<PAGE>
As filed with the Securities and Exchange Commission on __________ __, 2000
Registration Nos. 33-24848; 811-5669
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [_]
Post-Effective Amendment No. 31 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 32 [X]
FIFTH THIRD FUNDS
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road
Columbus, Ohio 43219
(Address of Principal Executive Office) (Zip Code)
(888) 799-5353
(Registrant's Telephone Number, including Area Code)
Jeffrey C. Cusick
Vice President
Fifth Third Funds
3435 Stelzer Road
Columbus, Ohio 43219
(Name and Address of Agent for Service)
with a copy to:
John Hunt, Esquire
Goodwin, Procter & Hoar LLP
53 State Street
Boston, Massachusetts 02109
Approximate Date of Proposed Public Offering: As soon as practicable after this
post-effective amendment becomes effective.
================================================================================
It is proposed that this filing will become effective (check appropriate box):
[_] Immediately upon filing pursuant to [_] On pursuant to paragraph (a)
paragraph (b)
[_] 60 days after filing pursuant to [_] On pursuant to
paragraph (a)(1) paragraph (a)(1)
[X] 75 days after filing pursuant to [_] On pursuant to
paragraph (a)(2) paragraph (a)(2) of
rule 485.
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for a
previously-filed post-effective amendment.
================================================================================
<PAGE>
********************************************************************************
* "The information in this prospectus is not complete and may be changed. We may
* not sell those securities until the registration statement filed with the
* Securities and Exchange Commission is effective. This prospectus is not an
* offer to sell these securities and it is not soliciting an offer to buy these
* securities in any state where the offer or sale is not permitted".
********************************************************************************
[LOGO OF FIFTH THIRD FUNDS]
[GRAPHIC]
TECHNOLOGY FUND
Fifth Third Funds
Investment A Shares
Investment C Shares
Working hard to build your wealth!
- -----------------
Prospectus
June 1, 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 critical offense.
<PAGE>
Fifth Third Funds Table of Contents
<TABLE>
<S> <C> <C>
Objectives, Strategies and Risks
- ----------------------------------------------
3 Overview
4 Fifth Third Technology Fund
Shareholder Fees and Fund Expenses
- ----------------------------------------------
6 Fee Table
7 Expense Example
Additional Information About the Fund's
Investments
- ----------------------------------------------
8
Fund Management
- ----------------------------------------------
11 Investment Advisor
11 Portfolio Manager
11 Fund Administration
Shareholder Information
- ----------------------------------------------
12 Purchasing and Selling Fund Shares
12 Purchasing and Adding to Your Shares
13 Selling Your Shares
14 Exchanging Your Shares
14 Distribution Arrangements/Sales
Charges
17 Dividends and Capital Gains
18 Taxation
- ----------------------------------------------
Back Cover
- ----------------------------------------------
Where to learn more about Fifth Third
Funds
</TABLE>
2
<PAGE>
Objectives, Strategies and Risks
Overview
This section provides important information about Fifth Third Technology Fund
(the "Fund"), a separate series of Fifth Third Funds (the "Trust"), including:
. the investment objective
. principal investment strategies
. principal risks, and
. volatility and performance information
The Fund is managed by Fifth Third Bank.
Like all mutual funds (other than money market funds and stable value funds),
the share price of the Fund may rise and fall in value and you could lose
money. There is no guarantee that the Fund will achieve its objective.
3
<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 engaged in
offering, using or developing products, processes or
services that provide or benefit significantly from
technological advances, or are expected to do so. Those
companies may be in a variety of industries and may
include computer hardware, software, electronic components
and systems, telecommunications, Internet, media and
information services companies. They also may include
other companies that use technology extensively in the
development of new or improved products or processes, such
as, securities brokers and consumer products retailers.
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 or recently
have been offered to the public.
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
An investment in lackluster performance.
the Fund is not
a deposit of The Fund, by concentrating in technology stocks, assumes
Fifth Third Bank many of the risks of holding technology stocks. For
or any other example, technology stocks tend to:
bank and is not
insured or . fluctuate in price more widely and rapidly than the
guaranteed by market as a whole
the FDIC or any
other government . underperform other types of stocks or be difficult to
agency. 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.
4
<PAGE>
Fifth Third Technology Fund
[LOGO]
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.
Volatility and Performance Information
The Fund is a new Fund, and as of the date of this prospectus, it did not have
a performance history.
5
<PAGE>
Shareholder Fees and Fund Expenses
Fee Table
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
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. The Fund's fees and expenses are estimates and are based
upon actual operating expenses of other Fifth Third Funds.
<TABLE>
<CAPTION>
Fifth Third
Technology
Fund
A C
Shareholder Fees
<S> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases 4.50% None
- ---------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None None
- ---------------------------------------------------------------------------
Maximum Deferred Sales Load None 1.00%
- ---------------------------------------------------------------------------
Annual Fund Operating Expenses (as a percentage of average net
assets)
Management fees 1.00% 1.00%
- ---------------------------------------------------------------------------
Distribution/Service (12b-1) fees/1/ 0.25% 1.00%
- ---------------------------------------------------------------------------
Other expenses 0.46% 0.46%
- ---------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.71% 2.46%
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Because some of the fund's expenses are expected to be
reduced through expense waivers and reimbursements,
actual total operating expenses for the current year
are expected to be as shown below.
Net Total Annual Fund Operating Expenses 1.71% 2.46%
- ---------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
/1/ Certain Service Organizations may receive fees from the Fund in amounts up
to an annual rate of 0.25% of the daily net asset value of the Fund shares
owned by the shareholders with whom the Service Organization has a servicing
relationship.
6
<PAGE>
Shareholder Fees and Fund Expenses
Expense Example
Use the table below to compare fees and expenses with the fees and expenses of
other mutual funds. The table illustrates 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 or no redemption in the case of Investment C Shares. Because these
examples are hypothetical and for comparison only, your actual costs may be
different.
<TABLE>
<CAPTION>
Fifth Third Technology 1 3
Fund Year Years
--------------------------------
<S> <C> <C>
Investment A Shares $616 $965
--------------------------------
Investment C Shares
Assuming Redemption $349 $767
Assuming no Redemption $249 $767
--------------------------------
</TABLE>
7
<PAGE>
Additional Information About The Fund's Investments
The primary investments and investment strategies of the Fund are described
above. Below are descriptions of some additional investments and strategies of
the Fund, some of its risks as well as other risks of investing in the Fund.
Please note, though, that the Fund may adjust the composition of its portfolio
as market and economic conditions change.
The success of achieving the Fund's investment strategy depends on Fifth Third
Bank's ability to assess the potential of the securities in which the Fund
invests as well as to evaluate and anticipate changing economic and market
conditions.
International Many U.S. companies in which the Fund may invest generate
Exposure significant revenues and earnings from abroad. As a
result, those companies and the prices of their
securities may be affected by weaknesses in global and
regional economies and the relative value of foreign
currencies to the U.S. dollar. Taken as a whole, those
factors could adversely affect the price of Fund shares.
Foreign Foreign securities are generally more volatile than their
Securities domestic counterparts, in part because of higher
political and economical risks, the general lack of
reliable information and fluctuations in currency
exchange rates. Those risks are usually higher in less
developed countries.
In addition, foreign securities may be more difficult to
resell and the markets for them less efficient than for
comparable U.S. securities. Even where a foreign security
increases in price in its local currency, the
appreciation may be diluted by the negative effect of
exchange rates when the security's value is converted to
U.S. dollars. Foreign withholding taxes also may apply
and errors and delays may occur in the settlement process
for foreign securities.
The Fund may use foreign currencies and related
instruments to hedge its foreign investments.
Repurchase The Fund may enter into repurchase agreements. A
Agreements repurchase agreement is an agreement in which the Fund
buys securities from a bank or other financial
institution and agrees to sell it back at a specified
time and place. The risks of repurchase agreements
include the risk that a counterparty will not buy back
the securities as required and the securities decline in
value. To mitigate those risks, the Fund intends to enter
repurchase agreements only with high quality
counterparties and purchase only high quality, short-term
debt securities.
Securities The Fund may seek additional income or fees by lending
Lending portfolio securities to qualified institutions. By
reinvesting any cash collateral it receives in these
transactions, the Fund could realize additional gains or
losses. If the borrower fails to return the securities
and the invested collateral has declined in value, the
Fund could lose money.
8
<PAGE>
Additional Information About The Fund's Investments
Any securities that are thinly traded or whose resale is
Restricted and restricted can be difficult to sell at a desired time and
Illiquid Securities price. Some of those securities are new and complex, and
trade only among institutions; the markets for these
securities are still developing and may not function as
efficiently as established markets. Owning a large
percentage of restricted or illiquid securities could
hamper the Fund's ability to raise cash in order to meet
redemptions. Also, because there may not be an
established market price for these securities, the Fund
may have to estimate their value, which means that their
valuation (and, to a much smaller extent, the valuation
of the Fund) may have a subjective element.
Derivatives Derivatives, a category that includes warrants, options
and futures, are financial instruments whose value
derives from another security, an index or currency. The
Fund may use derivatives for hedging (attempting to
offset a potential loss in one position by establishing
an interest in an opposite position). This includes the
use of currency-based derivatives for hedging its
positions in foreign securities. The Fund may also use
derivatives for speculation (investing for potential
income or capital gain).
While hedging can guard against potential risks, it adds
to the Fund's expenses and can eliminate some
opportunities for gains. There is also a risk that a
derivative intended as a hedge may not perform as
expected.
The main risk with derivatives is that some types can
amplify a gain or loss, potentially earning or losing
substantially more money than the actual cost of the
derivative.
With some derivatives, whether used for hedging or
speculation, there is also the risk that the counterparty
may fail to honor its contract terms, causing a loss for
the Fund.
When-Issued The Fund may invest in securities prior to their date of
Securities issue. These securities could fall in value by the time
they are actually issued, which may be any time from a
few days to over a year.
Bonds The value of any bond held by the Fund is likely to
decline when interest rates rise; this risk is greater
for bonds with longer maturities. A less significant risk
is that a bond issuer could default on principal or
interest payments, causing a loss for the Fund.
Defensive Investing During unusual market conditions, the Fund may place up
to 100% of total assets in cash or high-quality, short-
term debt securities. To the extent that the Fund does
this, it is not pursuing its goal.
9
<PAGE>
Additional Information About The Fund's Investments
Year 2000 Fifth Third Bank and BISYS Fund Services Limited
Partnership ("BISYS"), the Funds' administrator, have not
experienced any computer problems related to the year
2000 that have had a material effect on any Fifth Third
Fund. There can be no assurances in this area, however,
and although Fifth Third Funds and BISYS have undertaken
significant projects to minimize the risk of year 2000
computer problems, some factors, including the year 2000
compliance of Fifth Third Fund's and BISYS's suppliers,
are not within their direct control and could negatively
affect communications systems, investment markets or the
economy in general.
10
<PAGE>
Fund Management
Investment Advisor
Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, serves as
investment advisor to the Fund. The advisor is a subsidiary of Fifth Third
Bancorp.
As of March 31, 2000, Fifth Third Bank had approximately $ billion of assets
under management, including approximately $ billion of assets of Fifth Third
Funds.
The annual management fee to be paid by the Fund is 1.00% of average net
assets.
Portfolio Manager
Fifth Third Bank
Steven J Mygrant has been the Director of Equity Analysis at Fifth Third Bank
since 1996. 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 an Equity Analyst covering semiconductor, semiconductor
equipment, enterprise hardware and software sectors at Fifth Third 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.
Fund Administration
BISYS serves as the administrator of the Funds. The administrator generally
assists in all aspects of the Fund's administration and operation, including
providing the Funds with certain administrative personnel and services
necessary to operate the Funds, such as legal and accounting services. BISYS
provides these at an annual rate as specified below:
<TABLE>
<CAPTION>
Maximum Average Aggregate Daily
Aministrative Feed 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 the 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 the Fund, including providing certain
administrative personnel and services necessary to operate the Fund. Fifth
Third Bank receives a fee from BISYS for providing sub-administrative services
at an annual rate of 0.025% of the average aggregate daily net assets of the
Fund.
11
<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 Fund 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.
The 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. The Fund's NAV may change on days when
shareholders will not be able to purchase or redeem Fund shares. The Fund 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 Fund or its transfer
agent. All orders must be received by the Fund or its transfer agent prior to
4:00 p.m. Cincinnati time in order to receive that day's NAV.
You may purchase Investment A 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. 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 Fund,
and you should consult your account documents for full details. Your shares in
the Fund 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 Fund 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.
Minimum The minimum initial investment in Investment A shares or
Investments Investment C shares of the Fund offered by this Prospectus
is $1,000. Subsequent investments must be in amounts of at
least $50.
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 Fund may reject a purchase
order for any reason.
Systematic You may make monthly systematic investments in Investment
Investment A shares of the Fund from your bank account. There is no
Program minimum amount required for initial amounts invested into
the Fund. You may elect to make systematic investments on
the 15th of each month, the last business day of each
month, or both. If the 15th or the last business day of a
month is not a day on which the Fund is open for business,
the purchase will be made on the previous day the Fund is
open for business. Please contact Fifth Third Securities,
Inc. or your financial institution for more information.
12
<PAGE>
Shareholder Information
Avoid 31% Tax Withholding
The 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
Fund, 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.
You may sell Investment A shares through Fifth Third Securities, Inc. or the
financial institution through which you purchased them.
The entity through which you are selling your shares is responsible for
transmitting the order to the Fund, 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 Fund prior to the time designated by the Fund for
receiving orders on a specific day, you will not receive the dividend declared
for that day.
Systematic Withdrawal Plan
You may make automatic withdrawals on a monthly, quarterly or annual basis on
the last day of that period that the Fund is open for business. Please contact
Fifth Third Securities, Inc. or your financial institution for more
information.
Postponement of Redemption Payments
The 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 to
the Fund your request by regular mail to: Fifth Third Funds, P.O. Box 5354,
Cincinnati, Ohio 45201-5354, or by express mail to: Fifth Third Funds, 312
Walnut Street, 21st Floor, Cincinnati, Ohio 45202-3874.
13
<PAGE>
Shareholder Information
Exchanging Your Shares
You may exchange If exchanging shares through Fifth Third Securities, Inc.
your Fund shares or your financial institution, ask it for exchange
for the same procedures or call 1-888-799-5353.
class of shares
of any other Notes on exchanges
Fifth Third Fund.
No transaction To prevent disruption in the management of the Fund,
fees are charged market timing strategies and frequent exchange activity
for exchanges. Be may be limited by the Fund. Although not anticipated, the
sure to read the Fund may reject exchanges, or change or terminate rights
Prospectus to exchange shares at any time.
carefully of any
Fund into which When exchanging from a Fund that has no sales charge or a
you wish to lower sales charge to a Fund with a higher sales charge,
exchange shares. you will pay the difference.
You must meet the Shares of the new Fund must be held in the same account
minimum name, with the same registration and tax identification
investment numbers, as the shares of the old Fund.
requirements for
the Fund into The Exchange Privilege (including automatic exchanges)
which you are may be changed or eliminated at any time.
exchanging.
Exchanges from The exchange privilege is available only in states where
one Fund to shares of the Fund may be sold.
another are
taxable for All exchanges are based on the relative net asset value
investors subject next determined after the exchange order is received by
to federal or the Fund.
state income
taxation. These
procedures apply
only to exchanges
between existing
accounts.
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.
Distribution
Arrangements/ This section describes the sales charges and fees you
Sales Charges will pay as an investor in different share classes
offered by the Fund and ways to qualify for reduced sales
charges.
<TABLE>
<CAPTION>
Investment A Investment C
<S> <C> <C>
Sales Charge (Load) Front-end No front-end
sales charge sales charge.
(not A contingent
applicable to deferred sales
money market charge (CDSC)
funds); will be
reduced sales imposed on
charges shares
available. redeemed
within 12
months after
purchase;
Distribution/Service Subject to Subject to
(12b-1) Fee annual annual
distribution distribution
and and
shareholder shareholder
servicing fees servicing fees
of up to 0.25% of up to 1.00%
of the Fund's of the Fund's
assets. assets.
Fund Expenses Lower annual Higher annual
expenses than expenses than
Investment C Investment A
shares. shares.
</TABLE>
14
<PAGE>
Shareholder Information
Calculation of Sales Charges
Investment A Investment A shares are sold at their public offering
Shares price. This price includes the initial sales charge.
Therefore, part of the money you send to the Fund 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>
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, in
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
15
<PAGE>
Shareholder Information
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 Fund) or accounts of
immediate family household members (spouse and children
under 21) to achieve reduced sales charges.
Sales Charge The following transactions qualify for waivers of sales
Waivers 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 Fund;
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.
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).
16
<PAGE>
Shareholder Information
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.
Distribution/Service 12b-1 fees compensate the Distributor and other dealers
(12b-1) Fees and investment representatives for services and expenses
related to the sale and distribution of the Fund's shares
and/or for providing shareholder services. 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.
. Investment C shares pay a 12b-1 fee 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. 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.
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.
Dealers BISYS, the distributor of Fund shares, in its discretion,
Incentives may pay all dealers selling Investment A shares all or a
portion of the sales charges it normally retains.
DIVIDENDS AND All dividends and capital gains will be automatically
CAPITAL GAINS 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 are higher for
Investment A shares than for Investment C shares, because
Investment A shares have lower operating expenses.
Distributions are made on a per share basis regardless of
how long you have 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 quarterly.
Capital gains, if any, are distributed at least annually.
17
<PAGE>
Shareholder Information
TAXATION
Federal Income Tax
The 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. No federal income tax is due on any dividend earned in an
IRA or qualified retirement plan until distributed.
This is a brief summary of certain federal income tax consequences relating to
an investment in the Fund, and shareholders are urged to consult their own tax
advisors regarding the taxation of their investments under federal, state and
local laws.
18
<PAGE>
Addresses
- --------------------------------------------------------------------------------
Fifth Third Technology Fund Fifth Third Funds
c/o Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
- --------------------------------------------------------------------------------
Investment Advisor Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
- --------------------------------------------------------------------------------
Custodian, Transfer Agent, Dividend
Disbursing Agent, and Sub-Administrator Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
- --------------------------------------------------------------------------------
Distributor and Administrator BISYS Fund Services L.P.
3435 Steizer Road
Columbus, Ohio 43219
- --------------------------------------------------------------------------------
Independent Auditors Ernst & Young LLP
1300 Chiquita Center
250 East Fifth Street
Cincinnati, Ohio 45202
- --------------------------------------------------------------------------------
<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 emailing 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
65-2540 6/00 Investment Company Act file no. 811-5669.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ "The information in this prospectus is not complete and may be changed. We +
+ may not sell these securities until the registration statement filed with +
+ the Securities and Exchange Commission is effective. This prospectus is not +
+ an offer to sell these securities and it is not soliciting an offer to buy +
+ these securities in any state where the offer or sale is not permitted." +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
[LOGO OF FIFTH THIRD FUNDS]
[GRAPHIC] TECHNOLOGY FUND
Fifth Third Funds
Institutional Shares
Working hard to build your wealth!
- ----------------
Prospectus
June 1, 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 Table of Contents
<TABLE>
<S> <C> <C>
Objectives, Strategies and Risks
- ----------------------------------------------
3 Overview
4 Fifth Third Technology Fund
Shareholder Fees and Fund Expenses
- ----------------------------------------------
6 Fee Table
7 Expense Example
Additional Information About the Fund's
Investments
- ----------------------------------------------
8
Fund Management
- ----------------------------------------------
10 Investment Advisor
10 Portfolio Manager
10 Fund Administration
Shareholder Information
- ----------------------------------------------
11 Purchasing and Selling Fund Shares
11 Purchasing and Adding to Your Shares
12 Selling Your Shares
13 Exchanging Your Shares
13 Dividends and Capital Gains
13 Taxation
- ----------------------------------------------
Back Cover
- ----------------------------------------------
Where to learn more about Fifth Third
Funds
</TABLE>
2
<PAGE>
Objectives, Strategies and Risks
Overview
This section provides important information about Fifth Third Technology Fund
(the "Fund"), a separate series of Fifth Third Funds (the "Trust"), including:
. the investment objective
. principal investment strategies
. principal risks, and
. volatility and performance information
The Fund is managed by Fifth Third Bank.
Like all mutual funds (other than money market funds and stable value funds),
the share price of the Fund may rise and fall in value and you could lose
money. There is no guarantee that the Fund will achieve its objective.
3
<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 engaged in
offering, using or developing products, processes or
services that provide or benefit significantly from
technological advances, or are expected to do so. Those
companies may be in a variety of industries and may
include computer hardware, software, electronic components
and systems, telecommunications, Internet, media and
information services companies. They also may include
other companies that use technology extensively in the
development of new or improved products or processes, such
as, securities brokers and consumer products retailers.
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 or recently
have been offered to the public.
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
An investment in lackluster performance.
the Fund is not
a deposit of The Fund, by concentrating in technology stocks, assumes
Fifth Third Bank many of the risks of holding technology stocks. For
or any other example, technology stocks tend to:
bank and is not
insured or . fluctuate in price more widely and rapidly than the
guaranteed by market as a whole
the FDIC or any
other government . underperform other types of stocks or be difficult to
agency. 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 vulnernable 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.
4
<PAGE>
Fifth Third Technology Fund
[LOGO]
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.
Volatility and Performance Information
The Fund is a new Fund, and as of the date of this prospectus, it did not have
a performance history.
5
<PAGE>
Shareholder Fees and Fund Expenses
Fee Table
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
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. The Fund's fees and expenses are estimates and are based
upon actual operating expenses of other Fifth Third Funds.
<TABLE>
<CAPTION>
Institutional
Shares
Shareholder Fees
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases None
- --------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None
- --------------------------------------------------------------------------
Maximum Deferred Sales Load None
- --------------------------------------------------------------------------
Annual Fund Operating Expenses
(as a percentage of average
net assets)
Management fees 1.00%
- --------------------------------------------------------------------------
Distribution (12b-1) fees None
- --------------------------------------------------------------------------
Other expenses 0.46%
- --------------------------------------------------------------------------
Total Annual Fund
Operating Expenses 1.46%
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Because some of the fund's expenses are expected to be
reduced through expense waivers and reimbursements,
actual total operating expenses for the current year
are expected to be as shown below.
Net Total Annual Fund Operating Expenses 1.46%
- --------------------------------------------------------------------------
</TABLE>
- ---------------------------------------------------------
6
<PAGE>
Shareholder Fees and Fund Expenses
Expense Example
Use the table below to compare fees and expenses with the fees and expenses of
other mutual funds. The table illustrates 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.
<TABLE>
<CAPTION>
Fifth Third 1 3
Technology Fund Year Years
------------------------------
<S> <C> <C>
Institutional Shares $149 $462
------------------------------
</TABLE>
7
<PAGE>
Additional Information About the Fund's Investments
The primary investments and investment strategies of the Fund are described
above. Below are descriptions of some additional investments and strategies of
the Fund, some of its risks as well as other risks of investing in the Fund.
Please note, though, that the Fund may adjust the composition of its portfolio
as market and economic conditions change.
The success of achieving the Fund's investment strategy depends on FifthThird
Bank's ability to assess the potential of the securities in which the Fund
invests as well as to evaluate and anticipate changing economic and market
conditions.
International Many U.S. companies in which the Fund may invest generate
Exposure significant revenues and earnings from abroad. As a
result, those companies and the prices of their securities
may be affected by weaknesses in global and regional
economies and the relative value of foreign currencies to
the U.S. dollar. Taken as a whole, those factors could
adversely affect the price of Fund shares.
Foreign Foreign securities are generally more volatile than their
Securities domestic counterparts, in part because of higher political
and economical risks, the general lack of reliable
information and fluctuations in currency exchange rates.
Those risks are usually higher in less developed
countries.
In addition, foreign securities may be more difficult to
resell and the markets for them less efficient than for
comparable U.S. securities. Even where a foreign security
increases in price in its local currency, the appreciation
may be diluted by the negative effect of exchange rates
when the security's value is converted to U.S. dollars.
Foreign withholding taxes also may apply and errors and
delays may occur in the settlement process for foreign
securities.
The Fund may use foreign currencies and related
instruments to hedge its foreign investments.
Repurchase The Fund may enter into repurchase agreements. A
Agreements repurchase agreement is an agreement in which the Fund
buys securities from a bank or other financial institution
and agrees to sell it back at a specified time and place.
The risks of repurchase agreements include the risk that a
counterparty will not buy back the securities as required
and the securities decline in value. To mitigate those
risks, the Fund intends to enter repurchase agreements
only with high quality counterparties and purchase only
high quality, short-term debt securities.
Securities The Fund may seek additional income or fees by lending
Lending portfolio securities to qualified institutions. By
reinvesting any cash collateral it receives in these
transactions, the Fund could realize additional gains or
losses. If the borrower fails to return the securities and
the invested collateral has declined in value, the Fund
could lose money.
Restricted and Any securities that are thinly traded or whose resale is
Illiquid restricted can be difficult to sell at a desired time and
Securities price. Some of those securities are new and complex, and
trade only among institutions; the markets for these
securities are still developing and may not function as
efficiently as established markets. Owning a large
percentage of restricted or illiquid securities could
hamper the Fund's ability to raise cash in order to meet
redemptions. Also, because there may not be an established
market price for these securities, the Fund may have to
estimate their value, which means that their valuation
(and, to a much smaller extent, the valuation of the Fund)
may have a subjective element.
8
<PAGE>
Additional Information About the Fund's Investments
Derivatives Derivatives, a category that includes warrants, options
and futures, are financial instruments whose value derives
from another security, an index or currency. The Fund may
use derivatives for hedging (attempting to offset a
potential loss in one position by establishing an interest
in an opposite position). This includes the use of
currency-based derivatives for hedging its positions in
foreign securities. The Fund may also use derivatives for
speculation (investing for potential income or capital
gain).
While hedging can guard against potential risks, it adds
to the Fund's expenses and can eliminate some
opportunities for gains. There is also a risk that a
derivative intended as a hedge may not perform as
expected.
The main risk with derivatives is that some types can
amplify a gain or loss, potentially earning or losing
substantially more money than the actual cost of the
derivative.
With some derivatives, whether used for hedging or
speculation, there is also the risk that the counterparty
may fail to honor its contract terms, causing a loss for
the Fund.
When-Issued The Fund may invest in securities prior to their date of
Securities issue. These securities could fall in value by the time
they are actually issued, which may be any time from a few
days to over a year.
Bonds The value of any bond held by the Fund is likely to
decline when interest rates rise; this risk is greater for
bonds with longer maturities. A less significant risk is
that a bond issuer could default on principal or interest
payments, causing a loss for a Fund.
Defensive During unusual market conditions, the Fund may place up to
Investing 100% of total assets in cash or high-quality, short-term
debt securities. To the extent that the Fund does this, it
is not pursuing its goal.
Year 2000 Fifth Third Bank and BISYS Fund Services Limited
Partnership ("BISYS"), the Funds' administrator, have not
experienced computer problems related to the year 2000
that have had a material effect on any Fifth Third Fund.
There can be no assurances in this area, however, and
although Fifth Third Funds and BISYS have undertaken
significant projects to minimize the risk of year 2000
computer problems, some factors, including the year 2000
compliance of Fifth Third Fund's and BISYS's suppliers,
are not within their direct control and could negatively
affect communications systems, investment markets or the
economy in general.
9
<PAGE>
Fund Management
Investment Advisor
Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, serves as
investment advisor to the Fund. The advisor is a subsidiary of Fifth Third
Bancorp.
As of March 31, 2000, Fifth Third Bank had approximately $ billion of assets
under management, including approximately $ billion of assets of Fifth Third
Funds.
The annual management fee to be paid by the Fund is 1.00% of average net
assets.
Portfolio Manager
Fifth Third Bank
Steven J Mygrant has been the Director of Equity Analysis at Fifth Third Bank
since 1996. 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 an Equity Analyst covering semiconductor, semiconductor
equipment, enterprise hardware and software sectors at Fifth Third 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.
Fund Administration
BISYS serves as the administrator of the Funds. The administrator generally
assists in all aspects of the Fund's administration and operation, including
providing the Funds with certain administrative personnel and services
necessary to operate the Funds, such as legal and accounting services. BISYS
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 the 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 the Fund, including providing certain
administrative personnel and services necessary to operate the Fund. Fifth
Third Bank receives a fee from BISYS for providing sub-administrative services,
at an annual rate of 0.025% of the average aggregate daily net assets of the
Fund.
10
<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 Fund 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.
The 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. The Fund's NAV may change on days when
shareholders will not be able to purchase or redeem Fund shares. The Fund 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 Fund or its transfer
agent. All orders must be received by the Fund 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 Fund,
and you should consult your account documents for full details. Your shares in
the Fund 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 Fund, 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 Fund 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 Fund
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 Fund may reject a purchase order for any reason.
11
<PAGE>
Shareholder Information
Avoid 31% Tax Withholding
The 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
Fund, 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
The 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 to
the Fund 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, the 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.
12
<PAGE>
Shareholder Information
Exchanging Your Shares
You may exchange Instructions for Exchanging Shares
your Fund shares
for Institutional To exchange your shares, call the Trust and Investment
shares of any Department at Fifth Third Bank, Fifth Third Securities,
other Fifth Third Inc.--Institutional Investment Division, the sponsor of
Fund. No your qualified employee retirement plan or the broker-
transaction fees dealer, investment adviser, financial planner or other
are charged for institution through which you purchased your shares for
exchanges. Be exchange procedures or call 1-888-799-5353.
sure to read the
Prospectus Notes on Exchanges
carefully of any
Fund into which To prevent disruption in the management of the Fund,
you wish to market timing strategies and frequent exchange activity
exchange shares. may be limited by the Fund. Although not anticipated, the
Fund may reject exchanges, or change or terminate rights
You must meet the to exchange shares at any time.
minimum
investment Shares of the new Fund must be held under the same
requirements for account name, with the same registration and tax
the Fund into identification numbers, as shares of the old Fund.
which you are
exchanging. The Exchange Privilege (including automatic exchanges)
Exchanges from may be changed or eliminated at any time.
one Fund to
another are The exchange privilege is available only in states where
taxable for shares of the Fund may be sold.
investors subject
to federal or All exchanges are based on the relative net asset value
state income next determined after the exchange order is received by
taxation. the Fund.
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 have
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 quarterly. Capital gains, if any, are
distributed at least annually.
Taxation
Federal Income Tax
The 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. No federal income tax is due on any dividend earned in an
IRA or qualified retirement plan until distributed.
This is a brief summary of certain federal income tax consequences relating to
an investment in the Fund, and shareholders are urged to consult their own tax
advisors regarding the taxation of their investments under federal, state and
local laws.
13
<PAGE>
Addresses
- --------------------------------------------------------------------------------
Fifth Third Technology Fund Fifth Third Funds
c/o Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
- --------------------------------------------------------------------------------
Investment Advisor Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
- --------------------------------------------------------------------------------
Custodian, Transfer Agent, Dividend
Disbursing Agent, and Sub-Administrator Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
- --------------------------------------------------------------------------------
Distributor and Administrator BISYS Fund Services L.P.
3495 Stelzer Road
Columbus, Ohio 43219
- --------------------------------------------------------------------------------
Independent Auditors Ernst & Young LLP
1300 Chiquita Center
250 East Fifth Street
Cincinnati Ohio 45202
- --------------------------------------------------------------------------------
<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 a 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 emailing the SEC at the following address: [email protected]
. At no charge from the Commission's Website at http://www.sec.gov.
[LOGO OF FIFTH THIRD FUNDS]
65-2549 06/00 Investment Company Act file no. 811-5669.
<PAGE>
[LOGO OF FIFTH THIRD FUNDS]
[PHOTO]
OHIO TAX EXEMPT MONEY MARKET FUND
Fifth Third Funds
Investment A Shares
Working hard to build
your wealth!
- ---------------
Prospectus
June 1, 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 Table of Contents
<TABLE>
<CAPTION>
Objectives, Strategies and Risks
- --------------------------------------------------
<S> <C> <C>
3 Overview
4 Fifth Third Ohio Tax Exempt Money
Market Fund
Shareholder Fees and Fund Expenses
- --------------------------------------------------
6 Fee Table
7 Expense Example
Additional Information About The Fund's
Investments
- --------------------------------------------------
8
Fund Management
- --------------------------------------------------
10 Investment Advisor and Subadvisor
10 Fund Administration
Shareholder Information
- --------------------------------------------------
11 Purchasing and Selling Fund Shares
11 Purchasing and Adding to Your Shares
12 Selling Your Shares
13 Exchanging Your Shares
14 Distribution Arrangements/Sales
Charges
14 Dividends and Capital Gains
14 Taxation
15 Additional Tax Information
Back Cover
- --------------------------------------------------
Where to learn more about Fifth Third
Funds
</TABLE>
2
<PAGE>
Objectives, Strategies And Risks
Overview
This section provides important information about Fifth Third Ohio Tax Exempt
Money Market Fund, (the "Fund"), a separate series of Fifth Third Funds (the
"Trust"), including:
. the investment objective
. principal investment strategies
. principal risks, and
. volatility and performance information
The Fund is managed by Fifth Third Bank. Fort Washington Investment Advisors,
Inc. serves as investment subadvisor to the Fund.
3
<PAGE>
Fifth Third Ohio Tax Exempt Money Market Fund
[LOGO]
Fundamental
Objective Current income, exempt from federal income tax and the
personal income tax imposed by the State of Ohio and Ohio
municipalities, while maintaining liquidity and stability
of principal.
Principal
Investment
Strategies The Fund manages its portfolio subject to strict SEC
guidelines, which are designed so that the Fund may
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 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. At
least 80% of its total assets are invested in Ohio
municipal securities, which include fixed and variable
rate debt obligations issued by the State of Ohio, its
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
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
Investment Risks The Fund's principal risks are those risks that could
affect the overall yield of the Fund and thus, the return
An investment in on your investment. They include factors that cause short-
the Fund is not term interest rates to decline, such as a weak economy,
a deposit of strong equity markets and changes by the Federal Reserve
Fifth Third Bank in its monetary policies.
or any other
bank and is not Because the Fund's securities are issued by the State of
insured or Ohio and Ohio cities, towns and public authorities, the
guaranteed by Fund's performance also may be affected by political and
the FDIC or any economic conditions at the state or local level. Those
other government conditions may include state or city budgetary problems,
agency. Although declines in the tax base and, generally, any factor that
the Fund seeks may cause rating agencies to downgrade the credit ratings
to preserve the on state or municipal securities. Actual or proposed
value of your changes in tax rates, regulations or government-sponsored
investment at programs also could affect the yield on your investment.
$1.00 per share, Economic activity in Ohio, as in many other states with a
it is possible significant industrial
to lose money by
investing in
this Fund.
4
<PAGE>
Fifth Third Ohio Tax Exempt Money Market Fund
[LOGO]
base, tends to be more cyclical than in other states and
in the nation as a whole.
The Fund's ability to meet redemption obligations could be
burdened by its investments in securities restricted as to
resale. Restricted securities generally trade among
institutions in markets that are not as developed or that
do not function as efficiently as more established
markets.
The Fund is a non-diversified fund. As a result, the Fund
could be significantly affected by the performance of a
limited number of securities or the financial condition of
a limited number of issuers.
Volatility and Performance Information
The Fund is a new Fund, and as of the date of this prospectus it did not have a
performance history.
5
<PAGE>
Shareholder Fees and Fund Expenses
[LOGO]
Fee Table
This table describes the fees and expenses that you may pay if you buy and hold
Investment A Shares of the Fund.
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. The Fund's fees and expenses are estimates and are based
upon actual expenses of other Fifth Third Funds.
<TABLE>
<CAPTION>
Investment A
Shares
Shareholder Fees
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases None
- -------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None
- -------------------------------------------------------------------------
Maximum Deferred Sales Load None
- -------------------------------------------------------------------------
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management fees 0.40%
- -------------------------------------------------------------------------
Distribution/Service (12b-1) fees 0.25%
- -------------------------------------------------------------------------
Other expenses 0.25%
- -------------------------------------------------------------------------
Total Annual Fund Operating Expenses 0.90%
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
Because some of the fund's expenses are expected to be
reduced through expense waivers and reimbursements,
actual total operating expenses for the current year
are expected to be as shown below.
Net Total Annual Fund Operating Expenses 0.90%
- -------------------------------------------------------------------------
</TABLE>
- ---------------------------------------------------------
6
<PAGE>
Shareholder Fees and Fund Expenses
[LOGO]
Expense Example
Use the table below to compare fees and expenses with the fees and expenses of
other mutual funds. The table illustrates 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.
<TABLE>
<CAPTION>
Fifth Third Ohio
Tax Exempt 1 3
Money Market Fund Year Years
----------------------------
<S> <C> <C>
Investment A Shares $92 $287
-----------------------------
</TABLE>
7
<PAGE>
Additional Information About the Fund's Investments
[LOGO]
The primary investments and investment strategies of the Fund are described
above. Below are descriptions of some additional investments and strategies of
the Fund, some of its risks as well as other risks of investing in the Fund.
Please note, though, that the Fund may adjust the composition of its portfolio
as market and economic conditions change.
The success of achieving the Fund's investment strategy depends on Fifth Third
Bank's ability to assess the potential of the securities in which the Fund
invests as well as to evaluate and anticipate changing economic and market
conditions.
Securities When securities are rated by one or more independent
Ratings rating agencies, the Fund uses these ratings to determine
credit quality. In cases where a security has received a
rating from only one independent rating agency, it may
rely on that rating. If a security has received ratings
from two or more rating agencies and at least two of the
ratings are equivalent, the Fund may rely on the two
equivalent ratings even if the other ratings are lower. In
cases where a security's two highest ratings are in
conflicting categories, the Fund must follow the lower
rating. If a security is unrated, the Fund may assign it
to a given category based on its own credit research.
Repurchase The Fund may enter into repurchase agreements. A
Agreements repurchase agreement is an agreement in which the Fund
buys securities from a bank or other financial institution
and agrees to sell it back at a specified time and place.
The risks of repurchase agreements include the risk that a
counterparty will not buy back the securities as required
and the securities decline in value. To mitigate those
risks, the Fund intends to enter repurchase agreements
only with high quality counterparties and purchase only
high quality, short-term debt securities.
Securities The Fund may seek additional income or fees by lending
Lending portfolio securities to qualified institutions. By
reinvesting any cash collateral it receives in these
transactions, the Fund could realize additional gains or
losses. If the borrower fails to return the securities and
the invested collateral has declined in value, the Fund
could lose money.
Restricted and Any securities that are thinly traded or whose resale is
Illiquid restricted can be difficult to sell at a desired time and
Securities price. Some of those securities are new and complex, and
trade only among institutions; the markets for these
securities are still developing and may not function as
efficiently as established markets. Owning a large
percentage of restricted or illiquid securities could
hamper the Fund's ability to raise cash in order to meet
redemptions. Also, because there may not be an established
market price for these securities, the Fund may have to
estimate their value, which means that their valuation
(and, to a much smaller extent, the valuation of the Fund)
may have a subjective element.
Derivatives Derivatives are financial instruments whose value derives
from one or more securities. Certain instruments that are
"first" or "second tier" securities also may be
derivatives, such as short-term, high-quality asset-backed
securities. The Fund uses derivatives to invest for
potential income, and may purchase them to the extent it
can purchase any other type of "first" or "second tier"
security. The values of some derivatives
8
<PAGE>
Additional Information About the Fund's Investments
are difficult to determine because they are based on the
values of other securities and the markets for some
derivatives may be limited. With some derivatives, such as
certain option contracts, there is also the risk that the
counterparty may fail to honor its contract terms, causing
a loss for the Fund.
When-Issued The Fund may invest in securities prior to their date of
Securities issue. These securities could fall in value by the time
they are actually issued, which may be any time from a few
days to over a year.
Loan The loan participation interests in which the Fund may
Participations invest represent pro rata undivided interests in an
underlying bank loan. The bank selling a participation
interest generally acts as a mere conduit between its
borrower and the purchasers of interests in the loan. The
purchaser of an interest generally does not have recourse
against the bank in the event of a default on the
underlying loan. Therefore, the credit risk associated
with such instruments is governed by the creditworthiness
of the underlying borrowers and not by the banks selling
the interests. Loan participation interests that cannot be
sold within a seven-day period are deemed by the Fund's
investment advisor to be illiquid investments.
Year 2000 Fifth Third Bank and BISYS Fund Services Limited
Partnership ("BISYS"), the Fund's administrator, have not
experienced any computer problems related to the year 2000
that have had a material effect on any Fifth Third Fund.
There can be no assurances in this area, however, and
although Fifth Third Funds and BISYS have undertaken
significant projects to minimize the risk of year 2000
computer problems, some factors, including the year 2000
compliance of Fifth Third Fund's and BISYS's suppliers,
are not within their direct control and could negatively
affect communications systems, investment markets or the
economy in general.
9
<PAGE>
Fund Management
Investment Advisor and Subadvisor
Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, serves as
investment advisor to the Fund. Fifth Third Bank is a subsidiary of Fifth Third
Bancorp.
Fort Washington Investment Advisors, Inc., 420 East Fourth Street, Cincinnati,
Ohio 45202, serves as investment subadvisor to Fifth Third Ohio Tax Exempt
Money Market Fund. The subadvisor is a subsidiary of The Western and Southern
Life Insurance Company.
As of March 31, 2000, Fifth Third Bank had approximately $ billion of assets
under management, including approximately $ billion of assets of Fifth Third
Funds.
The annual management fees to be paid by the Fund is 0.40% of average net
assets.
Fund Administration
BISYS serves as the administrator of the Fund. The administrator generally
assists in all aspects of the Fund's administration and operation, including
providing the Fund with certain administrative personnel and services necessary
to operate the Fund, 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 the 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 the Fund, including providing certain
administrative personnel and services necessary to operate the Fund. Fifth
Third Bank receives a fee from BISYS for providing sub-administrative services
at an annual rate of 0.025% of the average aggregate daily net assets of the
Fund.
10
<PAGE>
Shareholder Information
Purchasing and Selling Fund Shares
Pricing Fund Shares
The price of the Fund's shares is based on the Fund's Net Asset Value (NAV).
The value of each portfolio instrument held by the Fund is determined by using
amortized cost.
Fifth Third Ohio Tax Exempt Money Market Fund calculates its NAV at 10:30 a.m.
Cincinnati time. The 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 Fund 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 and full
payment have been received by the Fund or its transfer agent. All orders must
be received by the Fund or its transfer agent by 10:30 a.m. (Cincinnati time)
in order to receive that day's NAV.
You may purchase Investment A shares through Fifth Third Securities, Inc. as
well as financial institutions which have a sales agreement with the
distributor of Fund shares. 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 the order to the Fund, 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 Fund prior to the time designated by
the Fund for receiving orders on a specific day, you will receive the dividend
declared for that day.
Minimum
Investments
The minimum initial investment in Investment A Shares of
the Fund offered by this Prospectus is $1,000. Subsequent
investments must be in amounts of at least $50.
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 Fund may reject a purchase order for any reason.
Systematic Investment Program
You may make monthly systematic investments in Investment A shares of the Funds
from your bank account. There is no minimum amount required for initial amounts
into the Fund. You may elect to make systematic investments on the 15th of each
month, the last business day of each month, or both. If the 15th or the last
business day of the month is not a day on which the Fund is open for business,
the purchase will be made on the previous day the Fund is open for business.
Please contact Fifth Third Securities, Inc. or your financial institution for
more information.
11
<PAGE>
Shareholder Information
Avoid 31% Tax Withholding
The 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
Fund, 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.
You may sell Investment A shares through Fifth Third Securities, Inc. or the
financial institution through which you purchased them.
The entity through which you are selling your shares is responsible for
transmitting the order to the Fund, 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 Fund prior to the time designated by the Fund for
receiving orders on a specific day, you will not receive the dividend declared
for that day.
Systematic Withdrawal Plan
You may make automatic withdrawals on a monthly, quarterly or annual basis on
the last day of that period that the Fund is open for business. Please contact
Fifth Third Securities, Inc. or your financial institution for more
information.
Postponement of Redemption Payments
The 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 to
the Fund your request by regular mail to: Fifth Third Funds, P.O. Box 5354,
Cincinnati, Ohio 45201-5354, or by express mail to: Fifth Third Funds, 312
Walnut Street, 21st Floor, Cincinnati, Ohio 45202-3874.
12
<PAGE>
Shareholder Information
Exchanging Your Shares
You may exchange If exchanging shares through Fifth Third Securities, Inc.
your Fund shares or your financial institution, ask it for exchange
for Investment A procedures or call 1-888-799-5353.
shares of any
other Fifth Third Notes on exchanges
Fund. No To prevent disruption in the management of the Fund,
transaction fees market timing strategies and frequent exchange activity
are charged for may be limited by the Fund. Although not anticipated, the
exchanges. Be Fund may reject exchanges, or change or terminate rights
sure to read the to exchange shares at any time.
Prospectus
carefully of any When exchanging from a Fund that has no sales charge or a
Fund into which lower sales charge to a Fund with a higher sales charge,
you wish to you will pay the difference.
exchange shares.
Shares of the new Fund must be held in the same account
You must meet the names, with the same registration and tax identification
minimum numbers, as the shares of the old Fund.
investment
requirements for The Exchange Privilege (including automatic exchanges)
the Fund into may be changed or eliminated at any time.
which you are
exchanging. The exchange privilege is available only in states where
Exchanges from shares of the Fund may be sold.
one Fund to
another are All exchanges are based on the relative net asset value
taxable for next determined after the exchange order is received by
investors subject the Fund.
to federal or
state income
taxation. These
procedures apply
only to exchanges
between existing
accounts.
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.
13
<PAGE>
Shareholder Information
Distribution This section describes the sales charges and fees you
Arrangements/Sales will pay as an investor in different share classes
Charges offered by the Fund and ways to qualify for reduced sales
charges.
<TABLE>
<CAPTION>
Investment A
<S> <C>
Sales Charge (Load) None
Distribution/Service Subject to annual distribution and
(12b-1) Fee shareholder servicing fees of up to
0.25% of the Fund's assets.
</TABLE>
Calculation of Investment A Shares are sold at their public offering
Sales Charges 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.
Distribution/Service 12b-1 fees compensate the Distributor and other dealers
(12b-1) Fees and investment representatives for services and expenses
related to the sale and distribution of the Fund's shares
and/or for providing shareholder services.
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.
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.
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 and Dividends, if any, are declared daily and paid monthly.
Capital Gains Capital gains, if any, are distributed at least annually.
The Fund does not expect to pay any capital gains.
Taxation
Federal Income Tax
The Fund expects to distribute substantially all of its investment income
(including net capital gains and tax-exempt interest income, if any) to its
shareholders. Dividends from the Fund representing interest from obligations
held by the Fund which are issued by the State of Ohio or its subdivisions,
which interest is exempt from federal income tax when received by a
shareholder, should also be exempt from 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. No federal income tax is due on any dividend earned in
an IRA or qualified retirement plan until distributed.
This is a brief summary of certain federal income tax consequences relating to
an investment in the Fund, and shareholders are urged to consult their own tax
advisors regarding the taxation of their investments under federal, state and
local laws.
14
<PAGE>
Shareholder Information
Additional Tax Information
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 the 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 the 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 earned it 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 as a result of the inclusion in alternative minimum
taxable income of 75% of the excess of adjusted current earnings over adjusted
net book income.
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 the 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. Shareholders not
subject to federal income tax on their income will not, of course, be required
to pay federal income tax on any amounts distributed to them. The 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 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. The 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.
15
<PAGE>
<TABLE>
<CAPTION>
Addresses
- ------------------------------------------------------------------------------------------------------------
<S> <C>
Fifth Third Ohio Tax Exempt Money Market Fund Fifth Third Funds
c/o Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
- ------------------------------------------------------------------------------------------------------------
Investment Advisor Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
- ------------------------------------------------------------------------------------------------------------
Sub Advisor Fort Washington Investment Advisors, Inc.
420 East Fourth Street
Cincinnati, Ohio 45202
- ------------------------------------------------------------------------------------------------------------
Custodian, Transfer Agent, Dividend Disbursing Agent,
and Sub-Administrator Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
- ------------------------------------------------------------------------------------------------------------
Distributor and Administrator BISYS Fund Services L.P.
3435 Stelzer Road
Columbus, Ohio 43219
- ------------------------------------------------------------------------------------------------------------
Independent Auditors Ernst & Young LLP
1300 Chiquita Center
250 East Fifth Street
Cincinnati, Ohio 45202
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
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 emailing the SEC at the following address:
[email protected].
. At no charge from the Commission's Website at http://www.sec.gov.
[LOGO OF FIFTH THIRD FUNDS]
65-2547 06/00 Investment Company Act file no. 811-5669.
<PAGE>
[LOGO OF FIFTH THIRD FUNDS]
OHIO TAX EXEMPT MONEY MARKET FUND
Fifth Third Funds [PHOTO]
Institutional Shares
Working hard to
build your wealth!
- -----------------
Prospectus
June 1, 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 Table of Contents
<TABLE>
<CAPTION>
Objectives, Strategies and Risks
- --------------------------------------------------
<S> <C> <C> <C>
3 Overview
4 Fifth Third Ohio Tax Exempt Money
Market Fund
<CAPTION>
Shareholder Fees and Fund Expenses
- --------------------------------------------------
<S> <C> <C> <C>
6 Fee Table
7 Expense Example
<CAPTION>
Additional Information About the Fund's
Investments
- --------------------------------------------------
<S> <C> <C> <C>
8
<CAPTION>
Fund Management
- --------------------------------------------------
<S> <C> <C> <C>
10 Investment Advisor and Subadvisor
10 Fund Administration
<CAPTION>
Shareholder Information
- --------------------------------------------------
<S> <C> <C> <C>
11 Purchasing and Selling Fund Shares
11 Purchasing and Adding to Your Shares
12 Selling Your Shares
13 Exchanging Your Shares
13 Dividends and Capital Gains
14 Taxation
- --------------------------------------------------
<CAPTION>
Back Cover
- --------------------------------------------------
<S> <C> <C> <C>
Where to learn more about Fifth Third
Funds
</TABLE>
2
<PAGE>
Objectives, Strategies and Risks
Overview
This section provides important information about Fifth Third Ohio Tax Exempt
Money Market Fund, (the "Fund"), a separate series of Fifth Third Funds (the
"Trust"), including:
. the investment objective
. principal investment strategies
. principal risks, and
. volatility and performance information
The Fund is managed by Fifth Third Bank. Fort Washington Investment Advisors,
Inc. serves as investment subadvisor to the Fund.
3
<PAGE>
Fifth Third Ohio Tax Exempt Money Market Fund
[LOGO]
Fundamental Current income, exempt from federal income tax and the
Objective personal income tax imposed by the State of Ohio and Ohio
municipalities, while maintaining liquidity and 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 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. At
least 80% of its total assets are invested in Ohio
municipal securities, which include fixed and variable
rate debt obligations issued by the State of Ohio, its
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
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 are those risks that could
Investment Risks affect the overall yield of the Fund and thus, the return
on your investment. They include factors that cause short-
term interest rates to decline, such as a weak economy,
strong equity markets and changes by the Federal Reserve
in its monetary policies.
An investment in Because the Fund's securities are issued by the State of
the Fund is not Ohio and Ohio cities, towns and public authorities, the
a deposit of Fund's performance also may be affected by political and
Fifth Third Bank economic conditions at the state or local level. Those
or any other conditions may include state or city budgetary problems,
bank and is not declines in the tax base and, generally, any factor that
insured or may cause rating agencies to downgrade the credit ratings
guaranteed by on state or municipal securities. Actual or proposed
the FDIC or any changes in tax rates, regulations or government-sponsored
other government programs also could affect the yield on your investment.
agency. Although Economic activity in Ohio, as in many other states with a
the Fund seeks significant industrial base, tends to be more cyclical
to preserve the than in other states and in the nation as a whole.
value of your
investment at
$1.00 per share,
it is possible
to lose money by
investing in
this Fund.
4
<PAGE>
Fifth Third Ohio Tax Exempt Money Market Fund
[LOGO]
The Fund's ability to meet redemption obligations could be
burdened by its investments in securities restricted as to
resale. Restricted securities generally trade among
institutions in markets that are not as developed or that
do not function as efficiently as more established
markets.
The Fund is a non-diversified fund. As a result, the Fund
could be significantly affected by the performance of a
limited number of securities or the financial condition of
a limited number of issuers.
Volatility and Performance Information
The Fund is a new Fund, and as of the date of this prospectus it did not have a
performance history.
5
<PAGE>
Shareholder Fees and Fund Expenses
Fee Table
This table describes the fees and expenses that you may pay if you buy and hold
Institutional shares of the Fund.
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. The Fund's fees and expenses are estimates and are based
upon actual operating expenses of other Fifth Third Funds.
<TABLE>
<CAPTION>
Institutional
Shares
Shareholder Fees
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases None
- ------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None
- ------------------------------------------------------------------------------
Maximum Deferred Sales Load None
- ------------------------------------------------------------------------------
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management fees 0.40%
- ------------------------------------------------------------------------------
Distribution (12b-1) fees None
- ------------------------------------------------------------------------------
Other expenses 0.25%
- ------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 0.65%
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Because some of the fund's expenses are expected to be reduced through expense
waivers and reimbursements, actual total operating expenses for the current
year are expected to be as shown below.
Net Total Annual Fund Operating Expenses 0.65%
- ------------------------------------------------------------------------------
</TABLE>
- ---------------------------------------------------------
6
<PAGE>
Shareholder Fees and Fund Expenses
Expense Example
Use the table below to compare fees and expenses with the fees and expenses of
other mutual funds. The table illustrates 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.
<TABLE>
<CAPTION>
Fifth Third Ohio Tax
Exempt 1 3
Money Market Fund Year Years
------------------------------
<S> <C> <C>
Institutional Shares $66 $208
-------------------------------
</TABLE>
7
<PAGE>
Additional Information About the Fund's Investments
The primary investments and investment strategies of the Fund are described
above. Below are descriptions of some additional investments and strategies of
the Fund, some of its risks as well as other risks of investing in the Fund.
Please note, though, that the Fund may adjust the composition of its portfolio
as market and economic conditions change.
The success of achieving the Fund's investment strategy depends on Fifth Third
Bank's ability to assess the potential of the securities in which the Fund
invests as well as to evaluate and anticipate changing economic and market
conditions.
Securities When securities are rated by one or more independent
Ratings rating agencies, the Fund uses these ratings to determine
credit quality. In cases where a security has received a
rating from only one independent rating agency, it may
rely on that rating. If a security has received ratings
from two or more rating agencies and at least two of the
ratings are equivalent, the Fund may rely on the two
equivalent ratings even if the other ratings are lower. In
cases where a security's two highest ratings are in
conflicting categories, the Fund must follow the lower
rating. If a security is unrated, the Fund may assign it
to a given category based on its own credit research.
Repurchase The Fund may enter into repurchase agreements. A
Agreements repurchase agreement is an agreement in which the Fund
buys securities from a bank or other financial institution
and agrees to sell it back at a specified time and place.
The risks of repurchase agreements include the risk that a
counterparty will not buy back the securities as required
and the securities decline in value. To mitigate those
risks, the Fund intends to enter repurchase agreements
only with high quality counterparties and purchase only
high quality, short-term debt securities.
Securities The Fund may seek additional income or fees by lending
Lending portfolio securities to qualified institutions. By
reinvesting any cash collateral it receives in these
transactions, the Fund could realize additional gains or
losses. If the borrower fails to return the securities and
the invested collateral has declined in value, the Fund
could lose money.
Restricted and Any securities that are thinly traded or whose resale is
Illiquid restricted can be difficult to sell at a desired time and
Securities price. Some of those securities are new and complex, and
trade only among institutions; the markets for these
securities are still developing and may not function as
efficiently as established markets. Owning a large
percentage of restricted or illiquid securities could
hamper the Fund's ability to raise cash in order to meet
redemptions. Also, because there may not be an established
market price for these securities, the Fund may have to
estimate their value, which means that their valuation
(and, to a much smaller extent, the valuation of the Fund)
may have a subjective element.
Derivatives Derivatives are financial instruments whose value derives
from one or more securities. Certain instruments that are
"first" or "second tier" securities also may be
derivatives, such as short-term, high-quality asset-backed
securities. The Fund uses derivatives to invest for
potential income, and may purchase them to the extent it
can purchase any other type of "first" or "second tier"
security. The values of some derivatives
8
<PAGE>
Additional Information About the Fund's Investments
are difficult to determine because they are based on the
values of other securities and the markets for some
derivatives may be limited. With some derivatives, such as
certain option contracts, there is also the risk that the
counterparty may fail to honor its contract terms, causing
a loss for the Fund.
When-Issued The Fund may invest in securities prior to their date of
Securities issue. These securities could fall in value by the time
they are actually issued, which may be any time from a few
days to over a year.
Loan The loan participation interests in which the Fund may
Participations invest represent pro rata undivided interests in an
underlying bank loan. The bank selling a participation
interest generally acts as a mere conduit between its
borrower and the purchasers of interests in the loan. The
purchaser of an interest generally does not have recourse
against the bank in the event of a default on the
underlying loan. Therefore, the credit risk associated
with such instruments is governed by the creditworthiness
of the underlying borrowers and not by the banks selling
the interests. Loan participation interests that cannot be
sold within a seven-day period are deemed by the Fund's
investment advisor to be illiquid investments.
Year 2000 Fifth Third Bank and BISYS Fund Services Limited
Partnership ("BISYS"), the Funds' administrator, have not
experienced any computer problems related to the year 2000
that have had a material effect on any Fifth Third Fund.
There can be no assurances in this area, however, and
although Fifth Third Funds and BISYS have undertaken
significant projects to minimize the risk of year 2000
computer problems, some factors, including the year 2000
compliance of Fifth Third Fund's and BISYS's suppliers,
are not within their direct control and could negatively
affect communications systems, investment markets or the
economy in general.
9
<PAGE>
Fund Management
Investment Advisor and Subadvisor
Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, serves as
investment advisor to the Fund. Fifth Third Bank is a subsidiary of Fifth Third
Bancorp.
Fort Washington Investment Advisors, Inc., 420 East Fourth Street, Cincinnati,
OH 45202, serves as investment subadvisor to Fifth Third Ohio Tax Exempt Money
Market Fund. The subadvisor is a subsidiary of The Western and Southern Life
Insurance Company.
As of March 31, 2000, Fifth Third Bank had approximately $ billion of assets
under management, including approximately $ billion of assets of Fifth Third
Funds.
The annual management fees to be paid by the Fund is 0.40% of average net
assets.
Fund Administration
BISYS serves as the administrator of the Fund. The administrator generally
assists in all aspects of the Fund's administration and operation, including
providing the Fund with certain administrative personnel and services necessary
to operate the Fund, 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 the 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 the Fund, including providing certain
administrative personnel and services necessary to operate the Fund. Fifth
Third Bank receives a fee from BISYS for providing sub-administrative services
at an annual rate of 0.025% of the average aggregate daily net assets of the
Fund.
10
<PAGE>
Shareholder Information
Purchasing and Selling Fund Shares
Pricing Fund Shares
The price of the Fund's shares is based on the Fund's Net Asset Value (NAV).
The value of each portfolio instrument held by the Fund is determined by using
amortized cost.
Fifth Third Tax Exempt Money Market Fund calculates its NAV at 10:30 a.m.
Cincinnati time. The 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 Fund 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 Fund or its transfer
agent. All orders must be received by the Fund or its transfer agent by 10:30
a.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 Fund,
and you should consult your account documents for full details. Your shares in
the Fund 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 Fund, 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 Fund prior to the time designated by
the Fund for receiving orders, you will receive the dividend declared for that
day.
Minimum
Investments
The minimum initial investment in Institutional Shares of
the Fund 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 Fund may reject a purchase order for any reason.
11
<PAGE>
Shareholder Information
Avoid 31% Tax Withholding
The 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
Fund, 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
The 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 to
the Fund 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, the 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.
12
<PAGE>
Shareholder Information
Exchanging Your Shares
You may exchange Instructions for Exchanging Shares
your Fund shares
for Institutional To exchange your shares, call the Trust and Investment
shares of any Department at Fifth Third Bank, Fifth Third Securities,
other Fifth Third Inc.--Institutional Investment Division, the sponsor of
Fund. No your qualified employee retirement plan or the broker-
transaction fees dealer, investment adviser, financial planner or other
are charged for institution through which you purchased your shares for
exchanges. Be exchange procedures or call 1-888-799-5353.
sure to read the
Prospectus Notes on Exchanges
carefully of any
Fund into which To prevent disruption in the management of the Fund,
you wish to market timing strategies and frequent exchange activity
exchange shares. may be limited by the Fund. Although not anticipated, the
Fund may reject exchanges, or change or terminate rights
to exchange shares at any time.
You must meet the Shares of the new Fund must be held under the same
minimum account names with the same registration and tax
investment identification numbers, as the shares of the old Fund.
requirements for
the Fund into The Exchange Privilege (including automatic exchanges)
which you are may be changed or eliminated at any time.
exchanging.
Exchanges from The exchange privilege is available only in states where
one Fund to shares of the Fund may be sold.
another are
taxable for All exchanges are based on the relative net asset value
investors subject next determined after the exchange order is received by
to federal or the Fund.
state income
taxation.
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. The Fund does not expect to pay any capital
gains.
13
<PAGE>
Shareholder Information
Taxation
Federal Income Tax
The Fund expects to distribute substantially all of its investment income
(including net capital gains and tax-exempt interest income, if any) to its
shareholders. Dividends from the Fund representing interest from obligations
held by the Fund which are issued by the State of Ohio or its subdivisions,
which interest is exempt from federal income tax when received by a
shareholder, should also be exempt from 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. No federal income tax is due on any dividend earned in
an IRA or qualified retirement plan until distributed.
This is a brief summary of certain federal income tax consequences relating to
an investment in the Fund, 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
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 the 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 the 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 earned it 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 as a result of the inclusion in alternative minimum
taxable income of 75% of the excess of adjusted current earnings over adjusted
net book income.
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 the 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. Shareholders not
subject to federal income tax on their income will not, of course, be required
to pay federal income tax on any amounts distributed to them. The 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 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. The 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.
14
<PAGE>
<TABLE>
<CAPTION>
Addresses
- ----------------------------------------------------------------------------------------------------
<S> <C>
Fifth Third Ohio Tax Exempt Money Market Fund Fifth Third Funds
c/o Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
- ----------------------------------------------------------------------------------------------------
Investment Advisor Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
- ----------------------------------------------------------------------------------------------------
Sub Advisor Fort Washington Investment Advisors, Inc.
420 East Fourth Street
Cincinnati, Ohio 45202
- ----------------------------------------------------------------------------------------------------
Custodian, Transfer Agent, Dividend Disbursing Agent, Fifth Third Bank
and Sub-Administrator 38 Fountain Square Plaza
Cincinnati, Ohio 45263
- ----------------------------------------------------------------------------------------------------
Distributor and Administrator BISYS Fund Services L.P.
3435 Stelzer Road
Columbus, Ohio 43219
- ----------------------------------------------------------------------------------------------------
Independent Auditors Ernst & Young L.L.P.
1300 Chiquita Center
250 East Fifth Street
Cincinnati, Ohio 45202
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
The following additional information is available to you upon request and
without charge.
Annual/Semi-annual 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 emailing the SEC at the following address: [email protected].
. At no charge from the Commission's Website at http://www.sec.gov.
[LOGO OF FIFTH THIRD FUNDS]
65-2548 06/00 Investment Company Act file no. 811-5669.
<PAGE>
FIFTH THIRD FUNDS
(formerly Fountain Square Funds)
Combined Statement of Additional Information
November 30, 1999, as revised February 1, 2000
and ____________ ____, 2000
This Combined Statement of Additional Information (the "SAI") relates to
the following portfolios (the "Funds") of Fifth Third Funds (the "Trust"):
. Fifth Third Quality Growth Fund
. Fifth Third Cardinal 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 SAI should be read with the Prospectuses of the Funds, each dated
November 30, 1999, except for Fifth Third Technology Fund and Fifth Third Ohio
Tax Exempt Money Market Fund each dated _________ ____, 2000. 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...............................................................................2
INVESTMENT OBJECTIVE AND POLICIES OF THE FUNDS....................................................................2
Types of Investments...........................................................................................3
Portfolio Turnover............................................................................................14
Investment Limitations........................................................................................14
Investment Risks (Ohio Tax Free Fund and Ohio Money Market Fund)..............................................18
Special Restriction on Fifth Third Government Money Market Fund...............................................19
Special Restriction on Fifth Third U.S. Treasury Money Market Fund............................................19
FIFTH THIRD FUNDS MANAGEMENT.....................................................................................19
Officers and Trustees.........................................................................................19
Trust Ownership...............................................................................................20
Trustee Liability.............................................................................................27
Code of Ethics................................................................................................27
INVESTMENT ADVISORY SERVICES.....................................................................................27
Investment Advisors to the Trust..............................................................................27
Advisory Fees.................................................................................................28
Sub-advisors..................................................................................................28
Sub-advisory Fees.............................................................................................28
Administrative Services.......................................................................................29
Transfer Agent and Dividend Disbursing Agent..................................................................30
BROKERAGE TRANSACTIONS...........................................................................................30
PURCHASING SHARES................................................................................................31
Distribution Plan and Administrative Services Agreement (Investment C Shares Only)............................32
Conversion to Federal Funds...................................................................................33
Exchanging Securities for Fund Shares.........................................................................33
Payments to Dealers...........................................................................................34
DETERMINING NET ASSET VALUE......................................................................................34
Determining Market Value of Securities........................................................................34
Valuing Municipal Bonds.......................................................................................35
Use of Amortized Cost.........................................................................................35
Monitoring Procedures.........................................................................................35
Investment Restrictions.......................................................................................36
Trading in Foreign Securities.................................................................................36
REDEEMING SHARES.................................................................................................37
Redemption in Kind............................................................................................37
Postponement of Redemptions...................................................................................37
TAX STATUS.......................................................................................................37
The Funds' Tax Status.........................................................................................37
Shareholders' Tax Status......................................................................................38
Capital Gains.................................................................................................38
State and Local Taxes.........................................................................................38
Foreign Taxes.................................................................................................39
PERFORMANCE INFORMATION..........................................................................................39
Total Return..................................................................................................39
Tax-Equivalent Yield..........................................................................................40
Tax Equivalency Table.........................................................................................41
PERFORMANCE COMPARISONS..........................................................................................42
FINANCIAL STATEMENTS.............................................................................................45
APPENDIX.........................................................................................................46
</TABLE>
<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 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 the following Funds and the following
classes of each Fund:
. Investment A Shares, Investment C Shares and Institutional Class Shares of the
following Funds: Fifth Third U.S. Government Securities Fund ("Government
Securities Fund"), Fifth Third Quality Bond Fund ("Quality Bond Fund"), Fifth
Third Ohio Tax Free Bond Fund ("Ohio Tax Free Fund"), Fifth Third Quality Growth
Fund ("Quality Growth Fund"), Fifth Third Cardinal Fund ("Cardinal Fund"), Fifth
Third Pinnacle Fund ("Pinnacle Fund"), Fifth Third Mid Cap Fund ("Mid Cap
Fund"), Fifth Third Balanced Fund ("Balanced Fund"), Fifth Third Technology Fund
("Technology Fund"), Fifth Third International Equity Fund ("International
Equity Fund"), Fifth Third Equity Income Fund ("Equity Income Fund"), Fifth
Third Bond Fund For Income ("Bond Fund For Income"), and Fifth Third Municipal
Bond Fund ("Municipal Bond Fund");
. Investment A Shares and Institutional Class Shares of the following Funds:
Fifth Third Government Money Market Fund ("Government Money Market Fund"), Fifth
Third Ohio Tax Exempt Money Market Fund ("Ohio Money Market Fund"), Fifth Third
Prime Money Market Fund ("Prime Money Market Fund") and Fifth Third Tax Exempt
Money Market Fund ("Tax Exempt Fund"); and
. Institutional Class Shares of Fifth Third U.S. Treasury Money Market Fund
("U.S. Treasury Money Market Fund").
All Funds are advised by Fifth Third Bank (the "Advisor"), except Pinnacle
Fund, which is advised by Heartland Capital Management, Inc. ("Heartland"),
Fifth Third Bank and Heartland are owned by Fifth Third Bancorp. Morgan Stanley
Asset 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").
INVESTMENT OBJECTIVE AND POLICIES OF THE FUNDS
The prospectuses discuss the objective of Funds and certain policies
employed to achieve those objectives. The following discussion supplements the
description of the Funds' investment policies in the prospectus. The Funds'
respective investment objectives cannot be changed without approval of
shareholders. Unless otherwise indicated, the investment policies described
below may be changed by the Board of Trustees (the "Trustees") without
shareholder approval.
2
<PAGE>
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, and the Municipal Bond 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
--------------------------------
funds may engage in futures and options transactions as described below to the
extent consistent with their investment objectives and policies.
As a means of reducing fluctuations in the net asset value of Shares of the
Funds, the Funds may attempt to hedge all or a portion of their portfolio
through the purchase of put options on portfolio securities and put options on
financial futures contracts for portfolio securities. The Funds may attempt to
hedge all or a portion of their portfolio by buying and selling financial
futures contracts and writing call options on futures contracts. The Funds may
also write covered call options on portfolio securities to attempt to increase
current income.
The Funds will maintain their position in securities, options, and
segregated cash subject to puts and calls until the options are exercised,
closed, or have expired. An option position may be 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 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.
3
<PAGE>
Financial futures contracts call for the delivery of particular debt
instruments issued or guaranteed by the U.S. Treasury or by specified agencies
or instrumentalities of the U.S. government at a certain time in the future.
The purpose of the acquisition or sale of a futures contract by a Fund is
to protect it from fluctuations in the value of securities caused by
unanticipated changes in interest rates or stock prices without necessarily
buying or selling securities. For example, in the fixed income securities
market, price moves inversely to interest rates. A rise in rates means a drop in
price. Conversely, a drop in rates means a rise in price. In order to hedge its
holdings of fixed income securities against a rise in market interest rates, a
Fund could enter into contracts to "go short" to protect itself against the
possibility that the prices of its fixed income securities may decline during
the Fund's anticipated holding period. The Fund would "go long" to hedge against
a decline in market interest rates. The International Equity Fund may also
invest in securities index futures contracts when the Sub-advisor believes such
investment is more efficient, liquid or cost-effective than investing directly
in the securities underlying the index.
Stock Index Options. The Funds other than Fifth Third Money Market Funds
-------------------
may purchase put options on stock indices listed on national securities
exchanges or traded in the over-the-counter market. A stock index fluctuates
with changes in the market values of the stocks included in the index.
The effectiveness of purchasing stock index options will depend upon the
extent to which price movements in the Funds' portfolio correlate with price
movements of the stock index selected. Because the value of an index option
depends upon movements in the level of the index rather than the price of a
particular stock, whether the Funds will realize a gain or loss from the
purchase of options on an index depends upon movements in the level of stock
prices in the stock market generally or, in the case of certain indices, in an
industry or market segment, rather than movements in the price of a particular
stock. Accordingly, successful use by the Funds of options on stock indices will
be subject to the ability of the Advisors to predict correctly movements in the
direction of the stock market generally or of a particular industry. This
requires different skills and techniques than predicting changes in the price of
individual stocks.
Put Options on Financial Futures Contracts. The Funds other than Fifth
------------------------------------------
Third Money Market Funds may purchase listed (and, in the case of International
Equity Fund, over-the-counter) put options on financial futures contracts. The
Funds would use these options only to protect portfolio securities against
decreases in value resulting from market factors such as anticipated increase in
interest rates, or in the case of the International Equity Fund when the
Sub-advisor believes such investment is more efficient, liquid or cost-effective
than investing directly in the futures contract or the underlying securities or
when such futures contracts or securities are unavailable for investment upon
favorable terms.
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
4
<PAGE>
value and the option will increase in value. In such an event, a Fund will
normally close out its option by selling an identical option. If the hedge is
successful, the proceeds received by a Fund upon the sale of the second option
will be large enough to offset both the premium paid by a Fund for the original
option plus the realized decrease in value of the hedged securities.
Alternatively, a Fund may exercise its put option to close out the
position. To do so, it would simultaneously enter into a futures contract of the
type underlying the option (for a price less than the strike price of the
option) and exercise the option. A Fund would then deliver the futures contract
in return for payment of the strike price. If a Fund neither closes out nor
exercises an option, the option will expire on the date provided in the option
contract, and only the premium paid for the contract will be lost.
The International Equity Fund may write listed put options on financial
futures contracts to hedge its portfolio or when the Sub-advisor believes such
investment is more efficient, liquid or cost-effective than investing directly
in the futures contract or the underlying securities or when such futures
contracts or securities are unavailable for investment upon favorable terms.
When the Fund writes a put option on a futures contract, it receives a premium
for undertaking the obligation to assume a long futures position (buying a
futures contract) at a fixed price at any time during the life of the option.
Call Options on Financial Futures Contracts. The Funds other than the Fifth
-------------------------------------------
Third Money Market Funds may write listed call options or over-the-counter call
options on futures contracts, to hedge their portfolios against an increase in
market interest rates, or in the case of International Equity Fund, when the
Sub-advisor believes such investment is more efficient, liquid or cost-effective
than investing directly in the futures contract or the underlying securities or
when such futures contracts or securities are unavailable for investment upon
favorable terms. When a Fund writes a call option on a futures contract, it is
undertaking the obligation of assuming a short futures position (selling a
futures contract) at the fixed strike price at any time during the life of the
option if the option is exercised. As market interest rates rise and cause the
price of futures to decrease, a Fund's obligation under a call option on a
future (to sell a futures contract) costs less to fulfill, causing the value of
a Fund's call option position to increase.
In other words, as the underlying future's price goes down below the strike
price, the buyer of the option has no reason to exercise the call, so that a
Fund keeps the premium received for the option. This premium can help
substantially offset the drop in value of a Fund's portfolio securities.
Prior to the expiration of a call written by a Fund, or exercise of it by
the buyer, a Fund may close out the option by buying an identical option. If the
hedge is successful, the cost of the second option will be less than the premium
received by a Fund for the initial option. The net premium income of a Fund will
then substantially offset the realized decrease in value of the hedged
securities.
The International Equity Fund may buy listed call options on financial
futures contracts to hedge its portfolio. When the Fund purchases a call option
on a futures contract, it is
5
<PAGE>
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. A Fund will not maintain open
------------------------------------
positions in futures contracts it has sold or options it has written on futures
contracts if, in the aggregate, the value of the open positions (marked to
market) exceeds the current market value of its securities portfolio plus or
minus the unrealized gain or loss on those open positions, adjusted for the
correlation of volatility between the securities or securities index underlying
the futures contract and the futures contracts. If a Fund exceeds this
limitation at any time, it will take prompt action to close out a sufficient
number of open contracts to bring its open futures and options positions within
this limitation.
"Margin" in Futures Transactions. Unlike the purchase or sale of a
--------------------------------
security, the Funds do not pay or receive money upon the purchase or sale of a
futures contract. Rather, the Funds are required to deposit an amount of
"initial margin" in cash or U.S. Treasury bills with its custodian (or the
broker, if legally permitted). The nature of initial margin in futures
transactions is different from that of margin in securities transactions in that
a futures contract's initial margin does not involve the borrowing by a Fund to
finance the transactions. Initial margin is in the nature of a performance bond
or good faith deposit on the contract which is returned to a Fund upon
termination of the futures contract, assuming all contractual obligations have
been satisfied.
A futures contract held by a Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day a Fund pays or
receives cash, called "variation margin, "equal to the daily change in value of
the futures contract. This process is known as "marking to market." Variation
margin does not represent a borrowing or loan by a Fund but is instead
settlement between a Fund and the broker of the amount one would owe the other
if the futures contract expired. In computing its daily net asset value, a Fund
will mark to market its open futures positions.
The Funds are also required to deposit and maintain margin when they write
call options on futures contracts.
Purchasing Put Options on Portfolio Securities. The Funds other than the
----------------------------------------------
Fifth Third Money Market Funds may purchase put options on portfolio securities
to protect against price movements in particular securities in their respective
portfolios. A put option gives a Fund, in return for a premium, the right to
sell the underlying security to the writer (seller) at a specified price during
the term of the option.
Writing Covered Call Options on Portfolio Securities. The Funds other than
----------------------------------------------------
the Fifth Third Money Market Funds may also write covered call options to
generate income. As the writer of a call option, a Fund has the obligation, upon
exercise of the option during the option period, to deliver the underlying
security upon payment of the exercise price. A Fund may sell call options either
on securities held in its portfolio or on securities which it has the right to
obtain without payment of further consideration (or securities for which it has
segregated cash in the amount of any additional consideration).
6
<PAGE>
Over-the-Counter Options. The Funds other than the Fifth Third Money Market
------------------------
Funds may purchase and write over-the-counter options on portfolio securities in
negotiated transactions with the buyers or writers of the options for those
options on portfolio securities held by a Fund and not traded on an exchange.
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. 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 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
7
<PAGE>
warrants. Warrants are basically options to purchase common stock at a specific
price (usually at a premium above the market value of the optioned common stock
at issuance) valid for a specific period of time. Warrants may have a life
ranging from less than a year to twenty years or may be perpetual. However, most
warrants have expiration dates after which they are worthless. In addition, if
the market price of the common stock does not exceed the warrant's exercise
price during the life of the warrant, the warrant will expire as worthless.
Warrants have no voting rights, pay no dividends, and have no rights with
respect to the assets of the corporation issuing them. The percentage increase
or decrease in the market price of the warrant may tend to be greater than the
percentage increase or decrease in the market price of the optioned common
stock.
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. 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. 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.
8
<PAGE>
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 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 invest a portion of their assets in cash. Any portion
of a Fund's assets maintained 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 Fund
values its assets daily in U.S. dollars, the Fund may not convert its holdings
of foreign currencies to U.S. dollars daily. The Fund may incur conversion costs
when it converts its holdings to another currency. Foreign exchange dealers may
realize a profit on the difference between the price at which the Fund buys and
sells currencies.
The Fund will engage in foreign currency exchange transactions in
connection with its portfolio investments. The Fund will conduct its foreign
currency exchange transactions either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market or through forward
contracts to purchase or sell foreign currencies.
Forward Foreign Currency Exchange Contracts. The Fund may enter into
-------------------------------------------
forward foreign currency exchange contracts in order to protect against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and a foreign currency involved in an underlying transaction.
However, forward foreign currency exchange contracts may limit
9
<PAGE>
potential gains which could result from a positive change in such currency
relationships. The Advisors believe that it is important to have the flexibility
to enter into forward foreign currency exchange contracts whenever it determines
that it is in the Fund's best interest to do so. The Fund will not speculate in
foreign currency exchange.
The Fund will not enter into forward foreign currency exchange contracts or
maintain a net exposure in such contracts when it would be obligated to deliver
an amount of foreign currency in excess of the value of its portfolio securities
or other assets denominated in that currency or, in the case of a "cross-hedge"
denominated in a currency or currencies that the Advisors believe will tend to
be closely correlated with that currency with regard to price movements.
Generally, the Fund will not enter into a forward foreign currency exchange
contract with a term longer than one year.
Foreign Currency Options. A foreign currency option provides the option
------------------------
buyer with the right to buy or sell a stated amount of foreign currency at the
exercise price on a specified date or during the option period. The owner of a
call option has the right, but not the obligation, to buy the currency.
Conversely, the owner of a put option has the right, but not the obligation, to
sell the currency.
When the option is exercised, the seller (i.e., writer) of the option is
obligated to fulfill the terms of the sold option. However, either the seller or
the buyer may, in the secondary market, close its position during the option
period at any time prior to expiration. A call option on foreign currency
generally rises in value if the underlying currency appreciates in value, and a
put option on foreign currency generally rises in value if the underlying
currency depreciates in value. Although purchasing a foreign currency option can
protect the Fund against an adverse movement in the value of a foreign currency,
the option will not limit the movement in the value of such currency. For
example, if the Fund was holding securities denominated in a foreign currency
that was appreciating and had purchased a foreign currency put to hedge against
a decline in the value of the currency, the Fund would not have to exercise
their put option. Likewise, if the Fund were to enter into a contract to
purchase a security denominated in foreign currency and, in conjunction with
that purchase, were to purchase a foreign currency call option to hedge against
a rise in value of the currency, and if the value of the currency instead
depreciated between the date of purchase and the settlement date, the Fund would
not have to exercise its call. Instead, the Fund could acquire in the spot
market the amount of foreign currency needed for settlement.
Special Risks Associated with Foreign Currency Options. Buyers and sellers
------------------------------------------------------
of foreign currency options are subject to the same risks that apply to options
generally. In addition, there are certain additional risks associated with
foreign currency options. The markets in foreign currency options are relatively
new, and the Fund's ability to establish and close out positions on such options
is subject to the maintenance of a liquid secondary market. Although the Fund
will not purchase or write such options unless and until, in the opinion of the
Advisors, the market for them has developed sufficiently to ensure that the
risks in connection with such options are not greater than the risks in
connection with the underlying currency, there can be no assurance that a liquid
secondary market will exist for a particular option at any specific time.
10
<PAGE>
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 Fund may be able to achieve many of
the same objectives as it would through the use of forward foreign currency
exchange contracts. The Fund may be able to achieve these objectives possibly
more effectively and at a lower cost by using futures transactions instead of
forward foreign currency exchange contracts.
Special Risks Associated with Foreign Currency Futures Contracts and
--------------------------------------------------------------------
Related Options. Buyers and sellers of foreign currency futures contracts are
- ---------------
subject to the same risks that apply to the use of futures generally. In
addition, there are risks associated with foreign currency futures contracts and
their use as a hedging device similar to those associated with options on
currencies, as described above.
Options on foreign currency futures contracts may involve certain
additional risks. Trading options on foreign currency futures contracts is
relatively new. The ability to establish and close out positions on such options
is subject to the maintenance of a liquid secondary market. To reduce this risk,
the Fund will not purchase or write options on foreign currency futures
contracts unless and until, in the opinion of the Advisors, the market for such
options has developed sufficiently that the risks in connection with such
options are not greater than the risks in connection with transactions in the
underlying foreign currency futures contracts. Compared to the purchase or sale
of foreign currency futures contracts, the purchase of call or put options on
futures contracts involves less potential risk to the Fund because the maximum
amount at risk is the premium paid for the option (plus transaction costs).
However, there may be circumstances when the purchase of a call or put option on
a futures contract would result in a loss, such as when there is no movement in
the price of the underlying currency or futures contract.
11
<PAGE>
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 Fund 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.
Reverse Repurchase Agreements. The Funds may also enter into reverse
-----------------------------
repurchase agreements. These transactions are similar to borrowing cash. In a
reverse repurchase agreement, a Fund transfers possession of a portfolio
instrument to another person, such as a financial
12
<PAGE>
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
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
13
<PAGE>
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.
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:
Fiscal year ended Fiscal year ended
July 31, 1999 July 31, 1998
------------- -------------
Government Securities Fund 93% 155%
Quality Bond Fund 349% 279%
Ohio Tax Free Fund 47% 42%
Quality Growth Fund 34% 45%
Mid Cap Fund 49% 44%
Balanced Fund 128% 135%
International Equity Fund 42% 39%
Equity Income Fund 69% 41%
Bond Fund For Income 104% 127%
Municipal Bond Fund 110% 121%
Cardinal Fund 15%* 15%**
Pinnacle Fund 51% 38%
- -----------------
* reflects period October 1, 1998 through July 31, 1999.
** or the fiscal year ended September 30, 1998
Portfolio turnover for the Quality Bond Fund increased during the past
fiscal year from the immediately prior fiscal year because the Fund restructured
its portfolio to take advantage of the competitive pricing among new issues.
Investment Limitations
Issuing Senior Securities and Borrowing Money. The Funds will not issue
---------------------------------------------
senior securities except that a Fund may borrow money directly or through
reverse repurchase agreements in amounts up to one-third of the value of its
total assets, including the amount borrowed and except to the extent that a Fund
(with the exception of Ohio Tax Free Fund and Municipal Bond Fund) may enter
into futures contracts, as applicable. The Funds will not borrow money or engage
in reverse repurchase agreements for investment leverage, but rather as a
temporary, extraordinary, or emergency measure or to facilitate management of
the portfolio by enabling a Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. No Fund (other than the Prime Money Market Fund and U.S.
Treasury Money Market Fund) will purchase any securities while any borrowings in
excess of 5% of its total assets are outstanding.
14
<PAGE>
Selling Short and Buying on Margin. The Funds will not sell any securities
----------------------------------
short or purchase any securities on margin, but may obtain such short-term
credits as are necessary for clearance of purchases and sales of securities.
The deposit or payment by the Funds (with the exception of Ohio Tax Free
Fund and Municipal Bond 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 Prime Money Market Fund will not mortgage, pledge or
---------------
hypothecate any assets. The other Funds will not mortgage, pledge, or
hypothecate any assets, except to secure permitted borrowings. The Government
Money Market Fund, Tax Exempt Money Market Fund, the Ohio Money Market Fund and
U.S. Treasury Money Market Fund only may pledge having a value not exceeding the
lesser of the dollar amounts borrowed or 10% of the value of total assets at the
time of the pledge. For purposes of this limitation, where applicable, (a) the
deposit of assets in escrow in connection with the writing of covered put or
call options and the purchase of securities on a when-issued basis and (b)
collateral arrangements with respect to: (i) the purchase and sale of stock
options (and options on stock indices) and (ii) initial or variation margin for
futures contracts, will not be deemed to be pledges of a Fund's assets.
Investing in Commodities. None of the Funds will purchase or sell
------------------------
commodities, commodity contracts, or commodity futures contracts except to the
extent that the Funds (with the exception of Ohio Tax Free Fund, Government
Securities Fund and Municipal Bond Fund) may engage in transactions involving
futures contracts or options on futures contracts.
Investing in Real Estate. None of the Funds will purchase or sell real
------------------------
estate, including limited partnership interests, although the Funds (with the
exception of Government Securities Fund) may invest in securities of issuers
whose business involves the purchase or sale of real estate or in securities
which are secured by real estate or interests in real estate.
Diversification of Investments. With respect to 75% of the value of their
------------------------------
respective total assets (and with respect to 100% of their total assets with
respect to Tax Exempt Money Market Fund, Government Money Market Fund and U.S.
Treasury Money Market Fund) a Fund (with the exception of Ohio Tax Free Fund and
Ohio 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 their total assets would be invested in the securities
of that issuer. A Fund will not acquire more than 10% of the outstanding voting
securities of any one issuer.
Dealing in Puts and Calls. The Ohio Tax Free Fund, the Municipal Bond Fund,
-------------------------
the Ohio Money Market Fund and the Tax Exempt Money Market Fund will not buy or
sell puts, calls, straddles, spreads, or any combination of these.
Concentration of Investments. The Government Securities Fund, Quality Bond
----------------------------
Fund, Quality Growth Fund, Technology Fund, Mid Cap Fund, Balanced Fund and
International
15
<PAGE>
Equity Fund will not invest 25% or more of the value of their respective total
assets in any one industry, except that these Funds may invest more than 25% of
the value of its total assets in securities issued or guaranteed by the U.S.
government, its agencies, or instrumentalities and repurchase agreements
collateralized by such securities.
The 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 Ohio Tax Free Fund, the Municipal Bond Fund, the Ohio Money Market Fund
and the Tax Exempt Money Market Fund will not purchase securities if, as a
result of such purchase, 25% or more of the value of their 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, the Funds may invest as temporary investments more
than 25% of the value of their respective assets in cash or cash items,
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities, or instruments secured by these Money Market instruments,
i.e., repurchase agreements.
Underwriting. A Fund will not underwrite any issue of securities, except as
------------
a Fund may be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its investment
objective, policies, and limitations.
The above limitations cannot be changed with respect to a Fund without
approval of the holders or a majority of that Fund's Shares. The following
limitations may be changed by the Trustees without shareholder approval.
Shareholders will be notified before any material change in these limitations
becomes effective.
Investing in Restricted Securities. The Funds will not invest more than 10%
----------------------------------
of the value of their respective net assets in securities that are subject to
restrictions on resale under federal securities law.
Investing in Illiquid Securities. The Funds other than the Money Market
--------------------------------
funds, will not invest more than 15% of the value of their respective net assets
in illiquid securities, including, as applicable, repurchase agreements
providing for settlement more than seven days after notice, over-the-counter
options, certain restricted securities not determined by the Trustees to be
liquid, and non-negotiable time deposits with maturities over seven days. The
Money Market funds will not invest more than 10% of the value of their
respective net assets in illiquid securities.
Investing in Securities of Other Investment Companies. With respect to 100%
-----------------------------------------------------
of their total assets (and for the Money Market Funds, with respect to 75% of
the Funds' total assets), the Funds will limit their respective investments in
other investment companies to no more than 3% of the total outstanding voting
stock of any investment company, invest no more than 5% of their
16
<PAGE>
respective total assets in any one investment company, and will invest no more
than 10% of their respective total assets in investment companies in general.
The Funds will purchase securities of closed-end investment companies only in
open market transactions involving only customary broker's commissions. However,
these limitations are not applicable if the securities are acquired in a merger,
consolidation, reorganization, or acquisition of assets. It should be noted that
investment companies incur certain expenses such as management fees and,
therefore, any investment by a Fund in shares of another investment company
would be subject to such expenses.
Investing in New Issuers. The Government Securities Fund, Quality Bond
------------------------
Fund, Quality Growth Fund, Mid Cap Fund, Balanced Fund, International Equity
Fund, Technology Fund and the Prime Money Market Fund will not invest more than
5% of the value of their respective total assets in securities of issuers which
have records of less than three years of continuous operations, including the
operation of any predecessor.
The Ohio Tax Free Fund, the Municipal Bond Fund, the Ohio Money Market Fund
and the Tax Exempt Money Market Fund will not invest more than 5% of the value
of their respective total assets in industrial development bonds where the
principal and interest are the responsibility of companies (or guarantors, where
applicable) with less than three years of continuous operations, including the
operation of any predecessor.
Investing in Issuers Whose Securities are Owned by Officers and Trustees of
---------------------------------------------------------------------------
the Trust. No Fund (other than the U.S. Treasury Money Market Fund, the Prime
- ---------
Money Market Fund and the Government Money Market Fund) may purchase or retain
the securities of any issuer if the officers and Trustees of the Trust or its
investment advisor, owning individually more than 1/2 of 1% of the issuer's
securities, together own more than 5% of the issuer's securities.
Investing in Minerals. No Fund (other than the U.S. Treasury Money Market
---------------------
Fund or the Government Money Market Fund) may purchase interests in oil, gas, or
other mineral exploration or development programs or leases, except they may
purchase the securities of issuers which invest in or sponsor such programs.
Investing in Commodities, Commodity Contracts, or Real Estate. The 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 and the Ohio 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 and the Ohio 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.
Arbitrage Transactions. No Fund (other than the Money Market funds) may
----------------------
enter into transactions for the purpose of engaging in arbitrage.
17
<PAGE>
Purchasing Securities to Exercise Control. No Fund (other than the Money
-----------------------------------------
Market funds) may purchase securities of a company for the purpose of exercising
control or management.
Investing in Warrants. The Quality Growth Fund, Technology Fund, Cardinal
---------------------
Fund, Mid Cap Fund, Balanced Fund, International Equity Fund, and Equity Income
Fund may not invest more than 5% of their net assets in warrants, including
those acquired in units or attached to other securities. To comply with certain
state restrictions, a Fund will limit its investment in such warrants not listed
on the New York or American Stock Exchanges to 2% of its net assets. (If state
restrictions change, this latter restriction may be revised without notice to
shareholders.) For purposes of this investment restriction, warrants will be
valued at the lower of cost or market, except that warrants acquired by a Fund
in units with or attached to securities may be deemed to be without value.
Investing in Put Options. The International Equity Fund will not purchase
------------------------
put options on securities or futures contracts, unless the securities or futures
contracts are held in the Fund's portfolio or unless the Fund in entitled to
them in deliverable form without further payment or after segregating cash in
the amount of any further payment.
Writing Covered Call Options. The International Equity Fund will not write
----------------------------
call options on securities or futures contracts unless the securities of futures
contracts are held in the Fund's portfolio or unless the Fund is entitled to
them in deliverable form without further payment or after segregating cash in
the amount of any further payment.
Except with respect to the Funds' policy of borrowing money, if a
percentage limitation is adhered to at the time of investment, a later increase
or decrease in percentage resulting from any change in value or net assets will
not result in a violation of such restriction. For purposes of its policies and
limitations, the Funds consider certificates of deposit and demand and time
deposits issued by a U.S. branch of a domestic bank or savings and loan having
capital, surplus, and undivided profits in excess of $100,000,000 at the time of
investment to be "cash items."
The Ohio Tax Free Fund 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.
Investment Risks (Ohio Tax Free Fund and Ohio Money Market Fund)
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
18
<PAGE>
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.
FIFTH THIRD FUNDS MANAGEMENT
Officers and Trustees
Officers and Trustees of the Trust are listed with their addresses,
principal occupations, and present positions. None of the Trustees are
"interested persons" of Fifth Third Bank (the "Advisor"), Fifth Third Bancorp,
The BISYS Group, Inc., BISYS Fund Services, Inc., BISYS
19
<PAGE>
Fund Services Ohio, Inc., or BISYS Fund Services Limited Partnership, as that
term is defined in Section 2(a)(19) of 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.
Lee A. Carter, 425 Walnut Street, Cincinnati, OH 45202. Birthdate: December
17, 1938. Member of the Board of Trustees, formerly President, Local
Marketing Corporation (retired December 31, 1993).
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.
Trust Ownership
As of November 15, 1999, the Officers and Trustees owned less than 1% of
any class of any Fund.
As of November 15, 1999, the following persons owned 5% or more of any
class of Shares of a Fund:
Fifth Third Quality Growth Fund-Investment A Shares
- ---------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
BHC Securities Inc. 5,471,985.874 97.97%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market St. #1200
Philadelphia, PA 19103-3212
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Fifth Third Quality Growth Fund-Investment C Shares
- ---------------------------------------------------
<S> <C> <C>
BHC Securities Inc. 434,322.406 99.02%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market St. #1200
Philadelphia, PA 19103-3212
Fifth Third Quality Growth Fund-Institutional Shares
- ----------------------------------------------------
Fifth Third Bank 13,032,501.704 50.24%
Trust and Investment Services (C)
Attn: Trust Accounting Dept MD 1090F2
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 7,615,585.271 29.36%
Trust and Investment Services (R)
Attn: Trust Accounting Dept MD 1090F2
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 5,263,915.724 20.29%
Expediter
Attn: Trust Accounting Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Cardinal Fund-Investment A Shares
- ---------------------------------------------
BHC Securities Inc. 4,821,224.517 40.24%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Fifth Third Cardinal Fund-Investment C Shares
- ---------------------------------------------
BHC Securities Inc. 31,495.02 164.78%
Trade House Accounting
Attn: Mutual Fund Department
2005 Market St., 11th Floor
Philadelphia, PA 19103
Fifth Third Cardinal Fund-Institutional Shares
- ----------------------------------------------
Fifth Third Bank 69,187.802 34.93%
Trust and Investment Services (C)
Attn: Trust Accounting Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 128,859.808 65.07%
Trust and Investment Services (R)
Attn: Trust Accounting Dept MD 109048
38 Fountain Square
Cincinnati, OH 45263
Fifth Third Pinnacle Fund-Investment A Shares
- ---------------------------------------------
BHC Securities Inc. 1,357,067.476 98.46%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market Street #1200
Philadelphia, PA 19103-3212
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Fifth Third Pinnacle Fund-Investment C Shares
- ---------------------------------------------
<S> <C> <C>
BHC Securities Inc. 162,106.472 98.74%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market Street #1200
Philadelphia, PA 19103-3212
Fifth Third Pinnacle Fund-Institutional Shares
- ----------------------------------------------
Fifth Third Bank 509,230.517 29.71%
Trust and Investment Services (C)
Attn: Trust Accounting Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 171,364.642 10.02%
Trust and Investment Services (R)
Attn: Trust Accounting Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 371,291.536 21.70%
Expediter
Attn: Trust Accounting Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Equity Income Fund-Investment A Shares
- --------------------------------------------------
BHC Securities Inc. 1,230,390.979 99.13%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market Street #1200
Philadelphia, PA 19103-3212
Fifth Third Equity Income Fund-Investment C Shares
- --------------------------------------------------
BHC Securities Inc. 81,777.165 98.76%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market Street #1200
Philadelphia, PA 19103-3212
Fifth Third Equity Income Fund-Institutional Shares
- ---------------------------------------------------
Fifth Third Bank 8,552,904,954 95.01%
Trust and Investment Services (C)
Attn: Trust Accounting Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Balanced Fund-Investment A Shares
- ---------------------------------------------
BHC Securities Inc. 4,596,080.766 91.95%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market Street #1200
Philadelphia, PA 19103-3212
Fifth Third Balanced Fund-Investment C Shares
- ---------------------------------------------
BHC Securities Inc. 412,368.705 98.52%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market Street #1200
Philadelphia, PA 19103-3212
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Fifth Third Balanced Fund-Institutional Shares
- ----------------------------------------------
<S> <C> <C>
Fifth Third Bank 1,075,790.554 12.17%
Trust and Investment Services (C)
Attn: Trust Accounting Dept MD 1090F2
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 4,131,679.723 46.75%
Trust and Investment Services (R)
Attn: Trust Accounting Dept MD 1090F2
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 3,625,357.975 41.02%
Expediter
Attn: Trust Accounting Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Mid Cap Fund-Investment A Shares
- --------------------------------------------
BHC Securities Inc. 1,562,232.821 91.60%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market Street #1200
Philadelphia, PA 19103-3212
Fifth Third Mid Cap Fund-Investment C Shares
- --------------------------------------------
BHC Securities Inc. 48,105.524 100.00%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market Street #1200
Philadelphia, PA 19103-3212
Fifth Third Mid Cap Fund-Institutional Shares
- ---------------------------------------------
Fifth Third Bank 6,274,297.844 51.66%
Trust and Investment Services (C)
Attn: Trust Accounting Dept MD 1090F2
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 3,696,217.356 30.43%
Trust and Investment Services (R)
Attn: Trust Accounting Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 2,174,051.562 17.90%
Expediter
Attn: Trust Accounting Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third International Equity Fund-Investment A Shares
- ---------------------------------------------------------
BHC Securities Inc. 454,600.589 99.19%
Trade House Accounting
2005 Market Street
Philadelphia, PA 19103
Fifth Third International Equity Fund-Investment C Shares
- ---------------------------------------------------------
BHC Securities Inc. 15,999.731 89.81%
Trade House Accounting
2005 Market Street
Philadelphia, PA 19103
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Donaldson Lufkin Jenrette 1,813.644 10.18%
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
Fifth Third International Equity Fund-Institutional Shares
- ----------------------------------------------------------
Fifth Third Bank & Investment Services 8,542,921.012 63.16%
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank & Investment Services 4,439,013.025 32.82%
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bond Fund for Income-Investment A Shares
- ----------------------------------------------------
BHC Securities Inc. 1,440,670.401 46.14%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market Street #1200
Philadelphia, PA 19103-3212
Fifth Third Bond Fund for Income-Investment C Shares
- ----------------------------------------------------
BHC Securities Inc. 44,771.550 100.00%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market Street #1200
Philadelphia, PA 19103-3212
Fifth Third Bond Fund for Income-Institutional Shares
- -----------------------------------------------------
Fifth Third Bank 16,170,312.747 96.25%
Trust and Investment Services (C)
Attn: Trust Accounting Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Quality Bond Fund-Investment A Shares
- -------------------------------------------------
BHC Securities Inc. 1,036,245.699 99.38%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market Street, #1200
Philadelphia, PA 19103-3212
Fifth Third Quality Bond Fund-Investment C Shares
- -------------------------------------------------
BHC Securities Inc. 84,061.408 100.00%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market Street, #1200
Philadelphia, PA 19103-3212
Fifth Third Quality Bond Fund-Institutional Shares
- --------------------------------------------------
Fifth Third Bank 6,440,162.376 43.52%
Trust and Investment Services (C)
Attn: Trust Accounting Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 6,895,616.810 46.60%
Trust and Investment Services (R)
Attn: Trust Accounting Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Fifth Third Bank 1,319,843.686 8.92%
Expediter
Attn: Trust Accounting Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Government Securities Fund-Investment A Shares
- ----------------------------------------------------------
BHC Securities Inc. 372,011.440 98.54%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market Street #1200
Philadelphia, PA 19103-3212
Fifth Third Government Securities Fund-Investment C Shares
- ----------------------------------------------------------
BHC Securities Inc. 39,248.088 100.00%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market Street #1200
Philadelphia, PA 19103-3212
Fifth Third Government Securities Fund-Institutional Shares
- -----------------------------------------------------------
Fifth Third Bank 2,453,533.790 53.49%
Trust and Investment Securities (C)
Attn: Trust Account Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 1,475,293.138 32.17%
Trust and Investment Securities (R)
Attn: Trust Account Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Bank 657,737.631 14.34%
Expediter
Attn: Trust Account Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Municipal Bond Fund-Investment A Shares
- ---------------------------------------------------
BHC Securities Inc. 25,948.211 95.08%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market Street #1200
Philadelphia, PA 19103-3212
Fifth Third Municipal Bond Fund-Institutional Shares
- ----------------------------------------------------
Fifth Third Bank 9,827,948.746 99.73%
Trust and Investment Securities (C)
Attn: Trust Account Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Ohio Tax Free Fund-Investment A Shares
- --------------------------------------------------
BHC Securities Inc. 2,113,994.104 99.91%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market Street #1200
Philadelphia, PA 19103-3212
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Fifth Third Ohio Tax Free Fund-Investment C Shares
- --------------------------------------------------
<S> <C> <C>
BHC Securities Inc. 117,594.773 99.59%
Trade House Account
Attn: Mutual Funds
1 Commerce Square 2005 Market Street #1200
Philadelphia, PA 19103-3212
Fifth Third Ohio Tax Free Fund-Institutional Shares
- ---------------------------------------------------
Fifth Third Bank 18,008,713.416 98.43%
Trust and Investment Services (C)
Attn: Trust Accounting Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Government Money Market Fund-Investment A Shares
- ------------------------------------------------------------
Fifth Third Bank Trust Dept 320,532,227.900 91.94%
Attn: Kim Haney
38 Fountain Square Plaza
Cincinnati, OH 45202
Fifth Third Government Money Market Fund-Institutional Shares
- -------------------------------------------------------------
Fifth Third Bank Trust Dept 251,071,044.300 100.00%
Attn: Kim Haney
38 Fountain Square Plaza
Cincinnati, OH 45202
Fifth Third Prime Money Market Fund-Investment A Shares
- -------------------------------------------------------
Fifth Third Bank Trust Dept 101,267,670.830 99.98%
Attn: Kim Haney
38 Fountain Square Plaza
Cincinnati, OH 45202
Fifth Third Prime Money Market Fund-Institutional Shares
- --------------------------------------------------------
Fifth Third Bank Trust Dept 347,733,272.620 92.92%
Attn: Kim Haney
38 Fountain Square Plaza
Cincinnati, OH 45202
Fifth Third Tax Exempt Money Market Fund-Investment A Shares
- ------------------------------------------------------------
Fifth Third Bank 22,696,917.270 86.07%
Trust and Investment Services
Attn: Diane Harmening MD 1090F2
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third Tax Exempt Money Market Fund-Institutional Shares
- -------------------------------------------------------------
Fifth Third Bank 70,729,868.250 100.00%
Trust and Investment Services (C)
Attn: Trust Accounting Dept MD 109048
38 Fountain Square Plaza
Cincinnati, OH 45263
Fifth Third U.S. Treasury Money Market Fund-Institutional Shares
- ----------------------------------------------------------------
Fifth Third Bank Trust Dept 750,239,637.870 84.19%
Attn: Kim Haney
38 Fountain Square Plaza
Cincinnati, OH 45202
</TABLE>
26
<PAGE>
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, 1999. The Trust
is the only investment company in the Fund complex.
+ The aggregate compensation is provided for the Trust which is comprised of
sixteen portfolios.
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 and Morgan Stanley Asset
Management, Inc., as investment advisor or investment sub-advisor to one or more
Funds, and 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
The Trust's investment advisors to all Funds other than the Pinnacle Fund
is Fifth Third Bank. 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 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.
27
<PAGE>
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.
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, 1999, July 31, 1998, and July 31, 1997 (amounts in thousands):
<TABLE>
<CAPTION>
Year ended Amount Year ended Amount Year ended Amount
Fund Name July 31, 1999 Waived-1999 July 31, 1998 Waived-1998 July 31, 1997 Waived-1997
- --------- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Government Securities Fund $261 $38 $228 $33 $234 $46
Quality Bond Fund 680 -- 545 -- 483 --
Ohio Tax Free Bond Fund 1,122 79 980 -- 813 --
Quality Growth Fund 4,920 -- 3,810 -- 2,328 --
Mid Cap Fund 1,753 -- 1,725 -- 1,146 --
Balanced Fund 1,673 -- 1,217 -- 861 --
International Equity Fund 1,634 -- 1,471 -- 1,361 --
Equity Income Fund 1,311 -- 1,088 -- 442 --
Bond Fund For Income 1,369 -- 938 -- 411 --
Municipal Bond Fund 661 -- 591 -- 282 --
Cardinal Fund 1,364* -- n/a n/a n/a n/a
Pinnacle Fund 586 -- 129 -- n/a n/a
Government Money Market Fund 2,789 -- 1,284 52 986 135
Prime Money Market Fund 1,657 83 1,762 88 1,358 139
Tax Exempt Money Market Fund 185 *60 n/a n/a n/a n/a
U.S. Treasury Money Market Fund 3,707 1,298 2,795 978 1,966 655
</TABLE>
- ---------------
* Reflects operations for the period October 1, 1998 through July 31, 1999.
Sub-advisors
Morgan Stanley Asset Management, Inc. is the sub-advisor to International
Equity Fund under the terms of a Sub-advisory Agreement between Fifth Third Bank
and Morgan Stanley Asset Management, Inc. 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, each of Morgan Stanley Asset Management,
Inc. and Fort Washington Investment Advisors, Inc. receives an annual
sub-advisory fee paid by the Advisor as described in the prospectus.
For the year ended July 31, 1997, Morgan Stanley Asset Management, Inc.
earned fees from International Equity Fund of $680,483, none of which was
waived. For the year ended July 31, 1998, Morgan Stanley Asset Management, Inc.
earned fees from International Equity Fund of $777,259, none of which was
waived. For the year ended July 31, 1999, Morgan Stanley
28
<PAGE>
Asset Management, Inc. earned fees from International Equity Fund of $735,375,
none of which was waived.
Administrative Services
BISYS Fund Services L.P., 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 and the amounts of
those fees that were voluntarily waived. For the years ended July 31, 1997 and
July 31, 1998 and July 31, 1999 (Amounts in Thousands):
<TABLE>
<CAPTION>
Year ended Amount Year ended Amount Year ended Amount
Fund Name July 31, 1999 Waived-1999 July 31, 1998Waived-1998 July 31, 1997 Waived-1997
--------- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Government Securities Fund $83 $46 $76 $41 $55 $14
Quality Bond Fund 217 120 180 99 114 30
Ohio Tax Free Fund 358 176 324 142 198 11
Quality Growth Fund 1,079 290 865 100 397 17
Mid Cap Fund 385 156 383 116 192 16
Balanced Fund 367 91 277 116 141 30
International Equity Fund 292 -- 265 -- 166 --
Equity Income Fund 288 75 247 113 85 37
Bond Fund For Income 437 70 310 111 114 50
Municipal Bond Fund 211 116 196 108 77 33
Cardinal Fund 400* 25 n/a n/a n/a n/a
Pinnacle Fund 129 9 22 11 n/a n/a
Government Money Market Fund 1,245 697 582 321 301 84
Prime Money Market Fund 741 372 801 441 426 128
Tax Exempt Money Market Fund 66* 37 n/a n/a n/a n/a
U.S. Treasury Money Market Fund 1,659 927 1,267 699 610 177
</TABLE>
- ----------------
* Reflects operations for the period October 1, 1998 through July 31, 1999.
Fifth Third Bank performs sub-administration services on behalf of each
Fund, for which it receives compensation from BISYS Fund Services L.P. For the
years ended July 31, 1997, July 31, 1998 and July 31, 1999, Fifth Third Bank
earned the following sub-administrative fees (Amounts in Thousands):
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
Fund Name July 31, 1997 July 31, 1998 July 31, 1999
--------- ------------------------------------------------
<S> <C> <C> <C>
Government Securities Fund $11 $10 $12
Quality Bond Fund
Ohio Tax Free Fund
Quality Growth Fund
Mid Cap Fund
Balanced Fund
International Equity Fund
Equity Income Fund
Bond Fund for Income
Municipal Bond Fund
Cardinal Fund n/a n/a
Pinnacle Fund n/a
Government Money Market Fund
Prime Money Market Fund
Tax Exempt Money Market Fund n/a n/a
U.S. Treasury Money Market Fund
</TABLE>
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
29
<PAGE>
with Fifth Third Bank, The Bank of New York, acts as the International Equity
Fund's sub-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, 1997, July 31, 1998 and July 31, 1999 (amounts in
thousands), those fees were approximately $388,000 $449,000 and $510,000
respectively, none of which was waived.
Transfer Agent and Dividend Disbursing Agent
Fifth Third Bank serves as transfer agent and dividend disbursing agent for
the Funds. The fee paid to the transfer agent is based upon the size, type and
number of accounts and transactions made by shareholders.
Fifth Third Bank also maintains the Trust's accounting records. The fee
paid for this service is based upon the level of the Funds' average net assets
for the period plus out-of-pocket expenses.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the 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, 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 $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.
30
<PAGE>
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.
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, 1999, some of the Funds acquired
securities of the Funds' regular brokers or dealers or their parents as follows:
<TABLE>
<CAPTION>
Fund Security Principal/Shares Market Value
- ---- -------- ----------------- ------------
<S> <C> <C> <C>
Quality Bond Fund Bear Stearns Co., Inc., 6.45% $5,000,000 $4,909,000
due 08/01/02
Balanced Fund Salomon Smith Barney Holdings, $3,000,000 $3,005,000
7.38%, due 05/15/07
T. Rowe Price Associates, Inc. 80,000 $2,800,000
common stock
A.G. Edwards, Inc. 30,000 $829,000
common stock
International Equity Deutsche Bank, AG 9,383 $595,000
Fund common stock
Equity Income Fund A.G. Edwards, Inc. 78,000 $2,155,000
common stock
Cardinal Fund T. Rowe Price Associates, Inc. 60,000 $2,100,000
common stock
Mid Cap Fund A.G. Edwards, Inc. 170,000 $4,696,000
common stock
T. Rowe Price Associates, Inc. 220,000 $7,700,000
common stock
</TABLE>
PURCHASING SHARES
Shares of the Funds are sold at their net asset value with an applicable
sales charge or contingent deferred sales charge on days the New York Stock
Exchange and the Federal Reserve Bank of Cleveland are open for business. The
procedure for purchasing Investment A Shares,
31
<PAGE>
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 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 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 pay the distributor a monthly distribution fee computed 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. As of the
date of this Statement of Additional Information, the Funds are not accruing or
paying l2b-1 fees for Investment A Shares. The Funds do not intend to accrue or
pay 12b-1 fees with respect to Investment A Shares until either separate classes
of shares have been created for certain fiduciary investors for the Funds or a
determination is made that such investors will be subject to the 12b-1 fees.
Pursuant to the Plan, with respect to Investment C Shares, the Funds are
authorized to pay the distributor a monthly distribution fee computed at the
annual rate of up to 0.75% of the average aggregate net asset value of the
Investment C Shares of each applicable Fund held during the month. For the
fiscal year ended July 31, 1999, the distributor received $119,000 pursuant to
the Plan.
32
<PAGE>
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, 1999, the Funds paid $59,000 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.
Conversion to Federal Funds
It is the Funds' policy to be as fully invested as possible so that maximum
interest or dividends may be earned. To this end, all payments from shareholders
must be in federal funds or be converted into federal funds. Fifth Third Bank
acts as the shareholder's agent in depositing checks and converting them to
federal funds.
Exchanging Securities for Fund Shares
Investors may exchange securities they already own for Shares of a Fund or
they may exchange a combination of securities and cash for Fund Shares. Any
securities to be exchanged must meet the investment objective and policies of
each Fund, must have a readily ascertainable market value, must be liquid, and
must not be subject to restrictions on resale. An investor should forward the
securities in negotiable form with an authorized letter of transmittal to Fifth
Third Bank. A Fund will notify the investor of its acceptance and valuation of
the securities within five business days of their receipt by the advisor.
A Fund values such securities in the same manner as a Fund values its
assets. The basis of the exchange will depend upon the net asset value of Shares
of a Fund on the day the securities are valued. One Share of a Fund will be
issued for each equivalent amount of securities accepted.
33
<PAGE>
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
Financial professionals 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:
<TABLE>
<CAPTION>
INVESTMENT INVESTMENT
AMOUNT OF INVESTMENT ($) A SHARES AMOUNT OF INVESTMENT ($) C SHARES
- ------------------------ -------- ------------------------ --------
<S> <C> <C> <C>
Under 50,000 3.825% Any Amount 1%
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*
- -----------------
</TABLE>
* 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.
Brokers and agents may charge a transaction fee on the purchase or sale of
shares by shareholders.
DETERMINING NET ASSET VALUE
Net asset values of the Funds generally, other than the Money Market funds,
change each day. The days on which the net asset value is calculated by these
Funds are described in the prospectus. The Money Market funds 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 Ohio
Tax Free Fund, Municipal Bond Fund and the Money Market funds) 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;
34
<PAGE>
. for unlisted equity securities, the latest bid prices;
. for bonds and other fixed income securities, as determined by an independent
pricing service;
. for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service except that short-term
obligations with remaining maturities of less than 60 days at the time of
purchase may be valued at amortized cost; or
. for all other securities, at fair value as determined in good faith by the
Board of Trustees.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may reflect institutional trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data.
The Funds will value futures contracts, options and put options on
financial futures at their market values established by the exchanges at the
close of option trading on such exchanges unless the Trustees determine in good
faith that another method of valuing option positions is necessary to appraise
their fair value.
Valuing Municipal Bonds
With respect to Ohio Tax Free Fund 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 funds 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 funds, 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 value. 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 value. The Trustees will take any steps they
consider appropriate (such as redemption in kind or shortening the average
35
<PAGE>
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 funds, the Rule requires that a Money Market fund
limit its investments to instruments that, in the opinion of the Trustees,
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 must determine that they are of
comparable quality. Shares of investment companies purchased by a Money Market
fund will meet these same criteria and will have investment policies consistent
with the Rule. The Rule also requires a Money Market fund 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.
Should the disposition of a portfolio security result in a dollar-weighted
average portfolio maturity of more than 90 days, a Money Market fund will invest
its available cash to reduce the average maturity to 90 days or less as soon as
possible.
A Money Market fund 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 fund 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 fund 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.
36
<PAGE>
REDEEMING SHARES
Shares are redeemed at the next computed net asset value after a Fund
receives the redemption request. Redemption procedures are explained in the
prospectus under "Redeeming Shares." Although Fifth Third Bank does not charge
for telephone redemptions, it reserves the right to charge a fee for the cost of
wire-transferred redemptions.
Investment C Shares redeemed within one year of purchase may be subject to
a contingent deferred sales charge. The contingent deferred sales charge may be
reduced with respect to a particular shareholder where a financial institution
selling Investment C Shares elects not to receive a commission from the
distributor with respect to its sale of such Shares.
Redemption in Kind
The Trust has elected to be governed by Rule 18f-1 of the Investment
Company Act of 1940 under which the Trust is obligated to redeem Shares for any
one shareholder in cash only up to the lesser of $250,000 or 1% of a Fund's net
asset value during any 90-day period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that payments should be in kind. In such a case, the Trust will pay
all or a portion of the remainder of the redemption in portfolio instruments,
valued in the same way as the Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable.
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.
TAX STATUS
The Funds' Tax Status
The Funds will pay no federal income tax because they expect to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. To qualify for this treatment, each Fund must, among other
requirements: derive at least 90% of its gross income from
37
<PAGE>
dividends, interest, and gains from the sale of securities; invest in securities
within certain statutory limits; and distribute to its shareholders at least 90%
of its net income earned during the year.
Shareholders' Tax Status
With respect to all Funds except the Ohio Tax Free Fund, the Municipal Bond
Fund, Ohio Money Market Fund and the Tax Exempt Money Market Fund, shareholders
are subject to federal income tax on dividends received as cash or additional
Shares. No portion of any income dividend paid by a Fund is eligible for the
dividends received deduction available to corporations. These dividends, and any
short-term capital gains, are taxable as ordinary income.
With respect to Ohio Tax Free Fund, Municipal Bond Fund, Ohio Money Market
Fund and the Tax Exempt Money Market Fund, no portion of any income dividend
paid by a Fund is eligible for the dividends received deduction available to
corporations.
Capital Gains
With respect to all Funds except the Ohio Tax Free Fund, the Municipal Bond
Fund, Ohio Money Market Fund and the Tax Exempt Money Market Fund, long-term
capital gains distributed to shareholders will be treated as long-term capital
gains regardless of how long shareholders have held Shares.
With respect to Ohio Tax Free Fund, Ohio Money Market Fund and Municipal
Bond Fund, capital gains or losses may be realized by a Fund on the sale of
portfolio securities and as a result of discounts from par value on securities
held to maturity. Sales would generally be made because of: the availability of
higher relative yields; differentials in market values; new investment
opportunities; changes in creditworthiness of an issuer; or an attempt to
preserve gains or limit losses.
Distributions of long-term capital gains are taxed as such, whether they
are taken in cash or reinvested, and regardless of the length of time the
shareholder has owned Shares. Any loss by a shareholder on Shares held for less
than six months and sold after a capital distribution will be treated as a
long-term capital loss to the extent of the capital gains distribution.
State and Local Taxes
The Government Money Market Fund intends to limit its investments to U.S.
government securities paying interest which, if owned directly by shareholders
of the Fund, would generally be exempt from state personal income tax. However,
from time to time, the Fund may also invest in other U.S. government securities
if the Advisor deems it advantages to do so. Moreover, under the laws of some
states, the net investment income generally distributed by the Fund may be
taxable to shareholders. State laws differ on this issue, and shareholders are
urged to consult their own tax advisors regarding the status of their accounts
under state and local tax laws.
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<PAGE>
Foreign Taxes
Investment income on certain foreign securities in which the Funds
(other than the Money Market Funds) may invest may be subject to foreign
withholding or other taxes that could reduce the return on these securities. Tax
treaties between the United States and foreign countries, however, may reduce or
eliminate the amount of foreign taxes to which the Fund would subject.
<TABLE>
<CAPTION>
PERFORMANCE INFORMATION
Total Return
Institutional Shares
Average Annual Total Return
Fiscal Year Ended July 31, 1999
Since
Fund Name 1 Year 5 Years 10 Years Inception
- --------- ------ ------- -------- ---------
<S> <C> <C> <C> <C>
U.S. Government Securities Fund 3.16% 5.67% 5.83% 5.95%
Quality Bond Fund 1.48% 6.18% 6.47% 8.02%
Ohio Tax Free Bond Fund 1.86% 5.00% 5.42% 4.97%
Quality Growth Fund 26.80% 25.34% 17.13% 17.50%
Mid Cap Fund 7.61% 16.28% 13.38% 14.98%
Balanced Fund 14.57% 16.94% 13.75% 15.95%
International Equity Fund 4.52% n/a n/a 9.24%
Equity Income Fund 10.24% 20.16% 13.20% 15.13%
Bond Fund for Income 2.79% 6.09% 6.40% 8.20%
Municipal Bond Fund 1.68% 4.43% 5.17% 6.79%
Cardinal Fund 21.21% 21.37% 14.66% 16.01%
Pinnacle Fund 17.44% 26.21% 16.25% 16.81%
Government Money Market Fund 4.60% 5.01% n/a 4.39%
Prime Money Market Fund 4.76% 5.12% 5.07% 5.12%
Tax Exempt Money Market Fund 2.73% 2.72% 3.03% 3.68%
U.S. Treasury Money Market Fund 4.68% 5.10% 5.05% 5.28%
</TABLE>
<TABLE>
<CAPTION>
Investment A Shares
Average Annual Total Returns
Fiscal Year Ended July 31, 1999
Since
Fund Name 1 Year 5 Years 10 Years Inception
- --------- ------ ------- -------- ---------
<S> <C> <C> <C> <C>
U.S. Government Securities Fund -1.71% 4.65% 5.32% 5.57%
Quality Bond Fund -3.30% 5.16% 5.96% 7.70%
Ohio Tax Free Bond Fund -2.92% 3.98% 4.92% 4.57%
Quality Growth Fund 20.82% 24.12% 16.56% 17.16%
Mid Cap Fund 2.48% 15.14% 12.83% 14.60%
Balanced Fund 9.13% 15.81% 13.20% 15.61%
International Equity Fund -0.45% n/a n/a 8.17%
Equity Income Fund 4.98% 18.99% 12.65% 14.79%
Bond Fund for Income -2.16% 5.05% 5.87% 7.89%
Municipal Bond Fund -3.04% 3.44% 4.68% 6.49%
Cardinal Fund 14.90% 20.06% 14.05% 15.75%
Pinnacle Fund 11.93% 25.00% 15.69% 16.42%
Government Money Market Fund 4.41% 4.98% n/a 4.33%
Prime Money Market Fund 4.53% 5.07% n/a 4.45%
Tax Exempt Money Market Fund 2.58% 2.73% 3.03% 3.68%
U.S. Treasury Money Market Fund n/a n/a n/a n/a
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
Investment C Shares
Average Annual Total Return
Fiscal Year Ended July 31, 1999
Since
Fund Name 1 Year 5 Years 10 Years Inception
------ ------- -------- ---------
<S> <C> <C> <C> <C>
U.S. Government Securities Fund 2.31% 5.09% 5.39% 5.46%
Quality Bond Fund 0.81% 5.66% 6.06% 7.59%
Ohio Tax Free Bond Fund 1.13% 4.48% 4.99% 4.46%
Quality Growth Fund 25.76% 24.74% 16.70% 17.04%
Mid Cap Fund 6.79% 15.76% 12.96% 14.42%
Balanced Fund 13.78% 16.42% 13.33% 15.50%
International Equity Fund 3.87% n/a n/a 8.80%
Equity Income Fund 9.34% 19.14% 12.19% 14.07%
Bond Fund for Income 1.92% 5.16% 5.39% 7.16%
Cardinal Fund 19.29% 20.97% 14.47% 15.93%
Pinnacle Fund 16.60% 25.58% 15.96% 16.61%
</TABLE>
Yield
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, 1999 were
as follows:
<TABLE>
<CAPTION>
Institutional Shares Investment A Shares Investment C Shares
-------------------- ------------------- -------------------
<S> <C> <C> <C>
U.S. Government Securities Fund 4.84% 4.59% 4.09%
Quality Bond Fund 5.34% 5.09% 4.59%
Ohio Tax Free Bond Fund .59% 3.34% 2.84%
Balanced Fund 1.52% 1.27% 1.06%
Bond Fund for Income 5.25% 5.00% 4.50%
Municipal Bond Fund 3.72% 3.47% n/a
</TABLE>
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.
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, 1999, was
6.62%, while the tax-equivalent yield for the Municipal Bond fund for the 30-day
period ended July 31, 1999, was 6.55%. The tax-equivalent yield of a Fund is
calculated similarly to the yield, but is adjusted to reflect the taxable
40
<PAGE>
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.
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.
<TABLE>
<CAPTION>
TAXABLE YIELD EQUIVALENT FOR 1999
STATE OF OHIO
FEDERAL TAX BRACKET:
<S> <C> <C> <C> <C> <C>
15.00% 28.00% 31.00% 36.00% 39.60%
COMBINED FEDERAL AND STATE TAX BRACKET:
19.457% 33.201% 37.900% 43.500% 47.100%
SINGLE $1- $23,351- $56,551- $117,951- OVER
RETURN 23,350 56,550 117,950 256,500 256,500
Tax-Exempt Yield Taxable Yield Equivalent
1.50% 1.86% 2.25% 2.42% 2.65% 2.84%
2.00% 2.48% 2.99% 3.22% 3.54% 3.78%
2.50% 3.10% 3.74% 4.03% 4.42% 4.73%
3.00% 3.72% 4.49% 4.83% 5.31% 5.67%
3.50% 4.35% 5.24% 5.64% 6.19% 6.62%
4.00% 4.97% 5.99% 6.44% 7.08% 7.56%
4.50% 5.59% 6.74% 7.25% 7.96% 8.51%
5.00% 6.21% 7.49% 8.05% 8.85% 9.45%
5.50% 6.83% 8.23% 8.86% 9.73% 10.40%
6.00% 7.45% 8.98% 9.66% 10.62% 11.34%
</TABLE>
The maximum marginal tax rate for each bracket was used in calculating the
taxable yield equivalent. Furthermore, additional state and local taxes paid on
comparable taxable investments were not used to increase federal deductions.
The chart above is for illustrative purposes only. It is not an indicator
of past or future performance of Ohio Tax Free Bond Fund Shares.
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.
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<PAGE>
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.
. 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
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<PAGE>
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 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
43
<PAGE>
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)
. 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
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<PAGE>
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
The financial statements for the Funds for the fiscal year ended July 31,
1999 are incorporated herein by reference to the Annual Report to Shareholders
of the Fifth Third Funds dated July 31, 1999. (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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<PAGE>
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
46
<PAGE>
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.
47
<PAGE>
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.
48
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits
(a) Declaration of Trust of the Registrant including Amendments No. 1 through 7
(incorporated by reference to Registrant's Post-Effective Amendment No. 15
on Form N-1A filed February 28, 1995)
(i) Amendment No. 8 to the Declaration of Trust (incorporated by
reference to Registrant's Post-Effective Amendment No. 19 on Form
N-lA filed on or about October 28, 1996)
(ii) Amendment No. 9 to the Declaration of Trust (incorporated by
reference to Registrant's Post-Effective Amendment No. 18 on Form
N-1A filed on or about October 1, 1996)
(iii) Amendment No. 10 to the Declaration of Trust (incorporated by
reference to Registrant's Post-Effective Amendment No. 22 on Form
N-1A filed on or about September 30, 1997)
(iv) Amendment No. 11 to the Declaration of Trust (incorporated by
reference to Registrant's Post-Effective Amendment No. 26 on Form
N-1A filed on or about January 21, 1998)
(v) Amendment No. 12 to the Declaration of Trust (incorporated by
reference to Registrant's Post-Effective Amendment No. 28 on Form
N-1A filed on or about October 30, 1998).
(vi) Amendment No. 13 to the Declaration of Trust (incorporated by
reference to Registrant's Post-Effective Amendment No. 28 on Form
N-1A filed on or about October 30, 1998).
(vii) Amendment No. 14 to the Declaration of Trust (incorporated by
reference to Registrants Post-Effective Amendment No. 29 on Form
N-1A filed on or about October 1, 1999).
(viii) Amendment No. 15 to the Declaration of Trust (filed herewith)
(b) By-Laws of the Registrant (incorporated by reference to Registrant's
Post-Effective Amendment No. 15 on Form N-1A filed February 28, 1995)
(c) Not applicable
(d) (i) Investment Advisory Contract of the Registrant through and including
Exhibit J (incorporated by reference to Registrant's Post-Effective
Amendment No. 15 on Form N-1A filed February 28, 1995)
(A) Exhibits K-M to Investment Advisory Contract of Registrant
(incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed on or about September 30,
1997)
C-1
<PAGE>
(B) Exhibits N-0 to Investment Advisory Contract (incorporated by
reference to Registrant's Post-Effective Amendment No. 28 on
Form N-1A filed on or about October 30, 1998).
(ii) Sub-Advisory Agreement (incorporated by reference to Registrant's
Post-Effective Amendment No. 13 on Form N-1A filed June 1, 1994)
(iii) Investment Advisory Contract of the Fifth Third Pinnacle Fund
(incorporated by reference to Registrant's Post-Effective Amendment
No. 28 on Form N-1A filed on or about October 30, 1998).
(e) (i) Distribution Agreement of the Registrant (incorporated by reference
to Registrant's Post-Effective Amendment No. 17 on Form N-1A filed on
or about January 18, 1996)
(A) Amended Schedules A-C to Distribution Agreement (incorporated by
reference to Registrant's Post-Effective Amendment No. 28 on
Form N-1A filed on or about October 30, 1998).
(ii) Administrative Service Agreement of the Registrant (incorporated by
reference to Registrant's Post-Effective Amendment No. 19 on Form
N-1A filed on or about October 28, 1996)
(A) Amended Exhibit A to Administrative Service Agreement
(incorporated by reference to Registrant's Post-Effective
Amendment No. 28 on Form N-1A filed on or about October 30,
1998).
(f) Not applicable
(g) (i) Custody Agreement of the Registrant (incorporated by reference to
Registrant's Post-Effective Amendment No. 25 on Form N-lA filed on or
about November 28, 1997);
(A) Amended Exhibit B to Custody Agreement (incorporated by
reference to Registrant's Post-Effective Amendment No. 22 on
Form N-1A filed on or about September 30, 1997)
(B) Amendment dated May 18, 1999 to the Custody Agreement
(incorporated by reference to Registrant's Post-Effective
Amendment No. 29 on Form N-1A filed on or about October 1, 1999)
(ii) [Foreign] Custody Agreement dated May 25, 1999 between Fifth Third
Bank and The Bank of New York (incorporated by reference to
Registrant's Post-Effective Amendment No. 29 on Form N-1A filed on or
about October 1, 1999)
C-2
<PAGE>
(A) Foreign Custody Manager Agreement dated May 25, 1999 between the
Registrant and The Bank of New York (incorporated by reference to
Registrant's Post-Effective Amendment No. 29 on Form N-1A filed
on or about October 1, 1999)
(B) [Foreign Custody Manager] Letter Agreement dated May 25, 1999
between the Registrant and Fifth Third Bank (incorporated by
reference to Registrant's Post-Effective Amendment No. 29 on Form
N-1A filed on or about October 1, 1999)
(h) (i) Transfer Agency and Accounting Services Agreement of the
Registrant (incorporated by reference to Registrant's Post-
Effective Amendment No. 15 on Form N-1A filed February 28, 1995)
(A) Amended Schedule A to Transfer Agency and Accounting
Services Agreement
(ii) Management and Administration Agreement of the Registrant
(incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed on or about September 30,
1997)
(A) Amended Schedule A to Management and Administration
Agreement (incorporated by reference to Registrant's Post-
Effective Amendment No. 28 on Form N-1A filed on or about
October 30, 1998).
(iii) Sub-Administration Agreement (incorporated by reference to
Registrant's Post-Effective Amendment No. 22 on Form N-1A filed
on or about September 30, 1997)
(A) Amended Schedule A to Sub-Administration Agreement (incorporated
by reference to Registrant's Post-Effective Amendment No. 28 on
Form N-1A filed on or about October 30, 1998).
(i) Opinion and Consent of Counsel as to legality of shares being
registered with respect to Fifth Third Technology Fund and Fifth Third
Ohio Tax Exempt Money Market Fund (filed herewith)
(j) (i) Consent of Ernst & Young LLP (to be filed concurrently with
effectiveness)
(k) Not applicable
C-3
<PAGE>
(l) Initial Capital Understanding (incorporated by reference to
Registrant's Post-Effective Amendment No. 15 on Form N-1A filed
February 28, 1995)
(m) (i) Amended Rule l2b-1 Plan through and including Exhibits A and B
(incorporated by reference to Registrant's Post-Effective
Amendment No. 28 on Form N-1A filed on or about October 30,
1998).
(ii) Form of Rule 12b-1 Agreement (incorporated by reference to
Registrant's Post-Effective Amendment No. 28 on Form N-1A filed
on or about October 30, 1998).
(n) Financial Data Schedules (incorporated by reference to Registrant's
Form N-1A filed on or about September 29, 1999)
(o) Amended and Restated Multiple Class Plan (incorporated by reference to
Registrant's Post-Effective Amendment No. 28 on Form N-1A filed on or
about October 30, 1998).
(p) Codes of Ethics (filed herewith).
Item 24. Persons Controlled by or Under Common Control with Registrant
None
Item 25. Indemnification
Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 7 on Form N-1A filed September 27, 1991 (File Nos. 811-5669 and
33-24848).
Item 26. Business and Other Connections of Investment Adviser
FIFTH THIRD BANK
<TABLE>
<CAPTION>
Other Substantial
Position with Business, Profession,
Name Fifth Third Bank Vocation or Employment
- ---- ---------------- ----------------------
<S> <C> <C>
George A. Schaefer, Jr. President, Chief Executive Officer
and Director None
Stephen J. Schrantz Executive Vice President None
P. Michael Brumm Executive Vice President None
Michael K. Keating Executive Vice President,
Trust Officer and Secretary None
Robert P. Niehaus Executive Vice President None
Michael D. Baker Executive Vice President None
James J. Hudepohl Executive Vice President None
Gerald L. Wissel Executive Vice President and
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Director of Audit None
Henry W. Hobson, III Senior Vice President None
J. Patrick Bell Senior Vice President None
Tom A. Bobenread Senior Vice President None
Edward H. Silva, Jr. Senior Vice President None
Neal E. Arnold Senior Vice President and
Chief Financial Officer None
Paul L. Reynolds Senior Vice President, General
Counsel and Assistant Secretary None
James D. Berghausen Senior Vice President & Chief None
Investment Officer
Barry L. Boerstler Senior Vice President None
Richard A. Bondie Senior Vice President None
Roger W. Dean Senior Vice President & Bancorp
Controller None
Diane L. Dewbrey Senior Vice President & Cashier None
Sandra L. Lobert Senior Vice President & Trust
Officer None
William J. Moran Senior Vice President None
Ronald A. Stahl Senior Vice President & Trust
Officer None
Darryl F. Allen Director Chairman, President and CEO,
Aeroquip Vickers, Inc.
John F. Barrett Director President and CEO, The Western-
Southern Life Insurance Company
Gerald V. Dirvin Director Former Executive Vice President, The
Proctor & Gamble Company
Thomas B. Donnell Director Chairman, Fifth Third Bank of
Northwestern Ohio
Richard T. Farmer Director Chairman, Cintas Corp.
Ivan W. Gorr Director Former Chairman and CEO, Cooper
Tire & Rubber Co.
Joseph H. Head, Jr. Director Chairman & CEO, Atkins and Pearce
Joan R. Herschede Director Former President and CEO, The Frank
Herschede Company
Allen M. Hill Director President and CEO, Dayton Power &
Light, Inc.
William G. Kagler Director Former Chairman of the Executive
Committee of the Board of Directors,
Skyline Chili, Inc.
James D. Kiggen Director Chairman, Xtek, Inc.
Jerry L. Kirby Director Chairman, Fifth Third Bank of
Western Ohio
Mitchel D. Livingston, Ph.D. Director Vice President for Student Affairs &
Human Resources, University of
Cincinnati
Robert B. Morgan Director President and CEO, Cincinnati
Financial Corp.
David E. Reese Director Chairman, Fifth Third Bank of the
Southwest
James E. Rogers Director Vice Chairman, President & CEO,
CINergy
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Brian H. Rowe Director Chairman Emeritus, GE Aircraft
Engines
John J. Schiff, Jr. Director Chairman, Cincinnati Financial Corp.
Donald B. Shackelford Director Chairman, Fifth Third Bank of
Columbus
Dennis J. Sullivan, Jr. Director Executive Counselor, Dan Pinger
Public Relations
Dudley S. Taft Director President, Taft Broadcasting Co.
</TABLE>
MORGAN STANLEY ASSET MANAGEMENT INC. (Sub-adviser to the Fifth Third
International Equity Fund):
Listed below are the officers and Directors of Morgan Stanley Asset
Management Inc. ("MSAM"). The information as to any other business, profession,
vocation, or employment of substantial nature engaged in by the Chairman,
President and Directors during the past two fiscal years, is incorporated by
reference to Schedule A and D of Form ADV filed by MSAM pursuant to the Advisers
Act (SEC File No. 801-15757).
C-6
<PAGE>
MORGAN STANLEY ASSET MANAGEMENT
Officers (Principals and Managing Directors)
John R. Alkire, Managing Director
James A. Allwin, Managing Director
Arden C. Armstrong, Managing Director
Thomas L. Bennett, Managing Director
Barton M. Biggs, Managing Director
Francine J. Bovich, Managing Director
Frances Campion, Managing Director
Stephen C. Cordy, Managing Director
Madhav Dhar, Managing Director
Kenneth B. Dunn, Managing Director
Stephen F. Esser, Managing Director
Philip W. Friedman, Managing Director
J. David Germany, Managing Director
Nicholas J. Kovich, Managing Director
Maryann K. Maiwald, Managing Director
Robert J. Marcin, Managing Director
Robert L. Meyer, Managing Director
Frank P.L. Minard, Managing Director
Margaret B. Nayulor, Managing Director
Russell C. Platt, Managing Director
Scott F. Richard, Managing Director
Robert A. Sargent, Managing Director
Gary G. Schlarbaum, Managing Director
Vinod R. Sethi, Managing, Director
Dennis G. Sherva, Managing Director
James L. Tanner, Managing Director
Horacio A. Valeiras, Managing Director
James R. Tanner, Managing Director
Mama C. Whittington, Managing Director
Richard G. Woolworth, Jr., Managing Director
Richard B. Worley, Managing Director
Warren J. Ackerman, 111, Principal
Susan S. Akers, Principal
Robert E. Angevine, Principal
W. David Armstrong, Principal
Eileen M. Barron, Principal
Gerald P. Barth-Wehrenalp, Principal
Glenn E. Becker, Principal
Richard M. Behler, Principal
Stephen H. Belgrad, Principal
William Bentley, Principal
Theodore R. Bigman, Principal
E. Clayton Boggs, Principal
Stuart H. Bohart, Principal
Richard F. Brereton, Principal
Andrew C. Brown, Principal
Jeffry P. Brown, Principal
Angelica T. Cantlon, Principal
Terence P. Carmichael, Principal
Arthur Certosimo, Principal
Marc Crespi, Principal
Jan Daikuhara, Principal
Jacqueline A. Day, Principal
Dana L. Dortone, Principal
Raye L. Dube, Principal
Hassan Elmasry, Principal
Abigail Jones Feder, Principal
Frits Nicolas Simon Fiena, Principal
Eugene Flood, Jr., Principal
Robert J. Formisano, Principal
Thomas C. Frame, Principal
W. Blain Gern, Principal
William B. Gerlach, Principal
Stephen T. Golding, Principal
Robert L. Haoin, Principal
Perry E. Hall 11, Principal
Ellen D. Harvey, Principal
John D. Hevner, Principal
Kimberly L. Hirschman, Principal
Ruth A. Hughes-Guden, Principal
Tracey H. Ivey, Principal
Timothy D. Jansen, Principal
Margaret Kinsley Johnson, Principal
James Jolinger, Principal
Michael F. Klein, Principal
Paul W. Klug, Jr., Principal
George Kosby, Principal
Steven K. Kreider, Principal
Michael B. Kushma, Principal
Khoon-Min Lim, Principal
Marianne J. Lippmann, Principal
William David Lock, Principal
Jeremy Lodewick, Principal
Gordon W. Loery, Principal
Yvonne Lonorley, Principal
Andrew John Mack, Principal
Gary J. Mangino, Principal
Angelo G. Maniowoekis, Principal
James J. Manley, Principal
Jeffrey Margolis, Principal
Ian Martin, Principal
M. Paul Martin, Principal
Teresa E. Martini, Principal
Walter Maynard, Jr., Principal
Phoebe Mcbee, Principal
Alexis C. McCarthy, Principal
C-7
<PAGE>
Mary Ann Milias St. Peter, Principal
Milesh Modi, Principal
Paul F. O'Brien, Principal
Yoshiro Okawa, Principal
Wayne D. Peterson, Principal
Christopher G. Petrow, Principal
Andreas Ludwig J. Povell, Principal
Akash Prakash, Principal
Narayan Rachmachandran, Principal
Gail H. Reeke, Principal
Ronald R. Reese, Principal
Christine 1. Reilly, Principal
Christian G. Roth, Principal
Stepano Russo, Principal
James D. Schmid, Principal
James H. Scott, Principal
Kiat Seng Seah, Principal
Roberto M. Sella, Principal
Stephen C. Sexauer, Principal
Andy B. Skov, Principal
Kim L. Spellman, Principal
Joseph P. Stadler, Principal
Kunihiko Sugio, Principal
Ram K. Sunclaram, Principal
Ann D. Thivierge, Principal
Lorraine Truten, Principal
Elizabeth A. Vale, Principal
Roberto Vedovetto, Principal
Marjorie M. Wilcox, Principal
Ram Willner, Principal
Philip W. Winters, Principal
Bruce Wolfe, Principal
Peter John Wright, Principal
Alford E. Zick, Principal
HEARTLAND CAPITAL MANAGEMENT, INC.
Other Substantial
Position with Business, Profession,
Name Heartland Vocation or Employment
- ---- --------- ----------------------
Robert D. Markley President and Chief Executive
Officer None
Thomas F. Maurath Executive Vice President None
Item 27. Principal Underwriters
(a) BISYS Fund Services Limited Partnership, formerly known as The Winsbury
Company Limited Partnership ("BISYS"), acts as distributor and administrator for
Registrant. BISYS also distributes the securities of Alpine Equity Trust,
American Performance Funds, AmSouth
C-8
<PAGE>
Mutual Funds, The BB&T Mutual Funds Group, The Coventry Group, ESC Strategic
Funds, Inc., The Eureka Funds, Govenor Funds, Fifth Third Funds, Hirtle
Callaghan Trust, HSBC Funds Trust and HSBC Mutual Funds Trust, INTRUST Funds
Trust, The Infinity Mutual Funds, Inc., Magna Funds, Mercantile Mutual Funds,
Inc., Meyers Investment Trust, MMA Praxis Mutual Funds, M.S.D.&T. Funds, Pacific
Capital Funds, The Republic Advisors Funds Trust, The Republic Funds Trust,
Sefton Funds Trust, SSgA International Liquidity Fund, Summit Investment Trust,
Variable Insurance Funds, The Victory Portfolios, The Victory Variable Insurance
Funds and Vintage Funds, Inc., each of which is an investment management
company.
(b) Directors, officers and partners of BISYS, as of September 1, 1999 were as
follows:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with
Business Address Positions and Offices with BISYS Registrant
- ---------------- -------------------------------- ----------
<S> <C> <C>
The BISYS Group, Inc. Sole shareholder of BISYS Fund None
150 Clove Road Services, Inc.
Little Falls, NJ 07424
BISYS Fund Services, Inc. Sole General Partner None
3435 Stelzer Road
Columbus, Ohio 43219
G. Ronald Henderson Executive Officer None
3435 Stelzer Road
Columbus, Ohio 43219
J. David Huber Senior Vice President None
3435 Stelzer Road Business Development
Columbus, Ohio 43219 Fund Services Division
Stephen G. Mintos Executive Vice President President
3435 Stelzer Road General Manager
Columbus, Ohio 433219 Fund Services Division
Kenneth B. Quintenz Executive Officer None
3435 Stelzer Road
Columbus, Ohio 43219
</TABLE>
(c) Not applicable.
C-9
<PAGE>
Item 28. Location of Accounts and Records
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 3la-1 through 3la-3 promulgated
thereunder are maintained at one of the following locations:
Fifth Third Funds (Registrant)
3435 Stelzer Road
Columbus, Ohio 43219-3035
Fifth Third Bank (Advisor, Custodian, Sub-administrator, transfer agent
and dividend disbursing agent)
38 Fountain Square Plaza
Cincinnati, Ohio 45263
BISYS (Administrator)
3435 Stelzer Road
Columbus, Ohio 43219-3035
Heartland Capital Management, Inc. (Advisor to the Fifth Third Pinnacle
Fund)
36 South Pennsylvania Street, Suite 610
Indianapolis, Indiana 46204
Morgan Stanley Asset Management Inc. (Sub-Advisor to the Fifth Third
International
Equity Fund)
1221 Avenue of the Americas
New York, New York 10020
Item 29. Management Services
Not applicable.
Item 30. Undertakings
Registrant undertakes to furnish to each person to whom a prospectus is
delivered a copy of Registrant's latest Annual Report to Shareholders, upon
request and without charge.
Registrant undertakes to call a meeting of shareholders for the purpose of
voting upon the questions of removal of a trustee or trustees if requested to do
so by the holders of at least 10% of Registrant's outstanding shares. Registrant
will stand ready to assist shareholder communications in connection with any
meeting of shareholders as prescribed in Section 16(c) of the Investment Company
Act of 1940.
C-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Columbus,
State of Ohio, on the 15th day of March 2000.
FIFTH THIRD FUNDS
BY: /S/ Stephen G. Mintos
----------------------
Stephen G. Mintos, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment has been signed below by the following persons in the
capacities indicated on March 15, 2000.
/s/ Stephen G. Mintos President and Trustee (Principal Executive Officer)
- ---------------------
Stephen G. Mintos
/s/ Gary R. Tenkman Treasurer (Principal Financial and
- --------------------- Accounting Officer)
Gary R. Tenkman
** Trustee
- ---------------------
Edward Burke Carey
** Trustee
- ---------------------
Lee A. Carter
** Chairman and Trustee
- ---------------------
Albert E. Harris
**Executed on behalf of the indicated person by the undersigned, pursuant to
power of attorney previously filed and incorporated herein by reference.
By: /S/ Stephen G. Mintos
-----------------------------------
Stephen G. Mintos, Attorney-in-fact
C-11
<PAGE>
EXHIBIT INDEX
(a)(viii) Amendment No. 15 to the Declaration of Trust
(i) Opinion and Consent of Goodwin, Procter & Hoar LLP with respect
to Fifth Third Technology Fund and Fifth Third Ohio Tax Exempt
Money Market Fund
(p) Codes of Ethics
<PAGE>
EXHIBIT (a)(viii)
FIFTH THIRD FUNDS
Amendment No. 15
dated February 18, 2000
to
DECLARATION OF TRUST
Effective March 15, 2000 the Declaration of Trust of Fifth Third Funds, a
Massachusetts business trust, is amended as follows:
1. Strike the first paragraph of Section 5 of Article III from the
Declaration of Trust and substitute in its place the following:
"Section 5. Establishing and Designation of Series or Class.
-----------------------------------------------
Without limiting the authority of the Trustees set forth in
Article XII , Section 8, inter alia, to establish and
designate any additional Series or Class, or to modify the
rights and preferences of any existing Series or Class, the
Series and Classes of the Trust shall be, and hereby are,
established and designated as:
Fifth Third Balanced Fund:
Investment A Shares;
Investment C Shares;
Institutional Shares;
Fifth Third Bond Fund for Income;
Investment A Shares;
Investment C Shares;
Institutional Shares;
Fifth Third Cardinal Fund;
Investment A Shares;
Investment C Shares;
Institutional Shares;
Fifth Third Prime Money Market Fund;
Investment A Shares;
Institutional Shares;
Fifth Third Equity Income Fund;
Investment A Shares;
Investment C Shares;
Institutional Shares;
Fifth Third Government Money Market Fund;
Investment A Shares;
Institutional Shares;
<PAGE>
Fifth Third International Equity Fund;
Investment A Shares;
Investment C Shares;
Institutional Shares;
Fifth Third Mid Cap Fund;
Investment A Shares;
Investment C Shares;
Institutional Shares;
Fifth Third Municipal Bond Fund;
Investment A Shares;
Investment C Shares;
Institutional Shares;
Fifth Third Ohio Tax Bond Fund;
Investment A Shares;
Investment C Shares;
Institutional Shares;
Fifth Third Pinnacle Fund;
Investment A Shares;
Investment C Shares;
Institutional Shares;
Fifth Third Quality Bond Fund;
Investment A Shares;
Investment C Shares;
Institutional Shares;
Fifth Third Quality Growth Fund;
Investment A Shares;
Investment C Shares;
Institutional Shares;
Fifth Third Tax Exempt Money Market Fund;
Investment A Shares;
Institutional Shares;
Fifth Third U.S. Government Securities Fund;
Investment A Shares;
Investment C Shares;
Institutional Shares; and
Fifth Third U.S. Treasury Money Market Fund;
Institutional Shares.
Fifth Third Technology Fund;
Investment A Shares;
Investment C Shares;
Institutional Shares.
Fifth Third Ohio Tax Exempt Money Market Fund;
Investment A Shares;
Institutional Shares.
<PAGE>
The remainder of Section 5 of Article III of the Declaration of Trust shall
remain in effect as previously constituted.
The undersigned Secretary of Fifth Third Funds hereby certifies that the
above-stated Amendment is a true and correct Amendment of the Declaration of
Trust, as adopted by the Board of Trustees on the 18th day of February, 2000.
WITNESS the due execution hereof this 1st day of March, 2000.
/s/ Rodney L. Ruehle
-----------------------------
Rodney L. Ruehle
Secretary
STATE OF OHIO )
)
COUNTY OF FRANKLIN )
On March 1, 2000, there appeared before me the above-named Rodney L.
Ruehle, to me personally known, who did acknowledge the foregoing instrument to
be his free act and deed in his capacity as Secretary of FIFTH THIRD FUNDS, a
Massachusetts business trust.
/s/ Douglas K. Jones
-------------------------------
Notary Public
My Commission expires: 10/12/04
[NOTARIAL SEAL]
<PAGE>
EXHIBIT (i)
-----------
GOODWIN, PROCTER & HOAR LLP
COUNSELLORS AT LAW
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
TELEPHONE (617) 570-1000
TELECOPIER (617) 227-8591
March 15, 2000
Fifth Third Funds
c/o Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Ladies and Gentlemen:
As counsel to Fifth Third Funds, a business trust organized under the laws
of The Commonwealth of Massachusetts (the "Trust"), we have been asked to render
our opinion in connection with the proposed issuance by the Trust of shares of
beneficial interest (the "Shares") of Fifth Third Technology Fund and Fifth
Third Ohio Tax Exempt Money Market Fund (the "Funds"), each of which is a
separate series of the Trust that has been established and designated pursuant
to Section 5 of Article III of the Declaration of Trust dated September 15,
1998, as amended to date (the "Master Trust Agreement"), and as more fully
described in the prospectuses and statement of additional information contained
in Parts A and B, respectively, of Post-Effective Amendment No. 31 (the
"Amendment") to the Trust's Registration Statement on Form N-1A (Securities Act
of 1933 Registration No. 33-24848; Investment Company Act of 1940 Registration
No. 811-8384).
We have examined the Master Trust Agreement, the By-Laws of the Trust,
certain resolutions adopted by the Board of Trustees of the Trust, the
prospectuses and statement of additional information of the Funds which form a
part of the Amendment and such other documents as we deemed necessary for
purposes of this opinion.
Based upon the foregoing, we are of the opinion that the Shares, which are
the subject of the foregoing Registration Statement will, when sold in
accordance with the terms of the prospectuses and statement of additional
information relating to the Shares, as in effect at the time of the sale, will
be legally issued, fully-paid and non-assessable by the Trust.
We hereby consent to the reference to this firm in the prospectuses and
statement of additional information and to a copy of this opinion being filed as
an exhibit to the foregoing Amendment.
Very truly yours,
/s/ Goodwin, Procter & Hoar LLP
GOODWIN, PROCTER & HOAR LLP
<PAGE>
EXHIBIT (P)
-----------
Fountain Square Funds
CODE OF ETHICS
1. Statement of General Fiduciary Principles
-----------------------------------------
This Code of Ethics ("Code") is based on the principles that (i) Access Persons
(as such term is hereinafter defined) owe a fiduciary duty to, among others, the
shareholders of the Fund to conduct their personal transactions in Securities in
a manner which neither interferes with the Fund portfolio transactions nor
otherwise takes unfair or inappropriate advantage of an Access Person's
relationship to the Fund; (ii) in complying with this fiduciary duty, Access
Persons owe shareholders the highest duty of trust and fair dealing; and (iii)
Access Persons must, in all instances, place the interests of the shareholders
of the Fund ahead of the Access Person's own personal interests or the interests
of others and avoid any potential conflicts of interest. For example, Access
Persons should avoid the appearance of conflict from a personal transaction in a
Security, when the Security is or should be recommended, or the failure to
purchase or sell such Security for, the Fund, occurs.
Access Persons must adhere to general fiduciary principles, as well as comply
with the specific provisions and Associated Procedures of this Code Technical
compliance with the terms of this Code and the Associated Procedures may not
automatically insulate an Access Person from scrutiny in instances where the
personal transactions in a Security undertaken by such Access Person show a
pattern of abuse of such Access Persons' fiduciary duty to the Fund and its
shareholders or a failure to adhere to general fiduciary principles.
2. Definition
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(a) "Adviser" means The Fifth Third Bank.
(b) "Fund" means the registered investment company named above, which adopts
this Code (including any series or portfolios of such Fund registered under
the 1940 Act).
(c) "Access Person" means any trustee, officer, general partner, employee, or
Advisory Person of the Fund, and all relatives living within the same
household as the Access Person who in connection with his/her regular
functions or duties makes, participates in or obtains information regarding
the purchase or sale of a Security by the Fund; provided however, that any
Access Person who is an employee of the Fund's investment adviser, its
principal underwriter or any affiliate or subsidiary of the Fund's
investment adviser or principal underwriter shall be subject to the
provisions and terms of such adviser's or underwriter's code of ethics and
shall not be subject to this Code and its Associated Procedures.
(d) The "1940 Act" means the Investment Company Act of 1940, as amended.
(e) "Advisory Person" means (i) any employee of the Fund, who, in connection
with the employee's regular functions or duties, makes, participates in, or
normally obtains
<PAGE>
information regarding the current purchase or sales of a Security by the
fund, or whose functions relate to the making of any recommendations with
respect to such purchases or sales; and (ii) any natural person in a
control relationship to the Fund who normally obtains information
concerning current recommendations made to the fund with regard to the
purchases or sales of a Security.
(f) "Associated Procedures" means those policies, procedures and/or statements
that have been adopted by the Fund, and which are designated to supplement
this Code and its provisions.
(g) A Security is "being considered for purchase or sale" when a recommendation
to purchase or sell a Security has been made and communicated and, with
respect to the person making the recommendation, when such person seriously
considers making such a recommendation.
(h) "Beneficial Ownership" shall be interpreted in the same manner as it would
be in determining whether a person is subject to the provisions of Section
16 of the Securities and Exchange Act of 1934, and the rules and
regulations thereunder, except that the determination of direct and
indirect beneficial ownership shall apply to all Securities which an Access
Person has or acquires. As a general matter, "beneficial ownership" will be
attributed to an Access Person in all instances where the Access Person (i)
possesses the ability to purchase or sell the Securities (or the ability to
direct the disposition of the Securities); (ii) possesses voting power
(including the power to vote or direct the voting) over such Securities; or
(iii) receives any benefits substantially equivalent to those of ownership.
(i) "Control" shall have the same meanings as that set forth in Section 2(a)(9)
of the 1940 Act.
(j) "Disinterested director means a director, trustee or managing general
partner of the Fund who is not an "interested person of the Fund within the
meaning of the Section 2(a)(19) of the 1940 Act.
(k) "Purchase or sale of a Security" includes, inter alia, the writing of an
----- ----
option to purchase or sell a Security.
(l) "Investment Personnel" include: Access Persons with direct responsibility
and authority to make investment decisions affecting the Fund (such as
portfolio managers); Access Persons who provide information and advice to
such portfolio managers (such as security analysts); and Access Persons who
assist in executing investment decisions for the Fund (such as traders). As
the context requires, "Investment Personnel may refer to one or more Access
Persons.
<PAGE>
(m) "Security" shall have the meaning set forth in Section 2(a)(36) of the
1940 Act, and shall include; equity and debt securities; options on and
warrants to purchase equity or debt securities; shares of close-end
investment companies; and Related Securities. "Related Securities" are
instruments and securities that are related to, but not the same as, a
Security. For example, a Related Security may be convertible into a
Security, or give its holder the right to purchase the Security. For
purposes of reporting, "Security" shall include future contracts.
"Security" shall not include securities issued by the Government of the
United States (including short term debt securities which are U.S.
government securities pursuant to Section 2(a)(16) of the 1940 Act);
bankers' acceptances; bank certificates of deposit; commercial paper
shares of registered open-end investment companies; Securities which are
not eligible for purchase or sale by the Fund; and such other instruments
as may be determined by the Fund's Board of Directors, from time to time.
(n) "Public Company" means any entity subject to the reporting requirements of
the Securities Exchange Act of 1934.
3. Exempted transactions
---------------------
The prohibitions of Section 4 of this Code shall not apply to:
(a) Purchases or sales effected in any account over which the Access Person
has no direct or indirect influence or control.
(b) Purchases or sales which are non-volitional on the part of either the
Access Person or the Fund.
(c) Purchases which are either: made solely with the dividend proceeds
received in a dividend reinvestment plan; or part of an automatic payroll
deduction plan, whereby an employee purchases securities issued by an
employer.
(d) Purchases effected upon the exercise of rights issued by an issuer pro
---
rata to all holders of a class of its Securities, to the extent such
----
rights were acquired from such issuers, and any sales of such rights so
acquired.
4. Prohibited Transactions and Activities
--------------------------------------
(a) No Access Person shall purchase or sell, directly or indirectly, any
Security in which he or she has, or by reason of such transaction
acquires, a direct or indirect beneficial ownership interest and which he
or she knows, or should have known, at the time of such purchase or sale:
(i) that such transaction violates the general fiduciary principles of
this Code; or
-3-
<PAGE>
(ii) such Security is being purchased or sold (pending buy or sell, see
section 4(f)) by the Fund.
(b) Inducing or causing the Fund to take action, or to fail to take action,
for the purpose of achieving a personal benefit, rather than to benefit
the Fund, is a violation of this Code. Examples of this would include
causing the Fund to purchase a Security owned by the Access Person for the
purpose of supporting or driving up the price of the Security and causing
the Fund to refrain from selling a Security in an attempt to protect the
value of the Access Person's investment, such as an outstanding option.
(c) Using knowledge of the fund's portfolio transactions to profit by the
market effect of such transactions is a violation of this Code. One test
which will be applied in determining whether this prohibition has been
violated will be to review the Securities transactions of Access Persons
for patterns. However, it is important to note that a violation could
result from a single transaction if the circumstances warranted a finding
that the provisions of Section 1 of this Code have been violated.
(d) All Access Persons are prohibited from acquiring any Security distributed
in an initial public offering, until trading of the Security commences in
the secondary market.
(e) All Access Persons are prohibited from acquiring Securities for their
personal accounts in a private placement made by an issuer that is a
Public Company, without the prior approval of an Executive or Senior Vice
President of the Fund's Adviser (or his designee). In instances where an
Investment Personnel, after receiving prior approval, acquires a Security
in a private placement, the Investment Personnel has an affirmative
obligation to disclose this investment to the Adviser if the Investment
Personnel participates in any subsequent consideration of any potential
investment, by the Fund, in the issuer of those Securities.
(f) All Access Persons are prohibited from executing a personal transaction in
any Security during which the Fund has a pending "buy" or "sell" order for
that Security, or is considering or reviewing a transaction in such
Security, until the Fund's order or action is either executed or
concluded. All Investment Personnel are prohibited from purchasing or
selling any Security within one (1) business day before or after the Fund
purchases or sells the same Security (the "Black-out period"), unless such
Access Person has obtained prior written approval from the Fund's
President to buy or sell any such Security. Transactions undertaken in
violation of this prohibition will either be required to be unwound, or
any profits realized by an Access Person on any personal transactions in
Securities within the Black-out period will be required to be disgorged
(to an entity designated by the Fund's Adviser, and the Access Person will
be subject to disciplinary action, as determined by the Fund's Board of
Directors.
(g) All Investment Personnel are prohibited from receiving any gift, favor,
preferential treatment, valuable consideration, or other thing or more
than a de minimis value in any
-4-
<PAGE>
year from any person or entity from, to or through whom the Fund purchases
or sells Securities, or an issuer of Securities. For purposes of this Code,
"de minimis value" is equal to $100 or less.
-- -------
(h) All Investment Personnel are prohibited from serving on the boards of
directors of any Public Company, absent express prior authorization from
the President of the fund. Authorization to serve on the board of a Public
Company may be granted in instances where the Fund determines that such
board service would be consistent with the interests of the Fund and its
shareholders. If prior approval to serve as a director of a Public Company
is granted, an Investment Personnel has an affirmative duty to recuse
himself from participating in any deliberations by the Fund regarding
possible investments in the securities issued by the Public Company on
whose board the Investment Personnel sits.
5. Reporting
---------
(a) Every Access Person shall report to the Fund the information described in
Section 5(c) of this Code with respect to transactions (other than those
personal transactions in Securities exempted under Section 3 of this Code)
in any Security in which such Access Person has, or by reason of such
transaction acquires, any direct or indirect beneficial ownership.
(b) A Disinterested director of the Fund need only report a personal
transaction In a Security if such director, at the time of that personal
transaction, knew or, in the ordinary course of fulfilling his or her
official duties as a director of the Fund, should have known, that during
the period immediately preceding or following the date of the personal
transaction by the director, such Security was purchased or sold by the
Fund or was being considered for purchase or sale by the Fund or its
investment adviser.
(c) Every report shall be made not later than 10 calendar days after the end of
the calendar quarter in which the transaction to which the report relates
was effected, shall be dated and signed by the Access Person submitting the
report, and shall contain the following information:
(i) the date of the transaction, the title and the number of shares, and
the principal amount of each Security involved;
(ii) the nature of the transaction (i.e., purchase, sale or any other type
of acquisition or disposition);
(iii) the price at which the transaction was effected;
(iv) the name of the broker, dealer or bank through whom the transaction
was effected; and
-5-
<PAGE>
(v) if there were no personal transactions in Securities during the
period, then the report must state "none".
(d) Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he or she
has any direct or indirect beneficial ownership in the Security to which
the report relates.
(e) Every Access Person, if requested by the President of the Fund, is required
to direct his or her broker to forward to the designated officer of the
Adviser, duplicate copies of both confirmations of all personal
transactions in Securities effected for any account in which such Access
Person has any direct or indirect beneficial ownership interest and
periodic statements relating to any such account.
(f) Any Access Person who receives any gift, favor, preferential treatment,
valuable consideration or other things of value of more than de minimis
-- -------
value in any year from any person or entity that does business either with
or on behalf of the Fund or (including an issuer of Securities or any
entity or person through whom the Fund purchases or sells Securities) is
required to report the receipt of such gift to the Fund's designated
compliance officer. This reporting requirement shall not apply to:
(i) salaries, wages, fees or other compensation paid, or expenses paid
or reimbursed, in the usual scope of an Access Person's employment
responsibilities for the Access Person's employer;
(ii) the acceptance of meals, refreshments or entertainments of
reasonable value in the course of a meeting or other occasion, the
purpose of which is to hold bona fide business discussions;
(iii) the acceptance of advertising or promotional material of nominal
value, such as pens, pencils, note pads, key chains, calendars and
similar items;
(iv) the acceptance of gifts, meals, refreshments, or entertainments of
reasonable value that are related to commonly recognized events or
occasions, such as a promotion, new job, Christmas, or other
recognized holiday; or
(v) the acceptance of awards, from an employer to an employee, for
recognition of service and accomplishment.
(g) All Access Persons, on an annual basis upon request of the President of the
Fund or his designee will be required to furnish a list of all Securities
held by such Access Person or the members of his household. All Access
Persons, upon commencement of employment, are required to disclose a list
of all personal Securities holdings.
-6-
<PAGE>
In addition, all Access Persons are required, on a periodic basis, to
certify that they have received, read, and understand the provisions of
this Code, and that they recognize that they are subject to its provisions.
Such certification shall also include a statement that the Access Person
has complied with the requirements of this Code and that the Access Person
has disclosed or reported all personal transactions in Securities that are
required to be disclosed or reported pursuant to the requirements of this
Code.
(h) A disinterested director shall be exempt from the reporting requirements
contained in subparagraphs (e) and (g) of this Section 5 of this Code, so
long as at the time of the personal transaction in the Security, the
Disinterested director neither know, nor in the ordinary course of
fulfilling his official duties as a director of the Fund, should have known
that during the pay period immediately preceding or after the date of the
transaction in the Security by the Disinterested director the Security was
purchased or sold by the Fund, or considered for purchase or sale.
6. Sanctions
---------
Upon discovering a violation of this Code, the Board of Directors of the Fund
may take such actions or impose such sanctions, if any, as it deems appropriate,
including a letter of censure or suspension, a fine, or termination of the
employment of the violator (In instances where the violation is committed by a
member of the Access Person's household, any sanction would be imposed on the
Access Person.) The filing of any false, incomplete or untimely reports, as
required by Section 5 of this Code, may (depending on the circumstances) be
considered a violation of this Code.