copies of prospectuses and
shareholder reports to
39
<PAGE>
the beneficial owners of Shares and prospective shareholders.
The Trustees expect that the Plan will result in the sale of a sufficient
number of Shares so as to allow a Fund to achieve economic viability. It is also
anticipated that an increase in the size of a Fund will facilitate more
efficient portfolio management and assist a Fund in seeking to achieve its
investment objective.
Pursuant to the Plan, with respect to Investment A Shares, the Funds are
authorized to compensate the distributor at the annual rate of up to 0.25% of
the average aggregate net asset value of the Investment A Shares of each
applicable Fund held during the month.
Pursuant to the Plan, with respect to Investment B Shares, the Funds which
offer Investment B Shares, are authorized to compensate the distributor at the
annual rate of up to 1.00% of the average aggregate net asset value of the
Investment B Shares of each applicable Fund held during the month. Investment B
Shares are new and the Funds have not accrued or paid any 12b-1 fees for these
Shares.
Pursuant to the Plan, with respect to Investment C Shares, the Funds are
authorized to compensate the distributor at the annual rate of up to 0.75% of
the average aggregate net asset value of the Investment C Shares of each
applicable Fund held during the month. For the fiscal year ended July 31, 2000,
the received $ pursuant to the Plan. For the fiscal year ended July 31, 1999,
the Distributor received $119,000 pursuant to the Plan.
With respect to Investment C Shares, the Trust may enter into an
Administrative Service Agreement to permit the payment of fees to financial
institutions, including Fifth Third Bank, to cause services to be provided to
shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. Benefits to shareholders of Investment C
Shares of the Funds may include: (1) providing personal services to
shareholders; (2) investing shareholder assets with a minimum of delay and
administrative detail; (3) enhancing shareholder recordkeeping systems; and (4)
responding promptly to shareholders' requests and inquiries concerning their
accounts.
For the fiscal year ended July 31, 2000, the Funds paid $ to Fifth Third
Bank to compensate BHC Securities, Inc. for providing administrative services to
Investment C Shares of the Funds.
Purchases with Proceeds from Redemptions of Unaffiliated Mutual Fund Shares
Investors may purchase Investment A Shares of the Funds at net asset value,
without a sales charge, with the proceeds from the redemption of shares of an
unaffiliated mutual fund that is not a money market or stable net asset value
fund. If the purchase of Investment A Shares is made with proceeds from the
redemption of mutual fund shares that were not sold with a sales charge or
commission, the investor must have held such mutual fund shares for at least 90
days to be eligible for the purchase of Investment A Shares at net asset value.
The purchase must be made within 60 days of the redemption, and the Funds must
be notified by the investor in writing, or by his financial institution, at the
time the purchase is made.
40
<PAGE>
Conversion of Investment B Shares to Investment A Shares
A shareholder's Investment B Shares of the Fund, including all Shares
received as dividends or distributions with respect to such Shares, will
automatically convert to Investment A Shares of the Fund at the end of eight
years following the issuance of such Shares, consequently, they will no longer
be subject to the higher expenses borne by Investment B Shares. The conversion
rate will be determined on the basis of the relative per Share net asset values
of the two classes and may result in a shareholder receiving either a greater or
fewer number of Investment A Shares than the Shares so converted.
Conversion to Federal Funds
It is the Funds' policy to be as fully invested as possible so that maximum
interest or dividends may be earned. To this end, all payments from shareholders
must be in federal funds or be converted into federal funds. Fifth Third Bank
acts as the shareholder's agent in depositing checks and converting them to
federal funds.
Exchanging Securities for Fund Shares
Investors may exchange securities they already own for Shares of a Fund or
they may exchange a combination of securities and cash for Fund Shares. Any
securities to be exchanged must, in the opinion of the Advisor, meet the
investment objective and policies of each Fund, must have a readily
ascertainable market value, must be liquid, and must not be subject to
restrictions on resale. An investor should forward the securities in negotiable
form with an authorized letter of transmittal to Fifth Third Bank. A Fund will
notify the investor of its acceptance and valuation of the securities within
five business days of their receipt by the Advisor.
A Fund values such securities in the same manner as a Fund values its
assets. The basis of the exchange will depend upon the net asset value of Shares
of a Fund on the day the securities are valued. One Share of a Fund will be
issued for each equivalent amount of securities accepted.
Any interest earned on the securities prior to the exchange will be
considered in valuing the securities. All interest, dividends, subscription,
conversion, or other rights attached to the securities become the property of a
Fund, along with the securities.
Payments to Dealers
Authorized broker-dealers, financial institutions and other financial
intermediaries who sell shares of Fifth Third Funds and perform services for
fund investors may receive sales commissions, annual fees and other
compensation. Such compensation is paid by the Distributor using money from
sales charges, distribution/service (12b-1) fees and its other resources. From
time to time, the Distributor may elect to pay up to the following amounts:
41
<PAGE>
AMOUNT OF INVESTMENT
INVESTMENT ($) A SHARES
--------------- ----------
Under 50,000 3.825%
50,000 but under 100,000 3.40%
100,000 but under 150,000 2.55%
150,000 but under 250,000 1.70%
250,000 but under 500,000 0.85%
500,000 and above 0.50%*
_________________
* A 1% contingent deferred sales charge shall apply on any portion redeemed
within one year of purchase. Such charge will be applied to the value of the
assets redeemed at the time of purchase or at the time of redemption, whichever
is lower. Payment is available to those financial professionals with an
agreement with the Distributor which provides for such payment. The Distributor
currently imposes no additional conditions on an any financial professional to
amend its agreement with the Distributor to provide for such payment.
Under certain circumstances the Distributor and/or the Advisor may use its
own funds to compensate broker-dealers, financial institutions, and
intermediaries in amounts that are additional to the amounts paid by the
Distributor.
Brokers and agents may charge a transaction fee on the purchase or sale of
shares by shareholders.
REDEEMING SHARES
Shares are redeemed at the next computed net asset value after a Fund
receives the redemption request, less any contingent deferred sales charge.
Redemption procedures are explained in the prospectus under "Redeeming Shares."
Although the Funds do not charge for telephone redemptions, they reserve the
right to charge a fee for the cost of wire-transferred redemptions.
Investment A Shares and Investment C Shares redeemed within one (1) year of
purchase and Investment B Shares redeemed within six (6) years of purchase may
be subject to a contingent deferred sales charge. The contingent deferred sales
charge may be reduced with respect to a particular shareholder where a financial
institution selling Investment B and/or Investment C Shares elects not to
receive a commission from the distributor with respect to its sale of such
Shares.
Redemption in Kind
The Trust has elected to be governed by Rule 18f-1 of the Investment
Company Act of 1940 under which the Trust is obligated to redeem Shares for any
one shareholder in cash only up to the lesser of $250,000 or 1% of a Fund's net
asset value during any 90-day period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that payments should be in kind. In such a case, the Trust will pay
all or a portion of the remainder of the redemption in portfolio instruments,
valued in the same way as the Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable.
42
<PAGE>
Postponement of Redemptions
No Fund may suspend the right of redemption or postpone the date of payment
of redemption proceeds for more than seven days, except that (a) it may elect to
suspend the redemption of shares or postpone the date of payment of redemption
proceeds: (1) during any period that the NYSE is closed (other than customary
weekend and holiday closings) or trading on the NYSE is restricted; (2) during
any period in which an emergency exists as a result of which disposal of
portfolio securities is not reasonably practicable or it is not reasonably
practicable to fairly determine the Fund's net asset values; or (3) during such
other periods as the SEC may by order permit for the protection of investors;
and (b) the payment of redemption proceeds may be postponed as otherwise
provided in this Statement of Additional Information.
DETERMINING NET ASSET VALUE
Net asset values of the Funds generally may change each day. The days on
which the net asset value is calculated by these Funds are described in the
prospectus. The Money Market attempt to maintain a net asset value per share of
$1.00.
Determining Market Value of Securities
The value of the Funds' portfolio securities (with the exception of the
Money Market) are determined as follows:
. for equity securities, according to the last sale price on a national
securities exchange, if available;
. in the absence of recorded sales for listed equity securities, according to
the mean between the last closing bid and asked prices;
. for unlisted equity securities, the latest bid prices;
. for bonds and other fixed income securities, as determined by an independent
pricing service;
. for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service except that short-term
obligations with remaining maturities of less than 60 days at the time of
purchase may be valued at amortized cost; or
. for all other securities, at fair value as determined in good faith by the
Board of Trustees.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may reflect institutional trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data.
The Funds will value futures contracts, options and put options on
financial futures at their market values established by the exchanges at the
close of option trading on such exchanges
43
<PAGE>
unless the Trustees determine in good faith that another method of valuing
option positions is necessary to appraise their fair value.
Valuing Municipal Bonds
With respect to Ohio Tax Free Fund and Municipal Bond Fund, the Trustees
use an independent pricing service to value municipal bonds. The independent
pricing service takes into consideration yield, stability, risk, quality, coupon
rate, maturity, type of issue, trading characteristics, special circumstances of
a security or trading market, and any other factors or market data it considers
relevant in determining valuations for normal institutional size trading units
of debt securities, and does not rely exclusively on quoted prices.
Use of Amortized Cost
The Trustees have decided that the fair value of debt securities authorized
to be purchased by the Money Market and by the other Fund with remaining
maturities of 60 days or less at the time of purchase may be their amortized
cost value, unless the particular circumstances of the security indicate
otherwise. Under this method, portfolio instruments and assets are valued at the
acquisition cost as adjusted for amortization of premium or accumulation of
discount rather than at current market value. The Trustees continually assess
this method of valuation and recommends changes where necessary to assure that
the Fund's portfolio instruments are valued at their fair value as determined in
good faith by the Trustees.
Monitoring Procedures
For the Money Market, the Trustees' procedures include monitoring the
relationship between the amortized cost value per share and the net asset value
per share based upon available indications of market values. The Trustees will
decide what, if any, steps should be taken if there is a difference of more than
0.50% of 1% between the two values. The Trustees will take any steps they
consider appropriate (such as redemption in kind or shortening the average
portfolio maturity) to minimize any material dilution or other unfair results
arising from differences between the two methods of determining net asset value.
Investment Restrictions
For the Money Market, SEC rules require that a Money Market limit its
investments to instruments that, in the opinion of the Trustees or their
delegate, present minimal credit risks and if rated, have received the requisite
rating from one or more nationally recognized statistical rating organizations.
If the instruments are not related, the Trustees or their delegate must
determine that they are of comparable quality. Shares of investment companies
purchased by a Money Market will meet these same criteria and will have
investment policies consistent with the Rule. The Rule also requires a Money
Market to maintain a dollar-weighted average portfolio maturity (not more than
90 days) appropriate to the objective of maintaining a stable net asset value of
$1.00 per share. In addition, no instruments with a remaining maturity of more
than 397 days can be purchased by a Money Market Fund.
44
<PAGE>
Should the disposition of a portfolio security result in a dollar-weighted
average portfolio maturity of more than 90 days, a Money Market will invest its
available cash to reduce the average maturity to 90 days or less as soon as
possible.
A Money Market may attempt to increase yield by trading portfolio
securities to take advantage of short-term market variations. This policy may,
from time to time, result in high portfolio turnover. Under the amortized cost
method of valuation, neither the amount of daily income nor the net asset value
is affected by any unrealized appreciation or depreciation of the portfolio. In
periods of declining interest rates, the indicated daily yield on shares of a
Money Market computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above may tend to be higher than a
similar computation made by using a method of valuation based upon market prices
and estimates.
In periods of rising interest rates, the indicated daily yield on shares of
a Money Market computed the same way may tend to be lower than a similar
computation made by using a method of calculation based upon market prices and
estimates.
Trading in Foreign Securities
Trading in foreign securities may be completed at times which vary from the
closing of regular trading on the New York Stock Exchange. In computing the net
asset value, the Funds (other than the Money Market Funds) value foreign
securities at the latest closing price on the exchange on which they are traded
immediately prior to the closing of the New York Stock Exchange. Certain foreign
currency exchange rates may also be determined at the latest rate prior to the
closing of the New York Stock Exchange. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at current rates. Occasionally,
events that affect these values and exchange rates may occur between the times
at which they are determined and the closing of the New York Stock Exchange. If
such events materially affect the value of portfolio securities, these
securities may be valued at their fair value as determined in good faith by the
Trustees, although the actual calculation may be done by others.
TAX STATUS
Qualification as a Regulated Investment Company
Each Fund intends to qualify annually as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). In order to so qualify and to qualify for the special tax treatment
accorded regulated investment companies and their Shareholders, a Fund must,
among other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, and gains from the
sale of stock, securities, and foreign currencies, or other income (including
but not limited to gains from options, futures, or forward contracts) derived
with respect to its business of investing in such stock, securities, or
currencies; (b) each year distribute at least 90% of its dividends, interest
(including tax-exempt interest), certain other income and the excess, if any, of
its net short-term capital gains over its net long-term capital losses; and (c)
diversify its holdings so
45
<PAGE>
that, at the end of each fiscal quarter (i) at least 50% of the market value of
the Fund's assets is represented by cash, cash items, U.S. Government
securities, securities of other regulated investment companies, and other
securities, limited in respect of any one issuer to a value not greater than 5%
of the value of the Fund's total assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its assets
is invested in the securities (other than those of the U.S. Government or other
regulated investment companies) of any one issuer or of two or more issuers that
the Fund controls and that are engaged in the same, similar, or related trades
or businesses.
If a Fund qualifies as a regulated investment company that is accorded
special tax treatment, the Fund will not be subject to federal income tax on
income paid to its shareholders in the form of dividends (including capital gain
dividends). If a Fund failed to qualify as a regulated investment company
accorded special tax treatment in any taxable year, the Fund would be subject to
tax on its taxable income at corporate rates, and all distributions from
earnings and profits, including any distributions of net tax-exempt income and
net long-term capital gains, would be taxable to shareholders as ordinary
income.
If a Fund fails to distribute in a calendar year substantially all of its
ordinary income for the year and substantially all its net capital gain income
for the one-year period ending October 31 of the year (and any retained amount
from the prior calendar year), the Fund will be subject to a non-deductible 4%
excise tax on the undistributed amounts.
Distributions
Each Fund will distribute at least annually any taxable income or realized
capital gains. Distributions of any taxable net investment income and net short-
term capital gain are taxable as ordinary income. Distributions of each Fund's
net capital gain (i.e., the excess of a Fund's net long-term capital gain over
net short-term capital loss), if any, are taxable as long-term capital gains,
regardless of how long a Shareholder has held Fund shares. Distributions of
taxable income or capital gains are taxable to Fund shareholders whether
received in cash or in Fund shares through automatic reinvestment. Any dividend
declared by a Fund to Shareholders of record on a date in October, November or
December generally is deemed to have been received by its Shareholders on
December 31 of such year (and paid by the Fund on or before such time) provided
that the dividend actually is paid during January of the following year.
If a Fund makes a distribution in excess of its current and accumulated
"earnings and profits" in any taxable year, the excess distribution will be
treated as a return of capital to the extent of a Shareholder's tax basis in
Fund shares, and thereafter as capital gain. A return of capital is not taxable,
but it reduces the Shareholder's tax basis in the shares, thus reducing any loss
or increasing any gain on a subsequent taxable disposition of those shares.
Selling Shares
Shareholders who sell Fund Shares will generally recognize gain or loss in
an amount equal to the difference between their adjusted tax basis in the Fund
Shares and the amount received. If Fund Shareholders hold their Fund Shares as
capital assets, the gain or loss will be a
46
<PAGE>
capital gain or loss. The tax rate generally applicable to net capital gains
recognized by individuals and other noncorporate taxpayers is (i) the same as
the maximum ordinary income tax rate for gains recognized on the sale of capital
assets held for one year or less or (ii) 20% for gains recognized on the sale of
capital assets held for more than one year (as well as capital gain dividends).
For taxable years beginning after December 31, 2000, the maximum capital gain
tax rate for capital assets (including Fund Shares) held by a non-corporate
Shareholder for more than 5 years will be 8 percent and 18 percent (rather than
10 percent and 20 percent). The 18-percent rate applies only to assets the
holding period for which begins after December 31, 2000 (including by way of an
election to mark the asset to the market, and to pay the tax on any gain
thereon, as of January 2, 2001). The mark-to-market election may be
disadvantageous from a federal tax perspective, and Shareholders should consult
their tax advisors before making such an election.
Any loss will be treated as a long-term capital loss to the extent of any
capital gain dividends received with respect to those Fund Shares. For purposes
of determining whether Fund Shares have been held for six months or less, the
holding period is suspended for any periods during which your risk of loss is
diminished as a result of holding one or more other positions in substantially
similar or related property, or through certain options or short sales. In
addition, any loss realized on a sale or exchange of Fund Shares will be
disallowed to the extent that Fund Shareholders replace the disposed of Fund
Shares with other Fund Shares within a period of 61 days beginning 30 days
before and ending 30 days after the date of disposition, which could, for
example, occur as a result of automatic dividend reinvestment. In such an event,
a Fund Shareholder's basis in the replacement Fund Shares will be adjusted to
reflect the disallowed loss.
Borrowing
If a Fund Shareholder borrows money to buy Fund Shares, such Shareholder
may not deduct the interest on that loan. Under Internal Revenue Service rules,
Fund Shares may be treated as having been bought with borrowed money even if the
purchase of the Fund Shares cannot be traced directly to borrowed money.
Hedging
If a Fund engages in hedging transactions, including hedging transactions
in options, futures contracts, and straddles, or other similar transactions, it
will be subject to special tax rules (including constructive sales, mark-to-
market, straddle, wash sale, and short sale rules), the effect of which may be
to accelerate income to the Fund, defer losses to the Fund, cause adjustments in
the holding periods of the Fund's securities, or convert short-term capital
losses into long-term capital losses. These rules could therefore affect the
amount, timing and character of distributions to shareholders.
Certain of a Fund's hedging activities (including its transactions, if any,
in foreign currencies or foreign currency-denominated instruments) are likely to
produce a difference between its book income and its taxable income. If a Fund's
book income exceeds its taxable income, the distribution (if any) of such excess
will be treated as (i) a dividend to the extent of
47
<PAGE>
the Fund's remaining earnings and profits (including earnings and profits
arising from tax-exempt income), (ii) thereafter as a return of capital to the
extent of the recipient's basis in the shares, and (iii) thereafter as gain from
the sale or exchange of a capital asset. If the Fund's book income is less than
its taxable income, the Fund could be required to make distributions exceeding
book income to qualify as a regulated investment company that is accorded
special tax treatment.
Discount Securities
A Fund's investment in securities issued at a discount and certain other
obligations will (and investments in securities purchased at a discount may)
require the Fund to accrue and distribute income not yet received. In order to
generate sufficient cash to make the requisite distributions, a Fund may be
required to sell securities in its portfolio that it otherwise would have
continued to hold.
Backup Withholding
The Funds will be required in certain cases to withhold and remit to the
United States Treasury 31% of taxable dividends and other distributions paid to
any Shareholder who has provided either an incorrect tax identification number
or no number at all, or who is subject to withholding by the Internal Revenue
Service for failure to properly include on his or her tax return payments of
interest or dividends.
The foregoing discussion and the one below regarding the Ohio Tax Free
Fund, the Municipal Bond Fund and the Tax Exempt Money Market Fund under "TAX
STATUS" is only a summary of some of the important Federal tax considerations
generally affecting purchasers of the Funds' Shares. No attempt has been made
to present a detailed explanation of the Federal income tax treatment of the
Funds, and this discussion is not intended as a substitute for careful tax
planning. Accordingly, potential purchasers of the Funds' Shares are urged to
consult their tax advisers with specific reference to their own tax situation.
Foreign Shareholders should consult their tax advisers regarding the U.S. and
foreign tax consequences of an investment in the Funds. In addition, this
discussion is based on tax laws and regulations that are in effect on the date
of this Statement of Additional Information; such laws and regulations may be
changed by legislative, judicial or administrative action, and such changes may
be retroactive.
Additional Tax Information Concerning the Ohio Tax Free Fund, the Municipal Bond
Fund and the Tax Exempt Money Market Fund
Federal Taxation. As indicated in their respective Prospectuses, the Ohio
Tax Free Fund, the Municipal Bond Fund and the Tax Exempt Money Market Fund are
designed to provide individual Shareholders with current tax-exempt interest
income. None of these Funds is intended to constitute a balanced investment
program or is designed for investors seeking capital appreciation. Shares of
the Funds may not be suitable for tax-exempt institutions, retirement plans
qualified under Section 401 of the Code, H.R. 10 plans, and individual
retirement accounts because such institutions, plans and accounts are generally
tax-exempt and, therefore, would not
48
<PAGE>
gain any additional benefit from the Funds' dividends being tax-exempt, and such
dividends would ultimately be taxable to the plan and account beneficiaries when
distributed to them.
The Code permits a regulated investment company that invests at least 50%
of its total assets in tax-free municipal securities (at the close of each
quarter of the Fund's taxable year) to pass through to its investors, tax-free,
net municipal securities interest income to the extent such interest would be
exempt if earned directly. Because the Ohio Tax Free Fund, the Municipal Bond
Fund and the Tax Exempt Money Market Fund intend to be qualified to pay such
exempt-interest dividends, these Funds will be limited in their ability to enter
into taxable transactions, such as forward commitments, repurchase agreements,
securities lending transactions, financial futures and options contracts on
financial futures, tax-exempt bond indices and other assets. The policy of the
Ohio Tax Free Fund, the Municipal Bond Fund and the Tax Exempt Money Market Fund
is to pay at least annually as dividends substantially all of each Fund's
municipal securities interest income net of certain deductions. An exempt-
interest dividend is any dividend or part thereof derived from interest
excludable from gross income and designated as an exempt-interest dividend in a
written notice mailed to Shareholders after the close of such Fund's taxable
year, but the aggregate of such dividends may not exceed the net municipal
securities interest received by each Fund during the taxable year.
Exempt-interest dividends may be treated by Shareholders of the Ohio Tax
Free Fund, the Municipal Bond Fund and the Tax Exempt Money Market Fund as items
of interest excludable from their gross income. However, each such Shareholder
is advised to consult his or her tax adviser with respect to whether exempt-
interest dividends would remain excludable if such Shareholder were treated as a
"substantial user" or a "related person" to such user with respect to facilities
financed through any of the tax-exempt obligations held by such Funds. In
addition, exempt-interest dividends may be taxable for federal alternative
minimum tax purposes and for state and local purposes.
The Ohio Tax Free Fund, the Municipal Bond Fund and the Tax Exempt Money
Market Fund will distribute substantially all of any investment company taxable
income for each taxable year. In general, a Fund's investment company taxable
income will be its taxable income subject to certain adjustments and excluding
the excess of any net long-term capital gains for the taxable year over the net
short-term capital loss, if any, for such year. Distributions of such income
will be taxable to Shareholders as ordinary income. The dividends-received
deduction for corporations is not expected to apply to such distributions.
Because Fund expenses attributable to earning tax-exempt income do not
reduce the Fund's current earnings and profits, a portion of any distribution in
excess of the Fund's net tax-exempt and taxable income may be considered as paid
out of the Fund's earnings and profits and may therefore be treated as a taxable
dividend (even though that portion represents a return of the Fund's capital).
Shareholders receiving social security or railroad retirement benefits may
be taxed on a portion of those benefits as a result of receiving tax-exempt
income (including exempt-interest dividends distributed by the Funds).
49
<PAGE>
A Fund's investments in municipal securities issued at a discount and
certain other portfolio positions will require the Fund to accrue and distribute
income and gains not yet received. In such cases, a Fund may be required to
sell assets (including when it is not advantageous to do so) to generate the
cash necessary to distribute as dividends to its shareholders all of its income
and gains and therefore eliminate any tax liability at the Fund level.
Like the other Funds, if for any taxable year the Ohio Tax Free Fund, the
Municipal Bond Fund and the Tax Exempt Money Market Fund do not qualify for the
special tax treatment afforded regulated investment companies, all of such
Fund's taxable income will be subject to tax at regular corporate rates (without
any deduction for distributions to Shareholders), and municipal securities
interest income, although not taxable to the Funds themselves, would be taxable
to Shareholders as ordinary income when distributed as dividends.
Foreign Taxes
Dividends and interest received by a Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on the Fund's securities. Tax conventions between
certain countries and the United States may reduce or eliminate these taxes.
Foreign countries generally do not impose taxes on capital gains with respect to
investments by foreign investors. If at the end of a Fund's fiscal year more
than 50% of the value of its total assets represents securities of foreign
corporations, the Fund will be eligible to make an election permitted by the
Code to treat any foreign taxes paid by it on securities it has held for at
least the minimum period specified in the Code as having been paid directly by
the Fund's Shareholders in connection with the Fund's dividends received by
them. In this case, Shareholders generally will be required to include in U.S.
taxable income their pro rata share of such taxes, and those Shareholders who
are U.S. citizens, U.S. corporations and, in some cases, U.S. residents will be
entitled to deduct their share of such taxes. Alternatively, such Shareholders
who hold Fund Shares (without protection from risk of loss) on the ex-dividend
date and for at least 15 other days during the 30-day period surrounding the ex-
dividend date will be entitled to claim a foreign tax credit for their share of
these taxes. If a Fund makes the election, it will report annually to its
Shareholders the respective amounts per share of the Fund's income from sources
within, and taxes paid to, foreign countries and U.S. possessions.
PERFORMANCE INFORMATION
Total Return (1)
Institutional Shares
Average Annual Total Return
For the Period Ended July 31, 2000
Since
Fund Name 1 Year 5 Years 10 Years Inception
--------- ------ ------- -------- ---------
U.S. Government Securities Fund 4.34% 5.01% 5.58% 5.84%
Quality Bond Fund 4.66 5.34 6.44 7.83
Ohio Tax Free Bond Fund 3.01 4.2 5.18 4.82
Quality Growth Fund 17.82 24.23 17.79 17.52
Mid Cap Fund 30.65 17.23 15.46 15.93
Balanced Fund 18.6 16.79 14.35 16.1
International Equity Fund 8.29 11.27 -- 9.08
50
<PAGE>
Equity Income Fund -5.96 15.37 11.97 13.82
Bond Fund for Income 4.09 5.08 6.26 7.97
Municipal Bond Fund 2.37 3.88 4.88 6.53
Cardinal Fund 15.2 22.03 16 15.97
Pinnacle Fund 4.07 21.82 15.3 15.94
Government Money Market Fund 5.31 5.03 -- 4.49
Prime Money Market Fund 5.53 5.17 4.8 5.16
Tax Exempt Money Market Fund 3.46 2.85 2.83 3.66
U.S. Treasury Money Market Fund 5.4 5.15 4.78 5.29
Investment A Shares
Average Annual Total Returns
For the Period Ended July 31, 2000
Since
Fund Name 1 Year 5 Years 10 Years Inception
--------- ------ ------- -------- ---------
U.S. Government Securities Fund -0.45% 3.97% 5.04% 5.47%
Quality Bond Fund -0.3 4.17 5.84 7.48
Ohio Tax Free Bond Fund -1.75 3.16 4.65 4.44
Quality Growth Fund 12.3 22.97 17.2 17.18
Mid Cap Fund 24.33 16.02 14.86 15.55
Balanced Fund 12.95 15.6 13.77 15.76
International Equity Fund 3.12 10.14 -- 8.14
Equity Income Fund -10.41 14.19 11.39 13.48
Bond Fund for Income -0.77 4.01 5.7 7.66
Municipal Bond Fund -2.56 2.85 4.35 6.23
Cardinal Fund 9.69 20.64 15.34 15.71
Pinnacle Fund -0.85 20.59 14.72 15.56
Government Money Market Fund 5.1 4.95 -- 4.42
Prime Money Market Fund 5.27 5.07 -- 4.55
Tax Exempt Money Market Fund 3.4 2.85 2.83 3.66
Investment B Shares
Average Annual Total Returns
For the Period Ended July 31, 2000
Since
Fund Name 1 Year 5 Years 10 Years Inception
--------- ------ ------- -------- ---------
Quality Bond Fund -1.32% 4.0% 5.55% 6.96%
Ohio Tax Free Bond Fund -2.93 2.98 4.36 4.0
Quality Growth Fund 11.71 23.03 16.87 16.61
Mid Cap Fund 24.2 16. 14.54 15.02
Balanced Fund 12.39 15.57 13.44 15.18
International Equity Fund 2.14 10.04 -- 8.04
Equity Income -11.5 14.18 11.1 12.93
Pinnacle -2.01 20.61 14.39 15.04
Prime Money Market Fund -0.52 3.95 -- 3.78
51
<PAGE>
Investment C Shares
Average Annual Total Return
For the Period Ended July 31, 2000
Since
Fund Name 1 Year 5 Years 10 Years Inception
--------- ------ ------- -------- ---------
U.S. Government Securities Fund 3.65% 4.19% 4.76% 5.03%
Quality Bond Fund 3.98 4.46 5.59 6.99
Ohio Tax Free Bond Fund 2.25 3.41 4.39 4.03
Quality Growth Fund 17.01 23.33 16.93 16.65
Mid Cap Fund 29.48 16.37 14.61 15.07
Balanced Fund 17.66 15.95 13.51 15.24
International Equity Fund 7.25 10.62 -- 8.54
Equity Income Fund -6.65 14.48 10.99 12.78
Bond Fund for Income 3.43 4.21 5.29 6.95
Cardinal Fund 14.22 19.48 14.33 14.82
Pinnacle Fund 3.26 20.55 14.28 14.97
_______________
Yield (1)
In addition to total returns, the Funds may advertise yields for each of
the share classes. The 30-day SEC yield for the 30 days ended July 31, 2000 were
as follows:
<TABLE>
<CAPTION>
Institutional Shares Investment A Shares Investment C Shares
-------------------- ------------------- -------------------
<S> <C> <C> <C>
U.S. Government Securities Fund 6% 5.31% 5.26%
Quality Bond Fund 6.36 5.87 5.88
Ohio Tax Free Bond Fund 4.14 3.63 3.39
Balanced Fund 1.71 1.4 0.95
Bond Fund for Income 6.02 5.5 5.16
Municipal Bond Fund 4.42 3.96 --
</TABLE>
_______________
(1) Investment B Shares are a new class of Shares, and as of the date of this
Statement of Additional Information, there is no performance history.
For each share class, the yield for a Fund is determined by dividing the
net investment income per share (as defined by the SEC) earned by the Fund over
a thirty-day period by the maximum offering price per share of the Fund on the
last day of the period. This value is then annualized using semi-annual
compounding. This means that the amount of income generated during the thirty-
day period is assumed to be generated each month over a 12-month period and is
reinvested every six months. The yield does not necessarily reflect income
actually earned by the Fund because of certain adjustments required by the SEC
and, therefore, may not correlate to the dividends or other distributions paid
to shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in a Fund,
the performance will be reduced for those shareholders paying those fees.
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<PAGE>
Tax-Equivalent Yield
The Ohio Tax Free Bond Fund, the Ohio Money Market Fund* and the Municipal
Bond Fund may also advertise tax-equivalent yield. The tax-equivalent yield for
the Ohio Tax Free Bond Fund for the 30-day period ended July 31, 2000, was 6.85%
for the Institutional shares, 6.01% for the Investment A shares, and 5.61% for
the Investment C shares, while the tax-equivalent yield for the Municipal Bond
fund for the 30-day period ended July 31, 2000, was 7.32% for the Institutional
shares and 6.56% for the Investment A shares. The tax-equivalent yield of a Fund
is calculated similarly to the yield, but is adjusted to reflect the taxable
yield that the Fund would have had to earn to equal its actual yield, assuming a
39.6% tax rate and assuming that income is 100% tax-exempt.
* The Ohio Money Market Fund is not being offered as of yet.
Tax Equivalency Table
The Ohio Tax Free Fund, the Ohio Money Market Fund and Municipal Bond Fund
may also use a tax-equivalency table in advertising and sales literature. The
interest earned by the municipal obligations in the Ohio Tax Free Fund's
portfolio generally remains free from federal regular income tax and is free
from income taxes imposed by the State of Ohio. The interest earned by the
Municipal Bond Fund's portfolio is generally free from federal regular income
tax. As the tables below indicates, a "tax-free" investment in the Ohio Tax Free
Fund is an attractive choice for investors, particularly in times of narrow
spreads between "tax-free" and taxable yields.
TAXABLE YIELD EQUIVALENT FOR 2000
STATE OF OHIO
FEDERAL TAX BRACKET:
15.00% 28.00% 31.00% 36.00% 39.60%
COMBINED FEDERAL AND STATE TAX BRACKET:
<TABLE>
<CAPTION>
19.425% 33.012% 37.650% 43.228% 46.828%
SINGLE $ 1- $26,251- $63,551- $132,601- OVER
RETURN 26,250 63,550 132,600 288,350 $288,351
Tax-Exempt Yield Taxable Yield Equivalent
<S> <C> <C> <C> <C> <C>
1.50% 1.86% 2.24% 2.41% 2.64% 2.82%
2.00% 2.48% 2.99% 3.21% 3.52% 3.76%
2.50% 3.10% 3.73% 4.01% 4.40% 4.70%
3.00% 3.72% 4.48% 4.81% 5.28% 5.64%
3.50% 4.34% 5.22% 5.61% 6.17% 6.58%
4.00% 4.96% 5.97% 6.42% 7.05% 7.52%
4.50% 5.58% 6.72% 7.22% 7.93% 8.46%
5.00% 6.21% 7.46% 8.02% 8.81% 9.40%
5.50% 6.83% 8.21% 8.82% 9.69% 10.34%
6.00% 7.45% 8.96% 9.62% 10.57% 11.28%
</TABLE>
The maximum marginal tax rate for each bracket was used in calculating the
taxable yield equivalent. Therefore, there is a possibility that your yield may
be higher than those disclosed in the table. Furthermore, additional state and
local taxes paid on comparable taxable investments were not used to increase
federal deductions.
53
<PAGE>
The chart above is for illustrative purposes only. It is not an indicator of
past or future performance of Ohio Tax Free Bond Fund Shares.
Some portion of Ohio Tax Free Fund's and Municipal Bond Fund's income may be
subject to the federal alternative minimum tax and state and local income taxes.
PERFORMANCE COMPARISONS
Each Fund's performance depends upon such variables as: portfolio quality;
average portfolio maturity; type of instruments in which the portfolio is
invested; changes in interest rates and market value of portfolio securities;
changes in each Fund's expenses; and various other factors.
Each Fund's performance fluctuates on a daily basis largely because net
earnings and offering price per share fluctuate daily. Both net earnings and net
asset value per share are factors in the computation of yield and total return
as described above.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Funds use in advertising may include:
. Dow Jones Industrial Average (the "DJIA") represents share prices of selected
blue-chip industrial corporations. The DJIA indicates daily changes in the
average price of stock of these corporations. Because it represents the top
corporations of America, the DJIA index is a leading economic indicator for
the stock market as a whole. (Quality Growth, Balanced, Mid Cap, and Equity
Income Funds)
. Europe, Australia, and Far East ("EAFE") is a market capitalization weighted
foreign securities index, which is widely used to measure the performance of
European, Australian, New Zealand, and Far Eastern stock markets. The index
covers approximately 1,020 companies drawn from 18 countries in the above
regions. The index values its securities daily in both U.S. dollars and local
currency and calculates total returns monthly. EAFE U.S. dollar total return
is a net dividend figure less Luxembourg withholding tax. EAFE is monitored by
Capital International, S.A., Geneva, Switzerland. (International Equity Fund)
. Lehman Muni Bond Fund Index is a broad-based total return index comprised of
8,000 Investment grade, fixed rate, tax-exempt, with a remaining maturity of
at least one year, including state and local general obligation, revenue,
insured and pre-refunded bonds and are selected from issues larger than $50
million dated since January 1984. Bonds are added to the index and weights are
updated monthly, with a one month lag.
54
<PAGE>
. Lehman Brothers Aggregate Bond Index is a total return index measuring both
the capital price changes and income provided by the underlying universe of
securities, weighted by market value outstanding. The Aggregate Bond Index is
comprised of the Lehman Brothers Government Bond Index, Corporate Bond Index,
Mortgage-Backed Securities Index and the Yankee Bond Index. These indices
include: U.S. Treasury obligations, including bonds and notes; U.S. agency
obligations, including those of the Federal Farm Credit Bank, Federal Land
Bank and the Bank for Co-Operatives; foreign obligations, U.S. investment-
grade corporate debt and mortgage-backed obligations. All corporate debt
included in the Aggregate Bond Index has a minimum S&P rating of BBB, a
minimum Moody's rating of Baa, or a Fitch rating of BBB. (Balanced, Quality
Bond and Bond Fund For Income)
. Lehman Brothers 5-Year Municipal Bond Index includes fixed-rate debt
obligations of state and local government entities. The securities have
maturities not less than four years but no more than six years, are investment
grade and are selected from issues larger than $50 million dated since 1984.
(Ohio Tax Free and Municipal Bond Funds)
. Lehman Brothers Government Index is an unmanaged index comprised of all
publicly issued, non-convertible domestic debt of the U.S. government, or any
agency thereof, or any quasi-federal corporation and of corporate debt
guaranteed by the U.S. government. Only notes and bonds with a minimum
outstanding principal of $1 million and a minimum maturity of one year are
included. (Government Securities, Balanced, Quality Bond, and Bond Fund For
Income)
. Lehman Brothers Government/Corporate (Total) Index is comprised of
approximately 5,000 issues which include non-convertible bonds publicly issued
by the U.S. government or its agencies; corporate bonds guaranteed by the U.S.
government and quasi-federal corporations; and publicly issued, fixed rate,
non-convertible domestic bonds of companies in industry, public utilities and
finance. The average maturity of these bonds approximates nine years. Tracked
by Shearson Lehman Brothers, Inc., the index calculates total returns for one
month, three month, twelve month and ten year periods and year-to-date.
(Government Securities, Balanced, Quality Bond, and Bond Fund For Income)
. Lehman Brothers Intermediate Government/Corporate Bond Index: An unmanaged
index comprised of all the bonds issued by the Lehman Brothers
Government/Corporate Bond Index with maturities between 1 and 9.99 years.
Total return is based on price appreciation/depreciation and income as a
percentage of the original investment. Indices are rebalanced monthly by
market capitalization. (Balanced, Quality Bond, Government Securities, and
Bond Fund For Income)
. Lehman Brothers 7-Year Municipal Bond Index includes fixed-rate debt
obligations of state and local government entities. The securities have
maturities between seven and eight years, are investment grade and are
selected from issues larger than $50 million dated since 1984. (Ohio Tax Free
Bond and Municipal Bond Funds)
. Lipper, Inc. ranks funds in various fund categories by making comparative
calculations using total return. Total return assumes the reinvestment of all
capital gains distributions and
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income dividends and takes into account any change in net asset value over a
specific period of time. From time to time, the Fund will quote its Lipper
ranking in the applicable funds category in advertising and sales literature.
(All of the Funds)
. Merrill Lynch Composite 1-5 Year Treasury Index is comprised of approximately
66 issues of U.S. Treasury securities maturing between 1 and 4.99 years, with
coupon rates of 4.25% or more. These total return figures are calculated for
one, three, six, and twelve month periods and year-to-date and include the
value of the bond plus income and any price appreciation or depreciation.
(Government Securities Fund)
. Merrill Lynch Corporate and Government Index includes issues which must be in
the form of publicly placed, nonconvertible, coupon-bearing domestic debt and
must carry a term of maturity of at least one year. Par amounts outstanding
must be no less than $10 million at the start and at the close of the
performance measurement period. Corporate instruments must be rated by S&P or
by Moody's as investment grade issues (i.e., in the BBB/Baa major rating
category or better). (Balanced, Quality Bond, and Bond Fund For Income)
. Merrill Lynch Domestic Master Index includes issues which must be in the form
of publicly placed, nonconvertible, coupon-bearing domestic debt and must
carry a term to maturity of at least one year. Par amounts outstanding must be
no less than $10 million at the start and at the close of the performance
measurement period. The Domestic Master Index is a broader index than the
Merrill Lynch Corporate and Government Index and includes, for example,
mortgage related securities. The mortgage market is divided by agency, type of
mortgage and coupon and the amount outstanding in each agency/type/coupon
subdivision must be no less than $200 million at the start and at the close of
the performance measurement period. Corporate instruments must be rated by S&P
or by Moody's as investment grade issues (i.e., in the BBB/Baa major rating
category or better). (Balanced, Quality Bond and Bond Fund For Income)
. Merrill Lynch 3-Year Treasury Yield Curve Index is an unmanaged index
comprised of the most recently issued 3-year U.S. Treasury notes. Index
returns are calculated as total returns for periods of one, three, six, and
twelve months as well as year-to-date. (Government Securities Fund)
. Merrill Lynch 3-5 Year Treasury Index is comprised of approximately 24 issues
of intermediate-term U.S. government and U.S. Treasury securities with
maturities between 3 and 4.99 years and coupon rates above 4.25%. Index
returns are calculated as total returns for periods of one, three, six and
twelve months as well as year-to-date. (Government Securities Fund)
. Morningstar, Inc., an independent rating service, is the publisher of the bi-
weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000 NASDAQ-
listed mutual funds of all types, according to their risk-adjusted returns.
The maximum rating is five stars, and ratings are effective for two weeks.
(All Funds)
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. Salomon Brothers AAA-AA Corporate Index calculates total returns of
approximately 775 issues which include long-term, high-grade domestic
corporate taxable bonds, rated AAA-AA with maturities of twelve years or more
and companies in industry, public utilities, and finance. (Balanced, Quality
Bond, and Bond Fund For Income)
. Salomon Brothers 3-5 Year Government Index quotes total returns for U.S.
Treasury issues (excluding flower bonds) which have maturities of three to
five years. These total returns are year-to-date figures which are calculated
each month following January 1. (Government Securities Fund)
. S&P/BARRA Growth Index is a sub-index of the S&P 500 composite index of common
stocks. The index represents approximately fifty percent of the S&P 500 market
capitalization and is comprised of those companies with higher price-to-book
ratios (one distinction associated with "growth stocks"). The index is
maintained by Standard and Poor's in conjunction with BARRA, an investment
technology firm. (Quality Growth, Balanced, Mid Cap, and Equity Income Funds)
. S&P Mid Cap 400 Index is comprised of the 400 common stocks issued by medium-
sized domestic companies whose market capitalizations range from $200 million
to $5 billion. The stocks are selected on the basis of the issuer's market
size, liquidity and industry group representation. (Mid Cap Fund)
. Standard & Poor's Ratings Group Daily Stock Price Indices of 500 and 400
Common Stocks are composite indices of common stocks in industry,
transportation, and financial and public utility companies that can be used to
compare to the total returns of funds whose portfolios are invested primarily
in common stocks. In addition, the S&P indices assume reinvestment of all
dividends paid by stocks listed on its indices. Taxes due on any of these
distributions are not included, nor are brokerage or other fees calculated in
the S&P figures. (Quality Growth, Balanced, Mid Cap, Cardinal, Pinnacle and
Equity Income Funds)
. Wilshire Mid Cap 750 Index is a subset of the Wilshire 5000 index of common
stocks. The Mid Cap 750 index consists of those Wilshire 5000 companies ranked
between 501 and 1,250 according to market capitalization. The index ranges in
market capitalization from $400 million to $1.7 billion. (Mid Cap Fund)
Advertisements and other sales literature for the Funds may quote total
returns which are calculated on non-standardized base periods. These total
returns also represent the historic change in the value of an investment in the
Funds based on monthly/quarterly reinvestment of dividends over a specified
period of time.
Advertisements may quote performance information which does not reflect the
effect of the sales load.
FINANCIAL STATEMENTS
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The financial statements for the Funds for the fiscal year ended July 31,
2000 are incorporated herein by reference to the Annual Report to Shareholders
of the Fifth Third Funds dated July 31, 2000. (File Nos. 33-24848 and 811-
5669.) A copy of the Annual Report may be obtained without charge by contacting
the Trust at the address located on the back cover of the prospectus.
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APPENDIX
Standard and Poor's Ratings Group Corporate and Municipal Bond Rating
Definitions
AAA--Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A--Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated "BBB" is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
NR--NR indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy. S&P may apply a plus (+) or
minus (-) to the above rating classifications to show relative standing within
the classifications,
Moody's Investors Service, Inc. Corporate and Municipal Bond Rating Definitions
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as high-
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be
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characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well.
NR--Not rated by Moody's. Moody's applies numerical modifiers, 1, 2 and 3 in
each generic rating classification from Aa through B in its bond rating system.
The modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic rating
category.
Fitch Investors Service, Inc. Long-Term Debt Rating Definitions
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F- I +.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
NR--NR indicates that Fitch does not rate the specific issue. Plus (+) or Minus
(-): Plus and minus signs are used with a rating symbol to indicate the relative
position of a credit within the rating category. Plus and minus signs, however,
are not used in the AAA category.
Standard and Poor's Ratings Group Municipal Note Rating Definitions
SP-1--Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
sign (+) designation.
SP-2--Satisfactory capacity to pay principal and interest.
SP-3--Speculative capacity to pay principal and interest.
Moody's Investors Service Short-Term Loan Rating Definitions
MIG1/VMIGI--This designation denotes best quality. There is a present strong
protection by established cash flows, superior liquidity support or demonstrated
broad based access to the market for refinancing.
MIG2/VMIG2--This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
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Fitch Investors Service, Inc. Short-Term Debt Rating Definitions
F-1 +--Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-I+.
F-2--Good Credit Quality. Issues carrying this rating have a satisfactory degree
of assurance for timely payment, but the margin of safety is not as great as the
F- I + and F- 1 categories.
Standard and Poor's Ratings Group Commercial Paper Rating Definitions
A-1--This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to have extremely strong safety
characteristics are denoted with a plus (+) sign.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
Moody's Investors Service, Inc. Commercial Paper Rating Definitions
Prime-1 --Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of senior short-term promissory obligations.
Prime-1 repayment capacity will often be evidenced by the following
characteristics:
. Leading market positions in well-established industries.
. High rates of return on funds employed.
. Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
. Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
. Well-established access to a range of financial markets and assured sources
of alternate liquidity.
P-2--Issuers (or supporting institutions) rated Prime-2 (P-2) have a strong
capacity for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
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