[LOGO] FIFTH THIRD FUNDS
[LOGO] FIFTH THIRD FUNDS
STOCK AND BOND MUTUAL FUNDS
ASSET ALLOCATION FUNDS
INSTITUTIONAL SHARES
PROSPECTUS
NOVEMBER 29, 2006
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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.
FIFTH THIRD FUNDS
STOCK AND BOND MUTUAL FUNDS
ASSET ALLOCATION FUNDS
INSTITUTIONAL SHARES
TABLE OF CONTENTS
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This prospectus has been arranged into different sections so that you can easily
review this important information. For more detailed information about each
Fund, please see:
OBJECTIVES, STRATEGIES AND RISKS
EQUITY FUNDS - GROWTH STYLE
Small Cap Growth Fund .................................................. 2
Mid Cap Growth Fund .................................................... 4
Quality Growth Fund .................................................... 6
EQUITY FUNDS - CORE STYLE
Large Cap Core Fund .................................................... 8
Equity Index Fund ...................................................... 10
Balanced Fund .......................................................... 12
EQUITY FUNDS - VALUE STYLE
Micro Cap Value Fund ................................................... 14
Small Cap Value Fund ................................................... 16
Multi Cap Value Fund ................................................... 18
Disciplined Large Cap Value Fund ....................................... 20
ASSET ALLOCATION STRATEGY
LifeModel Aggressive Fund SM ........................................... 22
LifeModel Moderately Aggressive Fund SM ................................ 26
LifeModel Moderate Fund SM ............................................. 30
LifeModel Moderately Conservative Fund SM .............................. 34
LifeModel Conservative Fund SM ......................................... 38
STRATEGIC INCOME STRATEGY
Strategic Income Fund .................................................. 42
SPECIALTY STRATEGY
Dividend Growth Fund ................................................... 44
Technology Fund ........................................................ 46
International Equity Fund .............................................. 48
FIXED INCOME FUNDS - TAXABLE STYLE
High Yield Bond Fund ................................................... 50
Bond Fund .............................................................. 52
Intermediate Bond Fund ................................................. 54
Short Term Bond Fund ................................................... 56
U.S. Government Bond Fund............................................... 58
FIXED INCOME FUNDS - MUNICIPAL STYLE
Municipal Bond Fund .................................................... 60
Intermediate Municipal Bond Fund ....................................... 62
Ohio Municipal Bond Fund ............................................... 64
Michigan Municipal Bond Fund ........................................... 66
SHAREHOLDER FEES AND FUND EXPENSES
Fee Tables ............................................................. 68
Expense Examples ....................................................... 72
ADDITIONAL INFORMATION ABOUT THE
FUNDS' INVESTMENTS
Name Policies .......................................................... 74
Investment Practices ................................................... 74
Investment Risks ....................................................... 81
Investment Policies of the Underlying Funds ............................ 83
Additional Information about the Funds ................................. 83
FUND MANAGEMENT
Investment Advisor and Subadvisors ..................................... 84
Portfolio Managers ..................................................... 92
Portfolio Holdings ..................................................... 97
SHAREHOLDER INFORMATION
Purchasing and Selling Fund Shares ..................................... 97
Abusive Trading Practices .............................................. 98
Purchasing and Adding To Your Shares ................................... 98
Selling Your Shares .................................................... 99
Exchanging Your Shares ................................................. 101
Dividends and Capital Gains ............................................ 101
Expenses ............................................................... 102
Taxation ............................................................... 102
FINANCIAL HIGHLIGHTS ................................................... 105
BACK COVER
Where to learn more about Fifth Third Funds
OVERVIEW
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This section provides important information about each of the stock, bond, and
asset allocation funds (each, a "Fund" and, collectively, the "Funds"), each a
separate series of Fifth Third Funds, including the investment objective,
principal investment strategies, principal risks, and volatility and performance
information.
All Funds are managed by Fifth Third Asset Management, Inc. ("FTAM" or
"Advisor") Morgan Stanley Investment Management Inc. ("MSIM") acts as investment
subadvisor to Fifth Third International Equity Fund. Fort Washington Investment
Advisors, Inc. ("Fort Washington") acts as investment subadvisor to Fifth Third
High Yield Bond Fund.
LIKE OTHER INVESTMENTS, YOU COULD LOSE MONEY ON YOUR INVESTMENT IN A FUND. YOUR
INVESTMENT IN A FUND IS NOT A DEPOSIT OR AN OBLIGATION OF FIFTH THIRD BANK OR
ANY OTHER BANK AND IS NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENT AGENCY.
There is no guarantee that any Fund will achieve its objective.
1
GROWTH
FIFTH THIRD SMALL CAP GROWTH FUND STYLE
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FUNDAMENTAL OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in the equity securities of small cap companies. Small
cap companies are defined as those companies included in the Russell 2000 Growth
Index and companies with similar market capitalizations. Market capitalization,
a common measure of the size of a company, is the market price of a share of a
company's stock multiplied by the number of shares that are outstanding. As of
October 31, 2006, the market capitalization of companies included in the Russell
2000 Growth Index ranged from $90 million to $2.90 billion. The median market
capitalization of companies included in the Russell 2000 Growth Index was
approximately $625 million.
The Fund seeks to outperform the Russell 2000 Growth Index over rolling
five-year periods. The Advisor believes that stock prices are driven by earnings
growth, and that superior returns occur when a company experiences rapid and
accelerating growth due to improving fundamentals. The Advisor uses a bottom-up
investment process with fundamental research providing the basis for stock
selection. The Advisor believes this method is particularly valuable in the
small cap universe. The Advisor uses a combination of fundamental, momentum and
valuation-based disciplines for portfolio construction, with a particular focus
on companies demonstrating above-average growth and strong balance sheets.
Quantitative analysis is used to identify stocks the Advisor believes have
above-average growth and strong balance sheets. Factors considered include
return on assets, price to earnings per share, price to cash flow, and earnings
per share growth. The Advisor uses a fundamental analysis of financial
statements to look for companies that, in its opinion, have stock prices that do
not accurately reflect cash flows, tangible assets or management skills.
The Advisor also utilizes a strict sell discipline and may consider selling a
security when: it becomes overvalued or less attractive; there is deterioration
in a company's fundamentals, management, or financial reporting; one of the
Fund's holdings has exceeded the Advisor's position weighting; or a company's
relative strength falls below the Advisor's target.
The Advisor will look to manage risk through several strategies, which will
typically include maintaining minimum and maximum sector and position weightings
relative to the Russell 2000 Growth Index and monitoring risk statistics
relative to the Russell 2000 Growth Index.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely impact the ability of the Fund to
achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
EQUITY SECURITIES RISK. The risks of investing in equity securities include the
risk of sudden and unpredictable drops in value or periods of lackluster
performance.
SMALLER COMPANY RISK. The smaller companies in which the Fund invests are
especially sensitive to these factors and therefore may be subject to greater
share price fluctuations than other companies. Also, securities of these smaller
companies are often less liquid, thus possibly limiting the ability of the Fund
to dispose of such securities when the Advisor deems it desirable to do so. As a
result of these factors, securities of these smaller companies may expose
shareholders of the Fund to above-average risk.
GROWTH SECURITIES RISK. The Fund invests in growth oriented stocks, which are
sensitive to market movements. The prices of growth stocks tend to reflect
future expectations, and when those expectations are not met, share prices
generally fall.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to a broad-based securities
index.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
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[BAR CHART]
19.56% 27.94% -6.15% 27.98% -0.38% -4.11% -25.00% 40.45% 6.04% 4.64%
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1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
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Best quarter: Q4 2001 20.66%
Worst quarter: Q3 1998 -21.20%
Year to Date Return (1/1/06 to 9/30/06): 5.47%
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______________________
1 For the period prior to October 29, 2001, the quoted performance of
Institutional shares reflects the performance of the Institutional shares
of the Kent Small Company Growth Fund. On October 29, 2001, the Kent Small
Company Growth Fund, a registered open-end investment company managed by
Fifth Third Asset Management, Inc. was merged into Fifth Third Small Cap
Growth Fund.
2
FIFTH THIRD SMALL CAP GROWTH FUND
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AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005) 1
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INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
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INSTITUTIONAL SHARES 2 11/2/92
Return Before Taxes 4.64% 2.31% 7.44%
Return After Taxes on Distributions 3 2.77% 1.00% 5.99%
Return After Taxes on Distributions and Sale of Fund Shares 3 5.55% 1.88% 6.09%
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RUSSELL 2000(R) GROWTH INDEX*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 4.15% 2.28% 4.69%
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1 On October 29, 2001, the Kent Small Company Growth Fund, a registered
open-end investment company managed by Fifth Third Asset Management, Inc.
was merged into Fifth Third Small Cap Growth Fund.
2 For the period prior to October 29, 2001, the quoted performance of
Institutional shares reflects the performance of the Institutional shares
of the Kent Small Company Growth Fund.
3 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The Russell 2000(R) Growth Index is an unmanaged index of common stocks
that measures the performance of those Russell 2000 companies with higher
price-to-book ratios and higher forecasted growth values.
3
GROWTH
FIFTH THIRD MID CAP GROWTH FUND STYLE
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FUNDAMENTAL OBJECTIVE Growth of capital. Income is a secondary objective.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in common stocks of mid cap companies. Mid cap companies
are defined as those companies included in the Russell MidCap Growth Index and
companies with similar market capitalizations. Market capitalization, a common
measure of the size of a company, is the market price of a share of a company's
stock multiplied by the number of shares that are outstanding. As of October 31,
2006, the market capitalization of companies included in the Russell MidCap
Growth Index ranged from approximately $1.4 billion to approximately $18.6
billion. The average market capitalization of companies included in the Russell
MidCap Growth Index was $8.1 billion and the median market capitalization was
approximately $4.1 billion.
To achieve its secondary objective of income, the Fund relies on dividend and
interest income. The Fund may invest up to 20% of its assets in common stocks of
large cap companies (many of which pay dividends), small cap companies,
convertible securities, and debt securities that pay interest.
The Fund seeks to outperform the Russell MidCap Growth Index over rolling
five-year periods. The Advisor believes that stock prices are driven by earnings
growth, and that superior returns occur when a company experiences rapid and
accelerating growth due to improving fundamentals. The Advisor uses a bottom-up
investment process with fundamental research providing the basis for stock
selection. The Advisor believes this method is particularly valuable in the mid
cap universe. The Advisor uses a combination of fundamental, momentum and
valuation-based disciplines for portfolio construction, with a particular focus
on companies demonstrating above-average growth and strong balance sheets.
Factors considered include return on assets, price to earnings per share, price
to cash flow, and earnings per share growth. The Advisor uses a fundamental
analysis of financial statements to look for companies that, in its opinion,
have stock prices that do not accurately reflect cash flows, tangible assets or
management skills.
The Advisor also utilizes a strict sell discipline and may consider selling a
security when: it becomes overvalued or less attractive; there is deterioration
in a company's fundamentals, management, or financial reporting; one of the
Fund's holdings has exceeded the Advisor's position weighting; or a company's
relative strength falls below the Advisor's target.
The Advisor will look to manage risk through several strategies, which will
typically include maintaining minimum and maximum sector and position weightings
relative to the Russell MidCap Growth Index and monitoring risk statistics
relative to the Russell MidCap Growth Index.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
EQUITY SECURITIES RISK. The risks of investing in equity securities include the
risk of sudden and unpredictable drops in value or periods of lackluster
performance.
MEDIUM-SIZED COMPANY RISK. Stocks of medium-sized companies can be more
sensitive to long market declines than larger companies, in part because they
generally do not have the financial resources that larger companies have.
DIVIDEND SECURITIES RISK. Stocks that pay regular dividends provide investors
some return on their investment, to an extent, supporting a stock's price, even
during periods when prices of equity securities are falling. However,
dividend-paying stocks, especially those that pay significant dividends, also
tend to appreciate less quickly than stocks of companies in developing
industries, which tend to reinvest profits into research, development, plant and
equipment to accommodate expansion.
GROWTH SECURITIES RISK. The Fund invests in growth oriented stocks, which are
sensitive to market movements. The prices of growth stocks tend to reflect
future expectations, and when those expectations change or are not met, share
prices generally fall.
CONVERTIBLE SECURITIES RISK. Prices of convertible securities, which include
bonds and preferred stocks, may be affected by the prices of the underlying
security, which generally is common stock.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to a broad-based securities
index.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
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[BAR CHART]
17.59% 32.64% 3.41% 17.06% 6.93% -6.28% -30.43% 37.51% 8.32% 11.30%
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1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q4 1999 23.15%
Worst quarter: Q3 2001 -22.69%
Year to Date Return (1/1/06 to 9/30/06): 4.96%
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______________________
1 The Fund first offered Institutional shares on August 11, 1998. The quoted
performance of Institutional shares for the period prior to August 11,
1998 reflects the performance for Class A shares, a class of shares of the
Fund not offered by this Prospectus. Class A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not
have the same expense structure.
4
FIFTH THIRD MID CAP GROWTH FUND
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AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005)
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INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
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INSTITUTIONAL SHARES 1 1/1/85
Return Before Taxes 11.30% 1.57% 8.12%
Return After Taxes on Distributions 2 11.09% 1.40% 6.69%
Return After Taxes on Distributions
and Sale of Fund Shares 2 7.63% 1.30% 6.44%
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RUSSELL MIDCAP(R) GROWTH INDEX*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 12.10% 1.38% 9.27%
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1 The Fund first offered Institutional shares on August 11, 1998. The quoted
performance of Institutional shares for the period prior to August 11,
1998 reflects the performance for Class A shares, a class of shares of the
Fund not offered by this Prospectus. Class A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not
have the same expense structure.
2 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The Russell MidCap(R) Growth Index is an unmanaged index that measures
the performance of the 800 smallest companies in the Russell 1000(R)
Index with higher price-to-book ratios and higher forecasted growth value.
5
GROWTH
FIFTH THIRD QUALITY GROWTH FUND STYLE
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FUNDAMENTAL OBJECTIVE Growth of capital. Income is a secondary objective.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 65% of total assets in common stocks of high quality growth companies.
High quality growth companies are companies that, in the opinion of the Advisor,
offer excellent prospects for consistent, above-average revenue and earnings
growth. To determine whether a company is of high quality, the Advisor generally
looks for a strong record of earnings growth, as well as the company's current
ratio of debt to capital and the quality of its management. Most of the
companies in which the Fund invests are U.S. companies with a market
capitalization greater than $3 billion.
To achieve its secondary objective of income, the Fund may rely on dividend
income that it receives from common stocks and interest income it receives from
other investments, including convertible securities. The Fund reserves the right
to invest up to 35% of total assets in convertible securities. At the time of
investment, those securities are rated investment grade, that is, in the BBB
major rating category or higher by Standard & Poor's or in the Baa major rating
category or higher by Moody's, or their unrated equivalents.
The Fund seeks to outperform the Russell 1000 Growth Index over rolling
five-year periods. The Russell 1000(R) Growth Index is an unmanaged index of
common stocks that measures the performance of those Russell 1000 companies with
higher-price-to-book ratios and higher forecasted growth values. The Advisor
believes that stock prices are driven by earnings growth, and that superior
returns occur when a company experiences rapid and accelerating growth due to
improving fundamentals. The Advisor uses a bottom-up investment process with
fundamental research providing the basis for stock selection. The Advisor uses a
combination of fundamental, momentum and valuation-based disciplines for
portfolio construction, with a particular focus on companies demonstrating
above-average growth and strong balance sheets. Factors considered include
return on assets, price to earnings per share, price to cash flow, and earnings
per share growth. The Advisor uses a fundamental analysis of financial
statements to look for companies that, in its opinion, have stock prices that do
not accurately reflect cash flows, tangible assets or management skills.
The Advisor also utilizes a strict sell discipline and may consider selling a
security when: it becomes overvalued or less attractive; there is deterioration
in a company's fundamentals, management, or financial reporting; one of the
Fund's holdings has exceeded the Advisor's position weighting; or a company's
relative strength falls below the Advisor's target.
The Advisor will look to manage risk through several strategies, which will
typically include maintaining minimum and maximum sector and position weightings
relative to the Russell 1000 Growth Index and monitoring risk statistics
relative to the Russell 1000 Growth Index.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
EQUITY SECURITIES RISK. The risks of investing in equity securities include the
risk of sudden and unpredictable drops in value and the potential for extended
periods of lackluster performance.
DIVIDEND SECURITIES RISK. Stocks that pay regular dividends provide investors
some return of their investment, to an extent, supporting the stock's price,
even during periods when the prices of equity securities generally are falling.
However, dividend-paying stocks, especially those that pay significant
dividends, also tend to appreciate less quickly than stocks of companies in
developing industries, which tend to reinvest most profits into research,
development, plant and equipment to accommodate expansion.
GROWTH SECURITIES RISK. The Fund invests in growth oriented stocks, which are
sensitive to market movements. The prices of growth stocks tend to reflect
future expectations, and when those expectations change or are not met, share
prices generally fall.
SMALLER COMPANY RISK. Stocks of smaller companies tend to be volatile and more
sensitive to long-term market declines than stocks of larger companies, in part
because they generally do not have the financial resources that larger companies
have.
CONVERTIBLE SECURITIES RISK. Prices of convertible securities, which include
bonds and preferred stocks, may be affected by the prices of the underlying
security, which generally is common stock.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to two broad-based
securities indices.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
6
FIFTH THIRD QUALITY GROWTH FUND
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YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
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[BAR CHART]
23.68% 32.70% 30.16% 23.86% -3.82% -13.76% -32.51% 31.37% -0.88% 6.25%
- --------------------------------------------------------------------------------
1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q4 1998 28.21%
Worst quarter: Q2 2002 -19.74%
Year to Date Return (1/1/06 to 9/30/06): 0.06%
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______________________
1 The Fund first offered Institutional shares on August 11, 1998. The quoted
performance of Institutional shares for the period prior to August 11,
1998 reflects the performance for Class A shares, a class of shares of the
Fund not offered by this Prospectus. Class A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not
have the same expense structure.
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AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005)
- -------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
- -------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 1 1/1/83
Return Before Taxes 6.25% -4.24% 7.44%
Return After Taxes on Distributions 2 6.21% -4.36% 6.34%
Return After Taxes on Distributions
and Sale of Fund Shares 2 4.11% -3.58% 6.15%
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RUSSELL 1000(R) GROWTH INDEX*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 5.26% -3.58% 6.73%
- -------------------------------------------------------------------------------------------------------------------------
S&P 500(R) INDEX**
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 4.91% 0.54% 9.07%
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1 The Fund first offered Institutional shares on August 11, 1998. The quoted
performance of Institutional shares for the period prior to August 11,
1998 reflects the performance for Class A shares, a class of shares of the
Fund not offered by this Prospectus. Class A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not
have the same expense structure.
2 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The Russell 1000(R) Growth Index is an unmanaged index of common stocks
that measures the performance of those Russell 1000 companies with higher
price-to-book ratios and higher forecasted growth values.
** The S&P 500(R) Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange, and is a measure
of the U.S. Stock market as a whole.
7
CORE
FIFTH THIRD LARGE CAP CORE FUND STYLE
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FUNDAMENTAL OBJECTIVE Long-term capital appreciation with current income as a
secondary objective.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in equity securities of large cap companies. Large cap
companies are defined as U.S. companies included in the S&P 500(R) Index* and
companies with similar market capitalizations. Market capitalization, a common
measure of the size of a company, is the market price of a share of a company's
stock multiplied by the number of shares that are outstanding. As of September
30, 2006, the market capitalization of companies included in the S&P 500(R)
Index ranged from $1.2 billion to $398.9 billion. The average market
capitalization of companies included in the S&P 500(R) Index was approximately
$24.0 billion and the median market capitalization was approximately $11.7
billion. The Fund seeks to provide moderate and consistent outperformance of the
S&P 500(R) Index.
In managing the Fund, the Advisor adheres to a disciplined, quantitative process
for stock selection and portfolio construction. The Advisor first screens out
those companies facing financial distress, and then uses a proprietary
multi-factor model to rank stocks both across the Fund's remaining investment
universe and on a sector-specific basis. The Advisor ranks each stock on the
basis of, among other things, valuation factors (e.g., valuation multiples),
earnings quality, financial discipline, and review of purchase and sale activity
in company shares by company executives. The Advisor believes these factors
denote long-term success.
The Advisor may consider selling a security held by the Fund when it becomes
overvalued or if the issuer's earnings quality or financial management
deteriorates. Stocks that are sold are generally replaced with stocks that are
attractive based on proprietary rankings and that contribute favorably to the
risk exposures of the entire portfolio. Risk exposure is actively managed
through portfolio construction. The Advisor will typically maintain certain
minimum and maximum sector and position weightings relative to the S&P 500(R)
Index and monitor risk statistics relative to the S&P 500(R) Index.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
The Advisor may hedge cash balances with derivative securities or exchange
traded funds. Cash hedging is performed in an effort to reduce Fund tracking
error and minimize cash drag on performance.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
EQUITY SECURITIES RISK. The risks of investing in equity securities include the
risk of sudden and unpredictable drops in value or periods of lackluster
performance.
LARGER COMPANY RISK. Significant investment in large companies also creates
various risks for the Fund. For instance, larger, more established companies
tend to operate in mature markets, which often are very competitive. Larger
companies also do not tend to respond quickly to competitive challenges,
especially to changes caused by technology or consumer preference.
VALUE SECURITIES RISK. Value stocks are those that appear to be underpriced
based upon valuation measures, such as lower price-to-earnings ratios and
price-to-book ratios. The Fund may expose shareholders to the risk of
underperformance during periods when value stocks do not perform as well as
other kinds of investments or market averages.
GROWTH SECURITIES RISK. Growth stocks are those that have a history of
above-average growth or that are expected to enter periods of above-average
growth. Growth stocks are sensitive to market movements. The prices of growth
stocks tend to reflect future expectations, and when those expectations are not
met, share prices generally fall.
DERIVATIVES RISK. When a derivative is used as a hedge against an opposite
position that the Fund also holds, any loss generated by the derivative should
be substantially offset by gains on the hedged investment, and vice versa.
Hedges are sometimes subject to imperfect matching between the derivative and
underlying security, and there can be no assurance that the Fund's hedging
transactions will be effective.
TURNOVER RISK. 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.
______________________
* "S&P 500" is a registered service mark of Standard & Poor's, a division of
the McGraw-Hill Companies, Inc., which does not sponsor and is in no way
affiliated with the Fund.
8
FIFTH THIRD LARGE CAP CORE FUND
- --------------------------------------------------------------------------------
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to two broad-based
securities indices.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
- --------------------------------------------------------------------------------
[BAR CHART]
19.47% 24.14% 28.07% 18.79% -11.25% -12.82% -23.77% 26.11% 10.64% 5.69%
- --------------------------------------------------------------------------------
1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q4 1998 21.19%
Worst quarter: Q3 2002 -18.15%
Year to Date Return (1/1/06 to 9/30/06): 9.33%
- --------------------------------------------------------------------------------
______________________
1 For the period prior to October 29, 2001, the quoted performance of
Institutional shares reflects the performance of the Institutional shares
of the Kent Growth and Income Fund. On October 29, 2001, the Kent Growth
and Income Fund, a registered open-end investment company managed by Fifth
Third Asset Management, Inc. was merged into Fifth Third Large Cap Core
Fund.
- -------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005) 1
- -------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
- -------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 2 11/2/92
Return Before Taxes 5.69% -0.40% 6.95%
Return After Taxes on Distributions 3 5.33% -0.86% 5.44%
Return After Taxes on Distributions and Sale of Fund Shares 3 4.17% -0.47% 5.39%
- -------------------------------------------------------------------------------------------------------------------------
S&P 500(R) INDEX*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 4.91% 0.54% 9.07%
- -------------------------------------------------------------------------------------------------------------------------
RUSSELL 1000(R) INDEX**
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 6.27% 1.07% 9.29%
- -------------------------------------------------------------------------------------------------------------------------
1 On October 29, 2001, the Kent Growth and Income Fund, a registered
open-end investment company managed by Fifth Third Asset Management, Inc.
was merged into Fifth Third Large Cap Core Fund.
2 For the period prior to October 29, 2001, the quoted performance of
Institutional shares reflects the performance of the Institutional shares
of the Kent Growth and Income Fund.
3 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The S&P 500(R) Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange, and is a measure
of the U.S. stock market as a whole.
** The Russell 1000(R) Index is an unmanaged index that measures the
performance of the 1,000 largest companies in the Russell 1000(R) Index.
9
CORE
FIFTH THIRD EQUITY INDEX FUND STYLE
- -------------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE Long-term capital appreciation with current income as a
secondary objective.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in equity securities that comprise an equity index. The
Fund invests substantially all of its assets in common stock of companies that
make up the Standard & Poor's 500 Composite Stock Price Index(R) ("S&P 500")*.
The Advisor attempts to track the performance of the S&P 500 to achieve a
correlation of 0.95 between the performance of the Fund and that of the S&P 500
without taking into account the Fund's expenses. Several factors may affect the
Fund's ability to exactly track the S&P 500's performance, including the timing
of purchases and redemptions, changes in securities markets, and changes in the
size of the Fund.
Although the Fund's investment style is essentially passive, the portfolio
managers attempt to add incremental value by timing the purchase and sale of
securities to changes in the index. Specifically, the portfolio managers may buy
or sell ahead of or after index changes to take advantage of price volatility
and obtain favorable prices. When index changes are not mirrored exactly,
additions and deletions within the portfolio index will generally be made within
several days so as to maintain a 0.95 correlation to the index.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely impact the ability of the Fund to
achieve its investment objective.
The Advisor may hedge cash balances with derivative securities or exchange
traded funds. Cash hedging is performed in an effort to reduce Fund tracking
error and minimize cash drag on performance.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
EQUITY SECURITIES RISK. The risks of investing in equity securities include the
risk of sudden and unpredictable drops in value and the potential for extended
periods of lackluster performance.
INDEX INVESTING RISK. Indexing is a strategy whereby the Fund attempts to weight
its securities to match those of a broad-based securities index (the S&P 500) in
an attempt to approximate the index's performance. The Fund may purchase, retain
and sell securities at times when an actively managed fund would not do so. If
the value of securities that are heavily weighted in the index changes, you can
expect a greater risk of loss than would be the case if the Fund were not fully
invested in such securities. There is also a risk that the Fund will not
accurately track the S&P 500. Should this occur, the Board of Trustees will act
as necessary to bring the Fund's accuracy back to 0.95. A correlation of 1.0
would mean that the Fund's net asset value (including the value of its dividends
and capital gains distributions) increases or decreases in exact proportion to
changes in the S&P 500. There is also the risk that the Fund's investment
results may fail to match those of the S&P 500 and the risk that if the S&P 500
does not perform well, the investment results of the Fund may not be as
favorable as those of other funds.
DERIVATIVES RISK. When a derivative is used as a hedge against an opposite
position that the Fund also holds, any loss generated by the derivative should
be substantially offset by gains on the hedged investment, and vice versa.
Hedges are sometimes subject to imperfect matching between the derivative and
underlying security, and there can be no assurance that the Fund's hedging
transactions will be effective.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to a broad-based securities
index.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
______________________
* "S&P 500" is a registered service mark of Standard & Poor's, a division of
the McGraw-Hill Companies, Inc., which does not sponsor and is in no way
affiliated with the Fund.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
- --------------------------------------------------------------------------------
[BAR CHART]
22.18% 32.55% 28.26% 20.55% -9.30% -12.22% -22.35% 28.20% 10.63% 4.72%
- --------------------------------------------------------------------------------
1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q4 1998 21.26%
Worst quarter: Q3 2002 -17.34%
Year to Date Return (1/1/06 to 9/30/06): 8.41%
- --------------------------------------------------------------------------------
______________________
1 For the period prior to October 29, 2001, the quoted performance of
Institutional shares reflects the performance of the Institutional shares
of the Kent Index Equity Fund. On October 29, 2001, the Kent Index Equity
Fund, a registered open-end investment company managed by Fifth Third
Asset Management, Inc. was merged into Fifth Third Equity Index Fund.
10
FIFTH THIRD EQUITY INDEX FUND
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005) 1
- -----------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
- -----------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 2 11/2/92
Return Before Taxes 4.72% 0.24% 8.68%
Return After Taxes on Distributions 3 4.44% -0.09% 8.06%
Return After Taxes on Distributions and Sale of Fund Shares 3 3.42% 0.08% 7.36%
- -----------------------------------------------------------------------------------------------------------------------------------
S&P 500(R) INDEX*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 4.91% 0.54% 9.07%
- -----------------------------------------------------------------------------------------------------------------------------------
1 On October 29, 2001, the Kent Index Equity Fund, a registered open-end
investment company managed by Fifth Third Asset Management, Inc. was
merged into Fifth Third Equity Index Fund.
2 For the period prior to October 29, 2001, the quoted performance of
Institutional shares reflects the performance of the Institutional shares
of the Kent Index Equity Fund.
3 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The S&P 500(R) Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange, and is a measure
of the U.S. stock market as a whole.
11
CORE
FIFTH THIRD BALANCED FUND STYLE
- --------------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE Capital appreciation and income.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund uses an
asset allocation strategy, investing in three primary categories of securities:
stocks, bonds and money market instruments. The Fund intends to invest between
50% to 75% of its net assets in common stocks, convertible preferred stocks and
convertible corporate bonds, 25% to 40% of its net assets in U.S. Treasury
bills, notes and bonds, securities of U.S. Government agencies and
instrumentalities and corporate debt securities, including mortgage-backed
securities, and 0% to 25% of its net assets in money market instruments. By
analyzing financial trends and market conditions, the Fund may adjust its
allocations from time to time based on the current, relative attractiveness of
stocks versus bonds. However, the Fund takes a moderate to long-term view of
changing market conditions, and tends to avoid large, sudden shifts in the
composition of its portfolio.
The equity portion of the Fund will be primarily invested in companies
exhibiting strong records of earnings growth, and excellent prospects for above
average revenue and earnings growth (such factors include rising earnings
expectations, new management, new products, restructuring) over the next one to
three years. The Advisor also considers balance sheet strength and cash flow, as
well as the company's debt ratio, and the quality of its management to be key
components in evaluating potential investments. The Fund will be comprised of
both growth and value-oriented stocks, typically of large and medium-sized
companies. The Advisor anticipates that most economic sectors will be
represented in this investment style and that the portfolio will typically
contain between 40-60 stocks.
The fixed income portion of the Fund tends to be invested in investment grade
bonds with maturities ranging from overnight to thirty years in length. In
selecting bond securities, the Advisor considers, among other things, the
remaining maturity, the stated interest rate, the price of the security, as well
as the financial condition of the issuer and its prospects for long-term growth
of earnings and revenues.
The Advisor may consider selling one of the Fund's holdings when a significant
deterioration in a company's strategic position or growth prospects is detected,
an individual security comprises too large of a position in the portfolio, a
company's valuations are no longer attractive or the Fund has realized its
intended profit, or a better opportunity arises.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
MANAGEMENT RISK-ASSET ALLOCATION STRATEGY The Fund is exposed to risks
associated with following an asset allocation strategy, such as the risk that
the Fund will not correctly anticipate the relative performance of the different
asset classes in which it may invest.
EQUITY SECURITIES RISK. To the extent the Fund invests in stocks and convertible
securities, it assumes the risks of equity investing, including sudden and
unpredictable drops in value and periods of lackluster performance.
LARGE AND MEDIUM-SIZED COMPANY RISK. There are inherent risks to investing in
equity securities of large and medium-sized companies. For instance, changes in
the competitive environment can create business challenges that may increase the
volatility of a specific equity. A company's size, usually defined by market
capitalization, can also create various risks for the Fund. Larger, more
established companies tend to operate in mature markets, which often are very
competitive with less robust growth prospects. Stocks of mid-sized companies
tend to be more volatile and more sensitive to market declines than stocks of
larger companies, in part because they generally do not have the financial
resources that larger companies have.
FIXED INCOME SECURITIES RISK. Through its investment in bonds, the Fund assumes
the risks of bond investing, including INTEREST RISK, which is the tendency of
prices to fall as interest rates rise. That risk is greater for bonds with
longer maturities.
CREDIT RISK is the risk that a bond issuer will default on principal or interest
payments. [Prices of convertible securities, which include bonds and preferred
stocks, may be affected by the price of the underlying security, which generally
is common stock.]
TURNOVER RISK. 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.
12
FIFTH THIRD BALANCED FUND
- --------------------------------------------------------------------------------
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to two broad-based
securities indices.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
- --------------------------------------------------------------------------------
[BAR CHART]
14.23% 24.08% 17.93% 15.64% 2.29% -8.44% -16.35% 14.68% 4.88% 1.86%
- --------------------------------------------------------------------------------
1966 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q4 1998 17.83%
Worst quarter: Q3 2001 -14.30%
Year to Date Return (1/1/06 to 9/30/06): 1.46%
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005)
- -----------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
- -----------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 1 1/1/83
Return Before Taxes 1.86% -1.27% 6.37%
Return After Taxes on Distributions 2 1.51% -1.71% 4.81%
Return After Taxes on Distributions
and Sale of Fund Shares 2 1.46% -1.26% 4.81%
- -----------------------------------------------------------------------------------------------------------------------------------
S&P 500(R) INDEX*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 4.91% 0.54% 9.07%
- -----------------------------------------------------------------------------------------------------------------------------------
LEHMAN BROTHERS AGGREGATE BOND INDEX(R)**
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 2.43% 5.87% 6.16%
- -----------------------------------------------------------------------------------------------------------------------------------
1 The Fund first offered Institutional shares on August 11, 1998. The quoted
performance of Institutional shares for the period prior to August 11,
1998 reflects the performance for Class A shares, a class of shares of the
Fund not offered by this Prospectus. Class A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not
have the same expense structure.
2 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The S&P 500(R) Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange, and is a measure
of the U.S. stock market as a whole.
** The Lehman Brothers Aggregate Bond Index(R) is an unmanaged total return
index measuring both capital price changes and income provided by the
underlying universe of securities and is generally representative of the
performance of the bond market as a whole.
13
VALUE
FIFTH THIRD MICRO CAP VALUE FUND STYLE
- --------------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE Capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in equity securities of micro cap companies. Micro cap
companies are those companies contained within the Russell Micro Cap Value
Index, or companies with similar size characteristics. As of October 31, 2006,
the market capitalization range for companies contained within the Russell Micro
Cap Value Index was from $23 million to $1.6 billion. Equity securities consist
of common stock and securities convertible into common stock.
The Fund seeks to provide broad exposure to micro cap domestic equities and
seeks to outperform the Russell Micro Cap Value Index over a long-term
investment horizon. The Advisor seeks to invest in companies that it considers
to be "statistically cheap" (based on factors which may include, for example,
low ratio of price to earnings, price to cash flow, price to book value, and
price to sales). The Advisor also looks for companies that it believes are
undervalued relative to their earning power and long term earnings growth
prospects, adjusted for risk. The Advisor may filter less attractive companies
by analyzing cash flows, evaluating financial strength, performing normalized
earnings analysis, review of purchase and sale activity in company shares by
company executives, and through fundamental analysis, which may include a review
of assets, earnings, sales, products, markets, and management, among other
indicators. Ideally, after filtering out companies that do not meet the
Advisor's criteria above, the Advisor looks for companies that have a positive
catalyst (e.g., new products, management changes, acquisition, etc.).
The Advisor also utilizes a strict sell discipline and may consider selling a
security when: it becomes fully valued or less attractive; one of the Fund's
holdings has performed well and reached or approached the Advisor's price
target; a company fails to pass the Advisor's investment screens; or there is
deterioration in a company's fundamentals, management or financial reporting.
The Advisor will look to manage risk through several strategies, which will
typically include: maintaining minimum and maximum sector weightings relative to
the Russell Micro Cap Value Index; monitoring risk statistics relative to the
Russell Micro Cap Value Index; and monitoring trade volume.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
EQUITY SECURITIES RISK. The prices of equity securities fluctuate based on
changes in a company's activities and financial condition and in overall market
and financial conditions. To the extent that the Fund invests in equity
securities, it assumes the risks of sudden and unpredictable drops in value and
periods of lack-luster performance.
SMALLER COMPANY RISK. The smaller companies in which the Fund invests are
especially sensitive to the risks of equity investing and therefore may be
subject to greater share price fluctuations than other companies. Also,
securities of these smaller companies may be thinly-traded, thus possibly
limiting the ability of the Fund to dispose of such securities when the Advisor
deems it desirable to do so. As a result of these factors, securities of these
smaller companies may expose shareholders of the Fund to above average risk.
VALUE SECURITIES RISK. Value stocks are those that appear to be underpriced
based upon valuation measures, such as lower price-to-earnings ratios and
price-to-book ratios. The Fund may expose shareholders to the risk of
underperformance during periods when value stocks do not perform as well as
other kinds of investments or market averages.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to two broad-based
securities indices.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
- --------------------------------------------------------------------------------
[BAR CHART]
21.81% -1.21% 22.90% 0.25% 69.41% 23.24% -0.31%
-----------------------------------------------------------
1999 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q2 2003 31.37%
Worst quarter: Q3 2002 -20.69%
Year to Date Return (1/1/06 to 9/30/06): 2.90%
- --------------------------------------------------------------------------------
______________________
1 For the period prior to August 13, 2001, the quoted performance of
Institutional shares reflects the performance of the Institutional shares
of the Fifth Third/Maxus Aggressive Value Fund. On August 13, 2001, the
Fifth Third/Maxus Aggressive Value Fund, a registered open-end investment
company managed by Fifth Third Asset Management, Inc., was merged into
Fifth Third Micro Cap Value Fund.
14
FIFTH THIRD MICRO CAP VALUE FUND
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005) 1
- ------------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS SINCE INCEPTION
- ------------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 2 2/1/98
Return Before Taxes -0.31% 20.72% 14.84%
Return After Taxes on Distributions 3 -4.52% 19.09% 13.15%
Return After Taxes on Distributions and Sale of Fund Shares 3 5.44% 18.22% 12.64%
- ------------------------------------------------------------------------------------------------------------------------------------
(SINCE 2/1/98)
RUSSELL 2000(R) VALUE INDEX*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 4.71% 13.55% 10.32%
- ------------------------------------------------------------------------------------------------------------------------------------
RUSSELL MICROCAP TM INDEX**
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 2.57% 13.95% N/A
- ------------------------------------------------------------------------------------------------------------------------------------
RUSSELL MICROCAP TM VALUE INDEX***
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 3.15% 19.62% N/A
- ------------------------------------------------------------------------------------------------------------------------------------
1 On August 13, 2001, the Fifth Third/Maxus Aggressive Value Fund, a
registered open-end investment company managed by Fifth Third Asset
Management, Inc., was merged into Fifth Third Micro Cap Value Fund.
2 For the period prior to August 13, 2001, the quoted performance of
Institutional shares reflects the performance of the Institutional shares
of the Fifth Third/Maxus Aggressive Value Fund.
3 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The Russell 2000(R) Value Index is an unmanaged index of the smallest
2,000 companies in the Russell 3000(R) Index, as ranked by market
capitalization with lower price-to-book ratios and lower forecasted growth
values.
** The Russell Microcap TM Index measures performance of the micro cap
segment, representing less than 3% of the U.S. equity market. The Russell
Microcap Index includes the 1,000 smallest securities in the small-cap
Russell 2000(R) Index plus the next 1,000 securities.
*** The Russell Microcap TM Value Index measures the performance of those
Russell MicroCap companies with lower price-to-book ratios and lower
forecasted growth values.
15
VALUE
FIFTH THIRD SMALL CAP VALUE FUND STYLE
- --------------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in the equity securities of small cap companies. Small
cap companies are defined as those companies included in the Russell 2000 Value
Index and companies with similar market capitalizations. Market capitalization,
a common measure of the size of a company, is the market price of a share of a
company's stock multiplied by the number of shares that are outstanding. As of
October 31, 2006, the market capitalization of companies included in the Russell
2000 Value Index ranged from $95 million to approximately $2.9 billion. The
median market capitalization of companies included in the Russell 2000 Value
Index was $643 million. Equity securities consist of common stock and securities
convertible into common stock. The Fund's investments in stocks may include real
estate investment trusts ("REITs"), which are pooled investment vehicles
investing primarily in income producing real estate or real estate loans or
interest.
The Fund seeks to outperform the Russell 2000 Value Index over a long-term
investment horizon, The Advisor seeks to invest in companies that it considers
to be "statistically cheap" (based on factors which may include, for example,
low ratio of price to earnings, price to cash flow, price to book value, and
price to sales). The Advisor also looks for companies that it believes are
undervalued relative to their earning power and long term earnings growth
prospects, adjusted for risk. The Advisor may filter less attractive companies
by analyzing cash flows, evaluating financial strength, performing normalized
earnings analysis, review of purchase and sale activity in company shares by
company executives, and through fundamental analysis. Ideally, attractive
companies will have a positive catalyst (e.g., new products, management changes,
acquisition, etc.).
The Advisor also utilizes a strict sell discipline and may consider selling a
security when: it becomes fully valued or less attractive; one of the Fund's
holdings has performed well and reached or approached the Advisor's price
target; a company fails to pass the Advisor's investment screens; or there is
deterioration in a company's fundamentals, management or financial reporting.
The Advisor will look to manage risk through several strategies, which will
typically include maintaining minimum and maximum sector weightings relative to
the Russell 2000 Value Index and monitoring risk statistics relative to the
Russell 2000 Value Index.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high quality,
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
EQUITY SECURITIES RISK. The risks of investing in equity securities include the
risk of sudden and unpredictable drops in value and the potential for extended
periods of lackluster performance.
SMALLER COMPANY RISK. The smaller companies in which the Fund invests are
especially sensitive to the risks of equity investing and therefore may be
subject to greater share price fluctuations than other companies. Also,
securities of these smaller companies are often thinly-traded, thus possibly
limiting the ability of the Fund to dispose of such securities when the Advisor
deems it desirable to do so. As a result of these factors, securities of these
smaller companies may expose shareholders of the Fund to above average risk.
VALUE SECURITIES RISK. Value stocks are those that appear to be underpriced
based upon valuation measures, such as lower price-to-earnings ratios and
price-to-book ratios. The Fund may expose shareholders to the risk of
underperformance during periods when value stocks do not perform as well as
other kinds of investments or market averages.
REIT RISK. Investments in real estate investment trusts or "REITs" subject the
Fund to risks associated with the direct ownership of real estate. Market
conditions or events affecting the overall market for REITs, such as declining
property values or rising interest rates, could have a negative impact on the
Fund's performance.
TURNOVER RISK. 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 bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
over time, as well as compared to a broad-based securities index.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
[BAR CHART]
11.78% 11.99%
---------------
2004 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q4 2004 7.84%
Worst quarter: Q3 2004 -2.62%
Year to Date Return (1/1/06 to 9/30/06): 6.54%
- --------------------------------------------------------------------------------
16
FIFTH THIRD SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005)
- -----------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR SINCE INCEPTION
- -----------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 4/1/03
Return Before Taxes 11.99% 22.12%
Return After Taxes on Distributions 1 9.00% 19.26%
Return After Taxes on Distributions and Sale of Fund Shares 1 9.06% 17.81%
- -----------------------------------------------------------------------------------------------------------------------
(SINCE 4/1/03)
RUSSELL 2000(R) VALUE INDEX*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 4.71% 27.94%
- -----------------------------------------------------------------------------------------------------------------------
1 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The Russell 2000(R) Value Index is an unmanaged index of the smallest
2,000 companies in the Russell 3000(R) Index, as marked by market
capitalization with lower price-to-book ratios and lower forecasted growth
values.
17
VALUE
FIFTH THIRD MULTI CAP VALUE FUND STYLE
- --------------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE High level of total return (using a combination of capital
appreciation and income).
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in equity securities of companies of all
capitalizations. Equity securities of multi cap companies consist of common
stock and securities convertible into common stock of companies with market
capitalizations of any size.
The Fund seeks to outperform the Russell 3000 Value Index over a long-term
investment horizon. The Advisor seeks to invest in companies that it considers
to be "statistically cheap" (based on factors which may include, for example,
low ratio of price to earnings, price to cash flow, price to book value, and
price to sales). The Advisor also looks for companies that it believes are
undervalued relative to their earning power and long term earnings growth
prospects, adjusted for risk. The Advisor may filter less attractive companies
by analyzing cash flows, evaluating financial strength, performing normalized
earnings analysis, review of purchase and sale activity in company shares by
company executives, and through fundamental analysis. Ideally, attractive
companies will have a positive catalyst (e.g., new products, management changes,
acquisition, etc.).
The Advisor also utilizes a strict sell discipline and may consider selling a
security when: it becomes fairly valued or less attractive; one of the Fund's
holdings has performed well and reached or approached the Advisor's price
target; a company fails to pass the Advisor's investment screens; or there is
deterioration in a company's fundamentals, management or financial reporting.
The Advisor will look to manage risk through several strategies, which will
typically include maintaining minimum and maximum sector weightings relative to
the Russell 3000 Value Index and monitoring risk statistics relative to the
Russell 3000 Value Index.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
EQUITY SECURITIES RISK. The prices of equity securities fluctuate based on
changes in a company's activities and financial condition and in overall market
conditions. To the extent that the Fund invests in equity securities, it assumes
the risks of sudden and unpredictable drops in value and periods of lack-luster
performance.
SMALLER COMPANY RISK. The smaller companies in which the Fund invests are
especially sensitive to the risks of equity investing and therefore may be
subject to greater share price fluctuations than other companies. Also,
securities of these smaller companies are often thinly-traded, thus possibly
limiting the ability of the Fund to dispose of such securities when the Advisor
deems it desirable to do so. As a result of these factors, securities of these
smaller companies may expose shareholders of the Fund to above-average risk.
VALUE SECURITIES RISK. Value stocks are those that appear to be underpriced
based upon valuation measures, such as lower price-to-earnings ratios and
price-to-book ratios. The Fund may expose shareholders to the risk of
underperformance during periods when value stocks do not perform as well as
other kinds of investments or market averages.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to two broad-based
securities indices.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
- --------------------------------------------------------------------------------
[BAR CHART]
19.07% 28.21% -8.77% 13.22% 23.78% 7.91% -15.83% 40.66% 15.40% 7.68%
- --------------------------------------------------------------------------------
1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q2 2003 23.22%
Worst quarter: Q3 1998 -21.09%
Year to Date Return (1/1/06 to 9/30/06): 12.54%
- --------------------------------------------------------------------------------
____________________
1 For the period prior to August 13, 2001, the quoted performance of
Institutional shares reflects the performance of the Institutional shares
of the Fifth Third/Maxus Equity Fund. For the period prior to April 1,
1999, the quoted performance reflects the performance of the Investor
shares of the Fifth Third/Maxus Equity Fund. On August 13, 2001, the Fifth
Third/Maxus Equity Fund, a registered open-end investment company managed
by Fifth Third Asset Management, Inc., was merged into Fifth Third Multi
Cap Value Fund.
18
FIFTH THIRD MULTI CAP VALUE FUND
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005) 1
- -----------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
- -----------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 2 9/30/89
Return Before Taxes 7.68% 9.69% 11.97%
Return After Taxes on Distributions 3 6.28% 8.93% 10.27%
Return After Taxes on Distributions and Sale of Fund Shares 3 6.85% 8.27% 9.74%
- -----------------------------------------------------------------------------------------------------------------------------------
RUSSELL 3000(R) VALUE INDEX*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 6.85% 5.86% 11.04%
- -----------------------------------------------------------------------------------------------------------------------------------
RUSSELL MIDCAP(R) VALUE INDEX**
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 12.65% 12.21% 13.65%
- -----------------------------------------------------------------------------------------------------------------------------------
1 On August 13, 2001, the Fifth Third/Maxus Equity Fund, a registered
open-end investment company managed by Fifth Third Asset Management, Inc.,
was merged into Fifth Third Multi Cap Value Fund.
2 For the period prior to August 13, 2001, the quoted performance of
Institutional shares reflects the performance of the Institutional shares
of the Fifth Third/Maxus Equity Fund. For the period prior to April 1,
1999, the quoted performance of the Fund reflects the performance of the
Investor shares of the Fifth Third/Maxus Equity Fund.
3 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The Russell 3000(R) Value Index is an unmanaged index that measures the
performance of those Russell 3000(R) Index companies with lower
price-to-book ratios and lower forecasted growth values.
** The Russell MidCap(R) Value Index measures the performance of those
securities found in the Russell universe with lower price-to-book ratios
and lower forecasted growth values. The stocks are also members of the
Russell 1000(R) Value Index.
19
VALUE
FIFTH THIRD DISCIPLINED LARGE CAP VALUE FUND STYLE
- --------------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE Long-term capital appreciation with current income as a
secondary objective.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in equity securities of large capitalization companies.
Large capitalization companies are defined as those companies included in the
Russell 1000 Value Index and companies with similar market capitalizations.
Market capitalization, a common measure of the size of a company, is the market
price of a share of a company's stock multiplied by the number of shares that
are outstanding. As of October 31, 2006, the market capitalization of companies
included in the Russell 1000 Value Index ranged from approximately $1.6 billion
to approximately $432 billion. The average market capitalization of companies
included in the Russell 1000 Value Index was approximately $105 billion and the
median market capitalization was approximately $5.1 billion.
The Fund seeks to outperform the Russell 1000 Value Index over a long-term
investment horizon. The Advisor seeks to invest in companies that it considers
to be "statistically cheap" (based on factors which may include, for example,
low ratio of price to earnings, price to cash flow, price to book value, price
to dividend and price to sales). The Advisor also looks for companies that it
believes are undervalued relative to their earning power and long term earnings
growth prospects, adjusted for risk. Ideally, attractive companies will have a
positive catalyst (e.g., new products, management changes, acquisition, etc.).
The Advisor may consider selling a security when it performs well and reaches
its price target, when a lower price target results from a reassessment of a
company's fundamentals, when a more attractive stock is identified or when the
integrity of financial reporting becomes suspect.
The Advisor will look to manage risk through several strategies, which will
typically include maintaining minimum and maximum sector weightings relative to
the Russell 1000 Value Index and monitoring risk statistics relative to the
Russell 1000 Value Index.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
EQUITY SECURITIES RISK. The risks of investing in equity securities include the
risk of sudden and unpredictable drops in value or periods of lackluster
performance.
VALUE SECURITIES RISK. Value stocks are those that appear to be underpriced
based upon valuation measures, such as lower price-to-earnings ratios and
price-to-book ratios. The Fund may expose shareholders to the risk of
underperformance during periods when value stocks do not perform as well as
other kinds of investments or market averages.
LARGER COMPANY RISK. Significant investment in large companies also creates
various risks for the Fund. For instance, larger, more established companies
tend to operate in mature markets, which often are very competitive. Larger
companies also do not tend to respond quickly to competitive challenges,
especially to challenges caused by technology and consumer preferences.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to a broad-based securities
index.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
- --------------------------------------------------------------------------------
[BAR CHART]
16.83% 38.15% 18.03% -4.71% 12.75% -12.35% -13.72% 34.14% 13.73% 5.98%
- --------------------------------------------------------------------------------
1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q2 2003 19.07%
Worst quarter: Q3 2002 -13.86%
Year to Date Return (1/1/06 to 9/30/06): 13.44%
- --------------------------------------------------------------------------------
_____________________
1 The Fund first offered Institutional shares on August 11, 1998. The quoted
performance of Institutional shares for the period prior to August 11,
1998 reflects the performance for Class A shares, a class of shares of the
Fund not offered by this Prospectus. Class A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not
have the same expense structure.
The quoted performance of the Disciplined Large Cap Value Fund includes
performance of certain collectively managed accounts advised by Fifth
Third Bank, prior to the Disciplined Large Cap Value Fund's commencement
of operations on January 27, 1997, as adjusted to reflect the expenses
associated with the Fund (without waivers or reimbursements). These
collectively managed accounts were not registered with the Securities and
Exchange Commission and, therefore, were not subject to the investment
restrictions imposed by law on registered mutual funds. If such accounts
had been registered, the performance may have been adversely affected. The
performance shown reflects the deduction of fees for value-added services
associated with a mutual fund, such as investment management and fund
accounting fees. The performance also reflects reinvestment of all
dividends and capital-gains distributions.
20
FIFTH THIRD DISCIPLINED LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005)
- -----------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
- -----------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 1 1/1/83
Return Before Taxes 5.98% 4.10% 9.61%
Return After Taxes on Distributions 2 4.15% 3.03% 8.01%
Return After Taxes on Distributions and
Sale of Fund Shares 2 6.06% 3.21% 7.75%
- -----------------------------------------------------------------------------------------------------------------------------------
RUSSELL 1000(R) VALUE INDEX*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 7.05% 5.28% 10.94%
- -----------------------------------------------------------------------------------------------------------------------------------
1 The Fund first offered Institutional shares on August 11, 1998. The quoted
performance of Institutional shares for the period prior to August 11,
1998 reflects the performance for Class A shares, a class of shares of the
Fund not offered by this Prospectus. Class A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not
have the same expense structure.
The quoted performance of the Disciplined Large Cap Value Fund includes
performance of certain collectively managed accounts advised by Fifth
Third Bank, prior to the Disciplined Large Cap Value Fund's commencement
of operations on January 27, 1997, as adjusted to reflect the expenses
associated with the Fund (without waivers or reimbursements). These
collectively managed accounts were not registered with the Securities and
Exchange Commission and, therefore, were not subject to the investment
restrictions imposed by law on registered mutual funds. If such accounts
had been registered, the performance may have been adversely affected. The
performance shown reflects the deduction of fees for value-added services
associated with a mutual fund, such as investment management and fund
accounting fees. The performance also reflects reinvestment of all
dividends and capital-gains distributions. The performance shown after tax
reflects only the performance dating back to the commencement of operation
of the Fund and does not include the performance of these collectively
managed accounts prior to that date.
2 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The Russell 1000(R) Value Index is an unmanaged index of common stocks
that measures the performance of those Russell 1000(R) companies with
lower price-to-book ratios and lower forecasted growth values.
21
ASSET
ALLOCATION
FIFTH THIRD LIFEMODEL AGGRESSIVE FUND SM STRATEGY
- ---------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE The Fund seeks long-term capital appreciation by investing
primarily in a diversified group of Fifth Third Funds which invest primarily in
equity securities.
PRINCIPAL INVESTMENT STRATEGIES The Fund is a "fund of funds." The Fund's
investment strategy is to invest in a diversified group of Fifth Third Funds
Institutional Shares. Because this is an aggressive allocation fund, the
majority of the Fund's assets will be invested in Fifth Third equity funds,
although a portion of its assets will be invested in Fifth Third bond and money
market funds. The Fund's investment return is diversified by its investment in
the underlying mutual funds which invest in growth and value stocks, foreign
securities, debt securities and cash or cash equivalents.
Under normal circumstances, the Fund is diversified between stocks and bonds,
with a heavy emphasis on stocks:
o From 80% to 100% of the Fund's net assets will be invested in Fifth
Third equity funds.
o Up to 20% of the Fund's net assets will be invested in Fifth Third
bond funds.
o Up to 10% of the Fund's net assets will be invested in Fifth Third
money market funds.
The Fund invests its assets in the underlying mutual funds within the following
ranges:
PERCENTAGE OF
FUND NAME FUND HOLDINGS
Small Cap Growth Fund................................................. 0-50%
Mid Cap Growth Fund................................................... 0-50%
Quality Growth Fund................................................... 0-50%
Large Cap Core Fund................................................... 0-50%
Small Cap Value Fund.................................................. 0-50%
Multi Cap Value Fund.................................................. 0-50%
Disciplined Large Cap Value Fund...................................... 0-50%
International Equity Fund............................................. 0-25%
High Yield Bond Fund.................................................. 0-20%
Bond Fund............................................................. 0-20%
Intermediate Bond Fund................................................ 0-20%
Short Term Bond Fund.................................................. 0-20%
Institutional Money Market Fund....................................... 0-10%
U.S. Treasury Money Market Fund....................................... 0-10%
The Advisor actively manages the allocations in the portfolio based on current
market and economic conditions. Changes in these conditions often lead to
adjustments in the portfolio's fund weightings.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in money market
instruments. The taking of such a temporary defensive posture may adversely
impact the ability of the Fund to achieve its investment objective.
Each LifeModel Fund SM has a target neutral index blend, which is listed below.
The target neutral index blend is an index-based baseline style class allocation
determined by the Advisor to be optimal under static market and economic
conditions. THE TARGET NEUTRAL STYLE CLASS INDEX BLEND IS A HYPOTHETICAL BLEND
ONLY AND DOES NOT REPRESENT UNDERLYING ALLOCATIONS IN THE FUND. The Advisor will
periodically adjust the baseline style class allocations.
LIFEMODEL AGGRESSIVE TARGET NEUTRAL STYLE CLASS INDEX BLEND
Small Cap Growth Index 1 ............................................. 6.0%
Small Cap Value Index 2 .............................................. 6.0%
International Index 3 ................................................ 8.0%
Mid Cap Growth Index 4 ............................................... 10.0%
Mid Cap Value Index 5 ................................................ 10.0%
Large Cap Growth Index 6 ............................................. 18.0%
Large Cap Value Index 7 .............................................. 18.0%
Large Cap Core Index 8 ............................................... 14.0%
High Yield Bond Index 9............................................... 5.0%
Intermediate Bond Index 10 ........................................... 5.0%
For more information about the Fund and its investment strategies, please see
the section "Additional Information About the Funds' Investments."
___________________________
1 The Small Cap Growth Index represents the Russell 2000(R) Growth Index.
The Russell 2000(R) Growth Index measures the performance of those
Russell 2000 companies that have higher price-to-book values and higher
forecasted growth rates.
2 The Small Cap Value Index represents the Russell 2000(R) Value Index. The
Russell 2000(R) Value Index measures the performance of those Russell
2000 companies that have lower price-to-book ratios and lower forecasted
growth values.
3 The International Index represents the MSCI EAFE(R) Index. The MSCI
EAFE(R) Index is a widely recognized, unmanaged index composed of a sample
of companies representative of the market structure of 20 European and
Pacific Basin countries.
4 The Mid Cap Growth Index represents the Russell MidCap(R) Growth Index.
The Russell MidCap(R) Growth Index measures the performance of those
Russell MidCap companies with higher price-to-book ratios and higher
forecasted growth values.
5 The Mid Cap Value Index represents the Russell MidCap(R) Value Index. The
Russell MidCap(R) Value Index measures the performance of those Russell
MidCap companies with lower price-to-book ratios and lower forecasted
growth values.
6 The Large Cap Growth Index represents the Russell 1000(R) Growth Index.
The Russell 1000(R) Growth Index measures the performance of those
Russell 1000 companies with higher price-to-book ratios and higher
forecasted growth values.
7 The Large Cap Value Index represents the Russell 1000(R) Value Index. The
Russell 1000(R) Value Index measures the performance of those Russell
1000 companies with lower price-to-book ratios and lower forecasted growth
values.
8 The Large Cap Core Index represents the Standard & Poor's 500(R) Index.
The Standard & Poor's 500(R) Index is comprised of 500 selected common
stocks, most of which are listed on the New York Stock Exchange, and is a
measure of the U.S. Stock market as a whole.
9 The High Yield Bond Index represents the Merrill Lynch High Yield Master
Index. The Merrill Lynch High Yield Master Index tracks the performance of
below investment grade, U.S. dollar-denominated corporate bonds publicly
issued in the U.S. domestic market. Qualifying bonds must have at least
one year remaining term to maturity, at least $100,000,000 par
outstanding, and a fixed coupon schedule.
10 The Intermediate Bond Index represents the Lehman Brothers
Government/Credit Intermediate Index. The Lehman Brothers
Government/Credit Intermediate Index is composed of 5,000 publicly-issued
corporate and U.S. Government debt issues rated Baa or better, with at
least one year to maturity and at least $150 million par outstanding.
22
FIFTH THIRD LIFEMODEL AGGRESSIVE FUND SM
- --------------------------------------------------------------------------------
PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are as
follows:
INVESTMENTS IN MUTUAL FUNDS. The Fund's investments are concentrated in
underlying Fifth Third Funds, so the Fund's investment performance is directly
related to the performance of the underlying funds. The Fund's net asset value
will change with changes in the equity and bond markets and the value of the
mutual funds in which it invests. In addition, the Fund must allocate its
investments among the underlying funds. As a result, the Fund does not have the
same flexibility to invest as a mutual fund without such constraints. In
addition, the Fund indirectly pays a portion of the expenses incurred by the
underlying funds.
EQUITY FUNDS. Equity funds invest primarily in equity securities (such as
stocks) that are more volatile and carry more risks than some other forms of
investment. The price of equity securities may rise or fall because of economic
or political changes or changes in a company's financial condition. Equity
securities also are subject to "stock market risk," meaning that stock prices in
general may decline over short or extended periods of time. When the value of
the stocks held by an underlying Fifth Third equity fund goes down, the value of
your investment in LifeModel Aggressive Fund SM will be affected.
BOND FUNDS. Bond funds invest primarily in fixed income securities. These
securities will increase or decrease in value based on changes in interest
rates. If rates increase, the value of a fund's investments generally declines.
On the other hand, if rates fall, the value of the investments generally
increases. The value of your investment in LifeModel Aggressive Fund SM will
change as the value of investments of the underlying Fifth Third Funds increases
and decreases. In addition, the prices of long-term bonds (bonds with a
remaining maturity of at least 10 years) tend to be more volatile than the
prices of bonds with a shorter maturity. Bond funds are subject to credit risk
which is the risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade securities.
The price of a security can be adversely affected prior to actual default as its
credit status deteriorates and the probability of default rises.
SMALLER COMPANIES. Investments in smaller, newer companies may be riskier than
investments in larger, more established companies. Small companies may be more
vulnerable to economic, market and industry changes. Because economic events
have a greater impact on smaller companies, there may be greater and more
frequent changes in their stock price. This may cause unexpected and frequent
decreases in the value of the underlying Fund's investment.
FOREIGN SECURITIES. Funds investing in foreign securities are subject to special
risks in addition to those of U.S. investments. These risks include political
and economic risks, currency fluctuations, higher transaction costs, delayed
settlement, and less stringent investor protection and disclosure standards of
some foreign markets. These risks can make foreign investments more volatile and
potentially less liquid than U.S. investments.
EMERGING MARKETS. The risks associated with foreign securities are magnified in
countries in "emerging markets." These countries may have relatively unstable
governments and less established market economies than developed countries.
Emerging markets may face greater social, economic, regulatory, and political
uncertainties. These risks make emerging market securities more volatile and
less liquid than securities issued in more developed countries.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
over time, as well as compared to two broad-based securities indices.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
[BAR CHART]
34.07% 8.61% 7.55%
----------------------
2003 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q2 2003 17.60%
Worst quarter: Q1 2003 -4.61%
Year to Date Return (1/1/06 to 9/30/06): 7.45%
- --------------------------------------------------------------------------------
23
FIFTH THIRD LIFEMODEL AGGRESSIVE FUND SM
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005)
- -----------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR SINCE INCEPTION
- -----------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 8/1/02
Return Before Taxes 7.55% 13.35%
Return After Taxes on Distributions 1 6.92% 12.78%
Return After Taxes on Distributions and
Sale of Fund Shares 1 5.55% 11.36%
- -----------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
WILSHIRE 5000 INDEX* (REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 6.32% 13.43%
- -----------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CREDIT BOND INDEX(R)**
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 1.57% 4.09%
- -----------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
LIFEMODEL AGGRESSIVE TARGET NEUTRAL STYLE CLASS INDEX BLEND***
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 7.30% 14.83%
- -----------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
LIFEMODEL AGGRESSIVE TARGET NEUTRAL ASSET CLASS INDEX BLEND****
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 5.88% 12.56%
- -----------------------------------------------------------------------------------------------------------------------
1 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assume a continued
investment in the Fund and show the effect of taxes on Fund distributions.
Returns after taxes on distributions and sales of Fund shares assume all
shares were redeemed at the end of each measurement period, and show the
effect of any taxable gain (or offsetting loss) on redemption, as well as
the effects of taxes on Fund distributions. These after tax returns do not
reflect the effect of any applicable state and local taxes. Actual
after-tax returns depend on an investor's tax situation and may differ
from those shown. After tax returns are not relevant to investors holding
shares through tax-deferred programs, such as IRA or 401(k) plans.
* The Wilshire 5000 Index is an unmanaged index that measures the
performance of all U.S. headquartered equity securities with readily
available price data. Over 5000 capitalization weighted security returns
are used to adjust the Wilshire 5000.
** The Lehman Brothers Intermediate Government/Credit Bond Index(R) is an
unmanaged index comprised of U.S. Treasuries issues, debt of U.S.
Government agencies, corporate debt guaranteed by the U.S. Government and
all publicly issued, fixed rate, nonconvertible investment-grade, dollar
denominated, SEC-registered corporate debt.
*** See page 22 for a description of the LifeModel Aggressive Target Neutral
Style Class Index Blend.
**** LifeModel Aggressive Target Neutral Asset Class Index Blend is an
unmanaged custom-blended index, created by Fifth Third Asset Management,
Inc., comprised of Dow Jones Wilshire 5000 Composite Index (90%) and
Lehman Brothers Intermediate Government/Credit Bond Index (10%). The
LifeModel Aggressive Target Neutral Asset Class Index Blend is a
hypothetical blend only and does not represent underlying allocations in
the Fund.
24
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
25
ASSET
ALLOCATION
FIFTH THIRD LIFEMODEL MODERATELY AGGRESSIVE FUND SM STRATEGY
- ---------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE The Fund seeks long-term capital appreciation and growth
of income by investing primarily in a diversified group of Fifth Third Funds
which invest primarily in equity securities.
PRINCIPAL INVESTMENT STRATEGIES The Fund is a "fund of funds." The Fund's
investment strategy is to invest in a diversified group of Fifth Third Funds
Institutional Shares. Because this is a moderately aggressive allocation fund,
the majority of the Fund's assets will be invested in Fifth Third equity funds,
although a portion of its assets will be invested in Fifth Third bond and money
market funds. The Fund's investment return is diversified by its investment in
the underlying mutual funds which invest in growth and value stocks, foreign
securities, debt securities and cash or cash equivalents.
Under normal circumstances, the Fund is diversified between stocks and bonds,
with an emphasis on stocks:
o From 60% to 80% of the Fund's net assets will be invested in Fifth
Third equity funds.
o From 20% to 40% of the Fund's net assets will be invested in Fifth
Third bond funds.
o Up to 10% of the Fund's net assets will be invested in Fifth Third
money market funds.
The Fund invests its assets in the underlying mutual funds within the following
ranges:
PERCENTAGE OF
FUND NAME FUND HOLDINGS
Small Cap Growth Fund................................................. 0-40%
Mid Cap Growth Fund................................................... 0-40%
Quality Growth Fund................................................... 0-40%
Large Cap Core Fund................................................... 0-40%
Small Cap Value Fund.................................................. 0-40%
Multi Cap Value Fund.................................................. 0-40%
Disciplined Large Cap Value Fund...................................... 0-40%
International Equity Fund............................................. 0-20%
High Yield Bond Fund.................................................. 0-20%
Bond Fund............................................................. 0-30%
Intermediate Bond Fund................................................ 0-30%
Short Term Bond Fund.................................................. 0-30%
Institutional Money Market Fund....................................... 0-10%
U.S. Treasury Money Market Fund....................................... 0-10%
The Advisor actively manages the allocations in the portfolio based on current
market and economic conditions. Changes in these conditions often lead to
adjustments in the portfolio's fund weightings.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in money market
instruments. The taking of such a temporary defensive posture may adversely
impact the ability of the Fund to achieve its investment objective.
Each LifeModel Fund SM has a target neutral index blend, which is listed below.
The target neutral index blend is an index-based baseline style class allocation
determined by the Advisor to be optimal under static market and economic
conditions. THE TARGET NEUTRAL STYLE CLASS INDEX BLEND IS A HYPOTHETICAL BLEND
ONLY AND DOES NOT REPRESENT UNDERLYING ALLOCATIONS IN THE FUND. The Advisor will
periodically adjust the baseline style class allocations.
LIFEMODEL MODERATELY AGGRESSIVE
TARGET NEUTRAL STYLE CLASS INDEX BLEND
Small Cap Growth Index 1 ............................................. 4.7%
Small Cap Value Index 2 .............................................. 4.7%
International Index 3 ................................................ 6.2%
Mid Cap Growth Index 4 ............................................... 7.8%
Mid Cap Value Index 5 ................................................ 7.8%
Large Cap Growth Index 6 ............................................. 14.0%
Large Cap Value Index 7 .............................................. 14.0%
Large Cap Core Index 8 ............................................... 10.8%
High Yield Bond Index 9............................................... 5.0%
Bond Index 10 ........................................................ 5.0%
Intermediate Bond Index 11 ........................................... 10.0%
Short Term Bond Index 12.............................................. 10.0%
____________________________
1 The Small Cap Growth Index represents the Russell 2000(R) Growth Index.
The Russell 2000(R) Growth Index measures the performance of those Russell
2000 companies that have higher price-to-book values and higher forecasted
growth rates.
2 The Small Cap Value Index represents the Russell 2000(R) Value Index. The
Russell 2000(R) Value Index measures the performance of those Russell 2000
companies that have lower price-to-book ratios and lower forecasted growth
values.
3 The International Index represents the MSCI EAFE(R) Index. The MSCI
EAFE(R) Index is a widely recognized, unmanaged index composed of a sample
of companies representative of the market structure of 20 European and
Pacific Basin countries.
4 The Mid Cap Growth Index represents the Russell MidCap(R) Growth Index.
The Russell MidCap(R) Growth Index measures the performance of those
Russell MidCap companies with higher price-to-book ratios and higher
forecasted growth values.
5 The Mid Cap Value Index represents the Russell MidCap(R) Value Index. The
Russell MidCap(R) Value Index measures the performance of those Russell
MidCap companies with lower price-to-book ratios and lower forecasted
growth values.
6 The Large Cap Growth Index represents the Russell 1000(R) Growth Index.
The Russell 1000(R) Growth Index measures the performance of those Russell
1000 companies with higher price-to-book ratios and higher forecasted
growth values.
7 The Large Cap Value Index represents the Russell 1000(R) Value Index. The
Russell 1000(R) Value Index measures the performance of those Russell 1000
companies with lower price-to-book ratios and lower forecasted growth
values.
8 The Large Cap Core Index represents the Standard & Poor's 500(R) Index.
The Standard & Poor's 500(R) Index is comprised of 500 selected common
stocks, most of which are listed on the New York Stock Exchange, and is a
measure of the U.S. Stock market as a whole.
9 The High Yield Bond Index represents the Merrill Lynch High Yield Master
Index. The Merrill Lynch High Yield Master Index tracks the performance of
below investment grade, U.S. dollar-denominated corporate bonds publicly
issued in the U.S. domestic market. Qualifying bonds must have at least
one year remaining term to maturity, at least $100,000,000 par
outstanding, and a fixed coupon schedule.
10 The Bond Index represents the Lehman Brothers Aggregate Bond Index. The
Lehman Brothers Aggregate Bond Index is a market value-weighted
performance benchmark for investment-grade fixed-rate debt issues,
including government, corporate, asset-backed and mortgage-backed
securities with maturities of at least one year.
11 The Intermediate Bond Index represents the Lehman Brothers
Government/Credit Intermediate Index. The Lehman Brothers
Government/Credit Intermediate Index is composed of 5,000 publicly-issued
corporate and U.S. Government debt issues rated Baa or better, with at
least one year to maturity and at least $150 million par outstanding.
12 The Short Term Bond Index represents the Merrill Lynch 1-3 Year Government
Corporate Bond Index. The Merrill Lynch 1-3 Year Government Corporate Bond
Index tracks the trading of short-term U.S. government securities and
short-term domestic investment-grade corporate bonds with maturities
between 1 and 2.99 years.
26
FIFTH THIRD LIFEMODEL MODERATELY AGGRESSIVE FUND SM
- --------------------------------------------------------------------------------
For more information about the Fund and its investment strategies, please see
the section "Additional Information About the Funds' Investments."
PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are as
follows:
INVESTMENTS IN MUTUAL FUNDS. The Fund's investments are concentrated in
underlying Fifth Third Funds, so the Fund's investment performance is directly
related to the performance of the underlying funds. The Fund's net asset value
will change with changes in the equity and bond markets and the value of the
mutual funds in which it invests. In addition, the Fund must allocate its
investments among the underlying funds. As a result, the Fund does not have the
same flexibility to invest as a mutual fund without such constraints. In
addition, the Fund indirectly pays a portion of the expenses incurred by the
underlying Funds.
EQUITY FUNDS. Equity funds invest primarily in equity securities (such as
stocks) that are more volatile and carry more risks than some other forms of
investment. The price of equity securities may rise or fall because of economic
or political changes or changes in a company's financial condition. Equity
securities also are subject to "stock market risk," meaning that stock prices in
general may decline over short or extended periods of time. When the value of
the stocks held by an underlying Fifth Third equity fund goes down, the value of
your investment in LifeModel Moderately Aggressive Fund SM will be affected.
BOND FUNDS. Bond funds invest primarily in fixed income securities. These
securities will increase or decrease in value based on changes in interest
rates. If rates increase, the value of a fund's investments generally declines.
On the other hand, if rates fall, the value of the investments generally
increases. The value of your investment in LifeModel Moderately Aggressive Fund
SM will change as the value of investments of the underlying Fifth Third Funds
increases and decreases. In addition, the prices of long-term bonds (bonds with
a remaining maturity of at least 10 years) tend to be more volatile than the
prices of bonds with a shorter maturity. Bond funds are subject to credit risk
which is the risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade securities.
The price of a security can be adversely affected prior to actual default as its
credit status deteriorates and the probability of default rises.
SMALLER COMPANIES. Investments in smaller, newer companies may be riskier than
investments in larger, more established companies. Small companies may be more
vulnerable to economic, market and industry changes. Because economic events
have a greater impact on smaller companies, there may be greater and more
frequent changes in their stock price. This may cause unexpected and frequent
decreases in the value of the underlying Fund's investment.
FOREIGN SECURITIES. Funds investing in foreign securities are subject to special
risks in addition to those of U.S. investments. These risks include political
and economic risks, currency fluctuations, higher transaction costs, delayed
settlement, and less stringent investor protection and disclosure standards of
some foreign markets. These risks can make foreign investments more volatile and
potentially less liquid than U.S. investments.
EMERGING MARKETS. The risks associated with foreign securities are magnified in
countries in "emerging markets." These countries may have relatively unstable
governments and less established market economies than developed countries.
Emerging markets may face greater social, economic, regulatory and political
uncertainties. These risks make emerging market securities more volatile and
less liquid than securities issued in more developed countries.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
over time, as well as compared to two broad-based securities indices.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
[BAR CHART]
27.55% 7.32% 6.18%
-----------------------
2003 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q2 2003 13.93%
Worst quarter: Q1 2003 -2.71%
Year to Date Return (1/1/06 to 9/30/06): 6.85%
- --------------------------------------------------------------------------------
27
FIFTH THIRD LIFEMODEL MODERATELY AGGRESSIVE FUND SM
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005)
- -----------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR SINCE INCEPTION
- -----------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 8/1/02
Return Before Taxes 6.18% 12.50%
Return After Taxes on Distributions 1 5.29% 11.77%
Return After Taxes on Distributions and Sale of Fund Shares 1 4.52% 10.50%
- -----------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
WILSHIRE 5000 INDEX*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 6.32% 13.43%
- -----------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CREDIT BOND INDEX(R)**
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 1.57% 4.09%
- -----------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
LIFEMODEL MODERATELY AGGRESSIVE TARGET NEUTRAL STYLE CLASS INDEX BLEND***
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 6.15% 12.47%
- -----------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
LIFEMODEL MODERATELY AGGRESSIVE TARGET NEUTRAL ASSET CLASS INDEX BLEND****
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 4.96% 10.77%
- -----------------------------------------------------------------------------------------------------------------------
1 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assume a continued
investment in the Fund and show the effect of taxes on Fund distributions.
Returns after taxes on distributions and sales of Fund shares assume all
shares were redeemed at the end of each measurement period, and show the
effect of any taxable gain (or offsetting loss) on redemption, as well as
the effects of taxes on Fund distributions. These after tax returns do not
reflect the effect of any applicable state and local taxes. Actual
after-tax returns depend on an investor's tax situation and may differ
from those shown. After tax returns are not relevant to investors holding
shares through tax-deferred programs, such as IRA or 401(k) plans.
* The Wilshire 5000 Index is an unmanaged index that measures the
performance of all U.S. headquartered equity securities with readily
available price data. Over 5000 capitalization weighted security returns
are used to adjust the Wilshire 5000.
** The Lehman Brothers Intermediate Government/Credit Bond Index(R) is an
unmanaged index comprised of U.S. Treasuries issues, debt of U.S.
Government agencies, corporate debt guaranteed by the U.S. Government and
all publicly issued, fixed rate, nonconvertible investment-grade, dollar
denominated, SEC-registered corporate debt.
*** See page 26 for a description of the LifeModel Moderately Aggressive
Target Neutral Style Class Index Blend.
**** LifeModel Moderately Aggressive Target Neutral Asset Class Index Blend is
an unmanaged custom-blended index, created by Fifth Third Asset
Management, Inc., comprised of Dow Jones Wilshire 5000 Composite Index
(70%) and Lehman Brothers Intermediate Government/Credit Bond Index (30%).
The LifeModel Moderately Aggressive Target Neutral Asset Class Index Blend
is a hypothetical blend only and does not represent underlying allocations
in the Fund.
28
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
29
ASSET
ALLOCATION
FIFTH THIRD LIFEMODEL MODERATE FUND SM STRATEGY
- ---------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE The Fund seeks high total return consistent with the
preservation of capital by investing primarily in a diversified group of Fifth
Third Funds which invest primarily in equity and fixed income securities.
PRINCIPAL INVESTMENT STRATEGIES The Fund is a "fund of funds." The Fund's
investment strategy is to invest in a diversified group of Fifth Third Funds
Institutional Shares. Because this is a moderate growth allocation fund,
approximately half of the Fund's assets will be invested in Fifth Third equity
funds and approximately half will be invested in Fifth Third bond funds,
although a portion of the Fund's assets will be invested in Fifth Third money
market funds. The Fund's investment return is diversified by its investment in
the underlying mutual funds which invest in growth and value stocks, foreign
securities, debt securities and cash or cash equivalents.
Under normal circumstances, the Fund is diversified between stocks and bonds:
o From 40% to 60% of the Fund's net assets will be invested in Fifth
Third equity funds.
o From 40% to 60% of the Fund's net assets will be invested in Fifth
Third bond funds.
o Up to 15% of the Fund's net assets will be invested in Fifth Third
money market funds.
The Fund invests its assets in the underlying mutual funds within the following
ranges:
PERCENTAGE OF
FUND NAME FUND HOLDINGS
Small Cap Growth Fund................................................. 0-30%
Mid Cap Growth Fund................................................... 0-30%
Quality Growth Fund................................................... 0-30%
Large Cap Core Fund................................................... 0-30%
Small Cap Value Fund.................................................. 0-30%
Multi Cap Value Fund.................................................. 0-30%
Disciplined Large Cap Value Fund...................................... 0-30%
International Equity Fund............................................. 0-15%
High Yield Bond Fund.................................................. 0-20%
Bond Fund............................................................. 0-40%
Intermediate Bond Fund................................................ 0-40%
Short Term Bond Fund.................................................. 0-40%
Institutional Money Market Fund....................................... 0-15%
U.S. Treasury Money Market Fund....................................... 0-15%
The Advisor actively manages the allocations in the portfolio based on current
market and economic conditions. Changes in these conditions often lead to
adjustments in the portfolio's fund weightings.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in money market
instruments. The taking of such a temporary defensive posture may adversely
impact the ability of the Fund to achieve its investment objective.
Each LifeModel Fund SM has a target neutral index blend, which is listed below.
The target neutral index blend is an index-based baseline style class allocation
determined by the Advisor to be optimal under static market and economic
conditions. THE TARGET NEUTRAL STYLE CLASS INDEX BLEND IS A HYPOTHETICAL BLEND
ONLY AND DOES NOT REPRESENT UNDERLYING ALLOCATIONS IN THE FUND. The Advisor will
periodically adjust the baseline style class allocations.
LIFEMODEL MODERATE TARGET NEUTRAL STYLE CLASS INDEX BLEND
Small Cap Growth Index 1 ............................................. 3.3%
Small Cap Value Index 2 .............................................. 3.3%
International Index 3 ................................................ 4.4%
Mid Cap Growth Index 4 ............................................... 5.6%
Mid Cap Value Index 5 ................................................ 5.6%
Large Cap Growth Index 6 ............................................. 10.0%
Large Cap Value Index 7 .............................................. 10.0%
Large Cap Core Index 8................................................ 7.8%
High Yield Bond Index 9............................................... 5.0%
Bond Index 10 ........................................................ 10.0%
Intermediate Bond Index 11 ........................................... 20.0%
Short Term Bond Index 12.............................................. 15.0%
___________________________
1 The Small Cap Growth Index represents the Russell 2000(R) Growth Index.
The Russell 2000(R) Growth Index measures the performance of those Russell
2000 companies that have higher price-to-book values and higher forecasted
growth rates.
2 The Small Cap Value Index represents the Russell 2000(R) Value Index. The
Russell 2000(R) Value Index measures the performance of those Russell 2000
companies that have lower price-to-book ratios and lower forecasted growth
values.
3 The International Index represents the MSCI EAFE(R) Index. The MSCI
EAFE(R) Index is a widely recognized, unmanaged index composed of a sample
of companies representative of the market structure of 20 European and
Pacific Basin countries.
4 The Mid Cap Growth Index represents the Russell MidCap(R) Growth Index.
The Russell MidCap(R) Growth Index measures the performance of those
Russell MidCap companies with higher price-to-book ratios and higher
forecasted growth values.
5 The Mid Cap Value Index represents the Russell MidCap(R) Value Index. The
Russell MidCap(R) Value Index measures the performance of those Russell
MidCap companies with lower price-to-book ratios and lower forecasted
growth values.
6 The Large Cap Growth Index represents the Russell 1000(R) Growth Index.
The Russell 1000(R) Growth Index measures the performance of those Russell
1000 companies with higher price-to-book ratios and higher forecasted
growth values.
7 The Large Cap Value Index represents the Russell 1000(R) Value Index. The
Russell 1000(R) Value Index measures the performance of those Russell 1000
companies with lower price-to-book ratios and lower forecasted growth
values.
8 The Large Cap Core Index represents the Standard & Poor's 500(R) Index.
The Standard & Poor's 500(R) Index is comprised of 500 selected common
stocks, most of which are listed on the New York Stock Exchange, and is a
measure of the U.S. Stock market as a whole.
9 The High Yield Bond Index represents the Merrill Lynch High Yield Master
Index. The Merrill Lynch High Yield Master Index tracks the performance of
below investment grade, U.S. dollar-denominated corporate bonds publicly
issued in the U.S. domestic market. Qualifying bonds must have at least
one year remaining term to maturity, at least $100,000,000 par
outstanding, and a fixed coupon schedule.
10 The Bond Index represents the Lehman Brothers Aggregate Bond Index. The
Lehman Brothers Aggregate Bond Index is a market value-weighted
performance benchmark for investment-grade fixed-rate debt issues,
including government, corporate, asset-backed and mortgage-backed
securities with maturities of at least one year.
11 The Intermediate Bond Index represents the Lehman Brothers
Government/Credit Intermediate Index. The Lehman Brothers
Government/Credit Intermediate Index is composed of 5,000 publicly-issued
corporate and U.S. Government debt issues rated Baa or better, with at
least one year to maturity and at least $150 million par outstanding.
12 The Short Term Bond Index represents the Merrill Lynch 1-3 Year Government
Corporate Bond Index. The Merrill Lynch 1-3 Year Government Corporate Bond
Index tracks the trading of short-term U.S. government securities and
short-term domestic investment-grade corporate bonds with maturities
between 1 and 2.99 years.
30
FIFTH THIRD LIFEMODEL MODERATE FUND SM
- --------------------------------------------------------------------------------
For more information about the Fund and its investment strategies, please see
the section "Additional Information About the Funds' Investments."
PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are as
follows:
INVESTMENTS IN MUTUAL FUNDS. The Fund's investments are concentrated in
underlying Fifth Third Funds, so the Fund's investment performance is net asset
value will change with changes in the equity and bond markets and the value of
the mutual funds in which it invests. In addition, the Fund must allocate its
investments among the underlying funds. As a result, the Fund does not have the
same flexibility to invest as a mutual fund without such constraints. In
addition, the Fund indirectly pays a portion of the expenses incurred by the
underlying Funds.
EQUITY FUNDS. Equity funds invest primarily in equity securities (such as
stocks) that are more volatile and carry more risks than some other forms of
investment. The price of equity securities may rise or fall because of economic
or political changes or changes in a company's financial condition. Equity
securities also are subject to "stock market risk," meaning that stock prices in
general may decline over short or extended periods of time. When the value the
stocks held by an underlying Fifth Third equity fund goes down, the value of
your investment in LifeModel Moderate Fund SM will be affected.
BOND FUNDS. Bond funds invest primarily in fixed income securities. These
securities will increase or decrease in value based on changes in interest
rates. If rates increase, the value of a fund's investments generally declines.
On the other hand, if rates fall, the value of the investments generally
increases. The value of your investment in LifeModel Moderate Fund SM will
change as the value of investments of the underlying Fifth Third Funds increases
and decreases. In addition, the prices of long-term bonds (bonds with a
remaining maturity of at least 10 years) tend to be more volatile than the
prices of bonds with a shorter maturity. Bond funds are subject to credit risk,
which is the risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade securities.
The price of a security can be adversely affected prior to actual default as its
credit status deteriorates and the probability of default rises.
SMALLER COMPANIES. Investments in smaller, newer companies may be riskier than
investments in larger, more established companies. Small companies may be more
vulnerable to economic, market and industry changes. Because economic events
have a greater impact on smaller companies, there may be greater and more
frequent changes in their stock price. This may cause unexpected and frequent
decreases in the value of the underlying Fund's investment.
FOREIGN SECURITIES. Funds investing in foreign securities are subject to special
risks in addition to those of U.S. investments. These risks include political
and economic risks, currency fluctuations, higher transaction costs, delayed
settlement, and less stringent investor protection and disclosure standards of
some foreign markets. These risks can make foreign investments more volatile and
potentially less liquid than U.S. investments.
EMERGING MARKETS. The risks associated with foreign securities are magnified in
countries in "emerging markets." These countries may have relatively unstable
governments and less established market economies than developed countries.
Emerging markets may face greater social, economic, regulatory, and political
uncertainties. These risks make emerging market securities more volatile and
less liquid than securities issued in more developed countries.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
over time, as well as compared to two broad-based securities indices.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
[BAR CHART]
20.65% 6.29% 5.08%
-------------------------
2003 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q2 2003 10.62%
Worst quarter: Q1 2003 -1.58%
Year to Date Return (1/1/06 to 9/30/06): 5.82%
- --------------------------------------------------------------------------------
31
FIFTH THIRD LIFEMODEL MODERATE FUND SM
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005)
- -----------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR SINCE INCEPTION
- -----------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 8/1/02
Return Before Taxes 5.08% 9.29%
Return After Taxes on Distributions 1 3.99% 8.41%
Return After Taxes on Distributions and Sale of Fund Shares 1 3.76% 7.57%
- -----------------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
WILSHIRE 5000 INDEX*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 6.32% 13.43%
- -----------------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CREDIT BOND INDEX(R)**
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 1.57% 4.09%
- -----------------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
LIFEMODEL MODERATE TARGET NEUTRAL STYLE CLASS INDEX BLEND***
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 4.96% 10.15%
- -----------------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
LIFEMODEL MODERATE TARGET NEUTRAL ASSET CLASS INDEX BLEND****
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 4.03% 8.92%
- -----------------------------------------------------------------------------------------------------------------------------
1 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assume a continued
investment in the Fund and show the effect of taxes on Fund distributions.
Returns after taxes on distributions and sales of Fund shares assume all
shares were redeemed at the end of each measurement period, and show the
effect of any taxable gain (or offsetting loss) on redemption, as well as
the effects of taxes on Fund distributions. These after tax returns do not
reflect the effect of any applicable state and local taxes. Actual
after-tax returns depend on an investor's tax situation and may differ
from those shown. After tax returns are not relevant to investors holding
shares through tax-deferred programs, such as IRA or 401(k) plans.
* The Wilshire 5000 Index is an unmanaged index that measures the
performance of all U.S. headquartered equity securities with readily
available price data. Over 5000 capitalization weighted security returns
are used to adjust the Wilshire 5000.
** The Lehman Brothers Intermediate Government/Credit Bond Index(R) is an
unmanaged index comprised of U.S. Treasuries issues, debt of U.S.
Government agencies, corporate debt guaranteed by the U.S. Government and
all publicly issued, fixed rate, nonconvertible investment-grade, dollar
denominated, SEC-registered corporate debt.
*** See page 30 for a description of the LifeModel Moderate Target Neutral
Style Class Index Blend.
**** LifeModel Moderate Target Neutral Asset Class Index Blend is an unmanaged
custom-blended index, created by Fifth Third Asset Management, Inc.,
comprised of Dow Jones Wilshire 5000 Composite Index (50%) and Lehman
Brothers Intermediate Government/Credit Bond Index (50%). The LifeModel
Moderate Target Neutral Asset Class Index Blend is a hypothetical blend
only and does not represent underlying allocations in the Fund.
32
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
33
ASSET
ALLOCATION
FIFTH THIRD LIFEMODEL MODERATELY CONSERVATIVE FUND SM STRATEGY
- ---------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE The Fund seeks income and capital appreciation by
investing primarily in a diversified group of Fifth Third Funds which invest
primarily in fixed income and equity securities.
PRINCIPAL INVESTMENT STRATEGIES The Fund is a "fund of funds." The Fund's
investment strategy is to invest in a diversified group of Fifth Third Funds
Institutional Shares. Because this is a moderately conservative allocation fund,
the majority of the Fund's assets will be invested in Fifth Third bond and
equity funds, although a portion of its assets will be invested in Fifth Third
money market funds. The Fund's investment return is diversified by its
investment in the underlying mutual funds which invest in debt securities,
growth and value stocks, foreign securities and cash or cash equivalents.
Under normal circumstances, the Fund is diversified between stocks and bonds,
with an emphasis on bonds:
o From 50% to 70% of the Fund's net assets will be invested in Fifth
Third bond funds.
o From 30% to 50% of the Fund's net assets will be invested in Fifth
Third equity funds.
o Up to 20% of the Fund's net assets will be invested in Fifth Third
money market funds.
The Fund invests its assets in the underlying mutual funds within the following
ranges:
PERCENTAGE OF
FUND NAME FUND HOLDINGS
Small Cap Growth Fund............................................ 0-25%
Mid Cap Growth Fund.............................................. 0-25%
Quality Growth Fund.............................................. 0-25%
Large Cap Core Fund.............................................. 0-25%
Small Cap Value Fund............................................. 0-25%
Multi Cap Value Fund............................................. 0-25%
Disciplined Large Cap Value Fund................................. 0-25%
International Equity Fund........................................ 0-10%
High Yield Bond Fund............................................. 0-20%
Bond Fund........................................................ 0-50%
Intermediate Bond Fund........................................... 0-50%
Short Term Bond Fund............................................. 0-50%
Institutional Money Market Fund.................................. 0-20%
U.S. Treasury Money Market Fund.................................. 0-20%
The Advisor actively manages the allocations in the portfolio based on current
market and economic conditions. Changes in these conditions often lead to
adjustments in the portfolio's fund weightings.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in money market
instruments. The taking of such a temporary defensive posture may adversely
impact the ability of the Fund to achieve its investment objective.
Each LifeModel Fund SM has a target neutral index blend, which is listed below.
The target neutral index blend is an index-based baseline style class allocation
determined by the Advisor to be optimal under static market and economic
conditions. THE TARGET NEUTRAL STYLE CLASS INDEX BLEND IS A HYPOTHETICAL BLEND
ONLY AND DOES NOT REPRESENT UNDERLYING ALLOCATIONS IN THE FUND. The Advisor will
periodically adjust the baseline style class allocations.
LIFEMODEL MODERATELY CONSERVATIVE
TARGET NEUTRAL STYLE CLASS INDEX BLEND
Small Cap Growth Index 1 ........................................ 2.7%
Small Cap Value Index 2 ......................................... 2.7%
International Index 3 ........................................... 3.6%
Mid Cap Growth Index 4 .......................................... 4.4%
Mid Cap Value Index 5 ........................................... 4.4%
Large Cap Growth Index 6 ........................................ 8.0%
Large Cap Value Index 7 ......................................... 8.0%
Large Cap Core Index 8........................................... 6.2%
High Yield Bond Index 9.......................................... 5.0%
Bond Index 10 ................................................... 10.0%
Intermediate Bond Index 11 ...................................... 30.0%
Short Term Bond Index 12......................................... 15.0%
_____________________
1 The Small Cap Growth Index represents the Russell 2000(R) Growth Index.
The Russell 2000(R) Growth Index measures the performance of those
Russell 2000 companies that have higher price-to-book values and higher
forecasted growth rates.
2 The Small Cap Value Index represents the Russell 2000(R) Value Index. The
Russell 2000(R) Value Index measures the performance of those Russell
2000 companies that have lower price-to-book ratios and lower forecasted
growth values.
3 The International Index represents the MSCI EAFE(R) Index. The MSCI EAFE
(R) Index is a widely recognized, unmanaged index composed of a sample of
companies representative of the market structure of 20 European and
Pacific Basin countries.
4 The Mid Cap Growth Index represents the Russell MidCap(R) Growth Index.
The Russell MidCap(R) Growth Index measures the performance of those
Russell MidCap companies with higher price-to-book ratios and higher
forecasted growth values.
5 The Mid Cap Value Index represents the Russell MidCap(R) Value Index. The
Russell MidCap(R) Value Index measures the performance of those Russell
MidCap companies with lower price-to-book ratios and lower forecasted
growth values.
6 The Large Cap Growth Index represents the Russell 1000(R) Growth Index.
The Russell 1000(R) Growth Index measures the performance of those
Russell 1000 companies with higher price-to-book ratios and higher
forecasted growth values.
7 The Large Cap Value Index represents the Russell 1000(R) Value Index. The
Russell 1000(R) Value Index measures the performance of those Russell
1000 companies with lower price-to-book ratios and lower forecasted growth
values.
8 The Large Cap Core Index represents the Standard & Poor's 500(R) Index.
The Standard & Poor's 500(R) Index is comprised of 500 selected common
stocks, most of which are listed on the New York Stock Exchange, and is a
measure of the U.S. Stock market as a whole.
9 The High Yield Bond Index represents the Merrill Lynch High Yield Master
Index. The Merrill Lynch High Yield Master Index tracks the performance of
below investment grade, U.S. dollar-denominated corporate bonds publicly
issued in the U.S. domestic market. Qualifying bonds must have at least
one year remaining term to maturity, at least $100,000,000 par
outstanding, and a fixed coupon schedule.
10 The Bond Index represents the Lehman Brothers Aggregate Bond Index. The
Lehman Brothers Aggregate Bond Index is a market value-weighted
performance benchmark for investment-grade fixed-rate debt issues,
including government, corporate, asset-backed and mortgage-backed
securities with maturities of at least one year.
11 The Intermediate Bond Index represents the Lehman Brothers
Government/Credit Intermediate Index. The Lehman Brothers
Government/Credit Intermediate Index is composed of 5,000 publicly-issued
corporate and U.S. Government debt issues rated Baa or better, with at
least one year to maturity and at least $150 million par outstanding.
12 The Short Term Bond Index represents the Merrill Lynch 1-3 Year Government
Corporate Bond Index. The Merrill Lynch 1-3 Year Government Corporate Bond
Index tracks the trading of short-term U.S. government securities and
short-term domestic investment-grade corporate bonds with maturities
between 1 and 2.99 years.
34
FIFTH THIRD LIFEMODEL MODERATELY CONSERVATIVE FUND SM
- --------------------------------------------------------------------------------
For more information about the Fund and its investment strategies, please see
the section "Additional Information About the Funds' Investments."
PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are as
follows:
INVESTMENTS IN MUTUAL FUNDS. The Fund's investments are concentrated in
underlying Fifth Third Funds, so the Fund's investment performance is directly
related to the performance of the underlying funds. The Fund's net asset value
will change with changes in the equity and bond markets and the value of the
mutual funds in which it invests. In addition, the Fund must allocate its
investments among the underlying funds. As a result, the Fund does not have the
same flexibility to invest as a mutual fund without such constraints. In
addition, the Fund indirectly pays a portion of the expenses incurred by the
underlying Funds.
EQUITY FUNDS. Equity funds invest primarily in equity securities (such as
stocks) that are more volatile and carry more risks than some other forms of
investment. The price of equity securities may rise or fall because of economic
or political changes or changes in a company's financial condition. Equity
securities also are subject to "stock market risk," meaning that stock prices in
general may decline over short or extended periods of time. When the value of
the stocks held by an underlying Fifth Third equity fund goes down, the value of
your investment in LifeModel Moderately Conservative Fund SM will be affected.
BOND FUNDS. Bond funds invest primarily in fixed income securities. These
securities will increase or decrease in value based on changes in interest
rates. If rates increase, the value of a fund's investments generally declines.
On the other hand, if rates fall, the value of the investments generally
increases. The value of your investment in LifeModel Moderately Conservative
Fund SM will change as the value of investments of the underlying Fifth Third
Funds increases and decreases. In addition, the prices of long-term bonds (bonds
with a remaining maturity of at least 10 years) tend to be more volatile than
the prices of bonds with a shorter maturity. Bond funds are subject to credit
risk, which is the risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade securities.
The price of a security can be adversely affected prior to actual default as its
credit status deteriorates and the probability of default rises.
SMALLER COMPANIES. Investments in smaller, newer companies may be riskier than
investments in larger, more established companies. Small companies may be more
vulnerable to economic, market and industry changes. Because economic events
have a greater impact on smaller companies, there may be greater and more
frequent changes in their stock price. This may cause unexpected and frequent
decreases in the value of the underlying Fund's investment.
FOREIGN SECURITIES. Funds investing in foreign securities are subject to special
risks in addition to those of U.S. investments. These risks include political
and economic risks, currency fluctuations, higher transaction costs, delayed
settlement, and less stringent investor protection and disclosure standards of
some foreign markets. These risks can make foreign investments more volatile and
potentially less liquid than U.S. investments.
EMERGING MARKETS. The risks associated with foreign securities are magnified in
countries in "emerging markets." These countries may have relatively unstable
governments and less established market economies than developed countries.
Emerging markets may face greater social, economic, regulatory, and political
uncertainties. These risks make emerging market securities more volatile and
less liquid than securities issued in more developed countries.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
over time, as well as compared to two broad-based securities indices.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
[BAR CHART]
17.23% 5.29% 4.32%
----------------------
2003 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q2 2003 8.96%
Worst quarter: Q1 2003 -1.15%
Year to Date Return (1/1/06 to 9/30/06): 5.34%
- --------------------------------------------------------------------------------
35
FIFTH THIRD LIFEMODEL MODERATELY CONSERVATIVE FUND SM
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31, 2005)
- -----------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR SINCE INCEPTION
- -----------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 8/1/02
Return Before Taxes 4.32% 7.55%
Return After Taxes on Distributions 1 3.06% 6.40%
Return After Taxes on Distributions and Sale of Fund Shares 1 3.35% 5.90%
- -----------------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
WILSHIRE 5000 INDEX*(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 6.32% 13.43%
- -----------------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CREDIT BOND INDEX(R)**
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 1.57% 4.09%
- -----------------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
LIFEMODEL MODERATELY CONSERVATIVE TARGET NEUTRAL STYLE CLASS INDEX BLEND***
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 4.33% 9.02%
- -----------------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
LIFEMODEL MODERATELY CONSERVATIVE TARGET NEUTRAL ASSET CLASS INDEX BLEND****
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 3.55% 7.98%
- -----------------------------------------------------------------------------------------------------------------------------
1 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assume a continued
investment in the Fund and show the effect of taxes on Fund distributions.
Returns after taxes on distributions and sales of Fund shares assume all
shares were redeemed at the end of each measurement period, and show the
effect of any taxable gain (or offsetting loss) on redemption, as well as
the effects of taxes on Fund distributions. These after tax returns do not
reflect the effect of any applicable state and local taxes. Actual
after-tax returns depend on an investor's tax situation and may differ
from those shown. After tax returns are not relevant to investors holding
shares through tax-deferred programs, such as IRA or 401(k) plans.
* The Wilshire 5000 Index is an unmanaged index that measures the
performance of all U.S. headquartered equity securities with readily
available price data. Over 5000 capitalization weighted security returns
are used to adjust the Wilshire 5000.
** The Lehman Brothers Intermediate Government/Credit Bond Index(R) is an
unmanaged index comprised of U.S. Treasuries issues, debt of U.S.
Government agencies, corporate debt guaranteed by the U.S. Government and
all publicly issued, fixed rate, nonconvertible investment-grade, dollar
denominated, SEC-registered corporate debt.
*** See page 34 for a description of the LifeModel Moderately Conservative
Target Neutral Style Class Index Blend.
**** LifeModel Moderately Conservative Target Neutral Asset Class Index Blend
is an unmanaged custom-blended index, created by Fifth Third Asset
Management, Inc., comprised of Dow Jones Wilshire 5000 Composite Index
(40%) and Lehman Brothers Intermediate Government/Credit Bond Index (60%).
The LifeModel Moderately Conservative Target Neutral Asset Class Index
Blend is a hypothetical blend only and does not represent underlying
allocations in the Fund.
36
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
37
ASSET
ALLOCATION
FIFTH THIRD LIFEMODEL CONSERVATIVE FUND SM STRATEGY
- ---------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE The Fund seeks income and capital appreciation by
investing primarily in a diversified group of Fifth Third Funds which invest
primarily in fixed income and equity securities.
PRINCIPAL INVESTMENT STRATEGIES The Fund is a "fund of funds." The Fund's
investment strategy is to invest in a diversified group of Fifth Third Funds
Institutional Shares. Because this is a conservative allocation fund, the
majority of the Fund's assets will be invested in Fifth Third bond funds,
although a portion of its assets will be invested in Fifth Third equity and
money market funds. The Fund's investment return is diversified by its
investment in the underlying mutual funds which invest in debt securities,
growth and value stocks, foreign securities, and cash or cash equivalents.
Under normal circumstances, the Fund is diversified between stocks and bonds,
with a heavy emphasis on bonds:
o From 70% to 90% of the Fund's net assets will be invested in Fifth
Third bond funds.
o From 10% to 30% of the Fund's net assets will be invested in Fifth
Third equity funds.
o Up to 20% of the Fund's net assets will be invested in Fifth Third
money market funds.
The Fund invests its asset in the underlying mutual funds within the following
ranges:
PERCENTAGE OF
FUND NAME FUND HOLDINGS
Small Cap Growth Fund............................................... 0-15%
Mid Cap Growth Fund................................................. 0-15%
Large Cap Core Fund................................................. 0-15%
Quality Growth Fund................................................. 0-15%
Small Cap Value Fund................................................ 0-15%
Multi Cap Value Fund................................................ 0-15%
Disciplined Large Cap Value Fund.................................... 0-15%
International Equity Fund........................................... 0-5%
High Yield Bond Fund................................................ 0-20%
Bond Fund........................................................... 0-60%
Intermediate Bond Fund.............................................. 0-60%
Short Term Bond Fund................................................ 0-60%
Institutional Money Market Fund..................................... 0-20%
U.S. Treasury Money Market Fund..................................... 0-20%
The Advisor actively manages the allocations in the portfolio based on current
market and economic conditions. Changes in these conditions often lead to
adjustments in the portfolio's fund weightings.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in money market
instruments. The taking of such a temporary defensive posture may adversely
impact the ability of the Fund to achieve its investment objective.
Each LifeModel Fund SM has a target neutral index blend, which
is listed below. The target neutral index blend is an index-based baseline style
class allocation determined by the Advisor to be optimal under static market and
economic conditions. THE TARGET NEUTRAL STYLE CLASS INDEX BLEND IS A
HYPOTHETICAL BLEND ONLY AND DOES NOT REPRESENT UNDERLYING ALLOCATIONS IN THE
FUND. The Advisor will periodically adjust the baseline style class allocations.
LIFEMODEL CONSERVATIVE TARGET NEUTRAL STYLE CLASS INDEX BLEND
Small Cap Growth Index 1 ........................................... 1.3%
Small Cap Value Index 2 ............................................ 1.3%
International Index 3 .............................................. 1.9%
Mid Cap Growth Index 4 ............................................. 2.2%
Mid Cap Value Index 5 .............................................. 2.2%
Large Cap Growth Index 6 ........................................... 4.0%
Large Cap Value Index 7 ............................................ 4.0%
Large Cap Core Index 8.............................................. 3.1%
High Yield Bond Index 9............................................. 5.0%
Bond Index 10 ...................................................... 15.0%
Intermediate Bond Index 11 ......................................... 40.0%
Short Term Bond Index 12 ........................................... 20.0%
For more information about the Fund and its investment strategies, please see
the section "Additional Information About the Funds' Investments."
____________________
1 The Small Cap Growth Index represents the Russell 2000(R) Growth Index.
The Russell 2000(R) Growth Index measures the performance of those
Russell 2000 companies that have higher price-to-book values and higher
forecasted growth rates.
2 The Small Cap Value Index represents the Russell 2000(R) Value Index. The
Russell 2000(R) Value Index measures the performance of those Russell
2000 companies that have lower price-to-book ratios and lower forecasted
growth values.
3 The International Index represents the MSCI EAFE(R) Index. The MSCI EAFE
(R) Index is a widely recognized, unmanaged index composed of a sample of
companies representative of the market structure of 20 European and
Pacific Basin countries.
4 The Mid Cap Growth Index represents the Russell MidCap(R) Growth Index.
The Russell MidCap(R) Growth Index measures the performance of those
Russell MidCap companies with higher price-to-book ratios and higher
forecasted growth values.
5 The Mid Cap Value Index represents the Russell MidCap(R) Value Index. The
Russell MidCap(R) Value Index measures the performance of those Russell
MidCap companies with lower price-to-book ratios and lower forecasted
growth values.
6 The Large Cap Growth Index represents the Russell 1000(R) Growth Index.
The Russell 1000(R) Growth Index measures the performance of those
Russell 1000 companies with higher price-to-book ratios and higher
forecasted growth values.
7 The Large Cap Value Index represents the Russell 1000(R) Value Index. The
Russell 1000(R) Value Index measures the performance of those Russell
1000 companies with lower price-to-book ratios and lower forecasted growth
values.
8 The Large Cap Core Index represents the Standard & Poor's 500(R) Index.
The Standard & Poor's 500(R) Index is comprised of 500 selected common
stocks, most of which are listed on the New York Stock Exchange, and is a
measure of the U.S. Stock market as a whole.
9 The High Yield Bond Index represents the Merrill Lynch High Yield Master
Index. The Merrill Lynch High Yield Master Index tracks the performance of
below investment grade, U.S. dollar-denominated corporate bonds publicly
issued in the U.S. domestic market. Qualifying bonds must have at least
one year remaining term to maturity, at least $100,000,000 par
outstanding, and a fixed coupon schedule.
10 The Bond Index represents the Lehman Brothers Aggregate Bond Index. The
Lehman Brothers Aggregate Bond Index is a market value-weighted
performance benchmark for investment-grade fixed-rate debt issues,
including government, corporate, asset-backed and mortgage-backed
securities with maturities of at least one year.
11 The Intermediate Bond Index represents the Lehman Brothers
Government/Credit Intermediate Index. The Lehman Brothers
Government/Credit Intermediate Index is composed of 5,000 publicly-issued
corporate and U.S. Government debt issues rated Baa or better, with at
least one year to maturity and at least $150 million par outstanding.
12 The Short Term Bond Index represents the Merrill Lynch 1-3 Year Government
Corporate Bond Index. The Merrill Lynch 1-3 Year Government Corporate Bond
Index tracks the trading of short-term U.S. government securities and
short-term domestic investment-grade corporate bonds with maturities
between 1 and 2.99 years.
38
FIFTH THIRD LIFEMODEL CONSERVATIVE FUND SM
- --------------------------------------------------------------------------------
PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are as
follows:
INVESTMENTS IN MUTUAL FUNDS. The Fund's investments are concentrated in
underlying Fifth Third Funds, so the Fund's investment performance is directly
related to the performance of the underlying funds. The Fund's net asset value
will change with changes in the equity and bond markets and the value of the
mutual funds in which it invests. In addition, the Fund must allocate its
investments among the underlying funds. As a result, the Fund does not have the
same flexibility to invest as a mutual fund without such constraints. In
addition, the Fund indirectly pays a portion of the expenses incurred by the
underlying Funds.
EQUITY FUNDS. Equity funds invest primarily in equity securities (such as
stocks) that are more volatile and carry more risks than some other forms of
investment. The price of equity securities may rise or fall because of economic
or political changes or changes in a company's financial condition. Equity
securities also are subject to "stock market risks," meaning that stock prices
in general may decline over short or extended periods of time. When the value of
the stocks held by an underlying Fifth Third equity fund goes down, the value of
your investment in LifeModel Conservative Fund SM will be affected.
BOND FUNDS. Bond funds invest primarily in fixed income securities. These
securities will increase or decrease in value based on changes in interest
rates. If rates increase, the value of a fund's investments generally declines.
On the other hand, if rates fall, the value of the investments generally
increases. The value of your investment in LifeModel Conservative Fund SM will
change as the value of investments of the underlying Fifth Third Funds increases
and decreases. In addition, the prices of long-term bonds (bonds with a
remaining maturity of at least 10 years) tend to be more volatile than the
prices of bonds with a shorter maturity. Bond funds are subject to credit risk
which is the risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade securities.
The price of a security can be adversely affected prior to actual default as its
credit status deteriorates and the probability of default rises.
SMALLER COMPANIES. Investments in smaller, newer companies may be riskier than
investments in larger, more established companies. Small companies may be more
vulnerable to economic, market and industry changes. Because economic events
have a greater impact on smaller companies, there may be greater and more
frequent changes in their stock price. This may cause unexpected and frequent
decreases in the value of the underlying Fund's investment.
FOREIGN SECURITIES. Funds investing in foreign securities are subject to special
risks in addition to those of U.S. investments. These risks include political
and economic risks, currency fluctuations, higher transaction costs, delayed
settlement, and less stringent investor protection and disclosure standards of
some foreign markets. These risks can make foreign investments more volatile and
potentially less liquid than U.S. investments.
EMERGING MARKETS. The risks associated with foreign securities are magnified in
countries in "emerging markets." These countries may have relatively unstable
governments and less established market economies than developed countries.
Emerging markets may face greater social, economic, regulatory, and political
uncertainties. These risks make emerging market securities more volatile and
less liquid than securities issued in more developed countries.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
over time, as well as compared to two broad-based securities indices. The
returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
[BAR CHART]
11.24% 3.83% 3.17%
------------------------
2003 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q2 2003 5.81%
Worst quarter: Q2 2004 -1.37%
Year to Date Return (1/1/06 to 9/30/06): 4.46%
- --------------------------------------------------------------------------------
39
FIFTH THIRD LIFEMODEL CONSERVATIVE FUND SM
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005)
- ----------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR SINCE INCEPTION
- ----------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 8/1/02
Return Before Taxes 3.17% 5.98%
Return After Taxes on Distributions 1 1.84% 4.69%
Return After Taxes on Distributions and
Sale of Fund Shares 1 2.26% 4.41%
- ----------------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
WILSHIRE 5000 INDEX* 6.32% 13.43%
- ----------------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CREDIT BOND INDEX(R)**
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 1.57% 4.09%
- ----------------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
LIFEMODEL CONSERVATIVE TARGET NEUTRAL STYLE CLASS INDEX BLEND***
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 3.11% 6.65%
- ----------------------------------------------------------------------------------------------------------------------------
(SINCE 8/1/02)
LIFEMODEL CONSERVATIVE TARGET NEUTRAL ASSET CLASS INDEX BLEND****
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 2.57% 6.06%
- ----------------------------------------------------------------------------------------------------------------------------
1 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assume a continued
investment in the Fund and show the effect of taxes on Fund distributions.
Returns after taxes on distributions and sales of Fund shares assume all
shares were redeemed at the end of each measurement period, and show the
effect of any taxable gain (or offsetting loss) on redemption, as well as
the effects of taxes on Fund distributions. These after tax returns do not
reflect the effect of any applicable state and local taxes. Actual
after-tax returns depend on an investor's tax situation and may differ
from those shown. After tax returns are not relevant to investors holding
shares through tax-deferred programs, such as IRA or 401(k) plans.
* The Wilshire 5000 Index is an unmanaged index that measures the
performance of all U.S. headquartered equity securities with readily
available price data. Over 5000 capitalization weighted security returns
are used to adjust the Wilshire 5000 Index.
** The Lehman Brothers Intermediate Government/Credit Bond Index(R) is an
unmanaged index comprised of U.S. Treasuries issues, debt of U.S.
Government agencies, corporate debt guaranteed by the U.S. Government and
all publicly issued, fixed rate, nonconvertible investment-grade, dollar
denominated, SEC-registered corporate debt.
*** See page 38 for a description of the LifeModel Conservative Target Neutral
Style Class Index Blend.
**** LifeModel Conservative Target Neutral Asset Class Index Blend is an
unmanaged custom-blended index, created by Fifth Third Asset Management,
Inc., comprised of Dow Jones Wilshire 5000 Composite Index (20%) and
Lehman Brothers Intermediate Government/Credit Bond Index (80%). The
LifeModel Conservative Target Neutral Asset Class Index Blend is a
hypothetical blend only and does not represent underlying allocations in
the Fund.
40
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
41
STRATEGIC
INCOME
FIFTH THIRD STRATEGIC INCOME FUND STRATEGY
- ----------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE High level of income consistent with reasonable risk.
Achieving capital appreciation is a secondary objective.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in income-producing securities such as debt securities,
common stocks, preferred stocks and common and preferred shares of closed-end
investment companies (also known as "closed-end funds") having portfolios
consisting primarily of income-producing securities. Certain of the debt
securities and preferred stocks in which the Fund invests may be convertible
into common shares. The Fund's investment in stocks may include real estate
investment trusts ("REITs"), which are pooled investment vehicles investing
primarily in income producing real estate or real estate loans or interest.
The Fund will respond to and attempt to anticipate economic and market trends.
The Advisor seeks to provide value by investing in asset classes that are most
attractive based on their risks and in companies with cheap (e.g., attractive
price to cash flow ratio) cash flows in each asset class. The Advisor may invest
in debt securities of any maturity, and will increase its investment in
short-term debt securities during periods when it believes interest rates will
rise and will increase its investment in long-term debt securities during
periods when it believes interest rates will decline. The Advisor seeks to
maximize risk-adjusted returns through fundamental research, quantitative
modeling, and capital structure analysis. In performing this research and
analysis, the Advisor reviews companies based on such factors as sales, assets,
earnings, markets, and management, and the Advisor searches for companies with
favorable debt-to-equity ratios. The Fund seeks returns by investing across a
larger universe than traditional investment grade fixed income funds, and the
Advisor believes that a low correlation between various asset classes leads to
stability of expected returns.
In selecting corporate debt securities for the Fund, the Advisor intends to
invest principally in securities rated BBB or better by Standard & Poor's, but
may invest in securities rated as low as BB, B, CCC or CC or unrated securities
when these investments are believed by the Advisor to be sound and consistent
with an objective of reasonable risk. The Fund will not invest more than 20% of
its portfolio in (i) securities rated BB or lower by Standard & Poor's and/or
(ii) unrated securities which, in the opinion of the Advisor, are of quality
comparable to those rated BB or lower. Securities rated lower than BBB by
Standard & Poor's, sometimes referred to as "junk bonds," are lower-rated
securities and have speculative characteristics.
Investments may be made in any diversified closed-end income fund as long as the
Fund's total portfolio maintains no more than 20% of its assets in securities
rated BB or lower. The Fund may consider closed-end funds as a "pass through"
security, and will look at the composition of the underlying portfolio.
Therefore, the Fund may invest in any single closed-end fund even if the
underlying portfolio contains more than 20% of its assets invested in securities
rated BB or lower. Such closed-end funds may invest in debt securities of United
States or foreign issuers.
The Advisor will look to manage risk through several strategies, which will
typically include: maintaining certain minimum and maximum sector and position
weightings; limiting investment in non-investment grade securities to a maximum
of 20% of the portfolio; and monitoring risk statistics relative to the Lehman
Aggregate Index.
The Advisor may consider selling one of the Fund's holdings when: deterioration
in a company's strategic position, growth prospects, or financial reporting
issues is detected, an individual security comprises too large a position in the
portfolio, a company with declining financial fundamentals has risk volatility
of more than one standard deviation in the Adviser's proprietary credit risk
model a company's valuations are no longer attractive, or a better opportunity
arises.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely impact the ability of the Fund to
achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
FIXED INCOME SECURITIES RISK. The risks of investing in debt securities include
INTEREST RATE RISK, which is the risk that prices of debt securities rise and
fall in response to interest rate changes for similar securities. Generally,
when interest rates rise, prices of debt securities fall. The net asset value of
the Fund may also decrease during periods of rising interest rates. In addition,
debt securities are subject to CREDIT RISK, which is the risk that an issuer of
debt securities may default (fail to repay interest and principal when due). If
an issuer defaults or the risk of such default is perceived to have increased,
the Fund may lose all or part of its investment. The net asset value of the Fund
may fall during periods of economic downturn when such defaults or risk of
defaults increase. Securities rated below investment grade, also known as junk
bonds, generally entail greater risks than investment grade securities. For
example, their prices are more volatile, their values are more negatively
impacted by economic downturns, and their trading market may be more limited.
CLOSED-END INVESTMENT COMPANY RISK. Investments in closed-end funds present
additional risks to investors. Investment by the Fund in closed-end funds
results in a duplication of advisory fees and other expenses, thereby resulting
in a lower return for the Fund than would be the case in the absence of such
duplication. Such investments may be less liquid than other investments and
often trade at a discount. In addition, since these closed-end funds invest in
debt securities, they are subject to the same risks described above.
CURRENCY RISK. Certain of the closed-end funds in which the Fund invests may
invest part or all of their assets in debt securities of foreign issuers.
Because foreign securities ordinarily are denominated in currencies other than
the U.S. dollar, the Fund may be subject to currency risk. Changes in foreign
currency exchange rates may affect the closed-end fund's net asset value, the
value of dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and capital gains, if any, to be
distributed to shareholders by the closed-end fund. If the value of a foreign
currency declines against the U.S. dollar, the value of the closed-end fund's
assets denominated in that currency will decrease. Although these closed-end
funds may enter into "hedging" transactions intended to minimize the risk of
loss due to a decline in the value of the subject foreign currency, in some
cases all or a portion of the closed-end fund's portfolio remains subject to
this risk of loss.
FOREIGN INVESTMENT RISK. There are additional risks relating to political,
economic, or regulatory conditions in foreign countries; withholding or other
taxes; trading, settlement, custodial, and other operational risks; and the
potentially less stringent investor protection and disclosure standards of
foreign markets. All of these factors can make foreign investments of such
closed-end funds more volatile and potentially less liquid than U.S.
investments.
42
FIFTH THIRD STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
REIT RISK. The Fund's investments in REITs are subject to the same risks as
direct investments in real estate. Real estate values rise and fall in response
to many factors, including local, regional and national economic conditions, the
demand for rental property, and interest rates. When economic growth is slowing,
demand for property decreases and prices may fall. Rising interest rates, which
drive up mortgage and financing costs, can inhibit construction, purchases, and
sales of property. Property values could decrease because of overbuilding,
extended vacancies, increase in property taxes and operating expenses, zoning
laws, environmental regulations, clean-up of and liability for environmental
hazards, uninsured casualty or condemnation losses, or a general decline in
neighborhood values. The Fund's investment may decline in response to declines
in property values or other adverse changes to the real estate market. In
addition, REITs may have limited financial resources, may trade less frequently
and in limited volume and may be more volatile than other securities.
PRE-PAYMENT/CALL RISK. The prices of mortgage-backed securities also are
affected by changes in interest rates. Although mortgage-backed securities tend
to pay higher interest rates, they also carry additional risk. For instance,
their prices and yields typically assume that the securities will be redeemed at
a given time before maturity. When interest rates fall substantially, they
usually are redeemed early because the underlying mortgages often are prepaid.
The Fund would then have to reinvest the proceeds it receives because of those
redemptions at a lower rate. The price or yield of mortgage-backed securities
also may fall if they are redeemed after that date.
EQUITY SECURITIES RISK. The risks of investing in equity securities include the
risk of sudden and unpredictable drops in value or periods of lackluster
performance.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to a broad-based securities
index.
The returns assume that Fund distributions have been reinvested. Past
performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1,2
- --------------------------------------------------------------------------------
[BAR CHART]
9.22% 11.48% 3.55% -5.60% 16.59% 13.12% 7.87% 10.33% 6.92% 1.93%
----------------------------------------------------------------------------
1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q2 2000 5.98%
Worst quarter: Q4 1999 -4.73%
Year to Date Return (1/1/06 to 9/30/06): 5.31%
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005) 1
- -----------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
- -----------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 2 3/10/85
Return Before Taxes 1.93% 7.97% 7.35%
Return After Taxes on Distributions 3 0.61% 6.05% 4.83%
Return After Taxes on Distributions and Sale of Fund Shares 3 1.58% 5.72% 4.73%
- -----------------------------------------------------------------------------------------------------------------------------------
LEHMAN AGGREGATE (U.S.) INDEX*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 2.43% 5.87% 6.16%
- -----------------------------------------------------------------------------------------------------------------------------------
LEHMAN BROTHERS INTERMEDIATE CREDIT BOND INDEX(R)**
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 1.42% 6.41% 6.20%
- -----------------------------------------------------------------------------------------------------------------------------------
1 On October 22, 2001, the Fifth Third/Maxus Income Fund, a registered
open-end investment company managed by Fifth Third Asset Management, Inc.,
was merged into Fifth Third Strategic Income Fund.
2 For the period prior to October 22, 2001, the quoted performance of
Institutional shares reflects the performance of the Institutional shares
of the Fifth Third/Maxus Income Fund. For the period prior to September 1,
1998, the quoted performance reflects the performance of the Investor
shares of the Fifth Third/Maxus Income Fund.
3 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* Effective September 29, 2006 the Fund changed its primary benchmark from
the Lehman Brothers Intermediate Credit Bond Index to the Lehman Aggregate
(U.S.) Index, retaining the Lehman Brothers Intermediate Credit Bond Index
as its secondary benchmark, to better correspond to the Fund's investment
strategy. The Lehman U.S. Aggregate Index covers the U.S.
dollar-denominated, investment-grade, fixed rate, taxable bond market of
SEC-registered securities. The index includes bonds from the Treasury,
government-related, corporate, mortgage-backed securities, asset-backed
securities, and CMBS sectors.
** The Lehman Brothers Intermediate Credit Bond Index(R) is comprised of
publicly issued, fixed rate, non-convertible investment grade
dollar-denominated, SEC-registered corporate debt. Included are debts
issued or guaranteed by foreign sovereign governments, municipalities,
governmental agencies or international agencies.
43
SPECIALTY
FIFTH THIRD DIVIDEND GROWTH FUND STRATEGY
- ----------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in equity securities. The Fund will normally concentrate
its investments in a group of 35 to 65 stocks. The Fund is designed to provide
long-term capital appreciation by investing primarily in high-quality companies
with histories of rising earnings and dividends. The portfolio managers believe
that high-quality companies have the potential to provide an increasing stream
of income to shareholders and protect investment capital in down markets. In
selecting suitable investments, the Advisor will attempt to find companies with
a track record of consistent growth in earnings and dividends. The Advisor will
focus on several key areas in implementing the Fund's investment strategy.
The Advisor will employ quantitative screens to identify high-quality companies
that meet market capitalization targets. The Advisor will evaluate widely-traded
companies with market capitalizations greater than $2 billion-including large
and some mid cap companies. Within this universe of companies, the Advisor will
seek companies that are experiencing consistent earnings and dividend growth by
searching for companies that have reported increased earnings and/or dividends
over the last several reporting periods.
The Advisor will also rank each company based on the quality of earnings and
dividends and the prospect for a continuation of earnings and dividends growth.
The Advisor will employ screening tools that capture quantitative factors such
as earnings and dividend quality rankings, earnings stability, and earnings and
dividend growth - screening that will aid in the identification of attractive
new ideas warranting further consideration.
The Advisor will also conduct an analysis of company fundamentals and
historical valuations. The Advisor will utilize a stock selection approach that
is fundamentally based and focuses on issues related to the quality of
management, product development, reputation, financial progress, business
models, and enterprise risks.
The Fund's disciplined approach will continue once a stock is purchased and the
Advisor will closely monitor risk factors of the portfolio and seek to control
risk by adjusting sector weights and diversifying the portfolio as it deems
appropriate.
The Advisor will also employ a consistent sell strategy. If a stock that was
chosen for the portfolio no longer meets the pre-established parameters, or if
another company is identified to have greater fundamental potential, the stock
may be sold.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
NON-DIVERSIFICATION RISK. The Fund is a non-diversified fund with regard to
issuers of securities. As a result, it does not have to invest in as many
issuers as a diversified fund and, thus, could be significantly affected by the
performance of one or a small number of issuers. Because the Fund is
non-diversified, a single security's increase or decrease in value may have a
greater impact on the Fund's net asset value and total return and the Fund also
could produce lower yields and be subject to higher volatility during some
periods.
EQUITY SECURITIES RISK. Equity securities may be subject to sudden and
unpredictable drops in value or periods of lackluster performance.
GROWTH SECURITIES RISK. Growth stocks are those that have a history of above
average growth or that are expected to enter periods of above average growth.
Growth stocks are sensitive to market movements. The prices of growth stocks
tend to reflect future expectations, and when those expectations are not met,
share prices generally fall.
LARGER COMPANY RISK. Larger, more established companies tend to operate in
mature markets, which often are very competitive. Larger companies also do not
tend to respond quickly to competitive challenges, especially to changes caused
by technology or consumer preferences.
MEDIUM-SIZED COMPANY RISK. Stocks of medium-sized companies can be more
sensitive to long market declines than larger companies, in part because they
generally do not have the financial resources that larger companies have.
DIVIDEND SECURITIES RISK. Stocks that pay regular dividends provide investors
some return of their investment, to an extent, supporting the stock's price,
even during periods when the prices of equity securities generally are falling.
However, dividend-paying stocks, especially those that pay significant
dividends, also tend to appreciate less quickly than stocks of companies in
developing industries, which tend to reinvest most profits into research,
development, plant and equipment to accommodate expansion.
TURNOVER RISK. 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.
44
FIFTH THIRD DIVIDEND GROWTH FUND
- --------------------------------------------------------------------------------
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to a broad-based securities
index.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1,2
- --------------------------------------------------------------------------------
[BAR CHART]
22.44% 35.43% 32.94% 11.64% -19.76% -21.81% -29.69% 20.37% 4.52% 4.46%
- --------------------------------------------------------------------------------
1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q4 1998 24.93%
Worst quarter: Q1 2001 -18.65%
Year to Date Return (1/1/06 to 9/30/06): 7.40%
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005) 1
- ------------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 2 3/4/85
Return Before Taxes 4.46% -6.29% 3.62%
Return After Taxes on Distributions 3 4.46% -6.29% 2.26%
Return After Taxes on Distributions and Sale of Fund Shares 3 2.90% -5.24% 2.37%
- ------------------------------------------------------------------------------------------------------------------------------------
S&P 500 INDEX(R)* (REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 4.91% 0.54% 9.07%
- ------------------------------------------------------------------------------------------------------------------------------------
RUSSELL 1000(R) INDEX** (REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 6.27% 1.07% 9.29%
- ------------------------------------------------------------------------------------------------------------------------------------
RUSSELL 1000 GROWTH INDEX*** (REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 5.26% -3.58% 6.73%
- ------------------------------------------------------------------------------------------------------------------------------------
1 Effective August 1, 2005, the investment strategies, policies and risks of
the Fifth Third Select Stock Fund were modified and the fund was renamed
the Fifth Third Dividend Growth Fund.
2 The Fund first offered Institutional shares on August 11, 1998. The quoted
performance of Institutional shares for the period from March 6, 1998
through August 10, 1998 reflects the performance for Class A shares of the
Dividend Growth Fund (formerly the Select Stock Fund). On March 6, 1998,
the Pinnacle Fund, a registered open-end investment company managed by
Heartland Capital Management, Inc. was merged into the Select Stock Fund.
For the period prior to March 6, 1998, the quoted performance of Class A
shares reflects the performance of Class A shares of the Pinnacle Fund.
Class A shares of the Fund would have substantially similar annual returns
as Institutional shares because the shares represent interests in the same
portfolio of investments and the annual returns would differ only to the
extent that the classes do not have the same expenses.
3 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The S&P 500(R) Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange, and is a measure
of the U.S. stock market as a whole. The Fund has changed its benchmark
from the Russell 1000(R) Index to the S&P 500(R) Index, effective August
1, 2005, in order to better represent the Fund's investment policies for
comparison purposes.
** The Russell 1000(R) Index is an unmanaged index of common stocks that
measures the performance of the 1,000 largest companies in the Russell
3000(R) Index, and represents approximately 92% of the total market
capitalization of the Russell 3000(R) Index.
*** The Russell Growth Index is an unmanaged index of common stocks that
measures the performance of those Russell 1000(R) companies with higher
price-to-book ratios and higher forecasted growth values.
45
SPECIALTY
FIFTH THIRD TECHNOLOGY FUND STRATEGY
- ----------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE Long-term capital appreciation.
Principal Investment Strategies Under normal circumstances, the Fund invests at
least 80% of its assets in the equity securities of technology companies. The
technology companies in which the Fund typically invests include U.S. and, to a
lesser extent, foreign companies.
Technology companies are those that are substantially engaged in developing
products, processes or services that provide technological advances. Those
companies may be in any of a variety of industries, such as computer hardware,
software, electronic components and systems, telecommunications, Internet, media
and information services, and biotechnology. They also may include companies in
more traditional industries, such as securities brokers and retailers that have
extensively used technological advances to develop new or to improve existing
products or processes.
The Fund generally takes a growth approach to selecting stocks, looking for
established companies that appear poised to grow because of new products,
technology or management, as well as new companies that are in the developmental
stage. Factors in identifying these companies include the quality of management,
financial strength, a strong position relative to competitors and a stock price
that appears reasonable relative to its expected growth rate. The Fund may
invest in companies of any size, including small, high growth companies. The
Fund also may invest in companies whose shares are being, or recently have been,
offered to the public for the first time.
The Advisor may consider selling one of the Fund's holdings when a significant
deterioration in a company's strategic position or growth prospects is detected,
an individual security comprises too large of a position in the portfolio, a
company's valuations are no longer attractive, or a better opportunity arises.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
EQUITY SECURITIES RISK. The risks of investing in equity securities include the
risk of sudden and unpredictable drops in value or periods of lackluster
performance.
TECHNOLOGY SECURITIES RISK. The Fund, by concentrating in technology stocks,
assumes the risks of holding technology stocks. For example, technology stocks
tend to:
o fluctuate in price more widely and rapidly than the market as a
whole
o underperform other types of stocks or be difficult to sell when the
economy is not robust, during market downturns, or when technology
stocks are out of favor
o decline in price due to sector specific developments
o 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.
SMALLER AND MEDIUM-SIZED COMPANIES RISK. 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.
GROWTH SECURITIES RISK. 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.
FOREIGN INVESTMENT RISK. Stocks of foreign companies present additional risks
for U.S. investors. Stocks of foreign companies tend to be less liquid and more
volatile than their U.S. counterparts, in part because accounting standards and
market regulations tend to be less standardized and economic and political
climates less stable. Fluctuations in exchange rates also may reduce or
eliminate gains or create losses.
EMERGING MARKETS RISK. The risks associated with foreign investments usually are
higher in emerging markets, such as most countries in Africa, Asia, Latin
America and the Middle East. To the extent that the Fund invests in those kinds
of stocks or in those areas, it will be exposed to the risks associated with
those kinds of investments.
IPO RISK. To the extent the Fund invests in companies whose shares are being, or
recently have been, offered to the public for the first time, the Fund takes on
additional risks, including risks associated with inexperienced management, the
risk that a liquid secondary trading market may not develop and risks of greater
market volatility often associated with the securities sold in initial public
offerings.
TURNOVER RISK. 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.
46
FIFTH THIRD TECHNOLOGY FUND
- --------------------------------------------------------------------------------
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to a broad-based securities
index.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
[BAR CHART]
-33.22% -42.00% 88.22% -6.91% 7.52%
---------------------------------------
2001 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q2 2003 41.08%
Worst quarter: Q3 2001 -35.41%
Year to Date Return (1/1/06 to 9/30/06): -0.09%
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005)
- ------------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS SINCE INCEPTION
- ------------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 6/5/00
Return Before Taxes 7.52% -6.11% -10.44%
Return After Taxes on Distributions 1 7.52% -6.11% -10.50%
Return After Taxes on Distributions and Sale of Fund Shares 1 4.89% -5.09% -8.52%
- ------------------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH 100 TECHNOLOGY INDEX* (SINCE 6/1/00)
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 5.87% -5.46% -11.61%
- ------------------------------------------------------------------------------------------------------------------------------------
1 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The Merrill Lynch 100 Technology Index is an equal-dollar weighted index
of 100 stocks designed to measure the performance of a cross-section of
large, actively traded technology stocks and ADRs.
47
SPECIALTY
FIFTH THIRD INTERNATIONAL EQUITY FUND STRATEGY
- ----------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in equity securities and at least 65% of its total
assets in securities of non-U.S. companies. The companies whose securities are
represented in the Fund's portfolio are located in at least three countries
other than the U.S.
The Fund uses a top-down strategy of selecting securities in its portfolio. It
allocates assets among geographic regions and individual countries and sectors,
rather than emphasizing individual stock selection. The Fund capitalizes on the
significance of country and sector selection in international equity portfolio
returns by over and underweighting countries and/or sectors based on three
factors: (i) valuation, (ii) fundamental change, and (iii) market
momentum/technicals. Valuation factors include price/book values and price/cash
earnings. Fundamental change factors include incremental shifts in economic
growth, interest rates, the political, social, business, and regulatory
environment, and monetary and fiscal policy. Market momentum/technical factors
include market capitalization, liquidity, volatility, and investor sentiment.
The Fund's investment subadvisor analyzes both the global economic environment
and the economies of countries throughout the world, focusing mainly on the
industrialized countries comprising the Morgan Stanley Capital International
Europe, Australasia, and Far East Index(R) (the "EAFE Index"). The investment
subadvisor views each country and sector as a unique investment opportunity and
evaluates prospects for value, growth, inflation, interest rates, corporate
earnings, liquidity and risk characteristics, investor sentiment and economic
and currency outlook. The investment subadvisor - on an ongoing basis -
establishes the proportion or weighting for each country and sector (E.G.,
overweight, underweight or neutral) relative to the EAFE Index for investment by
the Fund. The investment subadvisor invests the Fund's assets within each
country and/or sector based on its assigned weighting. Within each country
and/or sector, the investment subadvisor will try to replicate, in the
aggregate, the performance of a broad local market index by investing in
"baskets" of common stocks and other equity securities. Although the Fund
invests primarily in established foreign securities markets, from time to time,
it may also invest in emerging market countries and, with regard to such
investments, may make global and regional allocations to emerging markets, as
well as allocations to specific emerging market countries. The Fund may use
various instruments that derive their values from those of specified securities,
indices, currencies or other points of reference for both hedging and
non-hedging purposes. Derivatives, including those used to manage risk, are
themselves subject to risks of the different markets in which they trade and may
not serve their intended purposes.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
EQUITY SECURITIES RISK. The risks of investing in equity securities, such as,
the risk of sudden and unpredictable drops in value or periods of lackluster
performance.
FOREIGN INVESTMENT RISK. Stocks of foreign companies present additional risks
for U.S. investors. Stocks of foreign companies tend to be less liquid and more
volatile than their U.S. counterparts, in part because accounting standards and
market regulations tend to be less standardized and economic and political
climates less stable. Fluctuations in exchange rates also may reduce or
eliminate gains or create losses.
EMERGING MARKETS RISK. The risks associated with foreign investments usually are
higher in emerging markets, such as most countries in Africa, Asia, Latin
America and the Middle East. To the extent that the Fund invests in those kinds
of stocks or in those areas, it will be exposed to the risks associated with
those kinds of investments.
CURRENCY RISK. The Fund's investments in foreign countries generally will be
denominated in foreign currencies. As a result, changes in the value of a
country's currency compared to the U.S. dollar may affect the value of the
Fund's investments.
DERIVATIVES RISK. The Fund may invest in derivatives, and may use certain
techniques, such as hedging, to manage currency risks as well as to gain
exposure to foreign markets. The primary risks of derivatives are: (1) changes
in the market value of securities, and of derivatives relating to those
securities, may not be proportionate; (2) there may not be a liquid market to
sell a derivative, which could result in difficulty closing a position; and (3)
certain derivatives can magnify the extent of losses incurred due to changes in
market value. In addition, some derivative are subject to counterparty risk.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to a broad-based securities
index.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
48
FIFTH THIRD INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
- --------------------------------------------------------------------------------
[BAR CHART]
8.54% 7.96% 19.45% 26.11% -14.24% -17.90% -13.77% 33.26% 15.96% 13.97%
- --------------------------------------------------------------------------------
1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------------------------
Best quarter: Q4 1999 17.74%
Worst quarter: Q3 2002 -17.95%
Year to Date Return (1/1/06 to 9/30/06): 11.75%
- --------------------------------------------------------------------------------
____________________
1 The Fund first offered Institutional shares on October 9, 1998. The quoted
performance of Institutional shares for the period prior to October 9,
1998 reflects the performance for Class A shares, a class of shares of the
Fund not offered by this Prospectus. Class A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not
have the same expense structure.
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005)
- ------------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 1 8/18/94
Return Before Taxes 13.97% 4.51% 6.56%
Return After Taxes on Distributions 2 13.43% 4.16% 5.08%
Return After Taxes on Distributions and Sale of Fund Shares 2 10.12% 3.78% 4.92%
- ------------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX(R)*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 14.02% 4.94% 6.18%
- ------------------------------------------------------------------------------------------------------------------------------------
1 The Fund first offered Institutional shares on October 9, 1998. The quoted
performance of Institutional shares for the period prior to October 9,
1998 reflects the performance for Class A shares, a class of shares of the
Fund not offered by this Prospectus. Class A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not
have the same expense structure.
2 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The Morgan Stanley Capital International EAFE Index(R) is a widely
recognized, unmanaged index composed of a sample of companies
representative of the market structure of 20 European and Pacific Basin
countries.
49
FIXED-
INCOME
FIFTH THIRD HIGH YIELD BOND FUND STYLE
- -------------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE High level of income. Capital appreciation is a secondary
objective.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in non-investment grade debt securities. The Fund
generally invests in non-investment grade debt securities of domestic
corporations. Non-investment grade securities are rated below investment grade
by the primary rating agencies (e.g., BB or lower by Standard & Poor's and Ba or
lower by Moody's). These securities are often referred to as "junk bonds" and
are considered speculative. The Fund expects to hold securities with an average
maturity of between 6 and 10 years, but the holding period average may vary
between 4 and 12 years.
In selecting portfolio securities, the Fund's Subadvisor analyzes the overall
investment opportunities and risks in different industry sectors focusing on
those industries that exhibit stability and predictability. Having developed
certain industry biases resulting from the current macroeconomic environment,
the Subadvisor implements a process of elimination through which certain types
of securities are removed from the list of initially selected securities due to
their structure. The Subadvisor then conducts a rigorous credit selection
process in order to identify securities that offer attractive investment
opportunities. Once a security has been purchased, the credit analysis process
is re-applied to each individual security in the Fund's portfolio on a periodic
basis or as new information becomes available to determine whether or not to
keep a security in the Fund's portfolio.
When the Subadvisor believes that market conditions warrant a temporary
defensive posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely impact the ability of the Fund to
achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
FIXED INCOME SECURITIES RISK. The risks of investing in debt securities include
INTEREST RATE RISK, which is the tendency of bond prices to fall when interest
rates rise and CREDIT RISK, which is the risk of an issuer defaulting on its
obligations of paying principal and interest. Generally, the price of a bond
moves in the opposite direction from interest rates. New bonds issued after a
rise in rates offer higher yields to investors. An existing bond with a lower
yield can appear attractive to investors by selling it at a lower price. This
process works in reverse as well; as interest rates fall, the price of a bond
tends to increase. The prices of long term bonds (bonds with a remaining
maturity of at least 10 years) tend to be more volatile than the prices of bonds
with a shorter remaining maturity.
NON-INVESTMENT GRADE SECURITIES Non-investment grade debt securities are
considered speculative and, compared to investment grade securities, tend to
have:
o more volatile prices and increased price sensitivity to changing
interest rates and to adverse economic and business developments;
o greater risk of loss due to default or declining credit quality;
o greater likelihood that adverse economic or company specific events
will make the issuer unable to make interest and/or principal
payments; and
o greater susceptibility to negative market sentiments leading to
depressed prices and decreased liquidity.
Non-investment grade debt securities present a higher degree of credit risk
because their issuers are often highly leveraged and may not have more
traditional methods of financing available to them. As a result, their ability
to service their debt obligations during an economic downturn or during
sustained periods of rising interest rates may be impaired. The risk of loss due
to default by such issuers is significantly greater than with investment grade
securities because these securities generally are unsecured and subordinated to
the prior payment of senior indebtedness. The Fund also may incur additional
expenses to the extent that it is required to seek recovery upon a default in
the payment of principal or interest on its portfolio holdings.
Under rating agency guidelines, medium- and lower-rated securities and
comparable unrated securities will likely have some quality and protective
characteristics that are outweighed by large uncertainties or major risk
exposures to adverse conditions. Medium- and lower-rated securities may have
poor prospects of ever attaining any real investment standing, may have a
current identifiable vulnerability to default or be in default, may be unlikely
to have the capacity to pay interest and repay principal when due in the event
of adverse business, financial or economic conditions, and/or may be likely to
be in default or not current in the payment of interest or principal. Such
securities are considered speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the
obligations. It is possible that these types of factors could reduce the value
of securities held by the Fund with a commensurate effect on the value of the
Fund's shares.
Changes by the primary rating agencies in their ratings of any fixed-income
security and in the ability of an issuer to make payments of interest and
principal may also affect the value of these investments. The ratings of S&P,
Moody's and other rating agencies generally represent the opinions of those
organizations as to the quality of the securities that they rate. Such ratings,
however, are relative and subjective, are not absolute standards of quality, are
subject to change and do not evaluate the market risk or liquidity of the
securities.
50
FIFTH THIRD HIGH YIELD BOND FUND
- --------------------------------------------------------------------------------
LIQUIDITY RISK. In addition, secondary markets for non-investment grade debt
securities are not as liquid as the secondary markets for higher-rated corporate
debt securities. The secondary markets for non-investment grade corporate debt
securities are concentrated in relatively few market makers, and participants in
the market are mostly institutional investors, including insurance companies,
banks, other financial institutions and funds. The trading volume for
non-investment grade corporate debt securities is generally lower than that for
higher-rated corporate debt securities and the secondary markets could contract
under adverse market or economic conditions independent of any specific adverse
changes in the condition of a particular issuer. These factors could have an
adverse effect on the ability of the Fund to dispose of particular portfolio
investments, adversely affect the Fund's net asset value and limit the ability
of the Fund to obtain accurate market quotations for purposes of valuing
securities and calculating net asset value. If the Fund is not able to obtain
precise or accurate market quotations for a particular security, it will become
more difficult to value the Fund's portfolio securities, and a greater degree of
judgment may be necessary in making such valuations. Less liquid secondary
markets also could affect the ability of the Fund to sell securities at their
fair value. If the secondary markets for non-investment grade securities
contract due to adverse economic conditions or for other reasons, certain liquid
securities in the Fund's portfolio may become illiquid and the proportion of the
Fund's assets invested in illiquid securities may significantly increase.
REGULATORY RISK. Prices for non-investment grade debt securities may be affected
by legislative and regulatory developments, which could adversely affect the
Fund's net asset value and investment practices, the secondary market for
non-investment grade securities, the financial condition of issuers of these
securities and the value of outstanding non-investment grade securities.
VOLATILITY AND PERFORMANCE INFORMATION This section would normally include a bar
chart and table showing how the Fund has performed and how performance has
varied from year to year. A bar chart and table will be provided after the Fund
has been in operation for a full calendar year.
51
FIXED-
INCOME
FIFTH THIRD BOND FUND STYLE
- -------------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE High current income. Capital growth is a secondary
objective.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in bonds. The bonds in which the Funds invests include
U.S. Government securities and corporate debt securities, including
mortgage-backed securities. Corporate bonds are rated as investment grade.
Investment grade securities are securities rated in the BBB major rating
category or higher by Standard & Poor's, or in the Baa major rating category or
higher by Moody's, or their unrated equivalents.
The Fund tends to be invested in high quality bonds with maturities ranging from
overnight to thirty years in length. The Fund is managed for growth of capital
but with less volatility than a bond fund investing in lower quality securities.
In selecting bond securities, the Advisor considers, among other things, the
remaining maturity, the stated interest rate, the price of the security, the
financial condition of the issuer and the issuer's prospects for long-term
growth of earnings and revenues.
U.S. Government securities (or bonds) are debt securities issued or guaranteed
as to principal and interest by the U.S. Treasury and obligations issued by U.S.
Government-sponsored enterprises ("GSEs"), which may be agencies or
instrumentalities of the U.S. Government, the securities of which are not
guaranteed as to principal and interest by the U.S. Treasury. U.S. Government
securities that are guaranteed and insured by the full faith and credit of the
U.S. Treasury include U.S. Treasury securities and securities issued by the
Government National Mortgage Association (Ginnie Mae), and the Small Business
Administration (SBA). U.S. Government securities issued by GSEs the securities
of which are neither guaranteed nor insured by the full faith and credit of the
U.S. Treasury but which have the ability to borrow from the Treasury include
Federal Home Loan Bank (FHLB), Student Loan Marketing Association (Sallie-Mae),
Tennessee Valley Authority (TVA), Federal National Mortgage Association (Fannie
Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). Federal Farm
Credit Bank (FFCB) is a GSE that issues securities that are neither guaranteed
nor insured by the full faith and credit of the U.S. Treasury and which has no
ability to borrow from the Treasury. While there are different degrees of credit
quality, all U.S. Government securities and securities issued by GSEs generally
are considered highly credit worthy.
The Fund reserves the right to invest up to 20% of its assets in other
securities, such as high yield securities, foreign bonds, and money market
instruments.
Quantitative analysis is used to identify stocks the Advisor believes have
above-average growth and strong balance sheets. Factors considered include
return on assets, price to earnings per share, price to cash flow, and earnings
per share growth. The Advisor uses a fundamental analysis of financial
statements to look for companies that, in its opinion, have stock prices that do
not accurately reflect cash flows, tangible assets or management skills.
The Advisor may consider selling one of the Fund's holdings when a deterioration
in a company's credit worthiness is detected, an individual security comprises
too large of a position in the portfolio, a security's valuations are no longer
attractive or the intended profit has been realized, or a better opportunity
arises.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
FIXED INCOME SECURITIES RISK. The risks of investing in debt securities include
INTEREST RATE RISK, which is the tendency of bond prices to fall when interest
rates rise and CREDIT RISK, which is the risk of an issuer defaulting on its
obligations of paying principal and interest. The prices of long-term bonds
(bonds with a remaining maturity of at least 10 years) tend to be more volatile
than the prices of bonds with a shorter remaining maturity. Generally, the price
of a bond moves in the opposite direction from interest rates. With respect to
GSEs such as FHLB, Sallie-Mae, TVA, Fannie Mae, FFCB and Freddie Mac, although
the issuers may be chartered or sponsored by Acts of Congress, their securities
are neither insured nor guaranteed by the U.S. Treasury and therefore have more
issuer default risk than any direct obligation of the U.S. Treasury. As interest
rates fall, the price of a bond tends to increase.
PRE-PAYMENT/CALL RISK. The prices of mortgage-backed securities also are
affected by changes in interest rates. Although mortgage-backed securities tend
to pay higher interest rates, they also carry additional risk. For instance,
their prices and yields typically assume that the securities will be redeemed at
a given time before maturity. When interest rates fall substantially, they
usually are redeemed early because the underlying mortgages often are prepaid.
The Fund would then have to reinvest the proceeds it receives because of those
redemptions at a lower rate. The price or yield of mortgage-backed securities
also may fall if they are redeemed after that date.
NON-INVESTMENT GRADE SECURITIES RISK. The Fund may invest up to 20% of its
assets in non-investment grade securities. High yield, or non-investment grade,
securities (also known as "junk bonds") are those rated below investment grade
by the primary rating agencies (e.g., below BB/Ba by S&P/Moody's) and are
considered speculative. Compared to investment grade debt securities,
non-investment grade debt securities tend to have more volatile prices and
increased price sensitivity to changing interest rates and adverse economic and
business developments. In addition, compared to investments in investment grade
securities, investments in non-investment grade securities are subject to
greater risk of loss due to default or a decline in credit quality, a greater
likelihood that adverse economic or company-specific events will make the issuer
unable to make interest and/or principal payments, and greater susceptibility to
negative market sentiment, leading to depressed prices and decreased liquidity.
FOREIGN INVESTMENT RISK. Investments in foreign bonds are subject to special
risks in addition to those to which U.S. investments are subject. These risks
include political and economic risks, currency fluctuations, higher transaction
costs, delayed settlement, and less stringent investor protection and disclosure
standards of some foreign markets. These risks can make foreign investments more
volatile and less liquid than U.S. investments.
52
FIFTH THIRD BOND FUND
- --------------------------------------------------------------------------------
TURNOVER RISK. 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 bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to a broad-based securities
index.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
- --------------------------------------------------------------------------------
[BAR CHART]
1.19% 10.55% 9.29% -4.41% 11.91% 7.25% 9.42% 3.20% 3.68% 2.11%
- --------------------------------------------------------------------------------
1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------
Best quarter: Q3 2001 5.24%
Worst quarter: Q1 1996 -3.63%
Year to Date Return (1/1/06 to 9/30/06): 2.82%
- --------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005) 1
- ------------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 1 3/20/95
Return Before Taxes 2.11% 5.10% 5.30%
Return After Taxes on Distributions 2 0.53% 3.35% 2.93%
Return After Taxes on Distributions and Sale of Fund Shares 2 1.41% 3.30% 3.03%
- ------------------------------------------------------------------------------------------------------------------------------------
LEHMAN BROTHERS AGGREGATE BOND INDEX(R)*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 2.43% 5.87% 6.16%
- ------------------------------------------------------------------------------------------------------------------------------------
1 On October 29, 2001, the Kent Income Fund, a registered open-end
investment company managed by Fifth Third Asset Management, Inc. was
merged into Fifth Third Bond Fund. As such, for the period prior to
October 29, 2001, the quoted performance of Institutional shares reflects
the performance of the Institutional shares of the Kent Income Fund.
2 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The Lehman Brothers Aggregate Bond Index(R) is an unmanaged total return
index measuring both capital price changes and income index provided by
the underlying universe of securities and is generally representative of
the performance of the bond market as a whole.
53
FIXED-
INCOME
FIFTH THIRD INTERMEDIATE BOND FUND STYLE
- -------------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE High level of current income.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in bonds. The Fund typically invests the following types
of investment grade bonds: corporate securities, asset-backed securities,
mortgage-backed securities, and U.S. Government securities. Investment grade
securities are securities rated in the BBB major rating category or higher by
Standard & Poor's or in the Baa major rating category or higher by Moody's, or
their unrated equivalents. The Fund's dollar-weighted average maturity will
range from more than three years to less than ten years.
U.S. Government securities (or bonds) are debt securities issued or guaranteed
as to principal and interest by the U.S. Treasury and obligations issued by U.S.
Government-sponsored enterprises ("GSEs"), which may be agencies or
instrumentalities of the U.S. Government, the securities of which are not
guaranteed as to principal and interest by the U.S. Treasury. U.S. Government
securities that are guaranteed and insured by the full faith and credit of the
U.S. Treasury include U.S. Treasury securities and securities issued by the
Government National Mortgage Association (Ginnie Mae) and the Small Business
Administration (SBA). U.S. Government securities issued by GSEs the securities
of which are neither guaranteed nor insured by the full faith and credit of the
U.S. Treasury but which have the ability to borrow from the Treasury include
Federal Home Loan Bank (FHLB), Student Loan Marketing Association (Sallie-Mae),
Tennessee Valley Authority (TVA), Federal National Mortgage Association (Fannie
Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). Federal Farm
Credit Bank (FFCB) is a GSE that issues securities that are neither guaranteed
nor insured by the full faith and credit of the U.S. Treasury and which has no
ability to borrow from the Treasury. While there are different degrees of credit
quality, all U.S. Government securities and securities issued by GSEs generally
are considered highly credit worthy.
The Fund strives to manage its portfolio so that it receives a fairly consistent
level of income regardless of fluctuations in interest rates. Additionally, the
Fund may seek some capital appreciation, especially when bond prices are rising,
if the Advisor believes that the Fund can realize such appreciation without
foregoing its objective of high current income.
The Fund reserves the right to invest up to 20% of its assets in other
securities, such as high yield securities, foreign bonds, and money market
instruments.
The Advisor seeks to improve performance by having greater or lesser sector
weightings and greater or lesser duration than the Fund's benchmark.
The Advisor may consider selling one of the Fund's holdings when a deterioration
in a company's credit worthiness is detected, an individual security comprises
too large of a position in the portfolio, a security's valuations are no longer
attractive or the intended profit has been realized, or a better opportunity
arises.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments and may shorten its
dollar-weighted average maturity below its normal range. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
FIXED INCOME SECURITIES RISK. The risks of investing in debt securities include
INTEREST RATE RISK, which is the tendency of bond prices to fall when interest
rates rise and CREDIT RISK, which is the risk of an issuer defaulting on its
obligations of paying principal and interest. Generally, the price of a bond
moves in the opposite direction from interest rates. As interest rates fall, the
price of a bond tends to increase. The prices of long-term bonds tend to be more
volatile than the prices of bonds with a shorter remaining maturity. With
respect to GSEs such as FHLB, Sallie-Mae, TVA, Fannie Mae, FFCB and Freddie Mac,
although the issuers may be chartered or sponsored by Acts of Congress, their
securities are neither insured nor guaranteed by the U.S. Treasury and therefore
have more issuer default risk than any direct obligation of the U.S. Treasury.
PRE-PAYMENT/CALL RISK. The prices of mortgage-backed securities also are
affected by changes in interest rates. Although mortgage-backed securities tend
to pay higher interest rates, they also carry additional risk. For instance,
their prices and yields typically assume that the securities will be redeemed at
a given time before maturity. When interest rates fall substantially, they
usually are redeemed early because the underlying mortgages are often prepaid.
The Fund would then have to reinvest the proceeds it receives because of those
redemptions at a lower rate. The price or yield of mortgage-backed securities
also may fall if they are redeemed after that date.
NON-INVESTMENT GRADE SECURITIES RISK. The Fund may invest up to 20% of its
assets in non-investment grade securites. High yield, or non-investment grade,
securities (also known as "junk bonds") are those rated below investment grade
by the primary rating agencies (e.g., below BB/Ba by S&P/Moody's) and are
considered speculative. Compared to investment grade debt securities,
non-investment grade debt securities tend to have more volatile prices and
increased price sensitivity to changing interest rates and adverse economic and
business developments. In addition, compare to investments in investment grade
securities, investments in non-investment grade securities are subject to
greater risk of loss due to default or a decline in credit quality, a greater
likelihood that adverse economic or company-specific events will make the issuer
unable to make interest and/or principal payments, and greater susceptibility to
negative market sentiment, leading to depressed prices and decreased liquidity.
54
FIFTH THIRD INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
FOREIGN INVESTMENT RISK. In addition, in foreign bonds are subject to special
risks in addition to those to which U.S. investments are subject. These risks
include political and economic risks, currency fluctuations, higher transaction
costs, delayed settlement, and less stringent investor protection and disclosure
standards of some foreign markets. These risks can make foreign investments more
volatile and less liquid than U.S. investments.
TURNOVER RISK. 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 bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to a broad-based securities
index.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
- --------------------------------------------------------------------------------
[BAR CHART]
3.01% 7.80% 7.65% -1.22% 9.74% 8.34% 8.61% 2.76% 2.54% 1.24%
- --------------------------------------------------------------------------------
1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------
Best Quarter Q3 2001 4.72%
Worst Quarter Q2 2004 -2.64%
Year to Date Return (1/1/06 to 9/30/06): 3.19%
- --------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005) 1
- ------------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 1 11/2/92
Return Before Taxes 1.24% 4.65% 4.98%
Return After Taxes on Distributions 2 -0.30% 2.93% 2.86%
Return After Taxes on Distributions and Sale of Fund Shares 2 0.80% 2.94% 2.92%
- ------------------------------------------------------------------------------------------------------------------------------------
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CREDIT BOND INDEX(R)*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 1.58% 5.50% 5.80%
- ------------------------------------------------------------------------------------------------------------------------------------
1 On October 29, 2001, the Kent Intermediate Bond Fund, a registered
open-end investment company managed by Fifth Third Asset Management, Inc.
was merged into Fifth Third Intermediate Bond Fund. As such, for the
period prior to October 29, 2001, the quoted performance of Institutional
shares reflects the performance of the Institutional shares of the Kent
Intermediate Bond Fund.
2 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The Lehman Brothers Intermediate Government/Credit Bond Index(R) is an
unmanaged index comprised of U.S. Treasuries issues, debt of U.S.
Government agencies, corporate debt guaranteed by the U.S. Government and
all publicly issued, fixed rate, nonconvertible investment-grade, dollar
denominated, SEC-registered corporate debt.
55
FIXED-
INCOME
FIFTH THIRD SHORT TERM BOND FUND STYLE
- -------------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE Current income.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in bonds. The securities debt bonds in which the Fund
invests typically include corporate, mortgage backed securities, asset backed
securities, and U.S. Government securities.
U.S. Government securities (or bonds) are debt securities issued or guaranteed
as to principal and interest by the U.S. Treasury and obligations issued by U.S.
Government-sponsored enterprises ("GSEs"), which may be agencies or
instrumentalities of the U.S. Government, the securities of which are not
guaranteed as to principal and interest by the U.S. Treasury. U.S. Government
securities that are guaranteed and insured by the full faith and credit of the
U.S. Treasury include U.S. Treasury securities and securities issued by the
Government National Mortgage Association (Ginnie Mae), and the Small Business
Administration (SBA). U.S. Government securities issued by GSEs the securities
of which are neither guaranteed nor insured by the full faith and credit of the
U.S. Treasury but which have the ability to borrow from the Treasury include
Federal Home Loan Bank (FHLB), Student Loan Marketing Association (Sallie-Mae),
Tennessee Valley Authority (TVA), Federal National Mortgage Association (Fannie
Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). Federal Farm
Credit Bank (FFCB) is a GSE that issues securities that are neither guaranteed
nor insured by the full faith and credit of the U.S. Treasury and which has no
ability to borrow from the Treasury. While there are different degrees of credit
quality, all U.S. Government securities and securities issued by GSEs generally
are considered highly credit worthy.
The Fund will maintain a dollar-weighted average portfolio maturity of less than
three years. While maturity and credit quality are the most important investment
factors, the Fund also considers current yield and yield to maturity and
potential for capital gain. The Fund may consider selling a security if it falls
below the minimum credit quality required for purchase.
The Fund reserves the right to invest up to 20% of its assets in other
securities, such as high yield securities, foreign bonds, and money market
instruments.
The Advisor may actively manage the Fund's sector weightings and duration to
attempt to capture excess returns, as related to the Fund benchmark.
The Advisor may consider selling one of the Fund's holdings when a deterioration
in a company's credit worthiness is detected, an individual security comprises
too large of a position in the portfolio, a security's valuations are no longer
attractive or the intended profit has been realized, or a better opportunity
arises.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in money market
instruments and may shorten its dollar-weighted average maturity below its
normal range. The taking of such a temporary defensive posture may adversely
impact the ability of the Fund to achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
FIXED INCOME SECURITIES RISK. The risks of investing in debt securities include
INTEREST RATE RISK, which is the tendency of bond prices to fall when interest
rates rise and CREDIT RISK, which is the risk of an issuer defaulting on its
obligations of paying principal and interest. Generally, the price of a bond
moves in the opposite direction from interest rates. As interest rates fall, the
price of a bond tends to increase. The prices of long-term bonds tend to be more
volatile than the prices of bonds with a shorter remaining maturity. With
respect to GSEs such as FHLB, Sallie-Mae, TVA, Fannie Mae, FFCB and Freddie Mac,
although the issuers may be chartered or sponsored by Acts of Congress, their
securities are neither insured nor guaranteed by the U.S. Treasury and therefore
have more issuer default risk than any direct obligation of the U.S. Treasury.
PRE-PAYMENT/CALL RISK. The prices of mortgage-backed securities also are
affected by changes in interest rates. Although mortgage-backed securities tend
to pay higher interest rates, they also carry additional risk. For instance,
their prices and yields typically assume that the securities will be redeemed at
a given time before maturity. When interest rates fall substantially, they
usually are redeemed early because the underlying mortgages are often prepaid.
The Fund would then have to reinvest the proceeds it receives because of those
redemptions at a lower rate. The price or yield of mortgage-backed securities
also may fall if they are redeemed after that date.
The Advisor may adjust the Fund's sector weightings and duration to attempt to
capture additional returns relative to the Fund's benchmark.
NON-INVESTMENT GRADE SECURITIES RISK. The Fund may invest up to 20% of its
assets in non-investment grade securities. High yield, or non-investment grade
securities (also known as "junk bonds") are those rated below investment grade
by the primary rating agencies (e.g., below BB/Ba by S&P/Moody's) and are
considered speculative. Compared to investment grade debt securities,
non-investment grade debt securities tend to have more volatile prices and
increased price sensitivity to changing interest rates and adverse economic and
business developments, greater risk of loss due to default or a decline in
credit quality, greater likelihood that adverse economic or company-specific
events will make the issuer unable to make interest and/or principal payments,
and greater susceptibility to negative market sentiment, leading to depressed
prices and decreased liquidity.
FOREIGN INVESTMENT RISK. Investments in foreign bonds are subject to special
risks in addition to those to which U.S. investments are subject. These risks
include political and economic risks, currency fluctuations, higher transaction
costs, delayed settlement, and less stringent investor protection and disclosure
standards of some foreign markets. These risks can make foreign investments more
volatile and less liquid than U.S. investments.
56
FIFTH THIRD SHORT TERM BOND FUND
- --------------------------------------------------------------------------------
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to a broad-based securities
index.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
- --------------------------------------------------------------------------------
[BAR CHART]
4.22% 6.42% 6.14% 2.50% 8.12% 7.90% 4.84% 2.03% 0.74% 1.66%
- --------------------------------------------------------------------------------
1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------
Best Quarter Q3 2001 3.19%
Worst Quarter Q2 2004 -1.08%
Year to Date Return (1/1/06 to 9/30/06): 3.03%
- --------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005) 1
- ------------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 1 11/2/92
Return Before Taxes 1.66% 3.40% 4.42%
Return After Taxes on Distributions 2 0.36% 1.86% 2.43%
Return After Taxes on Distributions and Sale of Fund Shares 2 1.07% 1.98% 2.53%
- ------------------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH 1-3 YEAR GOVERNMENT CORPORATE INDEX(R)*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 1.75% 4.06% 5.03%
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER PRICE INDEX** 3.42% 2.49% 2.52%
- ------------------------------------------------------------------------------------------------------------------------------------
91-DAY TREASURY BILL*** 3.07% 2.11% 3.63%
- ------------------------------------------------------------------------------------------------------------------------------------
1 On October 29, 2001, the Kent Short Term Bond Fund, a registered open-end
investment company managed by Fifth Third Asset Management, Inc. was
merged into Fifth Third Short Term Bond Fund. As such, for the period
prior to October 29, 2001, the quoted performance of Institutional shares
reflects the performance of the Institutional shares of the Kent Short
Term Bond Fund.
2 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The Merrill Lynch 1-3 Year Government Corporate Index(R) is an unmanaged
index trading short-term U.S. Government securities and short-term
domestic investment-grade corporate bonds with maturities between 1 and
2.99 years.
** The Consumer Price Index is an unmanaged index measuring price increases
in a standardized "market basket" of goods.
*** The 91-day Treasury Bill return tracks the investment return paid on U.S.
Treasury bills maturing in 91 days.
57
FIXED-
INCOME
FIFTH THIRD U.S. GOVERNMENT BOND FUND STYLE
- -------------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE High level of current income. Capital growth is a
secondary objective.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in U.S. Government bonds.
U.S. Government securities (or bonds) are debt securities issued or guaranteed
as to principal and interest by the U.S. Treasury and obligations issued by U.S.
Government-sponsored enterprises ("GSEs"), which may be agencies or
instrumentalities of the U.S. Government, the securities of which are not
guaranteed as to principal and interest by the U.S. Treasury. U.S. Government
securities that are guaranteed and insured by the full faith and credit of the
U.S. Treasury include U.S. Treasury securities and securities issued by the
Government National Mortgage Association (Ginnie Mae) and the Small Business
Administration (SBA). U.S. Government securities issued by GSEs the securities
of which are neither guaranteed nor insured by the full faith and credit of the
U.S. Treasury but which have the ability to borrow from the Treasury include
Federal Home Loan Bank (FHLB), Student Loan Marketing Association (Sallie-Mae),
Tennessee Valley Authority (TVA), Federal National Mortgage Association (Fannie
Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). Federal Farm
Credit Bank (FFCB) is a GSE that issues securities that are neither guaranteed
nor insured by the full faith and credit of the U.S. Treasury and which has no
ability to borrow from the Treasury. While there are different degrees of credit
quality, all U.S. Government securities and securities issued by GSEs generally
are considered highly credit worthy.
In selecting portfolio securities, the Fund generally considers, among other
things, stated interest rates and the price of a security. The Fund attempts to
limit volatility of Fund share prices by managing the average life of the Fund's
investment portfolio. The Fund seeks to maintain a dollar-weighted average
maturity of between two and ten years.
The Fund reserves the right to invest up to 20% of its assets in other
securities, such as money market instruments.
The Advisor may actively manage the Fund's duration to attempt to capture excess
returns, as related to the Fund benchmark. The Advisor may consider selling one
of the Fund's holdings when there is a dramatic shift in interest rates, the
portfolio mix is not considered optimal, or a better opportunity arises.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments and may shorten its
dollar-weighted average maturity below its normal range. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
FIXED INCOME SECURITIES RISK. The risks of investing in debt securities include
INTEREST RATE RISK, which is the tendency of bond prices to fall when interest
rates rise and CREDIT RISK, which is the risk of an issuer defaulting on its
obligations of paying principal and interest. Generally, the price of a bond
moves in the opposite direction from interest rates. As interest rates fall, the
price of a bond tends to increase. With respect to GSEs such as FHLB,
Sallie-Mae, TVA, Fannie Mae, FFCB and Freddie Mac, although the issuers may be
chartered or sponsored by Acts of Congress, their securities are neither insured
nor guaranteed by the U.S. Treasury and therefore have more issuer default risk
than any direct obligation of the U.S. Treasury.
PRE-PAYMENT/CALL RISK. The prices of mortgage-backed securities also are
affected by changes in interest rates. Although mortgage-backed securities tend
to pay higher interest rates, they also carry additional risk. For instance,
their prices and yields typically assume that the securities will be redeemed at
a given time before maturity. When interest rates fall substantially, they
usually are redeemed early because the underlying mortgages often are prepaid.
The Fund would then have to reinvest the proceeds it receives because of those
redemptions at a lower rate. The price or yield of mortgage-backed securities
also may fall if they are redeemed after that date.
TURNOVER RISK. 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.
58
FIFTH THIRD U.S. GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to a broad-based securities
index.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
- --------------------------------------------------------------------------------
[BAR CHART]
2.45% 7.14% 7.50% 0.18% 9.48% 7.66% 8.78% 1.49% 2.00% 1.57%
- --------------------------------------------------------------------------------
1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------
Best Quarter Q3 2001 4.83%
Worst Quarter Q2 2004 -2.25%
Year to Date Return (1/1/06 to 9/30/06): 2.93%
- --------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005)
- ------------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 1 1/1/86
Return Before Taxes 1.57% 4.25% 4.77%
Return After Taxes on Distributions 2 0.34% 2.79% 2.95%
Return After Taxes on Distributions
and Sale of Fund Shares 2 1.07% 2.77% 2.95%
- ------------------------------------------------------------------------------------------------------------------------------------
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT BOND INDEX(R)*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 1.58% 5.50% 5.80%
- ------------------------------------------------------------------------------------------------------------------------------------
1 The Fund first offered Institutional shares on August 11, 1998. The quoted
performance of Institutional shares for the period prior to August 11,
1998 reflects the performance for Class A shares, a class of shares of the
Fund not offered by this Prospectus. Class A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not
have the same expenses.
2 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The Lehman Brothers Intermediate Government Bond Index(R) is an unmanaged
index generally representative of intermediate-term government bonds.
59
FIXED-
INCOME
FIFTH THIRD MUNICIPAL BOND FUND STYLE
- -------------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE Current income that is exempt from federal income tax.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in municipal bond obligations. Municipal bond
obligations consist of bonds, notes and commercial paper issued by states and
their political subdivisions that pay interest that is exempt from federal
income taxes. The Fund may invest up to 100% of its assets in securities that
may subject you to federal alternative minimum tax. The Fund maintains a
dollar-weighted average portfolio maturity of between five and twenty-five
years. The Fund will purchase securities rated in one of the four highest rating
categories by a Rating Agency or unrated securities of comparable quality (for
example, BBB- or higher by Standard & Poor's or Baa3 or higher by Moody's).
While maturity and credit quality are the most important investment factors, the
Fund also considers current yield and yield to maturity and potential for
capital gain. The Advisor may consider selling a security if it falls below the
minimum credit quality required for purchase.
The Advisor may actively manage the Fund's sector weightings and duration to
attempt to capture excess returns, as related to the Fund benchmark.
The Advisor may consider selling one of the Fund's holdings when a deterioration
in an issuer's credit worthiness is detected, an individual security comprises
too large of a position in the portfolio, a security's valuation is no longer
attractive or the intended profit has been realized, or a better opportunity
arises.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in money market
instruments and may shorten its dollar-weighted average maturity below its
normal range. The taking of such a temporary defensive posture may adversely
impact the ability of the Fund to achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
FIXED INCOME SECURITIES RISK. The risks of investing in debt securities include
INTEREST RATE RISK, which is the tendency of bond prices to fall when interest
rates rise and CREDIT RISK, which is risk of an issuer defaulting on its
obligations of paying principal and interest. Generally, the price of a bond
moves in the opposite direction from interest rates. As interest rates fall, the
price of a bond tends to increase. The prices of long-term bonds tend to be more
volatile than the prices of bonds with a shorter remaining maturity.
LOWER-RATED SECURITIES RISK. The Fund can acquire bonds that carry investment
grade credit ratings, which are bonds rated by a Rating Agency in one of the
four highest rating categories. Obligations rated in the fourth highest rating
category involve greater risks, including price volatility and risk of default
in the payment of interest and principal, than higher-quality securities.
POLITICAL RISK. The Fund's performance may be affected by political and economic
factors at the state, regional or national level. Those factors may include
budgetary problems and declining tax bases. Actual or proposed changes in tax
rates also may affect your net return.
LIMITED OBLIGATION SECURITIES RISK. Limited obligation securities are not
general obligations of the issuers. As a result, in the event of a default or
termination, the security holders may have limited recourse.
TAX RISK. Tax risk involves the possibility that the issuer of securities will
fail to comply with certain requirements of the Internal Revenue Code, which
would create adverse tax consequences.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to a broad-based securities
index.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
- --------------------------------------------------------------------------------
[BAR CHART]
3.92% 8.59% 5.71% -3.26% 12.40% 4.07% 9.65% 4.69% 3.07% 1.97%
- --------------------------------------------------------------------------------
1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------
Best quarter: Q4 2000 5.01%
Worst quarter: Q2 2004 -2.57%
Year to Date Return (1/1/06 to 9/30/06): 3.35%
- --------------------------------------------------------------
____________________
1 For the period prior to October 29, 2001, the quoted performance of
Institutional shares reflects the performance of the Institutional shares
of the Kent Tax-Free Income Fund. On October 29, 2001, the Kent Tax-Free
Income Fund, a registered open-end investment company managed by Fifth
Third Asset Management, Inc. was merged into Fifth Third Municipal Bond
Fund.
60
FIFTH THIRD MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005) 1
- ------------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 1 3/20/95
Return Before Taxes 1.97% 4.66% 5.00%
Return After Taxes on Distributions 2 1.23% 4.08% 4.62%
Return After Taxes on Distributions and Sale of Fund Shares 2 3.44% 4.44% 4.77%
- ------------------------------------------------------------------------------------------------------------------------------------
(SINCE 4/1/95)
LEHMAN BROTHERS MUNICIPAL BOND INDEX(R)*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 3.51% 5.59% 5.71%
- ------------------------------------------------------------------------------------------------------------------------------------
1 On October 29, 2001, the Kent Tax-Free Income Fund, a registered open-end
investment company managed by Fifth Third Asset Management, Inc. was
merged into Fifth Third Municipal Bond Fund. As such, for the period prior
to October 29, 2001, the quoted performance of Institutional shares
reflects the performance of the Institutional shares of the Kent Tax-Free
Income Fund.
2 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The Lehman Brothers Municipal Bond Index(R) is an unmanaged index that is
generally representative of the municipal bond market. The index is
comprised of 8,000-investment grade, fixed rate tax exempt securities with
remaining maturities of at least one year.
61
FIXED-
INCOME
FIFTH THIRD INTERMEDIATE MUNICIPAL BOND FUND STYLE
- -------------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE High level of current income that is exempt from federal
regular income taxes.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in municipal bonds obligations. Municipal bond
obligations consist of bonds, notes and commercial paper issued by states and
their political subdivisions that pay interest that is exempt from federal
income taxes. The Fund may invest up to 100% of its assets in securities that
may subject you to federal alternative minimum tax. The Fund maintains a
dollar-weighted average portfolio maturity of between three and ten years. The
Fund will purchase securities rated in one of the four highest rating categories
by a Rating Agency or unrated securities of comparable quality (for example,
BBB- or higher by Standard & Poor's or Baa3 or higher by Moody's).
While maturity and credit quality are the most important investment factors, the
Fund also considers current yield and yield to maturity and potential for
capital gain. The Advisor may consider selling a security if it falls below the
minimum credit quality required for purchase.
The Advisor may actively manage the Fund's sector weightings and duration to
attempt to capture excess returns, as related to the Fund benchmark.
The Advisor may consider selling one of the Fund's holdings when a deterioration
in an issuer's credit worthiness is detected, an individual security comprises
too large of a position in the portfolio, a security's valuation is no longer
attractive or the intended profit has been realized, or a better opportunity
arises.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in money market
instruments and may shorten its dollar-weighted average maturity below its
normal range. The taking of such a temporary defensive posture may adversely
impact the ability of the Fund to achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
FIXED INCOME SECURITIES RISK. The risks of investing in debt securities include
INTEREST RATE RISK, which is the tendency of bond prices to fall when interest
rates rise and CREDIT RISK, which is the risk of an issuer defaulting on its
obligations of paying principal and interest. Generally, the price of a bond
moves in the opposite direction from interest rates. As interest rates fall, the
price of a bond tends to increase.The price of long-term bonds tend to be more
volatile than the prices of bonds with a shorter remaining maturity.
LOWER-RATED SECURITIES RISK. The Fund can acquire bonds that carry investment
grade credit ratings, which are bonds rated by a Rating Agency in one of the
four highest rating categories. Obligations rated in the fourth highest rating
category involve greater risks, including price volatility and risk of default
in the payment of interest and principal, than higher-quality securities.
POLITICAL RISK. The Fund's performance may be affected by political and economic
factors at the state, regional or national level. Those factors may include
budgetary problems and declining tax bases. Actual or proposed changes in tax
rates also may affect your net return. Limited obligation securities are not
general obligations of the issuers. As a result, in the event of a default or
termination, the security holders may have limited recourse.
TAX RISK. Tax risk involves the possibility that the issuer of securities will
fail to comply with certain requirements of the Internal Revenue Code, which
would create adverse tax consequences.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to two broad-based
securities indices.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
- --------------------------------------------------------------------------------
[BAR CHART]
3.41% 7.07% 5.37% -1.01% 8.99% 4.73% 8.24% 3.26% 2.06% 1.21%
- --------------------------------------------------------------------------------
1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------
Best quarter: Q3 2002 3.56%
Worst quarter: Q2 2004 -2.02%
Year to Date Return (1/1/06 to 9/30/06): 2.98%
- --------------------------------------------------------------
____________________
1 For the period prior to October 29, 2001, the quoted performance of
Institutional shares reflects the performance of the Institutional shares
of the Kent Intermediate Tax-Free Fund. On October 29, 2001, the Kent
Intermediate Tax-Free Fund, a registered open-end investment company
managed by Fifth Third Asset Management, Inc. was merged into Fifth Third
Intermediate Municipal Bond Fund.
62
FIFTH THIRD INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005) 1
- ------------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 1 12/16/92
Return Before Taxes 1.21% 3.87% 4.29%
Return After Taxes on Distributions 2 0.94% 3.57% 4.12%
Return After Taxes on Distributions and Sale of Fund Shares 2 2.17% 3.73% 4.19%
- ------------------------------------------------------------------------------------------------------------------------------------
LEHMAN BROTHERS QUALITY INTERMEDIATE MUNICIPAL BOND INDEX(R)*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 1.65% 4.78% 5.02%
- ------------------------------------------------------------------------------------------------------------------------------------
1 On October 29, 2001, the Kent Intermediate Tax-Free Fund, a registered
open-end investment company managed by Fifth Third Asset Management, Inc.
was merged into Fifth Third Intermediate Municipal Bond Fund. As such, for
the period prior to October 29, 2001, the quoted performance of
Institutional shares reflects the performance of the Institutional shares
of the Kent Intermediate Tax-Free Fund.
2 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The Lehman Brothers Quality Intermediate Municipal Bond Index(R) is
generally representative of intermediate term municipal bonds with a
maturity between two and twelve years.
63
FIXED-
INCOME
FIFTH THIRD OHIO MUNICIPAL BOND FUND STYLE
- -------------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE Current income exempt from federal income tax and the
personal income taxes imposed by the State of Ohio and Ohio municipalities.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in municipal bond obligations that pay interest that is
exempt from personal income taxes imposed by Ohio and its municipalities. The
securities are generally issued by the State of Ohio, as well as counties,
cities, towns, territories, and public authorities in Ohio. These securities pay
interest that is exempt from personal income taxes imposed by Ohio and its
municipalities. Municipal bond obligations consist of bonds, notes and
commercial paper issued by states and their political subdivisions which pay
interest that is exempt from federal income taxes. The Fund may invest up to
100% of its assets in securities that may subject you to federal alternative
minimum tax. The Fund maintains a dollar-weighted average portfolio maturity of
between three and ten years. The Fund will purchase securities rated in one of
the four highest rating categories by a Rating Agency or unrated securities of
comparable quality (for example, BBB- or higher by Standard & Poor's or Baa3 or
higher by Moody's).
While maturity and credit quality are the most important investment factors, the
Fund also considers current yield and yield to maturity and potential for
capital gain. The Advisor may consider selling a security if it falls below the
minimum credit quality required for purchase.
The Advisor may actively manage the Fund's sector weightings and duration to
attempt to capture excess returns, as related to the Fund benchmark.
The Advisor may consider selling one of the Fund's holdings when a deterioration
in an issuer's credit worthiness is detected, an individual security comprises
too large of a position in the portfolio, a security's valuation is no longer
attractive or the intended profit has been realized, or a better opportunity
arises.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in money market
instruments and may shorten its dollar-weighted average maturity below its
normal range. In addition, during times when the Fund assumes a temporary
defensive posture, the Fund may invest in municipal bonds, the income on which
is exempt from federal income tax but not exempt from Ohio personal income
taxes. The taking of such a temporary defensive posture may adversely impact the
ability of the Fund to achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
FIXED INCOME SECURITIES RISK. The risks of investing in debt securities INCLUDE
RATE RISK, which is the tendency of bond prices to fall when interest rates rise
and CREDIT RISK, which is the risk of an issuer defaulting on its obligations of
paying principal and interest. Generally, the price of a bond moves in the
opposite direction from interest rates. As interest rates fall, the price of a
bond tends to increase.The prices of long-term bonds tend to be more volatile
than the prices of bonds with a shorter remaining maturity.
NON-DIVERSIFICATION RISK. This Fund is a non-diversified fund with regard to
issuers of securities. As a result, it does not have to invest in as many
issuers as a diversified fund and thus, could be significantly affected by the
performance of one or a small number of issuers and a single security's increase
or decrease in value may have a greater impact on the Fund's NAV and total
return.
OHIO STATE-SPECIFIC RISK. Because the Fund is non-diversified and because it
concentrates its investments in the securities of issuers in Ohio, certain
factors including economic conditions, constitutional amendments, legislative
and executive measures, and voter initiatives may have a disproportionately
negative effect on the Fund's investments. For example, the Ohio economy relies
to a significant degree on manufacturing. As a result, economic activity in Ohio
tends to be cyclical, which may affect the market value of Ohio municipal
securities or the ability of issuers to make timely payments of interest and
principal. Actual or proposed changes in tax rates also may affect your net
return.
LIMITED OBLIGATION SECURITIES RISK. In addition, because revenue bonds and
limited obligation securities are not general obligations of the issuers, the
Fund will have limited recourse in the event of a default or termination of
these securities.
TAX RISK. Tax risk involves the possibility that the issuer of securities will
fail to comply with certain requirements of the Internal Revenue Code, which
would create adverse tax consequences.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to a broad-based securities
index.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
64
FIFTH THIRD OHIO MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
- --------------------------------------------------------------------------------
[BAR CHART]
3.48% 6.92% 5.61% -2.94% 8.87% 4.57% 7.85% 3.84% 1.98% 1.09%
- --------------------------------------------------------------------------------
1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------
Best quarter: Q3 2002 3.58%
Worst quarter: Q2 1999 -2.28%
Year to Date Return (1/1/06 to 9/30/06): 2.82%
- --------------------------------------------------------------
__________________
1 The Fund first offered Institutional shares on August 11, 1998. The quoted
performance of Institutional shares for the period prior to August 11,
1998 reflects the performance for Class A shares, a class of shares of the
Fund not offered by this Prospectus. Class A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not
have the same expense structure.
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005)
- ------------------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 1 1/1/87
Return Before Taxes 1.09% 3.84% 4.07%
Return After Taxes on Distributions 2 1.04% 3.80% 4.02%
Return After Taxes on Distributions
and Sale of Fund Shares 2 1.97% 3.82% 4.04%
- ------------------------------------------------------------------------------------------------------------------------------------
LEHMAN BROTHERS QUALITY INTERMEDIATE MUNICIPAL BOND INDEX(R)*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 1.65% 4.78% 5.02%
- ------------------------------------------------------------------------------------------------------------------------------------
1 The Fund first offered Institutional shares on August 11, 1998. The quoted
performance of Institutional shares for the period prior to August 11,
1998 reflects the performance for Class A shares, a class of shares of the
Fund not offered by this Prospectus. Class A shares of the Fund would have
substantially similar annual returns as Institutional shares because the
shares represent interests in the same portfolio of investments and the
annual returns would differ only to the extent that the classes do not
have the same expense structure.
2 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The Lehman Brothers Quality Intermediate Municipal Bond Index(R) is
generally representative of intermediate term municipal bonds with a
maturity between two and twelve years.
65
FIXED-
INCOME
FIFTH THIRD MICHIGAN MUNICIPAL BOND FUND STYLE
- -------------------------------------------------------------------------
FUNDAMENTAL OBJECTIVE Current income that is exempt from federal income tax and
Michigan personal income tax.
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, the Fund invests at
least 80% of its assets in municipal bond obligations that pay interest that is
exempt from personal income taxes imposed by the State of Michigan or its
political subdivisions. The securities are generally issued by the State of
Michigan, as well as counties, cities, towns, territories and public authorities
in Michigan. These securities pay interest that is exempt from personal income
taxes imposed by Michigan and its municipalities. Municipal bond obligations
consist of bonds, notes and commercial paper issued by states and their
political subdivisions that pay interest that is exempt from federal income
taxes. The Fund may invest up to 100% of its assets in securities that may
subject you to federal alternative minimum tax. The Fund maintains a
dollar-weighted average portfolio maturity of between two and five years. No
security in the Fund will have a remaining maturity of more than ten years. The
Fund will purchase securities rated in one of the four highest rating categories
by a Rating Agency or unrated securities of comparable quality (for example BBB-
or higher by Standard & Poor's or Baa3 or higher by Moody's).
While maturity and credit quality are the most important investment factors, the
Fund also considers current yield and yield to maturity and potential for
capital gain. The Advisor may consider selling a security if it falls below the
minimum credit quality required for purchase.
The Advisor may actively manage the Fund's sector weightings and duration to
attempt to capture excess returns, as related to the Fund benchmark.
The Advisor may consider selling one of the Fund's holdings when a deterioration
in an issuer's credit worthiness is detected, an individual security comprises
too large of a position in the portfolio, a security's valuation is no longer
attractive or the intended profit has been realized, or a better opportunity
arises.
When the Advisor believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in money market
instruments and may shorten its dollar-weighted average maturity below its
normal range. In addition, during times when the Fund assumes a temporary
defensive posture, the Fund may invest in municipal bonds, the income on which
is exempt from federal income tax but not exempt from Michigan personal income
taxes. The taking of such a temporary defensive posture may adversely impact the
ability of the Fund to achieve its investment objective.
PRINCIPAL INVESTMENT RISKS Below is a description of the principal risks of
investing in the Fund.
FIXED INCOME SECURITIES RISK. The risks of investing in debt securities include
INTEREST RATE RISK, which is the tendency of bond prices to fall when interest
rates rise and CREDIT RISK, which is the risk of an issuer defaulting on its
obligations of paying principal and interest. Generally, the price of a bond
moves in the opposite direction from interest rates. As interest rates fall, the
price of a bond tends to increase. The prices of long-term bonds tend to be more
volatile than the prices of bonds with a shorter remaining maturity.
LOWER-RATED SECURITIES RISK. The Fund can acquire bonds that carry investment
grade credit ratings, which are bonds rated by a rating agency in one of the
four highest rating categories. Obligations rated in the fourth highest rating
category involve greater risks, including price volatility and risk of default
in the payment of interest and principal, than higher-quality securities.
MICHIGAN STATE-SPECIFIC RISK. Due to the level of investments in municipal
obligations issued by the State of Michigan and its local political
subdivisions, the performance of the Fund will be closely tied to the economic
and political conditions in the State of Michigan, and, therefore, an investment
in the Fund may be riskier than an investment in other types of bond funds. The
State's economy is principally dependent upon manufacturing (particularly
automobiles, office equipment and other durable goods), tourism and agriculture
and historically has been highly cyclical. The Fund may also be subject to
credit risks of municipal issuers which may have historically experienced
periods of financial difficulties. When the Fund's assets are invested in
obligations from revenues of similar projects issued by issuers located in the
same state or in industrial development bonds, the Fund will be subject to the
particular risks (including legal and economic conditions) related to such
securities to a greater extent than if its assets were not so invested.
TAX RISK. Tax risk involves the possibility that the issuer of securities will
fail to comply with certain requirements of the Internal Revenue Code which
would create adverse tax consequences.
VOLATILITY AND PERFORMANCE INFORMATION The bar chart and table provide an
indication of the risks of an investment in the Fund by showing its performance
from year to year and over time, as well as compared to a broad-based securities
index.
The returns assume that Fund distributions have been reinvested.
Past performance does not indicate how the Fund will perform in the future.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES 1
- --------------------------------------------------------------------------------
[BAR CHART]
3.51% 5.52% 4.75% 0.67% 6.31% 5.48% 6.21% 2.36% 1.07% 0.80%
- --------------------------------------------------------------------------------
1996 97 98 99 00 01 02 03 04 05
The bar chart above does not reflect the impact of any applicable sales charges
or account fees, which would reduce returns.
- --------------------------------------------------------------
Best quarter: Q2 2002 2.87%
Worst quarter: Q2 2004 -1.38%
Year to Date Return (1/1/06 to 9/30/06): 2.08%
- --------------------------------------------------------------
____________________
1 For the period prior to October 29, 2001, the quoted performance of
Institutional shares reflects the performance of the Institutional shares
of the Kent Michigan Municipal Bond Fund. On October 29, 2001, the Kent
Michigan Municipal Bond Fund, a registered open-end investment company
managed by Fifth Third Asset Management, Inc. was merged into Fifth Third
Michigan Municipal Bond Fund.
66
FIFTH THIRD MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 2005) 1
- ---------------------------------------------------------------------------------------------------------------------------
INCEPTION DATE PAST YEAR PAST 5 YEARS PAST 10 YEARS
- ---------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES 1 5/3/93
Return Before Taxes 0.80% 3.16% 3.64%
Return After Taxes on Distributions 2 0.80% 3.10% 3.61%
Return After Taxes on Distributions and Sale of Fund Shares 2 1.50% 3.15% 3.64%
- ---------------------------------------------------------------------------------------------------------------------------
LEHMAN BROTHERS 1-5 YEAR MUNICIPAL BOND INDEX(R)*
(REFLECTS NO DEDUCTION FOR FEES, EXPENSES OR TAXES) 1.02% 3.85% 4.30%
- ---------------------------------------------------------------------------------------------------------------------------
1 On October 29, 2001, the Kent Michigan Municipal Bond Fund, a registered
open-end investment company managed by Fifth Third Asset Management, Inc.
was merged into Fifth Third Michigan Municipal Bond Fund. As such, for the
period prior to October 29, 2001, the quoted performance of Institutional
shares reflects the performance of the Institutional shares of the Kent
Michigan Municipal Bond Fund.
2 After tax returns are calculated using a standard set of assumptions. The
stated returns assume the highest historical federal income and capital
gains tax rules. Returns after taxes on distributions assumes a continued
investment in the Fund and shows the effect of taxes on Fund
distributions. Returns after taxes on distributions and sales of Fund
shares assumes all shares were redeemed at the end of each measurement
period, and shows the effect of any taxable gain (or offsetting loss) on
redemption, as well as the effects of taxes on Fund distributions. These
after tax returns do not reflect the effect of any applicable state and
local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown. After tax returns are not
relevant to investors holding shares through tax-deferred programs, such
as IRA or 401(k) plans.
* The Lehman Brothers 1-5 Year Municipal Bond Index(R) is representative of
short term municipal bonds with a maturity between one and six years.
67
SHAREHOLDER FEES AND FUND EXPENSES
- --------------------------------------------------------------------------------
FEE TABLES
- --------------------------------------------------------------------------------
THESE TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE FUNDS.
Shareholder fees are paid by you at the time you purchase or sell your shares.
Annual Fund Operating Expenses are paid out of Fund assets, and are reflected in
the share price. Each Fund's fees and expenses are based upon the Fund's
operating expenses for the fiscal year ended July 31, 2006.
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) STOCK FUNDS--FEE TABLE
- ---------------------------------------------------------------------------------------------------------------------------------
FIFTH THIRD FIFTH THIRD FIFTH THIRD FIFTH THIRD
SMALL CAP MID CAP GROWTH QUALITY LARGE CAP
GROWTH FUND FUND GROWTH FUND CORE FUND
- ---------------------------------------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON
REINVESTED DIVIDENDS None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
MAXIMUM DEFERRED SALES LOAD None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
- ---------------------------------------------------------------------------------------------------------------------------------
MANAGEMENT FEES 0.70% 0.80% 0.80% 0.70%
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION (12b-1) FEES None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER EXPENSES 0.33% 0.28% 0.28% 0.33%
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 1.03% 1.08% 1.08% 1.03%
- ---------------------------------------------------------------------------------------------------------------------------------
FEE WAIVER AND/OR EXPENSE REIMBURSEMENT -- -- 0.01% 1 0.11% 1
- ---------------------------------------------------------------------------------------------------------------------------------
NET EXPENSES -- -- 1.07% 0.92%
- ---------------------------------------------------------------------------------------------------------------------------------
1 The Funds' Advisor and Administrator have contractually agreed to waive
fees and/or reimburse expenses to limit total annual fund operating
expenses for the Quality Growth Fund to 1.07% and for the Large Cap Core
Fund to 0.92%. These waivers and/or expense reimbursements will remain in
effect until November 28, 2007. Under the terms of the expense limitation
agreement, fees waived or expenses reimbursed by the Advisor and
Administrator are subject to reimbursement by the Fund for the 13 month
period in which the expense limitation agreement is in effect. No
reimbursement payment will be made by the Fund if it would result in the
Fund exceeding the expense limitation described herein.
68
SHAREHOLDER FEES AND FUND EXPENSES
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) STOCK FUNDS--FEE TABLE
- --------------------------------------------------------------------------------------------------------------------
FIFTH THIRD FIFTH THIRD FIFTH THIRD
EQUITY INDEX BALANCED MICRO CAP
FUND FUND VALUE FUND
- --------------------------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None None None
- --------------------------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS None None None
- --------------------------------------------------------------------------------------------------------------------
MAXIMUM DEFERRED SALES LOAD None None None
- --------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------------------------------------------
MANAGEMENT FEES 0.30% 0.80% 1.00%
- --------------------------------------------------------------------------------------------------------------------
DISTRIBUTION (12b-1) FEES None None None
- --------------------------------------------------------------------------------------------------------------------
OTHER EXPENSES 0.30% 0.42% 0.40%
- --------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.60% 1.22% 2 1.40%
- --------------------------------------------------------------------------------------------------------------------
FEE WAIVER AND/OR EXPENSE REIMBURSEMENT 0.41% 1 -- --
- --------------------------------------------------------------------------------------------------------------------
NET EXPENSES 0.19% -- --
- --------------------------------------------------------------------------------------------------------------------
1 The Funds' Advisor and Administrator have contractually agreed to waive
fees and/or reimburse expenses through November 28, 2007, to limit total
annual fund operating expenses for the Equity Index Fund to 0.19%. Under
the terms of the expense limitation agreement, fees waived or expenses
reimbursed by the Advisor and Administrator are subject to reimbursement
by the Fund for the 13 month period in which the expense limitation
agreement is in effect. No reimbursement payment will be made by the Fund
if it would result in the Fund exceeding the expense limitation described
herein.
2 The Funds' Advisor and Administrator have voluntarily agreed to waive fees
and/or reimburse expenses to limit total annual fund operating expenses
for the Balanced Fund to 0.96%. These waivers and/or expense
reimbursements may be discontinued at any time.
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) STOCK FUNDS--FEE TABLE
- -----------------------------------------------------------------------------------------------------------------------
FIFTH THIRD FIFTH THIRD FIFTH THIRD
SMALL CAP MULTI CAP DISCIPLINED LARGE
VALUE FUND VALUE FUND CAP VALUE FUND
- -----------------------------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None None None
- -----------------------------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS None None None
- -----------------------------------------------------------------------------------------------------------------------
MAXIMUM DEFERRED SALES LOAD None None None
- -----------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
- -----------------------------------------------------------------------------------------------------------------------
MANAGEMENT FEES 0.90% 1.00% 0.80%
- -----------------------------------------------------------------------------------------------------------------------
DISTRIBUTION (12b-1) FEES None None None
- -----------------------------------------------------------------------------------------------------------------------
OTHER EXPENSES 0.34% 0.31% 0.27%
- -----------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 1.24% 1.31% 1.07%
- -----------------------------------------------------------------------------------------------------------------------
FEE WAIVER AND/OR EXPENSE REIMBURSEMENT -- 0.12% 1 0.06% 1
- -----------------------------------------------------------------------------------------------------------------------
NET EXPENSES -- 1.19% 1.01%
- -----------------------------------------------------------------------------------------------------------------------
1 The Funds' Advisor and Administrator have contractually agreed to waive
fees and/or reimburse expenses to limit total annual fund operating
expenses through November 28, 2007 to limit total annual fund operating
expenses for the Multi Cap Value Fund to 1.19% and for the Disciplined
Large Cap Value Fund to 1.01%. Under the terms of the expense limitation
agreement, fees waived or expenses reimbursed by the Advisor and
Administrator are subject to reimbursement by the Fund for the 13 month
period in which the expense limitation agreement is in effect. No
reimbursement payment will be made by the Fund if it would result in the
Fund exceeding the expense limitation described herein.
69
SHAREHOLDER FEES AND FUND EXPENSES
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) ASSET ALLOCATION STRATEGY--FEE TABLE
- ---------------------------------------------------------------------------------------------------------------------------------
FIFTH THIRD FIFTH THIRD
FIFTH THIRD LIFEMODEL FIFTH THIRD LIFEMODEL FIFTH THIRD
LIFEMODEL MODERATELY LIFEMODEL MODERATELY LIFEMODEL
AGGRESSIVE AGGRESSIVE MODERATE CONSERVATIVE CONSERVATIVE
FUND SM FUND SM FUND SM FUND SM FUND SM
- ---------------------------------------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON
REINVESTED DIVIDENDS None None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
MAXIMUM DEFERRED SALES LOAD None None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
- ---------------------------------------------------------------------------------------------------------------------------------
MANAGEMENT FEES 0.15% 0.15% 0.15% 0.15% 0.15%
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION (12b-1) FEES None None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER EXPENSES 0.33% 0.30% 0.28% 0.35% 0.43%
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.48% 0.45% 0.43% 0.50% 0.58%
- ---------------------------------------------------------------------------------------------------------------------------------
FEE WAIVER AND/OR EXPENSE REIMBURSEMENT 1 0.40% 0.37% 0.35% 0.42% 0.50%
- ---------------------------------------------------------------------------------------------------------------------------------
NET EXPENSES 2 0.08% 0.08% 0.08% 0.08% 0.08%
- ---------------------------------------------------------------------------------------------------------------------------------
1 The Funds' Advisor and Administrator have contractually agreed to waive
fees and/or reimburse expenses through November 28, 2007 to limit total
annual fund operating expenses for the LifeModel Aggressive Fund SM, the
LifeModel Moderately Aggressive Fund SM, the LifeModel Moderate Fund SM,
the LifeModel Moderately Conservative Fund SM and the LifeModel
Conservative Fund SM to 0.08%. Under the terms of the expense limitation
agreement, fees waived or expenses reimbursed by the Advisor and
Administrator are subject to reimbursement by the Fund for the 13 month
period in which the expense limitation agreement is in effect. No
reimbursement payment will be made by the Fund if it would result in the
Fund exceeding the expense limitation described herein.
2 In addition to the operating expenses disclosed above, each Fund
indirectly pays a portion of the expenses incurred by the underlying
funds. The estimated average weighted expense ratios for the underlying
funds of the LifeModel Aggressive Fund SM are 1.03%, of the LifeModel
Moderately Aggressive Fund SM are 0.99%, of the LifeModel Moderate Fund SM
are 0.95%, of the LifeModel Moderately Conservative Fund SM are 0.90% and
of the LifeModel Conservative Fund SM are 0.86%.
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) STOCK FUNDS--FEE TABLE
- --------------------------------------------------------------------------------------------------------------------------------
FIFTH THIRD FIFTH THIRD FIFTH THIRD FIFTH THIRD
STRATEGIC DIVIDEND TECHNOLOGY INTERNATIONAL
INCOME FUND GROWTH FUND FUND EQUITY FUND
- --------------------------------------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None None None None
- --------------------------------------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON
REINVESTED DIVIDENDS None None None None
- --------------------------------------------------------------------------------------------------------------------------------
MAXIMUM DEFERRED SALES LOAD None None None None
- --------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------------------------------------------------------
MANAGEMENT FEES 1.00% 0.80% 1.00% 1.00%
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION (12b-1) FEES None None None None
- --------------------------------------------------------------------------------------------------------------------------------
OTHER EXPENSES 0.34% 1.92% 0.51% 0.37%
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 1.34% 2.72% 1.51% 1.37%
- --------------------------------------------------------------------------------------------------------------------------------
FEE WAIVER AND/OR EXPENSE REIMBURSEMENT 0.38% 2 1.99% 1 -- 0.02% 2
- --------------------------------------------------------------------------------------------------------------------------------
NET EXPENSES 0.96% 0.73% -- 1.35%
- --------------------------------------------------------------------------------------------------------------------------------
1 The Fund's Advisor and Administrator have contractually agreed to waive
fees and/or reimburse expenses through November 28, 2008 to limit total
annual fund operating expenses for the Fund to 0.73%. Under the terms of
the expense limitation agreement, fees waived or expenses reimbursed by
the Advisor and Administrator are subject to reimbursement by the Fund for
the 40 month period in which the expense limitation agreement is in
effect. No reimbursement payment will be made by the Fund if it would
result in the Fund exceeding the expense limitation described herein.
2 The Funds' Advisor and Administrator have contractually agreed to waive
fees and/or reimburse expenses through November 28, 2007 to limit total
annual fund operating expenses for the Strategic Income Fund to 0.96% and
for the International Equity Fund to 1.35%. Under the terms of the expense
limitation agreement, fees waived or expenses reimbursed by the Advisor
and Administrator are subject to reimbursement by the Fund for the 13
month period in which the expense limitation agreement is in effect. No
reimbursement payment will be made by the Fund if it would result in the
Fund exceeding the expense limitation described herein.
70
SHAREHOLDER FEES AND FUND EXPENSES
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) BOND FUNDS--FEE TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
FIFTH THIRD FIFTH THIRD FIFTH THIRD FIFTH THIRD FIFTH THIRD
HIGH YIELD BOND INTERMEDIATE SHORT TERM U.S. GOVERNMENT
BOND FUND FUND BOND FUND BOND FUND BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None None None None None
- ------------------------------------------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON
REINVESTED DIVIDENDS None None None None None
- ------------------------------------------------------------------------------------------------------------------------------------
MAXIMUM DEFERRED SALES LOAD None None None None None
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
- ------------------------------------------------------------------------------------------------------------------------------------
MANAGEMENT FEES 0.70% 0.60% 0.55% 0.50% 0.55%
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION (12b-1) FEES None None None None None
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER EXPENSES 0.45% 0.30% 0.28% 0.28% 0.43%
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 1.15% 0.90% 1 0.83% 1 0.78% 1 0.98% 1
- ------------------------------------------------------------------------------------------------------------------------------------
FEE WAIVER AND/OR EXPENSE REIMBURSEMENT 2 0.41% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
NET EXPENSES 0.74% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
1 The Funds' Advisor and Administrator have voluntarily agreed to waive fees
and/or reimburse expenses to limit total annual fund operating expenses
for the Bond Fund to 0.72%, for the Intermediate Bond Fund to 0.70%, for
the Short Term Bond Fund to 0.64%, and for the U.S. Government Bond Fund
to 0.69%. These waivers and/or expense reimbursements may be discontinued
at any time.
2 The Funds' Advisor and Administrator have contractually agreed to waive
fees and/or reimburse expenses through November 28, 2007 to limit total
annual fund operating expenses for the High Yield Bond Fund to 0.74%.
Under the terms of the expense limitation agreement, fees waived or
expenses reimbursed by the Advisor and Administrator are subject to
reimbursement by the Fund for the 13 month period in which the expense
limitation agreement is in effect. No reimbursement payment will be made
by the Fund if it would result in the Fund exceeding the expense
limitation described herein.
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) BOND FUNDS--FEE TABLE
- -------------------------------------------------------------------------------------------------------------------------------
FIFTH THIRD FIFTH THIRD FIFTH THIRD
FIFTH THIRD INTERMEDIATE OHIO MICHIGAN
MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES None None None None
- -------------------------------------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS None None None None
- -------------------------------------------------------------------------------------------------------------------------------
MAXIMUM DEFERRED SALES LOAD None None None None
- -------------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
- -------------------------------------------------------------------------------------------------------------------------------
MANAGEMENT FEES 0.55% 0.55% 0.55% 0.45%
- -------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION (12b-1) FEES None None None None
- -------------------------------------------------------------------------------------------------------------------------------
OTHER EXPENSES 0.51% 0.32% 0.35% 0.43%
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL FUND OPERATING EXPENSES 1.06% 1 0.87% 0.90% 1 0.88%
- -------------------------------------------------------------------------------------------------------------------------------
FEE WAIVER AND/OR EXPENSE REIMBURSEMENT 2 -- 0.20% -- 0.20%
- -------------------------------------------------------------------------------------------------------------------------------
NET EXPENSES -- 0.67% -- 0.68%
- -------------------------------------------------------------------------------------------------------------------------------
1 The Funds' Advisor and Administrator have voluntarily agreed to waive fees
and/or reimburse expenses to limit total annual fund operating expenses
for the Municipal Bond Fund to 0.61%, for the Intermediate Municipal Bond
Fund to 0.71% and for the Ohio Municipal Bond Fund to 0.79%. These waivers
and/or expense reimbursements may be discontinued at any time.
2 The Funds' Advisor and Administrator have contractually agreed to waive
fees and/or reimburse expenses through November 28, 2007 to limit total
annual fund operating expenses for the Intermediate Municipal Bond Fund to
0.67% and for the Michigan Municipal Bond Fund to 0.68%. Under the terms
of the expense limitation agreement, fees waived or expenses reimbursed by
the Advisor and Administrator are subject to reimbursement by the Fund for
the 13 month period in which the expense limitation agreement is in
effect. No reimbursement payment will be made by the Fund if it would
result in the Fund exceeding the expense limitation described herein.
71
SHAREHOLDER FEES AND FUND EXPENSES
- --------------------------------------------------------------------------------
EXPENSE EXAMPLES
- --------------------------------------------------------------------------------
Use the tables below to compare fees and expenses with the fees and expenses of
other mutual funds. The tables illustrate the amount of fees and expenses you
and the Fund would pay, assuming a $10,000 initial investment, 5% annual return,
payment of maximum sales charges, and no changes in the Fund's operating
expenses. Because these examples are hypothetical and for comparison only, your
actual costs may be different.
STOCK FUNDS - INSTITUTIONAL SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------
FIFTH THIRD SMALL CAP GROWTH FUND $ 105 $ 328 $ 569 $ 1,259
- ------------------------------------------------------------------------------------------------
FIFTH THIRD MID CAP GROWTH FUND $ 110 $ 343 $ 595 $ 1,317
- ------------------------------------------------------------------------------------------------
FIFTH THIRD QUALITY GROWTH FUND $ 109 $ 342 $ 595 $ 1,316
- ------------------------------------------------------------------------------------------------
FIFTH THIRD LARGE CAP CORE FUND $ 94 $ 317 $ 558 $ 1,249
- ------------------------------------------------------------------------------------------------
FIFTH THIRD EQUITY INDEX FUND $ 19 $ 151 $ 294 $ 711
- ------------------------------------------------------------------------------------------------
FIFTH THIRD BALANCED FUND $ 124 $ 387 $ 670 $ 1,477
- ------------------------------------------------------------------------------------------------
FIFTH THIRD MICRO CAP VALUE FUND $ 143 $ 443 $ 766 $ 1,680
- ------------------------------------------------------------------------------------------------
FIFTH THIRD SMALL CAP VALUE FUND $ 126 $ 393 $ 681 $ 1,500
- ------------------------------------------------------------------------------------------------
FIFTH THIRD MULTI CAP VALUE FUND $ 121 $ 403 $ 707 $ 1,569
- ------------------------------------------------------------------------------------------------
FIFTH THIRD DISCIPLINED LARGE CAP VALUE FUND $ 103 $ 334 $ 584 $ 1,300
- ------------------------------------------------------------------------------------------------
ASSET ALLOCATION
STRATEGY - INSTITUTIONAL SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------
FIFTH THIRD LIFEMODEL AGGRESSIVE FUND SM $ 8 $ 114 $ 229 $ 565
- ------------------------------------------------------------------------------------------------
FIFTH THIRD LIFEMODEL MODERATELY AGGRESSIVE FUND SM $ 8 $ 107 $ 215 $ 531
- ------------------------------------------------------------------------------------------------
FIFTH THIRD LIFEMODEL MODERATE FUND SM $ 8 $ 103 $ 206 $ 508
- ------------------------------------------------------------------------------------------------
FIFTH THIRD LIFEMODEL MODERATELY CONSERVATIVE FUND SM $ 8 $ 118 $ 238 $ 588
- ------------------------------------------------------------------------------------------------
FIFTH THIRD LIFEMODEL CONSERVATIVE FUND SM $ 8 $ 135 $ 274 $ 678
- ------------------------------------------------------------------------------------------------
72
SHAREHOLDER FEES AND FUND EXPENSES
- --------------------------------------------------------------------------------
STRATEGIC INCOME STRATEGY 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------
FIFTH THIRD STRATEGIC INCOME FUND - INSTITUTIONAL SHARES $ 98 $ 387 $ 698 $ 1,580
- ------------------------------------------------------------------------------------------------
SPECIALTY STRATEGY - INSTITUTIONAL SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------
FIFTH THIRD DIVIDEND GROWTH FUND $ 75 $ 451 $ 1,070 $ 2,745
- ------------------------------------------------------------------------------------------------
FIFTH THIRD TECHNOLOGY FUND $ 154 $ 477 $ 824 $ 1,802
- ------------------------------------------------------------------------------------------------
FIFTH THIRD INTERNATIONAL EQUITY FUND $ 137 $ 432 $ 748 $ 1,645
FIXED INCOME FUNDS (TAXABLE) --
INSTITUTIONAL SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------
FIFTH THIRD HIGH YIELD BOND FUND $ 76 $ 325 $ 593 $ 1,361
- ------------------------------------------------------------------------------------------------
FIFTH THIRD BOND FUND $ 92 $ 287 $ 498 $ 1,108
- ------------------------------------------------------------------------------------------------
FIFTH THIRD INTERMEDIATE BOND FUND $ 85 $ 265 $ 460 $ 1,025
- ------------------------------------------------------------------------------------------------
FIFTH THIRD SHORT TERM BOND FUND $ 80 $ 249 $ 433 $ 966
- ------------------------------------------------------------------------------------------------
FIFTH THIRD U.S. GOVERNMENT BOND FUND $ 100 $ 312 $ 542 $ 1,201
- ------------------------------------------------------------------------------------------------
FIXED INCOME FUNDS (MUNICIPAL) --
INSTITUTIONAL SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------
FIFTH THIRD MUNICIPAL BOND FUND $ 108 $ 337 $ 585 $ 1,294
- ------------------------------------------------------------------------------------------------
FIFTH THIRD INTERMEDIATE MUNICIPAL BOND FUND $ 68 $ 258 $ 463 $ 1,054
- ------------------------------------------------------------------------------------------------
FIFTH THIRD OHIO MUNICIPAL BOND FUND $ 92 $ 287 $ 498 $ 1,108
- ------------------------------------------------------------------------------------------------
FIFTH THIRD MICHIGAN MUNICIPAL BOND FUND $ 69 $ 261 $ 468 $ 1,066
- ------------------------------------------------------------------------------------------------
73
ADDITIONAL INFORMATION ABOUT THE FUNDS' INVESTMENTS
- --------------------------------------------------------------------------------
NAME POLICIES
- --------------------------------------------------------------------------------
To comply with Securities and Exchange Commission ("SEC") rules regarding the
use of descriptive words in a fund's name, some Funds have adopted policies of
investing at least 80% of their net assets plus any borrowings made for
investment purposes in specific types of investments or industries. Each Fund's
policy is described in its summary description under the heading "Principal
Investment Strategies." A Fund will not change its name policy without providing
its shareholders at least 60 days' prior written notice.
INVESTMENT PRACTICES
- --------------------------------------------------------------------------------
Each Fund may invest in a variety of securities and employ a number of
investment techniques. The following table includes a list of permissible
securities and investment techniques that each Fund may use; however, the
selection of such securities and techniques is left to the investment discretion
of the Advisor or Subadvisor. Each security and technique involves certain
risks. Following the table is a discussion of the risks associated with these
securities and techniques. You may also consult the Statement of Additional
Information for additional details regarding these permissible investments.
74
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
75
ADDITIONAL INFORMATION ABOUT THE FUNDS' INVESTMENTS
- --------------------------------------------------------------------------------
Foreign
FIFTH THIRD FUNDS Asset-Backed Common Convertible Delayed Delivery/ Currency
EQUITY FUNDS Securities Stock Securities When-Issueds Derivatives Transactions
- ---------------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Mid Cap Growth Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Quality Growth Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Large Cap Core Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Equity Index Fund X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Balanced Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Micro Cap Value Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Small Cap Value Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Multi Cap Value Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Disciplined Large Cap Value Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION STRATEGY
- ---------------------------------------------------------------------------------------------------------------------------------
LifeModel Aggressive Fund SM
- ---------------------------------------------------------------------------------------------------------------------------------
LifeModel Moderately Aggressive Fund SM
- ---------------------------------------------------------------------------------------------------------------------------------
LifeModel Moderate Fund SM
- ---------------------------------------------------------------------------------------------------------------------------------
LifeModel Moderately Conservative Fund SM
- ---------------------------------------------------------------------------------------------------------------------------------
LifeModel Conservative Fund SM
- ---------------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME STRATEGY
- ---------------------------------------------------------------------------------------------------------------------------------
Strategic Income Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
SPECIALTY STRATEGY
- ---------------------------------------------------------------------------------------------------------------------------------
Dividend Growth Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Technology Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
International Equity Fund X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
FIXED INCOME FUNDS
- ---------------------------------------------------------------------------------------------------------------------------------
High Yield Bond Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Bond Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Intermediate Bond Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Short Term Bond Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. Government Bond Fund X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Municipal Bond Fund X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Intermediate Municipal Bond Fund X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Ohio Municipal Bond Fund X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Michigan Municipal Bond Fund X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Money Market Fund X X X
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money Market Fund X X
- ---------------------------------------------------------------------------------------------------------------------------------
Guaranteed High-Yield/ Investment Investment
FIFTH THIRD FUNDS Investment High-Risk Debt Illiquid Company Grade Loan
EQUITY FUNDS Contracts Securities Securities Securities Bonds Participations
- ---------------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Fund X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Mid Cap Growth Fund X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Quality Growth Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Large Cap Core Fund X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Equity Index Fund X X
- ---------------------------------------------------------------------------------------------------------------------------------
Balanced Fund X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Micro Cap Value Fund X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Small Cap Value Fund X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Multi Cap Value Fund X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Disciplined Large Cap Value Fund X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION STRATEGY
- ---------------------------------------------------------------------------------------------------------------------------------
LifeModel Aggressive Fund SM X
- ---------------------------------------------------------------------------------------------------------------------------------
LifeModel Moderately Aggressive Fund SM X
- ---------------------------------------------------------------------------------------------------------------------------------
LifeModel Moderate Fund SM X
- ---------------------------------------------------------------------------------------------------------------------------------
LifeModel Moderately Conservative Fund SM X
- ---------------------------------------------------------------------------------------------------------------------------------
LifeModel Conservative Fund SM X
- ---------------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME STRATEGY
- ---------------------------------------------------------------------------------------------------------------------------------
Strategic Income Fund X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
SPECIALTY STRATEGY
- ---------------------------------------------------------------------------------------------------------------------------------
Dividend Growth Fund X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Technology Fund X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
International Equity Fund X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
FIXED INCOME FUNDS
- ---------------------------------------------------------------------------------------------------------------------------------
High Yield Bond Fund X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Bond Fund X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Intermediate Bond Fund X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Short Term Bond Fund X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. Government Bond Fund X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Municipal Bond Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Intermediate Municipal Bond Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Ohio Municipal Bond Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Michigan Municipal Bond Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Money Market Fund X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money Market Fund X
- ---------------------------------------------------------------------------------------------------------------------------------
76
ADDITIONAL INFORMATION ABOUT THE FUNDS' INVESTMENTS
- --------------------------------------------------------------------------------
Money Mortgage Non-U.S.
FIFTH THIRD FUNDS Market Mortgage-Backed Dollar Municipal Traded Foreign Preferred
EQUITY FUNDS Instruments Securities Rolls Securities Securities Stocks
- -------------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Fund X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
Mid Cap Growth Fund X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
Quality Growth Fund X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
Large Cap Core Fund X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
Equity Index Fund X
- -------------------------------------------------------------------------------------------------------------------------------
Balanced Fund X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
Micro Cap Value Fund X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
Small Cap Value Fund X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
Multi Cap Value Fund X X X X
- -------------------------------------------------------------------------------------------------------------------------------
Disciplined Large Cap Value Fund X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION STRATEGY
- -------------------------------------------------------------------------------------------------------------------------------
LifeModel Aggressive Fund SM X
- -------------------------------------------------------------------------------------------------------------------------------
LifeModel Moderately Aggressive Fund SM X
- -------------------------------------------------------------------------------------------------------------------------------
LifeModel Moderate Fund SM X
- -------------------------------------------------------------------------------------------------------------------------------
LifeModel Moderately Conservative Fund SM X
- -------------------------------------------------------------------------------------------------------------------------------
LifeModel Conservative Fund SM X
- -------------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME STRATEGY
- -------------------------------------------------------------------------------------------------------------------------------
Strategic Income Fund X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
SPECIALTY STRATEGY
- -------------------------------------------------------------------------------------------------------------------------------
Dividend Growth Fund X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
Technology Fund X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
International Equity Fund X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
FIXED INCOME FUNDS
- -------------------------------------------------------------------------------------------------------------------------------
High Yield Bond Fund X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
Bond Fund X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
Intermediate Bond Fund X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
Short Term Bond Fund X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
U.S. Government Bond Fund X X X X
- -------------------------------------------------------------------------------------------------------------------------------
Municipal Bond Fund X X X X
- -------------------------------------------------------------------------------------------------------------------------------
Intermediate Municipal Bond Fund X X X X
- -------------------------------------------------------------------------------------------------------------------------------
Ohio Municipal Bond Fund X X X X
- -------------------------------------------------------------------------------------------------------------------------------
Michigan Municipal Bond Fund X X X X
- -------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS
- -------------------------------------------------------------------------------------------------------------------------------
Institutional Money Market Fund X X X
- -------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money Market Fund X
- -------------------------------------------------------------------------------------------------------------------------------
Real Estate
Investment Reverse Small and
FIFTH THIRD FUNDS Trusts Restricted Repurchase Securities Short-Term Micro Cap
EQUITY FUNDS (REITs) Securities Agreements Lending Trading Equities
- ------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Fund X X X X X X
- ------------------------------------------------------------------------------------------------------------------------
Mid Cap Growth Fund X X X X X X
- ------------------------------------------------------------------------------------------------------------------------
Quality Growth Fund X X X X X X
- ------------------------------------------------------------------------------------------------------------------------
Large Cap Core Fund X X X X X X
- ------------------------------------------------------------------------------------------------------------------------
Equity Index Fund X X X X X X
- ------------------------------------------------------------------------------------------------------------------------
Balanced Fund X X X X X X
- ------------------------------------------------------------------------------------------------------------------------
Micro Cap Value Fund X X X X X X
- ------------------------------------------------------------------------------------------------------------------------
Small Cap Value Fund X X X X X X
- ------------------------------------------------------------------------------------------------------------------------
Multi Cap Value Fund X X X X X X
- ------------------------------------------------------------------------------------------------------------------------
Disciplined Large Cap Value Fund X X X X X X
- ------------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION STRATEGY
- ------------------------------------------------------------------------------------------------------------------------
LifeModel Aggressive Fund SM
- ------------------------------------------------------------------------------------------------------------------------
LifeModel Moderately Aggressive Fund SM
- ------------------------------------------------------------------------------------------------------------------------
LifeModel Moderate Fund SM
- ------------------------------------------------------------------------------------------------------------------------
LifeModel Moderately Conservative Fund SM
- ------------------------------------------------------------------------------------------------------------------------
LifeModel Conservative Fund SM
- ------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME STRATEGY
- ------------------------------------------------------------------------------------------------------------------------
Strategic Income Fund X X X X X X
- ------------------------------------------------------------------------------------------------------------------------
SPECIALTY STRATEGY
- ------------------------------------------------------------------------------------------------------------------------
Dividend Growth Fund X X X X X X
- ------------------------------------------------------------------------------------------------------------------------
Technology Fund X X X X X X
- ------------------------------------------------------------------------------------------------------------------------
International Equity Fund X X X X X X
- ------------------------------------------------------------------------------------------------------------------------
FIXED INCOME FUNDS
- ------------------------------------------------------------------------------------------------------------------------
High Yield Bond Fund X X X X X
- ------------------------------------------------------------------------------------------------------------------------
Bond Fund X X X X X
- ------------------------------------------------------------------------------------------------------------------------
Intermediate Bond Fund X X X X X
- ------------------------------------------------------------------------------------------------------------------------
Short Term Bond Fund X X X X X
- ------------------------------------------------------------------------------------------------------------------------
U.S. Government Bond Fund X X X X
- ------------------------------------------------------------------------------------------------------------------------
Municipal Bond Fund X X X X
- ------------------------------------------------------------------------------------------------------------------------
Intermediate Municipal Bond Fund X X X X
- ------------------------------------------------------------------------------------------------------------------------
Ohio Municipal Bond Fund X X X X
- ------------------------------------------------------------------------------------------------------------------------
Michigan Municipal Bond Fund X X X X
- ------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS
- ------------------------------------------------------------------------------------------------------------------------
Institutional Money Market Fund X X X X
- ------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money Market Fund X
- ------------------------------------------------------------------------------------------------------------------------
U.S. Government U.S. Traded Variable and
FIFTH THIRD FUNDS Stripped Agency Foreign U.S. Treasury Floating Rate
EQUITY FUNDS Obligations Securities Securities Obligations Instruments
- --------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Mid Cap Growth Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Quality Growth Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Large Cap Core Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Equity Index Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Balanced Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Micro Cap Value Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Small Cap Value Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Multi Cap Value Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Disciplined Large Cap Value Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION STRATEGY
- --------------------------------------------------------------------------------------------------------------------------
LifeModel Aggressive Fund SM
- --------------------------------------------------------------------------------------------------------------------------
LifeModel Moderately Aggressive Fund SM
- --------------------------------------------------------------------------------------------------------------------------
LifeModel Moderate Fund SM
- --------------------------------------------------------------------------------------------------------------------------
LifeModel Moderately Conservative Fund SM
- --------------------------------------------------------------------------------------------------------------------------
LifeModel Conservative Fund SM
- --------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME STRATEGY
- --------------------------------------------------------------------------------------------------------------------------
Strategic Income Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
SPECIALTY STRATEGY
- --------------------------------------------------------------------------------------------------------------------------
Dividend Growth Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Technology Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
International Equity Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
FIXED INCOME FUNDS
- --------------------------------------------------------------------------------------------------------------------------
High Yield Bond Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Bond Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Intermediate Bond Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Short Term Bond Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
U.S. Government Bond Fund X X X X
- --------------------------------------------------------------------------------------------------------------------------
Municipal Bond Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Intermediate Municipal Bond Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Ohio Municipal Bond Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Michigan Municipal Bond Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS
- --------------------------------------------------------------------------------------------------------------------------
Institutional Money Market Fund X X X X X
- --------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money Market Fund X X X
- --------------------------------------------------------------------------------------------------------------------------
Zero-Coupon
FIFTH THIRD FUNDS Debt
EQUITY FUNDS Warrants Obligations
- -------------------------------------------------------------------
Small Cap Growth Fund X X
- -------------------------------------------------------------------
Mid Cap Growth Fund X X
- -------------------------------------------------------------------
Quality Growth Fund X X
- -------------------------------------------------------------------
Large Cap Core Fund X X
- -------------------------------------------------------------------
Equity Index Fund X X
- -------------------------------------------------------------------
Balanced Fund X X
- -------------------------------------------------------------------
Micro Cap Value Fund X X
- -------------------------------------------------------------------
Small Cap Value Fund X X
- -------------------------------------------------------------------
Multi Cap Value Fund X X
- -------------------------------------------------------------------
Disciplined Large Cap Value Fund X X
- -------------------------------------------------------------------
ASSET ALLOCATION STRATEGY
- -------------------------------------------------------------------
LifeModel Aggressive Fund SM
- -------------------------------------------------------------------
LifeModel Moderately Aggressive Fund SM
- -------------------------------------------------------------------
LifeModel Moderate Fund SM
- -------------------------------------------------------------------
LifeModel Moderately Conservative Fund SM
- -------------------------------------------------------------------
LifeModel Conservative Fund SM
- -------------------------------------------------------------------
STRATEGIC INCOME STRATEGY
- -------------------------------------------------------------------
Strategic Income Fund X X
- -------------------------------------------------------------------
SPECIALTY STRATEGY
- -------------------------------------------------------------------
Dividend Growth Fund X X
- -------------------------------------------------------------------
Technology Fund X X
- -------------------------------------------------------------------
International Equity Fund X X
- -------------------------------------------------------------------
FIXED INCOME FUNDS
- -------------------------------------------------------------------
High Yield Bond Fund X
- -------------------------------------------------------------------
Bond Fund X
- -------------------------------------------------------------------
Intermediate Bond Fund X
- -------------------------------------------------------------------
Short Term Bond Fund X
- -------------------------------------------------------------------
U.S. Government Bond Fund X
- -------------------------------------------------------------------
Municipal Bond Fund X
- -------------------------------------------------------------------
Intermediate Municipal Bond Fund X
- -------------------------------------------------------------------
Ohio Municipal Bond Fund X
- -------------------------------------------------------------------
Michigan Municipal Bond Fund X
- -------------------------------------------------------------------
MONEY MARKET FUNDS
- -------------------------------------------------------------------
Institutional Money Market Fund X
- -------------------------------------------------------------------
U.S. Treasury Money Market Fund X
- -------------------------------------------------------------------
77
ADDITIONAL INFORMATION ABOUT THE FUNDS' INVESTMENTS
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES: Securities secured by company receivables, home equity
loans, truck and auto loans, leases, credit card receivables and securities
backed by other types of receivables or other assets.
COMMON STOCK: Shares of ownership of a company.
COLLATERALIZED LOAN OBLIGATIONS: A type of asset-backed security that is an
obligation of a Trust typically collateralized by pools of loans.
CONVERTIBLE SECURITIES: Bonds or preferred stock that convert to common stock.
DELAYED DELIVERY TRANSACTIONS/FORWARD COMMITMENTS/WHEN-ISSUEDS: A purchase of,
or contract to purchase, securities at a fixed price for delivery at a future
date. Under normal market conditions, a Fund's obligations under these
commitments will not exceed 25% of its total assets.
DERIVATIVES: Instruments whose value is derived from an underlying contract,
index or security, or any combination thereof, including futures, options,
(e.g., put and calls), options on futures, swaps, swaptions, some
mortgage-backed securities and custody receipts.
CALL AND PUT OPTIONS: A call option gives the buyer the right to buy, and
obligates the seller of the option to sell, a security at a specified price. A
put option gives the buyer the right to sell, and obligates the seller of the
option to buy a security at a specified price. The Dividend Growth Fund,
Intermediate Municipal Bond Fund, Ohio Municipal Bond Fund, and the Money Market
Funds may not invest in these securities. In addition, the following Funds may
only buy or sell listed put options on financial futures contracts or buy or
sell listed call options or over-the-counter call options on futures contracts:
Micro Cap Value Fund, Multi Cap Value Fund, and Strategic Income Fund.
CUSTODY RECEIPTS: Derivative products which, in the aggregate, evidence
direct ownership in a pool of securities, such as Lehman Brothers TRAINs and
Morgan Stanley TRACERs.
FUTURES AND RELATED OPTIONS: A contract providing for the future sale and
purchase of a specified amount of a specified security, class of securities, or
an index at a specified time in the future and at a specified price. The
Dividend Growth Fund, Intermediate Municipal Bond Fund, Ohio Municipal Bond
Fund, and the Money Market Funds may not invest in these.
STOCK-INDEX OPTIONS: A security that combines features of options with
securities trading using composite stock indices. The Dividend Growth Fund, the
Bond Funds, and the Money Market Funds may not invest in these.
STRUCTURED NOTES: Debt obligations that may include components such as
swaps, forwards, options, caps or floors, which change their return pattern.
They may be used to alter the risks to a portfolio or, alternatively, may be
used to expose a portfolio to asset classes or markets in which one does not
desire to invest in directly. The Money Market Funds may not invest in these.
SWAPS AND SWAPTIONS: Two-party contracts where the parties agree to
exchange net returns (or differentials in rates of return) earned or realized on
particular predetermined investments or instruments. The Money Market Funds may
not invest in these.
FOREIGN CURRENCY TRANSACTIONS: Foreign currency transactions include forward
foreign currency exchange contracts, foreign currency options, and foreign
currency futures transactions.
FOREIGN SECURITIES--NON-U.S. TRADED: Stocks, bonds, and other obligations issued
by foreign companies, foreign governments, and supranational entities that trade
on non-U.S. exchanges.
FOREIGN SECURITIES--U.S. TRADED: Stocks, bonds, and other obligations issued by
foreign companies, foreign governments, and supranational entities that trade on
U.S. exchanges.
AMERICAN DEPOSITARY RECEIPTS ("ADRS"): ADRs are foreign shares of a
company held by a U.S. bank that issues a receipt evidencing ownership.
YANKEE BONDS AND SIMILAR DEBT OBLIGATIONS: U.S.-dollar denominated bonds
issued by foreign corporations or governments.
CANADA BONDS: Issued by Canadian provinces.
SOVEREIGN BONDS: Issued by the government of a foreign country.
SUPRANATIONAL BONDS: Issued by supranational entities, such as the
World Bank and European Investment Bank.
GUARANTEED INVESTMENT CONTRACTS: Contract between a fund and an insurance
company that guarantees a specific rate of return on the invested capital over
the life of the contract.
78
ADDITIONAL INFORMATION ABOUT THE FUNDS' INVESTMENTS
- --------------------------------------------------------------------------------
HIGH-YIELD/HIGH-RISK DEBT SECURITIES: High-yield/high-risk debt securities are
securities that are rated below investment grade by the primary rating agencies
(e.g., BB or lower by Standard & Poor's and Ba or lower by Moody's). These
securities are considered speculative and involve greater risk of loss than
investment grade debt securities. Other terms commonly used to describe such
securities include "lower rated bonds," "non-investment grade bonds," and "junk
bonds."
ILLIQUID SECURITIES: Securities that cannot be disposed of within seven days in
the ordinary course of business at approximately the amount at which the Fund
has valued the security.
INVESTMENT COMPANY SECURITIES: Shares of investment companies. Investment
companies may include money market funds of Fifth Third Funds and shares of
other registered investment companies for which the Advisor to a Fund or any of
its affiliates serves as investment advisor, administrator or distributor.
BEAR FUNDS: A fund intended to increase/decrease in value inversely to the
stock or equity index to which it relates. The Money Market Funds may not invest
in these.
CLOSED-END FUNDS: Funds traded on an exchange, which are not redeemable on
a continuous basis. The Money Market Funds may not invest in these.
EXCHANGE-TRADED FUNDS ("ETFS"): ETFs entitle a holder to receive
proportionate quarterly cash distributions corresponding to the dividends that
accrue to the index stocks in the underlying portfolios, less trust expenses.
Examples of ETFs include Standard & Poor's Depositary Receipts ("SPDRs"). A SPDR
is an ownership interest in a long-term unit investment trust that holds a
portfolio of common stocks designed to track the price performance and dividend
yield of an index, such as the S&P 500(R) Index. iShares(R) are also ETFs and
are index funds that trade like shares. Each share represents a portfolio of
stocks designed to track closely one specific index. The Money Market Funds may
not invest in these.
LEVERAGED FUNDS: Funds that utilize leverage in an attempt to maximize
gains. The Money Market Funds may not invest in these.
INVESTMENT GRADE BONDS: Interest-bearing or discounted securities that obligate
the issuer to pay the bondholder a specified sum of money, usually at specific
intervals, and to repay the principal amount of the loan at maturity. These
bonds are rated BBB or better by S&P or Baa or better by Moody's or similarly
rated by other nationally recognized statistical rating organizations, or, if
not rated, determined to be of comparable quality by the Advisor.
LOAN PARTICIPATIONS: Interests in loans to U.S. corporations that are
administered by the lending bank or agent for a syndicate of lending banks.
MONEY MARKET INSTRUMENTS: Investment-grade, U.S.-dollar denominated debt
securities that have remaining maturities of one year or less. These securities
may include U.S. Government obligations, commercial paper and other short-term
corporate obligations, repurchase agreements collateralized with U.S. Government
securities, certificates of deposit, bankers' acceptances, and other financial
institution obligations. Money market instruments may carry fixed or variable
interest rates.
BANKERS' ACCEPTANCES: Bills of exchange or time drafts drawn on and
accepted by a commercial bank. Maturities are generally six months or less.
CERTIFICATES OF DEPOSIT: Negotiable instruments with a stated maturity.
COMMERCIAL PAPER: Secured and unsecured short-term promissory notes issued
by corporations and other entities. Maturities generally vary from a few days to
nine months.
REPURCHASE AGREEMENTS: The purchase of a security and the simultaneous
commitment to return the security to the seller at an agreed upon price on an
agreed upon date.
TIME DEPOSITS: Non-negotiable receipts issued by a bank in exchange for
the deposit of funds.
MORTGAGE-BACKED SECURITIES: Debt obligations secured by real estate loans and
pools of loans. These include collateralized mortgage obligations and real
estate mortgage investment conduits.
COLLATERALIZED MORTGAGE OBLIGATIONS: Mortgage-backed bonds that separate
mortgage pools into different maturity classes.
MORTGAGE DOLLAR ROLLS: Transactions in which a Fund sells securities and
simultaneously contracts with the same counterparty to repurchase similar but
not identical securities on a specified future date.
79
ADDITIONAL INFORMATION ABOUT THE FUNDS' INVESTMENTS
- --------------------------------------------------------------------------------
MUNICIPAL SECURITIES: Securities issued by a state or political subdivision to
obtain funds for various public purposes. Municipal securities include (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; (b)
municipal notes and tax-exempt commercial paper; (c) serial bonds; (d) tax
anticipation notes sold to finance working capital needs of municipalities in
anticipation of receiving taxes at a later date; (e) bond anticipation notes
sold in anticipation of the issuance of long-term bonds in the future; (f)
pre-refunded municipal bonds whose timely payment of interest and principal is
ensured by an escrow of U.S. Government obligations; and (g) general obligation
bonds.
STAND-BY COMMITMENTS: Contract where a dealer agrees to purchase at a
fund's option a specified municipal obligation at its amortized cost value to a
fund plus accrued interest.
PREFERRED STOCKS: Equity securities that generally pay dividends at a specified
rate and have preference over common stock in the payment of dividends and
liquidation. These securities generally do not carry voting rights.
REAL ESTATE INVESTMENT TRUSTS ("REITS"): Pooled investment vehicles investing
primarily in income producing real estate or real estate loans or interest.
RESTRICTED SECURITIES: Securities not registered under the Securities Act of
1933, such as privately placed commercial paper and Rule 144A securities.
REVERSE REPURCHASE AGREEMENTS: The sale of a security and the simultaneous
commitment to buy the security back at an agreed upon price on an agreed upon
date. This is treated as a borrowing by a Fund.
SECURITIES LENDING: The lending of up to 33 1/3% of the Fund's total assets,
plus the amount of the securities out on loan. In return, the Fund will receive
cash, other securities, and/or letters of credit.
SHORT-TERM TRADING: The sale of a security soon after its purchase. A portfolio
engaging in such trading will have higher turnover and transaction expenses.
SMALL AND MICRO CAP EQUITIES: Equity securities of companies with market
capitalizations within or lower than those included in the Russell 2000(R)
Index.
STRIPPED OBLIGATIONS: U.S. Treasury Obligations and their unmatured interest
coupons that have been separated ("stripped") by their holder, typically a
custodian bank or other institution.
TRUST PREFERRED SECURITIES: Securities possessing characteristics of both equity
and debt issues.
U.S. GOVERNMENT AGENCY SECURITIES: Securities issued by agencies and
instrumentalities of the U.S. Government. These include Fannie Mae and Freddie
Mac.
U.S. TREASURY OBLIGATIONS: Bills, notes, bonds, Ginnie Maes, separately traded
registered interest and principal securities, and coupons under bank entry
safekeeping.
VARIABLE AND FLOATING RATE INSTRUMENTS: Obligations with interest rates which
are reset daily, weekly, quarterly or according to some other period and that
may be payable to a Fund on demand.
WARRANTS: Securities, typically issued with preferred stock or bonds, which give
the holder the right to buy a proportionate amount of common stock at a
specified price.
ZERO-COUPON DEBT OBLIGATIONS: Bonds and other debt obligations that pay no
interest, but are issued at a discount from their value at maturity. When held
to maturity, their entire return equals the difference between their issue price
and their maturity value.
80
ADDITIONAL INFORMATION ABOUT THE FUNDS' INVESTMENTS
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INVESTMENT RISKS
- --------------------------------------------------------------------------------
Below is a discussion of the types of risks inherent in the securities and
investment techniques listed above as well as those risks discussed in
"Principal Investment Risks." Because of these risks, the value of the
securities held by the Funds may fluctuate, as will the value of your investment
in the Funds. Certain investments and Funds are more susceptible to these risks
than others. Equity securities and subject mainly to market risk. Fixed income
securities are primarily influenced by market, credit and pre-payment risks,
although certain securities may be subject to additional risks.
CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation. Credit risk is generally higher for non-investment grade securities.
The price of a security can be adversely affected prior to actual default as its
credit status deteriorates and the probability of default rises. The following
investments and practices are subject to credit risk: asset-backed securities,
bankers' acceptances, bonds, call and put options, certificates of deposit,
commercial paper, convertible securities, derivatives, futures and related
options, guaranteed investment contracts, high-yield/high-risk/debt securities,
investment grade bonds, loan participations, money market instruments,
mortgage-backed securities, municipal securities, real estate investment trusts
(REITs), securities lending, stock-index options, time deposits, U.S. Government
agency securities, variable and floating rate instruments, warrants, when-issued
and delayed delivery transactions, Yankee bonds and similar debt obligations,
and zero-coupon debt obligations.
FOREIGN INVESTMENT RISK. The risk associated with higher transaction costs,
delayed settlements, currency controls and adverse economic developments related
to foreign investments. This also includes the risk that fluctuations in the
exchange rates between the U.S. dollar and foreign currencies may negatively
affect an investment. Adverse changes in exchange rates may erode or reverse any
gains produced by foreign currency denominated investments and may widen any
losses. Exchange rate volatility also may affect the ability of an issuer to
repay U.S. dollar denominated debt, thereby increasing credit risk. Foreign
securities also may be affected by incomplete or inaccurate financial
information on companies, social upheavals or political actions ranging from tax
code changes to governmental collapse. These risks are more significant in
emerging markets. The following investments and practices are subject to foreign
investment risk: American depository receipts (ADRs), foreign currency
transactions, non-U.S. traded and U.S. traded foreign securities, and Yankee
bonds and similar debt obligations.
INTEREST RATE RISK. The risk that debt prices overall will decline over short or
even long periods due to rising interest rates. A rise in interest rates
typically causes a fall in values, while a fall in rates typically causes a rise
in values. Interest rate risk should be modest for shorter-term securities,
moderate for intermediate-term securities, and high for longer-term securities.
Generally, an increase in the average maturity of a Fund will make it more
sensitive to interest rate risk. The market prices of securities structured as
zero coupon are generally affected to a greater extent by interest rate changes.
These securities tend to be more volatile than securities that pay interest
periodically. The following investments and practices are subject to interest
rate risk: asset-backed securities, bankers' acceptances, bonds, certificates of
deposit, collateralized mortgage obligations, commercial paper, derivatives,
high-yield/high-risk/debt securities, investment grade bonds, loan
participations, mortgage-backed securities, REITs, stripped obligations, U.S.
Government agency securities, U.S. Treasury obligations, Yankee bonds and
similar debt obligations, and zero-coupon debt obligations.
INVERSE MARKET RISK. The particular type of market risk (see summary below)
associated with "bear funds" that are intended to perform when equity markets
decline. These investments will lose value when the equity markets to which they
are tied are increasing in value.
LEVERAGE RISK. The risk associated with securities or practices that multiply
small index or market movements into large changes in value. Leverage is often
associated with investments in derivatives, but also may be embedded directly in
the characteristics of other securities.
HEDGED. When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position that a
Fund also holds, any loss generated by the derivative should be
substantially offset by gains on the hedged investment, and vice versa.
Hedges are sometimes subject to imperfect matching between the derivative
and underlying security, and there can be no assurance that a Fund's
hedging transactions will be effective.
SPECULATIVE. To the extent that a derivative is not used as a hedge, a
Fund is directly exposed to the risks of that derivative. Gains or losses
from speculative positions in a derivative may be substantially greater
than the derivative's original cost.
The following investments and practices are subject to leverage risk: bear
funds, call and put options, derivatives, forward commitments, futures and
related options, leveraged funds, repurchase agreements, reverse repurchase
agreements, securities lending, stock-index options, and when-issued and delayed
delivery transactions.
LIQUIDITY RISK. The risk that certain securities may be difficult or impossible
to sell at the time and the price that would normally prevail in the market. The
seller may have to lower the price, sell other securities instead or forego an
investment opportunity, any of which
81
ADDITIONAL INFORMATION ABOUT THE FUNDS' INVESTMENTS
- --------------------------------------------------------------------------------
could have a negative effect on investment management or performance. This
includes the risk of missing out on an investment opportunity because the assets
necessary to take advantage of it are tied up in less advantageous investments.
The following investments and practices are subject to liquidity risk:
asset-backed securities, bankers' acceptances, bear funds, call and put options,
certificates of deposit, closed-end funds, commercial paper, derivatives,
non-U.S. traded and U.S. traded foreign securities, forward commitments, futures
and related options, high-yield/high-risk/debt securities, illiquid securities,
loan participations, REITs, restricted securities, securities lending, small and
micro cap equities, stock-index options, time deposits, variable and floating
rate instruments, and when-issued and delayed delivery transactions.
MANAGEMENT RISK. The risk that a strategy used by a Fund's portfolio manager may
fail to produce the intended result. This includes the risk that changes in the
value of a hedging instrument will not match those of the asset being hedged.
Incomplete matching can result in unanticipated risks. The following investments
and practices are subject to management risk: call and put options, derivatives,
futures and related options, REITs, and stock-index options.
MARKET RISK. The risk that the market value of a security may move up and down,
sometimes rapidly and unpredictably. These fluctuations may cause a security to
be worth less than the price originally paid for it, or less than it was worth
at an earlier time. Market risk may affect a single issuer, industrial sector of
the economy or the market as a whole. There is also the risk that the current
interest rate may not accurately reflect existing market rates. For fixed income
securities, market risk is largely, but not exclusively, influenced by changes
in interest rates. A rise in interest rates typically causes a fall in values,
while a fall in rates typically causes a rise in values. Finally, key
information about a security or market may be inaccurate or unavailable. This is
particularly relevant to investments in foreign securities. The following
investments/investment practices are subject to market risk: ADRs, asset-backed
securities, bankers' acceptances, bonds, call and put options, certificates of
deposit, closed-end funds, commercial paper, common stock, convertible
securities, derivatives, exchange-traded funds (ETFs), foreign currency
transactions, non-U.S. traded and U.S. traded foreign securities, futures and
related options, high-yield/high-risk/debt securities, illiquid securities,
investment company securities, investment grade bonds, leveraged funds, money
market instruments, mortgage-backed securities, mortgage dollar rolls, municipal
securities, preferred stocks, REITs, repurchase agreements, restricted
securities, reverse repurchase agreements, securities lending, short-term
trading, small and micro cap equities, stand-by commitments, stock-index
options, time deposits, variable and floating rate instruments, warrants,
when-issued and delayed delivery transactions, Yankee bonds and similar debt
obligations, and zero-coupon debt obligations.
POLITICAL RISK. The risk of losses attributable to unfavorable governmental or
political actions, seizure of foreign deposits, changes in tax or trade
statutes, and governmental collapse and war. The following
investments/investment practices are subject to political risk: ADRs, bonds,
foreign currency transactions, non-U.S. traded and U.S. traded foreign
securities, municipal securities, and Yankee bonds and similar debt obligations.
PRE-PAYMENT/CALL RISK. The risk that the principal repayment of a security will
occur at an unexpected time. Pre-payment risk is the chance that the repayment
of a mortgage will occur sooner than expected. Call risk is the possibility
that, during times of declining interest rates, a bond issuer will "call"--or
repay--higher yielding bonds before their stated maturity. Changes in
pre-payment rates can result in greater price and yield volatility. Pre-payments
and calls generally accelerate when interest rates decline. When mortgage and
other obligations are pre-paid or called, a Fund may have to reinvest in
securities with a lower yield. In this event, the Fund would experience a
decline in income--and the potential for taxable capital gains. Further, with
early pre-payment, a Fund may fail to recover any premium paid, resulting in an
unexpected capital loss. Pre-payment/call risk is generally low for securities
with a short-term maturity, moderate for securities with an intermediate-term
maturity, and high for securities with a long-term maturity. The following
investments/investment practices are subject to pre-payment/call risk:
asset-backed securities, bonds, collateralized mortgage obligations,
mortgage-backed securities, and mortgage dollar rolls.
REGULATORY RISK. The risk associated with federal and state laws that may
restrict the remedies that a lender has when a borrower defaults on loans. These
laws include restrictions on foreclosures, redemption rights after foreclosure,
federal and state bankruptcy and debtor relief laws, restrictions on "due on
sale" clauses, and state usury laws. The following investments/investment
practices are subject to regulatory risk: asset-backed securities,
mortgage-backed securities, mortgage dollar rolls, and municipal securities.
SMALLER COMPANY RISK. The risk associated with investment in companies with
smaller market capitalizations. These investments may be riskier than
investments in larger, more established companies. Small companies may be more
vulnerable to economic, market and industry changes. Because economic events
have a greater impact on smaller companies, there may be greater and more
frequent changes in their stock price. Small and Micro Cap Equities are subject
to smaller company risk.
TAX RISK. The risk that the issuer of securities will fail to comply with
certain requirements of the Internal Revenue Code, which would cause adverse tax
consequences. Municipal securities are subject to tax risk.
TURNOVER RISK. The risk that, 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.
82
ADDITIONAL INFORMATION ABOUT THE FUNDS' INVESTMENTS
- --------------------------------------------------------------------------------
INVESTMENT POLICIES OF THE UNDERLYING FUNDS
- --------------------------------------------------------------------------------
The following is a brief description of the principal investment policies of the
Institutional Money Market Fund and the U.S. Treasury Money Market Fund, two
Underlying Funds of the LifeModel Funds SM whose policies are not otherwise
described in this Prospectus.
INSTITUTIONAL MONEY MARKET FUND
The Fund's fundamental investment objective is current income from short-term
securities consistent with the stability of principal.
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 be able to do so. All of the Fund's
investments are expected to mature in the short-term (397 days or less) and the
dollar-weighted average portfolio maturity of the Fund may not exceed 90 days.
The Fund invests at least 95% of its portfolio in high-quality securities called
"first tier" securities or unrated securities that are considered equivalent by
the Fund's investment manager. These generally will be corporate securities,
including commercial paper, that at the time of purchase are rated by such firms
as Standard & Poor's and Moody's in their highest short-term major rating
categories, or are unrated securities that are considered equivalent by the
Fund's investment manager. They also may include securities issued or guaranteed
as to principal or interest by the U.S. Treasury or any U.S. Government agency
or instrumentality. Additionally, shares of registered money market investment
companies that invest exclusively in these securities may be used.
The Fund reserves the right to invest up to 5% of its total assets in "second
tier" securities, which generally are corporate securities that, at the time of
purchase, are rated by such firms as Standard & Poor's and Moody's in their
second highest short-term major rating categories, or unrated securities that
are considered equivalent by the Fund's investment manager. Some corporate
securities purchased by the Fund may be restricted securities, that is, they may
be subject to limited resale rights.
The Fund may also invest in repurchase agreements collateralized by the
securities mentioned above.
U.S. TREASURY MONEY MARKET FUND
The Fund's fundamental investment objective is stability of principal and
current income consistent with stability of principal.
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 (397 days or less), and the dollar-weighted
average portfolio maturity of the Fund may not exceed 90 days.
The Fund invests all of its assets in high-quality, short-term obligations
issued by the U.S. Treasury, which are guaranteed as to principal and interest
by the U.S. Government, and repurchase agreements collateralized by U.S.
Treasury securities, and shares of registered money market investment companies
that invest exclusively in securities.
ADDITIONAL INFORMATION ABOUT THE FUNDS
- --------------------------------------------------------------------------------
INVESTMENT IN EXCHANGE-TRADED FUNDS. The Funds may each invest in
exchange-traded funds, such as iShares(R) Trust and iShares(R), Inc.
("iShares(R)").*
iShares(R) is a registered investment company unaffiliated with the Funds that
offers several series, each of which seeks to replicate the performance of a
stock market index or a group of stock markets in a particular geographic area.
Thus, investment in iShares(R) offers, among other things, an efficient means
to achieve diversification to a particular industry that would otherwise only be
possible through a series of transactions and numerous holdings. Although
similar diversification benefits may be achieved through an investment in
another investment company, exchange-traded funds generally offer greater
liquidity and lower expenses. Because an exchange-traded fund charges its own
fees and expenses, fund shareholders will indirectly bear these costs. The Funds
will also incur brokerage commissions and related charges when purchasing shares
in an exchange-traded fund in secondary market transactions. Unlike typical
investment company shares, which are valued once daily, shares in an
exchange-traded fund may be purchased or sold on a listed securities exchange
throughout the trading day at market prices that are generally close to net
asset value.
* iShares(R) is a registered trademark of Barclays Global Investors, N.A.
("BGI"). Neither BGI nor the iShares(R) Funds make any representations
regarding the advisability of investing in an iShares(R) fund.
83
ADDITIONAL INFORMATION ABOUT THE FUNDS' INVESTMENTS
- --------------------------------------------------------------------------------
Because most exchange-traded funds are investment companies, investment in most
such funds would, absent exemptive relief, be limited under applicable federal
statutory provisions. Those provisions restrict a fund's investment in the
shares of another investment company to up to 5% of its assets (which may
represent no more than 3% of the securities of such other investment company)
and limit aggregate investments in all investment companies to 10% of assets,
unless otherwise permitted under the Investment Company Act of 1940 or the rules
thereunder. Upon meeting certain conditions the Funds may invest their
respective assets in iShares(R) in excess of the statutory limit in reliance on
an exemptive order issued to that entity.
FUND MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISOR AND SUBADVISORS
Fifth Third Asset Management, Inc., (the "Advisor" or "FTAM"), 38 Fountain
Square Plaza, Cincinnati, Ohio 45202, serves as investment advisor to all Funds.
The Advisor is a wholly-owned subsidiary of Fifth Third Bank. Fifth Third Bank
is a wholly-owned subsidiary of Fifth Third Financial Corporation, which is in
turn a wholly-owned subsidiary of Fifth Third Bancorp. FTAM provides
comprehensive advisory services for institutional and personal clients. FTAM
offers a broadly diversified asset management product line utilizing proprietary
mutual funds, commingled funds, and separate accounts. Through teams of
experienced and knowledgable investment professionals, advanced research
resources, and disciplined investment processes, the Advisor's goal is to
produce superior, long-term investment results and client satisfaction.
Morgan Stanley Investment Management Inc. ("MSIM"), 1221 Avenue of the Americas,
New York, New York 10020, serves as investment subadvisor to Fifth Third
International Equity Fund.
Fort Washington Investment Advisors, Inc. ("Fort Washington"), 420 East Fourth
Street, Cincinnati, OH 45202-4133, serves as investment subadvisor to Fifth
Third High Yield Bond Fund.
Subject to the supervision of the Funds' Board of Trustees, the Advisor manages
the Funds' assets, including buying and selling portfolio securities. The
Advisor employs an experienced staff of over 50 professional investment
analysts, portfolio managers and traders, and uses several computer-based
systems in conjunction with fundamental analysis to identify investment
opportunities. The Advisor also furnishes office space and certain
administrative services to the Funds.
As of September 30, 2006, Fifth Third Asset Management, Inc. had approximately
$21.0 billion of assets under management, including approximately $11.8 billion
of assets in the Fifth Third Funds. As of September 30, 2006, MSIM, together
with its affiliated institutional asset management companies, had approximately
$448.3 billion of assets under management, including approximately $295.5
billion of assets held by mutual funds (including sub-advisory relationships).
As of September 30, 2006, Fort Washington, together with its wholly-owned
subsidiaries, had approximately $31.1 billion of assets under management.
A discussion of the basis for the Board of Trustees' approval of the Funds'
investment advisory contracts is included in the shareholder reports for the
period during which the Board of Trustees approved such contracts.
The Advisor may appoint one or more subadvisors to manage all or a portion of
the assets of the Funds. On September 28, 2005, the Securities and Exchange
Commission (SEC) granted exemptive relief to the Funds and the Advisor to permit
the Advisor, subject to certain conditions, including the one-time approval of
the Funds' Board of Trustees and shareholders to appoint and replace
subadvisors, enter into subadvisory agreements, and amend and terminate
subadvisory agreements on behalf of the Funds without shareholder approval. The
Advisor has received the one-time approval from the Funds' Board of Trustees and
shareholders. The exemptive order gives the Advisor the ability to change the
fee payable to a subadvisor or appoint a new subadvisor at a fee different than
that paid to the current subadvisor, which in turn may result in a different fee
retained by the Advisor.
84
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85
SPECIALTY
STRATEGY
- ----------------------------------------------------------------------
DIVIDEND GROWTH STRATEGY
- --------------------------------------------------------------------------------
RELATED PERFORMANCE OF THE INVESTMENT ADVISOR
The table below sets forth the performance data relating to the historical
performance of all fully discretionary, tax-exempt, fee-paying separate accounts
greater than $1 million managed by the Advisor and its predecessor, since the
dates indicated, that have substantially similar investment objectives,
policies, strategies and risks to the Fifth Third Dividend Growth Fund (the
"Fund"). The Advisor has offered institutional and high net worth clients a
dividend growth strategy for more than 16 years. THESE COMPOSITES ARE PROVIDED
TO ILLUSTRATE THE PAST PERFORMANCE OF THE ADVISOR IN MANAGING ACCOUNTS
SUBSTANTIALLY SIMILAR TO THE FUND. THESE COMPOSITES DO NOT REPRESENT THE
PERFORMANCE OF THE FUND. YOU SHOULD NOT CONSIDER THIS PERFORMANCE DATA AS AN
INDICATION OF FUTURE PERFORMANCE OF THE FUND OR OF THE ADVISOR.
The annual composite performance was computed by geometrically linking quarterly
composite rates of return for periods January 1, 1996 -- December 31, 2001 and
monthly composite rates of return thereafter. All returns reflect the deduction
of the highest annualized fee applied to the separate accounts (a 0.75%
all-inclusive investment management fee). In addition, all returns are net of
trading commissions and assume the reinvestment of dividends and capital gains.
The separately managed accounts include institutional separate accounts,
collective funds and common funds managed by the Advisor, but do not include
retail or personal accounts managed by affiliates of the Advisor. The separately
managed accounts were not subject to the same types of expenses to which the
Fund is subject, nor to the specific tax restrictions, investment limitations,
or diversification requirements imposed on the Fund by the Investment Company
Act. Consequently, the performance results for the separately managed accounts
could have been adversely affected if the separately managed accounts had been
regulated as investment companies under the federal securities laws.
The results presented at right may not necessarily equate with the return
experienced by any particular investor as a result of timing of investments and
redemptions. In addition, the effect of taxes on any investor will depend on
such person's tax status, and the results have not been reduced to reflect any
income tax which may have been payable.
The investment results presented at right are unaudited and are not intended to
predict or suggest the returns that might be experienced by the Fund or an
individual investor investing in the Fund. The investment results were not
calculated pursuant to the methodology established by the SEC that will be used
to calculate the Fund's performance results. Investors should also be aware that
the use of a methodology different from that used below to calculate performance
could result in different performance data.
DIVIDEND GROWTH COMPOSITE AND BENCHMARK PERFORMANCE COMPARISON 1
- --------------------------------------------------------------------------------
FIFTH THIRD DIVIDEND GROWTH COMPOSITE VS. S&P 500(R) INDEX
- --------------------------------------------------------------------------------
- -----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
1/1/96 -- 12/31/05
RETURN
Dividend Growth Composite 1,2 10.58%
S&P 500 Index 3 9.06%
- -----------------------------------------------
[LINE GRAPH]
Dividend Growth
Composite 1,2 S&P 500 Index 3
10000.00 10000.00
10406.00 10537.00
10752.00 11010.00
11381.00 11350.00
12132.00 12297.00
12438.00 12626.00
14842.00 14831.00
15752.00 15942.00
17493.00 16399.00
19751.00 18687.00
19655.00 19304.00
18401.00 17383.00
21590.00 21086.00
21457.00 22136.00
22342.00 23696.00
20608.00 22218.00
22256.00 25524.00
21092.00 26108.00
22745.00 25414.00
24246.00 25167.00
26130.00 23199.00
23194.00 20448.00
23824.00 21644.00
22243.00 18467.00
23767.00 20430.00
24728.00 20495.00
22440.00 17749.00
20400.00 14682.00
21374.00 15921.00
20515.00 15419.00
22280.00 17792.00
22701.00 18264.00
24920.00 20488.00
25129.00 20835.00
26151.00 21193.00
26042.00 20797.00
27695.00 22716.00
27014.00 22228.00
26585.00 22532.00
26465.00 23343.00
27332.00 23831.00
- -------------------------------------------------------------------------------------------------------
ANNUAL RETURNS -- DIVIDEND GROWTH COMPOSITE VS. S&P 500(R) INDEX
- -------------------------------------------------------------------------------------------------------
DIVIDEND 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
GROWTH ---------------------------------------------------------------------------------------
COMPOSITE 1,2 21.32% 44.19% 23.42% 3.08% 17.41% -9.04% -10.07% 16.59% 11.14% -1.31%
- -------------------------------------------------------------------------------------------------------
S&P 500(R)
INDEX 3 22.96% 33.36% 28.58% 21.04% -9.11% -11.88% -22.10% 28.68% 10.88% 4.91%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS 4 SEPTEMBER 2006 ------ AS OF 12/31/05 --------
YEAR-TO-DATE 1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
DIVIDEND GROWTH COMPOSITE 1,2 8.37% -1.31% 0.90% 10.58%
- --------------------------------------------------------------------------------
S&P 500(R) INDEX 3 8.53% 4.91% 0.54% 9.06%
- --------------------------------------------------------------------------------
1 These composites are provided to illustrate the past performance of the
Advisor in managing accounts substantially similar to the Dividend Growth
Fund. These composites do not represent the performance of the Dividend
Growth Fund. You should not consider this performance data as an
indication of the future performance of the Dividend Growth Fund or the
Advisor.
2 Performance numbers reflect the deduction of the highest annualized fee
applied to the separate accounts (a 0.75% all-inclusive investment
management fee). As a result, the performance of the Dividend Growth
Composite presented herein will not match the performance of the composite
in instances where actual fees are applied.
3 The S&P 500 Index is a broad-based measurement of changes in stock-market
conditions based on the average performance of 500 widely held common
stocks.
4 Annualized total returns from January 1, 1996 to December 31, 2005.
Returns of less than one year are not annualized.
86
SPECIALTY
STRATEGY
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DIVIDEND GROWTH STRATEGY
- --------------------------------------------------------------------------------
THE FIFTH THIRD DIVIDEND GROWTH STRATEGY
o The portfolio management team focuses on five key areas as they implement
the Dividend Growth Strategy for clients:
o Quantitative screens are conducted to identify high-quality companies
that meet market capitalization targets
o Dividend and Earnings Rankings are evaluated and the prospect for a
continuation of superior earnings and dividend growth is assessed for
each company
o An extensive analysis of company fundamentals and historical
valuations is completed
o Risk factors of the portfolio are evaluated and controls are
maintained
o A consistent sell strategy is implemented
o A disciplined investment process seeks to provide investors with capital
appreciation, less portfolio volatility than the stock market as a whole,
and regular income for those investors seeking income
- --------------------------------------------------------------------------------
KEY AREAS OF FOCUS
- --------------------------------------------------------------------------------
o QUANTITATIVE SCREENS
Produces a list of stocks that have specific market capitalization
requirements and meet the desired financial strength criteria of fund
managers
o DIVIDEND AND EARNINGS RANKINGS
FTAM's portfolio management team ranks each company based on the quality
of the earnings and dividends, and prospects for increasing dividends
o FUNDAMENTAL ANALYSIS
Portfolio managers evaluate the business model of each company, the
quality of management, competitive advantages, historical profitability
and securities valuation, and prospects for the future
o RISK CONTROLS
Individual portfolio positions and sector allocations are closely
monitored to control risk in the portfolio
o SELL DISCIPLINE
A highly disciplined sell strategy typically results in the sale of the
stock when the company experiences a deceleration in earnings or dividend
growth, or a change in its dividend policy
[GRAPHIC OMITTED]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
Indexes are unmanaged and investors cannot invest directly in an index. Index
returns do not reflect any fees, expenses or sales charges associated with
mutual fund investing.
Stocks tend to be more volatile than other types of investments, but generally
provide greater return potential.
87
87
HIGH YIELD
BOND
STRATEGY
- ---------------------------------------------------------------------
HIGH YIELD BOND STRATEGY
- --------------------------------------------------------------------------------
RELATED PERFORMANCE OF THE INVESTMENT SUBADVISOR
The table below sets forth data relating to the historical performance of all
fee-paying, fully discretionary portfolios managed by Fort Washington
Investments Advisors, Inc. ("Fort Washington") with a minimum of $20 million
under Fort Washington's management that have investment objectives, policies,
strategies and risks substantially similar to those of the High Yield Bond Fund.
The portfolios include private accounts, Fort Washington High Yield Investors
LLC, a limited liability company, Touchstone Investment Trust High Yield Fund, a
mutual fund, and Touchstone Variable Series Trust High Yield Fund, a variable
annuity mutual fund. THE DATA IS PROVIDED TO ILLUSTRATE THE PAST PERFORMANCE OF
FORT WASHINGTON IN MANAGING SUBSTANTIALLY SIMILAR PORTFOLIOS AS MEASURED AGAINST
A SPECIFIED MARKET INDEX AND DOES NOT REPRESENT THE PERFORMANCE OF THE HIGH
YIELD BOND FUND. YOU SHOULD NOT CONSIDER THIS PERFORMANCE DATA AS AN INDICATION
OF FUTURE PERFORMANCE OF THE HIGH YIELD BOND FUND OR OF FORT WASHINGTON.
Portfolios in this composite include cash, cash equivalents, investment
securities, interest and dividends. Investment performance of segments of
balanced portfolios, which are separately managed, are also included in the
composite. Cash is maintained, within each separately managed account segment,
in accordance with Fort Washington's asset allocation ratio. The U.S. dollar is
the base currency. Composite returns are reported net of management fees and
transaction costs and include realized and unrealized gains and losses as well
as the reinvestment of all dividend and interest income. Trade date accounting
is used when calculating performance. Individual portfolio returns are
calculated on a daily valuation basis. Prior to January 1, 1997, individual
portfolio returns were calculated on a monthly basis using a time-weighted
return method. There is no use of leverage or derivatives. The private accounts
and limited liability company included in the Subadvisor's composite are not
subject to the same types of expenses to which the High Yield Bond Fund is
subject nor to the diversification requirements, specific tax restrictions and
investment limitations imposed on the High Yield Bond Fund by the 1940 Act or
Subchapter M of the Internal Revenue Code. Consequently, the performance results
for the Subadvisor's composite could have been adversely affected if the private
accounts and limited liability company had been regulated as investment
companies under the federal securities laws. A fee of 0.55% was applied to the
private accounts and limited liability company in the composite. This represents
the highest fee paid at the account level by the private accounts and limited
liability company included in the composite. A fee of 1.05% was applied to the
mutual fund included in the composite. This represents the actual fee, after
applicable fee waivers and/or reimbursements, applied to Class A shares of the
mutual fund included in the composite. A fee of 0.80% was applied to the
variable annuity mutual fund included in the composite. This represents the
actual fee, after applicable fee waivers and/or reimbursements, applied to the
variable annuity mutual fund included in the composite, but does not reflect the
effect of any fees or other expenses of any variable annuity or variable life
insurance product. Composite performance results would be lower if fee waivers
and/or reimbursements were not applied. Composite performance results would be
lower if the expenses to which the High Yield Bond Fund is subject were applied.
The investment results of the private accounts and limited liability company
were not calculated pursuant to the methodology established by the SEC that will
be used below to calculate performance results of the High Yield Bond Fund. The
use of a methodology different from that used to calculate performance could
result in different performance data. All information set forth in the tables
relies on data supplied by the Subadvisor or from statistical services, reports
or other sources believed by the Subadvisor to be reliable. The benchmark for
this composite is the Merrill Lynch High Yield Master Index. This benchmark
return includes interest income, but as an unmanaged fixed-income index, it does
not include transaction fees (brokerage commissions), and no direct comparison
is possible. This benchmark is a broad-based measure of the performance of the
non-investment grade U.S. domestic bond market. PAST PERFORMANCE IS NOT
INDICATIVE OF FUTURE RESULTS.
FORT WASHINGTON INVESTMENT ADVISORS, INC. HIGH YIELD BOND COMPOSITE
(NET OF FEES) AND BENCHMARK PERFORMANCE COMPARISON 1
- --------------------------------------------------------------------------------
HIGH YIELD BOND COMPOSITE VS. MERRILL LYNCH HIGH YIELD MASTER
- --------------------------------------------------------------------------------
- -----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
1/1/96 -- 12/31/05
RETURN
High Yield Bond Composite 7.17%
Merrill Lynch High Yield Master 6.80%
- -----------------------------------------------
[LINE GRAPH]
High Yield Merrill Lynch
Bond Composite High Yield Master
10000.00 10000.00
10149.60 10146.00
10162.80 10285.00
10548.70 10686.10
10911.40 11106.10
11023.80 11222.70
11486.50 11755.80
11907.00 12215.40
12123.70 12530.60
12478.10 12880.20
12628.60 13096.60
12378.60 12627.70
12634.20 12990.10
12973.20 13130.40
12965.40 13218.40
12792.80 13053.20
12889.20 13194.10
12651.90 12956.70
12898.80 13038.30
13105.20 13215.60
12414.80 12694.90
13240.90 13483.30
13358.50 13312.00
13113.90 12774.20
13689.60 13481.90
14114.80 13746.20
13986.30 12902.10
13442.20 12494.40
14091.60 13327.80
14881.50 14247.40
16294.20 15625.20
16718.10 16020.50
17527.50 16956.10
17995.50 17334.20
17934.70 17181.60
18730.00 17978.90
19311.90 18780.70
19084.70 18512.20
19569.20 19010.10
19792.40 19183.10
19980.20 19313.60
- -----------------------------------------------------------------------------------------
ANNUAL RETURNS -- HIGH YIELD BOND COMPOSITE VS. MERRILL LYNCH HIGH YIELD MASTER
- -----------------------------------------------------------------------------------------
HIGH YIELD 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
BOND --------------------------------------------------------------------------
COMPOSITE 1,2 9.11 11.11 4.21 2.02 -3.68 10.27 2.94 24.38 10.18 3.46
- -----------------------------------------------------------------------------------------
MERRILL LYNCH
HIGH YIELD
MASTER 3 11.06 12.82 3.66 1.57 -3.79 6.20 -1.15 27.23 10.76 2.83
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS 4 YTD ------ AS OF 9/30/06 ------
9/30/06 1 Year 3 Years 10 Years
- --------------------------------------------------------------------------------
HIGH YIELD BOND COMPOSITE (NET OF FEES) 1,2 3.86% 3.46 9.985 7.167
- --------------------------------------------------------------------------------
MERRILL LYNCH HIGH YIELD MASTER 3 7.17% 2.83 8.75 6.80
- --------------------------------------------------------------------------------
1 The composite is provided to illustrate past performance of Fort
Washington in managing private accounts, a limited liability company, a
mutual fund, and a variable annuity mutual fund substantially similar to
the High Yield Bond Fund. The composite does not represent the performance
of the High Yield Bond Fund. You should not consider this performance data
as an indication of the future performance of the High Yield Bond Fund or
Fort Washington.
2 Performance numbers reflect the deduction of the highest annualized fee
applied to the private accounts and limited liability company (a 0.55 %
all-inclusive investment management fee), deduction of a 1.05% fee applied
to the mutual fund (representing the mutual fund's total operating
expenses, after waivers and/or reimbursements), and deduction of a 0.80%
fee applied to the variable annuity mutual fund (representing the variable
annuity mutual fund's total operating expenses, after waivers and/or
reimbursements, but not including the effect of any fees or other expenses
of any variable annuity or variable life insurance product). As a result,
the performance of the High Yield Bond Fund Composite presented herein
will not match the performance of the composite in instances where actual
fees are applied.
3 The Merrill Lynch High Yield Master Index is a broad-based measure of the
performance of the non-investment grade U.S. domestic bond market.
4 Annualized total returns from January 1, 1996 to December 31, 2005.
Returns of less than one year are not annualized.
88
HIGH YIELD
BOND
STRATEGY
- ---------------------------------------------------------------------
HIGH YIELD BOND STRATEGY
- --------------------------------------------------------------------------------
THE SUBADVISOR'S HIGH YIELD BOND STRATEGY
o The Subadvisor's portfolio management team focuses on five key areas as
they implement the High Yield Bond Strategy for clients
1. Alignment of Risk and Return is used to form the philosophy and
process to select the credit types that have had the best historical
risk-adjusted return
2. A Full Market Cycle Orientation is designed to outperform the
benchmark over the long term. Excluding the lowest rated issues has
historically reduced the volatility of the portfolio, while not
inhibiting performance
3. Industry Bias is used to overweight industries with favorable
characteristics and underweight those that are less favorable
4. Issue Selection identifies bonds that are backed by companies with a
strong management, prudent and flexible capital structure and an
ability to generate free cash flow
5. A consistent and diligent sell strategy is implemented
o A disciplined investment process seeks to achieve a high level of income
as its main goal. Capital appreciation is a secondary consideration
- --------------------------------------------------------------------------------
KEY AREAS OF FOCUS
- --------------------------------------------------------------------------------
o ALIGNMENT OF RISK AND RETURN
Assesses the risk-adjusted return for each credit level to determine which
level has the best risk-return relationship
o FULL MARKET CYCLE ORIENTATION
Seeks a portfolio of securities that has the potential to outperform over
an entire market cycle, including strong markets, moderate markets, and
weak markets. The goal is to manage volatility and provide competitive
returns over the long term
o INDUSTRY BIAS ANALYSIS
Identifies and overweights industries that have a history of stable and
predictable cash flow, consistent product demand, stable pricing and
conservative accounting practices. Typically underweights those with more
speculative business models, potential for aggressive accounting practices
and cyclical tendencies
o INDIVIDUAL SECURITY SELECTION
Evaluates company management, capital structure, liquidity and income
statements to find the securities that managers believe provide the best
risk-return relationship
o SELL DISCIPLINE
Considers selling securities when:
o Companies become cash users instead of cash generators
o Access to capital becomes questionable
o Management adversely alters strategy
o Risk-return relationship becomes inappropriate
[GRAPHIC OMITTED]
89
HIGH YIELD
BOND
STRATEGY
- ---------------------------------------------------------------------
HIGH YIELD BOND STRATEGY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO BUILDING PROCESS
o The five key areas of focus lead to a disciplined portfolio building
process
o The process narrows the universe of available securities into a group of
issues with attractive risk-return relationships
o Initial "top-down" steps manage risk while final "bottom-up" issue
selection step provides the potential for outperforming peers and the
benchmark
o Rigorous bottom-up security selection is performed by the Subadvisor's
team of credit analysts and is the core competency of the process
o Diversification is achieved with portfolios generally holding 90 to 120
securities across multiple industries. The portfolios have an overall
emphasis on higher rated securities, which are continuously monitored for
any signs of deterioration
o Objective is a return profile that outperforms over a full market cycle
and has less volatility
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INDUSTRY BIAS ANALYSIS: OVERWEIGHT OR UNDERWEIGHT PARTICULAR INDUSTRIES
o Identify those sectors that are considered "stable" - predictable cash
flows, stable pricing, mature industries, consistent product demand
o Underweight those sectors that have more speculative characteristics -
cyclical in nature, aggressive accounting practices, excess volatility
GOAL : A UNIVERSE OF BELOW-INVESTMENT GRADE SECURITIES IN "STABLE" INDUSTRIES
- --------------------------------------------------------------------------------
PORTFOLIO RISK MANAGEMENT ANALYSIS
o Evaluate Macroeconomic and Regulatory Outlook
o Analyze the macroeconomic and legislative environment, including the
outlook for GDP growth, consumer confidence, inflation and anticipated
Fed activity
o Determine if any factors may have an impact on the fixed-income market
or specific industries
o Eliminate unattractive security types
o Select issues that meet size and rating criteria
o Avoid triple-C rated securities because of their inappropriate
risk-return trade-off
o Avoid deferred pay securities, as they tend to be issued by companies
that do not generate cash flow
GOAL : A UNIVERSE OF SECURITIES FROM THE HIGHER QUALITY, MORE STABLE SEGMENTS OF
THE HIGH YIELD MARKET WHICH HAVE OFFERED THE BEST RETURN FOR THE LEVEL OF RISK
- --------------------------------------------------------------------------------
ISSUE SELECTION: RIGOROUS BOTTOM-UP CREDIT SELECTION PROCESS
o Identify key attributes that contribute to a high risk-return relationship
o Solid market position and stable to improving trends
o Strong asset coverage that can reduce losses in the event of a
deteriorating credit profile
o Ability to generate cash flow to reduce debt for de-leveraging
o Exceptional and accessible management.
o The fixed-income credit analysts research leverage ratios, capital
structure, maturity schedules, liquidity and covenant packages
o Utilize external research, including Wall Street research reports, annual
reports, 10Ks, and 10Qs
GOAL : A PORTFOLIO OF HIGHER RATED, HIGH YIELD SECURITIES THAT IS BELIEVED TO
HAVE A FAVORABLE RISK RETURN PROFILE AND HAS THE POTENTIAL TO OUTPERFORM OVER A
FULL MARKET CYCLE
- --------------------------------------------------------------------------------
90
FUND MANAGEMENT
- --------------------------------------------------------------------------------
The management and subadvisory fees, after fee waivers, paid by the Funds for
the fiscal year ended July 31, 2006 are as follows:
AS A PERCENTAGE OF
AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
FIFTH THIRD SMALL CAP GROWTH FUND 0.70%
- --------------------------------------------------------------------------------
FIFTH THIRD MID CAP GROWTH FUND 0.80%
- --------------------------------------------------------------------------------
FIFTH THIRD QUALITY GROWTH FUND 0.80%
- --------------------------------------------------------------------------------
FIFTH THIRD LARGE CAP CORE FUND 0.70%
- --------------------------------------------------------------------------------
FIFTH THIRD EQUITY INDEX FUND 0.10%
- --------------------------------------------------------------------------------
FIFTH THIRD BALANCED FUND 0.60%
- --------------------------------------------------------------------------------
FIFTH THIRD MICRO CAP VALUE FUND 1.00%
- --------------------------------------------------------------------------------
FIFTH THIRD SMALL CAP VALUE FUND 0.90%
- --------------------------------------------------------------------------------
FIFTH THIRD MULTI CAP VALUE FUND 1.00%
- --------------------------------------------------------------------------------
FIFTH THIRD DISCIPLINED LARGE CAP VALUE FUND 0.80%
- --------------------------------------------------------------------------------
FIFTH THIRD LIFEMODEL AGGRESSIVE FUND SM 0.03%
- --------------------------------------------------------------------------------
FIFTH THIRD LIFEMODEL MODERATELY AGGRESSIVE FUND SM 0.03%
- --------------------------------------------------------------------------------
FIFTH THIRD LIFEMODEL MODERATE FUND SM 0.03%
- --------------------------------------------------------------------------------
FIFTH THIRD LIFEMODEL MODERATELY CONSERVATIVE FUND SM 0.03%
- --------------------------------------------------------------------------------
FIFTH THIRD LIFEMODEL CONSERVATIVE FUND SM 0.03%
- --------------------------------------------------------------------------------
FIFTH THIRD STRATEGIC INCOME FUND 1.00%
- --------------------------------------------------------------------------------
FIFTH THIRD DIVIDEND GROWTH FUND 0.64%
- --------------------------------------------------------------------------------
FIFTH THIRD TECHNOLOGY FUND 1.00%
- --------------------------------------------------------------------------------
FIFTH THIRD INTERNATIONAL EQUITY FUND 1 1.00%
- --------------------------------------------------------------------------------
FIFTH THIRD HIGH YIELD BOND FUND 1,2 0.70%
- --------------------------------------------------------------------------------
FIFTH THIRD BOND FUND 0.53%
- --------------------------------------------------------------------------------
FIFTH THIRD INTERMEDIATE BOND FUND 0.51%
- --------------------------------------------------------------------------------
FIFTH THIRD SHORT TERM BOND FUND 0.43%
- --------------------------------------------------------------------------------
FIFTH THIRD U.S. GOVERNMENT BOND FUND 0.41%
- --------------------------------------------------------------------------------
FIFTH THIRD MUNICIPAL BOND FUND 0.44%
- --------------------------------------------------------------------------------
FIFTH THIRD INTERMEDIATE MUNICIPAL BOND FUND 0.40%
- --------------------------------------------------------------------------------
FIFTH THIRD OHIO MUNICIPAL BOND FUND 0.55%
- --------------------------------------------------------------------------------
FIFTH THIRD MICHIGAN MUNICIPAL BOND FUND 0.45%
- --------------------------------------------------------------------------------
1 The Advisor paid a portion of this fee to the Fund's subadvisor.
2 As of the date of this prospectus, the High Yield Bond Fund has not
operated for a full fiscal year, but pays an annual management fee of
0.70% of its average net assets, a portion of which is paid to the Fund's
subadvisor.
91
FUND MANAGEMENT
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------
FIFTH THIRD ASSET MANAGEMENT INC.
JOHN E. AUGUSTINE has been portfolio manager for the FIFTH THIRD LIFEMODEL
FUNDS SM since their inception in August 2002, and is the Chief Investment
Strategist for Fifth Third Asset Management, Inc. He joined Fifth Third Bank in
1998 as a Senior Portfolio Manager for both equity and fixed income clients.
Previously, he spent four years with Star Bank as a portfolio manager, three
years with Heritage Trust & Asset Management, and two years with IDS Financial
Services. He is a member of the Fifth Third Asset Management Investment Policy
Committee, Investment Strategy Team, Alternative Investments Team, and has over
15 years of portfolio management experience. He holds the professional
designation of Chartered Financial Analyst. Mr. Augustine is a graduate of The
Ohio State University and the Midwest Bankers Association Trust School. He is a
former president and board member for the Dayton Society of Financial Analysts,
is on the University of Dayton-Flyer Investment Advisory Board, and is a
part-time business professor in the graduate school at the University of Dayton.
SCOTT A. BILLEADEAU has been the portfolio manager of the FIFTH THIRD MID CAP
GROWTH FUND since June 2003, of the FIFTH THIRD SMALL CAP GROWTH FUND since
February 2005, and of the FIFTH THIRD TECHNOLOGY FUND since November 2003. A
Chartered Financial Analyst, Mr. Billeadeau graduated from Princeton University
with a degree in Economics. He started his career at IDS/American Express (now
Ameriprise) in 1985 as a statistical project analyst. In 1991 he joined Pacific
Century Advisers, a subsidiary of Security Pacific Bank (which was subsequently
acquired by Bank of America) as a portfolio manager and analyst. In 1994 he
assumed management responsibilities for all small- and mid-cap assets for Bank
of America. Mr. Billeadeau joined Nation's Bank's subsidiary Tradestreet
Investment Associates, Inc. in 1997 where he was the Director and Senior
Portfolio Manager responsible for the mid-cap and small-cap growth strategies.
Mr. Billeadeau joined Investment Advisers, Inc. in July of 1999 and became a
principal of Paladin Investment Associates, LLC upon its launch on December 1,
2000. At Paladin, Mr. Billeadeau was a Senior Portfolio Manager of Small,
Small-Mid Cap and Mid Cap Growth strategies. Additionally, in 2000, Scott was
elected to the Board of Directors of FactSet Research Systems, a NYSE listed
company, where he serves as Chairman of the audit committee. Mr. Billeadeau has
20 years of investment experience.
JOHN L. CASSADY III has been the portfolio manager of the FIFTH THIRD BOND FUND
and the FIFTH THIRD INTERMEDIATE BOND FUND since November 1999, of the FIFTH
THIRD U.S. GOVERNMENT BOND FUND since October 2001, and of the FIFTH THIRD
BALANCED FUND (fixed income portion) since August 2002. Mr. Cassady is a Senior
Portfolio Manager - Taxable Fixed Income for Fifth Third Asset Management, Inc.
Prior to joining Fifth Third Asset Management, Inc.'s predecessor, Lyon Street
Asset Management, in 1999, Mr. Cassady spent eight years as a portfolio manager
for APAM, Inc. Mr. Cassady earned his Chartered Financial Analyst designation in
1999 and has over eighteen years of investment experience, including thirteen
years of fixed income portfolio management experience. He earned his BS in
Industrial Management from the Georgia Institute of Technology.
AMY DENN has been a portfolio manager for the FIFTH THIRD BALANCED FUND (equity
portion) since January 2006 and for the FIFTH THIRD QUALITY GROWTH FUND since
November 2006. Ms. Denn joined Fifth Third Asset Management in March 2003 as
Portfolio Manager of Core Strategies. Prior to joining FTAM, she spent thirteen
years with Minneapolis-based Investment Advisers, Inc., and then over three
years as a portfolio manager with Paladin Investment Associates. Ms. Denn
graduated from Minnesota State University, Mankato in 1987 with a BS degree in
Business Administration, majoring in Accounting and Finance. Ms. Denn has nine
years of investment experience.
JON FISHER has been a portfolio manager for the FIFTH THIRD BALANCED FUND
(equity portion) since January 2006. Mr. Fisher is a Portfolio Manager of Core
Strategies. Prior to joining FTAM in 2000, he worked for seven years at PNC as a
Portfolio Manager and Equity Analyst and subsequently worked for two years at
Dain Bosworth as an Equity Analyst. In January 2000, Mr. Fisher joined FTAM as a
healthcare analyst supporting their growth products. In 2002, he was promoted to
Director of Research and in 2003 was named co-Portfolio Manager of the Small Cap
Growth Strategy. In January 2005, Mr. Fisher became Portfolio Manager of FTAM's
Active Core and Active Growth products. Mr. Fisher has taught courses in
Economics and Basic Investments for the Cincinnati Chapter of the American
Institute of Bankers, has served as President for the Cincinnati Society of
Financial Analysts, and has over 16 years of investment experience. Mr. Fisher
graduated from the University of Iowa with a BS degree in Business
Administration, majoring in Finance and earned his MBA from the University of
Chicago. He earned the Chartered Financial Analyst designation in 1996.
92
FUND MANAGEMENT
- --------------------------------------------------------------------------------
STEVEN E. FOLKER has been the portfolio manager of the FIFTH THIRD QUALITY
GROWTH FUND since February 1993, and the portfolio manager of the FIFTH THIRD
LIFEMODEL FUNDS (SM) since August 2006. Mr. Folker is the Managing Director of
Growth Strategies for Fifth Third Asset Management, Inc. and is a Vice President
of Fifth Third Bank. He has earned his Chartered Financial Analyst designation
and has over twenty-five years of investment experience. He earned a BBA in
Finance & Accounting and an M.S. - Business in Finance, Investments & Banking
from the University of Wisconsin.
MARTIN E. HARGRAVE has been the portfolio manager of the FIFTH THIRD MID CAP
GROWTH FUND since February 2005, and has been the portfolio manager of the FIFTH
THIRD SMALL CAP GROWTH FUND since August 2006. A Chartered Financial Analyst,
Mr. Hargrave graduated from the University of Southern California with a
Bachelor of Science degree, followed by a Master's degree in Finance from the
Anderson School at the University of California, Los Angeles. In 1991, Mr.
Hargrave joined Sunkist Growers, Inc. where he was responsible for managing the
employee benefits investments, banking relationships and cash management
operations. Mr. Hargrave joined Investment Advisers, Inc. in 1996 as an
institutional client service representative and in August 2000 he joined their
small/mid cap team as a portfolio manager. Mr. Hargrave joined Fifth Third in
2003 as a Portfolio Manager of Small, Small-to-Mid, and Mid Cap Growth
Strategies. Mr. Hargrave has 15 years of investment experience.
JOHN P. HOETING has been the portfolio manager of the Fifth Third taxable money
market funds since February 2000 and the portfolio manager of the FIFTH THIRD
SHORT TERM BOND FUND since April 2004. Prior to joining Fifth Third Asset
Management, Inc. in February 2000, he spent nearly 3 years as a research analyst
and money market portfolio manager with Ft. Washington Investment Advisors and
its predecessor, Countrywide Investments. Mr. Hoeting has over fourteen years of
experience as a research analyst and portfolio manager. Mr. Hoeting earned a BS
in Finance from the University of Dayton and earned the Chartered Financial
Analyst designation in 1997.
ERIC J. HOLMES has been the portfolio manager for the FIFTH THIRD MICRO CAP
VALUE FUND since April 2005. Mr. Holmes is the Director of Micro Cap Strategies
for Fifth Third Asset Management, Inc. Prior to joining Fifth Third in February
2003, Mr. Holmes accumulated over eight years of experience as an equity analyst
for Manning & Napier Advisors and Victory Capital Management. Mr. Holmes
received his undergraduate degree in Economics from the State University of New
York at Geneseo and his MBA in Finance from Rochester Institute of Technology.
He earned the Chartered Financial Analyst designation in 1998.
JAMES R. KIRK has been a portfolio manager of the FIFTH THIRD DISCIPLINED LARGE
CAP VALUE FUND since August 2002 and of the FIFTH THIRD MULTI CAP VALUE FUND
since April 2005. He is Managing Director of Value Strategies for Fifth Third
Asset Management, Inc. Prior to joining Fifth Third, he spent almost three years
as the chief investment strategist and manager of a value equity fund for
National City Investment Management Co., and then four years as the chief
investment officer for National City Bank's Private Investment Advisors Group.
Prior to his association with National City, Mr. Kirk was the President and
Chief Investment Officer of Society Asset Management, a subsidiary of KeyCorp.
Mr. Kirk earned a BA in Economics and an MBA from Case Western Reserve
University and has also earned his Chartered Financial Analyst designation. He
has accumulated over thirty-four years of investment experience in the
capacities of portfolio manager, director of research, and chief investment
officer. He is a member of the board of trustees of the Fairview/Lutheran
Hospital Foundation and is a past president of the CFA Society of Cleveland.
PETER M. KLEIN has been the portfolio manager of the FIFTH THIRD MULTI CAP VALUE
FUND since January 2003. Mr. Klein is a Senior Portfolio Manager of Value
Strategies for Fifth Third Asset Management, Inc. He spent seven years as an
individual and institutional portfolio manager and an equity analyst with
Gelfand/Maxus Asset Management, which, prior to its merger with Fifth Third
Asset Management, Inc., was a subsidiary of Maxus Investment Group. He has over
twenty-three years of experience managing personal, corporate, endowment and
Taft-Hartley portfolios. Mr. Klein received his undergraduate degree in
Philosophy magna cum laude from John Carroll University and his MBA in Finance
from Cleveland State University. He holds the Chartered Financial Analyst
designation as well as a Series-7 General Securities Representative license. In
addition, he has served as President and Program Chairman for the CFA Society of
Cleveland.
93
FUND MANAGEMENT
- --------------------------------------------------------------------------------
MARK KOENIG has been the portfolio manager of the FIFTH THIRD LARGE CAP CORE
FUND and the FIFTH THIRD EQUITY INDEX FUND since February 2005. He is the
Managing Director of Quantitative Strategies for Fifth Third Asset Management,
Inc. He has nine years of investment experience and served as the Director of
Quantitative Analysis at the National City Investment Management Co. from
1999-2004. In this capacity he was responsible for the management of the
quantitative equity products and the development of decision support models for
National City's fundamental equity teams. From 1995-1998, Mr. Koenig was a
quantitative analyst with National City Bank, where he was responsible for
developing risk analytics to support the bank's fixed-income desk. Previously,
he spent ten years as a research engineer at Draper Laboratory, where he
specialized in developing guidance, navigation, and control algorithms for
spacecraft, aircraft, and underwater vehicles. Mr. Koenig has an M.S. in
Computational Finance from Carnegie Mellon University, an M.S. in Electrical
Engineering from the University of Arizona, and a B.S. in Aerospace Engineering
from the University of Cincinnati. He is a member of the American Finance
Association. He earned the Chartered Financial Analyst designation in 2003.
JOSEPH W. KREMER has been the portfolio manager of the FIFTH THIRD SMALL CAP
VALUE FUND since November 2005, and is the Director of Small Cap Value
Strategies. Mr. Kremer joined Fifth Third Asset Management in November 2005 as
Senior Portfolio Manager of Small Cap Value Strategies. Mr. Kremer previously
spent 3 1/2 years with Evergreen Asset Management, a subsidiary of Wachovia
Bank, where he was a Regional Investment Manager. Prior to that, he worked for
National City for 2 1/2 years, where he was a Senior Investment Officer. He has
also worked for M&I Investment Management Corporation, a subsidiary of Marshall
& Ilsley Corp. and has run his own investment management firm. Before beginning
his investment career, Mr. Kremer was an assistant professor of finance at the
University of Notre Dame, where he taught portfolio management and investment
theory courses for six years and contributed to academic journals including the
JOURNAL OF FINANCIAL AND QUANTITATIVE ANALYSIS and ADVANCES IN FUTURES AND
OPTIONS RESEARCH. He has a Ph.D. in Business Administration with a major in
Finance from the University of South Carolina, where his dissertation topic was
the pricing of corporate warrants. His other degrees include an M.B.A. from the
University of Wisconsin, a B.S. in Accounting and a B.A. in Economics, both CUM
LAUDE, from the University of Delaware. He is a CFA charterholder and a CFP. Mr.
Kremer earned the Charter Financial Analyst designation and is a Certified
Financial Planner.
J. JEFFREY KRUMPELMAN has been the portfolio manager for the FIFTH THIRD
DIVIDEND GROWTH FUND and the FIFTH THIRD STRATEGIC INCOME FUND since September
2005. He joined Fifth Third Asset Management, Inc. in August 2005 as the
Director of Quality Core Strategies. Previously, Mr. Krumpelman spent six years
with INVESCO National Asset Management, where he was a Managing Director and
Portfolio Manager and managed three products with over $10 billion in assets.
Prior to that, he was a Senior Portfolio Manager for First Union National Bank,
where he managed over $300 million in private assets. Mr. Krumpelman graduated
from DePauw University with a B.A. in Economics and holds an M.B.A. in Finance
from Northwestern University. He earned the Chartered Financial Analyst
designation in 1993 and has accumulated over 14 years of investment management
experience.
PETER KWIATKOWSKI has been the portfolio manager of the FIFTH THIRD STRATEGIC
INCOME FUND since February 2005 and portfolio manager of the FIFTH THIRD
DIVIDEND GROWTH FUND since August 2005. He is currently a Portfolio Manager of
Income Strategies of Fifth Third Asset Management, Inc. He joined Fifth Third
Bank's Treasury Group in August 2001 with responsibility for structured
finance/securitizations, investments, balance sheet management, and economic
analysis. He moved in May 2003 to Fifth Third's Income Strategies Group, where
he is responsible for strategic income, dividend growth, fixed income, and
alternative income/quantitative strategies. He spent over two years beginning in
April 1999 with Pacific Investment Management Company LLC (PIMCO) in various
functions including as a Portfolio Analyst supporting the emerging markets and
mortgage strategies. Mr. Kwiatkowski's previous experience includes seven years
in real estate. He graduated summa cum laude from California State University at
Long Beach with a B. S. in Finance, Real Estate and Law and earned the Chartered
Financial Analyst designation in 2002.
DAVID R. LUEBKE has been the portfolio manager of the FIFTH THIRD MID CAP GROWTH
FUND and the FIFTH THIRD SMALL CAP GROWTH FUND since August 2006. For the four
years prior to joining Fifth Third, Mr. Luebke was Vice President and Senior
Equity Analyst for Harbor Capital Management and then Fortis Investments, after
its acquisition of Harbor, where he was responsible for covering the technology
sector for small, mid and large cap stocks. Prior to joining Fortis, Mr. Luebke
was Portfolio Manager and Equity Analyst at First American Asset Management and
Piper Capital Management. Mr. Luebke graduated with honors (recipient of the
Wall Street Journal Achievement Award) from the University of Minnesota with a
Bachelor of Science degree in Business Administration. He also has an MBA in
Finance from the Carlson School of Management. A Chartered Financial Analyst,
Mr. Luebke has 9 years of investment experience.
MICHAEL J. MARTIN has been portfolio manager for the FIFTH THIRD MUNICIPAL BOND
FUND and the FIFTH THIRD INTERMEDIATE MUNICIPAL BOND FUND since November 1997,
of the FIFTH THIRD MICHIGAN MUNICIPAL BOND FUND since January 1995, and of the
FIFTH THIRD OHIO MUNICIPAL BOND FUND since October 2001. Mr. Martin is the
Managing Director of Tax Exempt Fixed Income for Fifth Third Asset Management,
Inc. and has over twelve years of experience as a portfolio manager with FTAM
and its predecessor, Lyon Street Asset Management Company. Mr. Martin earned his
Chartered Financial Analyst designation in 1993. He earned his BS in Geological
Engineering, with honors, from Michigan Technological University in 1983 and his
MBA from Michigan State University in 1989.
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FUND MANAGEMENT
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MARY JANE MATTS has been a portfolio manager of the FIFTH THIRD DISCIPLINED
LARGE CAP VALUE FUND since July 2005. Prior to joining Fifth Third Asset
Management, Inc. in July 2005, she spent 10 years in various functions with
National City Bank. Most recently, from 2000 to 2005, she was Director of
Research for the Wealth Management Group, which includes the Private Client
Group and NatCity Investments, a brokerage firm. From 2001-2002, Ms. Matts
served as the interim Chief Investment Officer for the Wealth Management Group.
In 2003, Ms. Matts assisted in the transition of the management of the Armada
value funds, while continuing to function as the Director of Research for the
Wealth Management Group. Prior to that, Ms. Matts managed the Value Team on the
institutional side. Before joining National City in 1995, Ms. Matts was the
Director of Research at Society Asset Management, now known as Victory Capital
Management. She has 19 years of investment experience. She earned a B.A. in
Economics, cum laude and with honors, from Kenyon College and an M.B.A. from
Case Western Reserve University. Ms. Matts earned the Chartered Financial
Analyst designation in 1991.
MIRKO M. MIKELIC has been a portfolio manager of the FIFTH THIRD BOND FUND since
April 2005 and of the FIFTH THIRD U.S. GOVERNMENT BOND FUND since November 2004.
Mr. Mikelic joined Fifth Third Asset Management, Inc. as a Senior Analyst-Fixed
Income in June 2003. Prior to joining Fifth Third, Mr. Mikelic was an
international equity analyst at ReachCapital Management in Harrison, NY and
wrote research reports for CCN LLC. Prior to CCN, Mr. Mikelic spent 3 years at
Credit Suisse First Boston/DLJ where he was part of the Liability Management
desk. Additionally, he worked in a mortgage sales capacity with many of the
largest fixed income managers globally. Previous to DLJ, Mr. Mikelic spent two
years with Morgan Stanley as a Fixed Income Associate on the Mortgage Research &
Trading desks. Mr. Mikelic received a BA degree in Chemistry/Physics at
Kalamazoo College as well as a BSEE from Wayne State University. Mr. Mikelic
also completed an MA in International Political Economy/Relations and later an
MBA in Analytic Finance and Accounting from the University of Chicago. In
between his MA and MBA, Mr. Mikelic was a consultant for Information Resources,
designing multidimensional OLAP databases.
TED MOORE joined Fifth Third Asset Management, Inc. in August 2006, and has been
a portfolio manager for the FIFTH THIRD SMALL CAP VALUE FUND since August 2006.
Mr. Moore has ten years of investment experience and, prior to joining Fifth
Third, he served as an Equity Research Analyst with National City Private Client
Group for six years and a small and mid cap stock analyst for both Driehaus
Capital Management and Morgan Keegan & Co. Mr. Moore earned a BA in history from
Williams College, an M.B.A. in finance from Indiana University, and earned the
Chartered Financial Analyst designation in 2000.
DANIEL O'NEILL has been the portfolio manager of the FIFTH THIRD MICRO CAP VALUE
FUND since April 2005. Prior to joining Fifth Third Asset Management, Inc., Mr.
O'Neill spent four years as an equity analyst focused on the Consumer/Retail
sector for DB Advisors, LLC and Granite Capital International Group, LP.
Previously, he was a sell-side analyst at Credit Suisse First Boston where he
followed the Leisure Industry for two years. Before attending business school,
Mr. O'Neill was an equity analyst at Clarion Management Ltd for four years. Mr.
O'Neill received his B.S. in Industrial and Labor Relations from Cornell
University and his MBA from Columbia Business School, where he was elected to
the Beta Gamma Sigma Honor Society. He earned the Chartered Financial Analyst
designation in 1997.
SARAH M. QUIRK has been the portfolio manager for the FIFTH THIRD MICHIGAN
MUNICIPAL BOND FUND, the FIFTH THIRD MUNICIPAL BOND FUND and the FIFTH THIRD
INTERMEDIATE MUNICIPAL BOND FUND since May 1998, and of the FIFTH THIRD OHIO
MUNICIPAL BOND FUND since May 2005. Ms. Quirk is a Senior Portfolio Manager of
Tax Exempt Fixed Income for Fifth Third Asset Management, Inc. and has over
twenty-one years of investment experience. Prior to joining Fifth Third Asset
Management, Inc.'s predecessor, Lyon Street Asset Management, in January 1998,
Ms. Quirk managed a Michigan municipal money market fund and spent fifteen years
in the municipal bond industry as a municipal bond trader. She earned her BS
degree in finance in 1979 from Ball State University and her MBA from The
University of Notre Dame in 1997.
SUNIL M. REDDY has been the portfolio manager for the FIFTH THIRD TECHNOLOGY
FUND since inception in June 2000. Mr. Reddy is a Senior Portfolio Manager of
Large Cap Growth Strategies for Fifth Third Asset Management, Inc. Since 1997,
he has been an Equity Analyst covering semiconductor, semiconductor equipment,
enterprise hardware and software sectors at Fifth Third Bank. Prior to 1997, he
was a portfolio manager at a large Midwestern bank. He earned his Chartered
Financial Analyst designation in 1996 and has over fourteen years of investment
experience. Mr. Reddy earned a BS in Electrical Engineering from The Ohio State
University and a MBA from Case Western Reserve University.
CHRISTIAN L. RIEDDLE has been a portfolio manager of the FIFTH THIRD BOND FUND,
the FIFTH THIRD INTERMEDIATE BOND FUND and the FIFTH THIRD U.S. GOVERNMENT BOND
FUND since March 2003. Mr. Rieddle joined Fifth Third Asset Management, Inc. as
a Senior Portfolio Manager of Taxable Fixed Income in August 2002. Prior to
joining Fifth Third Asset Management, Inc., he spent nearly four years as a
Trust Officer and Portfolio Manager with First Indiana Bank. From 1989 through
1998, Mr. Rieddle was an Institutional Portfolio Manager with Bank One and its
predecessor institutions. Mr. Rieddle graduated from Indiana
University-Bloomington with a B.S. degree in Business in May 1979, and a Masters
of Business Administration degree in May 1982. Mr. Rieddle earned his Chartered
Financial Analyst designation in 1993.
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FUND MANAGEMENT
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MITCHELL L. STAPLEY has been the portfolio manager of the FIFTH THIRD BALANCED
FUND (fixed income portion) since August 2002, of the FIFTH THIRD INTERMEDIATE
BOND FUND since November 1992, of the FIFTH THIRD U.S. GOVERNMENT BOND FUND
since October 2001, of the FIFTH THIRD SHORT TERM BOND FUND since November 1996,
of the FIFTH THIRD BOND FUND since March 1995, of the FIFTH THIRD HIGH YIELD
BOND FUND since November 2005, and the portfolio manager of the FIFTH THIRD
LIFEMODEL FUNDS SM since August 2006. Mr. Stapley, Chief Fixed Income Officer
for Fifth Third Asset Management, Inc., is responsible for all fixed income
management and trading. Mr. Stapley has been with Fifth Third since December
1988 and has over twenty-two years of portfolio management experience. Prior to
joining Fifth Third, Mr. Stapley was Manager of Short Term Investments/Foreign
Exchange Exposure at Navistar International Corporation in Chicago, where he was
responsible for both investment strategy and implementation and foreign exchange
hedging and trading. Prior to joining Navistar, Mr. Stapley served as a
Portfolio Manager for William Wrigley Jr. Company in Chicago. He earned the
Chartered Financial Analyst designation in 1994 and received his BS degree in
Economics and Political Science, with honors, from Albion College in 1981. Mr.
Stapley is a member of the Detroit Bond Club.
JILL A. THOMPSON has been the portfolio manager of the FIFTH THIRD SMALL CAP
GROWTH FUND since July 2005, and has been the portfolio manager of the FIFTH
THIRD MID CAP GROWTH FUND since August 2006. Ms. Thompson joined Fifth Third
Asset Management in March 2005 as Portfolio Manager on the firm's small and mid
cap growth products. Before joining Fifth Third, Ms. Thompson served as
co-portfolio manager of KB Growth Advisors' small cap growth product for five
years. Prior to that, she was with US Bancorp Piper Jaffray for ten years, where
she served as co-portfolio manager of US Bancorp Asset Management/Piper Capital
Management's small and mid cap growth products. A Chartered Financial Analyst,
Ms. Thompson graduated from St. Cloud State University with a Bachelor of
Science in Finance. Ms. Thompson has 17 years of investment experience.
MICHAEL P. WAYTON has been a portfolio manager of the FIFTH THIRD EQUITY INDEX
FUND and the FIFTH THIRD LARGE CAP CORE FUND since February 2005. Mr. Wayton is
a Portfolio Manager of Quantitative Strategies for Fifth Third Asset Management,
Inc. Prior to joining Fifth Third in December 2004, he spend 4 1/2 years as a
quantitative analyst for the National City Investment Management Company where
he was responsible for the management of the firm's passive assets and the
development of quantitative equity models. Prior to that, he spend 1 1/2
years in National City's personal trust department. Mr. Wayton earned the
Chartered Financial Analyst designation in 2005. Mr. Wayton earned a BSBA in
finance from The Ohio State University.
E. KEITH WIRTZ has been the portfolio manager of the FIFTH THIRD INTERNATIONAL
EQUITY FUND since November 2003, and the portfolio manager of the FIFTH THIRD
LIFEMODEL FUNDS (SM) since August 2006. Mr. Wirtz joined Fifth Third Asset
Management, Inc. as the President and Chief Investment Officer and Fifth Third
Bank as the Chief Investment Officer in March 2003. From 2000 through March
2003, Mr. Wirtz was the President and Chief Executive Officer of Paladin
Investment Associates, LLC, an investment management firm. From 1999 to 2000,
Mr. Wirtz was the President and Chief Executive Officer of Investment Advisers,
Inc., an investment management subsidiary of Lloyds TSB. From 1981 to 1999, Mr.
Wirtz held a variety of investment management positions at Bank of America Corp.
DAVID L. WITHROW has been the portfolio manager the FIFTH THIRD SHORT TERM BOND
FUND since May 2002 and of the FIFTH THIRD INTERMEDIATE BOND FUND since April
2004. He joined Fifth Third Bank's Investment Advisors Division in 1999 as a
senior fixed income portfolio manager for actively managed institutional
accounts. Prior to joining Fifth Third, he spent over 10 years as a fixed income
portfolio manager with Prime Capital Management. Mr. Withrow graduated from
Anderson University and earned a BA in Economics. Mr. Withrow earned his
Chartered Financial Analyst designation in 1993.
PATRICIA YOUNKER has been a portfolio manager for the FIFTH THIRD municipal
money market funds since October 2001 and has been a portfolio manager for the
FIFTH THIRD MICHIGAN MUNICIPAL BOND FUND, the FIFTH THIRD MUNICIPAL BOND FUND,
the FIFTH THIRD INTERMEDIATE MUNICIPAL BOND FUND, and the FIFTH THIRD OHIO
MUNICIPAL BOND FUND since November 29, 2006. Ms. Younker has been a Senior
Portfolio Manager for Fifth Third Asset Management, Inc. Ms. Younker has 20
years of experience within the investment department of FTAM and its
predecessor, Lyon Street Asset Management Company. Ms. Younker graduated from
Davenport University with a B.S. in Business Administration.
MORGAN STANLEY INVESTMENT MANAGEMENT INC.
ANN D. THIVIERGE has served as portfolio manager for the FIFTH THIRD
INTERNATIONAL EQUITY FUND since November 1995. She joined Morgan Stanley in
1986. Pior to 1995, Ms. Thivierge was a senior professional in Morgan Stanley
Investment Management's (MSIM) Fiduciary Group, advising large pension plans and
family trusts on asset allocation and manager selection. In 1997, Ms. Thivierge
was named managing director and has been a member of MSIM's Asset Allocation
Committee since 1998. Ms. Thivierge graduated from James Madison College,
Michigan State University with a B.A. in International Relations and earned her
M.B.A. in finance from Stern Business School, New York University in 1992. Ms.
Thivierge is on the Board of Highbridge Voices, an afterschool choir program
serving over 200 children in the Bronx.
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FUND MANAGEMENT
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FORT WASHINGTON INVESTMENT ADVISORS, INC.
J. KEVIN SEAGRAVES, CFA is a Chartered Financial Analyst and has served as
portfolio manager for the FIFTH THIRD HIGH YIELD BOND FUND since its inception
in November, 2005. Mr. Seagraves has served as a Senior Credit Analyst for Fixed
Income and Credit Research at Fort Washington since 2003. From 1998-2003, Mr.
Seagraves was a Senior Analyst at Summit Investment Partners. From 1996-1998,
Mr. Seagraves was a Credit Team Leader and Credit Analyst at National City Bank.
Mr. Seagraves earned a BS in Finance from Miami University.
BRENDAN M. WHITE, CFA is a Chartered Financial Analyst and has served as
portfolio manager for the FIFTH THIRD HIGH YIELD BOND FUND since its inception
in November, 2005. Mr. White is currently a Managing Director and Senior
Portfolio Manager of Fort Washington and was previously a Vice President and
Senior Portfolio Manager of Fort Washington. He has worked for Fort Washington
since 1993 and has over 15 years of fixed-income management experience. Mr.
White holds an MBA from Xavier University and a BS in Finance from The Ohio
State University.
The SAI provides additional information about the portfolio managers'
compensation, other accounts managed by the portfolio managers, and the
portfolio managers' ownership of securities in the Funds.
PORTFOLIO HOLDINGS
- --------------------------------------------------------------------------------
The Funds have established policies and procedures with respect to the
disclosure of the Funds' portfolio holdings. A description of the policies and
procedures is provided in the Statement of Additional Information. The Funds
will publicly disclose their portfolio holdings, as reported on a week-end
basis, by posting this information on the Trust's website
(www.fifththirdfunds.com), in the section entitled "Annual Reports and Other
Information". The schedules will consist of the following information about each
security (other than cash positions) held by the Funds as of the relevant
week-end: CUSIP number, the name of the issuer, number of shares or aggregate
par value held, and the traded market value. This information will be posted on
the Tuesday following the relevant week's end, and will remain accessible on the
website until the next week's information is posted.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
PURCHASING AND SELLING FUND SHARES
- --------------------------------------------------------------------------------
PRICING FUND SHARES
The price of Fund shares is based on the Fund's Net Asset Value (NAV). The value
of each portfolio instrument held by the Funds is determined by using market
prices, where available, and fair market value. 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, but prior to 4:00 p.m. Eastern
Time, which, in the investment manager's opinion has materially affected the
price of those securities, the Fund may use fair value pricing. There is no
guarantee that the value determined for a particular security would be the value
realized upon sale of the security. Each Fund's NAV is calculated at 4:00 p.m.
Eastern Time each day the New York Stock Exchange is open for regular trading.
Each Fund's NAV may change on days when shareholders will not be able to
purchase or redeem Fund shares. The Funds will be closed on the following
holidays: New Year's Day, Martin Luther King Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas.
ADDITIONAL INFORMATION ABOUT PRICING FUND SHARES
Shares of the Funds are sold through financial intermediaries who have entered
into sales agreements with Fifth Third Funds Distributor, Inc., the Funds'
Distributor. The trust has authorized one or more brokers to receive on its
behalf purchase or redemption orders. These brokers are authorized to designate
other intermediaries to act in this capacity. Orders received prior to the close
of the New York Stock Exchange by a financial intermediary that has been
authorized to accept orders on the Trust's behalf will be deemed accepted by the
Trust the same day and will be executed at that day's closing share price. Each
financial intermediary's agreement with the Trust permits the financial
intermediary to transmit orders received by the financial intermediary prior to
the close of regular trading on the New York Stock Exchange to the Trust after
that time and allows those orders to be executed at the closing share price
calculated on the day the order was received by the financial intermediary.
97
SHAREHOLDER INFORMATION
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The purchase or sale of Fund shares through financial intermediaries may be
subject to transaction fees or other different or additional fees than those
otherwise disclosed in this Prospectus.
ABUSIVE TRADING PRACTICES
- --------------------------------------------------------------------------------
In order to protect shareholders, the Funds discourage excessive short-term or
other abusive trading practices that can increase transactional expenses,
produce adverse tax consequences, or interfere with the efficient execution of
portfolio management strategies. The Funds may reject purchases or exchanges, or
terminate purchase or exchange privileges where excessive short-term or other
abusive trading practices are detected. Certain accounts ("omnibus accounts")
include multiple investors and such accounts typically provide the Funds with a
net purchase or redemption request on any given day where purchasers of Fund
shares and redeemers of Fund shares are netted against one another and the
identity of individual purchasers and redeemers whose orders are aggregated are
not known by the Funds. While the Funds monitor for excessive short-term or
other abusive trading practices, there can be no guarantee that the Funds will
be successful in identifying this activity, particularly with respect to
activity occurring within omnibus accounts.
The Trustees have approved policies and procedures designed to detect and
prevent short-term trading activity and other abusive trading activity in Fund
shares. First, when a market quotation is not readily available for a security,
the Funds are exposed to the risk that investors may purchase or redeem shares
at a net asset value that does not appropriately reflect the value of the
underlying securities. The Funds seek to deter and prevent this activity,
sometimes referred to as "stale price arbitrage", by the appropriate use of
"fair value" pricing of the Funds' portfolio securities. Second, the Funds seek
to monitor shareholder account activities in order to detect and prevent
excessive and disruptive trading practices. Personnel responsible for detecting
short-term trading activity (the "Trading Monitor") in the Funds' shares is
responsible for (i) rejecting any purchase or exchange, or (ii) terminating
purchase or exchange privileges if, in the judgment of the Trading Monitor, the
transaction would adversely affect a Fund or its shareholders. The Funds
recognize that the Trading Monitor will not always be able to detect or prevent
short-term or other abusive trading practices, particularly with respect to
activity occurring within omnibus accounts.
PURCHASING AND ADDING TO YOUR SHARES
- --------------------------------------------------------------------------------
You may purchase shares on days when the Funds are open for business. Your
purchase price will be the next NAV after your purchase order, completed
application and full payment have been received by the Funds, its transfer
agent, or other servicing agent. All orders must be received by the Funds or its
transfer agent prior to 4:00 p.m. Eastern Time in order to receive that day's
NAV.
Institutional shares may only 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 the Funds to place trades for
themselves or their clients for a fee. In order to purchase Institutional shares
through one of those entities, you must have an account with it. That account
will be governed by its own rules and regulations, which may be more stringent
than the rules and regulations governing an investment in the Funds, and you
should consult your account documents for full details. Your shares in the Funds
may be held in an omnibus account in the name of that institution.
SHAREHOLDER CONTACT INFORMATION
For accounts held at the Funds, please call 1-800-282-5706, or write to Fifth
Third Funds, P.O. Box 182706, Columbus, Ohio 43218-2706 or via express mail to:
Fifth Third Funds, c/o BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
43219-3035.
For account holders at other financial institutions, contact your investment
representative at your financial institution.
The entity through which you are purchasing your shares is responsible for
transmitting the order to the Funds and it may have an earlier cut-off time and
different trading and exchanging policies. Consult that entity for specific
information. Some policy differences may include:
o minimum investment requirements
o exchange policies
o cutoff time for investments
o redemption fees
If your purchase order has been received by the Funds prior to the time
designated by the Funds for receiving orders, you will receive the dividend, if
any, declared for that day.
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SHAREHOLDER INFORMATION
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INVESTMENT AMOUNTS
The minimum initial investment in Institutional shares of the Funds offered by
this Prospectus (except for the Equity Index Fund) is $1,000. An Institutional
shareholder's minimum investment cannot be calculated by combining all accounts
she/he maintains with Fifth Third Funds -- rather, the shareholder must meet the
minimum amount for each fund in which she/he wishes to invest. The minimum
initial investment in Institutional shares of the Equity Index Fund is
$5,000,000. 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. The Funds reserve the right to reject cash, third-party checks,
starter checks, traveler's checks and credit card convenience checks. Money
orders are not accepted. All checks should be made payable to the Fifth Third
Funds.
The Funds may reject a purchase order for any reason. The Funds reserve the
right to waive the minimum investment.
For details, contact the Trust toll free at 1-800-282-5706 or write to: Fifth
Third Funds, P.O. Box 182706, Columbus, Ohio 43218-2706, or by express mail to:
Fifth Third Funds, 3435 Stelzer Road, Columbus, Ohio 43219.
AVOID WITHHOLDING TAX
Each Fund is required to withhold a portion 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) or otherwise fails to comply with IRS
rules. Shareholders are urged to read the additional information concerning
withholding provided in the SAI.
CUSTOMER IDENTIFICATION INFORMATION
To help the government fight the funding of terrorism and money laundering
activities, federal law requires all financial institutions to obtain, verify
and record information that identifies each person that opens a new account, and
to determine whether such person's name appears on government lists of known or
suspected terrorists and terrorist organizations.
As a result, the Funds must obtain the following information for each person
that opens a new account:
o Name;
o Date of birth (for individuals);
o Residential or business street address (although post office boxes are
still permitted for mailing); and
o Social security number, taxpayer identification number, or other
identifying number.
You may also be asked for a copy of your driver's license, passport or other
identifying document in order to verify your identity. In addition, it may be
necessary to verify your identity by cross-referencing your identification
information with a consumer report or other electronic database. Additional
information may be required to open accounts for corporations and other
entities. Federal law prohibits the Funds and other financial institutions from
opening a new account unless they receive the minimum identifying information
listed above. After an account is opened, the Funds may restrict your ability to
purchase additional shares until your identity is verified. The Funds may close
your account or take other appropriate action if they are unable to verify your
identity within a reasonable time. If your account is closed for this reason,
your shares will be redeemed at the NAV next calculated after the account is
closed.
SELLING YOUR SHARES
- --------------------------------------------------------------------------------
You may sell your shares on days when the Funds are open for business. Your
sales price will be the next NAV after your sell order is received by the Funds,
its transfer agent, or other servicing agent. All orders must be received prior
to the time the Fund calculates its NAV in order to receive that day's NAV. If
your order has been received by the Fund prior to the time the Fund calculates
its NAV, and your shares have been sold, you will not receive the dividend, if
any, declared for that day. Normally you will receive your proceeds within a
week after your request is received.
In order to sell your shares, call the Trust and Investment Department at Fifth
Third Bank, Fifth Third Securities, Inc.--Institutional Investment Division, the
sponsor of your qualified employee retirement plan or the broker-dealer,
investment adviser, financial planner or other institution through which you
purchased your shares.
99
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
The entity through which you are selling your shares is responsible for
transmitting the order to the Funds, and it may have an earlier cut-off for sale
requests. Consult that entity for specific information. If your sell order has
been received by the Funds prior to the time designated by the Funds for
receiving orders on a specific day, you will not receive the dividend, if any,
declared for that day. See "Shareholder Contact Information" above.
For accounts held at the Funds, please call 1-800-282-5706, or write to Fifth
Third Funds, P.O. Box 182706, Columbus, Ohio 43218-2706 or via express mail to:
Fifth Third Funds, c/o BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
43219-3035.
For account holders at other financial institutions, contact your investment
representative at your financial institution.
In certain circumstances, shares may be sold only by written request,
accompanied by a signature guarantee.
REDEMPTIONS IN WRITING REQUIRED
You must request redemption in writing and obtain a signature guarantee if:
o The address on file has been changed in the last 10 business days.
o The check is not being mailed to the address on your account.
o The check is not being made payable to the owner of the account.
o You are requesting a redemption with electronic or wire transfer
payment and have not previously established this option on your
account.
You may obtain a signature guarantee from a financial institution, such as a
bank, broker-dealer, or credit union, or from members of the Securities Transfer
Agents Medallion Program (STAMP), New York Stock Exchange Medallion Signature
Program (MSP), or Stock Exchanges Medallion Program (SEMP). Members of the
STAMP, MSP, and SEMP are subject to dollar limitations, which must be considered
when requesting their guarantee. The Transfer Agent may reject any signature
guarantee if it believes the transaction would otherwise be improper.
POSTPONEMENT OF REDEMPTION PAYMENTS
Federal securities law permits any Fund to delay sending to you redemption
proceeds for up to seven days if the Fund believes that a redemption would
disrupt its operation or performance. Under unusual circumstances, the law also
permits the Fund to delay sending redemption payments during any period when (a)
trading on the NYSE is restricted by applicable rules and regulations of the
SEC, (b) the NYSE is closed for other than customary weekend and holiday
closings, (c) the SEC has by order permitted such suspension, or (d) an
emergency exists as determined by the SEC.
REDEMPTION IN KIND
If, during any 90 day period, you redeem Fund shares worth more than $250,000
(or 1% of a Fund's net asset value if that amount is less than $250,000), the
Funds reserve the right to pay part or all of the redemption proceeds in excess
of these amounts in readily marketable securities instead of in cash.
REDEMPTIONS WITHIN 15 DAYS OF INVESTMENT - SHARES PURCHASED BY CHECK
When you have made your investment by check, you cannot redeem any portion of it
until the Transfer Agent is satisfied that the check has cleared (which may
require up to 15 business days). You can avoid this delay by purchasing shares
with a certified check, or by wire.
UNDELIVERABLE OR UNCASHED CHECKS
Any check tendered in payment of a redemption transaction that cannot be
delivered by the post office or which remains uncashed for more than six months
may be reinvested in the shareholder's account at the then-current NAV.
Any check tendered in payment of dividends or other distributions that cannot be
delivered by the post office or which remains uncashed for more than six months
may be reinvested in the shareholder's account at the then-current NAV, and the
dividend option may be changed from cash to reinvest. Distributions are
reinvested on the ex- date at the NAV determined at the close of business on
that date. No interest will accrue on amounts represented by uncashed redemption
checks.
100
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
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.
EXCHANGING YOUR SHARES
- --------------------------------------------------------------------------------
You may exchange your Institutional shares for Institutional shares of any other
Fifth Third Fund. No transaction fees are charged for exchanges. Be sure to read
the Prospectus carefully of any Fund into which you wish to exchange shares.
You must meet the minimum investment requirements for the Fund into which you
are exchanging. Exchanges from one Fund to another are taxable for investors
subject to federal or state income taxation.
INSTRUCTIONS FOR EXCHANGING SHARES
For accounts held at the Funds, please call 1-800-282-5706, or write to Fifth
Third Funds, P.O. Box 182706, Columbus, Ohio 43218-2706 or via express mail to:
Fifth Third Funds, c/o BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
43219-3035.
For account holders at other financial institutions, contact your investment
representative at your financial institution.
NOTES ON EXCHANGES
In order to prevent excessive short-term or other abusive trading practices, the
Funds may reject exchanges, or change or terminate rights to exchange shares at
any time.
Shares of the new Fund must be held under the same account name, with the same
registration and tax identification numbers, as shares of the old Fund.
The Exchange Privilege may be changed or eliminated at any time.
The Exchange Privilege is available only in states where shares of the Funds may
be sold.
All exchanges are based on the relative net asset value next determined after
the exchange order is received by the Funds.
DIVIDENDS AND CAPITAL GAINS
- --------------------------------------------------------------------------------
All dividends and capital gains will be automatically reinvested unless you
request otherwise. You can receive them in cash or by electronic funds transfer
to your bank account if you are not a participant in an IRA account or in a tax
qualified plan. There are no sales charges for reinvested distributions.
Distributions are made on a per share basis regardless of how long you've owned
your shares. Therefore, if you invest shortly before the distribution date, some
of your investment will be returned to you in the form of a taxable
distribution.
Dividends, if any, are DECLARED DAILY AND PAID MONTHLY by the Strategic Income
Fund.
Dividends, if any, are DECLARED AND PAID MONTHLY by the following Funds: Fifth
Third High Yield Bond Fund, Fifth Third Bond Fund, Fifth Third Intermediate Bond
Fund, Fifth Third Short Term Bond Fund, Fifth Third U.S. Government Bond Fund,
Fifth Third Municipal Bond Fund, Fifth Third Intermediate Municipal Bond, Fifth
Third Ohio Municipal Bond Fund and Fifth Third Michigan Municipal Bond Fund.
Dividends, if any, are DECLARED AND PAID QUARTERLY by the following Funds: Fifth
Third Mid Cap Growth Fund, Fifth Third Quality Growth Fund, Fifth Third Large
Cap Core Fund, Fifth Third Equity Index Fund, Fifth Third Balanced Fund, Fifth
Third Micro Cap Value Fund, Fifth Third Multi Cap Value Fund, Fifth Third
Disciplined Large Cap Value Fund, Fifth Third LifeModel Aggressive Fund SM,
Fifth Third LifeModel Moderately Aggressive Fund SM, Fifth Third LifeModel
Moderate Fund SM, Fifth Third LifeModel Moderately Conservative Fund SM, Fifth
Third LifeModel Conservative Fund SM, Fifth Third Dividend Growth Fund and Fifth
Third Technology Fund.
Dividends, if any, are DECLARED AND PAID ANNUALLY by the following Funds: Fifth
Third Small Cap Growth Fund, Fifth Third Small Cap Value Fund, and Fifth Third
International Equity Fund.
Capital gains, if any, are distributed at least annually.
101
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
As discussed in detail in the Statement of Additional Information, if a Fund
makes a distribution in excess of its current and accumulated "earnings and
profits" in any taxable year, the excess distribution will be treated as a
return of capital to the extent of a Shareholder's tax basis in Fund shares, and
thereafter as capital gain. A return of capital is not taxable, but it reduces
the Shareholder's tax basis in the shares, thus reducing any loss or increasing
any gain on a subsequent taxable disposition of those shares. The Fifth Third
Strategic Income Fund is particularly susceptible to this possibility because it
may, at times in its discretion, pay out less than the entire amount of net
investment income earned in any particular period and may at times pay out such
accumulated undistributed income in addition to net investment income earned in
other periods in order to permit the Fund to maintain a more stable level of
distributions. As a result, the dividend paid by the Fund to shareholders for
any particular period may be more or less than the amount of net investment
income earned by the Fund during such period. The Fund is not required to
maintain a stable level of distributions to shareholders.
EXPENSES
- --------------------------------------------------------------------------------
The expenses for investing in funds of funds, like the LifeModel Funds SM, are
generally higher than those for mutual funds that do not invest primarily in
other mutual funds. This is because shareholders in a fund of funds indirectly
pay a portion of the fees and expenses charged at the underlying fund level. To
lessen the impact of expenses incurred at the underlying fund level, the
LifeModel Funds SM invest in Institutional shares of the underlying funds, which
are not subject to any sales charge or distribution/service (12b-1) fees.
TAXATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
TAXATION OF SHAREHOLDER TRANSACTIONS
A sale, exchange or redemption of Fund shares generally will result in a taxable
gain or loss to the shareholder.
TAXATION OF DISTRIBUTIONS
Each Fund expects to distribute substantially all of its net investment income
(including net realized capital gains and tax-exempt interest income, if any) to
its shareholders at least annually. 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
reinvested in additional shares. For federal income tax purposes, distributions
of investment income are generally taxable as ordinary income. Taxes on
distributions of capital gains are determined by how long the Fund owned the
investments that generated them, rather than how long a shareholder has owned
his or her shares. Distributions of net capital gain (that is, the excess of net
long-term capital gains over net short-term capital losses) from the sale of
investments that the Fund owned for more than one year and that are properly
designated by the Fund as capital gain dividends will be taxable as long-term
capital gains. Distributions of gains from the sale of investments that the Fund
owned for one year or less will be taxable as ordinary income. Distributions of
investment income designated by the Fund as derived from "qualified dividend
income" will be taxed at the rates applicable to long-term capital gains,
provided holding period and other requirements are met at both the Shareholder
and Fund level. The fixed income funds do not expect a significant portion of
Fund distributions to be derived from qualified dividend income. An Asset
Allocation Fund will not be able to offset gains realized by one Fund in which
it invests against losses realized by another Fund in which it invests until it
disposes of shares of the Fund that realized such losses. The use of a
fund-of-funds structure could therefore affect the amount, timing and character
of distributions to shareholders and increase the amount of taxes payable by
shareholders. Distributions are taxable to shareholders even if they are paid
from income or gains earned by a Fund before a shareholder's investment (and
thus were included in the price paid). See the Statement of Additional
Information for further details.
FOREIGN INVESTMENTS
If a Fund invests in foreign securities, please note that investment income
received by the Fund from sources within foreign countries may be subject to
foreign taxes withheld at the source which may decrease the yield of such
investments. The United States has entered into tax treaties with many foreign
countries that entitle the Fund to reduce tax rates or exemption on this income.
The effective rate of foreign tax cannot be predicted since the amount of the
Fund's assets to be invested within various countries is unknown. However, Fifth
Third International Equity Fund intends to operate so as to qualify for
treaty-reduced tax rates where applicable.
Fifth Third International Equity Fund intends to qualify so as to be eligible to
elect to "pass through" to its shareholders foreign income taxes that it pays.
If Fifth Third International Equity Fund makes that election, a shareholder must
include its share of those taxes in gross income as a distribution from the Fund
and will be allowed to claim a credit (or a deduction, if that shareholder
itemizes deductions) for such amounts on its U.S. federal income tax return,
subject to certain limitations. In general, shareholders in other Funds
investing in foreign
102
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
securities will not be entitled to claim a credit or deduction for foreign taxes
on their U.S. federal income tax returns. There are, some exceptions, however.
Shareholders should consult their tax advisors for more information with respect
to their individual circumstances.
In addition, foreign investment may prompt a Fund to distribute ordinary income
more frequently or in greater amounts than purely domestic funds, which could
increase a shareholder's tax liability.
ADDITIONAL TAX INFORMATION FOR FIFTH THIRD MICHIGAN MUNICIPAL BOND FUND, FIFTH
THIRD OHIO MUNICIPAL BOND FUND, FIFTH THIRD MUNICIPAL BOND FUND, FIFTH THIRD
INTERMEDIATE MUNICIPAL BOND FUND (THE "MUNICIPAL SECURITIES FUNDS")
If, at the end of each quarter of its taxable year, at least 50% of the value of
a Fund's assets consists of obligations the interest on which is exempt from
federal income tax, the Fund may pay "exempt-interest dividends" to its
shareholders. Generally, exempt-interest dividends will be excluded from gross
income for federal income tax purposes but may be subject to federal alternative
minimum tax and state and local taxes. Exempt-interest dividends attributable to
investments in certain "private activity" bonds will be treated as tax
preference items in computing the alternative minimum tax. Also, a portion of
all other exempt-interest dividends earned by a corporation may be subject to
the alternative minimum tax.
If a shareholder receives an exempt-interest dividend with respect to any share
and such share is held by the shareholder for six months or less, any loss on
the sale or exchange of such share will be disallowed to the extent of the
amount of such exempt-interest dividend. In certain limited instances, the
portion of Social Security or Railroad Retirement benefits that may be subject
to federal income taxation may be affected by the amount of tax-exempt interest
income, include exempt-interest dividends, received by a shareholder.
Shareholders who receive Social Security or Railroad Retirement benefits, should
consult their tax advisors to determine what effect, if any, an investment in
the Funds may have on the federal taxation of their benefits.
Interest income from certain types of municipal securities may be subject to
federal alternative minimum tax. To the extent a Fund invests in those
securities, individual shareholders, depending on their own tax status, may be
subject to alternative minimum tax on that part of the Fund's distributions
derived from those securities.
Distributions, if any, derived from net capital gains will generally be taxable
to shareholders as long-term capital gains. The Municipal Securities Funds may
pay such capital gains distributions from time to time. Dividends, if any,
derived from taxable interest income and any distributions of short-term capital
gains will be taxable to shareholders as ordinary income.
The Municipal Securities Funds may invest as much as 100% of their assets in
municipal securities issued to finance private activities, the interest on which
is a tax preference item for purposes of the alternative minimum tax.
Interest on indebtedness incurred by a shareholder to purchase or carry shares
of the Municipal Securities Funds generally will not be deductible for federal
income tax purposes.
STATE AND LOCAL TAXES
Shareholders may also be subject to state and local taxes on distributions and
redemptions. Under state or local law, distributions of investment income may be
taxable to shareholders as dividend income even though a substantial portion of
such distribution may be derived from interest excluded from gross income for
federal income tax purposes that, if received directly, would be exempt from
such income taxes. State laws differ on this issue, and shareholders are urged
to consult their own tax advisors regarding the taxation of their investments
under state and local tax laws.
Dividends from Fifth Third Ohio Municipal Bond Fund representing interest on
obligations held by that Fund which are issued by the State of Ohio, political
or governmental subdivisions thereof as defined in Section 5709.76(D)(10) of the
Ohio Revised Code, or nonprofit corporations authorized to issue public
securities for or on behalf of Ohio or a subdivision or agencies or
instrumentalities of Ohio or its political subdivisions ("Ohio Obligations") are
exempt from Ohio personal income tax as well as Ohio municipal or school
district income taxes. Corporate shareholders that are subject to the Ohio
corporation franchise tax may exclude such dividends from the Fund from the net
income base of the Ohio Corporation franchise tax.
Distributions with respect to shares of the Fifth Third Ohio Municipal Bond Fund
properly attributable to profit on the sale, exchange or other disposition of
Ohio Obligations will not be subject to Ohio personal income tax, the Ohio
commercial activity tax, or municipal or school district income taxes in Ohio
and will not be included in the net income base of the Ohio corporation
franchise tax. Distributions attributable to other sources generally will not be
exempt from Ohio personal income tax, municipal or school district income taxes
in Ohio or the net income base of the Ohio corporation franchise tax.
103
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
Although the Fund distributions described above attributable to interest on, and
any profit from the sale, exchange or other disposition of, Ohio Obligations are
excludable from the net income base of the Ohio corporation franchise tax, the
value of all Fund shares may be included in the net worth base of the Ohio
corporation franchise tax.
This discussion of Ohio taxes assumes that the Fifth Third Ohio Municipal Bond
Fund will continue to qualify as a regulated investment company under the
Internal Revenue Code and that at all times at least 50% of the value of the
total assets of the Fund consists of Ohio Obligations or similar obligations of
other states or their subdivisions.
Shareholders of the Fifth Third Ohio Municipal Bond Fund should consult with
their tax advisers about other state and local tax consequences of their
investments in the Fund.
If a shareholder receives an exempt-interest dividend with respect to any share
and such share is held by the shareholder for six months or less, any loss on
the sale or exchange of such share will be disallowed to the extent of the
amount of such exempt-interest dividend. In certain limited instances, the
portion of social security benefits that may be subject to federal income
taxation may be affected by the amount of tax-exempt interest income, include
exempt-interest dividends, received by a shareholder.
Interest income from certain types of municipal securities may be subject to
federal alternative minimum tax. To the extent either Fund invests in those
securities, individual shareholders, depending on their own tax status, may be
subject to alternative minimum tax on that part of the Fund's distributions
derived from those securities.
Because the Fifth Third Michigan Municipal Bond Fund intends to invest
substantially all of its assets in tax-exempt obligations of the State of
Michigan or its political subdivisions, shareholders who are subject to Michigan
state income tax will generally not be subject to tax on dividends paid by these
Funds to the extent that the dividends are attributable to interest income from
these obligations. Shareholders should consult their tax advisors regarding the
tax status of distributions in their state and locality.
This is a brief summary of certain income tax consequences relating to an
investment in the Funds. The Statement of Additional Information provides
further details regarding taxation. Shareholders are urged to consult their own
tax advisors regarding the taxation of their investments under federal, state
and local tax laws.
ADDITIONAL COMPENSATION TO SERVICING AGENTS
The Advisor and/or its affiliates may pay amounts from their own assets to
selling or servicing agents of the Funds for distribution-related activities,
shareholder servicing, or other services they provide. These amounts may be
fixed dollar amounts, a percentage of sales, a percentage of assets, or any
combination thereof, and may be up-front or ongoing payments or both. Agents may
agree to provide a variety of shareholder servicing services, marketing related
services, or access advantages to the Funds, including, for example, presenting
the Funds on "approved" or "select" lists, in return for these payments. Selling
or servicing agents, in turn, may pay some or all of these amounts to their
employees who recommend or sell Fund shares or allocate or invest client assets
among different investment options.
In addition, the Advisor and/or its affiliates may pay amounts from their own
assets for services provided and costs incurred by third parties of a type that
would typically be provided or incurred directly by Fifth Third Funds' transfer
agent. The Fifth Third Funds also may pay amounts to third party intermediaries,
including selling and servicing agents, for providing these types of services or
incurring these types of costs.
104
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the Funds'
financial performance for the past five years or the period of each Fund's
operations, if shorter. Certain information reflects financial results for a
single Fund share. The total returns in the tables represent the rate that an
investor would have earned or lost on an investment in a Fund (assuming
reinvestment of all dividends and distributions). The information for the Funds
has been audited by PricewaterhouseCoopers LLP. PricewaterhouseCoopers LLP's
report, along with the Funds' financial statements, is incorporated by reference
in the SAI which is available upon request.
105
FIFTH THIRD FUNDS
FINANCIAL HIGHLIGHTS
(FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD)
CHANGE IN NET ASSETS LESS DIVIDENDS AND
RESULTING FROM OPERATIONS DISTRIBUTIONS FROM
----------------------------- --------------------
NET REALIZED
AND
UNREALIZED CHANGE IN
NET ASSET GAINS/(LOSSES) NET ASSETS
VALUE, NET FROM RESULTING NET NET
BEGINNING INVESTMENT INVESTMENT FROM INVESTMENT REALIZED
OF PERIOD INCOME/(LOSS) TRANSACTIONS OPERATIONS INCOME GAINS
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $17.86 (0.04) (3.56) (3.60) -- (0.56)
Year ended 7/31/03 $13.70 (0.03) 2.23 2.20 -- --
Year ended 7/31/04 $15.90 (0.12) @ 1.43 1.31 -- (1.73)
Year ended 7/31/05 $15.48 (0.10) @ 3.07 2.97 -- (2.87)
Year ended 7/31/06 $15.58 (0.11) @ 0.50 0.39 -- (1.87)
- -----------------------------------------------------------------------------------------------------------------------
MID CAP GROWTH FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $15.10 (0.06) (4.33) (4.39) -- (0.47)
Year ended 7/31/03 $10.24 (0.07) @ 1.85 1.78 -- --
Year ended 7/31/04 $12.02 (0.09) 1.03 0.94 -- --
Year ended 7/31/05 $12.96 --^ 3.07 3.07 -- --
Year ended 7/31/06 $16.03 (0.04) @ 0.77 0.73 (0.02) (0.19)
- -----------------------------------------------------------------------------------------------------------------------
QUALITY GROWTH FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $18.48 (0.04) (4.94) (4.98) -- (0.59)
Year ended 7/31/03 $12.91 0.01 1.31 1.32 --^ --
Year ended 7/31/04 $14.23 (0.04) 0.42 0.38 -- --
Year ended 7/31/05 $14.61 0.03 1.74 1.77 (0.04) --
Year ended 7/31/06 $16.34 (0.03) @ (0.64) (0.67) -- --
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP CORE FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $15.17 0.08 (3.66) (3.58) (0.08) (0.31)
Year ended 7/31/03 $11.20 0.12 0.63 0.75 (0.11) --
Year ended 7/31/04 $11.84 0.12 1.36 1.48 (0.12) --
Year ended 7/31/05 $13.20 0.18 1.76 1.94 (0.18) (0.35)
Year ended 7/31/06 $14.61 0.17 0.72 0.89 (0.16) (0.18)
- -----------------------------------------------------------------------------------------------------------------------
EQUITY INDEX FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $23.11 0.23 (5.70) (5.47) (0.22) --
Year ended 7/31/03 $17.42 0.24 1.51 1.75 (0.24) --
Year ended 7/31/04 $18.93 0.29 @ 2.12 2.41 (0.33) --
Year ended 7/31/05 $21.01 0.44 @ 2.45 2.89 (0.44) --
Year ended 7/31/06 $23.46 0.42 @ 0.79 1.21 (0.43) --
- -----------------------------------------------------------------------------------------------------------------------
BALANCED FUND INSTITUTIONAL SHARES
Year ended 7/31/02(e) $13.39 0.14 (2.27) (2.13) (0.15) (0.20)
Year ended 7/31/03 $10.91 0.15 0.49 0.64 (0.17) --
Year ended 7/31/04 $11.38 0.13 0.64 0.77 (0.15) --
Year ended 7/31/05 $12.00 0.24 0.80 1.04 (0.25) --
Year ended 7/31/06 $12.79 0.25 (0.44) (0.19) (0.25) --
- -----------------------------------------------------------------------------------------------------------------------
MICRO CAP VALUE FUND INSTITUTIONAL SHARES
Year ended 12/31/01 $ 4.91 0.01 1.11 1.12 -- --^
1/1/02 to 7/31/02(c) $ 6.03 (0.01) (0.13) (0.14) -- --
Year ended 7/31/03 $ 5.89 (0.04) @ 2.40 2.36 -- (0.05)
Year ended 7/31/04 $ 8.20 (0.02) @ 2.66 2.64 -- (0.52)
Year ended 7/31/05 $10.32 (0.01) @ 1.41 1.40 -- (0.72)
Year ended 7/31/06 $11.00 0.02 @ 0.17 0.19 (0.01) (3.13)
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE FUND INSTITUTIONAL SHARES
4/1/03(d) to 7/31/03 $15.00 --^ 2.54 2.54 -- --
Year ended 7/31/04 $17.54 (0.03) @ 3.50 3.47 (0.02) (0.98)
Year ended 7/31/05 $20.01 (0.04) @ 4.51 4.47 -- (1.66)
Year ended 7/31/06 $22.82 0.09 0.46 0.55 (0.05) (2.43)
- -----------------------------------------------------------------------------------------------------------------------
NET TOTAL
TOTAL ASSET RETURN
DIVIDENDS VALUE, (EXCLUDES
AND END OF SALES
DISTRIBUTIONS PERIOD CHARGE)
- ----------------------------------------------------------------------------
SMALL CAP GROWTH FUND INSTITUTIONAL SHARES
Year ended 7/31/02 (0.56) $13.70 (20.80%)
Year ended 7/31/03 -- $15.90 16.06%
Year ended 7/31/04 (1.73) $15.48 7.31%
Year ended 7/31/05 (2.87) $15.58 20.81%
Year ended 7/31/06 (1.87) $14.10 2.71%
- ----------------------------------------------------------------------------
MID CAP GROWTH FUND INSTITUTIONAL SHARES
Year ended 7/31/02 (0.47) $10.24 (30.02%)
Year ended 7/31/03 -- $12.02 17.38%
Year ended 7/31/04 -- $12.96 7.82%
Year ended 7/31/05 -- $16.03 23.69%
Year ended 7/31/06 (0.21) $16.55 4.56%
- ----------------------------------------------------------------------------
QUALITY GROWTH FUND INSTITUTIONAL SHARES
Year ended 7/31/02 (0.59) $12.91 (27.90%)
Year ended 7/31/03 --^ $14.23 10.23%
Year ended 7/31/04 -- $14.61 2.67%
Year ended 7/31/05 (0.04) $16.34 12.13%
Year ended 7/31/06 -- $15.67 (4.10%)
- ----------------------------------------------------------------------------
LARGE CAP CORE FUND INSTITUTIONAL SHARES
Year ended 7/31/02 (0.39) $11.20 (24.07%)
Year ended 7/31/03 (0.11) $11.84 6.79%
Year ended 7/31/04 (0.12) $13.20 12.50%
Year ended 7/31/05 (0.53) $14.61 14.92%
Year ended 7/31/06 (0.34) $15.16 6.12%
- ----------------------------------------------------------------------------
EQUITY INDEX FUND INSTITUTIONAL SHARES
Year ended 7/31/02 (0.22) $17.42 (23.82%)
Year ended 7/31/03 (0.24) $18.93 10.22%
Year ended 7/31/04 (0.33) $21.01 12.75%
Year ended 7/31/05 (0.44) $23.46 13.86%
Year ended 7/31/06 (0.43) $24.24 5.21%
- ----------------------------------------------------------------------------
BALANCED FUND INSTITUTIONAL SHARES
Year ended 7/31/02(e) (0.35) $10.91 (16.34%)
Year ended 7/31/03 (0.17) $11.38 5.94%
Year ended 7/31/04 (0.15) $12.00 6.76%
Year ended 7/31/05 (0.25) $12.79 8.73%
Year ended 7/31/06 (0.25) $12.35 (1.51%)
- ----------------------------------------------------------------------------
MICRO CAP VALUE FUND INSTITUTIONAL SHARES
Year ended 12/31/01 --^ $ 6.03 22.90%
1/1/02 to 7/31/02(c) -- $ 5.89 (2.32%)
Year ended 7/31/03 (0.05) $ 8.20 40.26%
Year ended 7/31/04 (0.52) $10.32 32.84%
Year ended 7/31/05 (0.72) $11.00 13.86%
Year ended 7/31/06 (3.14) $ 8.05 1.93%
- ----------------------------------------------------------------------------
SMALL CAP VALUE FUND INSTITUTIONAL SHARES
4/1/03(d) to 7/31/03 -- $17.54 16.87%*
Year ended 7/31/04 (1.00) $20.01 20.11%
Year ended 7/31/05 (1.66) $22.82 23.59%
Year ended 7/31/06 (2.48) $20.89 2.62%
- ----------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------
RATIOS OF RATIOS OF
NET EXPENSES RATIOS OF NET EXPENSES
ASSETS, TO INVESTMENT TO
END OF AVERAGE INCOME/(LOSS) AVERAGE PORTFOLIO
PERIOD NET TO AVERAGE NET TURNOVER
(000'S) ASSETS NET ASSETS ASSETS (a) RATE (b)
- -----------------------------------------------------------------------------------------------------
SMALL CAP GROWTH FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $485,623 0.93% (0.21%) 0.96% 25%
Year ended 7/31/03 $391,934 0.93% (0.16%) 0.98% 63%
Year ended 7/31/04 $223,439 1.00% (0.72%) 1.00% 95%
Year ended 7/31/05 $213,892 1.01% (0.68%) 1.01% 65%
Year ended 7/31/06 $126,809 1.02% (0.75%) 1.03% 67%
- -----------------------------------------------------------------------------------------------------
MID CAP GROWTH FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $207,807 1.12% (0.49%) 1.14% 27%
Year ended 7/31/03 $335,285 1.10% (0.65%) 1.10% 25%
Year ended 7/31/04 $335,815 1.09% (0.68%) 1.09% 83%
Year ended 7/31/05 $392,929 1.09% (0.03%) 1.09% 54%
Year ended 7/31/06 $318,133 1.08% (0.24%) 1.08% 69%
- -----------------------------------------------------------------------------------------------------
QUALITY GROWTH FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $566,235 1.09% (0.24%) 1.09% 20%
Year ended 7/31/03 $795,988 1.08% 0.05% 1.08% 19%
Year ended 7/31/04 $882,256 1.07% (0.24%) 1.07% 35%
Year ended 7/31/05 $707,766 1.08% 0.16% 1.08% 71%
Year ended 7/31/06 $616,737 1.08% (0.18%) 1.08% 108%
- -----------------------------------------------------------------------------------------------------
LARGE CAP CORE FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $520,727 0.93% 0.64% 0.97% 5%
Year ended 7/31/03 $181,278 0.92% 0.99% 0.99% 13%
Year ended 7/31/04 $ 90,222 0.92% 0.84% 1.04% 101%
Year ended 7/31/05 $169,723 0.92% 1.17% 1.05% 102%
Year ended 7/31/06 $166,510 0.92% 1.09% 1.03% 126%
- -----------------------------------------------------------------------------------------------------
EQUITY INDEX FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $608,556 0.41% 1.06% 0.56% 9%
Year ended 7/31/03 $583,530 0.40% 1.42% 0.58% 2%
Year ended 7/31/04 $193,734 0.27% 1.43% 0.58% 14%
Year ended 7/31/05 $168,279 0.19% 1.97% 0.62% 4%
Year ended 7/31/06 $184,177 0.19% 1.75% 0.60% 6%
- -----------------------------------------------------------------------------------------------------
BALANCED FUND INSTITUTIONAL SHARES
Year ended 7/31/02(e) $189,730 1.10% 1.11% 1.13% 78%
Year ended 7/31/03 $177,052 1.10% 1.39% 1.12% 133%
Year ended 7/31/04 $ 98,282 1.13% 1.07% 1.13% 166%
Year ended 7/31/05 $ 59,868 1.02% 1.89% 1.18% 146%
Year ended 7/31/06 $ 35,740 0.97% 1.86% 1.22% 191%
- -----------------------------------------------------------------------------------------------------
MICRO CAP VALUE FUND INSTITUTIONAL SHARES
Year ended 12/31/01 $ 14,957 1.29% 0.21% 1.35% 47%
1/1/02 to 7/31/02(c) $ 45,538 1.40%** (0.51%)** 1.68%** 16%
Year ended 7/31/03 $100,676 1.40% (0.68%) 1.47% 28%
Year ended 7/31/04 $155,798 1.33% (0.25%) 1.33% 23%
Year ended 7/31/05 $ 98,885 1.35% (0.07%) 1.35% 12%
Year ended 7/31/06 $ 72,981 1.37% 0.23% 1.40% 42%
- -----------------------------------------------------------------------------------------------------
SMALL CAP VALUE FUND INSTITUTIONAL SHARES
4/1/03(d) to 7/31/03 $ 72,783 1.24%** 0.03%** 1.60%** 39%
Year ended 7/31/04 $107,344 1.25% (0.15%) 1.41% 279%
Year ended 7/31/05 $158,505 1.20% (0.20%) 1.20% 105%
Year ended 7/31/06 $116,503 1.21% 0.39% 1.24% 99%
- -----------------------------------------------------------------------------------------------------
Spread 106 - 107
FIFTH THIRD FUNDS
FINANCIAL HIGHLIGHTS
(FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD)
CHANGE IN NET ASSETS LESS DIVIDENDS AND
RESULTING FROM OPERATIONS DISTRIBUTIONS FROM
----------------------------- -----------------------------
NET REALIZED
AND
UNREALIZED CHANGE IN
NET ASSET GAINS/(LOSSES) NET ASSETS TOTAL
VALUE, NET FROM RESULTING NET NET RETURN DIVIDENDS
BEGINNING INVESTMENT INVESTMENT FROM INVESTMENT REALIZED OF AND
OF PERIOD INCOME/(LOSS) TRANSACTIONS OPERATIONS INCOME GAINS CAPITAL DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------------------------------------
MULTI CAP VALUE FUND INSTITUTIONAL SHARES
Year ended 12/31/01 $18.64 0.05 1.43 1.48 (0.07) (0.91) -- (0.98)
1/1/02 to 7/31/02(c) $19.14 -- (3.28) (3.28) -- -- -- --
Year ended 7/31/03 $15.86 0.02 3.14 3.16 -- -- -- --
Year ended 7/31/04 $19.02 0.06 3.62 3.68 (0.05) (0.07) -- (0.12)
Year ended 7/31/05 $22.58 0.10 4.85 4.95 (0.11) (1.38) -- (1.49)
Year ended 7/31/06 $26.04 0.26 1.77 2.03 (0.24) (2.15) -- (2.39)
- -----------------------------------------------------------------------------------------------------------------------------
DISCIPLINED LARGE CAP VALUE FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $13.12 0.09 (1.73) (1.64) (0.10) (0.53) -- (0.63)
Year ended 7/31/03 $10.85 0.18 @ 1.14 1.32 (0.16) (0.16) -- (0.32)
Year ended 7/31/04 $11.85 0.15 2.08 2.23 (0.16) (0.40) -- (0.56)
Year ended 7/31/05 $13.52 0.18 1.95 2.13 (0.18) (0.39) -- (0.57)
Year ended 7/31/06 $15.08 0.21 1.07 1.28 (0.20) (1.44) -- (1.64)
- -----------------------------------------------------------------------------------------------------------------------------
LIFEMODEL AGGRESSIVE FUND SM INSTITUTIONAL SHARES
8/1/02(d) to 7/31/03 $10.00 0.04# 1.35# 1.39 (0.04) -- -- (0.04)
Year ended 7/31/04 $11.35 0.14# 1.31# 1.45 (0.13) (0.18) -- (0.31)
Year ended 7/31/05 $12.49 0.16# 1.94# 2.10 (0.15) (0.08) -- (0.23)
Year ended 7/31/06 $14.36 0.21# 0.52# 0.73 (0.20) (0.31) -- (0.51)
- -----------------------------------------------------------------------------------------------------------------------------
LIFEMODEL MODERATELY AGGRESSIVE FUND SM INSTITUTIONAL SHARES
8/1/02(d) to 7/31/03 $10.00 0.09# 1.58# 1.67 (0.08) -- -- (0.08)
Year ended 7/31/04 $11.59 0.19# 1.03# 1.22 (0.19) (0.14) -- (0.33)
Year ended 7/31/05 $12.48 0.22# 1.50# 1.72 (0.21) (0.08) -- (0.29)
Year ended 7/31/06 $13.91 0.28# 0.34# 0.62 (0.28) (0.27) -- (0.55)
- -----------------------------------------------------------------------------------------------------------------------------
LIFEMODEL MODERATE FUND SM INSTITUTIONAL SHARES
8/1/02(d) to 7/31/03 $10.00 0.14# 0.92# 1.06 (0.13) -- -- (0.13)
Year ended 7/31/04 $10.93 0.21# 0.76# 0.97 (0.21) (0.12) -- (0.33)
Year ended 7/31/05 $11.57 0.27# 0.97# 1.24 (0.26) (0.03) -- (0.29)
Year ended 7/31/06 $12.52 0.33# 0.15# 0.48 (0.33) (0.24) -- (0.57)
- -----------------------------------------------------------------------------------------------------------------------------
LIFEMODEL MODERATELY CONSERVATIVE FUND SM INSTITUTIONAL SHARES
8/1/02(d) to 7/31/03 $10.00 0.18# 0.60# 0.78 (0.16) -- -- (0.16)
Year ended 7/31/04 $10.62 0.27# 0.51# 0.78 (0.25) (0.20) -- (0.45)
Year ended 7/31/05 $10.95 0.27# 0.73# 1.00 (0.27) (0.09) -- (0.36)
Year ended 7/31/06 $11.59 0.34# 0.04# 0.38 (0.34) (0.27) -- (0.61)
- -----------------------------------------------------------------------------------------------------------------------------
LIFEMODEL CONSERVATIVE FUND SM INSTITUTIONAL SHARES
8/1/02(d) to 7/31/03 $10.00 0.23# 0.52# 0.75 (0.21) -- -- (0.21)
Year ended 7/31/04 $10.54 0.31# 0.26# 0.57 (0.29) (0.16) -- (0.45)
Year ended 7/31/05 $10.66 0.31# 0.36# 0.67 (0.32) (0.09) -- (0.41)
Year ended 7/31/06 $10.92 0.40# @ (0.09)# 0.31 (0.40) (0.11) -- (0.51)
- -----------------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME FUND INSTITUTIONAL SHARES
Year ended 12/31/01 $ 9.96 0.69 0.59 1.28 (0.67) -- --^ (0.67)
1/1/02 to 7/31/02(c) $10.57 0.32 0.08 0.40 (0.34) -- -- (0.34)
Year ended 7/31/03 $10.63 0.58 0.25 0.83 (0.55) -- -- (0.55)
Year ended 7/31/04 $10.91 0.51 0.25 0.76 (0.52) -- -- (0.52)
Year ended 7/31/05 $11.15 0.51 0.39 0.90 (0.50) (0.01) -- (0.51)
Year ended 7/31/06 $11.54 0.52 @ (0.23) 0.29 (0.52) (0.03) -- (0.55)
- -----------------------------------------------------------------------------------------------------------------------------
DIVIDEND GROWTH FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $25.47 (0.21) (7.20) (7.41) -- -- -- --
Year ended 7/31/03 $18.06 (0.12) 0.23 0.11 -- -- -- --
Year ended 7/31/04 $18.17 (0.19) 1.12 0.93 -- -- -- --
Year ended 7/31/05 $19.10 (0.15) @ 2.76 2.61 -- -- -- --
Year ended 7/31/06 $21.71 0.28 @ 0.83 1.11 (0.26) -- -- (0.26)
- -----------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $10.37 (0.12) (4.70) (4.82) -- -- -- --
Year ended 7/31/03 $ 5.55 (0.09) @ 3.26 3.17 -- -- -- --
Year ended 7/31/04 $ 8.72 (0.11) @ (0.15) (0.26) -- -- -- --
Year ended 7/31/05 $ 8.46 (0.13) @ 1.63 1.50 -- -- -- --
Year ended 7/31/06 $ 9.96 (0.14) @ 0.24 0.10 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
NET TOTAL
ASSET RETURN
VALUE, (EXCLUDES
END OF SALES
PERIOD CHARGE)
- ---------------------------------------------------------------------------------
MULTI CAP VALUE FUND INSTITUTIONAL SHARES
Year ended 12/31/01 $19.14 7.91%
1/1/02 to 7/31/02(c) $15.86 (17.14%)*
Year ended 7/31/03 $19.02 19.92%
Year ended 7/31/04 $22.58 19.36%
Year ended 7/31/05 $26.04 22.51%
Year ended 7/31/06 $25.68 8.38%
- ---------------------------------------------------------------------------------
DISCIPLINED LARGE CAP VALUE FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $10.85 (12.96%)
Year ended 7/31/03 $11.85 12.53%
Year ended 7/31/04 $13.52 19.22%
Year ended 7/31/05 $15.08 16.07%
Year ended 7/31/06 $14.72 9.29%
- ---------------------------------------------------------------------------------
LIFEMODEL AGGRESSIVE FUND SM INSTITUTIONAL SHARES
8/1/02(d) to 7/31/03 $11.35 13.92%*
Year ended 7/31/04 $12.49 12.83%
Year ended 7/31/05 $14.36 16.91%
Year ended 7/31/06 $14.58 5.13%
- ---------------------------------------------------------------------------------
LIFEMODEL MODERATELY AGGRESSIVE FUND SM INSTITUTIONAL SHARES
8/1/02(d) to 7/31/03 $11.59 16.78%*
Year ended 7/31/04 $12.48 10.54%
Year ended 7/31/05 $13.91 13.87%
Year ended 7/31/06 $13.98 4.60%
- ---------------------------------------------------------------------------------
LIFEMODEL MODERATE FUND SM INSTITUTIONAL SHARES
8/1/02(d) to 7/31/03 $10.93 10.66%*
Year ended 7/31/04 $11.57 8.84%
Year ended 7/31/05 $12.52 10.79%
Year ended 7/31/06 $12.43 3.90%
- ---------------------------------------------------------------------------------
LIFEMODEL MODERATELY CONSERVATIVE FUND SM INSTITUTIONAL SHARES
8/1/02(d) to 7/31/03 $10.62 7.87%*
Year ended 7/31/04 $10.95 7.39%
Year ended 7/31/05 $11.59 9.24%
Year ended 7/31/06 $11.36 3.39%
- ---------------------------------------------------------------------------------
LIFEMODEL CONSERVATIVE FUND SM INSTITUTIONAL SHARES
8/1/02(d) to 7/31/03 $10.54 7.58%*
Year ended 7/31/04 $10.66 5.44%
Year ended 7/31/05 $10.92 6.38%
Year ended 7/31/06 $10.72 2.88%
- ---------------------------------------------------------------------------------
STRATEGIC INCOME FUND INSTITUTIONAL SHARES
Year ended 12/31/01 $10.57 13.12%
1/1/02 to 7/31/02(c) $10.63 3.82%*
Year ended 7/31/03 $10.91 7.89%
Year ended 7/31/04 $11.15 7.04%
Year ended 7/31/05 $11.54 8.21%
Year ended 7/31/06 $11.28 2.61%
- ---------------------------------------------------------------------------------
DIVIDEND GROWTH FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $18.06 (29.09%)
Year ended 7/31/03 $18.17 0.61%
Year ended 7/31/04 $19.10 5.12%
Year ended 7/31/05 $21.71 13.66%
Year ended 7/31/06 $22.56 5.14%
- ---------------------------------------------------------------------------------
TECHNOLOGY FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $ 5.55 (46.48%)
Year ended 7/31/03 $ 8.72 57.12%
Year ended 7/31/04 $ 8.46 (2.98%)
Year ended 7/31/05 $ 9.96 17.73%
Year ended 7/31/06 $10.06 1.00%
- ---------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------
RATIOS OF RATIOS OF
NET EXPENSES RATIOS OF NET EXPENSES
ASSETS, TO INVESTMENT TO
END OF AVERAGE INCOME/(LOSS) AVERAGE PORTFOLIO
PERIOD NET TO AVERAGE NET TURNOVER
(000'S) ASSETS NET ASSETS ASSETS (a) RATE (b)
- -----------------------------------------------------------------------------------------------------------------------
MULTI CAP VALUE FUND INSTITUTIONAL SHARES
Year ended 12/31/01 $ 18,069 1.23% 0.59% 1.26% 80%
1/1/02 to 7/31/02(c) $ 49,844 1.33%** 0.01%** 1.55%** 25%
Year ended 7/31/03 $182,485 1.33% 0.17% 1.36% 23%
Year ended 7/31/04 $235,228 1.30% 0.29% 1.30% 17%
Year ended 7/31/05 $270,131 1.30% 0.41% 1.30% 24%
Year ended 7/31/06 $226,189 1.29% 0.99% 1.31% 40%
- -----------------------------------------------------------------------------------------------------------------------
DISCIPLINED LARGE CAP VALUE FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $ 80,906 1.16% 0.83% 1.19% 22%
Year ended 7/31/03 $335,967 1.08% 1.74% 1.10% 79%
Year ended 7/31/04 $632,120 1.07% 1.27% 1.07% 22%
Year ended 7/31/05 $574,251 1.07% 1.27% 1.07% 31%
Year ended 7/31/06 $581,507 1.07% 1.40% 1.07% 57%
- -----------------------------------------------------------------------------------------------------------------------
LIFEMODEL AGGRESSIVE FUND SM INSTITUTIONAL SHARES
8/1/02(d) to 7/31/03 $ 32,421 0.08%** 0.45%** 0.78%** 79%
Year ended 7/31/04 $ 52,085 0.08% 1.09% 0.51% 22%
Year ended 7/31/05 $ 70,072 0.08% 1.15% 0.47% 35%
Year ended 7/31/06 $101,365 0.08% 1.38% 0.48% 14%
- -----------------------------------------------------------------------------------------------------------------------
LIFEMODEL MODERATELY AGGRESSIVE FUND SM INSTITUTIONAL SHARES
8/1/02(d) to 7/31/03 $ 62,677 0.08%** 1.15%** 0.54%** 55%
Year ended 7/31/04 $ 82,264 0.08% 1.56% 0.45% 16%
Year ended 7/31/05 $110,379 0.08% 1.62% 0.44% 35%
Year ended 7/31/06 $135,542 0.08% 2.09% 0.45% 19%
- -----------------------------------------------------------------------------------------------------------------------
LIFEMODEL MODERATE FUND SM INSTITUTIONAL SHARES
8/1/02(d) to 7/31/03 $ 71,538 0.08%** 1.82%** 0.52%** 55%
Year ended 7/31/04 $315,055 0.08% 1.76% 0.43% 14%
Year ended 7/31/05 $340,163 0.08% 2.17% 0.42% 41%
Year ended 7/31/06 $369,903 0.08% 2.70% 0.43% 30%
- -----------------------------------------------------------------------------------------------------------------------
LIFEMODEL MODERATELY CONSERVATIVE FUND SM INSTITUTIONAL SHARES
8/1/02(d) to 7/31/03 $ 40,412 0.08%** 2.23%** 0.60%** 72%
Year ended 7/31/04 $ 38,097 0.08% 2.33% 0.49% 19%
Year ended 7/31/05 $ 38,606 0.08% 2.44% 0.47% 38%
Year ended 7/31/06 $ 42,683 0.08% 3.05% 0.50% 22%
- -----------------------------------------------------------------------------------------------------------------------
LIFEMODEL CONSERVATIVE FUND SM INSTITUTIONAL SHARES
8/1/02(d) to 7/31/03 $ 16,014 0.08%** 2.90%** 0.75%** 63%
Year ended 7/31/04 $ 14,201 0.08% 2.79% 0.58% 27%
Year ended 7/31/05 $ 22,236 0.08% 3.00% 0.54% 46%
Year ended 7/31/06 $ 24,385 0.08% 3.72% 0.58% 15%
- -----------------------------------------------------------------------------------------------------------------------
STRATEGIC INCOME FUND INSTITUTIONAL SHARES
Year ended 12/31/01 $ 3,142 1.26% 6.62% 1.28% 34%
1/1/02 to 7/31/02(c) $ 11,491 1.35%** 5.14%** 1.63%** 27%
Year ended 7/31/03 $ 67,649 1.35% 5.25% 1.35% 38%
Year ended 7/31/04 $ 90,995 1.33% 4.64% 1.33% 36%
Year ended 7/31/05 $ 97,921 1.36% 4.47% 1.36% 17%
Year ended 7/31/06 $107,130 1.31% 4.56% 1.34% 8%
- -----------------------------------------------------------------------------------------------------------------------
DIVIDEND GROWTH FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $ 16,623 1.38% (0.79%) 1.38% 70%
Year ended 7/31/03 $ 14,659 1.47% (0.67%) 1.63% 50%
Year ended 7/31/04 $ 7,166 1.43% (0.68%) 1.74% 81%
Year ended 7/31/05 $ 5,973 1.45% (0.73%) 1.99% 28%
Year ended 7/31/06 $ 15,759 0.73% 1.25% 2.72% 147%
- -----------------------------------------------------------------------------------------------------------------------
TECHNOLOGY FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $ 21,183 1.51% (1.35%) 1.51% 97%
Year ended 7/31/03 $ 29,573 1.55% (1.46%) 1.87% 258%
Year ended 7/31/04 $ 37,573 1.20% (1.07%) 1.55% 191%
Year ended 7/31/05 $ 38,941 1.63% (1.40%) 1.63% 367%
Year ended 7/31/06 $ 47,523 1.51% (1.24%) 1.51% 506%
- -----------------------------------------------------------------------------------------------------------------------
Spread 108-109
FIFTH THIRD FUNDS
FINANCIAL HIGHLIGHTS
(FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD)
CHANGE IN NET ASSETS LESS DIVIDENDS AND
RESULTING FROM OPERATIONS DISTRIBUTIONS FROM
-------------------------- --------------------
NET REALIZED
AND
UNREALIZED CHANGE IN
NET ASSET GAINS/(LOSSES) NET ASSETS
VALUE, NET FROM RESULTING NET NET
BEGINNING INVESTMENT INVESTMENT FROM INVESTMENT REALIZED
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME GAINS
- -------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $ 9.04 0.02 (1.30) (1.28) (0.11) --
Year ended 7/31/03 $ 7.65 0.06 0.12 0.18 (0.04) --
Year ended 7/31/04 $ 7.79 0.06 @ 1.61 1.67 (0.14) --
Year ended 7/31/05 $ 9.32 0.13 1.54 1.67 (0.20) --
Year ended 7/31/06 $10.79 0.15 @ 2.37 2.52 (0.20) (0.28)
- -------------------------------------------------------------------------------------------------------------------------------
HIGH YIELD BOND FUND INSTITUTIONAL SHARES
11/29/05(d) to 7/31/06 $10.00 0.44 (0.28) 0.16 (0.42) --
- -------------------------------------------------------------------------------------------------------------------------------
BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $ 9.97 0.50 (0.01) 0.49 (0.53) --
Year ended 7/31/03 $ 9.93 0.39 0.09 0.48 (0.45) --
Year ended 7/31/04 $ 9.96 0.28 0.14 0.42 (0.36) --
Year ended 7/31/05 $10.02 0.34 0.10 0.44 (0.38) (0.01)
Year ended 7/31/06 $10.07 0.42 (0.30) 0.12 (0.45) (0.06)
- -------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $ 9.90 0.47 0.11 0.58 (0.50) --
Year ended 7/31/03 $ 9.98 0.38 0.10 0.48 (0.42) --
Year ended 7/31/04 $10.04 0.31 (0.04) 0.27 (0.38) --
Year ended 7/31/05 $ 9.93 0.37 (0.08) 0.29 (0.42) --
Year ended 7/31/06 $ 9.80 0.43 @ (0.27) 0.16 (0.45) --
- -------------------------------------------------------------------------------------------------------------------------------
SHORT TERM BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $ 9.83 0.41 0.07 0.48 (0.49) --
Year ended 7/31/03 $ 9.82 0.28 0.03 0.31 (0.38) --
Year ended 7/31/04 $ 9.75 0.19 @ (0.06) 0.13 (0.31) --
Year ended 7/31/05 $ 9.57 0.20 (0.08) 0.12 (0.32) --
Year ended 7/31/06 $ 9.37 0.31 (0.06) 0.25 (0.37) --
- -------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02(f) $10.06 0.41 0.33 0.74 (0.38) --
Year ended 7/31/03 $10.42 0.30 0.03 0.33 (0.30) (0.16)
Year ended 7/31/04 $10.29 0.25 --^ 0.25 (0.26) (0.16)
Year ended 7/31/05 $10.12 0.30 (0.06) 0.24 (0.28) --
Year ended 7/31/06 $10.08 0.38 (0.19) 0.19 (0.35) (0.03)
- -------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $10.75 0.43 0.24 0.67 (0.43) (0.25)
Year ended 7/31/03 $10.74 0.43 @ (0.09) 0.34 (0.43) (0.16)
Year ended 7/31/04 $10.49 0.43 @ 0.08 0.51 (0.43) (0.17)
Year ended 7/31/05 $10.40 0.40 0.06 0.46 (0.40) (0.39)
Year ended 7/31/06 $10.07 0.37 (0.23) 0.14 (0.37) (0.44)
- -------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE MUNICIPAL BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $10.78 0.38 0.25 0.63 (0.38) (0.24)
Year ended 7/31/03 $10.79 0.37 @ (0.09) 0.28 (0.36) (0.07)
Year ended 7/31/04 $10.64 0.37 (0.03) 0.34 (0.36) (0.09)
Year ended 7/31/05 $10.53 0.37 (0.07) 0.30 (0.42) (0.08)
Year ended 7/31/06 $10.33 0.36 @ (0.21) 0.15 (0.36) (0.13)
- -------------------------------------------------------------------------------------------------------------------------------
OHIO MUNICIPAL BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02(g) $10.27 0.39 0.20 0.59 (0.38) --
Year ended 7/31/03 $10.48 0.37 (0.09) 0.28 (0.37) --
Year ended 7/31/04 $10.39 0.36 0.02 0.38 (0.35) (0.03)
Year ended 7/31/05 $10.39 0.36 (0.09) 0.27 (0.35) (0.07)
Year ended 7/31/06 $10.24 0.36 @ (0.21) 0.15 (0.36) (0.03)
- -------------------------------------------------------------------------------------------------------------------------------
MICHIGAN MUNICIPAL BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $10.25 0.38 0.19 0.57 (0.38) (0.05)
Year ended 7/31/03 $10.39 0.31 (0.05) 0.26 (0.31) (0.03)
Year ended 7/31/04 $10.31 0.28 (0.13) 0.15 (0.28) (0.01)
Year ended 7/31/05 $10.17 0.28 (0.13) 0.15 (0.28) (0.01)
Year ended 7/31/06 $10.03 0.28 (0.15) 0.13 (0.28) --
- -------------------------------------------------------------------------------------------------------------------------------
NET TOTAL
TOTAL ASSET RETURN
DIVIDENDS VALUE, (EXCLUDES
AND END OF SALES
DISTRIBUTIONS PERIOD CHARGE)
- ----------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND INSTITUTIONAL SHARES
Year ended 7/31/02 (0.11) $ 7.65 (14.30%)
Year ended 7/31/03 (0.04) $ 7.79 2.47%
Year ended 7/31/04 (0.14) $ 9.32 21.56%
Year ended 7/31/05 (0.20) $10.79 17.99%
Year ended 7/31/06 (0.48) $12.83 23.86%
- ----------------------------------------------------------------------------------------
HIGH YIELD BOND FUND INSTITUTIONAL SHARES
11/29/05(d) to 7/31/06 (0.42) $ 9.74 1.59%*
- ----------------------------------------------------------------------------------------
BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 (0.53) $ 9.93 5.06%
Year ended 7/31/03 (0.45) $ 9.96 4.79%
Year ended 7/31/04 (0.36) $10.02 4.26%
Year ended 7/31/05 (0.39) $10.07 4.43%
Year ended 7/31/06 (0.51) $ 9.68 1.21%
- ----------------------------------------------------------------------------------------
INTERMEDIATE BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 (0.50) $ 9.98 6.15%
Year ended 7/31/03 (0.42) $10.04 4.77%
Year ended 7/31/04 (0.38) $ 9.93 2.71%
Year ended 7/31/05 (0.42) $ 9.80 2.85%
Year ended 7/31/06 (0.45) $ 9.51 1.65%
- ----------------------------------------------------------------------------------------
SHORT TERM BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 (0.49) $ 9.82 4.96%
Year ended 7/31/03 (0.38) $ 9.75 3.23%
Year ended 7/31/04 (0.31) $ 9.57 1.31%
Year ended 7/31/05 (0.32) $ 9.37 1.16%
Year ended 7/31/06 (0.37) $ 9.25 2.75%
- ----------------------------------------------------------------------------------------
U.S. GOVERNMENT BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02(f) (0.38) $10.42 7.55%
Year ended 7/31/03 (0.46) $10.29 3.19%
Year ended 7/31/04 (0.42) $10.12 2.42%
Year ended 7/31/05 (0.28) $10.08 2.39%
Year ended 7/31/06 (0.38) $ 9.89 1.91%
- ----------------------------------------------------------------------------------------
MUNICIPAL BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 (0.68) $10.74 6.57%
Year ended 7/31/03 (0.59) $10.49 3.18%
Year ended 7/31/04 (0.60) $10.40 4.84%
Year ended 7/31/05 (0.79) $10.07 4.53%
Year ended 7/31/06 (0.81) $ 9.40 1.49%
- ----------------------------------------------------------------------------------------
INTERMEDIATE MUNICIPAL BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 (0.62) $10.79 6.00%
Year ended 7/31/03 (0.43) $10.64 2.64%
Year ended 7/31/04 (0.45) $10.53 3.27%
Year ended 7/31/05 (0.50) $10.33 2.83%
Year ended 7/31/06 (0.49) $ 9.99 1.43%
- ----------------------------------------------------------------------------------------
OHIO MUNICIPAL BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02(g) (0.38) $10.48 5.86%
Year ended 7/31/03 (0.37) $10.39 2.65%
Year ended 7/31/04 (0.38) $10.39 3.66%
Year ended 7/31/05 (0.42) $10.24 2.61%
Year ended 7/31/06 (0.39) $10.00 1.46%
- ----------------------------------------------------------------------------------------
MICHIGAN MUNICIPAL BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 (0.43) $10.39 5.65%
Year ended 7/31/03 (0.34) $10.31 2.70%
Year ended 7/31/04 (0.29) $10.17 1.43%
Year ended 7/31/05 (0.29) $10.03 1.49%
Year ended 7/31/06 (0.28) $ 9.88 1.35%
- ----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------
RATIOS OF RATIOS OF
NET EXPENSES RATIOS OF NET EXPENSES
ASSETS, TO INVESTMENT TO
END OF AVERAGE INCOME AVERAGE PORTFOLIO
PERIOD NET TO AVERAGE NET TURNOVER
(000'S) ASSETS NET ASSETS ASSETS (a) RATE (b)
- ----------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $148,593 1.38% 0.17% 1.38% 23%
Year ended 7/31/03 $159,160 1.42% 0.96% 1.45% 44%
Year ended 7/31/04 $324,852 1.36% 0.61% 1.42% 50%
Year ended 7/31/05 $282,476 1.35% 1.15% 1.39% 21%
Year ended 7/31/06 $434,572 1.35% 1.24% 1.37% 23%
- ----------------------------------------------------------------------------------------------------------------
HIGH YIELD BOND FUND INSTITUTIONAL SHARES
11/29/05(d) to 7/31/06 $ 66,033 0.74%** 6.77%** 1.15%** 41%
- ----------------------------------------------------------------------------------------------------------------
BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $403,677 0.81% 4.74% 0.90% 229%
Year ended 7/31/03 $303,450 0.80% 3.86% 0.89% 332%
Year ended 7/31/04 $277,706 0.79% 2.75% 0.90% 389%
Year ended 7/31/05 $292,043 0.78% 3.28% 0.91% 385%
Year ended 7/31/06 $252,145 0.74% 4.23% 0.90% 352%
- ----------------------------------------------------------------------------------------------------------------
INTERMEDIATE BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $799,642 0.77% 4.53% 0.82% 229%
Year ended 7/31/03 $772,536 0.76% 3.72% 0.81% 252%
Year ended 7/31/04 $676,344 0.76% 3.13% 0.81% 189%
Year ended 7/31/05 $544,101 0.76% 3.69% 0.82% 104%
Year ended 7/31/06 $440,962 0.72% 4.42% 0.83% 154%
- ----------------------------------------------------------------------------------------------------------------
SHORT TERM BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $304,882 0.74% 4.02% 0.76% 111%
Year ended 7/31/03 $490,229 0.74% 2.59% 0.76% 72%
Year ended 7/31/04 $495,271 0.74% 1.96% 0.77% 90%
Year ended 7/31/05 $333,909 0.73% 2.35% 0.77% 68%
Year ended 7/31/06 $258,423 0.67% 3.33% 0.78% 53%
- ----------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02(f) $ 50,809 0.87% 4.02% 1.02% 180%
Year ended 7/31/03 $ 50,649 0.81% 2.88% 0.92% 304%
Year ended 7/31/04 $ 43,820 0.76% 2.35% 0.91% 180%
Year ended 7/31/05 $ 33,246 0.82% 2.91% 0.97% 159%
Year ended 7/31/06 $ 29,005 0.73% 3.88% 0.98% 103%
- ----------------------------------------------------------------------------------------------------------------
MUNICIPAL BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $104,209 0.79% 4.06% 0.89% 97%
Year ended 7/31/03 $ 74,347 0.79% 3.98% 0.93% 21%
Year ended 7/31/04 $ 57,638 0.79% 4.05% 0.98% 35%
Year ended 7/31/05 $ 49,802 0.78% 3.86% 1.04% 83%
Year ended 7/31/06 $ 39,514 0.65% 3.87% 1.06% 87%
- ----------------------------------------------------------------------------------------------------------------
INTERMEDIATE MUNICIPAL BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $346,386 0.73% 3.56% 0.83% 86%
Year ended 7/31/03 $304,754 0.73% 3.36% 0.83% 85%
Year ended 7/31/04 $255,026 0.73% 3.42% 0.84% 84%
Year ended 7/31/05 $205,078 0.70% 3.45% 0.86% 60%
Year ended 7/31/06 $164,537 0.71% 3.53% 0.87% 60%
- ----------------------------------------------------------------------------------------------------------------
OHIO MUNICIPAL BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02(g) $169,455 0.86% 3.80% 0.91% 28%
Year ended 7/31/03 $151,478 0.77% 3.49% 0.85% 20%
Year ended 7/31/04 $126,343 0.78% 3.39% 0.86% 15%
Year ended 7/31/05 $104,554 0.79% 3.37% 0.87% 19%
Year ended 7/31/06 $ 85,716 0.80% 3.54% 0.90% 25%
- ----------------------------------------------------------------------------------------------------------------
MICHIGAN MUNICIPAL BOND FUND INSTITUTIONAL SHARES
Year ended 7/31/02 $ 96,269 0.69% 3.64% 0.78% 25%
Year ended 7/31/03 $118,867 0.69% 3.02% 0.77% 12%
Year ended 7/31/04 $105,361 0.69% 2.75% 0.78% 21%
Year ended 7/31/05 $ 74,099 0.68% 2.70% 0.80% 11%
Year ended 7/31/06 $ 50,670 0.68% 2.84% 0.88% 12%
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Spread 110 - 111
FIFTH THIRD FUNDS
NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(a) During various periods, certain fees were reduced. The ratios shown do not
include these fee reductions.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(c) The Fund changed its fiscal year end to July 31 from December 31.
(d) Reflects date of commencement of operations.
(e) As required, effective August 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting discounts on debt securities. The effect of this change for the
period ended, July 31, 2002 for the Balanced Fund, Institutional Shares
was to increase net investment income per share by $0.02, decrease net
realized and unrealized gains and losses per share by ($0.02) and increase
the ratio of net investment income to average net assets from 0.96% to
1.11%. Per share, ratios and supplemental data for periods prior to July
31, 2001 have not been restated to reflect this change in presentation.
(f) As required, effective August 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting discounts on debt securities. The effect of this change for the
period ended July 31, 2002 for the U.S. Government Bond Fund,
Institutional Shares was to increase net investment income per share by
$0.02, decrease net realized and unrealized gains and losses per share by
($0.02) and increase the ratio of net investment income to average net
assets from 3.82% to 4.02%. Per share, ratios and supplemental data for
the periods prior to July 31, 2001 have not been restated to reflect this
change in presentation.
(g) As required, effective August 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting discounts on debt securities. The effect of this change for the
period ended July 31, 2002 for the Ohio Municipal Bond Fund, Institutional
Shares was to increase net investment income per share by $0.00, decrease
net realized and unrealized gains and losses per share by ($0.00) and
increase the ratio of net investment income to average net assets from
3.77% to 3.80%. Per share, ratios and supplemental data for periods prior
to July 31, 2001 have not been restated to reflect this change in
presentation.
^ Amount is less than $0.005 per share.
* Not annualized.
** Annualized.
# Represents income or gains/(losses) from affiliates.
@ Average shares method used in calculation.
112
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113
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114
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115
ADDRESSES
- ------------------------------------------------------------------------------------------------------------
Fifth Third Funds Fifth Third Funds
Stock and Bond Mutual Funds 3435 Stelzer Road
Asset Allocation Funds Columbus, Ohio 43219
Institutional Shares
- ------------------------------------------------------------------------------------------------------------
Investment Advisor, Administrator and Accountant Fifth Third Asset Management, Inc.
38 Fountain Square Plaza
Cincinnati, Ohio 45263
- ------------------------------------------------------------------------------------------------------------
Sub-Advisor Morgan Stanley Investment Management Inc.
(International Equity Fund only) 1221 Avenue of the Americas
New York, New York 10020
- ------------------------------------------------------------------------------------------------------------
Sub-Advisor Fort Washington Investment Advisors, Inc.
(High Yield Bond Fund only) 420 East Fourth Street
Cincinnati, Ohio 45202
- ------------------------------------------------------------------------------------------------------------
Distributor Fifth Third Funds Distributor, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
- ------------------------------------------------------------------------------------------------------------
Custodian Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
- ------------------------------------------------------------------------------------------------------------
Sub-Administrator BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219
- ------------------------------------------------------------------------------------------------------------
Transfer and Dividend Disbursing Agent and Sub-Accountant BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
- ------------------------------------------------------------------------------------------------------------
Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP
100 East Broad Street
Suite 2100
Columbus, Ohio 43215
- ------------------------------------------------------------------------------------------------------------
116
The following additional information is available to you upon request and
without charge.
ANNUAL/SEMI-ANNUAL REPORTS:
The Funds' annual and semi-annual reports to shareholders contain additional
information on the Funds' investments. The Funds' annual reports also contain
discussions of the market conditions and investment strategies that
significantly affected the Funds' performance during each Fund's last fiscal
year.
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
3435 STELZER ROAD
COLUMBUS, OHIO 43219
TELEPHONE: 1-800-282-5706
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:
o For a fee, by writing the Public Reference Section of the
Commission, Washington, D.C. 20549-0102 or calling 1-202-942-8090,
or by electronic request, by e-mailing the Commission at the
following address: publicinfo@sec.gov.
o At no charge on the EDGAR Database on the Commission's Website at
http://www.sec.gov.
Investment Company Act file no. 811-5669.
117
[LOGO] FIFTH THIRD FUNDS