497 1 e83012b.htm

FIFTH THIRD FUNDS
COMBINED STATEMENT OF ADDITIONAL INFORMATION
DATED NOVEMBER 23, 2011
This Combined Statement of Additional Information (the “SAI”) relates to the Prospectuses of the following portfolios (the “Funds”) of Fifth Third Funds (the “Trust”) dated November 23, 2011:

Class
A Class
B Class
C Institutional
Class Select
Class Preferred
Class Trust
Class
Fifth Third Small Cap Growth Fund KNEMX FTGBX FTGCX KNEEX
Fifth Third Mid Cap Growth Fund FSMCX FBMBX FCMCX FMCIX
Fifth Third Quality Growth Fund FSQGX FSBQX FSQCX FQGIX
Fifth Third Dividend Growth Fund FSPIX FTPBX FTPCX FPFIX
Fifth Third Micro Cap Value Fund MXCAX MXCBX MXCSX MXAIX
Fifth Third Small Cap Value Fund FTVAX FTVBX FTVCX FTVIX
Fifth Third All Cap Value Fund MXLAX MXLBX MXLCX MXEIX
Fifth Third Disciplined Large Cap Value Fund FSSIX FBEQX FEQCX FEINX
Fifth Third Structured Large Cap Plus Fund KNVIX FBLVX FCLVX KNVEX
Fifth Third Equity Index Fund KNIDX FBINX FCINX KNIEX KNISX KNIPX KNITX
Fifth Third International Equity Fund FSIEX FBIEX FTECX FIEIX
Fifth Third Strategic Income Fund FFSAX FFSBX FRACX MXIIX
Fifth Third LifeModel Aggressive FundSM LASAX LASBX LASCX LASIX
Fifth Third LifeModel Moderately Aggressive FundSM LMAAX LMABX LMACX LMAIX
Fifth Third LifeModel Moderate FundSM LMDAX LMDBX LMDCX LMDIX
Fifth Third LifeModel Moderately Conservative FundSM LAMVX LBMVX LCMVX LIMVX
Fifth Third LifeModel Conservative FundSM LCVAX LCVBX LCVCX LCVIX
Fifth Third High Yield Bond Fund FTYAX FTYBX FTYCX FTYIX
Fifth Third Total Return Bond Fund KIFIX FBBDX FCBDX KNIIX
Fifth Third Short Term Bond Fund KNLIX KNLCX KNLMX
Fifth Third Prime Money Market Fund FSCXX FBPXX FPCXX FCPXX
Fifth Third Institutional Money Market Fund LSIXX LSSXX LSPXX LSTXX
Fifth Third Institutional Government Money Market Fund KGIXX KGSXX KGPXX KGTXX
Fifth Third U.S. Treasury Money Market Fund FQTXX FTSXX FTPXX FTTXX



This SAI, which has been filed with the Securities and Exchange Commission (“SEC”), provides supplementary information pertaining to all classes of shares representing interests in each of the investment portfolios listed above (each a “Fund” and, collectively, the “Funds”). This SAI is not a prospectus, and should be read only in conjunction with the prospectus for the Funds (the “Prospectus”). The Prospectus is dated November 23, 2011. The financial statements for the Funds, including the notes thereto, dated July 31, 2011, are incorporated by reference into this SAI from the annual reports of the Funds. To receive a copy of the Prospectus, you may write the Trust at Fifth Third Funds, 38 Fountain Square Plaza, Cincinnati, Ohio 45263 or call toll-free (800) 282-5706.


TABLE OF CONTENTS


PAGE
GENERAL INFORMATION ABOUT THE TRUST 1
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS 3
Investment Objectives

3
Investment Limitations

4
ADDITIONAL RISKS AND INFORMATION CONCERNING CERTAIN INVESTMENT TECHNIQUES 15
Types of Investments

15
FIFTH THIRD FUNDS MANAGEMENT 39
Trustees and Officers

39
Codes of Ethics

49
Voting Proxies on Fund Portfolio Securities

49
Disclosure of Portfolio Holdings

50
INVESTMENT ADVISORY AND OTHER SERVICE ARRANGEMENTS 53
Investment Adviser and Subadviser

53
Administrator and Sub-Administrator

55
Fund Accountant and Sub-Accountant

57
Custodian

58
Transfer and Dividend Disbursing Agent

59
Additional Services – Services Agent

59
Distributor

59
Legal Counsel

65
Independent Registered Public Accounting Firm

65
PORTFOLIO MANAGER INFORMATION 65
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS 72
PURCHASING SHARES 77
Conversion to Federal Funds

78
Exchanging Securities for Fund Shares

78
Payments to Dealers

78
ADDITIONAL PAYMENTS BY THE ADVISER AND AFFILIATES 80
SELLING YOUR SHARES 82
Redemption In-Kind

83
Postponement of Redemptions

83
DETERMINING NET ASSET VALUE 84
Valuation of the Equity Funds, the Bond Funds and Asset Allocation Funds

84
Use of Amortized Cost

85
Monitoring Procedures

85
Investment Restrictions

85

i



Trading In Foreign Securities

86
FEDERAL INCOME TAX STATUS 86
FINANCIAL STATEMENTS 102
APPENDIX A 103
APPENDIX B 109

ii


GENERAL INFORMATION ABOUT THE TRUST

The Trust was established as a Massachusetts business trust under a Declaration of Trust dated September 15, 1988. The Trust’s Declaration of Trust permits the Trust to offer separate series of shares of beneficial interest representing interests in separate portfolios of securities, and it permits the Trust to offer separate classes of each such series. This Statement of Additional Information relates to the following funds (each, a “Fund” and collectively, the “Funds”):

THE “EQUITY FUNDS”:

Fifth Third Small Cap Growth Fund (“Small Cap Growth Fund”)
Fifth Third Mid Cap Growth Fund (“Mid Cap Growth Fund”)
Fifth Third Quality Growth Fund (“Quality Growth Fund”)
Fifth Third Dividend Growth Fund (“Dividend Growth Fund”)
Fifth Third Micro Cap Value Fund (“Micro Cap Value Fund”)
Fifth Third Small Cap Value Fund (“Small Cap Value Fund”)
Fifth Third All Cap Value Fund (“All Cap Value Fund”)
Fifth Third Disciplined Large Cap Value Fund (“Disciplined Large Cap Value Fund”)
Fifth Third Structured Large Cap Plus Fund (“Structured Large Cap Plus Fund”)
Fifth Third Equity Index Fund (“Equity Index Fund”)
Fifth Third International Equity Fund (“International Equity Fund”)
Fifth Third Strategic Income Fund (“Strategic Income Fund”)

THE “ASSET ALLOCATION FUNDS”:

Fifth Third LifeModel Aggressive FundSM (“LifeModel Aggressive FundSM”)
Fifth Third LifeModel Moderately Aggressive FundSM (“LifeModel Moderately Aggressive FundSM”)
Fifth Third LifeModel Moderate FundSM (“LifeModel Moderate FundSM”)
Fifth Third LifeModel Moderately Conservative FundSM(“LifeModel Moderately Conservative FundSM”)
Fifth Third LifeModel Conservative FundSM (“LifeModel Conservative FundSM” and, together with the LifeModel Aggressive FundSM, the LifeModel Moderately Aggressive FundSM, the LifeModel Moderate FundSM, the LifeModel Moderately Conservative FundSM, the “Asset Allocation Funds”)

THE “BOND FUNDS”:

Fifth Third High Yield Bond Fund (“High Yield Bond Fund”)
Fifth Third Total Return Bond Fund (“Total Return Bond Fund”)
Fifth Third Short Term Bond Fund (“Short Term Bond Fund”)


THE “MONEY MARKET FUNDS”:

Fifth Third Prime Money Market Fund (“Prime Money Market Fund”)
Fifth Third Institutional Money Market Fund (“Institutional Money Market Fund”)
Fifth Third Institutional Government Money Market Fund (“Institutional Government Money Market Fund”)
Fifth Third U.S. Treasury Money Market Fund (“U.S. Treasury Money Market Fund”)

1


The Trust offers shares of the following Funds and shares of the following classes of each Fund:


Institutional Class A Class B* Class C Select Preferred Trust
Small Cap Growth Fund X X X X
Mid Cap Growth Fund X X X X
Quality Growth Fund X X X X
Dividend Growth Fund X X X X
Micro Cap Value Fund X X X X
Small Cap Value Fund X X X X
All Cap Value Fund X X X X
Disciplined Large Cap Value Fund X X X X
Structured Large Cap Plus Fund X X X X
Equity Index Fund X X X X X X X
International Equity Fund X X X X
Strategic Income Fund X X X X
LifeModel Aggressive FundSM X X X X
LifeModel Moderately Aggressive FundSM X X X X
LifeModel Moderate FundSM X X X X
LifeModel Moderately Conservative FundSM X X X X
LifeModel Conservative FundSM X X X X
High Yield Bond Fund X X X X
Total Return Bond Fund X X X X
Short Term Bond Fund X X X
Prime Money Market Fund X X X X
Institutional Money Market Fund X X X X
Institutional Government Money Market Fund X X X X
U.S. Treasury Money Market Fund X X X X


* Effective May 11, 2007, all Class B shares were closed to all purchases. Dividends may continue to be reinvested automatically without incurring a sales charge, and existing shareholders owning Class B shares may exchange to Class B shares of other Fifth Third Funds and may redeem shares as described in the Prospectus. Please contact Fifth Third Funds Shareholder Services at 1-800-282-5706 with any questions.


Each Fund is an “open-end” management investment company and, each is a “diversified” investment company, as those terms are defined in the Investment Company Act of 1940, as amended (the “1940 Act”). Among other things, a diversified Fund must, with respect to 75% of its total assets, not invest more than 5% of its total assets in any one issuer.

Shares have no subscription or preemptive rights and only such conversion or exchange rights as the Board of Trustees (“Trustees”) may grant in its discretion. When issued for payment as described in the Prospectuses and this SAI, the Fifth Third Funds’ shares will be fully paid and non-assessable. In the event of a liquidation or dissolution of the Fifth Third Funds, shareholders of a Fund are entitled to receive the assets available for distribution belonging to that Fund, and a proportionate distribution, based upon the relative asset values of the respective Funds, of any general assets not belonging to any particular Fund which are available for distribution.

2


Shares of the Fifth Third Funds are entitled to one vote per share (with proportional voting for fractional shares) on such matters as shareholders are entitled to vote. Shareholders vote in the aggregate and not by series or class on all matters except (i) when required by the 1940 Act, shares shall be voted by individual series, (ii) when the Trustees have determined that a matter affects only the interests of a particular series or class, then only shareholders of such series or class shall be entitled to vote thereon, and (iii) only the holders of Class A, Class B, and Class C shares will be entitled to vote on matters submitted to shareholder vote with regard to the Distribution Plan applicable to such class. There will normally be no meetings of shareholders for the purposes of electing Trustees unless and until such time as less than a majority of the Trustees have been elected by the shareholders, at which time the Trustees then in office will call a shareholders’ meeting for the election of Trustees.



As used in this SAI, a “vote of a majority of the outstanding shares” of the Fifth Third Funds or a particular Fund means the affirmative vote, at a meeting of shareholders duly called, of the lesser of (a) 67% or more of the votes of shareholders of the Fifth Third Funds or such Fund present at such meeting at which the holders of more than 50% of the votes attributable to the shareholders of record of the Fifth Third Funds or such Fund are represented in person or by proxy, or (b) more than 50% of the votes attributable to the outstanding shares of the Fifth Third Funds or such Fund.

For purposes of determining the presence of a quorum and counting votes on matters presented, shares represented by abstentions and “broker non-votes” will be counted as present, but not as votes cast, at the meeting. Under the 1940 Act, the affirmative vote necessary to approve a matter under consideration may be determined by reference to a percentage of votes present at the meeting, which would have the effect of treating abstentions and non-votes as if they were votes against the proposal.



The Trust’s executive offices are located at 38 Fountain Square Plaza, Cincinnati, Ohio 45202. The Trustees are responsible for managing the business and affairs of the Trust.

All Funds are advised by Fifth Third Asset Management, Inc. (“FTAM” or the “Adviser”). Fifth Third Asset Management, Inc. 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. Fort Washington Investment Advisors, Inc. (“Fort Washington” or “Subadviser”) serves as investment sub-adviser to the High Yield Bond Fund.

INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS

The Prospectuses state the investment objective of each Fund and discuss certain investment policies employed to achieve those objectives. The following discussion supplements the description of the Funds’ investment policies in the Prospectuses.

Investment Objectives

Each Fund’s investment objective is fundamental and may not be changed without shareholder approval.

3




Investment Limitations
Fundamental Limitations for Equity Funds and Bond Funds


Except as provided below, each Fund has adopted the following fundamental investment limitations. As fundamental investment limitations, they cannot be changed with respect to a Fund without approval of the holders of a majority of that Fund’s outstanding shares.

Issuing Senior Securities and Borrowing Money. Except for the Structured Large Cap Plus Fund, none of the Funds will issue senior securities, except that a Fund may borrow money directly or through reverse repurchase agreements in amounts up to one-third of the value of its total assets, including the amount borrowed; and except to the extent that a Fund (with the exception of the Dividend Growth Fund) may enter into futures contracts, as applicable. The Funds will not borrow money or engage in reverse repurchase agreements for investment leverage, but rather as a temporary, extraordinary, or emergency measure or to facilitate management of the portfolio by enabling a Fund to meet redemption requests when the liquidation of portfolio securities is deemed to be inconvenient or disadvantageous. None of the Funds will purchase any securities while any borrowings in excess of 5% of its total assets are outstanding. Currently, none of the Funds intend to borrow money for investment leverage. None of the Funds consider a cash advance used to cover a short-term overdraft to be a borrowing.

Selling Short and Buying on Margin. Except for the Structured Large Cap Plus Fund, none of the Funds will sell any securities short or purchase any securities on margin, but the Funds may obtain such short-term credits as are necessary for clearance of purchases and sales of securities. The deposit or payment by a Fund (with the exception of the Dividend Growth Fund) of initial or variation margin in connection with futures contracts or related options transactions is not considered the purchase of a security on margin.



The Structured Large Cap Plus Fund may sell securities short or purchase securities on margin, and may obtain such short-term credits as are necessary for clearance of purchases and sales of securities. The deposit or payment by the Structured Large Cap Plus Fund of initial or variation margin in connection with futures contracts or related options transactions is not considered the purchase of a security on margin.

Pledging Assets. The Funds will not mortgage, pledge, or hypothecate any assets, except to secure permitted borrowings. In these cases, a Fund may pledge assets as necessary to secure such borrowings. For purposes of this limitation, where applicable, (a) the deposit of assets in escrow in connection with the writing of covered put or call options and the purchase of securities on a when-issued basis and (b) collateral arrangements with respect to: (i) the purchase and sale of stock options (and options on stock indices) and (ii) initial or variation margin for futures contracts, will not be deemed to be pledges of a Fund’s assets.

Lending Cash or Securities. The Funds will not lend any of their respective assets except that (i) cash may be lent to other Funds of the Trust, subject to applicable SEC

4


limitations, and (ii) portfolio securities up to one-third of the value of a Fund’s total assets may be lent to third parties. The preceding limitation shall not prevent a Fund from purchasing or holding U.S. government obligations, money market instruments, publicly or non-publicly issued municipal bonds, variable rate demand notes, bonds, debentures, notes, certificates of indebtedness, or other debt securities, entering into repurchase agreements, or engaging in other transactions where permitted by a Fund’s investment objectives, policies and limitations or the Trust’s Declaration of Trust.

Investing in Commodities. None of the Funds will purchase or sell commodities or commodity contracts except to the extent that the Funds (with the exception of the Dividend Growth Fund) may engage in transactions involving financial futures contracts or options on financial futures contracts.

Investing in Real Estate. None of the Funds will purchase or sell real estate, including limited partnership interests, although each of the Funds may invest in securities of issuers whose business involves the purchase or sale of real estate or in securities which are secured by real estate or interests in real estate.

Diversification of Investments. Each of the Funds may purchase securities of any issuer only when consistent with the maintenance of its status as a diversified company under the 1940 Act, or the rules or regulations thereunder, as such statute, rules or regulations may be amended from time to time.

Under the 1940 Act, and the rules, regulations and interpretations thereunder, a “diversified company,” as to 75% of its total assets, may not purchase securities of any issuer (other than obligations of, or guaranteed by, the U.S. Government, its agencies or its instrumentalities) if, as a result, more than 5% of the value of its total assets would be invested in the securities of such issuer or more than 10% of the issuer’s voting securities would be held by the fund.

In order to qualify as a regulated investment company for federal income tax purposes, each Fund may have no more than 25% of the value of its total assets invested in the securities (other than securities of the U.S. government, its agencies or instrumentalities, or securities of other regulated investment companies) of any one issuer or of two or more issuers that the Fund controls and that are engaged in the same, similar or related trades or businesses or in the securities of qualified publicly traded partnerships. In addition, at least 50% of the value of each Fund’s total assets must be represented by cash, cash items, government securities, securities of other regulated investment companies and other securities limited with respect to any one issuer to an amount not greater in value than 5% of the value of the Fund’s total assets and to not more than 10% of the outstanding voting securities of such issuer.

Dealing in Put and Call Options. The Micro Cap Value Fund, All Cap Value Fund, Strategic Income Fund and Dividend Growth Fund will not buy or sell put options (with the exception of listed put options on financial futures contracts), call options (with the exception of listed call options or over-the-counter call options on futures contracts), straddles, spreads, or any combination of these.

5


Concentration of Investments. A Fund will not invest 25% or more of the value of its total assets in any one industry, except that each Fund may invest more than 25% of the value of its total assets in securities issued or guaranteed by the U.S. Government, its agencies, or instrumentalities and repurchase agreements collateralized by such securities.

Underwriting. A Fund will not underwrite any issue of securities, except as a Fund may be deemed to be an underwriter under the Securities Act of 1933 in connection with the sale of securities in accordance with its investment objectives, policies, and limitations.

Small Cap Growth Fund. The Fund intends to invest at least 65% of its total assets in equity securities of companies that the Adviser believes have above-average potential for growth in revenues, earnings, or assets.

6




Non-Fundamental Limitations for Equity Funds and Bond Funds

Except as provided below, each Fund has adopted the following non-fundamental investment limitations. As non-fundamental investment limitations, they may be changed by the Trustees without shareholder approval.

Investing in Illiquid Securities. The Funds will not invest more than 15% of the value of their respective net assets in illiquid securities, including, as applicable, repurchase agreements providing for settlement more than seven days after notice, over-the-counter options, certain restricted securities determined in accordance with procedures adopted by the Trustees not to be liquid, and non-negotiable time deposits with maturities over seven days.



Investing in Securities of Other Investment Companies. Each Fund may invest in shares of other investment companies, including shares of iShares®. The Funds will limit their respective investments in other investment companies that are not part of the same group of investment companies to no more than 3% of the total outstanding voting stock of any investment company, no more than 5% of their respective total assets in any one investment company, and will invest no more than 10% of their respective total assets in investment companies in general. The Funds may invest their respective assets in shares of other investment companies in excess of these limits in reliance upon an exemptive order issued to it and the Adviser. The Funds will purchase securities of closed-end investment companies only in open market transactions involving only customary broker’s commissions. The Funds may invest without limitation in shares of money market funds. The preceding limitations do not apply if the securities are acquired in a merger, consolidation, reorganization, or acquisition of assets. Each of the Small Cap Growth Fund, Mid Cap Growth Fund, Quality Growth Fund, Small Cap Value Fund, All Cap Value Fund, Disciplined Large Cap Value Fund, Structured Large Cap Plus Fund, International Equity Fund, Strategic Income Fund, High Yield Bond Fund, Total Return Bond Fund and Short Term Bond Fund may not invest in shares of other registered investment companies or registered unit investment trusts in reliance on Section 12(d)(1)(F) or Section 12(d)(1)(G) of the 1940 Act.

Investment companies include exchange-traded funds (“ETFs”). See the disclosure under the heading “Exchange-Traded Funds” below for more information on investments in ETFs. Pursuant to an SEC exemptive order issued to iShares®, dated April 15, 2003, upon adherence to the conditions set forth in the order, the Funds may invest their respective net assets in iShares® in excess of the 3%, 5% and 10% limits described above.

It should be noted that investment companies incur certain expenses such as management fees and, therefore, any investment by a Fund in shares of another investment company would be subject to such expenses.

Investing in Put Options. The Micro Cap Value Fund, All Cap Value Fund, Strategic Income Fund and International Equity Fund will not purchase put options on securities or futures contracts, unless the securities or futures contracts are held in the Fund’s portfolio or unless the Fund is entitled to them in deliverable form without further payment or after segregating liquid assets in the amount of any further payment.

7


Writing Covered Call Options. The International Equity Fund will not write call options on securities or futures contracts unless the securities or futures contracts are held in the Fund’s portfolio or unless the Fund is entitled to them in deliverable form without further payment or after segregating liquid assets in the amount of any further payment.

Miscellaneous. Except with respect to a Fund’s policy relating to borrowing money, if a percentage limitation is adhered to at the time of investment, a later increase or decrease in percentage resulting from any change in value or net assets will not result in a violation of such restriction. For purposes of its policies and limitations, the Trust considers certificates of deposit and demand and time deposits issued by a U.S. branch of a domestic bank or savings and loan having capital, surplus, and undivided profits in excess of $100,000,000 at the time of investment to be “cash items.”




8




Fundamental Limitations for Money Market Funds

Except as otherwise provided below, each Fund has adopted the following fundamental investment limitations. As fundamental investment limitations, they cannot be changed with respect to a Fund without approval of the holders of a majority of that Fund’s shares.

Selling Short and Buying on Margin. None of the Funds will sell any securities short or purchase any securities on margin, but each may obtain such short-term credit as may be necessary for clearance of purchases and sales.

Issuing Senior Securities and Borrowing Money. None of the Funds will issue senior securities, except that a Fund may borrow money directly or through reverse repurchase agreements as a temporary measure for extraordinary or emergency purposes or in an amount up to one-third of the value of its total assets, including the amount borrowed, in order to meet redemption requests without immediately selling portfolio instruments. Any direct borrowings need not be collateralized. None of the Funds considers the issuance of separate classes of shares to involve the issuance of “senior securities” within the meaning of this investment limitation.

None of the Funds will purchase any securities while borrowings in excess of 5% of its total assets are outstanding. None of the Funds has any present intention to borrow money. None of the Funds consider a cash advance used to cover a short-term overdraft to be a borrowing.

Pledging Securities or Assets. The Prime Money Market Fund will not pledge securities. The Institutional Money Market Fund, Institutional Government Money Market Fund and U.S. Treasury Money Market Fund will not mortgage, pledge, or hypothecate any assets except to secure permitted borrowings. In those cases, the Fund may pledge assets having a market value not exceeding the lesser of the dollar amounts borrowed or 10% of the value of total assets at the time of the pledge.

Investing in Commodities, Commodity Contracts, or Real Estate. The Prime Money Market Fund will not invest in commodities, commodity contracts, or real estate, except that it may purchase money market instruments issued by companies that invest in real estate or sponsor such interests. The Institutional Money Market Fund and Institutional Government Money Market Fund will not purchase or sell commodities, commodity contracts, commodity futures contracts or real estate, including limited partnership interests.

Underwriting. A Fund will not underwrite any issue of securities, except as a Fund may be deemed to be an underwriter under the Securities Act of 1933 in connection with the sale of securities in accordance with its investment objectives, policies, and limitations.

Lending Cash or Securities. The Funds will not lend any of their respective assets except portfolio securities up to one-third of the value of total assets except that (i) cash may be lent to other Funds of the Trust subject to applicable SEC limitations and (ii) portfolio securities of the Funds (other than the U.S. Treasury Money Market Fund) may be lent to third parties.

9


This shall not prevent a Fund from purchasing or holding U.S. government obligations, money market instruments, publicly or non-publicly issued municipal bonds, variable rate demand notes, bonds, debentures, notes, certificates of indebtedness, or other debt securities, entering into repurchase agreements, or engaging in other transactions where permitted by a Fund’s investment objectives, policies and limitations or the Trust’s Declaration of Trust.

Acquiring Voting Securities. The Prime Money Market Fund, Institutional Money Market Fund and Institutional Government Money Market Fund will not acquire the voting securities of any issuer for the purpose of exercising control or management.

Diversification of Investments. Each of the Funds may purchase securities of any issuer only when consistent with the maintenance of its status as a diversified company under the 1940 Act, or the rules or regulations thereunder, as such statute, rules or regulations may be amended from time to time.

Under the 1940 Act, and the rules, regulations and interpretations thereunder, a “diversified company,” as to 75% of its total assets, may not purchase securities of any issuer (other than obligations of, or guaranteed by, the U.S. Government, its agencies or its instrumentalities) if, as a result, more than 5% of the value of its total assets would be invested in the securities of such issuer or more than 10% of the issuer’s voting securities would be held by the fund.

Concentration of Investments. Each of the Prime Money Market Fund, Institutional Money Market Fund and Institutional Government Money Market Fund will not invest more than 25% of the value of its total assets in any one industry except commercial paper of finance companies. However, the Prime Money Market Fund reserves the right to invest more than 25% of its total assets in domestic bank instruments (such as time and demand deposits and certificates of deposit), U.S. government obligations or instruments secured by these money market instruments, such as repurchase agreements. The Prime Money Market Fund will not invest more than 25% of its total assets in instruments of foreign banks.

Dealing in Put and Calls. The Money Market Funds will not buy or sell puts, calls, straddles, spreads, or any combination of these.



Non-Fundamental Limitations for Money Market Funds

Except as otherwise provided below, each Fund has adopted the following non-fundamental investment limitations. As non-fundamental investment limitations, they may be changed by the Trustees without shareholder approval.

Investing In Securities of Other Investment Companies. The Funds will limit their respective investments in other investment companies (other than the Money Market Funds) to no more than 3% of the total outstanding voting stock of any investment company. The Funds will purchase securities of closed-end investment companies only in open market transactions involving only customary broker’s commissions. The preceding limitations do not apply if the securities are acquired in a merger, consolidation, reorganization, or acquisition of assets. The Funds may invest in shares of money market funds without limitation. Each of the Institutional

10


Money Market Fund and U.S. Treasury Money Market Fund may not invest in shares of other registered investment companies or registered unit investment trusts in reliance on Section 12(d)(1)(F) or Section 12(d)(1)(G) of the 1940 Act.

It should be noted that investment companies incur certain expenses such as management fees and, therefore, any investment by a Fund in shares of another investment company would be subject to such expenses.

Investing in Illiquid Securities. None of the Funds will invest more than 5% of the value of its net assets in illiquid securities, including, as applicable, repurchase agreements providing for settlement more than seven days after notice, over-the-counter options, certain restricted securities determined in accordance with procedures adopted by the Trustees not to be liquid, and non-negotiable time deposits with maturities over seven days.

Miscellaneous. Except with respect to a Fund’s policy relating to borrowing money, if a percentage limitation is adhered to at the time of investment, a later increase or decrease in percentage resulting from any change in value or net assets will not result in a violation of such restriction. For purposes of its policies and limitations, the Trust considers certificates of deposit and demand and time deposits issued by a U.S. branch of a domestic bank or savings and loan having capital, surplus, and undivided profits in excess of $100,000,000 at the time of investment to be “cash items.”




11




Fundamental Limitations for Asset Allocation Funds

Except as provided below, each Fund has adopted the following fundamental investment limitations. As fundamental investment limitations, they cannot be changed with respect to a Fund without approval of the holders of a majority of that Fund’s outstanding shares.

Issuing Senior Securities and Borrowing Money. None of the Funds will issue senior securities, except that a Fund may borrow money directly or through reverse repurchase agreements in amounts up to one-third of the value of its total assets, including the amount borrowed; and except to the extent that a Fund may enter into futures contracts, as applicable. The Asset Allocation Funds will not borrow money or engage in reverse repurchase agreements for investment leverage, but rather as a temporary, extraordinary, or emergency measure or to facilitate management of the portfolio by enabling a Fund to meet redemption requests when the liquidation of portfolio securities is deemed to be inconvenient or disadvantageous. None of the Funds will purchase any securities while any borrowings in excess of 5% of its total assets are outstanding. Currently, none of the Funds intends to borrow money for investment leverage. None of the Funds consider a cash advance used to cover a short-term overdraft to be a borrowing.

Selling Short and Buying on Margin. The Asset Allocation Funds will not sell any securities short or purchase any securities on margin, but the Funds may obtain such short-term credits as are necessary for clearance of purchases and sales of securities. The deposit or payment by a Fund of initial or variation margin in connection with futures contracts or related options transactions is not considered the purchase of a security on margin.




Pledging Assets. The Funds will not mortgage, pledge, or hypothecate any assets, except to secure permitted borrowings. In these cases, a Fund may pledge assets as necessary to secure such borrowings. For purposes of this limitation, where applicable, (a) the deposit of assets in escrow in connection with the writing of covered put or call options and the purchase of securities on a when-issued basis and (b) collateral arrangements with respect to: (i) the purchase and sale of stock options (and options on stock indices) and (ii) initial or variation margin for futures contracts, will not be deemed to be pledges of a Fund’s assets.

Lending Cash or Securities. The Funds will not lend any of their respective assets except that (i) cash may be lent to other Funds of the Trust, subject to applicable SEC limitations, and (ii) portfolio securities up to one-third of the value of a Fund’s total assets may be lent to third parties. The preceding limitation shall not prevent a Fund from purchasing or holding U.S. government obligations, money market instruments, publicly or non-publicly issued municipal bonds, variable rate demand notes, bonds, debentures, notes, certificates of indebtedness, or other debt securities, entering into repurchase agreements, or engaging in other transactions where permitted by a Fund’s investment objectives, policies and limitations or the Trust’s Declaration of Trust.

12


Investing in Commodities. None of the Funds will purchase or sell commodities or commodity contracts except to the extent that the Funds may engage in transactions involving financial futures contracts or options on financial futures contracts.

Investing in Real Estate. None of the Funds will purchase or sell real estate, including limited partnership interests, although each of the Funds may invest in securities of issuers whose business involves the purchase or sale of real estate or in securities which are secured by real estate or interests in real estate.

Diversification of Investments. Each of the Funds may purchase securities of any issuer only when consistent with the maintenance of its status as a diversified company under the 1940 Act, or the rules or regulations thereunder, as such statute, rules or regulations may be amended from time to time.

Under the 1940 Act, and the rules, regulations and interpretations thereunder, a “diversified company,” as to 75% of its total assets, may not purchase securities of any issuer (other than obligations of, or guaranteed by, the U.S. Government, its agencies or its instrumentalities) if, as a result, more than 5% of the value of its total assets would be invested in the securities of such issuer or more than 10% of the issuer’s voting securities would be held by the fund.

In order to qualify as a regulated investment company for federal income tax purposes, each Fund may have no more than 25% of the value of its total assets invested in the securities (other than securities of the U.S. government, its agencies or instrumentalities, or securities of other regulated investment companies) of any one issuer or of two or more issuers that the Fund controls and that are engaged in the same, similar or related trades or businesses or in the securities of qualified publicly traded partnerships. In addition, at least 50% of the value of each Fund’s total assets must be represented by cash, cash items, government securities, securities of other regulated investment companies and other securities limited with respect to any one issuer to an amount not greater in value than 5% of the value of the Fund’s total assets and to not more than 10% of the outstanding voting securities of such issuer.

Concentration of Investments. A Fund will not invest 25% or more of the value of its total assets in any one industry, except that each Fund may invest more than 25% of the value of its total assets in securities issued or guaranteed by the U.S. Government, its agencies, or instrumentalities and repurchase agreements collateralized by such securities. Regarding the Asset Allocation Funds, underlying Funds are not themselves considered to be included in an industry for purposes of the preceding limitation.

Underwriting. A Fund will not underwrite any issue of securities, except as a Fund may be deemed to be an underwriter under the Securities Act of 1933 in connection with the sale of securities in accordance with its investment objectives, policies, and limitations.

13




Non-Fundamental Limitations for Asset Allocation Funds

Except as provided below, each Fund has adopted the following non-fundamental investment limitations. As non-fundamental investment limitations, they may be changed by the Trustees without shareholder approval.

Investing in Illiquid Securities. The Funds will not invest more than 15% of the value of their respective net assets in illiquid securities, including, as applicable, repurchase agreements providing for settlement more than seven days after notice, over-the-counter options, certain restricted securities determined in accordance with procedures adopted by the Trustees not to be liquid, and non-negotiable time deposits with maturities over seven days.



Investing in Securities of Other Investment Companies. Each Fund may invest in shares of other investment companies, including shares of iShares®. The Funds will limit their respective investments in other investment companies that are not part of the same group of investment companies to no more than 3% of the total outstanding voting stock of any investment company, no more than 5% of their respective total assets in any one investment company, and will invest no more than 10% of their respective total assets in investment companies in general. The Funds may invest their respective assets in shares of other investment companies in excess of these limits in reliance upon an exemptive order issued to it and the Adviser. The Funds will purchase securities of closed-end investment companies only in open market transactions involving only customary broker’s commissions. The Funds may invest without limitation in shares of money market funds. The preceding limitations do not apply if the securities are acquired in a merger, consolidation, reorganization, or acquisition of assets. The Asset Allocation Funds may invest all of their assets in investment companies that are part of the same group of investment companies.

Investment companies include exchange-traded funds (“ETFs”). See the disclosure under the heading “Exchange-Traded Funds” below for more information on investments in ETFs. Pursuant to an SEC exemptive order issued to iShares®, dated April 15, 2003, upon adherence to the conditions set forth in the order, the Funds may invest their respective net assets in iShares® in excess of the 3%, 5% and 10% limits described above.

It should be noted that investment companies incur certain expenses such as management fees and, therefore, any investment by a Fund in shares of another investment company would be subject to such expenses.

Miscellaneous. Except with respect to a Fund’s policy relating to borrowing money, if a percentage limitation is adhered to at the time of investment, a later increase or decrease in percentage resulting from any change in value or net assets will not result in a violation of such restriction. For purposes of its policies and limitations, the Trust considers certificates of deposit and demand and time deposits issued by a U.S. branch of a domestic bank or savings and loan having capital, surplus, and undivided profits in excess of $100,000,000 at the time of investment to be “cash items.”

14


ADDITIONAL RISKS AND INFORMATION CONCERNING
CERTAIN INVESTMENT TECHNIQUES



The Funds may invest in a variety of securities and may employ a number of investment techniques. With respect to the Asset Allocation Funds, investments and techniques used by a Fund include investments and techniques of the underlying funds in which a Fund invests, and to which an Asset Allocation Fund is exposed indirectly. The types of investments a Fund uses and some of the risks posed by such investments are described below. Not all Funds may use each type of investment technique. For example, a Fund’s fundamental investment limitation may prohibit a Fund from using a specific investment technique or instrument. Please consult the Prospectus for additional details regarding these and other permissible investments.

Types of Investments

Bank Instruments. Each Fund may invest in the instruments of banks and savings and loans whose deposits are insured by the Bank Insurance Fund or the Savings Association Insurance Fund, both of which are administered by the Federal Deposit Insurance Corporation. Such instruments include certificates of deposit, demand and time deposits, savings shares, and bankers’ acceptances. These instruments are not necessarily guaranteed by those organizations.

In addition to domestic bank obligations such as certificates of deposit, demand and time deposits, and bankers’ acceptances, the Funds may invest in: (a) Eurodollar Certificates of Deposit issued by foreign branches of U.S. or foreign banks; (b) Eurodollar Time Deposits, which are U.S. dollar-denominated deposits in foreign branches of U.S. or foreign banks; and (c) Yankee Certificates of Deposit, which are U.S. dollar-denominated certificates of deposit issued by U.S. branches of foreign banks and held in the United States; provided such investment is in agreement with the Fund’s investment objective and policies.

Cash. From time to time, such as when suitable securities are not available, the Funds may retain a portion of their assets in cash. Any portion of a Fund’s assets retained in cash may reduce the Fund’s return and, in the case of Bond Funds and Money Market Funds, the Fund’s yield.

Bear Funds. The Funds may invest in bear funds. Bear funds are designed to allow investors to speculate on anticipated decreases in the S&P 500® Index or to hedge an existing portfolio of securities or mutual fund shares.



Due to the nature of bear funds, investors could experience substantial losses during sustained periods of rising equity prices. This is the opposite result expected of investing in a traditional equity mutual fund in a generally rising stock market. Bear funds employ certain investment techniques, including engaging in short sales and in certain transactions in stock index futures contracts, options on stock index futures contracts, and options on securities and stock indexes. Using these techniques, bear funds will generally incur a loss if the price of the underlying security or index increases between the date of the employment of the technique and the date on which the fund terminates the position. Bear funds will generally realize a gain if the underlying security or index declines in price between those dates. The amount of any

15


gain or loss on an investment technique may be affected by any premium or amounts in lieu of dividends or interest that the funds pay or receive as the result of the transaction.



Closed-End Investment Funds. The Funds may invest in closed-end investment companies. The shares of closed-end investment companies will generally be exchange-traded and are not redeemable. Closed-end fund shares often trade at a substantial discount (or premium) from their net asset value (“NAV”). Therefore, there can be no assurance that a share of a closed-end fund, when sold, will be sold at a price that approximates its NAV.

The Funds may also invest in closed-end investment companies in transactions not involving a public offering. These shares will be “restricted securities” and a Fund may be required to hold such shares until the closed-end fund’s termination unless redeemed earlier. Shares may not be sold, transferred, assigned, pledged, or otherwise disposed of without registration under applicable federal or state securities laws or pursuant to an exemption from registration (in which case the shareholder will, at the option of the closed-end fund, be required to provide the closed-end fund with a legal opinion, in form and substance satisfactory to the closed-end fund, that registration is not required). Accordingly, an investor must be willing to bear the economic risk of investment in the shares until shares are redeemed or the closed-end fund is liquidated. No sale, transfer, assignment, pledge, or other disposition, whether voluntary or involuntary, of the shares may be made except by registration by the transfer agent on the closed-end fund’s books. Each transferee will be required to execute an instrument agreeing to be bound by these restrictions and to execute such other instruments or certifications as are reasonably required by the closed-end fund. A transfer of the shares owned by a shareholder will not relieve the shareholder of any unfulfilled subscription obligation. Consent of the closed-end fund is required prior to the assumption of the transferee’s Subscription Agreement by another party. The closed-end fund may withhold consent to such an assumption at its absolute discretion.



Exchange-Traded Funds (“ETFs”). The Funds (except for the Money Market Funds) may invest in shares of various ETFs, including exchange-traded index and bond funds and ETFs listed on U.S. and foreign exchanges. ETFs seek to track the performance of various securities indices. Shares of ETFs have many of the same risks as direct investments in common stocks or bonds. In addition, their market value is expected to rise and fall as the value of the underlying index or bonds rises and falls. The market value of their shares may differ from the NAV of the particular fund. A Fund will bear its ratable share of the ETF’s expenses, including its advisory and administration fees. At the same time, a Fund will continue to pay its own investment management fees and other expenses. As a result, a Fund will absorb duplicate levels of fees with respect to investments in ETFs.

Because most ETFs are investment companies, absent exemptive relief, investment in most such funds generally would be limited under applicable federal statutory provisions. Those provisions restrict a fund’s investment in the shares of another investment company that is not part of the same group of investment companies 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 its assets. Pursuant to an exemptive order issued to iShares® Trust and iShares®, Inc. (“iShares®”) dated April 15, 2003, upon adherence to the conditions set forth in the order, the Funds may invest their respective

16


total assets in excess of the 3%, 5% and 10% limits described above. iShares® is a registered trademark of Barclays Global Investors, N.A. (“BGI”). Neither BGI nor iShares® Funds make any representations regarding the advisability of investing in an iShares® Fund.

iShares® 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® 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.

Collateralized Loan Obligations (“CLOs”). A CLO is a type of asset-backed security that is an obligation of a trust typically collateralized by pools of loans, which may include domestic and foreign senior secured and unsecured loans and subordinate corporate loans, including loans that may be rated below investment grade, or equivalent unrated loans. The cash flows from the trust are split into two or more portions, called tranches, which vary in risk and yield. The riskier portion is the residual, or “equity,” tranche, which bears some or all of the risk of default by the loans in the trust, and therefore protects the other more senior tranches from default in all but the most severe circumstances. Since it is partially protected from defaults, a senior tranche of a CLO trust typically has higher ratings and lower yields than its underlying securities, and can be rated investment grade. Despite the protection provided by the equity tranche, senior CLO tranches can experience substantial losses due to actual defaults, increased sensitivity to defaults due to collateral default, the total loss of the equity tranche due to losses in the collateral, market anticipation of defaults, fraud by the trust, and the illiquidity of CLO securities.



The risks of an investment in a CLO largely depend on the type of underlying collateral securities and the tranche in which a Fund invests. Typically, CLOs are privately offered and sold, and thus are not registered under the securities laws. As a result, a Fund may characterize its investments in CLOs as illiquid, unless an active dealer market for a particular CLO allows the CLO to be purchased and sold in Rule 144A transactions. CLOs are subject to the typical risks associated with debt instruments discussed elsewhere in the Prospectus and in this SAI (i.e., interest rate risk and credit risk). Additional risks of CLOs include (i) the possibility that distributions from collateral securities will be insufficient to make interest or other payments, (ii) a decline in the quality of the collateral, and (iii) the possibility that a Fund may invest in a subordinate tranche of a CLO. In addition, due to the complex nature of a CLO, an investment in a CLO may not perform as expected. An investment in a CLO also is subject to the risk that the issuer and the investors may interpret the terms of the instrument differently, giving rise to disputes.

17




Commercial Paper and Other Short-Term Obligations. The Funds may invest in commercial paper (including variable amount master demand notes), which consists of short-term unsecured promissory notes issued by U.S. corporations, partnerships, trusts or other entities in order to finance short-term credit needs, and non-convertible debt securities (e.g., bonds and debentures) with no more than 397 days remaining to maturity at the date of purchase. Certain notes may have floating or variable rates. Variable and floating rate notes with a demand notice period exceeding seven days will be subject to the Funds’ restrictions on illiquid investments unless, in the judgment of the Adviser or Subadviser, as applicable, and subject to the procedures adopted by the Board of Trustees, such note is deemed to be liquid.

Convertible Securities. The Funds may invest in convertible securities. Convertible securities include fixed-income securities that may be exchanged or converted into a predetermined number of shares of the issuer’s underlying common stock at the option of the holder during a specified period. Convertible securities may take the form of convertible preferred stock, convertible bonds or debentures, units consisting of “usable” bonds and warrants or a combination of the features of several of these securities. The investment characteristics of each convertible security vary widely, which allows convertible securities to be employed for a variety of investment strategies.

A Fund will exchange or convert the convertible securities held in its portfolio into shares of the underlying common stock when, in the opinion of the Adviser or Subadviser, as applicable, the investment characteristics of the underlying common shares will assist the Fund in achieving its investment objectives. Otherwise, the Fund may hold or trade convertible securities.

In selecting convertible securities for a Fund, the Adviser or Subadviser, as applicable, evaluates the investment characteristics of the convertible security as a fixed income instrument and the investment potential of the underlying equity security for capital appreciation. In evaluating these characteristics with respect to a particular convertible security, the Adviser or Subadviser, as applicable, considers numerous factors, including the economic and political outlook, the value of the security relative to other investment alternatives, trends in the determinants of the issuer’s profits, and the issuer’s management capability and practices.

Derivatives. Each Fund may, but is not required to, use derivative instruments for hedging, risk management purposes, as a substitute for direct investment in securities or other assets, or as part of its investment strategies. Generally, derivatives are financial contracts whose value depend upon, or are derived from, the value of an underlying asset, reference rate, or index, and may relate to stocks, bonds, interest rates, currencies or currency exchange rates, commodities, and related indexes. Examples of derivative instruments include option contracts, futures contracts, options on futures contracts, and swap agreements (including, but not limited to, credit default swaps). A description of these and other derivative instruments that the Funds may use are described further below.

The use of derivative instruments may involve risks different from, or potentially greater than, the risks associated with investing directly in securities and other more traditional assets. In particular, the use of derivative instruments exposes a Fund to the risk that the counterparty to an over-the-counter (“OTC”) derivatives contract will be unable or unwilling to

18


make timely settlement payments or otherwise to honor its obligations. If the counterparty defaults, the Fund will have contractual remedies, but there is no assurance that the counterparty will meet its contractual obligations or that, in the event of default, the Fund will succeed in enforcing its contractual rights.

Derivative instruments are subject to other risks. For example, since the value of derivatives is calculated and derived from the value of other assets, instruments or references, there is a risk that they will be improperly valued. Derivatives also are subject to the risk that changes in their value may not correlate perfectly with the assets, rates, or indices they are designed to hedge or closely track.

Custody Receipts. The Funds may invest in custody receipts that represent corporate debt securities. Custody receipts, such as Morgan Stanley TRACERs, are derivative products which, in the aggregate, evidence direct ownership in a pool of securities. Typically, a sponsor will deposit a pool of securities with a custodian in exchange for custody receipts evidencing those securities. Generally the sponsor will then sell those custody receipts in negotiated transactions at varying prices that are determined at the time of sale. Each custody receipt evidences the individual securities in the pool, and the holder of a custody receipt generally will have all the rights and privileges of owners of those securities. Each holder of a custody receipt will be treated as directly purchasing its pro rata share of the securities in the pool, for an amount equal to the amount that such holder paid for its custody receipt. If a custody receipt is sold, a holder will be treated as having directly disposed of its pro rata share of the securities evidenced by the custody receipt. Additionally, the holder of a custody receipt may withdraw the securities represented by a custody receipt subject to certain conditions.

Custody receipts are generally subject to the same risks as those securities evidenced by the receipts which, in the case of the Funds, are corporate debt securities. Additionally, custody receipts may be less liquid than the underlying securities if the sponsor fails to maintain a trading market.

Futures and Options Transactions. The Funds may engage in futures and options transactions to create investment exposure or to hedge, to the extent consistent with their investment objectives and policies.



As a means of reducing fluctuations in the NAV of their shares, the Funds may attempt to hedge all or a portion of their portfolios through the purchase of put options on portfolio securities and put options on financial futures contracts for portfolio securities. The Funds may attempt to create investment exposure or to hedge all or a portion of their portfolios by buying and selling financial futures contracts and writing call options on futures contracts. The Funds may also write covered call options on portfolio securities to attempt to increase current income.
The Funds will maintain their positions in securities, options, and segregated cash subject to puts and calls until the options are exercised, closed, or have expired. An option position may be closed out OTC or on an exchange which provides a secondary market for options of the same series.


19


The International Equity Fund may invest in securities index futures contracts when the Adviser believes such investment is more efficient, liquid or cost-effective than investing directly in the securities underlying the index.

Futures Contracts. A futures contract is a firm commitment by the seller, who agrees to make delivery of the specific type of security called for in the contract (“going short”), and the buyer, who agrees to take delivery of the security (“going long”) at a certain time in the future.

A securities index futures contract is an agreement pursuant to which two parties agree to take or make delivery of an amount of cash equal to the difference between the value of the index at the close of the last trading day of the contract and the price at which the index was originally written. No physical delivery of the underlying securities in the index is made. Financial futures contracts call for the delivery of particular debt instruments issued or guaranteed by the U.S. Treasury or by specified agencies or instrumentalities of the U.S. government at a certain time in the future.



The purpose of the acquisition or sale of a futures contract by a Fund may be to protect it from fluctuations in the value of securities caused by unanticipated changes in interest rates or stock prices without necessarily buying or selling securities. For example, in the fixed income securities market, price moves inversely to interest rates. A rise in rates means a drop in price. Conversely, a drop in rates means a rise in price. In order to hedge its holdings of fixed income securities against a rise in market interest rates, a Fund could enter into contracts to “go short” to protect itself against the possibility that the prices of its fixed income securities may decline during the Fund’s anticipated holding period. The Fund would “go long” to hedge against a decline in market interest rates. Each Fund intends to comply with guidelines of eligibility for exclusion from the definition of the term “commodity pool operator” adopted by the Commodities Futures Trading Commission and the National Futures Association, which regulate trading in the futures markets.
Stock Index Options. The Funds may purchase put options on stock indices listed on national securities exchanges or traded in the OTC market. A stock index fluctuates with changes in the market values of the stocks included in the index.


The effectiveness of purchasing stock index options will depend upon the extent to which price movements in the Funds’ portfolios correlate with price movements of the stock index selected. Because the value of an index option depends upon movements in the level of the index rather than the price of a particular stock, whether the Funds will realize a gain or loss from the purchase of options on an index depends upon movements in the level of stock prices in the stock market generally or, in the case of certain indices, in an industry or market segment, rather than movements in the price of a particular stock. Accordingly, successful use by the Funds of options on stock indices will be subject to the ability of the Adviser or Subadviser, as applicable, to predict correctly movements in the direction of the stock market generally or of a particular industry. This requires different skills and techniques than predicting changes in the price of individual stocks.

Put Options on Financial Futures Contracts. The Funds may purchase listed put options on financial futures contracts. The Funds will use these options only to protect portfolio securities

20



against decreases in value resulting from market factors such as an anticipated increase in interest rates, to create investment exposure, or when such investment is more efficient, liquid or cost-effective than investing directly in the futures contract or the underlying securities or when such futures contracts or securities are unavailable for investment upon favorable terms.

Unlike entering directly into a futures contract, which requires the purchaser to buy a financial instrument on a set date at a specified price, the purchase of a put option on a futures contract entitles (but does not obligate) its purchaser to decide on or before a future date whether to assume a short position at the specified price. Generally, if the hedged portfolio securities decrease in value during the term of an option, the related futures contracts will also decrease in value and the option will increase in value. In such an event, a Fund will normally close out its option by selling an identical option. If the hedge is successful, the proceeds received by a Fund upon the sale of the second option will be large enough to offset both the premium paid by a Fund for the original option plus the realized decrease in value of the hedged securities.

Alternatively, a Fund may exercise its put option to close out the position. To do so, it would simultaneously enter into a futures contract of the type underlying the option (for a price less than the strike price of the option) and exercise the option. A Fund would then deliver the futures contract in return for payment of the strike price. If a Fund neither closes out nor exercises an option, the option will expire on the date provided in the option contract, and only the premium paid for the contract will be lost.

A Fund may write listed put options on financial futures contracts to hedge its portfolio or when such investment is more efficient, liquid or cost-effective than investing directly in the futures contract or the underlying securities or when such futures contracts or securities are unavailable for investment upon favorable terms. When a Fund writes a put option on a futures contract, it receives a premium for undertaking the obligation to assume a long futures position (buying a futures contract) at a fixed price at any time during the life of the option.


Call Options on Financial Futures Contracts. The Funds may write listed call options or OTC call options on futures contracts, to hedge their portfolios against an increase in market interest rates, to create investment exposure, or when such investment is more efficient, liquid or cost-effective than investing directly in the futures contract or the underlying securities or when such futures contracts or securities are unavailable for investment upon favorable terms. When a Fund writes a call option on a futures contract, it is undertaking the obligation of assuming a short futures position (selling a futures contract) at the fixed strike price at any time during the life of the option if the option is exercised. As market interest rates rise and cause the price of futures to decrease, a Fund’s obligation under a call option on a future (to sell a futures contract) costs less to fulfill, causing the value of a Fund’s call option position to increase. In other words, as the underlying future’s price goes down below the strike price, the buyer of the option has no reason to exercise the call, so that a Fund keeps the premium received for the option. This premium can help substantially offset the drop in value of a Fund’s portfolio securities.


Prior to the expiration of a call written by a Fund, or exercise of it by the buyer, a Fund may close out the option by buying an identical option. If the hedge is successful, the cost of the
21


second option will be less than the premium received by a Fund for the initial option. The net premium income of a Fund will then substantially offset the realized decrease in value of the hedged securities.

A Fund may buy listed call options on financial futures contracts to hedge its portfolio. When the Fund purchases a call option on a futures contract, it is purchasing the right (not the obligation) to assume a long futures position (buy a futures contract) at a fixed price at any time during the life of the option.

Limitation on Open Futures Positions. No Fund will maintain open positions in futures contracts it has sold or options it has written on futures contracts if, in the aggregate, the value of the open positions (marked to market) exceeds the current market value of its securities portfolio plus or minus the unrealized gain or loss on those open positions, adjusted for the correlation of volatility between the securities or securities index underlying the futures contract and the futures contracts. If a Fund exceeds this limitation at any time, it will take prompt action to close out a sufficient number of open contracts to bring its open futures and options positions within this limitation.

“Margin” in Futures Transactions. Unlike the purchase or sale of a security, the Funds do not pay or receive money upon the purchase or sale of a futures contract. Rather, the Funds are required to deposit an amount of “initial margin” in cash, securities or U.S. Treasury bills with its custodian (or the broker, if legally permitted). The nature of initial margin in futures transactions is different from that of margin in securities transactions in that a futures contract’s initial margin does not involve the borrowing by a Fund to finance the transactions. Initial margin is in the nature of a performance bond or good faith deposit on the contract which is returned to a Fund upon termination of the futures contract, assuming all contractual obligations have been satisfied.


A futures contract held by a Fund is valued daily at the official settlement price of the exchange on which it is traded. Each day a Fund pays or receives cash, called “variation margin”, equal to the daily change in value of the futures contract. This process is known as “marking to market.” Variation margin does not represent a borrowing or loan by a Fund but is instead settlement between a Fund and the broker of the amount one would owe the other if the futures contract expired. In computing its daily NAV, a Fund will mark to market its open futures positions. The Funds are also required to deposit and maintain margin when they write call options on futures contracts.


Purchasing Put Options on Portfolio Securities. The Funds may purchase put options on portfolio securities to protect against price movements in particular securities in their respective portfolios. A put option gives a Fund, in return for a premium, the right to sell the underlying security to the writer (seller) at a specified price during the term of the option.

Writing Covered Call Options on Portfolio Securities. The Funds may also write covered call options to generate income. As the writer of a call option, a Fund has the obligation, upon exercise of the option during the option period, to deliver the underlying security upon payment of the exercise price. A Fund may sell call options either on securities held in its portfolio or on securities which it has the right to obtain without payment of further
22


consideration (or securities for which it has segregated cash in the amount of any additional consideration).


Over-the-Counter Options. The Funds may purchase and write OTC options on portfolio securities in negotiated transactions with the buyers or writers of the options for those options on portfolio securities held by a Fund and not traded on an exchange.


Structured Investments. Structured investments are derivatives in the form of a unit or units representing an undivided interest(s) in assets held in a trust that is not an investment company as defined in the 1940 Act. A trust unit pays a return based on the total return of securities and other investments held by the trust and the trust may enter into one or more swaps to achieve its objective. For example, a trust may purchase a basket of securities and agree to exchange the return generated by those securities for the return generated by another basket or index of securities. The Funds will purchase structured investments in trusts that engage in such swaps only where the counterparties are approved by the Adviser or Subadviser, as applicable.


Structured Notes. The Funds may invest in structured notes. Structured notes are derivatives where the amount of principal repayment and/or interest payments is based upon the movement of one or more factors. These factors include, but are not limited to, currency exchange rates, interest rates (such as the prime lending rate and LIBOR) and stock indices such as the S&P 500 Index. In some cases, the impact of the movements of these factors may increase or decrease through the use of multipliers or deflators. The use of structured notes allows the Fund to tailor its investments to the specific risks and returns the Adviser or Subadviser, as applicable, wishes to accept while reducing or avoiding certain other risks.

Swap Agreements . The Funds may enter into equity index or interest rate swap agreements for purposes of attempting to gain exposure to the stocks making up an index of securities in a market without actually purchasing those stocks, or to hedge a position. Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a day to more than one year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a “notional amount,” i.e., the return on or increase in value of a particular dollar amount invested in a “basket” of securities representing a particular index. Forms of swap agreements include interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified level, or “floor;” and interest rate dollars, under which a party sells a cap and purchases a floor, or vice versa, in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels. A credit default swap is a specific kind of counterparty agreement designed to transfer the third party credit risk between parties. One party in the swap is a lender and faces credit risk from a third party and the counterparty in the credit default swap agrees to insure this risk in exchange for regular periodic payments (essentially an insurance premium). If the third party defaults, the party providing insurance will have to purchase from the insured party the defaulted asset.

23



Most swap agreements entered into by the Funds calculate the obligations of the parties to the agreement on a “net basis.” Consequently, a Fund’s current obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the “net amount”).


A Fund’s current obligations under a swap agreement will be accrued daily (offset against any amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by segregating assets determined to be liquid. Obligations under swap agreements so covered will not be construed to be “senior securities” for purposes of a Fund’s investment restriction concerning senior securities. Because they are two party contracts and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid for a Fund’s illiquid investment limitations. A Fund will not enter into any swap agreement unless the Adviser or Subadviser, as applicable, believes that the other party to the transaction is creditworthy. A Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty.


Each Fund may enter into swap agreements to invest in a market without owning or taking physical custody of securities in circumstances in which direct investment is restricted for legal reasons or is otherwise impracticable. The counterparty to any swap agreement will typically be a bank, investment banking firm or broker/dealer. The counterparty will generally agree to pay the Fund the amount, if any, by which the notional amount of the swap agreement would have increased in value had it been invested in the particular stocks, plus the dividends that would have been received on those stocks. The Fund will agree to pay to the counterparty a floating rate of interest on the notional amount of the swap agreement plus the amount, if any, by which the notional amount would have decreased in value had it been invested in such stocks. Therefore, the return to the Fund on any swap agreement should be the gain or loss on the notional amount plus dividends on the stocks less the interest paid by the Fund on the notional amount.


Swap agreements are typically settled on a net basis, which means that the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. Payments may be made at the conclusion of a swap agreement or periodically during its term. Swap agreements do not involve the delivery of securities or other underlying assets. Accordingly, the risk of loss with respect to swap agreements is limited to the net amount of payments that a Fund is contractually obligated to make. If the counterparty to a swap agreement defaults, a Fund’s risk of loss consists of the net amount of payments that such Fund is contractually entitled to receive, if any. The net amount of the excess, if any, of a Fund’s obligations over its entitlements with respect to each equity swap will be accrued on a daily basis and an amount of cash or liquid assets, having an aggregate NAV at least equal to such accrued excess will be maintained in a segregated account by a Fund’s custodian. In as much as these transactions are entered into for hedging purposes or are offset by segregated cash of liquid assets, as permitted by applicable law, the Funds and the Adviser or Subadviser, as appropriate, believe that these transactions do not constitute senior securities under the 1940 Act and, accordingly, will not treat them as being subject to a Fund’s borrowing restrictions.

24




The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid in comparison with the markets for other similar instruments, which are traded in the OTC market. The Adviser or Subadviser, as applicable, in accordance with procedures adopted by the Board of Trustees, is responsible for determining and monitoring liquidity of a particular Fund’s transactions in swap agreements.


The use of equity swaps is a highly specialized activity, which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions.

Collateralized Mortgage Obligations (“CMOS”). The Funds may invest in CMOs. Privately issued CMOs generally represent an ownership interest in a pool of federal agency mortgage pass-through securities such as those issued by the Government National Mortgage Association, Federal National Mortgage Association or Federal Home Loan Mortgage Corporation. The terms and characteristics of the mortgage instruments may vary among pass-through mortgage loan pools.

The market for such CMOs has expanded considerably since its inception. The size of the primary issuance market and the active participation in the secondary market by securities dealers and other investors make government-related pools highly liquid.

Certain debt securities such as, but not limited to, mortgage-related securities, CMOs, asset backed securities (“ABSs”) and securitized loan receivables, as well as securities subject to prepayment of principal prior to the stated maturity date, are expected to be repaid prior to their stated maturity dates. As a result, the effective maturity of these securities is expected to be shorter than the stated maturity. For purposes of compliance with stated maturity policies and calculation of the Bond Funds’ weighted average maturity, the effective maturity of such securities will be used.

Adjustable Rate Mortgage Securities (“ARMS”). The Funds may invest in ARMS. Generally, adjustable rate mortgages have a specified maturity date and amortize principal over their life. In periods of declining interest rates there is a reasonable likelihood that ARMS will experience increased rates of prepayment of principal. However, the major difference between ARMS and fixed-rate mortgage securities is that the interest rate can and does change in accordance with movements in a particular, pre-specified, published interest rate index. There are two main categories of indices: those based on U.S. Treasury obligations and those derived from a calculated measure, such as a cost of funds index or a moving average of mortgage rates. The amount of interest on an adjustable rate mortgage is calculated by adding a specified amount to the applicable index, subject to limitations on the maximum and minimum interest that is charged during the life of the mortgage or to maximum and minimum changes to that interest rate during a given period.

The underlying mortgages which collateralize the ARMS will frequently have caps and floors which limit the maximum amount by which the loan rate to the residential borrower may change up or down (1) per reset or adjustment interval and (2) over the life of the loan. Some
25


residential mortgage loans restrict periodic adjustments by limiting changes in the borrower’s monthly principal and interest payments rather than limiting interest rate changes. These payment caps may result in negative amortization. The value of mortgage-related securities in which a Fund invests may be affected if market interest rates rise or fall faster and farther than the allowable caps or floors on the underlying residential mortgage loans. Additionally, even though the interest rates on the underlying residential mortgages are adjustable, amortization and prepayments may occur, thereby causing the effective maturities of the mortgage-related securities in which the Fund invests to be shorter than the maturities stated in the underlying mortgages.

Foreign Currency Transactions. The Funds may engage in foreign currency transactions. In addition, the Strategic Income Fund, the Total Return Bond Fund and the Short-Term Bond Fund may invest in foreign government debt.

Currency Risks. The exchange rates between the U.S. dollar and foreign currencies are a function of such factors as supply and demand in the currency exchange markets, international balances of payments, governmental intervention, speculation and other economic and political conditions. Although the Funds value their assets daily in U.S. dollars, they may not convert their holdings of foreign currencies to U.S. dollars daily. The Funds may incur conversion costs when they convert their holdings to another currency. Foreign exchange dealers may realize a profit on the difference between the price at which the Funds buy and sell currencies.

The Funds may engage in foreign currency exchange transactions in connection with their portfolio investments. The Funds will conduct their foreign currency exchange transactions either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market or through forward contracts to purchase or sell foreign currencies.

Forward Foreign Currency Exchange Contracts. The Funds may enter into forward foreign currency exchange contracts in order to protect against a possible loss resulting from an adverse change in the relationship between the U.S. dollar and a foreign currency involved in an underlying transaction. However, forward foreign currency exchange contracts may limit potential gains which could result from a positive change in such currency relationships. Each of the Adviser or Subadviser, as applicable, believes that it is important to have the flexibility to enter into forward foreign currency exchange contracts whenever it determines that it is in each of the Funds’ best interest to do so. The Funds may also enter into forward foreign currency exchange contracts to gain exposure to currencies underlying various securities or financial instruments held in the respective Fund.


In addition, the Funds may be permitted to engage in cross-hedging. Cross-hedging involves the use of forward contracts to shift currency exposure from one non-U.S. dollar currency to another non-U.S. dollar currency. An example would be where the Fund were overweight securities denominated in Sterling and the portfolio manager wished to bring that segment’s currency weighting back within the parameters of the index. In this case, the portfolio manager would sell Sterling and buy the Euro using forward contracts. Cross-hedging will only be done relative to an established index and will not exceed 50% of a Fund’s net assets.

26



Currency hedging may also be accomplished through “proxy hedging,” which is defined as entering into a position in one currency to hedge investments denominated in another currency, where two currencies are economically linked or otherwise correlated.

Foreign Currency Options. The Funds may engage in foreign currency options, and the funds in which they invest may engage in foreign currency options. A foreign currency option provides the option buyer with the right to buy or sell a stated amount of foreign currency at the exercise price on a specified date or during the option period. The owner of a call option has the right, but not the obligation, to buy the currency. Conversely, the owner of a put option has the right, but not the obligation, to sell the currency.

When the option is exercised, the seller (i.e., writer) of the option is obligated to fulfill the terms of the sold option. However, either the seller or the buyer may, in the secondary market, close its position during the option period at any time prior to expiration. A call option on foreign currency generally rises in value if the underlying currency appreciates in value, and a put option on foreign currency generally rises in value if the underlying currency depreciates in value. Although purchasing a foreign currency option can protect the Funds against an adverse movement in the value of a foreign currency, the option will not limit the movement in the value of such currency. For example, if a Fund were holding securities denominated in a foreign currency that was appreciating and had purchased a foreign currency put to hedge against a decline in the value of the currency, it would not have to exercise its put option. Likewise, if a Fund were to enter into a contract to purchase a security denominated in foreign currency and, in conjunction with that purchase, were to purchase a foreign currency call option to hedge against a rise in value of the currency, and if the value of the currency instead depreciated between the date of purchase and the settlement date, it would not have to exercise its call. Instead, it could acquire in the spot market the amount of foreign currency needed for settlement.

Special Risks Associated with Foreign Currency Options. Buyers and sellers of foreign currency options are subject to the same risks that apply to options generally. There are certain additional risks associated with foreign currency options. The markets in foreign currency options are relatively new, and a Fund’s ability to establish and close out positions on such options is subject to the maintenance of a liquid secondary market. Although the Funds will not purchase or write such options unless and until, in the opinion of the Adviser or Subadviser, as applicable, the market for them has developed sufficiently to ensure that the risks in connection with such options are not greater than the risks in connection with the underlying currency, there can be no assurance that a liquid secondary market will exist for a particular option at any specific time. In addition, options on foreign currencies are affected by all of those factors that influence foreign exchange rates and investments generally.

The value of a foreign currency option depends upon the value of the underlying currency relative to the U.S. dollar. As a result, the price of the option position may vary with changes in the value of either or both currencies and may have no relationship to the investment merits of a foreign security. Because foreign currency transactions occurring in the interbank market involve substantially larger amounts than those that may be involved in the use of foreign currency options, investors may be disadvantaged by having to deal in an odd lot
27


market (generally consisting of transactions of less than $1 million) for the underlying foreign currencies at prices that are less favorable than for round lots.

There is no systematic reporting of last sale information for foreign currencies or any regulatory requirement that quotations available through dealers or other market sources be firm or revised on a timely basis. Available quotation information is generally representative of very large transactions in the interbank market and thus may not reflect relatively smaller transactions (i.e., less than $1 million) where rates may be less favorable. The interbank market in foreign currencies is a global, around-the-clock market. To the extent that the U.S. option markets are closed while the markets for the underlying currencies remain open, significant price and rate movements may take place in the underlying markets that cannot be reflected in the options markets until they reopen.

Foreign Currency Futures Transactions. By using foreign currency futures contracts and options on such contracts, the Funds may be able to achieve many of the same objectives as they would through the use of forward foreign currency exchange contracts. The Funds may be able to achieve these objectives possibly more effectively and at a lower cost by using futures transactions instead of forward foreign currency exchange contracts.

Special Risks Associated with Foreign Currency Futures Contracts and Related Options. Buyers and sellers of foreign currency futures contracts are subject to the same risks that apply to the use of futures generally. In addition, there are risks associated with foreign currency futures contracts and their use as a hedging device similar to those associated with options on currencies, as described above.

Options on foreign currency futures contracts may involve certain additional risks. Trading options on foreign currency futures contracts is relatively new. The ability to establish and close out positions on such options is subject to the maintenance of a liquid secondary market. To reduce this risk, the Funds will not purchase or write options on foreign currency futures contracts unless and until, in the opinion of the Adviser or Subadviser, as applicable, the market for such options has developed sufficiently that the risks in connection with such options are not greater than the risks in connection with transactions in the underlying foreign currency futures contracts. Compared to the purchase or sale of foreign currency futures contracts, the purchase of call or put options on futures contracts involves less potential risk to the Funds because the maximum amount at risk is the premium paid for the option (plus transaction costs). However, there may be circumstances when the purchase of a call or put option on a futures contract would result in a loss, such as when there is no movement in the price of the underlying currency or futures contract.

Guaranteed Investment Contracts. The Funds may make limited investments in guaranteed investment contracts (“GICs”) issued by highly rated U.S. insurance companies. Under a GIC, the Fund gives cash to an insurance company which credits the Fund with the amount given plus interest based on a certain index, which interest is guaranteed to be not less than a certain minimum rate. A GIC is normally a general obligation of the issuing insurance company and not a separate account. The purchase price paid for a GIC becomes part of the general assets of the insurance company, and the contract is paid from the insurance company’s general assets. The Funds will only purchase GICs from insurance companies which, at the time
28


of purchase, have total assets of $1 billion or more and meet quality and credit standards established by the Adviser pursuant to guidelines approved by the Board of Trustees. Generally, GICs are not assignable or transferable without the permission of the issuing insurance companies, and an active secondary market in GICs does not currently exist. Therefore, GICs will normally be considered illiquid investments, and will be subject to a Fund’s limitation on illiquid investments.

Lending of Portfolio Securities. The Funds (except for the Money Market Funds) may lend portfolio securities. The collateral received when a Fund lends portfolio securities must be valued daily and, should the market value of the loaned securities increase, the borrower must furnish additional collateral to the Fund. During the time portfolio securities are on loan, the borrower pays the Fund any dividends or interest paid on such securities. Loans are subject to termination at the option of a Fund or the borrower. A Fund may pay reasonable administrative and custodial fees in connection with a loan and may pay a negotiated portion of the interest earned on the cash or equivalent collateral to the borrower or placing broker. A Fund would not have the right to vote securities on loan, but would terminate the loan and regain the right to vote if that were considered important with respect to the investment.

Loan Participation Notes. The Funds may purchase loan participation notes. A loan participation note represents participation in a corporate loan of a commercial bank with a remaining maturity of one year or less. Such loans must be to corporations in whose obligations the Funds may invest. Any participation purchased by a Fund must be issued by a bank in the United States with total assets exceeding $1 billion. Because the issuing bank does not guarantee the participation in any way, the participation is subject to the credit risks generally associated with the underlying corporate borrower. In addition, because it may be necessary under the terms of the loan participation for a Fund to assert through the issuing bank such rights as may exist against the corporate borrower if the underlying corporate borrower fails to pay principal and interest when due, a Fund may be subject to delays, expenses and risks that are greater than those that would have been involved if the Fund had purchased a direct obligation of such borrower. Moreover, under the terms of the loan participation a Fund may be regarded as a creditor of the issuing bank (rather than the underlying corporate borrower), so that the Fund may also be subject to the risk that the issuing bank may become insolvent. The secondary market, if any, for loan participations is extremely limited and any such participation purchased by a Fund may be regarded as illiquid.

Lower-Rated and Unrated Securities. The Funds may invest in higher yielding (and, therefore, higher risk), lower-rated fixed-income securities, including investment-grade securities, junk bonds and unrated securities. Securities rated in the fourth highest category by S&P or Moody’s, BBB and Baa, respectively, although considered investment grade, may possess speculative characteristics, and changes in economic or other conditions are more likely to impair the ability of issuers of these securities to make interest and principal payments than with respect to issuers of higher grade bonds.

Generally, medium or lower-rated securities and unrated securities of comparable quality, sometimes referred to as “junk bonds,” offer a higher current yield than is offered by higher rated securities, but also (i) will likely have some quality and protective characteristics that, in the judgment of the rating organizations, are outweighed by large uncertainties or major
29


risk exposures to adverse conditions and (ii) are predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal in accordance with the terms of the obligation. The yield of junk bonds will fluctuate over time.


Special Risks Associated with Lower-Rated And Unrated Securities. The market values of certain of these securities also tend to be more sensitive to individual corporate developments and changes in economic conditions than higher quality bonds. In addition, medium and lower-rated securities and comparable unrated securities generally present a higher degree of credit risk. The risk of loss due to default by these issuers is significantly greater because medium and lower-rated securities and unrated securities of comparable quality generally are unsecured and frequently are subordinated to the prior payment of senior indebtedness. Since the risk of default is higher for lower-rated debt securities, the Adviser’s or Subadviser’s, as appropriate, research and credit analysis are an especially important part of managing securities of this type held by a Fund. In light of these risks, the Adviser or Subadviser, in evaluating the creditworthiness of an issue, whether rated or unrated, will take various factors into consideration, which may include, as applicable, the issuer’s financial resources, its sensitivity to economic conditions and trends, the operating history of and the community support for the facility financed by the issue, the ability of the issuer’s management and regulatory matters.

In addition, the market value of securities in lower-rated categories is more volatile than that of higher quality securities, and the markets in which medium and lower-rated or unrated securities are traded are more limited than those in which higher rated securities are traded. The existence of limited markets may make it more difficult for a Fund to obtain accurate market quotations for purposes of valuing its portfolio and calculating its NAV. Moreover, the lack of a liquid trading market may restrict the availability of securities for a Fund to purchase and may also have the effect of limiting the ability of the Fund to sell securities at their fair value either to meet redemption requests or to respond to changes in the economy or the financial markets.


Lower-rated debt obligations also present risks based on payment expectations. If an issuer calls the obligation for redemption, a Fund may have to replace the security with a lower yielding security, resulting in a decreased return for shareholders. Also, as the principal value of bonds moves inversely with movements in interest rates, in the event of rising interest rates the value of the securities held by the Funds may decline relatively proportionately more than a portfolio consisting of higher rated securities. If a Fund experiences unexpected net redemptions, it may be forced to sell its higher rated bonds, resulting in a decline in the overall credit quality of the securities held by the Fund and increasing the exposure of the Fund to the risks of lower-rated securities.


Subsequent to its purchase by a Fund, a security may cease to be rated or its rating may be reduced below the minimum required for purchase by that Fund. Neither event will require sale of the security by the Fund, but the Adviser or Subadviser, as appropriate, will consider this event in its determination of whether the Fund should continue to hold the security.


The market for lower-rated debt securities may be thinner and less active than that for higher rated debt securities, which can adversely affect the prices at which the former are sold. If market quotations are not available, lower-rated debt securities will be valued in accordance
30


with procedures established by the Board of Trustees, including the use of outside pricing services. Judgment plays a greater role in valuing high yield corporate debt securities than is the case for securities for which more external sources for quotations and last sale information is available. Adverse publicity and changing investor perception may affect the ability of outside pricing services to value lower-rated debt securities and the ability to dispose of these securities.

A Fund may choose, at its expense or in conjunction with others, to pursue litigation or otherwise exercise its rights as a security holder to seek to protect the interest of security holders if it determines this to be in the best interest of the Fund.

In considering investments for the Strategic Income Fund and High Yield Bond Fund, the Adviser and Subadviser, respectively, will attempt to identify those issuers of high yielding debt securities whose financial condition is adequate to meet future obligations, has improved or is expected to improve in the future. The Adviser’s or Subadviser’s analysis will focus on relative values based on such factors as interest or dividend coverage, asset coverage, earnings prospects and the experience and managerial strength of the issuer.

Although not a principal investment strategy, up to 5% of the Quality Growth Fund’s total assets may be represented by higher yielding (and, therefore, higher risk), lower-rated fixed-income securities, including investment-grade securities, junk bonds and unrated securities.

Master Limited Partnerships. Master limited partnerships (“MLPs”) are limited partnerships in which ownership units are publicly traded. MLPs often own or own interests in properties or businesses that are related to oil and gas industries, including pipelines, although MLPs may invest in other types of industries, or in credit-related investments. Generally, an MLP is operated under the supervision of one or more managing general partners. Limited partners (like a Fund that invests in an MLP) are not involved in the day-to-day management of the partnership. A Fund also may invest in companies who serve (or whose affiliates serve) as the general partner of an MLP.

Investments in MLPs are generally subject to many of the risks that apply to partnerships. For example, holders of the units of MLPs may have limited control and limited voting rights on matters affecting the partnership. There may be fewer corporate protections afforded investors in an MLP than investors in a corporation. Conflicts of interest may exist among unit holders, subordinated unit holders and the general partner of an MLP, including those arising from incentive distribution payments. MLPs that concentrate in a particular industry or region are subject to risks associated with such industry or region. MLPs holding credit-related investments are subject to interest rate risk and the risk of default on payment obligations by debt issuers. Investments held by MLPs may be illiquid. MLP units may trade infrequently and in limited volume, and they may be subject to more abrupt or erratic price movements than securities of larger or more broadly based companies.

The Funds may also hold investments in limited liability companies that have many of the same characteristics and are subject to many of the same risks as MLPs. Distributions attributable to gain from the sale of MLPs may be taxed as ordinary income for federal income tax purposes.
31




Money Market Instruments. The Funds may invest in money market instruments, which are high quality, short-term fixed income securities that adhere to the guidelines (i.e., liquidity, maturity and credit quality) set forth by Securities and Exchange Commission (“SEC”) Rule 2a-7 under the 1940 Act, which governs the allowable investments purchased by money market funds.


Municipal Leases. The Funds may purchase municipal securities in the form of participation interests which represent undivided proportional interests in lease payments by a governmental or non-profit entity. The lease payments and other rights under the lease provide for and secure the payments on the certificates. Lease obligations may be limited by municipal charter or the nature of the appropriation for the lease. In particular, lease obligations may be subject to periodic appropriation. If the entity does not appropriate funds for future lease payments, the entity cannot be compelled to make such payments. Furthermore, a lease may provide that the certificate trustee cannot accelerate lease obligations upon default. The trustee would only be able to enforce lease payments as they become due. In the event of a default or failure of appropriation, it is unlikely that the trustee would be able to obtain an acceptable substitute source of payment. In determining the liquidity of municipal lease securities, the Adviser, in accordance with procedures adopted by the Trustees, will base its determination on the following factors: (1) the frequency of trades and quotes for the security; (2) the number of dealers recently willing to purchase or sell the security and the number of other potential purchasers; (3) dealer undertakings to make a market in the security; (4) the nature of the security and the nature of the market for the security (i.e., the time needed to dispose of the security, the method of soliciting offers, and the mechanics of transfer); and (5) the general credit quality of the municipality, including: (a) whether the lease can be cancelled; (b) whether the assets represented by the lease can be sold; (c) the strength of the lessee’s general credit; (d) the likelihood that the municipality will discontinue appropriating funding for the leased property because the property is no longer deemed essential to the operations of the municipality; and (e) the legal recourse in the event of a failure to appropriate.


Municipal Securities. The Funds may invest in municipal securities of any state which have the characteristics set forth in the Prospectus of that Fund. Examples of municipal securities are (a) governmental lease certificates of participation issued by state or municipal authorities where payment is secured by installment payments for equipment, buildings, or other facilities being leased by the state or municipality; (b) municipal notes; (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.


Variable Rate Municipal Securities. The Funds may invest in variable rate municipal securities. Variable interest rates generally reduce changes in the market value of municipal securities from their original purchase prices. Accordingly, as interest rates decrease or increase, the potential for capital appreciation or depreciation is less for variable rate municipal securities than for fixed income obligations. Many municipal securities with variable interest rates purchased by the Funds are subject to repayment of principal (usually within seven days) on
32


the Funds’ demand. The terms of these variable-rate demand instruments require payment of principal and accrued interest from the issuer of the municipal obligations, the issuer of the participation interests, or a guarantor of either issuer.

Participation Interests. The Funds may invest in participation interests. Participation interests include the underlying securities and any related guaranty, letter of credit, or collateralization arrangement which a Fund would be allowed to invest in directly. The financial institutions from which the Funds may purchase participation interests frequently provide or secure from another financial institution irrevocable letters of credit or guarantees and give these Funds the right to demand payment of the principal amounts of the participation interests plus accrued interest on short notice (usually within seven days).

Real Estate Investment Trusts. The Funds (other than the Money Market Funds) may invest in real estate investment trusts (“REITs”), which are pooled investment vehicles investing primarily in income producing real estate or real estate loans or interest. The Funds’ 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.

Repurchase Agreements. A Fund may enter into repurchase agreements. A repurchase agreement is an agreement whereby a Fund takes possession of securities from another party in exchange for cash and agrees to sell the security back to the party at a specified time and price. To the extent that the original seller does not repurchase the securities from a Fund, the Fund could receive less than the repurchase price on any sale of such securities. In the event that such a defaulting seller filed for bankruptcy or became insolvent, disposition of such securities by a Fund might be delayed pending court action. A Fund will only enter into repurchase agreements with banks and other recognized financial institutions such as broker/dealers which are deemed by the Adviser or Subadviser, as applicable, to be creditworthy.


Restricted and Illiquid Securities. A Fund may invest in securities issued in reliance on the exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). Section 4(2) securities are restricted as to disposition under the federal securities laws and are generally sold to institutional investors, such as the Funds, who agree that they are purchasing such securities for investment purposes and not with a view to public distributions. Any resale by the purchaser must be in an exempt transaction. Section 4(2) securities are normally resold to other institutional investors like the Funds through or with the assistance of the issuer or investment dealers who make a market in such securities, thus providing liquidity. The Funds believe that Section 4(2) securities and possibly certain other

33




restricted securities which meet the criteria for liquidity established in accordance with procedures adopted by the Trustees are quite liquid. The Funds intend, therefore, to treat the restricted securities which meet the criteria for liquidity in accordance with such procedures, including Section 4(2) securities, as determined by the Adviser or Subadviser, as applicable, as liquid and not subject to the investment limitation applicable to illiquid securities.

The ability to determine the liquidity of certain restricted securities is permitted under the SEC staff position set forth in the adopting release for Rule 144A under the 1933 Act (the “Rule”). The Rule is a non-exclusive safe harbor for certain secondary market transactions involving securities subject to restrictions on resale under federal securities laws. The Rule provides an exemption from registration for resales of otherwise restricted securities to qualified institutional buyers. The Rule was expected to further enhance the liquidity of the secondary market for securities eligible for resale under the Rule. The determination of the liquidity of restricted securities is made by the Adviser or Subadviser, as appropriate, in accordance with procedures adopted by the Trustees. The following criteria, among others, are considered in determining the liquidity of certain restricted securities: the frequency of trades and quotes for the security; the number of dealers willing to purchase or sell the security and the number of other potential buyers; dealer undertakings to make a market in the security; and the nature of the security and the nature of the marketplace trades.


Reverse Repurchase Agreements. Except as provided above, the Funds may also enter into reverse repurchase agreements. These transactions are similar to borrowing cash. In a reverse repurchase agreement, a Fund transfers possession of a portfolio instrument to another person, such as a financial institution, broker, or dealer, in return for a percentage of the instrument’s market value in cash and agrees that on a stipulated date in the future it will repurchase the portfolio instrument by remitting the original consideration plus interest at an agreed upon rate. The use of reverse repurchase agreements may enable a Fund to avoid selling portfolio instruments at a time when a sale may be deemed to be disadvantageous, but the ability to enter into reverse repurchase agreements does not ensure that a Fund will be able to avoid selling portfolio instruments at a disadvantageous time.

When effecting reverse repurchase agreements, liquid assets of a Fund, in a dollar amount sufficient to make payment for the obligations to be purchased, are segregated on a Fund’s records at the trade date. These securities are marked to market daily and maintained until the transaction is settled.

Stand-By Commitments. The Funds may enter into stand-by commitments with respect to municipal obligations held by them. Under a stand-by commitment, a dealer agrees to purchase at a Fund’s option a specified municipal obligation at its amortized cost value to the Fund plus accrued interest, if any. Stand-by commitments may be exercisable by a Fund at any time before the maturity of the underlying municipal obligations and may be sold, transferred or assigned only with the instruments involved.

The Funds expect that stand-by commitments will generally be available without the payment of any direct or indirect consideration. However, if necessary or advisable, the Funds may pay for a stand-by commitment either separately in cash or by paying a higher price for
34


municipal obligations which are acquired subject to the commitment (thus reducing the yield to maturity otherwise available for the same securities).


The Funds intend to enter into stand-by commitments only with dealers, banks and broker-dealers which, in the Adviser’s opinion, present minimal credit risks. The Funds will acquire stand-by commitments solely to facilitate portfolio liquidity and do not intend to exercise their rights thereunder for trading purposes. Stand-by commitments will be valued at zero in determining the NAV of a Fund. Accordingly, where a Fund pays directly or indirectly for a stand-by commitment, its cost will be reflected as unrealized depreciation for the period during which the commitment is held by the Fund and will be reflected in realized gain or loss when the commitment is exercised or expires.


Stripped Obligations. The Funds may purchase U.S. Treasury Obligations and their unmatured interest coupons that have been separated (“stripped”) by their holder, typically a custodian bank or other institution. These “stripped” U.S. Treasury obligations are offered under the Separate Trading of Registered Interest and Principal Securities (“STRIPS”) program or Coupon Under Bank-Entry Safekeeping (“CUBES”) program. The Funds may also purchase other stripped securities issued directly by agencies or instrumentalities of the U.S. government. STRIPS and CUBES represent either future interest or principal payments and are direct obligations of the U.S. government that clear through the Federal Reserve System. These participations, which may be issued by the U.S. government (or a U.S. government agency or instrumentality) or by private issuers such as banks and other institutions, are issued at a discount to their face value, and may, with respect to the Bond Funds, include stripped mortgage-backed securities (“SMBS”). Stripped securities, particularly SMBS, may exhibit greater price volatility than ordinary debt securities because of the manner in which their principal and interest are returned to investors. The Funds also may purchase U.S. dollar-denominated stripped securities that evidence ownership in the future interest payments or principal payments on obligations of foreign governments.

SMBS are usually structured with two or more classes that receive different proportions of the interest and principal distributions from a pool of mortgage-backed obligations. A common type of SMBS will have one class receiving all of the interest, while the other class receives all of the principal. However, in some cases, one class will receive some of the interest and most of the principal while the other class will receive most of the interest and the remainder of the principal. If the underlying obligations experience greater than anticipated prepayments of principal, a Fund may fail to fully recoup its initial investment. The market value of the class consisting entirely of principal payments can be extremely volatile in response to changes in interest rates. The yields on a class of SMBS that receives all or most of the interest are generally higher than prevailing market yields on other mortgage-backed obligations because their cash flow patterns are also volatile and there is a greater risk that the initial investment will not be fully recouped.

SMBS which are not issued by the U.S. government (or a U.S. government agency or instrumentality) are considered illiquid. SMBS issued by the U.S. government (or a U.S. government agency or instrumentality) may be considered liquid under guidelines established by the Trust’s Board of Trustees.
35



Within the past several years, the Treasury Department has facilitated transfers of ownership of stripped securities by accounting separately for the beneficial ownership of particular interest coupon and principal payments on Treasury securities through the Federal Reserve book-entry record-keeping system and the STRIPS program. Under the STRIPS program, the Funds will be able to have their beneficial ownership of stripped securities recorded directly in the book-entry record-keeping system in lieu of having to hold certificates or other evidences of ownership of the underlying U.S. Treasury securities.

In addition, the Funds may acquire other U.S. government obligations and their unmatured interest coupons that have been stripped by their holder. Having separated the interest coupons from the underlying principal of the U.S. government obligations, the holder will resell the stripped securities in custodial receipt programs with a number of different names, including “Treasury Income Growth Receipts” (“TIGRs”) and “Certificate of Accrual on Treasury Securities” (“CATS”). The stripped coupons are sold separately from the underlying principal, which is usually sold at a deep discount because the buyer receives only the right to receive a future fixed payment on the security and does not receive any rights to periodic interest (cash) payments. The underlying U.S. Treasury bonds and notes themselves are held in book-entry form at the Federal Reserve Bank or, in the case of bearer securities (i.e., unregistered securities which are ostensibly owned by the bearer or holder), in trust on behalf of the owners.

Although a “stripped” security may not pay interest to holders prior to maturity, federal income tax regulations require a Fund to recognize as interest income a portion of the security’s discount each year. This income must then be distributed to shareholders along with other income earned by the Fund. To the extent that any shareholders in a Fund elect to receive their dividends in cash rather than reinvest such dividends in additional Fund shares, cash to make these distributions will have to be provided from the assets of the Fund or other sources such as proceeds of sales of Fund shares and/or sales of portfolio securities. In such cases, the Fund will not be able to purchase additional income producing securities with cash used to make such distributions and its current income may ultimately be reduced as a result.


Trust Preferred Securities. Trust preferred securities are issued by a special purpose trust subsidiary backed by subordinated debt of the corporate parent. Trust preferred securities currently permit the issuing entity to treat the interest payments as a tax-deductible cost. These securities, which have no voting rights, have a final stated maturity date and a fixed schedule for periodic payments. In addition, these securities have provisions which afford preference over common and preferred stock upon liquidation, although the securities are subordinated to other, more senior debt securities of the same issuer. The issuers of these securities have the right to defer interest payments for a period of up to five years, although interest continues to accrue cumulatively. The deferral of payments may not exceed the stated maturity date of the securities themselves. The non-payment of deferred interest at the end of the permissible period will be treated as an event of default. At the present time, the Internal Revenue Service (“IRS”) treats trust preferred securities as debt.


U.S. Government Obligations. The types of U.S. government obligations in which the Funds may invest include 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”),
36


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 that are neither guaranteed or 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 Student Loan Marketing Association can also issue debt as a corporation, which is not considered a U.S. Government obligation.

Variable Rate U.S. Government Securities. Some of the short-term U.S. government securities that the Funds may purchase carry variable interest rates. These securities have a rate of interest subject to adjustment at least annually. This adjusted interest rate is ordinarily tied to some objective standard, such as the 91-day U.S. Treasury bill rate. Variable interest rates will reduce the changes in the market value of such securities from their original purchase prices. Accordingly, the potential for capital appreciation or capital depreciation should not be greater than the potential for capital appreciation or capital depreciation of fixed interest rate U.S. government securities having maturities equal to the interest rate adjustment dates of the variable rate U.S. government securities.

Overseas Private Investment Corporation Certificates. The Funds may invest in Certificates of Participation issued by the Overseas Private Investment Corporation (“OPIC”). OPIC is a U.S. Government agency that sells political risk insurance and loans to help U.S. businesses invest and compete in over 140 emerging markets and developing nations worldwide. OPIC provides medium to long-term loans and guaranties to projects involving significant equity or management participation. OPIC can lend up to $250 million per project on either a project finance or a corporate finance basis in countries where conventional institutions are often unable or unwilling to lend on such a basis. OPIC issues Certificates of Participation to finance projects undertaken by U.S. companies. These certificates are guaranteed by OPIC and backed by the full faith and credit of the U.S. Government.

Warrants. The Funds may invest in warrants. Warrants are basically options to purchase common stock at a specific price (usually at a premium above the market value of the optioned common stock at issuance) valid for a specific period of time. Warrants may have a life ranging from less than a year to twenty years or may be perpetual. However, most warrants have expiration dates after which they are worthless. In addition, if the market price of the common stock does not exceed the warrant’s exercise price during the life of the warrant, the warrant will expire as worthless. Warrants have no voting rights, pay no dividends, and have no rights with respect to the assets of the corporation issuing them. The percentage increase or decrease in the market price of the warrant may tend to be greater than the percentage increase or decrease in the market price of the optioned common stock.
37



When-Issued and Delayed Delivery Transactions. A Fund may enter into when-issued and delayed delivery transactions. These transactions are made to secure what is considered to be an advantageous price or yield for a Fund. No fees or other expenses, other than normal transaction costs, are incurred. However, liquid assets of a Fund sufficient to make payment for the securities to be purchased are segregated on the Fund’s records at the trade date. These assets are marked-to-market daily and are maintained until the transaction has been settled. The Funds do not intend to engage in when-issued and delayed delivery transactions to an extent that would cause the segregation of more than 25% of the total value of their assets.

Temporary and Defensive Investments. A Fund (other than the Money Market Funds) may hold up to 100% of its assets in cash, short-term debt securities or other short-term instruments for temporary defensive purposes. The Short Term Bond Fund may shorten its dollar-weighted average maturity below its normal range if such action is deemed appropriate by the Adviser. The Money Market Funds may hold up to 100% of their assets in cash. A Fund will adopt a temporary defensive position when, in the opinion of the Adviser or Subadviser, as applicable, such a position is more likely to provide protection against adverse market conditions than adherence to the Fund’s other investment policies. The types of short-term instruments in which the Funds may invest for such purposes include short-term money market securities, such as repurchase agreements, and securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, certificates of deposit, time deposits and bankers’ acceptances of certain qualified financial institutions and corporate commercial paper, which at the time of purchase are rated at least within the “A” major rating category by Standard & Poor’s (“S&P”) or the “Prime” major rating category by Moody’s Investors Service, Inc. (“Moody’s”), or, if not rated, issued by companies having an outstanding long-term unsecured debt issue rated at least within the “A” category by S&P or Moody’s.


Portfolio Turnover. The Funds will not attempt to set or meet portfolio turnover rates since any turnover would be incidental to transactions undertaken in an attempt to achieve the Funds’ investment objectives. The portfolio turnover rates for the Funds except the Money Market Funds for fiscal years ended July 31, 2011 and July 31, 2010 were as follows:


Fiscal Year Ended
July 31, 2011 Fiscal Year Ended
July 31, 2010
Small Cap Growth Fund 74% 86%
Mid Cap Growth Fund1 111% 92%
Quality Growth Fund 88% 56%
Dividend Growth Fund 53% 63%
Micro Cap Value Fund 59% 56%
Small Cap Value Fund 93% 65%
All Cap Value Fund 59% 37%
Disciplined Large Cap Value Fund 72% 54%
Structured Large Cap Plus Fund2 198% 180%
Equity Index Fund 2% 6%
International Equity Fund3 131% 137%
Strategic Income Fund 42% 31%
LifeModel Aggressive FundSM 18% 11%
LifeModel Moderately Aggressive FundSM 18% 16%

38



Fiscal Year Ended
July 31, 2011 Fiscal Year Ended
July 31, 2010
LifeModel Moderate FundSM 20% 9%
LifeModel Moderately Conservative FundSM 25% 14%
LifeModel Conservative FundSM 25% 14%
High Yield Bond Fund 81% 71%
Total Return Bond Fund 60% 39%
Short Term Bond Fund 61% 78%



1
In April of 2010, Jon Fisher, FTAM Director of Mid Cap Growth Strategies, took over portfolio management responsibilities for the Fund. Modifications in the management philosophy have naturally resulted in a temporary increase in the portfolio turnover rate. The portfolio turnover rate is expected to normalize over the long term.
2
During the fiscal years ended July 31, 2010 and July 31, 2011, the quantitative management process employed by the Structured Large Cap Plus Fund resulted in slightly higher turnover rates than some fundamentally managed portfolios. The Fund is risk controlled with extensive constraint sets used in portfolio construction. Maintaining these constraints results in modestly high turnover. Furthermore a new version of the statistical stock selection model was introduced during the period which naturally results in higher turnover. Finally, the highly volatile market environment and frequent sector rotations have also resulted in higher portfolio turnover.
3
During the fiscal years ended July 31, 2010 and July 31, 2011, the quantitative management process employed by the International Equity Fund resulted in slightly higher turnover rates than some fundamentally managed portfolios. The Fund is risk controlled with extensive constraint sets used in portfolio construction. Maintaining these constraints results in modestly high turnover. Furthermore a new version of the statistical stock selection model was introduced during the period which naturally results in higher turnover. Finally, the highly volatile market environment and frequent sector rotations have also resulted in higher portfolio turnover.

FIFTH THIRD FUNDS MANAGEMENT


The Funds are managed under the direction of the Board of Trustees. Subject to the provisions of the Declaration of Trust, By-laws and Massachusetts law, the Trustees have all powers necessary and desirable to carry out this responsibility, including the election and removal of Trust officers.
Trustees and Officers



The Trustees and officers of the Trust, their ages, the positions they hold with the Trust, their terms of office and lengths of time served, a description of their principal occupations during the past five years, the number of portfolios in the fund complex that each Trustee oversees and any other directorships held by the Trustee are listed in the two tables immediately following. The business address, unless otherwise noted, of the persons listed below is 38 Fountain Square Plaza, Cincinnati, Ohio 45202. Fund Complex includes the portfolios of the Trust described in this SAI.

39



Name and Age Position
Held With
The Trust Term of
Office and
Length of
Time
Served1 Principal Occupation(s)
During the Past 5 Years Number of
Portfolios
In Fund
Complex
Overseen by
Trustee Other
Directorships
Held by
Trustee

Independent Trustees
Edward Burke Carey
Age: 66 Chairman-
Board of
Trustees January
1989-
Present President, Carey Realty Investments, Inc. (commercial real estate), 1990-Present. 24 Canisius
College-
Trustee
David J. Durham
Age: 66 Trustee June 2001-
Present Chairman of Clipper Products, Inc., a wholesale distributor, 2005-Present. Chairman of Norris Products Corp., a wholesale distributor, 2005-Present. President and Chief Executive Officer of Clipper Products, Inc., 1997-Present. 24 None
David J. Gruber
Age: 47 Trustee December
2003-
Present President, DJG Financial Consulting (accounting and finance consultant), June 2007-Present. Resources Global Professionals, Project Professional (accounting and finance consultant), December 2004-June 2007. Ohio Arts & Sports Facilities Commission (state funding oversight agency), CFO, April 2003-December 2004. 24 None

40



Name and Age Position
Held With
The Trust Term of
Office and
Length of
Time
Served1 Principal Occupation(s)
During the Past 5 Years Number of
Portfolios
In Fund
Complex
Overseen by
Trustee Other
Directorships
Held by
Trustee
J. Joseph Hale Jr.
Age: 61 Trustee March
2001-
Present Consultant, Duke Energy, July 2010-Present. President and CEO of MediLux Health Care, April 2008-March 2010. EVP and Managing Director, DHR International (executive recruiter), April 2007-2008. President, Cinergy Foundation, November 2001-March 2006. 24 Trustee for Hanover College, The Egan Martime Institute, The Sconset Chapel, The Sconset Trust, The Community Foundation for Nantucket, Theatre Workshop of Nantucket and The Bright Light Foundation
John E. Jaymont
Age: 66 Trustee October
2001-
Present Business Development Director, Printing Industry of Ohio/North Kentucky (printing industry association), February 2002-Present. 24 None
Interested Trustee and Officers of the Trust

E. Keith Wirtz2
Age: 51 President
and
Trustee April 2007-
Present;
March
2010-
Present President, Fifth Third Asset Management, Inc. 2003-Present. 24 None
Matthew A. Ebersbach
Age: 41 Vice
President,
Assistant
Treasurer
and
Assistant
Principal
Financial
Officer March
2006-
Present;
September
2008-
Present Vice President of Fifth Third Asset Management, Inc. since 2001. Registered representative of FTAM Funds Distributor, Inc. N/A N/A

41



Name and Age Position
Held With
The Trust Term of
Office and
Length of
Time
Served1 Principal Occupation(s)
During the Past 5 Years Number of
Portfolios
In Fund
Complex
Overseen by
Trustee Other
Directorships
Held by
Trustee
Richard B. Ille
Age: 47 Vice
President April 2007-
Present Managing Director, Products and Marketing, Fifth Third Asset Management, Inc., 2001-Present. Registered representative of FTAM Funds Distributor, Inc. N/A N/A
James A. Mautino
Age: 43 Anti-Money
Laundering
and Chief
Compliance
Officer February
2007-
Present Vice President and Chief Compliance Officer, Fifth Third Asset Management, Inc. August 2005-Present. N/A N/A
Shannon King
Age: 39 Treasurer
and
Principal
Financial
Officer March
2008-
Present Vice President, Fifth Third Asset Management, Inc. September 2007-Present. Assistant Vice President, Capital Markets Treasury and Derivatives Manager 2005-2007. N/A N/A
Julie Tedesco
State Street Bank and
Trust Company
One Lincoln Street
Boston, MA 02111
Age: 54 Secretary June 2011 -
Present Senior Vice President and Senior Managing Counsel, State Street Bank and Trust Company (a Massachusetts trust company) 2000 - Present. N/A N/A
Tracy Kaufman
State Street Bank and
Trust Company
One Lincoln Street
Boston, MA 02111
Age: 53 Assistant
Treasurer June 2007-
Present Assistant Vice President, State Street Bank and Trust Company (a Massachusetts trust company) 1986-Present. N/A N/A
Francine S. Hayes
State Street Bank and
Trust Company
One Lincoln Street
Boston, MA 02111
Age: 43 Assistant
Secretary June 2007-
Present Vice President and Managing Counsel, State Street Bank and Trust Company (a Massachusetts trust company) 2004-Present. N/A N/A


1.
Each Trustee serves until the election and qualification of a successor, or until death, resignation, retirement or removal as provided in the Trust’s Amended and Restated Declaration of Trust. Retirement occurs on the last day of the fiscal year in which the Trustee’s 73rd birthday occurs. The Trust’s Officers are elected annually by the Trustees.
2.
Mr. Wirtz is an interested person of the Trust due to his employment relationship with Fifth Third Asset Management, Inc., the investment adviser for the Trust.
42


For Officers, positions held with affiliated persons of the Trust (or affiliated persons of such persons) are listed in the following table:


Name

Positions held with Affiliated Persons of the Funds

E. Keith Wirtz

Fifth Third Asset Management, Inc., President

Matthew A. Ebersbach

Fifth Third Asset Management, Vice President

Richard B. Ille

Fifth Third Asset Management, Inc., Executive Director

James A. Mautino

Fifth Third Asset Management, Inc., Vice President and Chief Compliance Officer

Shannon King

Fifth Third Asset Management, Inc., Vice President


Experience and Qualifications

The following is a summary of the experience, qualifications, attributes and skills of each trustee that support the conclusion, as of the date of this Statement of Additional Information, that each trustee should serve as a trustee in light of the Trust’s business and structure.



Edward Burke Carey. Mr. Carey has served as a trustee of the Trust and as Chairman of the Board since January 1989 and is a member of the Compliance Committee. In 2010, Mr. Carey was named Small Board Trustee of the Year by Fund Directions. He has been President of Carey Realty Investments, Inc., a commercial real estate development firm, since 1990. From 1983 to 1990, Mr. Carey was senior vice president with John W. Galbreath & Co., a national development firm. Prior to 1983, he was owner of Carey Realty in Buffalo, New York and was previously employed by Hammerson Properties, a brokerage company and international development firm. He is currently a trustee of Canisius College, formerly chairman of the Ohio/Kentucky Chapter of Counselors of Real Estate and board member of the Catholic Foundation chairing the Investment Committee. He has served as a board member of the Columbus and national boards of National Association of Industrial & Office Properties, the Columbus Theatrical Association, Franklin County Republican Party Finance Committee and the City of Columbus Development Commission.
David J. Durham. Mr. Durham has served as a trustee of the Trust since June 2001 and is a member of the Audit, Nominations, Compensation and Special Proxy Voting Committees. He has been President and Chief Executive Officer of Clipper Products, Inc., an importer and wholesale distributor, since September 1997. Prior to joining Clipper Products, Mr. Durham was Director of IBM Business at Structural Dynamics Research Corporation, an engineering software and services company, and Vice-President of Marketing at Zonic Corporation, a manufacturer of engineering test instrumentation. He is a founder and Chairman of the Board of Norris Products Corporation, an importer and distributor of consumer products, since June 2005. He currently is a trustee and treasurer of the St. Thomas Housing Corporation and the Thomaston Woods Senior Housing Corporation.

David J. Gruber. Mr. Gruber has served as a trustee of the Trust since December 2003 and the Chairman of the Compliance Committee since 2010. He is a member of the Audit, Nominations, Compliance and Special Proxy Voting Committees. He has been the President of DJG Financial Consulting, an accounting and financial consulting firm, since June 2007. Mr. Gruber was a project professional at Resource Global Professionals, an accounting and finance consulting firm from December 2004 to June 2007; Chief Financial Officer of Ohio Arts


43




& Sports Facilities Commission, a state funding oversight agency, from April 2003 to December 2004; and Finance Director of Ohio Expositions Commission, state fair and expo center, from April 1996 to March 2003. He previously served as a director of CASA of Delaware County. He began his career at PricewaterhouseCoopers (Coopers & Lybrand) and is a CPA (inactive). The Board of the Trust has determined that Mr. Gruber is an “audit committee financial expert” as defined by the SEC.
J. Joseph Hale Jr. Mr. Hale has served as a trustee of the Trust since March 2001, the Chairman of the Nominations Committee since 2005 and the Chairman of the Compensation Committee since 2010. He is a member of the Audit, Nominations, Compliance, Compensation and Special Proxy Voting Committees. Mr. Hale is currently a consultant to the CEO of Duke Energy, where he retired in 2008 after serving 15 years in a variety of capacities, including President of Cincinnati Gas and Electric Company, Chief Communications Officer of Cinergy Corp, and President of the Cinergy Foundation. He is currently a trustee for Hanover College, the Egan Maritime Institute, The Sconset Chapel, The Sconset Trust, the Community Foundation for Nantucket, Theatre Workshop of Nantucket and The Bright Light Foundation.


John E. Jaymont. Mr. Jaymont has served as a trustee of the Trust since October 2001 and the Chairman of the Audit Committee since 2001. He is a member of the Audit, Nominations and Special Proxy Voting Committees. He has been Business Development Director, Printing Industries of Ohio/North Kentucky, a printing industry association, since February 2002. In January 2010, Mr. Jaymont was inducted into the Greater Cincinnati Printing Hall of Fame and honored as the Printer of the Year, and in May 2010 he was inducted into the national honorary Web Offset Society. He was a management consultant from April 2000 to February 2002. Mr. Jaymont was previously President and COO of Metroweb, a large publication printer, as well as President of Brinkman-Jaymont Associates, a real estate investment holding company. He has served in leadership positions on numerous printing industry boards, including the Master Printers of America, the Web Offset Association, the Magazine Printers Section, and the Ohio Graphic Arts Health Fund.

E. Keith Wirtz. Mr. Wirtz has served as a trustee of the Trust since March 2010 and as President since April 2007. He has been President and Chief Investment Officer of the Adviser and Senior Vice President and Chief Investment Officer of Fifth Third Bank since 2003. He is responsible for all investment management activities within Fifth Third Bank and its affiliates. Prior to joining Fifth Third, Mr. Wirtz served as President and Managing Partner of Paladin Investment Associates from 2000 until its sale to Fifth Third Bank in 2003. Before Paladin Investment Associates he was with Investment Advisers, a subsidiary of Lloyds TSB based in the United Kingdom as its President and CIO. Mr. Wirtz also has 18 years’ experience in senior management positions with Bank of America, his last seven as Chief Investment Officer, where he managed a team of 100 investment professions supporting institutional assets of $100 billion, both domestic and international.

Board Structure

The Trust’s board of trustees manages the business affairs of the Trust. The trustees establish policies and review and approve contracts and their continuance. The trustees regularly request and/or receive reports from the Adviser, the Trust’s other service providers

44




and the Trust’s Chief Compliance Officer. The Board is comprised of six trustees, five of whom (including the chairman) are independent trustees. The Board has established four standing committees, each of which is comprised solely of independent trustees. The Audit Committee oversees the Trust’s accounting and financial reporting policies and practices; oversees the quality and objectivity of the Trust’s financial statements and the independent audit thereof; considers the selection of an independent registered public accounting firm for the Trust and the scope of the audit; and acts as a liaison between the Trust’s independent auditors and the full Board of Trustees. The Nominations Committee recommends qualified candidates to the Board of Trustees in the event that a position is vacated or created. The Compliance Committee reviews, analyzes and investigates compliance matters of the Trust identified by the Board to that Committee. The Compensation Committee reviews and makes recommendations regarding the compensation of the Independent Trustees and the Trust’s Chief Compliance Officer. The Special Proxy Voting Committee considers and determines how to vote on behalf of the Trust with respect to specific votes referred by the Adviser. The Trust’s day-to-day operations are managed by the Adviser and other service providers. The Board and the committees meet periodically throughout the year to review the Trust’s activities, including, among others, fund performance, valuation matters and compliance with regulatory requirements, and to review contractual arrangements with service providers. The Board has determined that the Trust’s leadership structure is appropriate given the number, size and nature of the funds in the fund complex.

Risk Oversight

Consistent with its responsibility for oversight of the Trust and its Funds, the Board, among other things, oversees risks associated with each Fund’s investment program and business affairs directly and through the committee structure that it has established. Risks to the Funds include, among others, investment risk, credit risk, liquidity risk, valuation risk and operational risk, as well as the overall business risk relating to the Funds. The Board has adopted, and periodically reviews, policies and procedures designed to address these risks. Under the overall supervision of the Board, the Adviser and other services providers to the Funds also have implemented a variety of processes, procedures and controls to address these risks. Different processes, procedures and controls are employed with respect to different types of risks. These processes include those that are embedded in the conduct of regular business by the Board and in the responsibilities of officers of the Trust and other service providers.



The Board requires senior officers of the Trust, including the President, Treasurer, Chief Legal Officer and Chief Compliance Officer (“CCO”), to report to the full Board on a variety of matters at regular and special meetings of the Board and its committees, as applicable, including matters relating to risk management. The Treasurer also reports regularly to the Audit Committee on the Trust’s internal controls and accounting and financial reporting policies and practices and provides the Audit Committee with valuation reports and minutes from pricing committee meetings. The Audit Committee also receives reports from the Trust’s independent registered public accounting firm on internal control and financial reporting matters. On at least a quarterly basis, the Board meets with the Trust’s CCO, including separate meetings with the Independent Trustees in executive session, to discuss issues related to portfolio compliance and, on at least an annual basis, receives a report from the CCO regarding the effectiveness of the Trust’s compliance program. In addition, the Board receives reports

45




from the Adviser on the investments and securities trading of the Funds. The Board also receives reports from the Trust’s primary service providers on a periodic or regular basis, including the Adviser to the Funds as well as the Subadviser, custodian and distributor. The Board also requires the Adviser to report to the Board on other matters relating to risk management on a regular and as-needed basis.

Committees of the Board of Trustees


Audit Committee. The purposes of the Audit Committee are to oversee the Trust’s accounting and financial reporting policies and practices; to oversee the quality and objectivity of the Trust’s financial statements and the independent audit thereof; to consider the selection of an independent registered public accounting firm for the Trust and the scope of the audit; and to act as a liaison between the Trust’s independent auditors and the full Board of Trustees. Messrs. Hale, Durham, Jaymont, and Gruber serve on this Committee. For the fiscal year ended July 31, 2011, there were four meetings of the Audit Committee.
Nominations Committee. The purpose of the Nominations Committee is to recommend qualified candidates to the Board of Trustees in the event that a position is vacated or created. Messrs. Hale, Durham, Jaymont and Gruber serve on this committee. The Committee will consider nominees recommended by shareholders. Recommendations should be submitted to the Nominations Committee in care of the Fifth Third Funds, 38 Fountain Square Plaza, Cincinnati, Ohio 45202. During the fiscal year ended July 31, 2011, the Nominations Committee did not meet.

Compliance Committee. The purpose of the Compliance Committee is to review, analyze and investigate compliance matters of the Trust identified by the Board to the Committee. The Committee’s function is strictly one of oversight. Generally, the full Board, rather than this Committee, will exercise direct oversight with respect to the Trust’s compliance matters. Messrs. Carey, Hale and Gruber serve on this committee. During the fiscal year ended July 31, 2011, the Compliance Committee did not meet.

Compensation Committee. The purpose of the Compensation Committee is to review and make recommendations regarding the compensation of the Trust’s independent trustees and CCO. Messrs. Durham and Hale serve on this Committee. During the fiscal year ended July 31, 2011, the Compensation Committee met once.

Special Proxy Voting Committee. The purpose of the Special Proxy Voting Committee is to consider and determine how to vote on behalf of the Trust with respect to specific votes referred by the Trust’s investment adviser. Messrs. Hale, Durham, Jaymont, and Gruber serve on this Committee. During the fiscal year ended July 31, 2011, the Special Proxy Voting Committee did not meet.


Trustees’ Securities Ownership

For each Trustee, the following table discloses the dollar range of equity securities beneficially owned by the Trustee in the Funds and, on an aggregate basis, in any registered

46




investment companies overseen by the Trustee within the Funds’ family of investment companies as of December 31, 2010:


Name of Trustee Dollar Range of Equity Securities in the Funds Aggregate Dollar Range of
Equity Securities in All
Registered Investment
Companies overseen by
Trustee in Family of
Investment Companies
Independent Trustees

Edward Burke Carey U.S. Treasury Money Market Fund
Prime Money Market Fund Over $100,000
$10,001-$50,000 Over $100,000
J. Joseph Hale, Jr. LifeModel Aggressive FundSM $1-$10,000 $1-$10,000
David J. Durham All Cap Value Fund
Mid Cap Growth Fund
Prime Money Market Fund
Quality Growth Fund
LifeModel Moderate FundSM
LifeModel Moderately Aggressive FundSM $10,001-$50,000
$10,001-$50,000
$1-$10,000
$10,001-$50,000
$10,001-$50,000
Over $100,000 Over $100,000
John E. Jaymont All Cap Value Fund
Dividend Growth Fund
International Equity Fund
Quality Growth Fund $1-$10,000
$1-$10,000
$1-$10,000
$1-$10,000 $1-$10,000
David J. Gruber All Cap Value Fund
Dividend Growth Fund
International Equity Fund
LifeModel Aggressive FundSM
LifeModel Moderate FundSM
LifeModel Moderately Aggressive FundSM
Strategic Income Fund $1-$10,000
$1-$10,000
$10,001-$50,000
$1-$10,000
$1-$10,000
$10,001-$50,000
$1-$10,000 $50,001-$100,000
Interested Trustee

E. Keith Wirtz Disciplined Large Cap Value Fund
Equity Index Fund
International Equity Fund
Quality Growth Fund
LifeModel Moderate FundSM $10,001-$50,000
$50,001-$100,000
$10,001-$50,000
$10,001-$50,000
Over $100,000 Over $100,000



As of December 31, 2010, none of the independent Trustees or their immediate family members owned beneficially the securities of an investment adviser or principal underwriter of the Trust, or a person (other than a registered investment company) directly or indirectly controlling, controlled by, or under common control with an investment adviser or principal underwriter of the Trust.
As of October 31, 2011, the Officers and Trustees owned less than 1% of any class of any Fund.


47


Trustees Compensation



Effective January 1, 2011, the Trustees, who are not interested persons of the Trust receive from the Trust, receive an annual retainer of $45,000 for service on the Board. Each Independent Trustee receives a fee of $8,000 for each regular quarterly Board meeting attended in person. Each Independent Trustee also receives a fee of $4,000 for attendance by telephone at any special meeting of the Board other than a regular quarterly meeting. Trustees are reimbursed for any out-of-pocket expenses relating to attendance at such meetings. The Chairperson of the Board receives $8,500 for each meeting over which he or she presides as Chairman, in addition to any other fees received.
Effective January 1, 2011, each Audit Committee member receives an annual retainer of $4,500 and a fee of $2,000 for each Audit Committee meeting attended in person. The Chairperson of the Audit Committee receives $3,000 for each meeting over which he presides as Chairman, in addition to any other fees received.


Each Compliance Committee member receives an annual retainer of $5,500 per year (payable in a lump sum at the first Compliance Committee meeting of the calendar year). The Compliance Committee fees are paid only in years in which a Compliance Committee meeting takes place. The Chairperson of the Compliance Committee receives an additional retainer of $2,000, in addition to any other fees received.

Each Nominations Committee member receives a fee of $1,000 for each Nominations Committee meeting attended in person.


Each Compensation Committee member receives an annual retainer of $4,000 per year and a fee of $1,500 for each Compensation Committee meeting attended.
The following table summarizes the compensation, including committee fees, paid to the Trustees of the Trust for the fiscal year ended July 31, 2011. Compensation excludes reimbursement of travel and other out-of-pocket expenses.



Name of Person Aggregate
Compensation
for the
Fiscal Year
ended
July 31, 2011 Pension or
Retirement Benefits
accrued as part of
Fund Expenses
Fiscal Year
ended
July 31, 2011 Estimate
Annual
Benefits upon
Retirement
Fiscal Year
ended
July 31, 2011 Total Compensation
from Funds and
Fund Complex paid
to Trustees for the
Fiscal Year
ended
July 31, 2011

Independent Trustees

Edward Burke Carey $124,500 None None $124,500
J. Joseph Hale, Jr. $98,000 None None $98,000
David J. Durham $98,000 None None $98,000
John E. Jaymont $106,500 None None $106,500
David J. Gruber $94,500 None None $94,500


48



Name of Person Aggregate
Compensation
for the
Fiscal Year
ended
July 31, 2011 Pension or
Retirement Benefits
accrued as part of
Fund Expenses
Fiscal Year
ended
July 31, 2011 Estimate
Annual
Benefits upon
Retirement
Fiscal Year
ended
July 31, 2011 Total Compensation
from Funds and
Fund Complex paid
to Trustees for the
Fiscal Year
ended
July 31, 2011
Interested Trustee

E. Keith Wirtz None None None None

Beneficial Ownership



The name, address, and percentage of ownership of each person who owns of record or is known by the Trust to own beneficially 5% or more of any Class of a Fund’s outstanding shares as of October 31, 2011 is set forth in Appendix B.

Trustee Liability

The Trust’s Declaration of Trust provides that the Trustees will not be liable for errors of judgment or mistakes of fact or law. However, the Trustees are not protected against any liability to which they would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of their office.

Codes of Ethics

Each of the Trust, Fifth Third Asset Management, Inc., Fort Washington Investment Advisors, Inc. and FTAM Funds Distributor, Inc. has adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act. Each code permits personnel subject to the code to invest in securities that may be purchased or held by the Funds.

Voting Proxies on Fund Portfolio Securities

The Board has delegated to the Adviser authority to vote proxies on the securities held in a Fund’s portfolio. The Board has also approved the Adviser’s policies and procedures for voting the proxies, which are described below.

Proxy Voting Procedures

The Adviser has engaged Institutional Shareholder Services (“ISS”) to administer the proxy voting policy. The Adviser’s Investment Committee reviews and adopts annually the proxy voting recommendations contained in the ISS Proxy Voting Guidelines Summary. The Chief Investment Officer of the Adviser must approve any deviations from these guidelines.

The Adviser will refer any proxy vote made on behalf of the Trust to the Special Proxy Voting Committee when (1) the Adviser has determined that voting in accordance with ISS’ policies/guidelines is not in the best interest of a Fund or ISS does not provide a recommendation and (2) the vote presents a conflict between the interests of the Fund and the

49


Adviser. The Special Proxy Voting Committee is composed exclusively of Independent Trustees of the Board of Trustees of the Funds and will conduct its activities according to the Special Proxy Voting Committee Charter.

Proxy Voting Policies

On matters of corporate governance, generally ISS will vote for proposals to: require independent tabulation of proxies and/or confidential voting by shareholders; reorganize in another jurisdiction when the economic factors outweigh any neutral or negative governance changes; and, with respect to shareholder proposals, ask a company to submit its poison pill for shareholder ratification.

On matters of capital structure, generally ISS will vote: against proposals to authorize or issue shares that are senior in priority or voting rights to the securities being voted; for proposals to reduce the par value of common stock, and for proposals to implement a reverse stock split when the number of authorized shares will be proportionately reduced.

On matters relating to management compensation, generally ISS will vote: for stock incentive plans that provide a dollar-for-dollar cash for stock exchange; and against proposals that would permit retirement plans for nonemployee directors.

On matters relating to corporate transactions, ISS will vote proxies relating to proposed mergers, capital reorganizations, and similar transactions in accordance with the general policy, based upon its analysis of the proposed transaction. ISS will vote proxies in contested elections of directors in accordance with the general policy, based upon its analysis of the opposing slates and their respective proposed business strategies. Some transactions may also involve proposed changes to the company’s corporate governance, capital structure or management compensation. ISS will vote on such changes based on its evaluation of the proposed transaction or contested election. In these circumstances, the Adviser may vote in a manner contrary to the general practice for similar proposals made outside the context of such a proposed transaction or change in the board. For example, if ISS decides to vote against a proposed transaction, it may vote for anti-takeover measures reasonably designed to prevent the transaction, even though ISS typically votes against such measures in other contexts.

Information Regarding Proxy Votes

You may obtain information without charge about how a Fund voted proxies related to its portfolio securities during the 12 month period ended June 30, without charge, by visiting the Securities and Exchange Commission’s Web site at www.sec.gov or the Funds’ website at www.fifththirdfunds.com.

Disclosure of Portfolio Holdings



The Board of Trustees has adopted on behalf of the Funds policies and procedures relating to disclosure of the Funds’ portfolio securities. These policies and procedures (the “Procedures”) are designed to protect the confidentiality of the Funds’ portfolio holdings information and to prevent the selective disclosure of such information (except as otherwise

50




permitted by applicable law and the Procedures). The Procedures may be modified at any time by the Trust’s CCO, provided that any material changes be reported to the Board of Trustees, and to the extent necessary, will be amended to conform to rules and regulations adopted by the SEC. No provision of the Procedures is intended to restrict or prevent the disclosure of portfolio holdings information that may be required by applicable law or requested by governmental authorities.
The Funds will make their respective portfolio holdings information available on the Funds’ website at www.fifththirdfunds.com under the “Funds” heading. The Funds’ website contains the complete schedule of each Fund’s portfolio holdings as of the most recent month’s end. For the Non-Money Market Funds, this information is generally posted on the Funds’ website no sooner than 15 days after each month’s end, and will remain available on the website until at least the date on which the Funds file a report on Form N-CSR or a report on Form N-Q for the period that includes the date as of which the information is current. For the Money Market Funds, this information is posted no later than five business days after each month’s end and will remain available on the website for at least six months. The posted schedules include information for each portfolio security (not including cash positions) held by each of the Funds as of the relevant month’s end. The Funds’ portfolio holdings are disclosed to the public, on a quarterly basis, on forms required to be filed with the SEC. The Money Market Funds’ portfolio holdings are disclosed to the public, on a monthly basis, on Form N-MFP, required to be filed with the SEC. The Funds’ reports on Form N-CSR (with respect to each annual period and semi-annual period), reports on Form N-Q (with respect to the first and third quarters of each of the Funds’ fiscal years) and the Money Market Funds’ reports on Form N-MFP (with respect to monthly periods) are available on the SEC’s website at www.sec.gov. If a Fund’s portfolio holdings information is disclosed to the public (either through a filing on the SEC’s EDGAR website or otherwise) before the disclosure of the information on the Funds’ website, such Fund may post such information on the Funds’ website. Except as provided in the Procedures, the Funds’ portfolio holdings may not be disclosed to third parties prior to posting on the website.


A Fund may, in certain cases, disclose to third parties its portfolio holdings which have not been made publicly available. Disclosure of non-public portfolio holdings to third parties may only be made if the CCO determines that such disclosure is in the best interests of the Fund’s shareholders. In addition, the third party receiving the non-public portfolio holdings will be required to agree in writing to keep the information confidential and/or agree not to trade directly or indirectly based on the information. The restrictions and obligations described in this paragraph do not apply to non-public portfolio holdings provided to entities who provide on-going services to the Funds in connection with their day-to-day operations and management, including but not limited to the Funds’ adviser and its affiliates, sub-advisers, and the Funds’ custodian, sub-administration and accounting services provider, brokers and/or dealers engaged in fund transactions, independent accounting firm, fund counsel, class action service provider, website vendor and proxy voting service provider.

Except for entities that utilize FTAM model portfolios (e.g., overlay managers and wrap sponsors) which may or may not closely resemble Fund portfolios, non-public portfolio holdings may not be disseminated for compensation or other consideration. A list of all persons who receive non-public portfolio holdings will be available upon request to the CCO.

51


The frequency with which the non-public portfolio holdings will be disclosed, as well as the lag time associated with such disclosure, will vary depending on such factors as the circumstances of the disclosure and the reason therefore.

The Funds have ongoing arrangements to disclose portfolio holdings to the following Service Providers:

Name of Vendor Type of Service Frequency Lag Time
DDM Marketing & Marketing & Communications Weekly and One day
Communications Quarterly
Standard & Poor’s Ratings Agency Weekly One day
Moody’s Investors Service Ratings Agency Weekly One day
Fitch Ratings Ltd. Ratings Agency Weekly One day
FactSet Portfolio analytics Daily N/A
Interactive Data Bond Edge Portfolio analytics Daily N/A
Investor Tools - SMART/Perform Portfolio analytics Daily N/A
Yield Book Portfolio analytics Daily N/A
Advent Axys Portfolio accounting Daily N/A
ICI Portfolio analytics Monthly 5 days
Able Noser Trade cost analysis Monthly Five days
SG Constellation Distribution services Weekly One day
eA Data Automation Services Marketing Support Quarterly 8 days
Fifth Third Bank Portfolio management and Daily N/A
administrative support
Prima Capital Management, Inc. Overlay manager Daily N/A
Merrill Lynch Wrap sponsor Daily N/A
Morgan Stanley Wrap sponsor Daily N/A
Fifth Third Securities Wrap sponsor Daily N/A
Envestnet Asset Management Overlay manager Daily N/A
Bear Stearns Wrap sponsor Daily N/A
TD Ameritrade Wrap sponsor Daily N/A
UBS Wrap sponsor Daily N/A
Smith Barney Wrap sponsor Daily N/A
Folio Dynamix Wrap sponsor Daily N/A
Placemark Investments Overlay manager Daily N/A
JP Morgan Wrap sponsor Same day N/A
ViceRoy Wrap sponsor Same day N/A


Exceptions to the Procedures may only be made if approved in writing by the CCO when a Fund has legitimate business purposes for doing so, and if the recipients are subject to a confidentiality agreement, as described above. Any exceptions must be reported to the Board of Trustees at its next regularly scheduled meeting.
The Adviser and Subadviser have primary responsibility for ensuring that each Fund’s portfolio holdings information is only disclosed in accordance with the Procedures. As part of this responsibility, the Adviser and Subadviser, as applicable, maintain such internal informational barriers as it believes are reasonably necessary for preventing the unauthorized disclosure of non-public portfolio holdings. The CCO is responsible for reviewing, at least


52




annually, the Adviser’s and Subadviser’s policies, procedures and/or processes and for reporting to the Board of Trustees whether, in the CCO’s view, these policies, procedures and/or processes are reasonably designed to comply with the Procedures.
If the CCO determines that the Adviser’s, and/or Subadviser’s, policies, procedures and/or processes are not reasonably designed to comply with the Procedures, the CCO shall notify the Adviser and/or Subadviser of such deficiency and request that the Adviser and/or Subadviser indicate how it intends to address the deficiency. If the deficiency is not addressed to the CCO’s satisfaction within a reasonable time after such notification (as determined by the CCO), then the CCO shall promptly notify the Board of Trustees of the deficiency and shall discuss with the Board possible responses.


INVESTMENT ADVISORY AND OTHER SERVICE ARRANGEMENTS

Investment Adviser and Subadviser


Fifth Third Asset Management, Inc., 38 Fountain Square Plaza, Cincinnati, Ohio 45202, serves as investment adviser to all Funds and provides investment advisory services through its Trust and Investment Division. FTAM is a wholly-owned subsidiary of Fifth Third Bank. Fifth Third Bank is a wholly-owned subsidiary of Fifth Third Financial Corporation, which, in turn, is a wholly-owned subsidiary of Fifth Third Bancorp.

Fort Washington Investment Advisors, Inc., 303 Broadway, Suite 1200, Cincinnati, Ohio, 45202, serves as investment subadviser to the High Yield Bond Fund. Fort Washington is a wholly owned subsidiary of The Western and Southern Life Insurance Company. The Western and Southern Life Insurance Company is a wholly owned subsidiary of Western & Southern Financial Group, Inc., which is a wholly owned subsidiary of Western-Southern Mutual Holding Company.

Neither the Adviser nor the Subadviser shall be liable to the Trust, a Fund, or any shareholder of any of the Funds for any losses that may be sustained in the purchase, holding, or sale of any security or for anything done or omitted by it, except acts or omissions involving willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties imposed upon it by its contract with the Trust.




Advisory Fees



For advisory services, the Adviser receives annual investment advisory fees as described in the Prospectuses. The following shows gross investment advisory fees for the Funds and fees waived by the Adviser for the fiscal years ended July 31, 2011, July 31, 2010, and July 31, 2009.


Fund Name Year
Ended
July 31, 2011 Fees
Waived/
Reimbursed-
2011* Year
Ended
July 31,
2010 Fees
Waived/
Reimbursed-
2010* Year
Ended
July 31,
2009 Fees
Waived/
Reimbursed
-2009*
Small Cap Growth Fund $321,828 $101,721 $335,323 $112,378 $357,230 $123,387
Mid Cap Growth Fund 720,422 221,803 722,831 221,172 925,124 147,123

53



Fund Name Year
Ended
July 31,
2011 Fees
Waived/
Reimbursed-
2011* Year
Ended
July 31,
2010 Fees
Waived/
Reimbursed-
2010* Year
Ended
July 31,
2009 Fees
Waived/
Reimbursed -2009*
Quality Growth Fund 2,662,122 162,792 2,549,188 171,933 2,547,955 145,539
Dividend Growth Fund 51,759 167,071 63,363 165,105 95,060 177,934
Micro Cap Value Fund 477,339 171,739 336,502 158,021 261,562 140,680
Small Cap Value Fund 644,654 134,348 594,031 98,291 580,781 63,537
All Cap Value Fund 1,223,058 441,947 1,405,584 428,811 1,527,248 250,458
Disciplined Large Cap Value Fund 1,966,316 297,803 2,782,387 370,321 2,683,558 200,669
Structured Large Cap Plus Fund 610,936 217,254 585,905 235,326 624,534 323,842
Equity Index Fund 1,030,174 1,152,151 852,560 1,006,359 766,516 935,822
International Equity Fund 2,235,154 424,929 2,509,959 393,341 2,514,187 285,475
Strategic Income Fund 1,361,263 666,743 909,694 434,520 842,711 350,603
LifeModel Aggressive FundSM 173,759 546,930 175,518 540,687 169,940 538,166
LifeModel Moderately Aggressive FundSM 291,966 893,905 313,883 944,041 308,023 942,139
LifeModel Moderate FundSM 394,815 996,104 424,326 1,035,186 491,434 1,183,434
LifeModel Moderately Conservative FundSM 86,185 319,719 93,026 316,255 95,935 324,975
LifeModel Conservative FundSM 59,248 252,682 64,408 244,650 64,356 243,454
High Yield Bond Fund 455,549 261,105 364,455 239,772 285,914 184,683
Total Return Bond Fund 1,626,413 478,828 2,062,992 537,135 2,721,916 509,300
Short Term Bond Fund 1,346,113 419,436 1,327,709 371,526 1,121,847 315,287
Prime Money Market Fund 3,623,296 1,680,732 4,176,733 910,200 5,934,575 125,345
Institutional Money Market Fund 10,346,804 8,715,175 12,242,870 10,109,416 11,571,778 9,373,218
Institutional Government Money Market Fund 6,837,630 6,252,811 8,460,755 7,603,271 9,321,621 8,194,726
U.S. Treasury Money Market Fund 5,352,463 4,347,404 5,793,805 4,497,786 9,005,061 6,820,287

*The amounts include fee waivers and expense reimbursements by the Adviser pursuant to expense limitations in effect during the fiscal year.

Subadviser and Subadvisory Fees



High Yield Bond Fund. Fort Washington is the subadviser to the High Yield Bond Fund under the terms of a Subadvisory Agreement between FTAM and Fort Washington. For its sub-advisory services, Fort Washington receives an annual sub-advisory fee paid by the Adviser of 0.40% of net assets for the initial $50 million in assets and 0.30% of net assets for assets in excess of $50 million. For the fiscal years ended July 31, 2009, July 31, 2010 and

54




July 31, 2011, the Adviser paid Fort Washington, as Subadviser to the High Yield Bond Fund, fees of $163,406, $205,789 and $245,202, respectively.

Administrator and Sub-Administrator


Fifth Third Asset Management, Inc. (the “Administrator”) is the Funds’ administrator which generally assists in all aspects of the Trust’s administration and operations including providing the Funds with certain administrative personnel and services necessary to operate the Funds. The Funds pay the Administrator administration fees at the annual rates set forth below which are computed daily and paid monthly based on average daily net assets of the Trust; the fees are prorated among the Funds based upon their relative average daily net assets. For certain Funds, the Administrator has voluntarily agreed to waive a portion of its net asset-based administration fee. In addition, a $10,000 annual per class per Fund fee applies beyond the first four classes per Fund, and each Fund that commences operations after September 18, 2002 is subject to an annual $20,000 minimum fee.


Administration Fee Trust Average Daily Net Assets
0.20% Up to $1 billion
0.18% In excess of $1 billion up to $2 billion
0.17% In excess of $2 billion

State Street Bank and Trust Company, State Street Financial Center, One Lincoln Street, Boston, MA 02111 is the Funds’ sub-administrator (the “Sub-Administrator”). The Sub-Administrator performs sub-administration services on behalf of each Fund for which it receives compensation from the Administrator.



The following shows administration fees incurred by the Funds, and the amounts of those fees that were waived by the Administrator for the fiscal years ended July 31, 2011, July 31, 2010 and July 31, 2009.


Fund Name Year
Ended
July 31, 2011 Fees
Waived-
2011 Year
Ended
July 31, 2010 Fees
Waived-
2010 Year
Ended
July 31, 2009 Fees
Waived- 2009
Small Cap Growth Fund $79,922 — $83,350 — $88,356 —
Mid Cap Growth Fund 156,570 $54,808 157,211 $87,047 200,192 $35,413
Quality Growth Fund 578,577 66,553 554,427 63,730 551,591 63,699
Dividend Growth Fund 11,265 — 13,755 — 20,587 —
Micro Cap Value Fund 83,018 — 58,475 — 45,287 —
Small Cap Value Fund 124,526 34,979 114,842 — 111,806 —
All Cap Value Fund 212,951 126,774 244,562 70,279 264,418 108,610
Disciplined Large Cap Value Fund 427,898 285,857 605,146 165,722 580,943 102,233
Structured Large Cap Plus Fund 151,732 44,943 145,635 62,810 154,580 —
Equity Index Fund 597,973 223,204 493,562 184,721 442,389 166,079
International Equity Fund 389,147 — 436,716 — 435,416 —
Strategic Income Fund 237,046 135,890 158,008 45,485 146,007 42,136

55



Fund Name Year
Ended
July 31, 2011 Fees
Waived- 2011 Year
Ended
July 31, 2010 Fees
Waived- 2010 Year
Ended
July 31, 2009 Fees
Waived- 2009
LifeModel Aggressive FundSM 201,704 — 203,214 — $196,155 —
LifeModel Moderately Aggressive FundSM 338,918 — 363,412 — 355,549 —
LifeModel Moderate FundSM 458,299 — 491,250 — 567,273 —
LifeModel Moderately Conservative FundSM 100,044 — 107,705 — 110,738 —
LifeModel Conservative FundSM 68,774 — 74,572 — 74,289 —
High Yield Bond Fund 113,152 — 90,590 — 70,767 —
Total Return Bond Fund 471,941 197,961 597,061 206,299 785,678 306,689
Short Term Bond Fund 468,729 347,769 461,130 183,956 388,739 —
Prime Money Market Fund 1,577,164 1,577,164 1,813,271 1,781,916 2,568,930 1,186,915
Institutional Money Market Fund 4,503,362 1,819,039 5,315,597 2,142,502 5,009,728 2,025,061
Institutional Government Money Market Fund 2,976,268 1,064,612 3,673,176 978,234 4,035,978 1,048,682
U.S. Treasury Money Market Fund 2,329,693 1,742,721 2,515,392 1,743,402 3,898,260 2,251,265



The following shows sub-administration fees paid by the Administrator to the Sub-Administrator for the fiscal years ended July 31, 2011, July 31, 2010 and July 31, 2009.


Fund Name Year
Ended
July 31,
2011 Year Ended
July 31, 2010 Year Ended
July 31, 2009
Small Cap Growth Fund $6,583 $10,662 $11,258
Mid Cap Growth Fund 10,611 15,285 18,439
Quality Growth Fund 32,738 40,109 41,194
Dividend Growth Fund 2,988 6,310 6,879
Micro Cap Value Fund 6,757 9,089 8,478
Small Cap Value Fund 8,921 12,622 12,771
All Cap Value Fund 13,528 20,744 22,626
Disciplined Large Cap Value Fund 24,718 43,231 43,082
Structured Large Cap Plus Fund 10,345 14,543 15,529
Equity Index Fund 36,156 41,027 38,930
International Equity Fund 22,730 33,366 34,274
Strategic Income Fund 14,836 15,279 14,981
LifeModel Aggressive FundSM 12,958 18,163 18,217
LifeModel Moderately Aggressive FundSM 20,139 28,220 28,511
LifeModel Moderate FundSM 26,381 36,169 42,194
LifeModel Moderately Conservative FundSM 7,634 12,189 12,700
LifeModel Conservative FundSM 5,998 10,112 10,349
High Yield Bond Fund* 8,332 11,101 10,122

56



Fund Name Year
Ended
July 31,
2011 Year Ended
July 31, 2010 Year Ended
July 31, 2009
Total Return Bond Fund $27,046 $42,868 $56,322
Short Term Bond Fund 26,089 33,189 29,669
Prime Money Market Fund 84,878 119,261 171,639
Institutional Money Market Fund 237,511 337,286 330,309
Institutional Government Money Market Fund 157,901 236,204 267,418
U.S. Treasury Money Market Fund 124,114 163,559 258,370

Fund Accountant and Sub-Accountant



Fifth Third Asset Management, Inc. serves as fund accountant for the Funds (the “Fund Accountant”). State Street Bank and Trust Company serves as the sub-fund accountant for the Funds (the “Sub-Accountant”). The Sub-Accountant maintains the Trust’s fund accounting records. The Funds pay the Fund Accountant accounting fees at the annual rates set forth below which are computed daily and paid monthly based on average daily net assets of each Fund, subject to a $30,000 per Fund annual minimum, plus out-of-pocket expenses. In addition, a $10,000 annual flat per class fee per Fund applies beyond the initial class of shares.

Accounting Fee Fund Average Daily Net Assets
0.020% Up to $500 million
0.015% $500 million and up to $1 billion
0.010% In excess of $1 billion


The following shows fund accounting fees incurred by the Funds for the fiscal years ended July 31, 2011, July 31, 2010 and July 31, 2009.


Fund Name Year Ended
July 31, 2011 Year Ended
July 31, 2010 Year Ended
July 31, 2009
Small Cap Growth Fund $64,257 $65,337 $ 62,774
Mid Cap Growth Fund 64,781 65,273 62,457
Quality Growth Fund 101,847 99,779 95,965
Dividend Growth Fund 64,356 64,974 62,233
Micro Cap Value Fund 65,836 66,423 63,451
Small Cap Value Fund 64,636 65,241 62,009
All Cap Value Fund 65,184 66,268 66,080
Disciplined Large Cap Value Fund 83,348 104,615 98,962
Structured Large Cap Plus Fund 69,192 69,692 69,790
Equity Index Fund 149,279 137,877 125,544
International Equity Fund 97,916 105,129 103,116
Strategic Income Fund 71,192 69,869 67,175
LifeModel Aggressive FundSM 61,468 61,955 58,851
LifeModel Moderately Aggressive FundSM 70,487 73,903 69,976
LifeModel Moderate FundSM 84,287 88,679 94,503
LifeModel Moderately Conservative FundSM 61,373 61,958 58,849
LifeModel Conservative FundSM 61,357 62,014 58,684
High Yield Bond Fund 73,570 72,839 67,701

57



Fund Name Year Ended
July 31, 2011 Year Ended
July 31, 2010 Year Ended
July 31, 2009
Total Return Bond Fund $101,090 $116,082 $137,783
Short Term Bond Fund 85,754 85,089 75,328
Prime Money Market Fund 214,728 216,303 257,844
Institutional Money Market Fund 391,183 421,970 402,035
Institutional Government Money Market Fund 299,381 324,161 342,883
U.S. Treasury Money Market Fund 259,384 254,353 333,705



The following shows sub-accounting fees paid by the Fund Accountant to the Sub-Accountant for the fiscal years ended July 31, 2011, July 31, 2010 and July 31, 2009.


Fund Name Year Ended
July 31, 2011 Year Ended
July 31, 2010 Year Ended
July 31, 2009
Small Cap Growth Fund $5,226 $8,393 $9,124
Mid Cap Growth Fund 7,951 11,492 13,799
Quality Growth Fund 25,912 31,139 31,661
Dividend Growth Fund 5,797 8,477 9,267
Micro Cap Value Fund 5,350 7,340 7,311
Small Cap Value Fund 6,807 9,707 10,113
All Cap Value Fund 9,917 15,152 16,541
Disciplined Large Cap Value Fund 17,461 30,233 29,891
Structured Large Cap Plus Fund 7,770 10,996 11,909
Equity Index Fund 29,009 33,502 32,457
International Equity Fund 19,127 26,212 26,746
Strategic Income Fund 10,814 11,490 11,556
LifeModel Aggressive FundSM 9,536 13,422 13,667
LifeModel Moderately Aggressive FundSM 14,388 20,165 20,389
LifeModel Moderate FundSM 18,605 25,481 29,327
LifeModel Moderately Conservative FundSM 5,937 9,417 10,068
LifeModel Conservative FundSM 4,831 8,025 8,535
High Yield Bond Fund* 6,411 8,687 8,386
Total Return Bond Fund 19,038 29,967 38,550
Short Term Bond Fund 18,135 22,516 20,008
Prime Money Market Fund 58,115 81,154 113,880
Institutional Money Market Fund 161,067 226,862 217,248
Institutional Government Money Market Fund 107,392 159,037 176,352
U.S. Treasury Money Market Fund 84,573 110,440 170,217

Custodian

State Street Bank and Trust Company is the custodian for the Funds (the “Custodian”). The Custodian holds each Fund’s portfolio securities and keeps all necessary records and documents relating to its duties. Fees for custody services are based upon the market value of Fund securities held in custody plus maintenance fees, transaction fees and out-of-pocket expenses.

58


Transfer and Dividend Disbursing Agent

Boston Financial Data Services, Inc., 30 Dan Road, Canton, Massachusetts 02021, serves as the transfer and dividend disbursing agent for the Funds (the “Transfer Agent”). The fees paid to the Transfer Agent are based upon the size, type and number of accounts and transactions made by shareholders. The Funds also reimburse the Transfer Agent for various out-of-pocket expenses.

Additional Services – Services Agent



Pursuant to a Services Agreement dated May 14, 2007, Fifth Third Asset Management, Inc. (the “Services Agent”) provides certain other transfer-agent related services for the Funds, for an annual fee of $370,000, payable monthly. For the fiscal years ended July 31, 2011, July 31, 2010 and July 31, 2009, the Services Agent earned $370,000, $370,000 and $370,000, respectively, in services agent fees.

Distributor

FTAM Funds Distributor, Inc. (the “Distributor”) serves as the Funds’ distributor and has a principal place of business at 1290 Broadway, Suite 1100, Denver, Colorado 80203. The Funds have entered into a distribution agreement (“Distribution Agreement”) under which the Distributor, as agent, sells shares for each Fund on a continuous basis. The Distributor has agreed to use appropriate efforts to solicit orders for the purchase of shares of each Fund, although it is not obligated to sell any particular amount of shares.

Distribution and Service Arrangements

Under the Rule 12b-1 Plan (the “Plan”) adopted in accordance with Rule 12b-1 under the 1940 Act with respect to the Class A, B and C shares of the Funds, each of the Funds may use its assets with respect to those classes of shares to finance activities relating to the distribution of its shares and the provision of certain shareholder services.

Pursuant to the Plan, the Trust will pay the Distributor: (i) with respect to the Class A shares of each Fund which has Class A shares a distribution fee at an annual rate up to 0.25 of 1.00% per annum of the average daily net assets of the Class A shares of such Fund; (ii) with respect to the Class B shares of each Fund which has Class B shares a distribution fee and a service fee at an annual rate equal to 0.75 of 1.00% per annum and 0.25 of 1.00% per annum, respectively, of the average daily net assets of the Class B shares of such Fund; and (iii) with respect to the Class C shares of each Fund which has Class C shares a distribution fee and a service fee at an annual rate equal to 0.75 of 1.00% per annum and up to 0.25 of 1.00% per annum, respectively, of the average daily net assets of the Class C shares of such Fund.

Under the terms of the Plan, the Plan continues from year to year with respect to each class of shares, provided such continuance is approved annually by vote of the Board, including a majority of the Trustees who are not “interested persons” (as defined in the 1940 Act) of the Trust and who have no direct or indirect financial interest in the Plan or any agreement related thereto (“Qualified Trustee”). All amendments of the Plan also must be approved by the

59


Trustees in the manner described above. The Plan may be terminated at any time, without penalty, by vote of a majority of the Qualified Trustees or by a vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the relevant class of the respective Fund. Pursuant to the Plan, the Distributor will provide the Board quarterly reports of amounts expended under the Plan and the purpose for which such expenditures were made.

The fees paid to the Distributor pursuant to the Plan for the Class A, B and C shares of the Funds are set forth in the tables below. To the extent a Fund is not listed in a table below, it made no payments to the Distributor under the Plan during the period shown.


Class A
Shares
Fiscal Year
Ended
July 31, 2011 Class A
Shares
Fiscal Year
Ended
July 31, 2010 Class A
Shares
Fiscal Year
Ended
July 31, 2009
Distribution
Fees Distribution
Fees Distribution
Fees
Small Cap Growth Fund $20,670 $17,607 $16,745
Mid Cap Growth Fund 37,366 30,765 30,960
Quality Growth Fund 160,920 157,020 153,355
Dividend Growth Fund 5,168 5,203 5,405
Micro Cap Value Fund 45,175 25,433 17,406
Small Cap Value Fund 5,847 3,939 3,076
All Cap Value Fund 84,576 91,944 82,919
Disciplined Large Cap Value Fund 28,490 28,552 28,799
Structured Large Cap Plus Fund 13,463 13,988 18,347
Equity Index Fund 106,744 102,329 100,001
International Equity Fund 27,032 28,448 29,534
Strategic Income Fund 55,979 41,552 27,011
LifeModel Aggressive FundSM 67,208 69,818 73,309
LifeModel Moderately Aggressive FundSM 151,012 167,553 169,602
LifeModel Moderate FundSM 100,900 114,021 129,456
LifeModel Moderately Conservative FundSM 36,637 39,681 45,697
LifeModel Conservative FundSM 23,107 24,982 25,543
High Yield Bond Fund 5,094 10,766 1,881
Total Return Bond Fund 35,866 38,278 42,666
Short Term Bond Fund 51,783 39,530 15,273
Prime Money Market Fund 01 10,7641 1,577,879



1.
The Distributor waived distribution fees of $1,008,228 and $1,170,999, respectively, for the fiscal year ended July 31, 2011 and July 31, 2010 to maintain a competitive yield for the Prime Money Market Fund.

60



Class B
Shares
Fiscal Year
Ended
July 31, 2011 Class B
Shares
Fiscal Year
Ended
July 31, 2010 Class B
Shares
Fiscal Year
Ended
July 31, 2009
Distribution and
Service Fees Distribution and
Service Fees Distribution and
Service Fees
Small Cap Growth Fund $3,002 $5,272 $5,607
Mid Cap Growth Fund 10,009 15,499 23,649
Quality Growth Fund 18,193 46,502 84,736
Dividend Growth Fund 600 1,197 1,398
Micro Cap Value Fund 7,757 16,043 19,509
Small Cap Value Fund 5,859 6,189 5,694
All Cap Value Fund 35,296 73,723 96,169
Disciplined Large Cap Value Fund 10,982 17,538 24,638
Structured Large Cap Plus Fund 1,738 3,001 4,400
Equity Index Fund 11,957 18,710 21,107
International Equity Fund 4,908 8,347 11,162
Strategic Income Fund 6,928 7,756 7,278
LifeModel Aggressive FundSM 64,352 75,987 85,498
LifeModel Moderately Aggressive FundSM 224,349 269,328 295,091
LifeModel Moderate FundSM 150,547 194,554 226,760
LifeModel Moderately Conservative FundSM 61,597 78,757 96,387
LifeModel Conservative FundSM 31,994 46,329 57,128
High Yield Bond Fund 950 846 898
Total Return Bond Fund 12,818 25,699 31,885
Prime Money Market Fund 01 1511 31,244



1. The Distributor waived distribution fees of $9,121 and $17,381, respectively, for the fiscal year ended July 31, 2011 and July 31, 2010 to maintain a competitive yield for the Prime Money Market Fund.



Class C
Shares
Fiscal Year
Ended
July 31, 2011 Class C
Shares
Fiscal Year
Ended
July 31, 2010 Class C
Shares
Fiscal Year
Ended
July 31, 2009
Distribution and
Service Fees Distribution and
Service Fees Distribution and
Service Fees
Small Cap Growth Fund $1,022 $1,128 $1,468
Mid Cap Growth Fund 3,617 2,197 3,016
Quality Growth Fund 8,820 10,604 13,673
Dividend Growth Fund 1,197 1,258 1,269
Micro Cap Value Fund 33,726 15,892 8,858
Small Cap Value Fund 11,646 3,868 2,589
All Cap Value Fund 29,470 36,506 40,887
Disciplined Large Cap Value Fund 3,522 5,017 6,863
Structured Large Cap Plus Fund 332 254 306
Equity Index Fund 8,524 8,590 9,691
International Equity Fund 2,263 2,643 3,024
Strategic Income Fund 108,681 77,286 55,555

61



Class C
Shares
Fiscal Year
Ended
July 31, 2011 Class C
Shares
Fiscal Year
Ended
July 31, 2010 Class C
Shares
Fiscal Year
Ended
July 31, 2009
Distribution and
Service Fees Distribution and
Service Fees Distribution and
Service Fees
LifeModel Aggressive FundSM $9,714 $9,420 $11,256
LifeModel Moderately Aggressive FundSM 23,256 24,489 29,270
LifeModel Moderate FundSM 21,376 20,564 22,888
LifeModel Moderately Conservative FundSM 7,725 8,284 10,787
LifeModel Conservative FundSM 7,919 10,919 13,433
High Yield Bond Fund 15,098 6,244 716
Total Return Bond Fund 5,506 5,697 6,348
Short Term Bond Fund 69,768 39,842 3,012
Prime Money Market Fund 01 551 7,427



1. The Distributor waived distribution fees of $1,397 and $2,245, respectively, for the fiscal year ended July 31, 2011 and July 31, 2010 to maintain a competitive yield for the Prime Money Market Fund.



The following amounts paid to the Distributor by the Funds under the Plan for Class A shares during the fiscal year ended July 31, 2011 were spent on:


Advertising Printing and
Mailing of
Prospectuses
to other than
Current
Shareholders Compensation
to
Underwriters Compensation
to Dealers Compensation
to Sales
Personnel Interest
Carrying
or other
Financing
Charges
Small Cap Growth Fund — — 569 24,485 — —
Mid Cap Growth Fund — — 4,119 68,949 — —
Quality Growth Fund — — 829 167,970 — —
Dividend Growth Fund — — 238 7,274 — —
Micro Cap Value Fund — — 6,805 103,055 — —
Small Cap Value Fund — — 1,558 19,575 — —
All Cap Value Fund — — 718 90,283 — —
Disciplined Large Cap Value Fund — — 365 31,364 — —
Structured Large Cap Plus Fund — — 54 13,950 — —
Equity Index Fund — — 375 109,888 — —
International Equity Fund — — 198 28,720 — —
Strategic Income Fund — — 20,256 213,093 — —
LifeModel Aggressive FundSM — — 1,566 80,557 — —
LifeModel Moderately Conservative FundSM — — 334 39,597 — —
LifeModel Moderate FundSM — — 1,477 114,286 — —
LifeModel Moderately Aggressive FundSM — — 3,717 183,087 — —

62



Advertising Printing and
Mailing of
Prospectuses
to other than
Current
Shareholders Compensation
to
Underwriters Compensation
to Dealers Compensation
to Sales
Personnel Interest
Carrying
or other
Financing
Charges
LifeModel Conservative FundSM — — 152 24,519 — —
High Yield Bond Fund — — 2,415 20,308 — —
Total Return Bond Fund — — 275 38,135 — —
Short Term Bond Fund — — 1,575 65,919 — —
Prime Money Market Fund — — — — — —



The following amounts paid to the Distributor by the Funds under the Plan for Class B shares during the fiscal year ended July 31, 2011 were spent on:


Advertising Printing and
Mailing of
Prospectuses
to other than
Current
Shareholders Compensation
to
Underwriters Compensation
to Dealers Compensation
to Sales
Personnel Interest
Carrying
or other
Financing
Charges
Small Cap Growth Fund — — — 3,002 — —
Mid Cap Growth Fund — — — 10,009 — —
Quality Growth Fund — — — 18,193 — —
Dividend Growth Fund — — — 600 — —
Micro Cap Value Fund — — — 7,756 — —
Small Cap Value Fund — — — 5,859 — —
All Cap Value Fund — — — 35,296 — —
Disciplined Large Cap Value Fund — — — 10,982 — —
Structured Large Cap Plus Fund — — — 1,738 — —
Equity Index Fund — — — 11,957 — —
International Equity Fund — — — 4,908 — —
Strategic Income Fund — — — 6,928 — —
LifeModel Aggressive FundSM — — — 64,347 — —
LifeModel Moderately Conservative FundSM — — — 61,597 — —
LifeModel Moderate FundSM — — — 150,547 — —
LifeModel Moderately Aggressive FundSM — — — 224,349 — —
LifeModel Conservative FundSM — — — 31,994 — —
High Yield Bond Fund — — — 950 — —
Total Return Bond Fund — — — 12,818 — —
Short Term Bond Fund — — — — — —
Prime Money Market Fund — — — — — —

63




The following amounts paid to the Distributor by the Funds under the Plan for Class C shares during the fiscal year ended July 31, 2011 were spent on:


Advertising Printing and
Mailing of
Prospectuses
to other than
Current
Shareholders Compensation
to
Underwriters Compensation
to Dealers Compensation
to Sales
Personnel Interest
Carrying
or other
Financing
Charges
Small Cap Growth Fund — — — 1,022 — —
Mid Cap Growth Fund — — — 3,617 — —
Quality Growth Fund — — — 8,820 — —
Dividend Growth Fund — — — 1,197 — —
Micro Cap Value Fund — — — 33,726 — —
Small Cap Value Fund — — — 11,646 — —
All Cap Value Fund — — — 29,470 — —
Disciplined Large Cap Value Fund — — — 3,522 — —
Structured Large Cap Plus Fund — — — 332 — —
Equity Index Fund — — — 8,523 — —
International Equity Fund — — — 2,263 — —
Strategic Income Fund — — — 108,681 — —
LifeModel Aggressive FundSM — — — 9,714 — —
LifeModel Moderately Conservative FundSM — — — 7,725 — —
LifeModel Moderate FundSM — — — 21,376 — —
LifeModel Moderately Aggressive FundSM — — — 23,256 — —
LifeModel Conservative FundSM — — — 7,918 — —
High Yield Bond Fund — — — 15,098 — —
Total Return Bond Fund — — — 5,506 — —
Short Term Bond Fund — — — 69,767 — —
Prime Money Market Fund — — — — — —

With respect to all share classes offered by the Trust, these classes of shares are designed for shareholders who may be investing through financial institutions that are providing additional services to such shareholders. These institutions may select whichever class most appropriately compensates them for the level of services they are providing and may be dependent on other fees charged to their clients. Such selection may not represent the least expensive class available to shareholders. The Funds seek to provide flexibility to financial institutions in levels of compensation they may receive from shareholders but are not able to verify that financial institutions are offering the most appropriate share class to their clients.

64


Administrative Services Agreement



With respect to Class C Shares, Select Shares, Preferred Shares and Trust Shares, the Trust has entered into an Administrative Service Agreement to permit the payment of non 12b-1 fees to the Distributor to cause services to be provided to shareholders by a representative who has knowledge of the shareholder’s particular circumstances and goals. These non 12b-1 fees are paid at the following amounts: Class C Shares - up to 0.25%, Select Shares - up to 0.08%, Preferred Shares - up to 0.15% and Trust Shares - up to 0.25%. Benefits to shareholders of Class C Shares, Select Shares, Preferred Shares and Trust Shares of the Funds may include: (1) providing personal services to shareholders; (2) processing shareholder transactions with a minimum of delay and administrative detail; (3) enhancing shareholder recordkeeping systems; (4) responding promptly to shareholders’ requests and inquiries concerning their accounts; and (5) providing such other services as necessary to service shareholder accounts. These classes of shares are designed for shareholders who may be investing through financial institutions that are providing additional services to such shareholders. These institutions may select whichever class most appropriately compensates them for the level of services they are providing and may be dependent on other fees charged to their clients. Such selection may not represent the least expensive class available to shareholders. The Funds seek to provide flexibility to financial institutions in levels of compensation they may receive from shareholders but are not able to verify that financial institutions are offering the most appropriate share class to their clients. For the fiscal year ended July 31, 2011, the Distributor was paid $124,396, $250,923, $121,794 and $254,641, for Class C Shares, Preferred Shares, Select Shares and Trust Shares, respectively. The Distributor waived $465, $733,170, $89,805 and $831,992, for Class C Shares, Preferred Shares, Select Shares and Trust Shares, respectively.

Legal Counsel

Vedder Price P.C., 222 North LaSalle Street, Chicago, IL 60601 is counsel to the Funds.

Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP, 1100 Walnut, Suite 1300, Kansas City, Missouri 64106, serves as the Funds’ independent registered public accounting firm. PricewaterhouseCoopers LLP will audit and report on the Funds’ annual financial statements, and may perform other professional tax, accounting, auditing and advisory services when engaged to do so by the Funds.

PORTFOLIO MANAGER INFORMATION

The portfolio managers identified under “Fund Management – Portfolio Managers” in each Prospectus are responsible for the day-to-day management of the Funds. Each portfolio manager also has responsibility for the day-to-day management of accounts other than the Fund(s) for which he or she serves as portfolio manager. Information regarding these accounts is set below.

65



Number of Other Accounts Managed and Assets by Account Type
as of July 31, 2011
Other Registered Other Pooled Investment
Portfolio Manager Investment Companies Vehicles Other Accounts
Michael Barr Number: 0 Number: 0 Number: 0
Assets: None Assets: None Assets: None
Helena Beltran-Lopez Number: 0 Number: 1 Number: 3
Assets: None Assets: $167,107,226.65 Assets: $29,769,819.44
Samrat Bhattacharya Number: 0 Number: 1 Number: 3
Assets: None Assets: $167,107,226.65 Assets: $29,769,819.44
Scott A. Billeadeau Number: 0 Number: 0 Number: 9
Assets: None Assets: None Assets: $51,343,074.59
John L. Cassady III Number: 0 Number: 3 Number: 167
Assets: None Assets: $118,906,310.63 Assets: $2,618,093,524.88
Mark Demos Number: 0 Number: 1 Number: 156
Assets: None Assets: $86,259,746.21 Assets: $897,883,535.81
Amy Denn Number: 0 Number: 1 Number: 147
Assets: None Assets: $86,259,746.21 Assets: $868,843,990.62
Jon Fisher Number: 0 Number: 1 Number: 156
Assets: None Assets: $86,259,746.21 Assets: $897,883,535.81
Martin E. Hargrave Number: 0 Number: 0 Number: 8
Assets: None Assets: None Assets: $43,721,782.59
John P. Hoeting Number: 0 Number: 2 Number: 76
Assets: None Assets: $60,211,555.89 Assets: $1,893,131,103.78
Eric J. Holmes Number: 0 Number: 0 Number: 9
Assets: None Assets: None Assets: $79,670,791.75
Michael Kemer Number: 0 Number: 2 Number: 76
Assets: None Assets: $60,211,555.89 Assets: $1,893,131,103.78
Peter M. Klein Number: 0 Number: 0 Number: 209
Assets: None Assets: None Assets: $163,770,722.95
Mark Koenig Number: 0 Number: 1 Number: 3
Assets: None Assets: $167,107,226.65 Assets: $29,769,819.44
Peter Kwiatkowski Number: 0 Number: 0 Number: 31
Assets: None Assets: None Assets: $1,160,819,777.82
Mary Jane Matts Number: 0 Number: 1 Number: 58
Assets: None Assets: $4,589,131.29 Assets: $567,375,833.48
Mirko M. Mikelic Number: 0 Number: 3 Number: 167
Assets: None Assets: $118,906,310.63 Assets: $2,618,093,524.88
Edward Moore Number: 0 Number: 1 Number: 58
Assets: None Assets: $4,589,131.29 Assets: $567,375,833.48
Craig P. Nedbalski Number: 0 Number: 0 Number: 9
Assets: None Assets: None Assets: $79,670,791.75
Dan Popowics Number: 0 Number: 0 Number: 40
Assets: None Assets: None Assets: $1,189,859,323.01
Scott Richter Number: 0 Number: 1 Number: 58
Assets: None Assets: $4,589,131.29 Assets: $567,375,833.48
Jason Schwartz Number: 0 Number: 3 Number: 162
Assets: None Assets: $118,906,310.63 Assets: $2,497,737,622.01
Mitchell L. Stapley Number: 0 Number: 3 Number: 168
Assets: None Assets: $118,906,310.63 Assets: $2,625,714,816.88
Zhiqiang Sun Number: 0 Number: 1 Number: 3
Assets: None Assets: $167,107,226.65 Assets: $29,769,819.44
Michael P. Wayton Number: 0 Number: 1 Number: 3
Assets: None Assets: $167,107,226.65 Assets: $29,769,819.44

66



Number of Other Accounts Managed and Assets by Account Type
as of July 31, 2011
Other Registered Other Pooled Investment
Portfolio Manager Investment Companies Vehicles Other Accounts
E. Keith Wirtz Number: 0 Number: 0 Number: 1
Assets: None Assets: None Assets: $7,621,292
David L. Withrow Number: 0 Number: 3 Number: 167
Assets: None Assets: $118,906,310.63 Assets: $2,618,093,524.88
Timothy J. Jossart Number: 2 Number: 2 Number: 21
Assets: $220,022,959 Assets: $312,201,717 Assets: $3,228,477,995
Brendan M. White Number: 2 Number: 2 Number: 21
Assets: $220,022,959 Assets: $312,201,717 Assets: $3,228,477,995

None of the portfolio managers are responsible for managing any accounts for which the advisory fee is based on performance.

Conflicts of Interest

From time to time, potential conflicts of interest may arise between a portfolio manager’s management of the investments of a Fund and the management of other registered investment companies, pooled investment vehicles and other accounts (collectively, the “Managed Accounts”). The Managed Accounts might have similar investment objectives or strategies as the Fund, track the same indexes the Fund tracks or otherwise hold, purchase, or sell securities that are eligible to be held, purchased or sold by the Fund. The Managed Accounts might also have different investment objectives or strategies than the Fund.

Knowledge and Timing of Fund Trades. A potential conflict of interest may arise as a result of the portfolio manager’s day-to-day management of a Fund. The portfolio manager knows the size, timing and possible market impact of the Fund’s trades and could use this information to the advantage of the Managed Accounts and to the possible detriment of the Fund.



Investment Opportunities. A potential conflict of interest may arise as a result of the portfolio manager’s management of a number of accounts with varying investment guidelines. Often, an investment opportunity may be suitable for both the Fund and the Managed Accounts, but may not be available in sufficient quantities for both the Fund and the Managed Accounts to participate fully. Similarly, there may be limited opportunity to sell an investment held by the Fund and a Managed Account. Fifth Third Asset Management, Inc. has adopted policies and procedures reasonably designed to allocate investment opportunities on a fair and equitable basis over time.

Portfolio Manager Compensation. Because the portfolio managers manage assets for other investment companies, pooled investment vehicles, and/or other accounts (including institutional clients, pension plans and certain high net worth individuals), there may be an incentive to favor one client over another resulting in conflicts of interest. For instance, the Adviser or Subadviser may receive fees from certain accounts that are higher than the fee it receives from the Funds, or it may receive a performance-based fee on certain accounts. In those instances, the portfolio managers may have an incentive to favor the higher and/or performance-based fee accounts over the Funds. The Adviser and Subadviser have adopted

67


trade allocation and other policies and procedures that they believe are reasonably designed to address these and other conflicts of interest.

Portfolio Manager Compensation

Fifth Third Asset Management, Inc.



Each FTAM portfolio manager’s compensation generally consists of a base salary, a cash incentive bonus and certain Fifth Third Bancorp long-term, non-cash incentives. Portfolio managers are also eligible for the standard retirement, health and welfare benefits available to all FTAM and Fifth Third Bancorp employees. In the case of portfolio managers responsible for managing multiple Funds and/or other FTAM advisory accounts, the method used to determine manager compensation is the same for all such Funds and other accounts.

Portfolio manager base salaries are based upon the manager’s experience and level of expertise, taking into account ongoing compensation benchmark analyses performed by FTAM’s human resource specialists. A portfolio manager’s base salary is generally a fixed amount that may change as a result of periodic performance reviews, upon assumption of new duties, or when a market adjustment of the position is deemed by management to be warranted.

A portfolio manager’s bonus is determined by a number of factors. The most important factor is the gross, pre-tax performance over rolling 3-year periods of the managed Funds and other accounts versus the applicable benchmarks against which the performance of the relevant asset class or classes are measured. No incentive bonus is earned under this factor unless the manager outperforms such benchmark(s). Another factor makes such comparison over the most recent one-year period and takes other, more subjective, components and factors into account, including but not limited to client involvement and interaction, client retention and the portfolio manager’s compliance record.

The applicable benchmarks for each Fund, which may include modified versions of the index and/or blends of multiple indexes, are as follows:



Fund Name
Index
Small Cap Growth Fund Russell 2000® Growth Index
Mid Cap Growth Fund Russell Midcap® Growth Index
Quality Growth Fund Russell 1000® Growth Index
Dividend Growth Fund S&P 500® Index
Micro Cap Value Fund Russell 2000® Value Index, Russell Microcap® Value Index
Small Cap Value Fund Russell 2000® Value Index
All Cap Value Fund Russell 3000® Value Index, Russell Midcap® Value Index
Disciplined Large Cap Value Fund Russell 1000® Value Index
Structured Large Cap Plus Fund S&P 500® Index, Russell 1000® Index
Equity Index Fund S&P 500® Index
International Equity Fund Morgan Stanley Capital International EAFE Index, Net

68




Fund Name
Index
Strategic Income Fund Barclays Capital U.S. Aggregate Bond Index
LifeModel Aggressive FundSM LifeModel Aggressive Target Neutral 90% Russell 3000® Index/10% Barclays Capital U.S. Intermediate Government/Credit Bond Index Blend, Barclays Capital U.S. Intermediate Government/Credit Bond Index and Russell 3000® Index,
LifeModel Moderately Aggressive FundSM LifeModel Moderately Aggressive Target Neutral 70% Russell 3000® Index/30% Barclays Capital U.S. Intermediate Government/Credit Bond Index® Blend, Barclays Capital U.S. Intermediate Government/Credit Bond Index and Russell 3000® Index
LifeModel Moderate FundSM LifeModel Moderate Target Neutral 50% Russell 3000® Index/50% Barclays Capital U.S. Intermediate Government/Credit Bond Index Blend, Barclays Capital U.S. Intermediate Government/Credit Bond Index and Russell 3000® Index
LifeModel Moderately Conservative FundSM LifeModel Moderately Conservative Target Neutral 40% Russell 3000® Index/60% Barclays Capital U.S. Intermediate Government/Credit Bond Index Blend, Barclays Capital U.S. Intermediate Government/Credit Bond Index and Russell 3000® Index
LifeModel Conservative FundSM LifeModel Conservative Target Neutral 20% Russell 3000® Index/80% Barclays Capital U.S. Intermediate Government/Credit Bond Index Blend, Barclays Capital U.S. Intermediate Government/Credit Bond Index and Russell 3000® Index
High Yield Bond Fund BofA Merrill Lynch U.S. High Yield, Cash Pay Index
Total Return Bond Fund Barclays Capital U.S. Aggregate Bond Index
Short Term Bond Fund BofA Merrill Lynch 1-3 Year Government/Corporate Bond Index

Portfolio managers also are eligible to participate in Fifth Third Bancorp long-term, non-cash incentive programs. Such incentives have taken the form of non-transferable restricted stock grants and stock appreciation rights and are awarded to eligible participants on the basis of Fifth Third Bancorp’s overall financial performance.

Fort Washington Investment Advisors, Inc.

All portfolio managers receive a fixed base salary and annual performance bonuses. Bonuses are based primarily on the overall performance of Fort Washington as well as the pretax performance (relative to Merrill Lynch High Yield Master Index, the benchmark for the High Yield Bond Fund) of their respective asset category over a one-year and a three-year time horizon. Secondarily, portfolio managers are also assessed on their ability to retain clients and attract new clients. Additionally a long-term retention plan was instituted in 2000, whereby

69


certain investment professionals are periodically granted participation units with a 7-year cliff vesting schedule. The structure includes long-term vesting provisions. The percentage of compensation allocated to performance bonuses, asset-increase incentives and long-term incentive compensation is determined annually by the firm’s President and approved by the Board of Directors.

Securities Ownership



The following table discloses the dollar range of equity securities beneficially owned by the portfolio managers in each of the Funds for which they are primarily responsible as of July 31, 2011:


Name of Portfolio Manager Fund Dollar Range of
Equity Securities*
Michael Barr, CFA All Cap Value Fund None
Micro Cap Value Fund None
Small Cap Value Fund None
Helena Beltran-Lopez, Ph.D. International Equity Fund None
Samrat Bhattacharya, Ph.D. Structured Large Cap Plus Fund None
Scott A. Billeadeau, CFA LifeModel Aggressive FundSM $10,001-$50,000
LifeModel Conservative FundSM None
LifeModel Moderate FundSM None
LifeModel Moderately Aggressive FundSM $1-$10,000
LifeModel Moderately Conservative FundSM None
Small Cap Growth Fund $10,001-$50,000
John L. Cassady III, CFA Strategic Income Fund None
Short Term Bond Fund None
Total Return Bond Fund None
Mark Demos, CFA Quality Growth Fund $50,001-$100,000
Mid Cap Growth Fund None
Amy Denn Dividend Growth Fund None
Quality Growth Fund $100,001-$500,000
Strategic Income Fund None
Jon Fisher, CFA Mid Cap Growth Fund None
Quality Growth Fund $100,001-$500,000
Martin E. Hargrave, CFA Small Cap Growth Fund $1-$10,000
John P. Hoeting Short Term Bond Fund None
Eric J. Holmes, CFA All Cap Value Fund None
Micro Cap Value Fund $50,001-$100,000
Small Cap Value Fund $50,001-$100,000
Timothy J. Jossart, CFA High Yield Bond Fund None
Peter M. Klein, CFA All Cap Value Fund $10,001-$50,000
Michael Kemer Short Term Bond Fund None
Total Return Bond Fund None

70



Name of Portfolio Manager Fund Dollar Range of
Equity Securities
Mark Koenig, CFA Equity Index Fund None
International Equity Fund $10,001-$50,000
Structured Large Cap Plus Fund $1-$10,000
Peter Kwiatkowski, CFA Dividend Growth Fund $10,001-$50,000
Strategic Income Fund None
Mary Jane Matts, CFA All Cap Value Fund $10,001-$50,000
Disciplined Large Cap Value $50,001-$100,000
Mirko M. Mikelic Strategic Income Fund None
Total Return Bond Fund None
Ted Y. Moore, CFA All Cap Value Fund $10,001-$50,000
Disciplined Large Cap Value $10,001-$50,000
Craig P. Nedbalski, CFA All Cap Value Fund $1-$10,000
Micro Cap Value Fund $50,001-$100,000
Small Cap Value Fund $50,001-$100,000
Dan Popowics, CFA Dividend Growth Fund $1-$10,000
Mid Cap Growth Fund $10,001-$50,000
Strategic Income Fund $10,001-$50,000
Scott G. Richter, CFA All Cap Value Fund None
Disciplined Large Cap Value $1-$10,000
Jason M. Schwartz, CFA Strategic Income Fund None
Short Term Bond Fund None
Total Return Bond $1-$10,000
Mitchell L. Stapley, CFA High Yield Bond Fund None
LifeModel Aggressive FundSM None
LifeModel Conservative FundSM None
LifeModel Moderate FundSM None
LifeModel Moderately Aggressive FundSM None
LifeModel Moderately Conservative FundSM None
Short Term Bond Fund None
Strategic Income Fund $100,001-$500,000
Total Return Bond Fund None
Zhiqiang Sun. Ph.D. Equity Index Fund $10,001-$50,000
International Equity Fund $10,001-$50,000
Michael P. Wayton, CFA Equity Index Fund $50,001-$100,000
Structured Large Cap Plus Fund None
Brendan M. White, CFA High Yield Bond Fund None
E. Keith Wirtz, CFA LifeModel Aggressive FundSM None
LifeModel Conservative FundSM None
LifeModel Moderate FundSM None
LifeModel Moderately Aggressive FundSM $100,001-$500,000

71



Name of Portfolio Manager Fund Dollar Range of
Equity Securities
LifeModel Moderately Conservative FundSM None
Dave L. Withrow, CFA Short Term Bond Fund None
Strategic Income Fund None
Total Return Bond Fund $10,001-$50,000

*
The Adviser maintains a deferred compensation plan for, among others, the portfolio managers. Pursuant to such plan, the portfolio managers may be deemed to be invested in shares of the Funds. Such deemed investments are not included in the table.

PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS

The Adviser selects brokers and dealers to handle the purchase and sale of portfolio instruments for the Funds. In selecting brokers and dealers to effect portfolio transactions for the Funds, the Adviser seeks to obtain the best combination of price and execution. The best net price, giving effect to brokerage commissions, spreads and other costs, is normally an important factor in this decision, but the Adviser may consider various other factors as it deems relevant. These factors may include, without limitation: (1) the Adviser’s knowledge of negotiated commission rates and spreads currently available; (2) the nature of the security being traded; (3) the size and type of transaction; (4) the nature and character of the market for the security; (5) the desired timing of the trade; (6) the activity existing and expected in the market for the security; (7) confidentiality and anonymity; (8) execution, (9) clearance and settlement capabilities, as well as the reputation and perceived soundness of the brokers/dealers selected and others which are considered; (10) the Adviser’s knowledge of actual or apparent broker/dealer operational problems; (11) the broker/dealer’s execution services rendered on a continuing basis and in other transactions; and (12) the reasonableness of spreads or commissions. The Adviser also may consider the quality of research and/or services provided by executing broker/dealers, as discussed below. The Adviser maintains procedures for monitoring best execution, and routinely reviews commission rates and execution and settlement services provided by various broker/dealers in order to determine their competitiveness. The Adviser is not permitted to consider sales of shares of the Funds as a factor in the selection of broker-dealers to execute portfolio transactions for the Funds.



In reliance on the “safe harbor” provided by Section 28(e) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), the Adviser may cause the Funds to pay broker/dealers providing the Funds with brokerage and research services (as defined in the 1934 Act) an amount of commission for effecting portfolio transactions in excess of the commission another broker/dealer would have charged for effecting the transaction. These brokerage and research services may include, without limitation, written and oral reports on the economy, industries, sectors and individual companies or issuers; appraisals and analyses relating to markets and economic factors; statistical information; accounting and tax law interpretations; political analyses; reports on legal developments affecting portfolio securities; information on technical market actions; credit analyses; on-line quotation and trading systems; risk measurement; analyses of corporate responsibility issues; on-line news services; and financial and market database services. Generally, the Adviser may use brokerage and research services to benefit the Funds as well as other investment accounts managed by the Adviser or its affiliates. The Adviser may not necessarily use all brokerage and research services received to benefit the particular Fund paying the brokerage commissions that gave rise to the receipt of such services.

72


The determination and evaluation of the reasonableness of brokerage commissions paid in connection with portfolio transactions are based primarily on the professional opinions of the advisory personnel responsible for the placement and review of such transactions. These opinions are formed on the basis of, among other things, the experience of these individuals in the securities industry and information available to them concerning the level of commissions being paid by other investors of comparable size and type. The Adviser may select broker/dealers based on its assessment of their ability to provide quality executions and its belief that the research, information and other services provided by such broker/dealer may benefit the Funds. It is not possible to place a precise dollar value on the special executions or on the brokerage and research services the Adviser receives from broker/dealers effecting transactions in portfolio securities. Accordingly, broker/dealers selected by the Adviser may be paid commissions for effecting portfolio transactions in excess of amounts other broker/dealers would have charged for effecting similar transactions if the Adviser determines in good faith that such amounts are reasonable in relation to the value of the brokerage and/or research services provided by those broker/dealers.


Selected products or services provided by broker/dealers may have multiple uses, including administrative, marketing or other uses which do not constitute brokerage or research services within the meaning of Section 28(e) of the 1934 Act. Such products or services are generally referred to as “mixed-use” items. The Adviser evaluates mixed-use products and services and will attempt to make a reasonable allocation of the cost of the product or service according to its use. The Adviser may consider various objective factors in making such an allocation, such as the amount of time that the product or service is used, for an eligible purpose within the meaning of Section 28(e) of the 1934 Act. A conflict of interest may arise in allocating the cost of mixed-use items between research and non-research purposes. The proportion of products and services attributable to eligible brokerage or research services will be paid through brokerage commissions generated by Fund transactions; the portion attributable to ineligible products and services will be paid by the Adviser from its own resources. Although the allocation of mixed-use items is not precisely determined, the Adviser makes a good faith effort to fairly allocate such items.

The Adviser evaluates brokerage and research services provided by broker/dealer firms on at least an annual basis. The evaluation criteria focus upon the quality and quantity of brokerage and research services provided by such broker/dealer firms and whether the commissions paid for such services are fair and reasonable.

The allocation of portfolio transactions, including their frequency, to various dealers is determined by the Adviser in its best judgment and in a manner deemed fair and reasonable to shareholders. The major consideration in allocating brokerage business is the assurance that best execution is being received on all transactions effected for all accounts.

Although investment decisions for the Funds are made independently from those of the other accounts managed by the Adviser, the Adviser may invest Fund assets in the same securities and at the same time as they invest assets of other accounts that they manage. When one of the Funds and one or more other accounts managed by the Adviser or its affiliates are prepared to invest in, or desire to dispose of, the same security, available investments or opportunities for sales will be allocated in a manner believed by the Adviser to be equitable to

73


each. In some cases, this procedure may affect the price paid or shares received by the Funds or the size of the position obtained or disposed of by the Funds. Generally, it is believed that coordination and the ability to participate in volume transactions will be to the benefit of the Funds.



The following table shows the amount of brokerage commissions paid by the Funds to brokers who provide research services to the Funds, and the total amounts of the transactions pursuant to which such commissions were paid, for the fiscal year ended July 31, 2011:


Fund Commissions Paid on
Transactions Directed
to Firms Providing
Research
July 31, 2011 Amount of Transactions
Directed to Firms
Providing
Research
July 31, 2011
Small Cap Growth Fund $233,700 $78,334,133
Mid Cap Growth Fund 241,289 217,248,322
Quality Growth Fund 542,978 599,632,288
Dividend Growth Fund 10,075 9,601,587
Micro Cap Value Fund 281,727 58,206,339
Small Cap Value Fund 502,825 138,892,929
All Cap Value Fund 460,370 182,455,001
Disciplined Large Cap Value Fund 885,486 521,528,917
Structured Large Cap Plus Fund 671,790 361,271,758
Equity Index Fund 4,610 4,600,729
International Equity Fund 930,042 652,783,318
Strategic Income Fund 91,465 51,770,274
High Yield Bond Fund 2,188 348,012
Total Return Bond Fund 8,307 2,062,529
Short Term Bond Fund 917 917

The following table shows the aggregate amount of brokerage commissions paid by each Fund for the fiscal years ended July 31 of each year shown:


Fund Total Brokerage
Commissions
Paid
July 31, 2011 Total Brokerage
Commissions
Paid
July 31, 2010 Total Brokerage
Commissions
Paid
July 31, 2009
Small Cap Growth Fund 235,863 $ 302,718 $ 287,186
Mid Cap Growth Fund 241,289 297,048 287,097
Quality Growth Fund 553,672 445,319 335,140
Dividend Growth Fund 10,075 13,823 43,105
Micro Cap Value Fund 282,039 189,283 179,363
Small Cap Value Fund 503,375 318,622 335,973
All Cap Value Fund 460,370 271,610 401,320
Disciplined Large Cap Value Fund 885,486 612,929 1,050,202
Structured Large Cap Plus Fund 671,790 541,889 415,235
Equity Index Fund 4,610 14,520 20,002
International Equity Fund 930,042 — 813,651
Strategic Income Fund 91,465 35,827 44,234

74



Fund Total Brokerage
Commissions
Paid
July 31, 2011 Total Brokerage
Commissions
Paid
July 31, 2010 Total Brokerage
Commissions
Paid
July 31, 2009
LifeModel Aggressive FundSM — — —
LifeModel Moderately Aggressive FundSM — — —
LifeModel Moderate FundSM — — —
LifeModel Moderately Conservative FundSM — — —
LifeModel Conservative FundSM — — —
High Yield Bond Fund 2,188 — —
Total Return Bond Fund 8,308 4,267 7,925
Short Term Bond Fund 917 815 4,483
Prime Money Market Fund — — —
Institutional Money Market Fund — — —
Institutional Government Money Market Fund — — —
U.S. Treasury Money Market Fund — — —

For each of the three most recent fiscal years, none of the Funds paid brokerage commissions to any affiliated broker.



During the fiscal year ended July 31, 2011, the Funds acquired securities of certain of the Funds’ regular broker dealers or the parents of such firms. The aggregate holdings of the Funds of those brokers or dealers as of July 31, 2011 (amounts in thousands, except shares) were as follows:


Broker/Dealer Fund Shares Principal($) Market
Value($)
Banc of America Securities LLC
Equity Index Fund 305,470 2,966
Total Return Bond Fund 1,505 1,614
Short Term Bond Fund 3,357 3,428
Institutional Government Money Market Fund 77,978 78,159

Barclays Capital, Inc. International Equity Fund 65,476 240

Bear Stearns Securities Corp. Strategic Income Fund 357 369
Total Return Bond Fund 2,000 2,142
Short Term Bond Fund 4,266 4,282
Prime Money Market Fund 19,108 19,312
Institutional Money Market Fund 40,645 41,130

BMO Nesbitt Burns, Inc. U.S. Treasury Money Market Fund 225,000 225,000


75



Broker/Dealer Fund Shares Principal($) Market
Value($)
BNY Capital Markets Inc. Equity Index Fund 37,188 934

Citigroup Global Markets, Inc. All Cap Value Fund 55,687 2,135
Disciplined Large Cap Value Fund 213,084 8,170
Structured Large Cap Plus Fund 16,536 634
Equity Index Fund 87,965 3,373
Strategic Income Fund 94,225 1,443 3,989
Total Return Bond Fund 6,461 7,114
Short Term Bond Fund 1200 1,272
Institutional Money Market Fund 10,000 10,121
Institutional Government Money Market Fund 48,265 48,529

Deutsche Bank Securities, Inc. International Equity Fund 30,092 1,666
Strategic Income Fund 36,000 1,000 1,922
Short Term Bond Fund 1,500 1,523
Prime Money Market Fund 30,000 30,000
Institutional Money Market Fund 20,000 20,000
Institutional Government Money Market Fund 70,000 70,000
U.S. Treasury Money Market Fund 80,000 80,000

Goldman Sachs & Co. All Cap Value Fund 13,220 1,784
Disciplined Large Cap Value Fund 39,021 5,267
Equity Index Fund 15,643 2,111
Strategic Income Fund 67,500 101 1,480
Total Return Bond Fund 997 1,008
Short Term Bond Fund 1,754 1,839
Prime Money Market Fund 1,111,356 15,000 16,111
Institutional Money Market Fund 1,284,855 5,000 6,285
Institutional Government Money Market Fund 287,026 145,050 145,346
U.S. Treasury Money Market Fund 1,908,234 11,260 13,178

JPMorgan Chase & Co. Quality Growth Fund 90,000 124 3,759
Dividend Growth Fund 3,132 127
All Cap Value Fund 93,943 3,800
Structured Large Cap Plus Fund 28,272 1,144
Equity Index Fund 119,688 4,841
Strategic Income Fund 32,300 1,700 2,642
Total Return Bond Fund 8,194 7,669
Short Term Bond Fund 10,714 10,559
U.S. Treasury Money Market Fund 24,700 24,862


76



Broker/Dealer Fund Shares Principal($) Market
Value($)
Merrill Lynch, Pierce, Fenner, & Smith Strategic Income Fund 24,800 701 1,305
Short Term Bond Fund 54 54

Morgan Stanley Group, Inc. Equity Index Fund 46,546 1,036
Strategic Income Fund 33,100 1,000 1,810
Total Return Bond Fund 2,455 2,546
Short Term Bond Fund 2,620 2,727
Prime Money Market Fund 8,500 8,514
Institutional Money Market Fund 18,000 18,030
Institutional Government Money Market Fund 4,600 4,608

Nomura Securities Total Return Bond Fund 1,000 1,070

State Street Bank and Trust Company Small Cap Growth Fund 11,290,374 11,290
Mid Cap Growth Fund 13,498,752 13,499
Quality Growth Fund 25,597,813 25,598
Dividend Growth Fund 399,739 400
All Cap Value Fund 9,200,628 9,201
Disciplined Large Cap Value Fund 4,063,593 4,064
Equity Index Fund 15,950,655 16,560
International Equity Fund 13,237,888 13,238
High Yield Bond Fund 13,396,035 13,396
Total Return Bond Fund 20,471,450 20,471
Short Term Bond Fund 39,113,846 1,400 40,635
Prime Money Market Fund 19,125 19,125
Institutional Money Market Fund 62,000 61,994
Institutional Government Money Market Fund 7,400 7,402
U.S. Treasury Money Market Fund 6,550 6,552

Toronto Dominion Bank Prime Money Market Fund 60,000 60,000
Institutional Money Market Fund 160,000 160,000
Institutional Government Money Market Fund 95,000 95,000
U.S. Treasury Money Market Fund 240,000 240,000

UBS Warburg LLC Prime Money Market Fund 23,570 23,570
Institutional Money Market Fund 17,541 17,541
Institutional Government Money Market Fund 147,860 147,860
U.S. Treasury Money Market Fund 131,163 131,163

PURCHASING SHARES

Shares of the Funds are sold at their net asset value, less any applicable sales charge, on days the New York Stock Exchange (“NYSE”) and the Federal Reserve Bank of Cleveland are open for business. The procedure for purchasing shares of the Funds is explained in the Prospectus for such Fund and Class under “Investing in the Funds.”

77


Conversion to Federal Funds

It is the Funds’ policy to be as fully invested as possible so that maximum interest or dividends may be earned. To this end, all payments from shareholders must be in federal funds or be converted into federal funds. Fifth Third Bank acts as the shareholder’s agent in depositing checks and converting them to federal funds.

Exchanging Securities for Fund Shares



Investors may, in certain circumstances as permitted by the Funds’ custodian, exchange securities they already own for shares of a Fund or they may exchange a combination of securities and cash for Fund shares. Any securities to be exchanged must, in the opinion of the Adviser, meet the investment objective and policies of the relevant Fund, must have a readily ascertainable market value, must be liquid, and must not be subject to restrictions on resale. An investor should forward the securities in negotiable form with an authorized letter of transmittal to the custodian. A Fund will notify the investor of its acceptance and valuation of the securities within five business days of their receipt by the Adviser. This securities exchange feature may not be available to shareholders of certain financial intermediaries that may not be able to support this.
A Fund values such securities in the same manner as a Fund values its assets. The basis of the exchange will depend upon the NAV of shares of a Fund on the day the securities are valued. One share of a Fund will be issued for each equivalent amount of securities accepted.


Any interest earned on the securities prior to the exchange will be considered in valuing the securities. All interest, dividends, subscription, conversion, or other rights attached to the securities become the property of a Fund, along with the securities.

An investor who transfers securities to a Fund in exchange for Fund shares may recognize gain or loss on the transfer of such securities for federal income tax purposes.

Payments to Dealers

Authorized broker-dealers, financial institutions and other financial intermediaries who sell shares of Fifth Third Funds and perform services for fund investors may receive sales commissions, annual fees and other compensation (a “reallowance”). Such reallowance is paid by the Distributor using money from sales charges and distribution/service (12b-1) fees. A broker or dealer who receives a reallowance in excess of 90% of the sales charge may be deemed to be an “underwriter” for purposes of the 1933 Act. From time to time, the Distributor may elect to reallow up to the following amounts:

78


Class A Shares

Equity Index Fund Equity Funds (except Equity Index Fund)
Asset Allocation Funds
Load/Sales Dealer Load/Sales Dealer
Purchase Amount

Charge Reallowance Charge Reallowance

Less than $50,000 5.00 % 4.50 % 5.00 % 4.50 %
$50,000 but less than $100,000 4.50 % 4.00 % 4.50 % 4.00 %
$100,000 but less than $250,000 3.50 % 3.00 % 3.50 % 3.00 %
$250,000 but less than $500,000 2.50 % 2.10 % 2.50 % 2.10 %
$500,000 but less than $1,000,000 2.00 % 1.70 % 2.00 % 1.70 %
$1,000,000 but less than $5,000,000* 0.00 % 0.05 % 0.00 % 1.00 %
$5,000,000 but less than $25,000,000* 0.00 % 0.04 % 0.00 % 0.75 %
$25,000,000 or more* 0.00 % 0.03 % 0.00 % 0.50 %

High Yield Bond Fund
Short Term Bond Fund Total Return Bond Fund
Load/Sales Dealer Load/Sales Dealer
Purchase Amount

Charge Reallowance Charge Reallowance

Less than $50,000 3.00 % 2.60 % 4.75 % 4.25 %
$50,000 but less than $100,000 2.50 % 2.10 % 4.50 % 3.75 %
$100,000 but less than $250,000 2.00 % 1.70 % 3.50 % 3.00 %
$250,000 but less than $500,000 1.50 % 1.25 % 2.50 % 2.10 %
$500,000 but less than $1,000,000 - - 2.00 % 1.70 %
$500,000 but less than $5,000,000* 0.00 % 0.50 % - -
$1,000,000 but less than $5,000,000* - - 0.00 % 0.75 %
$5,000,000 but less than $25,000,000* 0.00 % 0.35 % 0.00 % 0.50 %
$25,000,000 or more* 0.00 % 0.25 % 0.00 % 0.25 %
A finder’s fee may be paid for Class A Shares only. The load/sales charge represents the amount a shareholder pays to purchase the Class A Shares, and the dealer reallowance represents the commission paid to the selling broker/dealer. If a finder’s fee is paid to a selling broker/dealer, there will be a 1% contingent deferred sales charge (“CDSC”) (0.50% for Short Term Bond Fund) for a period of 12 months.

*If you purchase $1,000,000 or more of Class A shares of the applicable Funds ($500,000 or more of the Short Term Bond Fund) and do not pay a sales charge, and you sell any of these shares before the twelfth month anniversary of purchase, you will pay a 1% CDSC (a 0.50% CDSC for the Short Term Bond Fund) on the portion redeemed at the time of redemption. The CDSC will be based upon the lowest of the NAV at the time of purchase and the NAV at the time of redemption. In any sales, certain shares not subject to the CDSC (i.e., shares purchased with reinvested dividends or distributions) will be redeemed first followed by shares subject to the lowest CDSC (typically shares held for the longest time). The CDSC will be waived for shares purchased as part of an agreement where an organization agrees to waive its customary sales commission.

Class A Shares are sold with an initial sales charge as detailed in the chart above.

79


The Distributor makes monthly payments to dealers at the annual rates set forth below (as a percentage of the average net asset value of Class A Shares for which such dealers are designated the dealer of record):

Rate Fund
Up to 0.25% All Funds currently making payments under a Class A Shares distribution plan
Up to 0.25% after 12 months after payment of a finders fee All funds currently making payments under a Class A Shares distribution plan
Class B Shares

Effective May 15, 2007, Class B shares are closed to all new shareholders. A contingent deferred sales charge may be applied to Class B Shares you sell within six years of purchase as shown in the schedule under “Shareholder Information” in the prospectus.

The Distributor makes monthly payments to dealers at the annual rates set forth below (as a percentage of the average net asset value of Class B Shares for which such dealers are designated the dealer of record):

Rate Fund
Up to 0.25% All Funds currently making payments under a Class B Shares distribution plan
Class C Shares

Class C Shares are sold without any initial sales charge. The Distributor pays 1% of the amount invested to dealers who sell Class C Shares. A contingent deferred sales charge may be applied to Class C Shares you sell within twelve months of purchase.

The Distributor makes monthly payments to dealers at the annual rates set forth below (as a percentage of the average net asset value of Class C Shares for which such dealers are designated the dealer of record):

Rate Fund
Up to 0.75% subsequent to first 12 months All funds currently making payments under a Class C Shares 12b-1 distribution plan


Underwriters retain monies, as well as 12b-1 and service fees for shareholder accounts held directly with the Funds that may be used by the Distributor or the Adviser to offset the costs of the Distributor including other distribution activities.

ADDITIONAL PAYMENTS BY THE ADVISER AND AFFILIATES

Under certain circumstances, the Adviser or its affiliates may use their own funds to compensate broker-dealers, financial institutions, and financial intermediaries that, for instance, sell or arrange for the sale of Fund shares or that perform various shareholder support services,

80


in amounts that are additional to the amounts paid by the Distributor. In addition, from time to time, the Adviser or its affiliates, at their expense, may provide additional commissions, compensation, or promotional incentives (“concessions”) to broker-dealers, financial institutions, and financial intermediaries which sell or arrange for the sale of shares of a Fund or that perform various shareholder support services. Additional information about such payments is provided below. The Adviser or its affiliates may terminate such payments at any time.


“Financial intermediaries” are firms that receive compensation for selling shares of the Funds and/or provide services to the Funds’ shareholders. Financial intermediaries may include, among others, your broker, your securities dealer, your financial planner or adviser, banks, or insurance companies. In addition to dealers, the financial intermediaries that may receive payments include sponsors of fund “supermarkets,” sponsors of wrap fee programs, and sponsors of networking systems.
The Adviser and/or its affiliates, in their discretion, may pay dealers, selling or servicing agents, or other financial intermediaries and service providers for distribution or shareholder servicing activities. These payments are made out of the Adviser’s and/or its affiliates’ own resources, including from the profits derived from the advisory fees the Adviser receives from the Funds. These cash payments, which may be substantial, are paid to firms having business relationships with the Adviser and/or its affiliates, and are in addition to any distribution fees, servicing fees, or transfer agency fees paid directly or indirectly by the Funds to these financial intermediaries and any commissions the Distributor pays to these firms out of the sales charges paid by investors.

In general, these payments to financial intermediaries can be categorized as “distribution-related” or “servicing” payments. Payments for distribution-related expenses, such as marketing or promotional expenses, are often referred to as “revenue-sharing”. Revenue sharing payments may be made on the basis of the sales of shares attributable to that dealer, the average net assets of the Funds attributable to the accounts of that dealer and its clients, negotiated lump sum payments for distribution services provided, or sales support fees. In some circumstances, revenue sharing payments may create an incentive for a dealer or financial intermediary or its representatives to recommend or offer shares of the Funds to its customers. These payments also may give an intermediary an incentive to cooperate with the Adviser’s marketing efforts. A revenue sharing payment may, for example, qualify the Fund for preferred status with the intermediary receiving the payment or provide representatives of the Adviser with access to representatives of the intermediary’s sales force, in some cases on a preferential basis over funds of competitors. Additionally, as firm support, the Adviser and/or its affiliates may reimburse expenses, including travel and lodging expenditures, related to educational seminars and “due diligence” or training meetings (to the extent permitted by applicable laws or the rules of the Financial Industry Regulatory Authority, Inc.) designed to increase sales representatives’ awareness about Funds.


The Adviser and/or its affiliates may make payments to financial intermediaries to compensate or reimburse them for administrative or other client services provided such as participation in networking arrangements, recordkeeping, and other shareholder services. The Adviser and/or its affiliates also may make payments for administrative services related to the

81


distribution of Fund shares through the intermediary. The service provider may use these payments to offset or reduce fees that would otherwise be paid directly to them by certain account holders.


The Adviser may consider various factors to determine whether to make revenue sharing payments. Possible considerations include, without limitation, the types of services provided by the intermediary, sales of Fund shares, the redemption rates on accounts of customers of the intermediary or overall asset levels of the Funds held for or by customers of the intermediary, the willingness of the intermediary to allow the Adviser to provide educational and training support for the intermediary’s sales personnel relating to the Funds, the availability of the Funds on the intermediary’s sales system, as well as the overall quality of the services provided by the intermediary, and the Adviser’s and/or its affiliates’ relationship with the intermediary. To the extent that financial intermediaries receiving distribution-related payments from the Adviser and/or its affiliates sell more of the Funds or retain more shares of the Funds in their client accounts, the Adviser benefits from the incremental management and other fees it receives with respect to those assets.
In addition to the commissions paid to financial intermediaries at the time of sale and Rule 12b-1 fees, some or all of which may be paid to financial intermediaries (and, in turn, to your financial adviser), the Adviser and/or its affiliates, at their expense, currently provide additional payments to firms that sell shares of the Funds. If one mutual fund sponsor makes greater distribution assistance payments than another, your financial adviser and his or her firm may have an incentive to recommend one fund complex over another. Similarly, if your financial adviser or his or her firm receives more distribution assistance for one share class versus another, then they may have an incentive to recommend that class. Your dealer may charge you fees or commissions in addition to those disclosed in the Prospectus. You should ask your dealer or financial intermediary for details about any such payments it receives from the Adviser and/or its affiliates, or any other fees or expenses it charges.


Although the Funds may use brokers and dealers who sell shares of the Funds to effect portfolio transactions, the Funds do not consider the sale of Fund shares as a factor when selecting brokers or dealers to effect portfolio transactions.

Transaction Fee. Brokers and agents may charge a transaction fee on the purchase or sale of shares by shareholders.

SELLING YOUR SHARES


Shares are redeemed at the next computed NAV after a Fund receives the redemption request, less any contingent deferred sales charge. Redemption procedures are explained in the Prospectus under “Selling Your Shares.” Although the Funds do not charge for telephone redemptions, they reserve the right to charge a fee for the cost of wire-transferred redemptions.
If you purchase $1,000,000 or more of Class A shares of the applicable Funds or $500,000 or more of the Short Term Bond Fund and do not pay a sales charge, and you sell any of these shares within twelve (12) months of their purchase, you will pay a 1% (0.50% for the Short Term Bond Fund) CDSC on the portion redeemed at the time of redemption. Class B Shares redeemed


82




within six (6) years of purchase and Class C Shares redeemed within one (1) year of purchase may be subject to a CDSC. The CDSC may be reduced with respect to a particular shareholder where a financial institution selling Class B and/or Class C Shares elects not to receive a commission from the distributor with respect to its sale of such shares.

Exchanging or Converting Shares

You may exchange your Fund shares for shares of the same class of another Fifth Third Fund based on their relative NAVs.


In certain circumstances, a Fund or the Distributor may enter into an agreement with a financial intermediary to permit exchanges from one class of a Fund into another class of the same Fund, subject to certain conditions. Such exchanges will only be permitted if, among other things, the financial intermediary agrees to follow procedures established by the Fund or Distributor, which generally will require that the exchanges be carried out (i) within accounts maintained and controlled by the intermediary, (ii) on behalf of all or a particular segment of beneficial owners holding shares of the affected Fund within those accounts, and (iii) all at once or within a given time period, or as agreed upon in writing by the Fund or the Distributor and the financial intermediary. A shareholder’s ability to make this type of exchange may be limited by operational or other limitations of his or her financial intermediary or the Fund.

Any conversion between classes of shares of the same Fund should be treated as a tax-free event for federal income tax purposes. By contrast, an exchange between different Funds is a taxable event for federal income tax purposes.

Redemption In-Kind

The Trust has elected to be governed by Rule 18f-1 of the 1940 Act under which the Trust is obligated to redeem shares for any one shareholder in cash only up to the lesser of $250,000 or 1% of a Fund’s net asset value during any 90-day period.



Any redemption beyond this amount will also be in cash unless the Trustees determine that payments should be in-kind. In such a case, the Trust will pay all or a portion of the remainder of the redemption in portfolio instruments, valued in the same way as the Fund determines NAV. The portfolio instruments will be selected in a manner that the Trustees deem fair and equitable. Redemption in-kind is taxable for federal income tax purposes in the same manner as redemption for cash.

Postponement of Redemptions

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 then customary weekend and holiday closings, (c) the SEC has by order permitted such suspension, or (d) an emergency exists as determined by the SEC.

83


DETERMINING NET ASSET VALUE

Valuation of the Equity Funds, the Bond Funds and Asset Allocation Funds


Except as noted below, investments of the Equity Funds, the Bond Funds, the Structured Large Cap Plus Fund and Asset Allocation Funds of the Trust in securities the principal market for which is a securities exchange or an over-the-counter market are valued at their latest available sale price (except for those securities traded on NASDAQ, which will be valued at the NASDAQ Official Closing Price or, absent such a price, by reference to the latest available bid and asked prices in the principal market in which such securities are normally traded). Investments of the International Equity Fund in securities the principal market for which is a securities exchange are valued at the closing mid-market price on that exchange on the day of computation. Investments of the Asset Allocation Funds in underlying funds are based on the NAV of such underlying funds.
With regard to each of the above-mentioned Funds, securities the principal market for which is not a securities exchange or an OTC market, are valued at the mean of their latest bid and ask quotations in such principal market. Securities and other assets for which quotations are not readily available are valued at their fair value as determined pursuant to the Valuation Procedures adopted by the Board of Trustees. Short-term securities are valued at either amortized cost or original cost plus interest, which approximates current value. Repurchase agreements are valued at original cost. Open-end mutual fund investments will be valued at the most recently calculated NAV. Closed-end funds are valued at their market values based upon the latest available sale price or, absent such a price, by reference to the latest available bid and asked prices in the principal market in which such securities are normally traded.


The value of a foreign security is determined in its national currency as of the close of trading on the foreign exchange or other principal market on which it is traded, which value is then converted into its U.S. dollar equivalent at the prevailing foreign rate. When the closing price is not an accurate representation of value due to events that have occurred after the closing of the primary exchange and prior to the time of NAV calculations (hereinafter, a “Significant Event”), then a market quotation is deemed to not be readily available and the fair value of affected securities will be determined by consideration of other factors by the Pricing Committee as detailed below. An example of a frequently occurring Significant Event is a movement in the U.S. equity markets. The Pricing Committee has predetermined the level of such a movement that constitutes a Significant Event (a “Trigger”) and has preauthorized the Trust’s Accounting Agent to utilize a pricing service authorized by the Board (a “Fair Value Pricing Service”) that has been designed to determine a fair value. On a day when a Fair Value Pricing Service is so utilized pursuant to a preauthorization, the Pricing Committee need not meet. The Pricing Committee, however, will determine the fair value of securities effected by a Significant Event where either (i) the Pricing Committee has not authorized the use of a Fair Value Pricing Service, or (ii) where the Significant Event is other than a movement in the U.S. equity markets that qualifies as a Trigger.

Securities for which market quotations are readily available will be valued on the basis of quotations provided by dealers in such securities or furnished through a national pricing

84


service approved by the Board of Trustees. Securities for which market quotations are not readily available and other assets will be valued at fair value using methods determined in good faith by the Pricing Committee under the supervision of the Trustees and may include yield equivalents or a price produced through use of a pricing matrix provided by a national pricing service approved by the Board.

Use of Amortized Cost

The value of debt securities authorized to be purchased by the Funds with remaining maturities of 60 days or less at the time of purchase may be their amortized cost value, unless the particular circumstances of the security indicate otherwise. Under this method, portfolio instruments and assets are valued at the acquisition cost as adjusted for amortization of premium or accumulation of discount rather than at current market value.

Monitoring Procedures



For the Money Market Funds, procedures include monitoring the relationship between the amortized cost value per share and the NAV per share based upon available indications of market values. The Trustees will decide what, if any, steps should be taken if there is a difference of more than 1/2 of 1% between the two values. The Trustees will take any steps they consider appropriate (such as redemption in-kind or shortening the average portfolio maturity) to minimize any material dilution or other unfair results arising from differences between the two methods of determining NAV.

Investment Restrictions


SEC rules require that a money market fund limit its investments to instruments that, in the opinion of the Trustees or their delegate, present minimal credit risks and if rated, have received the requisite rating from one or more nationally recognized statistical rating organizations. If the instruments are not rated, the Trustees or their delegate must determine that they are of comparable quality. Shares of investment companies purchased by a Money Market Fund will meet these same criteria and will have investment policies consistent with the Rule. The Rule also requires a money market fund to maintain a dollar-weighted average portfolio maturity (not more than 60 days) appropriate to the objective of maintaining a stable NAV of $1.00 per share. In addition, no instruments with a remaining maturity of more than 397 days can be purchased by a Money Market Fund. Should the disposition of a portfolio security result in a dollar-weighted average portfolio maturity of more than 60 days, a Money Market Fund will invest its available cash to reduce the average maturity to 60 days or less as soon as possible.
A Money Market Fund may attempt to increase yield by trading portfolio securities to take advantage of short-term market variations. This policy may, from time to time, result in high portfolio turnover. Under the amortized cost method of valuation, neither the amount of daily income nor the net asset value is affected by any unrealized appreciation or depreciation of the portfolio. In periods of declining interest rates, the indicated daily yield on shares of a Money Market Fund computed by dividing the annualized daily income on the Fund’s


85




portfolio by the NAV computed as above may tend to be higher than a similar computation made by using a method of valuation based upon market prices and estimates.

In periods of rising interest rates, the indicated daily yield on shares of a Money Market Fund computed the same way may tend to be lower than a similar computation made by using a method of calculation based upon market prices and estimates.

Trading In Foreign Securities

Trading in foreign securities may be completed at times which vary from the closing of regular trading on the NYSE. In computing the net asset value, the Funds (other than the Money Market Funds) value foreign securities at the latest closing price on the exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates may also be determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. Occasionally, events that affect these values and exchange rates may occur between the times at which they are determined and the closing of the NYSE. If such events materially affect the value of portfolio securities, these securities may be valued at their fair value as determined in good faith by the Trustees, although the actual calculation may be done by others.

FEDERAL INCOME TAX STATUS



The following is only a summary of certain additional federal income tax considerations generally affecting the Fund and its shareholders that is intended to supplement the discussion contained in the Fund’s prospectus. No attempt is made to present a detailed explanation of the tax treatment of the Fund or its shareholders, and the discussion here and in the Fund’s prospectus is not intended as a substitute for careful tax planning. Shareholders are urged to consult their tax advisors with specific reference to their own tax situations, including their state and local tax liabilities.
This general discussion of certain federal income tax consequences is based on the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations issued thereunder as in effect on the date of this SAI. New legislation, as well as administrative changes or court decisions, may significantly change the conclusions expressed herein, and may have a retroactive effect with respect to the transactions contemplated herein.


Qualification as a Regulated Investment Company



Congress passed the Regulated Investment Company Modernization Act on December 22, 2010 (the “RIC Mod Act”) which makes certain beneficial changes for regulated investment companies (“RICs”) and their shareholders. In general, the RIC Mod Act contains simplification provisions effective for taxable years beginning after December 22, 2010, which are aimed at preventing disqualification of a RIC for “inadvertent” failures of the asset diversification and/or qualifying income tests described below. Additionally, the RIC Mod Act allows capital losses to be carried forward indefinitely and retain the character of the original loss, exempts RICs from the preferential dividend rule, and repeals the 60-day designation requirement for certain types of income and gains.

86




Each Fund intends to qualify each year as a regulated investment company (“RIC”) under Subchapter M of the Code. In order to so qualify and to qualify for the special federal income tax treatment accorded RICs and their shareholders, a Fund must, among other things, (a) derive at least 90% of its gross income for each taxable year from (i) dividends, interest, payments with respect to certain securities loans, gains from the sale or other disposition of stock, securities, or foreign currencies, or other income (including but not limited to gains from options, futures, or forward contracts) derived with respect to its business of investing in such stock, securities, or currencies and (ii) net income derived from interests in “qualified publicly traded partnerships” (as defined below); (b) diversify its holdings so that, at the end of each quarter of the Fund’s taxable year (i) at least 50% of the market value of the Fund’s assets is represented by cash, cash items, U.S. Government securities, securities of other RICs, and other securities, limited in respect of any one issuer to a value not greater than 5% of the value of the Fund’s total assets and 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of its assets is invested (x) in the securities (other than those of the U.S. Government or other RICs) of any one issuer or of two or more issuers that the Fund controls and that are engaged in the same, similar, or related trades or businesses or (y) in the securities of one or more qualified publicly traded partnerships (as defined below) and (c) distribute with respect to each taxable year at least 90% of the sum of its investment company taxable income (as that term is defined in the Code without regard to the deduction for dividends paid – generally taxable ordinary income and the excess, if any, of net short-term capital gains over net long-term capital losses), and its net tax-exempt income, if any, for such year.
In general, for purposes of the 90% gross income requirement described in (a) above, income derived from a partnership will be treated as qualifying income only to the extent such income is attributable to items of income of the partnership which would be qualifying income if realized by the RIC. However, 100% of the net income derived from an interest in a “qualified publicly traded partnership” (generally a partnership (x) the interests in which are traded on an established securities market or readily tradable on a secondary market or the substantial equivalent thereof and (y) that derives less than 90% of its income from the qualifying income described in (a)(i) above) will be treated as qualifying income. In addition, although in general the passive loss rules of the Code do not apply to RICs, such rules do apply to a RIC with respect to items attributable to an interest in a qualified publicly traded partnership.

For purposes of meeting the diversification requirement described in (b) above, in the case of a Fund’s investments in loan participations, the Fund shall treat both the financial intermediary and the issuer of the underlying loan as an issuer. Additionally, the term “outstanding voting securities of such issuer” will include the equity securities of a qualified publicly traded partnership. It is possible that certain partnerships in which a Fund may invest, including MLPs, could be qualified publicly traded partnerships and, therefore, the extent to which a Fund may invest in such partnerships is limited by its intention to qualify as a RIC. Fund investments in partnerships, including in qualified publicly traded partnerships, may result in the Fund being subject so state, local or foreign income, franchise or withholding taxes.

If a Fund qualifies as a RIC that is accorded special federal income tax treatment, the Fund will not be subject to federal income tax on income distributed in a timely manner to its shareholders in the form of dividends (including Capital Gain Dividends, as defined below). If


87




a Fund fails to qualify as a RIC accorded special tax treatment in any taxable year and does not cure such failure, including by paying a fund-level tax and, in the case of a diversification test failure, by disposing of certain assets, the Fund would be subject to federal income tax on its taxable income at corporate rates (without any deduction for distributions to its shareholders), and all distributions from earnings and profits, including any distributions of net tax-exempt income and net long-term capital gains, would be taxable to shareholders as ordinary income. However, some portions of such distributions may be eligible (i) to be treated as qualified dividend income in the case of shareholders taxed as individuals and (ii) for the dividends received deduction in the case of corporate shareholders, provided in both cases, the shareholder meets certain holding period and other requirements with respect to the Fund’s shares. In addition, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before requalifying as a RIC that is accorded special federal income tax treatment.

Each Fund intends to distribute at least annually to its shareholders all or substantially all of its investment company taxable income (computed without regard to the dividends-paid deduction), net tax-exempt income and net capital gain. Investment company taxable income which is retained by a Fund will be subject to federal income tax at regular corporate rates. If a Fund retains any net capital gain, it will be subject to federal income tax at regular corporate rates on the amount retained, but may designate the retained amount as undistributed capital gains in a notice to its shareholders who (i) will be required to include in income for federal income tax purposes, as long-term capital gain, their shares of such undistributed amount, and (ii) will be entitled to credit their proportionate shares of the tax paid by the Fund on such undistributed amount against their federal income tax liabilities, if any, and to claim refunds to the extent the credit exceeds such liabilities. For federal income tax purposes, the basis of shares owned by a shareholder of the Fund will be increased by an amount equal to the difference between the amount of undistributed capital gains included in the shareholder’s gross income and the federal income tax deemed paid by the shareholder under clause (ii) of the preceding sentence.


If a Fund fails to distribute in a calendar year at least an amount equal to the sum of 98% of its ordinary income for the year and 98.2% of its capital gain net income for the one-year period ending October 31 and any retained amount from the prior calendar year, the Fund will be subject to a non-deductible 4% federal excise tax on the undistributed amounts. For these purposes, the Fund will be treated as having distributed any amount on which it is subject to corporate income tax for the taxable year ending within the calendar year. Each Fund intends generally to make distributions sufficient to avoid imposition of the 4% excise tax, although there can be no assurance that each Fund will be able to do so.

A dividend paid to shareholders by a Fund in January of a year generally is deemed to have been paid by the Fund on December 31 of the preceding year if the dividend was declared and payable to shareholders of record on a date in October, November or December of that preceding year.


88


Additional Tax Information Concerning the Asset Allocation Funds

An Asset Allocation Fund will not be able to offset gains realized by one underlying fund (“Underlying Fund”) in which such Asset Allocation Fund invests against losses realized by another Underlying Fund in which such Asset Allocation Fund invests. The use of a fund-of-funds structure can therefore affect the amount, timing and character of distributions to shareholders, and may increase the amount of taxes payable by shareholders.

Because each Asset Allocation Fund will invest all of its assets in shares of Underlying Funds, its distributable income and gains will normally consist entirely of distributions from Underlying Funds and gains and losses on the disposition of shares of Underlying Funds. To the extent that an Underlying Fund realizes net losses on its investments for a given taxable year, an Asset Allocation Fund will not be able to recognize its shares of those losses (so as to offset distributions of net income or capital gains from other Underlying Funds) until it disposes of shares of the Underlying Fund. Moreover, even when an Asset Allocation Fund does make such a disposition, a portion of its loss may be recognized as a long-term capital loss, which will not be treated as favorably for federal income tax purposes as a short-term capital loss or an ordinary deduction. In particular, an Asset Allocation Fund will not be able to offset any capital losses from its dispositions of Underlying Fund shares against its ordinary income (including distributions of any net short-term capital gains realized by an Underlying Fund).



In addition, in certain circumstances, the “wash sale” rules under Section 1091 of the Code may apply to a Fund’s sales of Underlying Fund shares that have generated losses. A wash sale occurs if shares of an Underlying Fund are sold by a Fund at a loss and the Fund acquires additional shares of that same Underlying Fund or other substantially identical stock or securities 30 days before or after the date of the sale. The wash-sale rules could defer losses in the Fund’s hands on sales of Underlying Fund shares (to the extent such sales are wash sales) for extended (and, in certain cases, potentially indefinite) periods of time.

As a result of the foregoing rules, and certain other special rules, it is possible that the amounts of net investment income and net capital gains that an Asset Allocation Fund will be required to distribute to shareholders will be greater than such amounts would have been had an Asset Allocation Fund invested directly in the securities held by the Underlying Funds, rather than investing in shares of the Underlying Funds. For similar reasons, the character of distributions from an Asset Allocation Fund (e.g., long-term capital gain, exempt interest, eligibility for dividends-received deduction, etc.) will not necessarily be the same as it would have been had the Asset Allocation Fund invested directly in the securities held by the Underlying Funds.



If an Asset Allocation Fund received dividends from an Underlying Fund that qualifies as a RIC, and the Underlying Fund designated such dividends as “qualified dividend income,” then an Asset Allocation Fund is permitted in turn to designate a corresponding portion of its distributions as “qualified dividend income” as well, provided the Asset Allocation Fund meets certain holding period and other requirements with respect to shares of the Underlying Fund. Dividends of an Asset Allocation Fund may not be eligible for treatment as qualified dividend income unless the holding period and other requirements for such treatment are met by both an Asset Allocation Fund and the Underlying Fund, as well as by the shareholder.

89




If an Asset Allocation Fund is a “qualified fund of funds” (i.e., a RIC that invests at least 50% of its total assets in other RICs at the close of each quarter of its taxable year), it may elect to pass through to its own shareholders foreign tax credits received from Underlying Funds that make the election to pass such foreign tax credits through to their shareholders (see “Foreign Taxes, Foreign Currency-Denominated Securities and Related Hedging Transactions”). In addition, an Asset Allocation Fund that is a qualified fund of funds can pass through to its shareholders exempt-interest dividends.

The foregoing is only a general description of the federal income tax consequences of a fund of funds structure. Accordingly, prospective purchasers of shares of an Asset Allocation Fund are urged to consult their tax advisors with specific reference to their own tax situation, including the potential application of state, local and foreign taxes.

Distributions



Each Fund will distribute at least annually any net investment income and realized net capital gains. Distributions of any net investment income (other than qualified dividend income, as discussed below) are generally taxable to shareholders as ordinary income. Taxes on distributions of capital gains are determined by how long a Fund owned (or is deemed to have owned) the investments that generated them, rather than how long a shareholder has owned his or her shares. Distributions of each Fund’s net capital gain (i.e., the excess of a Fund’s net long-term capital gain over net short-term capital loss), if any, that are properly designated by the Fund as capital gain dividends (“Capital Gain Dividends”) are taxable as long-term capital gains. For taxable years beginning before January 1, 2013, such distributions will generally be taxed to individuals and other noncorporate investors at a 15% federal income tax rate, with a 0% rate applying to taxpayers in the 10% and 15% rate brackets, and will not be eligible for the dividends received deduction. For taxable years beginning on or after January 1, 2013, Capital Gain Dividends will generally be taxed to individuals and other noncorporate investors at a 20% federal income tax rate, unless Congress enacts legislation providing otherwise. Distribution of gains from the sale of investments that a Fund owned for one year or less will be taxable as ordinary income.

Distributions of taxable income or capital gains are taxable to Fund shareholders whether received in cash or reinvested in additional Fund shares. Dividends and distributions on a Fund’s shares generally are subject to federal income tax as described herein to the extent they do not exceed the Fund’s realized income and gains, even though such dividends and distributions economically may represent a return of a particular shareholder’s investment. Such distributions are likely to occur in respect of shares purchased at a time when the Fund’s net asset value reflects gains that are either unrealized, or realized but not distributed. Realized gains may be required to be distributed even when a Fund’s net asset value also reflects unrealized losses.



If a Fund makes a distribution to a shareholder in excess of its current and accumulated “earnings and profits” in any taxable year, the excess distribution will be treated for federal income tax purposes as a return of capital to the extent of a shareholder’s basis in Fund shares, and thereafter as capital gain. A return of capital is not taxable, but it reduces the shareholder’s

90





basis in the shares, thus reducing any loss or increasing any gain on a subsequent taxable disposition of those shares. The Strategic Income Fund may be particularly susceptible to this possibility because it may seek to maintain a 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.

For taxable years beginning before January 1, 2013, distributions of net investment income properly designated by a Fund as derived from “qualified dividend income” will be taxed to individuals and other noncorporate investors at the federal income tax rates applicable to long-term capital gain, provided certain holding period and other requirements are met at both the shareholder and Fund levels. In order for some portion of the dividends received by a Fund shareholder to be qualified dividend income, a Fund must meet certain holding period and other requirements with respect to the stock in its portfolio generating such dividend income and the shareholder must meet certain holding period and other requirements with respect to the Fund’s shares. A dividend will not be treated as qualified dividend income (at either the Fund or shareholder level) (i) if the dividend is received with respect to any share of stock held for fewer than 61 days during the 121-day period beginning on the date which is 60 days before the date on which such share becomes ex-dividend with respect to such dividend (or, in the case of certain preferred stock, 91 days during the 181-day period beginning 90 days before such date), (ii) to the extent that the recipient is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property, (iii) if the recipient elects to have the dividend income treated as investment income for purposes of the limitation on deductibility of investment interest, or (iv) if the dividend is received from a foreign corporation that is (a) not eligible for the benefits of a comprehensive income tax treaty with the United States (with the exception of dividends paid on stock of such a foreign corporation readily tradable on an established securities market in the United States) or (b) treated as a passive foreign investment company. Neither the Bond Funds nor the Money Market Funds expect a significant portion of Fund distributions to be derived from qualified dividend income. For purposes of determining the holding period for stock on which a dividend is received, such holding period is reduced for any period the recipient has an option to sell, is under a contractual obligation to sell or has made (and not closed) a short sale of substantially identical stock or securities, and in certain other circumstances. Additionally, dividends of an Asset Allocation Fund may not be eligible for treatment as qualified dividend income unless the holding period and other requirements for such treatment are met by both the Asset Allocation Fund and the Underlying Funds as well as the shareholder.


In general, distributions of net investment income designated by a Fund as derived from qualified dividend income will be treated as qualified dividend income by a shareholder taxed as an individual, provided the shareholder meets the holding period and other requirements described above with respect to the Fund’s shares. If the aggregate qualified dividends received by a Fund during any taxable year are 95% or more of its gross income (excluding net long-term capital gain over net short-term capital loss), then 100% of the Fund’s dividends (other than dividends properly designated as Capital Gain Dividends) will be eligible to be treated as qualified dividend income. To the extent that a Fund makes a distribution of income received by the Fund in lieu of dividends (a “substitute payment”) with respect to securities on loan
91


pursuant to a securities lending transaction, such income will not constitute qualified dividend income and thus will not be eligible for taxation at the rates applicable to long-term capital gain for individual and other noncorporate shareholders, nor will it be eligible for the dividends-received deduction for corporate shareholders.


Dividends of net investment income received by corporate shareholders of a Fund may qualify for the 70% dividends received deduction generally available to corporations to the extent of the amount of qualifying dividends received by the Fund from domestic corporations for the taxable year. A dividend received by a Fund will not be treated as a qualifying dividend (i) if it has been received with respect to any share of stock that such Fund has held for less than 46 days during the 91-day period beginning on the date which is 45 days before the date on which such share becomes ex-dividend with respect to such dividend (91 days during the 181-day period beginning 90 days before the ex-dividend date in the case of certain preferred stock) or (ii) to the extent that such Fund is under an obligation (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. Moreover, the dividends received deduction may be disallowed or reduced (i) if the corporate shareholder fails to satisfy the foregoing requirements with respect to its shares of the Fund or (ii) by application of other provisions of the Code (for instance, the dividends received deduction is reduced in the case of a dividend received on debt-financed portfolio stock (generally, stock acquired with borrowed funds)). For purposes of determining the holding period for stock on which a dividend is received, such holding period is reduced for any period the recipient has an option to sell, is under a contractual obligation to sell or has made (and not closed) a short sale of substantially identical stock or securities, and in certain other circumstances.


A portion of the interest paid or accrued on certain high yield discount obligations owned by a Fund may not be deductible to the issuer. If a portion of the interest paid or accrued on certain high yield discount obligations is not deductible, that portion will be treated as a dividend for purposes of the corporate dividends received deduction and for qualified dividend income purposes. In such cases, if the issuer of the high yield discount obligations is a domestic corporation, dividend payments by the Fund may be eligible for the dividends received deduction or qualified dividend income treatment to the extent of the deemed dividend portion of such accrued interest.


For taxable years beginning after December 31, 2012, an additional 3.8% Medicare tax will be imposed on certain net investment income (including ordinary dividends and Capital Gain Dividends received from a Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust) exceeds a threshold amount.

Transactions in Fund Shares



The Fund (or its administrative agent) must report to the Internal Revenue Service (“IRS”) and furnish to Fund shareholders cost basis information for Fund shares purchased on or after January 1, 2012, and sold on or after that date. In addition to reporting the gross proceeds from the sale of Fund shares, the Fund will also be required to report the cost basis

92



information for such shares and indicate whether these shares had a short-term or long-term holding period. For each sale of Fund shares, the Fund will permit shareholders to elect from among several IRS-accepted cost basis methods, including the average basis method. In the absence of an election, the Fund will use the average basis method as the default cost basis method. The cost basis method elected by the Fund shareholder (or the cost basis method applied by default) for each sale of Fund shares may not be changed after the settlement date of each such sale of Fund shares. Fund shareholders should consult with their tax advisors to determine the best IRS-accepted cost basis method for their tax situation and to obtain more information about how the new cost basis reporting law applies to them.

Shareholders who sell, exchange or redeem Fund shares will generally recognize gain or loss in an amount equal to the difference between their adjusted basis in the Fund shares and the amount received. Because the Money Market Funds seek to maintain a stable share price, it is unlikely that a shareholder will have a gain or loss when shares of a Money Market Fund are sold, exchanged or redeemed. In general, any gain or loss realized upon a taxable disposition of Fund shares will be treated as long-term capital gain or loss if the shares have been held for more than 12 months, and as short-term capital gain or loss if the shares have been held for 12 months or less. Short-term capital gain is taxed for federal income tax purposes at ordinary income rates. For taxable years beginning on or before January 1, 2013, long-term capital gain rates applicable to individuals and other noncorporate investors have been reduced to 15% with a 0% rate applying to taxpayers in the 10% and 15% tax brackets. For taxable years beginning on or after January 1, 2013, the maximum long-term capital gain rate is scheduled to increase to 20%. A shareholder’s ability to utilize capital losses may be limited under the Code.

Any loss realized upon a taxable disposition of Fund shares held for six months or less will be disallowed to the extent of any exempt-interest dividends received by the shareholder with respect to such shares and, to the extent not disallowed will be, treated as a long-term capital loss to the extent of any Capital Gain Dividends received (or deemed received) by a shareholder with respect to those Fund shares. For purposes of determining whether Fund shares have been held for six months or less, the holding period is suspended for any periods during which a shareholder’s risk of loss is diminished as a result of holding one or more other positions in substantially similar or related property, or through certain options or short sales. In addition, any loss realized on a sale or exchange of Fund shares will be disallowed to the extent that the Fund shareholder acquires other Fund shares or other substantially identical stock or securities within a period of 61 days beginning 30 days before and ending 30 days after the date of disposition, which could, for example, occur as a result of automatic dividend reinvestment. In such an event, a Fund shareholder’s basis in the replacement Fund shares or other substantially identical stock or securities will be adjusted to reflect the disallowed loss.

In some cases, shareholders who exchange shares will not be permitted to take all or a portion of their sales loads into account for purposes of determining the amount of gain or loss realized on the disposition of their shares. This prohibition generally applies where (1) the shareholder incurs a sales load in acquiring the shares of a Fund, (2) the shares are disposed of before the 91st day after the date on which they were acquired, and (3) the shareholder subsequently acquires no later than January 31st of the calendar year following the calendar year of the disposition shares in the same Fund or another RIC and an otherwise applicable sales charge is reduced under a “reinvestment right” received upon the initial purchase of Fund

93




shares. The term “reinvestment right” means any right to acquire shares of one or more RICs without the payment of a sales load or with the payment of a reduced sales charge. Sales charges affected by this rule are treated as if they were incurred with respect to the shares acquired under the reinvestment right and not with respect to the original shares. This provision may be applied to successive acquisitions of Fund shares.


The sale or other disposition of shares of a Fund by a retirement plan qualifying for tax-exempt treatment under the Code will not be subject to U.S. federal income tax. Because the federal income tax treatment of a sale or exchange of Fund shares depends on your purchase price and your personal tax position, you should keep your regular account statements to use in determining your federal income tax liability.

Foreign Taxes, Foreign Currency-Denominated Securities and Related Hedging Transactions


Dividends, interest and gains received by a Fund from investments in securities of foreign issuers may be subject to income, withholding or other taxes imposed by foreign countries and U.S. possessions. Tax conventions between certain countries and the United States may reduce or eliminate these taxes. Shareholders in the Funds, other than the International Equity Fund, generally will not be entitled to claim a credit or deduction with respect to foreign taxes. However, if at the end of a Fund’s fiscal year more than 50% of the value of its total assets consists of securities of foreign corporations, the Fund will be eligible to make an election permitted by the Code to treat any foreign taxes paid by it on securities it has held for at least the minimum period specified in the Code as having been paid directly by the Fund’s shareholders.

Under normal circumstances, more than 50% of the value of the International Equity Fund’s total assets will consist of securities of foreign corporations and it will be eligible to make the election. If the election is made, shareholders generally will be required to include in U.S. taxable income their pro rata share of such taxes, and those shareholders who are U.S. citizens, U.S. corporations and, in some cases, U.S. residents will be entitled to deduct on their federal income tax returns their share of such taxes, subject to certain limits. Alternatively, such shareholders who hold Fund shares (without protection from risk of loss) on the ex-dividend date and for at least 15 other days during the 30-day period surrounding the ex-dividend date will be entitled to claim a foreign tax credit for their share of these taxes, subject to generally applicable limitations under the Code. If a Fund makes the election, it will report annually to its shareholders the respective amounts per share of the Fund’s income from sources within, and taxes paid to, foreign countries and U.S. possessions.


A Fund’s transactions in foreign currencies, foreign currency-denominated debt securities and certain foreign currency options, futures contracts and forward contracts (and similar instruments) may give rise to ordinary income or loss to the extent such income or loss results from fluctuations in the value of the foreign currency concerned.

Investment by a Fund in “passive foreign investment companies” (“PFICs”) could subject the Fund to a U.S. federal income tax (including interest charges) or other charge on distributions received from the company or on proceeds from the sale of its investment in such a company, which tax cannot be eliminated by making distributions to Fund shareholders.
94


However, this tax can be avoided by making an election to mark such investments to market annually or to treat a PFIC as a “qualified electing fund” (“QEF”). If a Fund makes a “mark to market” election with respect to a PFIC, the Fund will recognize each year as ordinary income or, subject to certain limitations, as ordinary loss, an amount determined as though the Fund had sold and repurchased its holdings in that PFIC on the last day of the Fund’s taxable year. If a Fund makes a QEF election with respect to a PFIC, the Fund will be required to include as income its share of the PFIC’s income and net capital gains annually, regardless of whether it receives any distribution from the company. These elections may accelerate the recognition of income (without the receipt of cash) and increase the amount required to be distributed by the Fund to avoid taxation. Making either of these elections therefore may require the Fund to liquidate other investments (including when it is not advantageous to do so) to meet its distribution requirement, which also may accelerate the recognition of gain and affect the Fund’s total return. Dividends paid by PFICs will not be eligible to be treated as “qualified dividend income.”

A PFIC is any foreign corporation: (i) 75% or more of the gross income of which for the taxable year is passive income, or (ii) the average percentage of the assets of which (generally by value, but by adjusted basis in certain cases) that produce or are held for the production of passive income is at least 50%. Generally, passive income for this purpose means dividends, interest (including income equivalent to interest), royalties, rents, annuities, the excess of gain over losses from certain property transactions and commodities transactions, and foreign currency gains. Passive income for this purpose does not include rents and royalties received by the foreign corporation from active business and certain income received from related persons.

Hedging and Derivatives

A Fund’s transactions in foreign currencies, derivative instruments (e.g., forward contracts, swap agreements, options and futures contracts (including options and futures contracts on foreign currencies)), as well other hedging, short sale or similar transactions, may be subject to special provisions of the Code (including provisions relating to “hedging transactions” and “straddles”) that, among other things, may affect the character of gains and losses realized by the Fund (i.e., may affect whether gains or losses are ordinary or capital), accelerate recognition of income to the Fund and defer Fund losses. These rules could therefore affect the character, amount and timing of distributions to shareholders. These provisions may also (i) require a Fund to mark to market annually certain types of the positions in its portfolio (i.e., treat them as if they were closed out at the end of each year), or (ii) cause a Fund to recognize income without receiving cash with which to pay dividends or make distributions in amounts necessary to satisfy the distribution requirements described above in order to avoid certain federal income and excise taxes. A Fund may be required to liquidate other investments (including when it is not advantageous to do so) to meet its distribution requirements, which may also accelerate the recognition of gain by the Fund. A Fund will monitor its transactions, will make the appropriate tax elections and will make the appropriate entries in its books and records when it acquires any foreign currency, forward contract, option, futures contract or hedged investment in order to mitigate the effect of these rules and prevent disqualification of a Fund as a RIC.
95



Options held by a Fund at the end of each fiscal year on a broad-based stock index are treated under the Code as Section 1256 contracts and will be required to be “marked-to-market” for federal income tax purposes. Sixty percent of any net gain or loss recognized on such deemed sales or on any actual sales will be treated as long-term capital gain or loss, and the remainder will be treated as short-term capital gain or loss (“60/40 gain or loss”). Certain other options, futures contracts and options on futures contracts utilized by the Funds are also Section 1256 contracts. Any gains or losses on these Section 1256 contracts held by a Fund at the end of each taxable year (and on October 31 of each year for purposes of the 4% excise tax) are also “marked-to-market” with the result that unrealized gains or losses are treated as though they were realized and the resulting gain or loss is treated as a 60/40 gain or loss.


The application of certain requirements for qualification as a RIC and the application of certain other federal income tax rules may be unclear in some respects in connection with investments in certain derivatives. As a result, a Fund may be required to limit its investments in such transactions and it is also possible that the IRS may not agree with a Fund’s treatment of such transactions. In addition, the tax treatment of derivatives and certain other investments may be affected by future legislation, Treasury regulations and guidance issued by the IRS (which could apply retroactively) that could affect the timing, character and amount of a Fund’s income and gains and distributions to shareholders, affect whether a Fund has made sufficient distributions and otherwise satisfied the requirements to maintain its qualification as a RIC and avoid federal income and excise taxes or limit the extent to which a Fund may invest in certain derivatives in the future.


Certain of a Fund’s hedging activities (including its transactions, if any, in foreign currencies or foreign currency-denominated instruments) are likely to produce a difference between its book income and its income as determined for federal income tax purposes. If a Fund’s book income exceeds its income as determined for tax purposes, the distribution (if any) of such excess will be treated as (i) a dividend to the extent of the Fund’s remaining earnings and profits (including earnings and profits arising from tax-exempt income), (ii) thereafter as a return of capital to the extent of a recipient’s basis in its shares, and (iii) thereafter as gain from the sale or exchange of a capital asset. If the Fund’s book income is less than its income as determined for federal income tax purposes, the Fund could be required to make distributions exceeding book income to qualify as a RIC that is accorded special federal income tax treatment.

Discount Securities

Some debt obligations with a fixed maturity date of more than one year from the date of issuance (and all zero-coupon debt obligations with a fixed maturity date of more than one year from the date of issuance) that are acquired by a Fund will be treated as debt obligations that are issued originally at a discount. Generally, the amount of the original issue discount (“OID”) is treated as interest income and is included in taxable income (and required to be distributed) over the term of the debt security, even though payment of that amount is not received until a later time, usually when the debt security matures.

Some debt obligations with a fixed maturity date of more than one year from the date of issuance that are acquired by a Fund in the secondary market may be treated as having market discount. Generally, any gain recognized on the disposition of, and any partial payment of
96


principal on, a debt security having market discount is treated as ordinary income to the extent the gain, or principal payment, does not exceed the “accrued market discount” on such debt security. Market discount generally accrues in equal daily installments. A Fund may make one or more of the elections applicable to debt obligations having market discount, which could affect the character and timing of recognition of income by the Fund from such debt obligations.

Some debt obligations with a fixed maturity date of one year or less from the date of issuance that are acquired by a Fund may be treated as having acquisition discount or OID. Generally, the Fund will be required to include the acquisition discount or OID in income over the term of the debt security, even though payment of that amount is not received until a later time, usually when the debt security matures. The Fund may make one or more of the elections applicable to debt obligations having acquisition discount or OID which could affect the character and timing of recognition of income by the Fund from such debt obligations.

If a Fund holds the foregoing kinds of securities, it may be required to accrue and distribute income not yet received. In order to generate sufficient cash to make the requisite distributions, a Fund may be required to sell securities in its portfolio that it otherwise would have continued to hold. The Fund may realize gains or losses from such liquidations, and its shareholders may accordingly receive a larger capital gain distribution than they would in the absence of such transactions.

Investments in debt obligations that are at risk of or in default present special tax issues for a Fund. Federal income tax rules are not entirely clear about issues such as whether and, if so, to what extent a Fund should recognize market discount on such a debt obligation, when a Fund may cease to accrue interest, OID or market discount, when and to what extent deductions may be taken for bad debts or worthless securities, how payments received on obligations in default should be allocated between principal and income and whether exchanges of debt obligations in a workout context are taxable. These and other issues will be addressed by a Fund, when, as and if it invests in such securities, in order to seek to ensure that it distributes sufficient income to preserve its status as a RIC and does not become subject to US federal income or excise tax.

Master Limited Partnerships


Some amounts received by a Fund from its investments in MLPs will likely be treated as returns of capital because of accelerated deductions available with respect to the activities of MLPs. On the disposition of an investment in such an MLP, the Fund will likely realize taxable income in excess of economic gain from that asset (or if a Fund does not dispose of the MLP, the Fund will likely realize taxable income in excess of cash flow received by the Fund from the MLP in a later period), and the Fund must take such income into account in determining whether the Fund has satisfied its RIC distribution requirements. The Fund may have to borrow or liquidate securities to satisfy its distribution requirements and meet its redemption requests, even though investment considerations might otherwise make it undesirable for the Fund to borrow money or sell securities at the time. In addition, distributions attributable to gain from the sale of MLPs that are characterized as ordinary income under the Code’s recapture provisions will be taxable to the Fund shareholders as ordinary income.

97



Real Estate Investment Trusts


A Fund’s investments in REIT equity securities may result in the Fund’s receipt of cash in excess of the REIT’s earnings; if the Fund distributes these amounts, these distributions could constitute a return of capital to Fund shareholders for federal income tax purposes. Investments in REIT equity securities also may require a Fund to accrue and distribute income not yet received. To generate sufficient cash to make the requisite distributions, a Fund may be required to sell securities in its portfolio (including when it is not advantageous to do so) that it otherwise would have continued to hold. Dividends received by a Fund from a REIT will not qualify for the corporate dividends-received deduction and generally will not constitute qualified dividend income.

Some of the REITs in which a Fund may invest may be permitted to hold residual interests in real estate mortgage investment conduits (“REMICs”). Under a notice issued by the IRS and Treasury regulations that have not yet been issued, but may apply retroactively, a portion of a Fund’s income from a REIT (or other pass-through entity) that is attributable to the REIT’s residual interest in a REMIC or an equity interest in a taxable mortgage pool (“TMP”) (referred to in the Code as an “excess inclusion”) will be subject to federal income tax in all events. This notice provides that excess inclusion income of a RIC, such as a Fund, will be allocated to shareholders of the RIC in proportion to the dividends received by such shareholders, with the same consequences as if the shareholders held the related REMIC residual interest or TMP directly.


In general, excess inclusion income allocated to shareholders (i) cannot be offset by net operating losses (subject to a limited exception for certain thrift institutions), (ii) will constitute unrelated business taxable income (“UBTI”) to entities (including a qualified pension plan, an individual retirement account, a 401(k) plan, a Keogh plan or other tax-exempt entity) subject to tax on UBTI, thereby potentially requiring such an entity that is allocated excess inclusion income, and otherwise might not be required to file a federal income tax return, to file a tax return and pay tax on such income, and (iii) in the case of a foreign shareholder, will not qualify for any reduction in U.S. federal withholding tax. In addition, if at any time during any taxable year a “disqualified organization” (as defined by the Code) is a record holder of a share in a RIC, then the RIC will be subject to a tax equal to that portion of its excess inclusion income for the taxable year that is allocable to the disqualified organization, multiplied by the highest federal income tax rate imposed on corporations. The Funds do not intend to invest directly in residual interests in REMICs or to invest in REITS in which a substantial portion of the assets will consist of residual interests in REMICs.

Backup Withholding


A Fund generally is required to withhold and remit to the U.S. Treasury a percentage of the dividends and other distributions paid to and proceeds of share sales, exchanges or redemptions made by any individual shareholder who fails to properly furnish the Fund with his or her correct taxpayer identification number (“TIN”), who has under-reported dividend or interest income, or who fails to certify to the Fund that he or she is not subject to such withholding. The backup withholding tax rate is 28% for amounts paid through 2012. The

98



backup withholding rate will be 31% for amounts paid after December 31, 2012, unless Congress enacts tax legislation providing otherwise.


Backup withholding is not an additional tax. Any amounts withheld may be credited against the shareholder’s U.S. federal income tax liability, provided the appropriate information is furnished to the Internal Revenue Service.

In order for a foreign investor to qualify for an exemption from the backup withholding or reduced withholding tax rates under income tax treaties, the foreign investor must comply with special certification and filing requirements. Foreign investors in a Fund should consult their tax advisers.

Tax Shelter Reporting Regulations


Under Treasury regulations, if a shareholder realizes a loss on disposition of a Fund’s shares of $2 million or more for an individual shareholder or $10 million or more for a corporate shareholder, the shareholder must file with the IRS a disclosure statement on Form 8886. Direct shareholders of portfolio securities are in many cases excepted from this reporting requirement, but under current guidance, shareholders of a RIC are not excepted. The fact that a loss is reportable under these regulations does not affect the legal determination of whether a taxpayer’s treatment of the loss is proper. Shareholders should consult their tax advisers to determine the applicability of these regulations in light of their individual circumstances.


Tax-Exempt Shareholders

Under current law, a Fund serves to “block” (that is, prevent the attribution to shareholders of) UBTI from being realized by tax-exempt shareholders. Notwithstanding this “blocking” effect, a tax-exempt shareholder could realize UBTI by virtue of its investment in a Fund if (i) the Fund invests in REITs that hold residual interests in REMICs or TMPs, as discussed above, or (ii) shares in the Fund constitute debt-financed property in the hands of the tax-exempt shareholder within the meaning of Code Section 514(b).

Shares Purchased through Tax-Qualified Plans

Special federal income tax rules apply to investments through defined contribution plans and other tax-qualified plans. Shareholders should consult their tax advisers to determine the suitability of shares of a Fund as an investment through such plans and the precise effect of such an investment on their particular tax situations.

Non-U.S. Shareholders


Capital Gain Dividends generally will not be subject to withholding of federal income tax. In general, dividends (other than Capital Gain Dividends and tax-exempt interest dividends) paid by a Fund to a shareholder that is not a “U.S. person” within the meaning of the Code (such shareholder, a “foreign person”) are subject to withholding of U.S. federal income tax at a rate of 30% (or lower applicable treaty rate) even if they are funded by income or gains (such as portfolio interest, short-term capital gains, or foreign-source dividend and interest income) that,

99



if paid to a foreign person directly, would not be subject to withholding. However, effective for taxable years of a Fund beginning before January 1, 2012, the Fund will generally not be required to withhold tax on any amounts paid to a foreign person with respect to dividends attributable to “qualified short-term gain” (i.e., the excess of net short-term capital gain over net long-term capital loss) designated as such by the Fund and dividends attributable to certain U.S. source interest income that would not be subject to federal withholding tax if earned directly by a foreign person, provided such amounts are properly designated by the Fund. A Fund may choose not to designate such amounts.


A beneficial holder of shares who is a foreign person is not, in general, subject to U.S. federal income tax on gains (and is not allowed a deduction for losses) realized on the sale of shares of a Fund or on Capital Gain Dividends (or exempt-interest dividends) unless (i) such gain or dividend is effectively connected with the conduct of a trade or business carried on by such holder within the United States, (ii) in the case of an individual holder, the holder is present in the United States for a period or periods aggregating 183 days or more during the year of the sale or the receipt of the Capital Gain Dividend and certain other conditions are met, or (iii) the shares constitute USRPIs or the Capital Gain Dividend is attributable to gains from the sale or exchange of USRPIs in accordance with the rules set forth below.


In order to qualify for any exemption from withholding tax or a reduced rate of withholding tax under an applicable income tax treaty, a foreign person will need to comply with applicable certification requirements relating to its non-U.S. status (including, in general, furnishing an IRS Form W-8BEN or substitute form). A foreign person who fails to provide an IRS Form W-8BEN or other applicable form may be subject to backup withholding at the appropriate rate.

The withholding tax does not apply to dividends paid to a foreign person who provides a Form W-8ECI, certifying that the dividends are effectively connected with the foreign person’s conduct of a trade or business within the United States. Instead, the effectively connected dividends will be subject to regular U.S. income tax as if the foreign person were a U.S. shareholder. A non-U.S. corporation receiving effectively connected dividends may also be subject to additional “branch profits tax” imposed at a rate of 30% (or a lower treaty rate).

Special rules apply to foreign persons who receive distributions from a Fund that are attributable to gain from “United States real property interests” (“USRPIs”). The Code defines USRPIs to include direct holdings of U.S. real property and any interest (other than an interest solely as a creditor) in a “United States real property holding corporation.” The Code defines a United States real property holding corporation as any corporation whose USRPIs make up 50% or more of the fair market value of its USRPIs, its interests in real property located outside the United States, plus any other assets it uses in a trade or business. In general, if a Fund is a United States real property holding corporation (determined without regard to certain exceptions), distributions by the Fund that are attributable to (a) gains realized on the disposition of USRPIs by the Fund and (b) distributions received by the Fund from a lower-tier RIC or REIT that the Fund is required to treat as USRPI gain in its hands will retain their character as gains realized from USRPIs in the hands of the foreign persons. (However, absent the enactment of legislation, this “look-through” treatment for distributions by a Fund to foreign persons applies only to such distributions that are attributable to distributions received

100



by the Fund from a lower-tier REIT and are required to be treated as USRPI gain in the Fund’s hands.) If the foreign shareholder holds (or has held at any time during the prior year) more than a 5% interest in a class of stock of a Fund, such distributions received by the shareholder with respect to such class of stock will be treated as gains “effectively connected” with the conduct of a “U.S. trade or business,” and subject to tax at graduated rates. Moreover, such shareholders will be required to file a U.S. income tax return for the year in which the gain was recognized and the Fund will be required to withhold 35% of the amount of such distribution. In the case of all other foreign persons (i.e., those whose interest in the Fund did not exceed 5% at any time during the prior year), the USRPI distribution will be treated as ordinary income (regardless of any designation by the Fund that such distribution is qualified short-term capital gain or capital gain dividend) and the Fund must withhold 30% (or a lower applicable treaty rate) of the amount of the distribution paid to such foreign persons.

In addition, if a Fund is a United States real property holding corporation or former United States real property holding corporation, the Fund may be required to withhold U.S. tax upon a redemption of shares by a greater-than-5% shareholder that is a foreign person, and that shareholder would be required to file a U.S. income tax return for the year of the disposition of the USRPI and pay any additional tax due on the gain. Prior to January 1, 2012, no withholding is generally required with respect to amounts paid in redemption of shares of a fund if the fund is a domestically controlled qualified investment entity, or, in certain other limited cases, if a fund (whether or not domestically controlled) holds substantial investments in RICs that are domestically controlled qualified investment entities. Unless legislation is enacted extending this legislation, beginning on January 1, 2012, such withholding is required, without regard to whether a Fund or any RIC in which it invests is domestically controlled.


General

The foregoing discussion is only a summary of some of the important U.S. federal income tax considerations generally affecting purchasers of the Funds’ shares. No attempt has been made to present a detailed explanation of the U.S. federal income tax treatment of the Funds, and this discussion is not intended as a substitute for careful tax planning. Accordingly, potential purchasers of a Fund’s shares are urged to consult their tax advisers with specific reference to their own tax situation. Foreign shareholders should consult their tax advisers regarding the U.S. and foreign tax consequences of an investment in any of the Funds. In addition, this discussion is based on tax laws and regulations that are in effect on the date of this SAI; such laws and regulations may be changed by legislative, judicial or administrative action, and such changes may be retroactive.
101


FINANCIAL STATEMENTS



The financial statements and related report of the independent registered public accounting firm for the Fifth Third Small Cap Growth Fund, Fifth Third Mid Cap Growth Fund, Fifth Third Quality Growth Fund, Fifth Third Dividend Growth Fund, Fifth Third Micro Cap Value Fund, Fifth Third Small Cap Value Fund, Fifth Third All Cap Value Fund, Fifth Third Disciplined Large Cap Value Fund, Fifth Third Structured Large Cap Plus Fund, Fifth Third Equity Index Fund, Fifth Third International Equity Fund, Fifth Third Strategic Income Fund, Fifth Third LifeModel Aggressive FundSM, Fifth Third LifeModel Moderately Aggressive FundSM, Fifth Third LifeModel Moderate FundSM, Fifth Third LifeModel Moderately Conservative FundSM, Fifth Third LifeModel Conservative FundSM, Fifth Third High Yield Bond Fund, Fifth Third Total Return Bond Fund, Fifth Third Short Term Bond Fund, Fifth Third Prime Money Market Fund, Fifth Third Institutional Money Market Fund, Fifth Third Institutional Government Money Market Fund and Fifth Third U.S. Treasury Money Market Fund for the fiscal year ended July 31, 2011 are incorporated herein by reference into this SAI from the annual reports for those Funds (File Nos. 33-24848 and 811-05669).

102


APPENDIX A

STANDARD AND POOR’S RATINGS GROUP CORPORATE
AND MUNICIPAL BOND RATING DEFINITIONS


AAA–Debt rated “AAA” has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong.

AA–Debt rated “AA” has a very strong capacity to pay interest and repay principal and differs from the higher rated issues only in small degree.

A–Debt rated “A” has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories.

BBB–Debt rated “BBB” is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories.

BB- Debt rated “BB” has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The BB rating category is also used for debt subordinated to senior debt that is assigned an actual or implied BBB rating.

B-Debt rated “B” has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The B rating category is also used for debt subordinated to senior debt that is assigned an actual or implied BB or BB- rating.

CCC-Debt rated “CCC” has a currently identifiable vulnerability to default and is dependent upon favorable business, financial or economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial or economic conditions, it is not likely to have the capacity to pay interest or repay principal. The CCC rating category is also used for debt subordinated to senior debt that is assigned an actual or implied B or B-rating.

CC-The rating “CC” is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

C-The rating “C” is typically applied to debt subordinated to senior debt which is assigned an actual or implied CCC- debt rating. The C rating may be used to cover a situation where a bankruptcy has been filed but debt service payments are continued.

CI-The rating “CI” is reserved for income bonds on which no interest is being paid.
103



D-Debt rated “D” is in payment default. The D rating category is used when interest payments or principal payments are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The D rating also will be used upon the filing of a bankruptcy petition and debt service payments are jeopardized.

NR–NR indicates that no public rating has been requested, that there is insufficient information on which to base a rating, or that S&P does not rate a particular type of obligation as a matter of policy. S&P may apply a plus (+) or minus (-) to the above rating classifications to show relative standing within the classifications.
MOODY’S INVESTORS SERVICE, INC. CORPORATE AND
MUNICIPAL BOND RATING DEFINITIONS


Aaa–Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as “gilt edged.” Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.

Aa–Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group, they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.

A–Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium-grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future.

Baa–Bonds which are rated Baa are considered as medium-grade obligations (i.e., they are neither highly protected nor poorly secured). Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.

Ba- Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.

B- Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.
104



Caa- Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca- Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C- Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

NR–Not rated by Moody’s. Moody’s applies numerical modifiers, 1, 2 and 3, in each generic rating classification from Aa through B in its bond rating system. The modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category.
FITCH INVESTORS SERVICE, INC. LONG-TERM DEBT RATING DEFINITIONS


AAA–Bonds considered to be investment grade and of the highest credit quality. The obligor has an exceptionally strong ability to pay interest and repay principal, which is unlikely to be affected by reasonably foreseeable events.

AA–Bonds considered to be investment grade and of very high quality. The obligor’s ability to pay interest and repay principal is very strong, although not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA categories are not significantly vulnerable to foreseeable future developments, short-term debt of these issuers is generally rated F-1+.

A–Bonds considered to be investment grade and of high credit quality. The obligor’s ability to pay interest and repay principal is considered to be strong, but may be more vulnerable to adverse changes in economic conditions and circumstances than bonds with higher ratings.

BBB- BBB ratings indicate that there is currently a low expectation of credit risk. Capacity for timely payment of financial commitments is considered adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity. This is the lowest investment grade category.

BB- BB ratings indicate that there is a possibility of credit risk developing, particularly as the result of adverse economic change over time; however, business or financial alternatives may be available to allow financial commitments to be met. Securities rated in this category are not investment grade.

B- B ratings indicate that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is contingent upon a sustained, favorable business and economic environment.
105



CCC, CC, C- Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic developments. A “CC” rating indicates that default of some kind appears probable. ‘C’ ratings signal imminent default.

DDD, DD, D-Securities have defaulted on some or all of their obligations. ‘DDD’ designates the highest prospect for resumption of performance or continued operation with or without a formal reorganization process. For U.S. corporates, for example, “DD” indicates potential recovery of 50%-90% of such outstanding, and “D” the lowest recovery potential, i.e. below 50%.

NR–NR indicates that Fitch does not rate the specific issue.

Plus (+) or Minus (-): Plus and minus signs are used with a rating symbol to indicate the relative position of a credit within the rating category. Plus and minus signs, however, are not used in the AAA category.
STANDARD AND POOR’S RATINGS GROUP MUNICIPAL
NOTE RATING DEFINITIONS


SP-1–Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus sign (+) designation.

SP-2–Satisfactory capacity to pay principal and interest.

SP-3–Speculative capacity to pay principal and interest.
MOODY’S INVESTORS SERVICE SHORT-TERM LOAN RATING DEFINITIONS


MIG1/VMIGI–This designation denotes best quality. There is a present strong protection by established cash flows, superior liquidity support or demonstrated broad based access to the market for refinancing.

MIG2/VMIG2–This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group.
FITCH INVESTORS SERVICE, INC. SHORT-TERM DEBT RATING DEFINITIONS


F-1+–Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment.

F-1–Very Strong Credit Quality. Issues assigned this rating reflect an assurance of timely payment only slightly less in degree than issues rated F-I+.

F-2–Good Credit Quality. Issues carrying this rating have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as the F-I + and F-1 categories.
106



F-3–Fair Credit Quality. The capacity for timely payment of financial commitments is adequate; however, near-term adverse changes could result in a reduction to non-investment grade.

B–Speculative. Minimal capacity for timely payment of financial commitments, plus vulnerability to near-term adverse changes in financial and economic conditions.

C–High Default Risk. Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon a sustained, favorable business and economic environment.

D–Default. Denotes actual or imminent payment default.
STANDARD AND POOR’S RATINGS GROUP COMMERCIAL
PAPER RATING DEFINITIONS


A-1–This designation indicates that the degree of safety regarding timely payment is strong. Those issues determined to have extremely strong safety characteristics are denoted with a plus (+) sign.

A-2–Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.

A-3–Issues carrying this designation have adequate capacity for timely payment. They are, however, more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations.
MOODY’S INVESTORS SERVICE, INC. COMMERCIAL PAPER RATING DEFINITIONS


Prime-1 –Issuers rated Prime-1 (or related supporting institutions) have a superior capacity for repayment of senior short-term promissory obligations. Prime-1 repayment capacity will often be evidenced by the following characteristics:

Leading market positions in well-established industries.

High rates of return on funds employed.

Conservative capitalization structure with moderate reliance on debt and ample asset protection.

Broad margins in earnings coverage of fixed financial charges and high internal cash generation.

Well-established access to a range of financial markets and assured sources of alternate liquidity.

Prime-2–Issuers (or supporting institutions) rated Prime-2 (P-2) have a strong capacity for repayment of senior short-term debt obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, may be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.
107



Prime-3–Issuers rated Prime-3 have an acceptable ability for payment of short-term promissory obligations.
108


APPENDIX B

Beneficial Ownership



The following table indicates the name, address, and percentage of ownership of each person who owns of record or is known by the Trust to own beneficially 5% or more of any Class of a Fund’s outstanding shares as of October 31, 2011.


Fund/Class Percent of the Class Total Assets Held by the Shareholder
Small Cap Growth Fund I Shares
FIFTH THIRD LIFEMODEL MODERATELY AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 21.76%
Small Cap Growth Fund I Shares
FIFTH THIRD LIFEMODEL MODERATE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 20.34%
Small Cap Growth Fund I Shares
FIFTH THIRD LIFEMODEL AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 16.73%
Small Cap Growth Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 14.62%
Small Cap Growth Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS
CASH DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 13.61%
Small Cap Growth Fund A Shares
NFS LLC FEBO FIRST MERCANTILE-PREMIER TR FIFT
FIRST MERCANTILE TRUST CO TTEE ATTN FUNDS MGMT
57 GERMANTOWN CT
CORDOVA TN 38018-7273 20.84%
Small Cap Growth Fund B Shares
NFS LLC FEBO MOHAMMAD HUSSAIN RUSKSHANDA HUSSAIN
8637 COPPER CREEK DR
NEWBURGH IN 47630-3131 15.41%
Small Cap Growth Fund B Shares
NFS LLC FEBO NFS FMTC IRA
FBO JAMES D MAYBERRY
989 OAKWOOD AVE
GURNEE IL 60031-2237 9.34%
Small Cap Growth Fund B Shares
NFS LLC FEBO NFS FMTC IRA FBO GEOFFREY D WILSON
2241 BLACKMOOR PARK LN
LEXINGTON KY 40509-8490 8.48%

109



Fund/Class Percent of the Class Total Assets Held by the Shareholder
Small Cap Growth Fund C Shares
NFS LLC FEBO NFS FMTC IRA
FBO JOSEPH J SUM
111628 SWINFORD LANE
MOKENA IL 60448 16.07%
Small Cap Growth Fund C Shares
NFS LLC FEBO
NFS FMTC SIMPLE IRA
R O APELT SONS INC FBO DIANE L APELT
4577 GRAYTON ROAD
CLEVELAND OH 44135-2325 9.81%
Small Cap Growth Fund C Shares
NFS LLC FEBO ANN H FITZGIBBONS TTEE
ANN FITZGIBBONS REVOCABLE TRUST U/A 9/7/05
6519 EMERALD DR
BURLINGTON KY 41005-8409 8.95%
Small Cap Growth Fund C Shares CHARLES SCHWAB & CO INC
SPECIAL CUSTODY A/C FBO CUSTOMERS
ATTN MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151 7.72%
Small Cap Growth Fund C Shares
NFS LLC FEBO NFS FMTC SIMPLE IRA
R O APELT SONS INC FBO ALAN R APELT
4577 GRAYTON RD
CLEVELAND OH 44135-2325 5.83%
Small Cap Growth Fund C Shares
NFS LLC FEBO NFS/FMTC IRA
FBO MARCIA L BOURAY
PO BOX 305
CEDARVILLE IL 61013-0305 5.36%
Small Cap Growth Fund C Shares
FIRST CLEARING LLC A/C 3429-0602
2801 MARKET ST
SAINT LOUIS MO 63103-2523 5.12%
Quality Growth Fund I Shares
JPMORGAN CHASE BANK AS TRUSTEE C/O JPMORGAN RPS 5500 TEAM
9300 WARD PKWY
KANSAS CITY MO 64114-3317 37.16%
Quality Growth Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 13.88%

110



Fund/Class Percent of the Class Total Assets Held by the Shareholder
Quality Growth Fund I Shares
FIFTH THIRD BANK FBO CINTAS
ATTN MICHELLE HODGEMAN MD 1090C7
38 FOUNTAIN SQUARE PLZ
CINCINNATI OH 45263-0074 9.31%
Quality Growth Fund I Shares
FIFTH THIRD LIFEMODEL MODERATE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 8.9%
Quality Growth Fund I Shares
FIFTH THIRD LIFEMODEL MODERATELY AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 8.72%
Quality Growth Fund I Shares
FIFTH THIRD LIFEMODEL AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 6.76%
Quality Growth Fund I Shares
FIFTH THIRD BANK TRUSTEE FBO VARIOUS FASCORP RECORD KEPT PLAN
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002 6.36%
Quality Growth Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS
REINVEST DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 5.47%
Short Term Bond Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 47.77%
Short Term Bond Fund I Shares
FIFTH THIRD LIFEMODEL MODERATE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 15.55%
Short Term Bond Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 7.68%
Short Term Bond Fund I Shares
FIFTH THIRD LIFEMODEL MODERATELY AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 6.17%

111



Fund/Class Percent of the Class Total Assets Held by the Shareholder
Short Term Bond Fund A Shares
MSSB FBO HENNY OBERMAIER TTEE HENNY OBERMAIER TRUST UA U/ADTD
02/18/2000
3200 NORTH OCEAN BLVD APT 2910
FT LAUDERDALE FL 33308-7171 8.82%
Short Term Bond Fund A Shares
NFS LLC FEBO FIRST MERCANTILE-PREMIER TR
FIFT PREMIER TRUST ATTN FUNDS MGMT
57 GERMANTOWN CT
CORDOVA TN 38018-7273 7.23%
Short Term Bond Fund A Shares
NFS LLC FEBO JAN MALLEY
10838 OMAHA TRCE
UNION KY 41091-9224 6.62%
Short Term Bond Fund C Shares
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS
CUSTOMERS
4800 DEER LAKE DRIVE EAST
JACKSONVILLE FL 32246-6484 25.35%
Short Term Bond Fund C Shares
FIRST CLEARING, LLC A/C 8421-8200 2801 MARKET STREET
SAINT LOUIS, MO 63103 5.7%
Small Cap Value Fund I Shares
JPMORGAN CHASE BANK AS TRUSTEE C/O JPMORGAN RPS 5500 TEAM
9300 WARD PKWY
KANSAS CITY MO 64114-3317 39.88%
Small Cap Value Fund I Shares
FIFTH THIRD LIFEMODEL MODERATELY AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 11.39%
Small Cap Value Fund I Shares
FIFTH THIRD LIFEMODEL MODERATE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 10.64%
Small Cap Value Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 10.62%
Small Cap Value Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 10.55%
Small Cap Value Fund I Shares
FIFTH THIRD LIFEMODEL AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 8.53%

112



Fund/Class Percent of the Class Total Assets Held by the Shareholder
Small Cap Value Fund A Shares
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS
CUSTOMERS
4800 DEER LAKE DRIVE EAST
JACKSONVILLE FL 32246-6484 21.56%
Small Cap Value Fund B Shares
NFS LLC FEBO NFS FMTC IRA FBO PAMELA S WEISSHAAR
8391 WYCLIFFE DR
CINCINNATI OH 45244-2597 9.56%
Small Cap Value Fund B Shares
NFS LLC FEBO MARY JANE SHEA JOSEPH E SHEA
555 WARREN PLAZA
VALPARAISO IN 46385-6810 5.02%
Small Cap Value Fund C Shares
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS
4800 DEER LAKE DRIVE EAST
JACKSONVILLE FL 32246-6484 69.24%
Small Cap Value Fund C Shares
NFS LLC FEBO THE DANIEL R UNK REVOCABLE TRUST
DANIEL R UNK TTEE U A 11 02 04
287 MARIAN LAKE BLVD
CUYAHOGA FALLS OH 44223-1123 10.23%
Micro Cap Value Fund I Shares
FIFTH THIRD BANK TRUSTEE FBO
VARIOUS FASCORP RECORD KEPT PLAN
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002 30.57%
Micro Cap Value Fund I Shares OPPENHEIMER & CO INC.
FBO CITY OF STAMFORD POLICEMEN PENSION TR FUND
DTD 10/20/1971 MICHAEL NOTO, CHAIRMAN
STAMFORD POLICE PENSION BOARD
805 BEDFORD STREET 10.85%
Micro Cap Value Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/CASH CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 10.73%
Micro Cap Value Fund I Shares
WELLS FARGO BANK NA
FBO CALGON CARBON BIG SANDY PLANT
PO BOX 1533
MINNEAPOLIS MN 55480-1533 8.64%


113



Fund/Class Percent of the Class Total Assets Held by the Shareholder
Micro Cap Value Fund I Shares
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS 4800
DEER LAKE DRIVE EAST
JACKSONVILLE FL 32246-6484 8.53%
Micro Cap Value Fund I Shares
WELLS FARGO BANK NA
FBO CALGON CARBON SALARIED EMPLOYEES
PO BOX 1533
MINNEAPOLIS MN 55480-1533 7.93%
Micro Cap Value Fund I Shares
FIFTH THIRD TRUST OPERATIONS REINVEST DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 7.02%
Micro Cap Value Fund A Shares
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS
4800 DEER LAKE DRIVE EAST
JACKSONVILLE FL 32246-6484 5.43%
Micro Cap Value Fund B Shares
NFS LLC FEBO WILFRED W COPA ADRIENE A COPA 3
834 EASTWIND CT
NORTHBROOK IL 60062-4206 13.44%
Micro Cap Value Fund C Shares
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS
4800 DEER LAKE DRIVE EAST
JACKSONVILLE FL 32246-6484 35.09%
Mid Cap Growth Fund I Shares
FIFTH THIRD LIFEMODEL MODERATELY AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 20.68%
Mid Cap Growth Fund I Shares
FIFTH THIRD LIFEMODEL MODERATE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 20.04%
Mid Cap Growth Fund I Shares
FIFTH THIRD FUNDS TRUST OPERATIONS CASH DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 17.8%
Mid Cap Growth Fund I Shares
FIFTH THIRD LIFEMODEL AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 14.9%

114



Fund/Class Percent of the Class Total Assets Held by the Shareholder
Mid Cap Growth Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS REINVEST DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 12.04%
Mid Cap Growth Fund A Shares
NFS LLC FEBO FIRST MERCANTILE TRUST CO
PREMIER TRUST ATTN FUNDS MGMT
57 GERMANTOWN CT
CORDOVA TN 38018-7273 15.77%
Mid Cap Growth Fund B Shares
NFS LLC FEBO NFS FMTC IRA FBO JAMES W CAMP
588 NORTH 50 WEST
VALPARAISO IN 46385-8967 9.59%
Mid Cap Growth Fund B Shares
NFS LLC FEBO MOHAMMAD HUSSAIN RUSKSHANDA HUSSAIN
8637 COPPER CREEK DR
NEWBURGH IN 47630-3131 5.68%
Mid Cap Growth Fund B Shares
NFS LLC FEBO NFS FMTC IRA FBO EDWARD C JACOB
6303 AUTUMN TRAIL
BURLINGTON KY 41005-8479 5.67%
Mid Cap Growth Fund C Shares
MSSB FBO DANIEL ROTHMAN & JANET ROTHMAN JT TEN
2952 HAMPTON CT
WANTAGH NY 11793-4608 7.3%
Mid Cap Growth Fund C Shares
NFS LLC FEBO NFS FMTC IRA FBO RANDY J ZACHRITZ
6465 GLENDALE COURT
FLORENCE KY 41042-4294 5.36%
Dividend Growth Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 42.91%
Dividend Growth Fund I Shares
LEE G JORDAN AND NANCY C JORDAN JTWROS
10629 WINTERWOOD
CARMEL IN 46032-8258 6.83%
Dividend Growth Fund I Shares
FIFTH THIRD BANK TRUSTEE FBO VARIOUS FASCORP RECORD KEPT PLAN
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002 6.77%
Dividend Growth Fund I Shares
TD AMERITRADE INC FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS
PO BOX 2226
OMAHA NE 68103-2226 5.82%

115



Fund/Class Percent of the Class Total Assets Held by the Shareholder
Dividend Growth Fund I Shares
STATE STREET BANK & TRUST CO
CUST FOR THE IRA RICHARD F GRAFFIS
4242 N PENNSYLVANIA ST
INDIANAPOLIS IN 46205-2613 5.47%
Dividend Growth Fund B Shares
NFS LLC FEBO HARVEY NESSER HELAINE M NESSER
5471 BLUE ASH ROAD
COLUMBUS OH 43229-3630 53.75%
Dividend Growth Fund B Shares
NFS LLC FEBO NFS/FMTC ROTH IRA FBO KATHERINE A RAKER
4868 LAKE VALENCIA BLVD
E PALM HARBOR FL 34684-4005 8.75%
Dividend Growth Fund B Shares
NFS LLC FEBO NFS FMTC IRA FBO KATHLEEN SOUTHERN
1119 CULPEPPER CIRCLE
FRANKLIN TN 37064-8959 5.59%
Dividend Growth Fund C Shares
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS
4800 DEER LAKE DRIVE EAST JACKSONVILLE FL 32246-6484 20.71%
Dividend Growth Fund C Shares
NFS LLC FEBO ROBERT JOSEPH BLUM III ROBERTA ANN BLUM
4795 CHAPEL RIDGE DR
CINCINNATI OH 45223-1274 12.66%
Dividend Growth Fund C Shares
NFS LLC FEBO NFS FMTC IRA FBO EDWARD J TROYAN
409 WHITTLESEY DR
TALLMADGE OH 44278-1678 12.17%
Equity Index Fund I Shares
FIFTH THIRD BANK TRUSTEE FBO VARIOUS FASCORP RECORD KEPT PLAN
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002 57.2%
Equity Index Fund I Shares
JPMORGAN CHASE BANK AS TRUSTEE C/O JPMORGAN RPS 5500 TEAM
9300 WARD PKWY
KANSAS CITY MO 64114-3317 22.99%
Equity Index Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 6.38%
Equity Index Fund I Shares
PERSHING LLC
PO BOX 2052
JERSEY CITY NJ 07303-2052 5.08%

116



Fund/Class Percent of the Class Total Assets Held by the Shareholder
Equity Index Fund A Shares
FIFTH THIRD BANK TRUSTEE FBO VARIOUS FASCORP RECORD KEPT PLAN
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002 54.27%
Equity Index Fund A Shares
NFS LLC FEBO FIRST MERCANTILE-PREMIER TR FIFT
FIRST MERCANTILE TRUST CO TTEE ATTN FUNDS MGMT
57 GERMANTOWN CT
CORDOVA TN 38018-7273 17.47%
Equity Index Fund C Shares
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS
4800 DEER LAKE DRIVE EAST
JACKSONVILLE FL 32246-6484 28.18
Equity Index Fund C Shares
NFS LLC FEBO NFS FMTC IRA FBO MARC MANLY
9200 OLD INDIAN HILL RD
CINCINNATI OH 45243-3438 16.4
Equity Index Fund C Shares
RAYMOND JAMES & ASSOC INC
FBO GREGORY BERRYMAN & LAUREL WOMEN’S HEALTH CENTER INC 401K
FBO LAUREL WRIGHT
1600 N GRAND AVE STE 400
PUEBLO CO 81003-2760 6.13%
Equity Index Fund S Shares
FIFTH THIRD BANK TRUSTEE FBO VARIOUS FASCORP RECORD KEPT PLAN
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002 69.85%
Equity Index Fund S Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 16.04%
Equity Index Fund S Shares
FIFTH THIRD BANK TRUST OPERATIONS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 14.11%
Equity Index Fund P Shares
FIFTH THIRD BANK TRUSTEE FBO VARIOUS FASCORP RECORD KEPT PLAN
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002 54.86%
Equity Index Fund P Shares
FIFTH THIRD BANK FBO CINTAS
ATTN MICHELLE HODGEMAN MD 1090C7
38 FOUNTAIN SQUARE PLZ
CINCINNATI OH 45263-0074 36.92%

117



Fund/Class Percent of the Class Total Assets Held by the Shareholder
Equity Index Fund P Shares
FIFTH THIRD BANK TRUST OPERATIONS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 7.25%
Equity Index Fund T Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 91.97%
Structured Large Cap Plus Fund I Shares
FIFTH THIRD LIFEMODEL MODERATE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 31.27%
Structured Large Cap Plus Fund I Shares
FIFTH THIRD LIFEMODEL MODERATELY AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 31%
Structured Large Cap Plus Fund I Shares
FIFTH THIRD LIFEMODEL AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 25.78%
Structured Large Cap Plus Fund B Shares
NFS LLC FEBO NFS/FMTC IRA FBO ANTHONY R GEACH
8258 MIDNIGHT PASS RD
SARASOTA FL 34242-2731 27.74%
Structured Large Cap Plus Fund B Shares
SUSAN M MC GUINNESS C F MARGIT MC GUINNESS UTMA IL
240 BERKLEY
ELMHURST IL 60126-3167 17.14%
Structured Large Cap Plus Fund B Shares
OPPENHEIMER & CO INC. FBO SUSAN M MC
GUINNESS C/F KATHLEEN MC GUINNESS UTMA/IL
240 BERKLEY ELMHURST IL 60126-3167 6.11%
Structured Large Cap Plus Fund C Shares
MERRILL LYNCH PIERCE FENNER & SMITH
FOR THE SOLE BENEFIT OF ITS CUSTOME
4800 DEER LAKE DRIVE EAST
JACKSONVILLE FL 32246-6484 78.54%
Structured Large Cap Plus Fund C Shares
NFS LLC FEBO NFS FMTC IRA FBO VIRGINIA KAY PETERS
1787 ARCADIA AVE
OBETZ OH 43207-4409 11.34%
Structured Large Cap Plus Fund C Shares
MSSB C/F ROBERT C REEVES IRA ROLLOVER DATED 08/04/09
38 RIDGELINE DR
EUGENE OR 97405-3578 6.54%

118



Fund/Class Percent of the Class Total Assets Held by the Shareholder
All Cap Value Fund I Shares
FIFTH THIRD LIFEMODEL MODERATELY AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 20.05%
All Cap Value Fund I Shares
FIFTH THIRD LIFEMODEL MODERATE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 19.2%
All Cap Value Fund I Shares
FIFTH THIRD BANK TRUSTEE FBO VARIOUS FASCORP RECORD KEPT PLA
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002 15.73%
All Cap Value Fund I Shares
FIFTH THIRD LIFEMODEL AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 14.85%
All Cap Value Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 13.96%
All Cap Value Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS A/C 38 38 0026216246
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 6.46%
All Cap Value Fund C Shares
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS
4800 DEER LAKE DRIVE EAST
JACKSONVILLE FL 32246-6484 42.47%
Disciplined Large Cap Value Fund I Shares
JPMORGAN CHASE BANK AS TRUSTEE C/O JPMORGAN RPS 5500 TEAM
9300 WARD PKWY
KANSAS CITY MO 64114-3317 28.02%
Disciplined Large Cap Value Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 18.3%
Disciplined Large Cap Value Fund I Shares
FIFTH THIRD LIFEMODEL MODERATELY AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 12.69%
Disciplined Large Cap Value Fund I Shares
FIFTH THIRD LIFEMODEL MODERATE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 12.5%

119



Fund/Class Percent of the Class Total Assets Held by the Shareholder
Disciplined Large Cap Value Fund I Shares
FIFTH THIRD LIFEMODEL AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 9.85%
Disciplined Large Cap Value Fund I Shares
FIFTH THIRD BANK TRUSTEE FBO VARIOUS FASCORP RECORD KEPT PLAN
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002 5.79%
Disciplined Large Cap Value Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS REINVEST DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 5.51%
Disciplined Large Cap Value Fund A Shares
FIFTH THIRD BANK TRUSTEE FBO VARIOUS FASCORP RECORD KEPT PLAN
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002 20.94%
Disciplined Large Cap Value Fund A Shares
NFS LLC FEBO FIRST MERCANTILE-PREMIER TR FIFT
FIRST MERCANTILE TRUST CO TTEE ATTN FUNDS MGMT
57 GERMANTOWN CT
CORDOVA TN 38018-7273 17.24%
Disciplined Large Cap Value Fund B Shares
PERSHING LLC
PO BOX 2052
JERSEY CITY NJ 07303-2052 5.03%
Disciplined Large Cap Value Fund C Shares
MERRILL LYNCH PIERCE FENNER & SMITH
FOR THE SOLE BENEFIT OF ITS CUSTOMERS
4800 DEER LAKE DRIVE EAST
JACKSONVILLE FL 32246-6484 25.48%
Disciplined Large Cap Value Fund C Shares
NFS LLC FEBO GEORGE H HOMAN CAROL H HOMAN
3756 E TAYLOR SCHOOL RD
HAMILTON OH 45011-8443 8.07%
Disciplined Large Cap Value Fund C Shares
NFS LLC FEBO THOMAS E BRINKMAN SR TTEE
THOMAS E BRINKMAN SR REVOC TR U A 12 29 93
2975 ALPINE TERRACE
CINCINNATI OH 45208-3407 8.03%
Strategic Income Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/CASH CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 63.21%

120



Fund/Class Percent of the Class Total Assets Held by the Shareholder
Strategic Income Fund I Shares
FIFTH THIRD LIFEMODEL MODERATE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 9.03%
Strategic Income Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 8.74%
Strategic Income Fund A Shares
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS
CUSTOMERS
4800 DEER LAKE DRIVE EAST
JACKSONVILLE FL 32246-6484 6.6%
Strategic Income Fund B Shares
NFS LLC FEBO NFS FMTC ROLLOVER IRA FBO ABBAS F HAZRAT
1S319 CHURCH AVENUE
LOMBARD IL 60148-4720 11.1%
Strategic Income Fund B Shares
RAYMOND JAMES & ASSOC INC CSDN
FBO CAROL BLACK IRA
8010 STONEGATE DR
CINCINNATI OH 45255-3179 6.82%
Strategic Income Fund B Shares
PRIMEVEST FINANCIAL SVCS
FBO KURT F KAUPISCH IRA
400 1ST ST S STE 300 PO BOX 283
SAINT CLOUD MN 56302-0283 6.74%
Strategic Income Fund C Shares
MERRILL LYNCH PIERCE FENNER & SMITH
FOR THE SOLE BENEFIT OF ITS CUSTOMERS
4800 DEER LAKE DRIVE EAST
JACKSONVILLE FL 32246-6484 12.62%
High Yield Bond Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 77.81%
High Yield Bond Fund I Shares
TD AMERITRADE INC FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS
PO BOX 2226
OMAHA NE 68103-2226 9.77%
High Yield Bond Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS REINVEST DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 6.51%

121



Fund/Class Percent of the Class Total Assets Held by the Shareholder
High Yield Bond Fund A Shares
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS
4800 DEER LAKE DRIVE EAST
JACKSONVILLE FL 32246-6484 10.79%
High Yield Bond Fund A Shares
NFS LLC FEBO NFS/FMTC ROLLOVER IRA
FBO DANIEL EUGENE ALLEN
131 ENCANTO DR
ESCONDIDO CA 92027-3517 10.54%
High Yield Bond Fund B Shares
NFS LLC FEBO TERRY L KELLER
23294 PINETREE CIRCLE
MACOMB MI 48042-5360 37.8%
High Yield Bond Fund B Shares
NFS LLC FEBO NFS FMTC IRA FBO BARBARA A BEYER
7214 BELLOWIND COURT
REYNOLDSBURG OH 43068-6020 34.8%
High Yield Bond Fund B Shares
NFS LLC FEBO NFS FMTC ROTH IRA
FBO RICHARD J MARTIN
348 DARBYHURST ROAD
COLUMBUS OH 43228-1323 7.09%
High Yield Bond Fund C Shares
MERRILL LYNCH PIERCE FENNER & SMITH
FOR THE SOLE BENEFIT OF ITS CUSTOMERS
4800 DEER LAKE DRIVE EAST
JACKSONVILLE FL 32246-6484 16.58%
Total Return Bond Fund I Shares
FIFTH THIRD LIFEMODEL MODERATE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 32.45%
Total Return Bond Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 22.09%
Total Return Bond Fund I Shares
FIFTH THIRD LIFEMODEL MODERATELY AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 12.55%
Total Return Bond Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS REINVEST DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 9.59%

122



Fund/Class Percent of the Class Total Assets Held by the Shareholder
Total Return Bond Fund I Shares
FIFTH THIRD LIFEMODEL CONSERVATIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 9.37%
Total Return Bond Fund I Shares
FIFTH THIRD LIFEMODEL MODERATELY CONSERVATIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 8.69%
Total Return Bond Fund A Shares
NFS LLC FEBO FIRST MERCANTILE-PREMIER TR
FIFT PREMIER TRUST ATTN FUNDS MGMT
57 GERMANTOWN CT
CORDOVA TN 38018-7273 12.3%
Total Return Bond Fund B Shares
NFS LLC FEBO NFS FMTC IRA
FBO ANNA M BALL
274 MAHER ROAD
WALTON KY 41094-9707 12.52%
Total Return Bond Fund B Shares
NFS LLC FEBO NFS FMTC IRA
FBO REGINALD J GROVES
1753 HAMPSTEAD CT
VALPARAISO IN 46385-8198 9.11%
Total Return Bond Fund B Shares
NFS LLC FEBO YI ZHU
2517 INDEPENDENCE AVE
GLENVIEW IL 60026-7730 7.61%
Total Return Bond Fund B Shares
NFS LLC FEBO RAYMOND D PAGE RHONDA C PAGE
2241 FELDMAN AVE
CINCINNATI OH 45212-1518 6.45%
Total Return Bond Fund C Shares MERRILL LYNCH PIERCE FENNER & SMITH
FOR THE SOLE BENEFIT OF ITS CUSTOMERS
4800 DEER LAKE DRIVE EAST
JACKSONVILLE FL 32246-6484 12.8%
Total Return Bond Fund C Shares
NFS LLC FEBO GINO GIORGETTI PIERA GIORGETTI
VIA A GRAMSCI 12
FORNACETTE PISA 56012 ITALY 12.25%
Total Return Bond Fund C Shares
NFS LLC FEBO DOLORES J LESSIG
2841 LONDON DR
STOW OH 44224-3713 6.13%

123



Fund/Class Percent of the Class Total Assets Held by the Shareholder
Total Return Bond Fund C Shares
NFS LLC FEBO NFS FMTC IRA
FBO ALBERT E PIERCE
10404 HWY 27 LOT 396
FROSTPROOF FL 33843-5203 5.18%
International Equity Fund I Shares JPMORGAN CHASE BANK AS TRUSTEE C/O
JPMORGAN RPS 5500 TEAM
9300 WARD PKWY
KANSAS CITY MO 64114-3317 24.29%
International Equity Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS REINVEST DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 21.03%
International Equity Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 15.56%
International Equity Fund I Shares
FIFTH THIRD LIFEMODEL MODERATELY AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 12.3%
International Equity Fund I Shares
FIFTH THIRD LIFEMODEL MODERATE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 12.01%
International Equity Fund I Shares
FIFTH THIRD LIFEMODEL AGGRESSIVE FUND
38 FOUNTAIN SQUARE PLAZA MD 1090BD
CINCINNATI OH 45263-0001 9.02%
International Equity Fund A Shares
NFS LLC FEBO FIRST MERCANTILE-PREMIER TR FIFT
FIRST MERCANTILE TRUST CO TTEE ATTN FUNDS MGMT
57 GERMANTOWN CT
CORDOVA TN 38018-7273 24.88%
International Equity Fund C Shares
NFS LLC FEBO NFS FMTC IRA
FBO RHONDA M GIEDD
345 NORTH HARRISON BOX 411
CEDARVILLE IL 61013-0411 8.36%
International Equity Fund C Shares
NFS LLC FEBO NFS FMTC IRA
FBO CHARLES E RODERICK
2388 EAGLE DR
FREEPORT IL 61032-8575 6.21%

124



Fund/Class Percent of the Class Total Assets Held by the Shareholder
International Equity Fund C Shares
NFS LLC FEBO NFS/FMTC IRA
FBO FRANK WATSON PARSONS
1025 ANTHONY DR
MUSKEGON MI 49441-7304 6.16%
International Equity Fund C Shares
NFS LLC FEBO NFS FMTC IRA
FBO LEE SHANK
19846 HENRY RD
CLEVELAND OH 44126-1646 5.04%
Institutional Government Money Market Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/CASH CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 43.82%
Institutional Government Money Market Fund I Shares
NATIONAL FINANCIAL SERVICES LLC FOR THE EXCLUSIVE BENEFIT OF OUR
CUSTOMERS
ATTN MUTUAL FUNDS DEPT 5TH FL
200 LIBERTY ST FL 5
NEW YORK NY 10281-5503 30.5%
Institutional Government Money Market Fund I Shares
BANK OF NEW YORK HARE & CO ATTN STIF/MASTER NOTE
111 SANDERS CREEK PKWY EAST
SYRACUSE NY 13057-1381 11.49%
Institutional Government Money Market Fund S Shares
NATIONAL FINANCIAL SERVICES LLC FOR THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS
ATTN MUTUAL FUNDS DEPT 5TH FL 200
LIBERTY ST FL 5
NEW YORK NY 10281-5503 53.73%
Institutional Government Money Market Fund S Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/CASH CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 46.27%
Institutional Government Money Market Fund P Shares
NATIONAL FINANCIAL SERVICES LLC FOR THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS
ATTN MUTUAL FUNDS DEPT 5TH FL
200 LIBERTY ST FL 5
NEW YORK NY 10281-5503 68.78%
Institutional Government Money Market Fund P Shares
BANK OF NEW YORK HARE & CO
ATTN STIF/MASTER NOTE
111 SANDERS CREEK PKWY EAST
SYRACUSE NY 13057-1381 28.4%

125



Fund/Class Percent of the Class Total Assets Held by the Shareholder
Institutional Government Money Market Fund T Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/CASH CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 83.04%
Institutional Government Money Market Fund T Shares
NATIONAL FINANCIAL SERVICES LLC FOR THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS
ATTN MUTUAL FUNDS DEPT 5TH FL
200 LIBERTY ST FL 5
NEW YORK NY 10281-5503 16.96%
Prime Money Market Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/CASH CAP GAINS
38 FOUNTAIN SQ PLAZA MD1090F2
CINCINNATI OH 45263-0001 76.61%
Prime Money Market Fund I Shares
NATIONAL FINANCIAL SERVICES LLC FOR THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS
ATTN MUTUAL FUNDS DEPT 5TH FL
200 LIBERTY ST FL 5
NEW YORK NY 10281-5503 11.22%
Prime Money Market Fund I Shares
FIFTH THIRD BANK TRUSTEE FBO VARIOUS FASCORP RECORD KEPT PLAN
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002 10.25%
Prime Money Market Fund A Shares
NATIONAL FINANCIAL SERVICES LLC FOR THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS
ATTN MUTUAL FUNDS DEPT 5TH FL
200 LIBERTY ST FL 5
NEW YORK NY 10281-5503 98.45%
Prime Money Market Fund B Shares
NFS LLC FEBO NFS FMTC ROLLOVER IRA
FBO MRS KAREN L KOCAB MRS KAREN KOCAB
1331 E WALLINGS ROAD
BROADVIEW HEIGHTS OH 44147-1317 10.07%
Prime Money Market Fund B Shares
NFS LLC FEBO NFS/FMTC ROLLOVER IRA
FBO CLYDE M SCHULZE CLYDE M. SCHULZE
3327 TRIPOLI BLVD
PUNTA GORDA FL 33950-7818 7.5%
Prime Money Market Fund B Shares
NFS LLC FEBO NFS FMTC IRA
FBO MELVIN J MEANY
7805 MANGO DRIVE
LOUISVILLE KY 40258-2350 6.82%

126



Fund/Class Percent of the Class Total Assets Held by the Shareholder
Prime Money Market Fund B Shares
NFS LLC FEBO NFS FMTC IRA
FBO PATRICIA BLANKENSHIP
311 COLEBROOK
TROY MI 48083-5002 5.33%
Prime Money Market Fund C Shares
NFS LLC FEBO VIVIAN M SMITH
1205 ORCHARD ST
OWOSSO MI 48867-4918 25.4%
Prime Money Market Fund C Shares
FIRST CLEARING LLC
2801 MARKET STREET
SAINT LOUIS MO 63103-2523 21.18%
Prime Money Market Fund C Shares
NFS LLC FEBO ELAINE BERWITT
2794 SHAKERCREST BLVD
BEACHWOOD OH 44122-2326 11.49%
Prime Money Market Fund C Shares
NFS LLC FEBO NFS FMTC IRA FBO WILLIAM I NELSON
984 NORTH 200 WEST
VALPARAISO IN 46385-8520 11.08%
Prime Money Market Fund C Shares
FIRST CLEARING LLC
2801 MARKET STREET
SAINT LOUIS MO 63103-2523 6.53%
Prime Money Market Fund C Shares
FIRST CLEARING LLC
2801 MARKET STREET
SAINT LOUIS MO 63103-2523 5.3%
Prime Money Market Fund C Shares
NFS LLC FEBO NFS FMTC SEP IRA
FBO GREGG S THEOBALD
410 MAIN ST
LAFAYETTE IN 47901-1368 5.06%
Institutional Money Market Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/CASH CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 45.85%
Institutional Money Market Fund I Shares
NATIONAL FINANCIAL SERVICES LLC FOR THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS
ATTN MUTUAL FUNDS DEPT 5TH FL
200 LIBERTY ST FL 5
NEW YORK NY 10281-5503 26.89%

127



Fund/Class Percent of the Class Total Assets Held by the Shareholder
Institutional Money Market Fund I Shares
JPMORGAN RETIREMENT PLAN SERVICES CUSTODIAN
STEELCASE P/S MONEY MARKET FUND
9300 WARD PKWY FL 1N
KANSAS CITY MO 64114-3317 6.09%
Institutional Money Market Fund S Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/CASH CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 65.93%
Institutional Money Market Fund S Shares
NATIONAL FINANCIAL SERVICES LLC FOR THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS
ATTN MUTUAL FUNDS DEPT 5TH FL
200 LIBERTY ST FL 5
NEW YORK NY 10281-5503 34.07%
Institutional Money Market Fund P Shares
NATIONAL FINANCIAL SERVICES LLC FOR THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS
ATTN MUTUAL FUNDS DEPT 5TH FL
200 LIBERTY ST FL 5
NEW YORK NY 10281-5503 83.08%
Institutional Money Market Fund P Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/CASH CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 16.92%
Institutional Money Market Fund T Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/CASH CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 87.71%
Institutional Money Market Fund T Shares
NATIONAL FINANCIAL SERVICES LLC FOR THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS
ATTN MUTUAL FUNDS DEPT 5TH FL
200 LIBERTY ST FL 5
NEW YORK NY 10281-5503 12.29%
U.S. Treasury Money Market Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/CASH CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 63.56%
U.S. Treasury Money Market Fund I Shares
NATIONAL FINANCIAL SERVICES LLC FOR THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS
ATTN MUTUAL FUNDS DEPT 5TH FL
200 LIBERTY ST FL 5
NEW YORK NY 10281-5503 20.04%

128



Fund/Class Percent of the Class Total Assets Held by the Shareholder
U.S. Treasury Money Market Fund I Shares
BANK OF NEW YORK HARE & CO
ATTN STIF/MASTER NOTE
111 SANDERS CREEK PKWY
EAST SYRACUSE NY 13057-1381 11.18%
U.S. Treasury Money Market Fund S Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/CASH CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 97.14%
U.S. Treasury Money Market Fund P Shares
NATIONAL FINANCIAL SERVICES LLC FOR THE EXCLUSIVE BENEFIT OF OUR CUSTOMERS
ATTN MUTUAL FUNDS DEPT 5TH FL
200 LIBERTY ST FL 5
NEW YORK NY 10281-5503 41.22%
U.S. Treasury Money Market Fund P Shares
BANK OF NEW YORK HARE & CO
ATTN STIF/MASTER NOTE
111 SANDERS CREEK PKWY
EAST SYRACUSE NY 13057-1381 37.61%
U.S. Treasury Money Market Fund P Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/CASH CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 20.81%
U.S. Treasury Money Market Fund T Shares
FIFTH THIRD BANK TRUST OPERATIONS CASH DIVS/CASH CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 100%
LifeModel Aggressive Fund I Shares JPMORGAN CHASE BANK AS TRUSTEE C/O JPMORGAN RPS 5500 TEAM
9300 WARD PKWY
KANSAS CITY MO 64114-3317 53.16%
LifeModel Aggressive Fund I Shares FIFTH THIRD BANK TRUSTEE FBO VARIOUS
FASCORP RECORD KEPT PLAN
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002 38%
LifeModel Aggressive Fund A Shares NFS LLC FEBO PREMIER TRUST
FMT 5TH 3RD LIFE M FIRST MERCANTILE TRUST TTEE U A 12 23 97
57 GERMANTOWN CT FL 4
CORDOVA TN 38018-4274 31.44%
LifeModel Aggressive Fund C Shares
NFS LLC FEBO DREW M FERGUSON DREW M FERGUSON
33393 ELECTRIC BLVD APT D-4
AVON LAKE OH 44012-1259 8.28%

129



Fund/Class Percent of the Class Total Assets Held by the Shareholder
LifeModel Aggressive Fund C Shares
NFS LLC FEBO BENJAMIN C SUN
11760 WELTERS WAY
EDEN PRAIRIE MN 55347-2837 7.39%
LifeModel Aggressive Fund C Shares
NFS LLC FEBO CHARLES F ADLER CUST JOSEPH FRANKLIN LAMOSEK UTMA
OH 1111 SUPERIOR AVE E STE 1000
CLEVELAND OH 44114-2568 6.33%
LifeModel Aggressive Fund C Shares
NFS LLC FEBO CHARLES F ADLER CUST MATTHEW RUSSELL LAMOSEK
UTMA OH 1111 SUPERIOR AVE E STE 1000
CLEVELAND OH 44114-2568 5.99%
LifeModel Aggressive Fund C Shares
NFS LLC FEBO CHARLES F ADLER CUST KAITLYN RENEE LAMOSEK UTMA OH
1111 SUPERIOR AVE E STE 1000
CLEVELAND OH 44114-2568 5.87%
LifeModel Moderate Aggressive Fund I Shares
FIFTH THIRD BANK TRUSTEE FBO VARIOUS FASCORP RECORD KEPT PLAN
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002 47.63%
LifeModel Moderate Aggressive Fund I Shares
JPMORGAN CHASE BANK AS TRUSTEE C/O JPMORGAN RPS 5500 TEAM
9300 WARD PKWY
KANSAS CITY MO 64114-3317 36.29%
LifeModel Moderate Aggressive Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS REINVEST DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 6.67%
LifeModel Moderate Aggressive Fund I Shares
NFS LLC FEBO PREMIER TRUST
FIRST MERCANTILE TRUST CO SPECTRUM CLEARING ACCOUNT
57 GERMANTOWN CT STE 400
CORDOVA TN 38018-4274 6.16%
LifeModel Moderate Aggressive Fund A Shares
NFS LLC FEBO PREMIER TRUST
FMT 5TH 3RD LIFE M FIRST MERCANTILE TRUST TTEE U A 12 23 97
57 GERMANTOWN CT FL 4
CORDOVA TN 38018-4274 18.31%
LifeModel Moderate Fund I Shares
JPMORGAN CHASE BANK AS TRUSTEE C/O JPMORGAN RPS 5500 TEAM
9300 WARD PKWY
KANSAS CITY MO 64114-3317 57.53%

130



Fund/Class Percent of the Class Total Assets Held by the Shareholder
LifeModel Moderate Fund I Shares
FIFTH THIRD BANK TRUSTEE
FBO VARIOUS FASCORP RECORD KEPT PLAN
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002 37.12%
LifeModel Moderate Fund A Shares
NFS LLC FEBO PREMIER TRUST FMT 5TH 3RD LIFE M
FIRST MERCANTILE TRUST TTEE U A 12 23 97
57 GERMANTOWN CT FL 4
CORDOVA TN 38018-4274 25.82%
LifeModel Moderate Conservative Fund I Shares
FIFTH THIRD BANK TRUSTEE FBO VARIOUS FASCORP RECORD KEPT PLAN
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002 49.27%
LifeModel Moderate Conservative Fund I Shares
JPMORGAN CHASE BANK AS TRUSTEE C/O JPMORGAN RPS 5500 TEAM
9300 WARD PKWY
KANSAS CITY MO 64114-3317 25.77%
LifeModel Moderate Conservative Fund I Shares
NFS LLC FEBO PREMIER TRUST FIRST MERCANTILE TRUST CO SPECTRUM
CLEARING ACCOUNT
57 GERMANTOWN CT STE 400
CORDOVA TN 38018-4274 11.31%
LifeModel Moderate Conservative Fund I Shares
FIFTH THIRD BANK TRUST OPERATIONS REINVEST DIVS/REINVEST CAP GAINS
38 FOUNTAIN SQ PLAZA MD 1090F2
CINCINNATI OH 45263-0001 8.39%
LifeModel Moderate Conservative Fund A Shares
NFS LLC FEBO PREMIER TRUST FMT 5TH 3RD LIFE M FIRST MERCANTILE TRUST TTEE U A 12 23 97
57 GERMANTOWN CT FL 4
CORDOVA TN 38018-4274 26.27%
LifeModel Moderate Conservative Fund C Shares
NFS LLC FEBO LOUIS A VOLPE CATHERINE A VOLPE
101 MCCOLLOCH DRIVE
WHEELING WV 26003-8007 17.82%
LifeModel Moderate Conservative Fund C Shares
FIRST CLEARING, LLC A/C 3186-7095 EDWIN BODOURIAN TOD
REGISTRATION
701 CENTER AVENUE #707
BLAWNOX PA 15238-3263 11.71%
LifeModel Moderate Conservative Fund C Shares
NFS LLC FEBO ROBERT M BURNS TOD KAREN HAYSLETT
8745 N UNION SHELBY RD
PIQUA OH 45356-8515 5.7%

131



Fund/Class Percent of the Class Total Assets Held by the Shareholder
LifeModel Moderate Conservative Fund C Shares
NFS LLC FEBO NFS FMTC ROLLOVER IRA FBO MR ARTHUR H REIBER JR
ARTHUR H REIBER JR
1586 SOUTH CHARLESTON ROAD
JAMESTOWN OH 45335-8788 5.5%
LifeModel Moderate Conservative Fund C Shares
NFS LLC FEBO SHIRLEY A GOODEN TOD GERALD A KULMAN
33875 KIELY DR APT S502
CHESTERFIELD MI 48047-4430 5.46%
LifeModel Moderate Conservative Fund C Shares
NFS LLC FEBO NFS FMTC IRA FBO H S SKINNER
19750 MATTHEW RD
MORRISON IL 61270-9552 5.14%
LifeModel Conservative Fund I Shares
FIFTH THIRD BANK TRUSTEE FBO VARIOUS FASCORP RECORD KEPT PLAN
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002 57.53%
LifeModel Conservative Fund I Shares
JPMORGAN CHASE BANK AS TRUSTEE C/O JPMORGAN RPS 5500 TEAM
9300 WARD PKWY
KANSAS CITY MO 64114-3317 36.03%
LifeModel Conservative Fund A Shares
NFS LLC FEBO PREMIER TRUST
FMT 5TH 3RD LIFE M FIRST MERCANTILE TRUST TTEE U A 12 23 97
57 GERMANTOWN CT FL 4
CORDOVA TN 38018-4274 31.6%
LifeModel Conservative Fund A Shares
NFS LLC FEBO NFS FMTC IRA
FBO LEWIS D BENSON
PO BOX 1049
OWOSSO MI 48867-6749 5.2%
LifeModel Conservative Fund B Shares
NFS LLC FEBO NFS/FMTC IRA
FBO DONALD C HARDESTY
2768 KELLYBROOKE CT
FINDLAY OH 45840-8638 6.52%
LifeModel Conservative Fund B Shares
NFS LLC FEBO NFS FMTC IRA
FBO MARY V CORMIER
5362 JULMAR DR
CINCINNATI OH 45238-3611 5.93%
LifeModel Conservative Fund B Shares
NFS LLC FEBO NFS FMTC IRA
FBO J LYNDON JOHNSON
10302 GENTLEWIND DR
CINCINNATI OH 45242-5815 5.8%

132



Fund/Class Percent of the Class Total Assets Held by the Shareholder
LifeModel Conservative Fund B Shares
NFSC FEBO 019-082759 ST MARY S UKRAINIAN CATHOLIC
2348 RIVER RD
WILLOUSHBY OH 44094-9686 5.16%
LifeModel Conservative Fund C Shares
NFS LLC FEBO BRAMKAMP PRINTING CO ATTN KEVIN MURRAY
9933 ALLIANCE ROAD
CINCINNATI OH 45242-5661 15.45%
LifeModel Conservative Fund C Shares
NFS LLC FEBO RICHARD BECHSTEIN CAROLINE BECHSTEIN
2299 SW HILLSBOROUGH AVE
ARCADIA FL 34266-7140 11.78%
LifeModel Conservative Fund C Shares
NFS LLC FEBO SUSMAN LINOLEUM RUG CO INC
ATTN DONALD SUSMAN ATTN ROBERT SUSMAN
3500 GRAND AVE
GURNEE IL 60031-3735 8.49%
LifeModel Conservative Fund C Shares
NFS LLC FEBO NFS FMTC ROLLOVER IRA FBO ABDO A ALWARD ABDO
ALWARD 6632 WOODVIEW
SAGINAW MI 48603-8607 6.68%
LifeModel Conservative Fund C Shares
NFS LLC FEBO EHSAN UL HAQ NASEEM S HAQ
9765 BUCKHORN DR
FRISCO TX 75033-1320 6.58%
LifeModel Conservative Fund C Shares
NFS LLC FEBO HILLVIEW RETIREMENT CENTER RESIDENT SCHOLARSHIP
ATTN TONYA BERRY
1610 28TH STREET
PORTSMOUTH OH 45662-2698 5.79%



As of November 3, 2011, Fifth Third Bank held of record, as agent or trustee for its customers, more than 25% of the outstanding shares of certain Funds as listed in the table below. As a result, Fifth Third Bank may be deemed to have control of one or more of these Funds because it and its affiliates possess or share investment or voting power with respect to more than 25% of the total shares outstanding of certain Funds of the Trust. As a result, Fifth Third Bank may be able to affect the outcome of matters presented for a vote of the shareholders of the Funds. Other shareholders of record with more than 25% of the outstanding shares of the Funds are believed to be held only as nominee.


Fund Percentage of Fund held by Fifth Third Bank
Small Cap Growth Fund 71.51%
Mid Cap Growth Fund 71.56%


133



Fund Percentage of Fund held by Fifth Third Bank
Quality Growth Fund 36.35%
Small Cap Value Fund 50.57%
All Cap Value Fund 53.63%
Disciplined Large Cap Value Fund 58.44%
Structured Large Cap Plus Fund 92.37%
International Equity Fund 68.56%
Strategic Income Fund 65.70%
High Yield Bond Fund 74.67%
Total Return Bond Fund 89.27%
Short Term Bond Fund 75.46%
Prime Money Market Fund 43.96%
Institutional Money Market Fund 55.49%
Institutional Government Money Market Fund 37.16%
U.S. Treasury Money Market Fund 57.39%


134

https://www.sec.gov/Archives/edgar/data/840678/000120928611000917/e83012b.htm

Cautionary statementFifth Third Bank | All Rights ReservedThis report contains statements that we believe are “forward-looking statements” within the meaning of Section 27A of the Securities Act of1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, andRule 3b-6 promulgated thereunder.

These statements relate to our financial condition, results of operations, plans, objectives, futureperformance or business. They usually can be identified by the use of forward-looking language such as “will likely result,” “may,” “areexpected to,” “is anticipated,” “estimate,” “forecast,” “projected,” “intends to,” or may include other similar words or phrases such as“believes,” “plans,” “trend,” “objective,” “continue,” “remain,” or similar expressions, or future or conditional verbs such as “will,” “would,”“should,” “could,” “might,” “can,” or similar verbs.

You should not place undue reliance on these statements, as they are subject to risksand uncertainties, including but not limited to the risk factors set forth in our most recent Annual Report on Form 10-K. When consideringthese forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements we maymake.

Moreover, you should treat these statements as speaking only as of the date they are made and based only on information thenactually known to us.There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to:

(1) general economic conditions andweakening in the economy, specifically the real estate market, either nationally or in the states in which Fifth Third, one or more acquiredentities and/or the combined company do business, are less favorable than expected;

(2) deteriorating credit quality;

(3) politicaldevelopments, wars or other hostilities may disrupt or increase volatility in securities markets or other economic conditions;

(4) changes inthe interest rate environment reduce interest margins;

(5) prepayment speeds, loan origination and sale volumes, charge-offs and loanloss provisions;

(6) Fifth Third’s ability to maintain required capital levels and adequate sources of funding and liquidity;

(7) maintainingcapital requirements may limit Fifth Third’s operations and potential growth;

(8) changes and trends in capital markets;

(9) problemsencountered by larger or similar financial institutions may adversely affect the banking industry and/or Fifth Third;

(10) competitivepressures among depository institutions increase significantly;

(11) effects of critical accounting policies and judgments;

(12) changes inaccounting policies or procedures as may be required by the Financial Accounting Standards Board (FASB) or other regulatory agencies;

(13) legislative or regulatory changes or actions, or significant litigation, adversely affect Fifth Third, one or more acquired entities and/orthe combined company or the businesses in which Fifth Third, one or more acquired entities and/or the combined company are engaged,including the Dodd-Frank Wall Street Reform and Consumer Protection Act;

(14) ability to maintain favorable ratings from rating agencies;

(15) fluctuation of Fifth Third’s stock price;

(16) ability to attract and retain key personnel;

(17) ability to receive dividends from itssubsidiaries;

(18) potentially dilutive effect of future acquisitions on current shareholders’ ownership of Fifth Third;

(19) effects ofaccounting or financial results of one or more acquired entities;

(20) difficulties from Fifth Third’s investment in, relationship with, andnature of the operations of Vantiv, LLC;

(21) loss of income from any sale or potential sale of businesses that could have an adverse effecton Fifth Third’s earnings and future growth;

(22) ability to secure confidential information and deliver products and services through the useof computer systems and telecommunications networks; and

(23) the impact of reputational risk created by these developments on suchmatters as business generation and retention, funding and liquidity.

You should refer to our periodic and current reports filed with the Securities and Exchange Commission, or “SEC,” for further informationon other factors, which could cause actual results to be significantly different from those expressed or implied by these forward-lookingstatements.
https://www.sec.gov/Archives/edgar/data/35527/000119312514334504/d783147dex991.htm

424H 1 d738362d424h.htm 424H
Table of Contents
Filed Pursuant to Rule 424(h)
Registration Nos. 333-211395
& 333-211395-02

Subject to completion, dated April 25, 2019



The information in this preliminary prospectus is not complete and may be changed. We may not sell the notes described in this preliminary prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these notes nor is it seeking an offer to buy these notes in any state where the offer or sale is not permitted.







PROSPECTUS



LOGO

$1,301,215,000

Fifth Third Auto Trust 2019-1

Issuing Entity

Central Index Key Number: 0001772608



Fifth Third Holdings Funding, LLC Fifth Third Bank
Depositor Sponsor and Servicer
Central Index Key Number: 0001405332 Central Index Key Number: 0000035528
The following notes are being issued by Fifth Third Auto Trust 2019-1:

You should carefully read the “risk factors” beginning on page 15 of this prospectus.

The notes are asset backed securities. The notes will be the obligations of the issuing entity only and will not be obligations of or guaranteed by any other person or entity, including Fifth Third Holdings Funding, LLC, Fifth Third Holdings, LLC, Fifth Third Bank or any of their affiliates (other than the issuing entity).

Neither the notes nor the underlying receivables are insured or guaranteed by any governmental entity.





Initial Principal
Amount Offered Amount(1) Interest Rate(2) Final Scheduled
Payment Date
Class A-1 Notes

$ 300,000,000 $ 285,000,000 ●% May 15, 2020
Class A-2-A Notes(3)

$ 500,000,000 $ 475,000,000 ●% May 16, 2022
Class A-2-B Notes(3)

LIBOR + ●%(4) May 16, 2022
Class A-3 Notes

$ 430,000,000 $ 408,500,000 ●% December 15, 2023
Class A-4 Notes

$ 139,700,000 $ 132,715,000 ●% November 16, 2026











Total

$ 1,369,700,000 $ 1,301,215,000















Price to Public Underwriting Discount Proceeds to the Depositor
Per Class A-1 Note

●% ●% ●%
Per Class A-2-A Note

●% ●% ●%
Per Class A-2-B Note

●% ●% ●%
Per Class A-3 Note

●% ●% ●%
Per Class A-4 Note

●% ●% ●%









Total

$● $● $●











(1)
The depositor will retain at least 5% of the initial principal amount of each class of notes. See “Credit Risk Retention.” The retained notes are not registered under the Securities Act of 1933, as amended, and are not offered hereby. The depositor or an affiliate thereof initially may retain an additional amount or all of one or more classes of notes.

(2)
The interest rate for each class of notes will be a fixed rate, a floating rate or combination of a fixed rate and a floating rate if that class has both a fixed rate tranche and a floating rate tranche.

(3)
The allocation of the principal balance between the Class A-2-A notes and the Class A-2-B notes will be determined no later than the day of pricing, although the principal balance of the Class A-2-B notes may not exceed 33.20% of the aggregate principal amount of the Class A-2 notes.

(4)
If the sum of LIBOR + ●% is less than 0.00% for any interest accrual period, then the interest rate for the Class A-2-B notes for such interest accrual period will be deemed to be 0.00%. For a description of how interest will be calculated on the Class A-2-B notes, see “The Notes–Payments of Interest.”


Payments on the Notes




The notes are payable solely from the assets of the issuing entity, which consist primarily of receivables which are motor vehicle retail installment sale contracts and/or installment loans that are secured by new and used automobiles, light-duty trucks, vans and other motor vehicles and funds on deposit in the reserve account.




The issuing entity will pay interest and principal on the notes on the 15th day of each month, or, if the 15th is not a business day, the next business day, starting on June 17, 2019.

Credit Enhancement




Credit enhancement for the notes offered hereby will consist of a reserve account with an initial deposit of approximately $3,583,828, excess interest on the receivables and overcollateralization.




The issuing entity will also issue certificates representing an equity interest in the issuing entity, which initially will be held by the depositor or an affiliate of the depositor and are not being offered hereby.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these notes or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

UNDERWRITERS



Credit Suisse Citigroup J.P. Morgan RBC Capital Markets
Fifth Third Securities
The date of this prospectus is ●, 2019

Table of Contents
TABLE OF CONTENTS



INCORPORATION BY REFERENCE

1
WHERE YOU CAN FIND MORE INFORMATION

2
CAPITALIZED TERMS

2
REPORTS TO NOTEHOLDERS

2
NOTICE TO RESIDENTS OF THE UNITED KINGDOM

3
NOTICE TO RESIDENTS OF THE EUROPEAN ECONOMIC AREA

3
SUMMARY OF STRUCTURE AND FLOW OF FUNDS

4
SUMMARY OF TERMS

6
RISK FACTORS

15
USE OF PROCEEDS

36
THE ISSUING ENTITY

36
Limited Purpose and Limited Assets

36
Capitalization and Liabilities of the Issuing Entity

37
The Issuing Entity Property

37
THE TRUSTEES

38
The Owner Trustee

38
The Delaware Trustee

38
The Indenture Trustee

39
Role of the Owner Trustee, the Delaware Trustee and the Indenture Trustee

39
THE DEPOSITOR

40
FIFTH THIRD HOLDINGS, LLC

41
THE SPONSOR

41
THE ORIGINATOR

41
General

41
Underwriting

42
Tangible and Electronic Contracting

43
THE SERVICER

43
Servicing

44
Extension Policy

45
Prepayment Fees

45
Physical Damage and Liability Insurance

46
Debt Cancellation Agreements

46
Material Servicing Changes During the Past Three Years

46
CREDIT RISK RETENTION

46
THE ASSET REPRESENTATIONS REVIEWER

47
AFFILIATIONS AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

48
THE RECEIVABLES POOL

48
The Receivables

48
The Receivables Pool

48
Calculation Methods

48
Exceptions to Underwriting Criteria

49
Criteria Applicable to Selection of Receivables

49
Delinquency, Loss and Repossession Information

54
Delinquency Experience Regarding the Pool of Receivables

56
Static Pool Information About Certain Previous Receivables Pools

56
Repurchase and Replacements

56
Review of Pool Assets

57
ASSET LEVEL INFORMATION

57
WEIGHTED AVERAGE LIFE OF THE NOTES

58
MATURITY AND PREPAYMENT CONSIDERATIONS

58
THE NOTES

64
General

64
Delivery of Notes

64
Book-Entry Registration

64
Definitive Notes

65


i

Table of Contents
Notes Owned by Transaction Parties

65
Access to Noteholders Lists

65
Noteholder Communication

66
Statements to Noteholders

66
Payments of Interest

67
Payments of Principal

69
THE CERTIFICATES

70
THE TRANSACTION DOCUMENTS

70
Sale and Assignment of Receivables and Related Security Interests

71
Asset Representations Review

71
Dispute Resolution

74
Administration Agreement

75
Trust Agreement

75
The Accounts

75
Overcollateralization

77
Priority of Payments

77
Excess Interest

78
Fees and Expenses

78
Risk Retention

79
Indemnification of the Indenture Trustee, the Owner Trustee and the Delaware Trustee

79
Optional Redemption

79
Collection of Receivable Payments

80
Realization Upon Defaulted Receivables

81
Servicing Compensation and Expenses

81
Servicer Replacement Events

82
Resignation, Removal or Replacement of the Servicer

82
Waiver of Past Servicer Replacement Events

83
Evidence as to Compliance

83
Annual Compliance Statement

84
Amendment Provisions

84
THE INDENTURE

85
Indenture Trustee’s Annual Report

85
Material Covenants

86
Events of Default

86
Rights Upon Event of Default

87
Priority of Payments Will Change Upon Events of Default that Result in Acceleration

88
FDIC Rule Covenant

88
List of Noteholders

89
Documents by Paying Agent to Noteholders

89
Satisfaction and Discharge of Indenture

89
Modification of the Indenture

89
MATERIAL LEGAL ASPECTS OF THE RECEIVABLES

91
Rights in the Receivables

91
Security Interests in the Financed Vehicles

91
Repossession

93
Notice of Sale; Redemption Rights

94
Deficiency Judgments and Excess Proceeds

94
Consumer Protection Law

94
Repurchase Obligation

96
Servicemembers Civil Relief Act

97
Other Limitations

97
Certain Matters Relating to Bankruptcy

98
Certain Matters Relating to Insolvency

98
FDIC Rule

99
Dodd-Frank Orderly Liquidation Framework

102
LEGAL INVESTMENT

104


ii

Table of Contents
Money Market Investment

104
Certain Volcker Rule Considerations

104
Requirements for Certain European Regulated Investors and Affiliates

104
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

105
U.S. Federal Income Tax Consequences to U.S. Holders of the Notes

106
Possible Alternative Treatments of the Notes and the Issuing Entity

110
STATE AND LOCAL TAX CONSEQUENCES

112
CERTAIN CONSIDERATIONS FOR ERISA AND OTHER U.S. BENEFIT PLANS

112
UNDERWRITING

113
Offering Restrictions

115
United Kingdom

115
European Economic Area

116
FORWARD-LOOKING STATEMENTS

116
LEGAL PROCEEDINGS

116
LEGAL MATTERS

117
GLOSSARY

118
INDEX OF PRINCIPAL TERMS

I-1
APPENDIX A STATIC POOL INFORMATION REGARDING CERTAIN PREVIOUS RECEIVABLES POOLS

A-1


iii

Table of Contents
OVERVIEW OF THE INFORMATION IN THIS PROSPECTUS

We provide information about your notes in this prospectus, including information about:




the type of notes offered;




certain risks relating to an investment in the notes;




the timing and amount of interest payments on and principal payments of the notes;




the receivables underlying your notes;




the credit enhancement and cash flow enhancement for each class of notes; and




the method of selling the notes.

WHERE TO FIND INFORMATION IN THIS PROSPECTUS

This prospectus provides information about the issuing entity, Fifth Third Auto Trust 2019-1, including terms and conditions that apply to the notes offered by this prospectus.

You should rely only on the information provided in this prospectus, including the information incorporated by reference herein. We have not authorized anyone to provide you with other or different information. If you receive any other information, you should not rely on it. We are not offering the notes in any jurisdiction where the offer is not permitted. We do not claim that the information in this prospectus is accurate on any date other than the date stated on its cover.

We have started with two introductory sections describing the notes and the issuing entity in abbreviated form, followed by a more complete description of the terms of the offering of the notes. The introductory sections are:




“Summary of Terms”—provides important information concerning the amounts and the payment terms of each class of notes and gives a brief introduction to the key structural features of the issuing entity; and




“Risk Factors”—briefly describes some of the risks to investors in the notes.

We include cross-references to captions in these materials where you can find additional related information. You can find the page numbers on which these captions are located under the Table of Contents. You can also find a listing of the pages where the principal terms are defined under “Index of Principal Terms” beginning on page I-1.

If you have received a copy of this prospectus in electronic format, and if the legal prospectus delivery period has not expired, you may obtain a paper copy of this prospectus from the depositor or from the underwriters upon request.

In this prospectus, the terms “we,” “us” and “our” refer to Fifth Third Holdings Funding, LLC.

INCORPORATION BY REFERENCE

The Securities and Exchange Commission (the “SEC”) allows us to “incorporate by reference” information we file with the SEC, which means that we can disclose important information to you by referring you to those documents. Such information that we file later with the SEC will automatically update the information in this prospectus. In all cases, you should rely on the most recently filed information rather than contradictory information included in this prospectus. Any information that has been so updated by more recent information shall not, except



1

Table of Contents
as so updated, constitute part of this prospectus. We incorporate by reference any current report on Form 8-K subsequently filed by us prior to the termination of this offering. Information that will be incorporated by reference will be filed under the name of the issuing entity.

As a recipient of this prospectus, you may request a copy of any document we incorporate by reference, except exhibits to the documents (unless the exhibits are specifically incorporated by reference), at no cost, by writing us at Fifth Third Holdings Funding, LLC, c/o Fifth Third Bank Legal Department, 38 Fountain Square Plaza, MD 10909F, Cincinnati, Ohio 45263 or calling us at (800) 972-3030.

WHERE YOU CAN FIND MORE INFORMATION

Fifth Third Holdings Funding, LLC, as depositor, has filed a registration statement with the SEC relating to the notes. This prospectus is a part of our registration statement. This prospectus does not contain all of the information in our registration statement. For further information, please see our registration statement and the accompanying exhibits which we have filed with the SEC. This prospectus may summarize contracts and/or other documents. For further information, please see the copy of the contract or other document filed as an exhibit to the registration statement. You can obtain copies of the registration statement from the SEC upon payment of the prescribed charges, or you can examine the registration statement free of charge at the SEC’s offices. Reports and other information filed with the SEC can be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, NE, Washington, D.C., 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the material can be obtained from the Public Reference Room of the SEC at 100 F Street, NE., Washington D.C., 20549, at prescribed rates. You can obtain information on the operation of the Public Reference Room by calling 1-800-732-0330. The SEC also maintains a site on the World Wide Web at http://www.sec.gov at which users can view and download copies of reports, proxy and information statements and other information filed electronically through the EDGAR system. Our SEC filings may be located by using the SEC Central Index Key (CIK) for the depositor, 0001405332. For purposes of any electronic version of this prospectus, the preceding uniform resource locator, or URL, is an inactive textual reference only. We have taken steps to ensure that this URL was inactive at the time we created any electronic version of this prospectus.

CAPITALIZED TERMS

The capitalized terms used in this prospectus, unless defined elsewhere in this prospectus, have the meanings set forth in the glossary at the end of this prospectus.

REPORTS TO NOTEHOLDERS

After the notes are issued, unaudited monthly reports containing information concerning the issuing entity, the notes and the receivables will be prepared by Fifth Third Bank, an Ohio banking corporation (“Fifth Third Bank”), and sent on behalf of the issuing entity to the indenture trustee who will forward or otherwise make available the same to Cede & Co. (“Cede”), as nominee of The Depository Trust Company (“DTC”).

The indenture trustee will also make such reports (and, at its option, any additional files containing the same information in an alternative format) available to noteholders each month via its internet website, which is presently located at www.wilmingtontrustconnect.com. Assistance in using this internet website may be obtained by calling the indenture trustee’s customer service desk at (866) 829-1928. The indenture trustee will notify the noteholders in writing of any changes in the address or means of access to the internet website where the reports are accessible.

The reports do not constitute financial statements prepared in accordance with generally accepted accounting principles. Fifth Third Bank, Fifth Third Holdings, LLC (“FTH LLC”), the depositor and the issuing entity do not intend to send any of their financial reports to the beneficial owners of the notes. The issuing entity will file with the SEC all required annual reports on Form 10-K, distribution reports on Form 10-D, monthly asset level data files and related documents on Form ABS-EE and current reports on Form 8-K. Those reports will be filed with the SEC by the depositor under file number 333-211395 and by Fifth Third Auto Trust 2019-1 under file number 333-211395-02.



2

Table of Contents
NOTICE TO RESIDENTS OF THE UNITED KINGDOM

THIS PROSPECTUS MAY ONLY BE COMMUNICATED OR CAUSED TO BE COMMUNICATED IN THE UNITED KINGDOM TO PERSONS AUTHORIZED TO CARRY ON A REGULATED ACTIVITY UNDER THE FINANCIAL SERVICES AND MARKETS ACT 2000, AS AMENDED (THE “FSMA”), OR TO PERSONS OTHERWISE HAVING PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND QUALIFYING AS INVESTMENT PROFESSIONALS UNDER ARTICLE 19 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE “ORDER”), OR TO PERSONS WHO FALL WITHIN ARTICLE 49(2)(A) TO (D) (HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.) OF THE ORDER OR TO ANY OTHER PERSON TO WHOM THIS PROSPECTUS MAY OTHERWISE LAWFULLY BE COMMUNICATED OR CAUSED TO BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”).

NEITHER THIS PROSPECTUS NOR THE NOTES ARE OR WILL BE AVAILABLE TO PERSONS OTHER THAN RELEVANT PERSONS IN THE UNITED KINGDOM AND ANY PERSON IN THE UNITED KINGDOM THAT IS NOT A RELEVANT PERSON MUST NOT RELY ON OR ACT ON, ANY INFORMATION IN THIS PROSPECTUS. IN THE UNITED KINGDOM, ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS PROSPECTUS RELATES, INCLUDING THE NOTES, IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THE COMMUNICATION OF THIS PROSPECTUS TO ANY PERSON IN THE UNITED KINGDOM OTHER THAN A RELEVANT PERSON IS UNAUTHORIZED AND MAY CONTRAVENE THE FSMA.

NOTICE TO RESIDENTS OF THE EUROPEAN ECONOMIC AREA

THIS PROSPECTUS IS NOT A PROSPECTUS FOR THE PURPOSES OF DIRECTIVE 2003/71/EC (AS AMENDED OR SUPERSEDED, INCLUDING ANY RELEVANT IMPLEMENTING MEASURE IN EACH RELEVANT MEMBER STATE (THE “PROSPECTUS DIRECTIVE”). THIS PROSPECTUS HAS BEEN PREPARED ON THE BASIS THAT ANY OFFER OF NOTES IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA WHICH HAS IMPLEMENTED THE PROSPECTUS DIRECTIVE (EACH, A “RELEVANT MEMBER STATE”) WILL BE MADE TO PERSONS OR LEGAL ENTITIES QUALIFYING AS QUALIFIED INVESTORS (AS DEFINED IN THE PROSPECTUS DIRECTIVE). ACCORDINGLY, ANY PERSON MAKING OR INTENDING TO MAKE AN OFFER IN A RELEVANT MEMBER STATE OF NOTES WHICH ARE THE SUBJECT OF THE OFFERING CONTEMPLATED IN THIS PROSPECTUS MAY ONLY DO SO TO ONE OR MORE QUALIFIED INVESTORS. NONE OF THE ISSUING ENTITY, THE DEPOSITOR OR ANY OF THE UNDERWRITERS HAVE AUTHORIZED, NOR DO THEY AUTHORIZE, THE MAKING OF ANY OFFER OF NOTES.

THE NOTES ARE NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO ANY RETAIL INVESTOR IN THE EUROPEAN ECONOMIC AREA. FOR THESE PURPOSES, A RETAIL INVESTOR MEANS A PERSON WHO IS ONE (OR MORE) OF: (I) A RETAIL CLIENT AS DEFINED IN POINT (11) OF ARTICLE 4(1) OF DIRECTIVE 2014/65/EU (AS AMENDED, “MIFID II”); OR (II) A CUSTOMER WITHIN THE MEANING OF DIRECTIVE (EU) 2016/97, WHERE THAT CUSTOMER WOULD NOT QUALIFY AS A PROFESSIONAL CLIENT AS DEFINED IN POINT (10) OF ARTICLE 4(1) OF MIFID II; OR (III) NOT A QUALIFIED INVESTOR AS DEFINED IN THE PROSPECTUS DIRECTIVE. CONSEQUENTLY NO KEY INFORMATION DOCUMENT REQUIRED BY REGULATION (EU) NO 1286/2014 (AS AMENDED, THE “PRIIPS REGULATION”) FOR OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO RETAIL INVESTORS IN THE EUROPEAN ECONOMIC AREA HAS BEEN PREPARED AND THEREFORE OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO ANY RETAIL INVESTOR IN THE EUROPEAN ECONOMIC AREA MAY BE UNLAWFUL UNDER THE PRIIPS REGULATION.



3

Table of Contents
SUMMARY OF STRUCTURE AND FLOW OF FUNDS

This structural summary briefly describes certain major structural components, the relationship among the parties, the flow of funds and certain other material features of the transaction. This structural summary does not contain all of the information that you need to consider in making your investment decision. You should carefully read this entire prospectus to understand all the terms of this offering.

Structural Diagram



LOGO



4

Table of Contents
Flow of Funds Prior to an Acceleration of the Notes(1)



LOGO



(1)
For further detail, see “The Notes—Payments of Principal,” “The Notes—Payments of Interest” and “The Transaction Documents—Priority of Payments.”



5

Table of Contents
SUMMARY OF TERMS

This summary provides an overview of selected information from this prospectus and does not contain all of the information that you need to consider in making your investment decision. This summary provides an overview of certain information to aid your understanding. You should carefully read this entire prospectus to understand all of the terms of this offering.



THE PARTIES

Issuing Entity

Fifth Third Auto Trust 2019-1, a Delaware statutory trust, will be the “issuing entity” of the notes and the certificates. The principal assets of the issuing entity will be a pool of receivables which are primarily motor vehicle retail installment sale contracts and/or installment loans that are secured by new and used automobiles, light-duty trucks, vans and other motor vehicles and funds on deposit in the reserve account.

Depositor

Fifth Third Holdings Funding, LLC, a Delaware limited liability company and a wholly-owned special purpose subsidiary of Fifth Third Holdings, LLC, is the “depositor.” The depositor will sell the receivables to the issuing entity. The depositor will be the initial holder of the issuing entity’s certificates.

You may contact the depositor by mail at 1701 Golf Road, Tower I, 8th Floor, Rolling Meadows, Illinois 60008, or by calling (847) 354-7341.

Fifth Third Holdings, LLC

Fifth Third Holdings, LLC, a Delaware limited liability company, known as “FTH LLC,” is the seller of receivables to the depositor.

Sponsor/Servicer

Fifth Third Bank, an Ohio banking corporation, known as “Fifth Third Bank” or the “servicer,” will service the receivables held by the issuing entity.

Fifth Third Bank is also the “sponsor.”

Originator

Fifth Third Bank originated the receivables. We refer to Fifth Third Bank in this capacity as the “originator.” All receivables will first be sold by the originator to FTH LLC. On the closing date, FTH LLC will sell all of the receivables to be included in the receivables pool to the depositor and the

depositor will sell those receivables to the issuing entity.

Administrator

Fifth Third Bank will be the “administrator” of the issuing entity, and in such capacity will provide administrative and ministerial services for the issuing entity.

Trustees

Wilmington Trust, National Association, a national banking association, will be the “indenture trustee.”

The Bank of New York Mellon, a New York banking corporation, will be the “owner trustee.”

BNY Mellon Trust of Delaware, a Delaware banking corporation, will be the “Delaware trustee.”

Asset Representations Reviewer

Clayton Fixed Income Services LLC, a Delaware limited liability company, will be the “asset representations reviewer.”

THE NOTES

The issuing entity will issue the following notes:



Class(1) Initial
Principal
Amount Interest Rate Final Scheduled
Payment Date
Class A-1 Notes

$ 300,000,000 ●% May 15, 2020
Class A-2-A Notes

$ 500,000,000 ●% May 16, 2022
Class A-2-B Notes

LIBOR + ●%(2) May 16, 2022
Class A-3 Notes

$ 430,000,000 ●% December 15, 2023
Class A-4 Notes

$ 139,700,000 ●% November 16, 2026


(1)
The depositor will initially retain at least 5% of the initial principal amount of each class of notes. See “Credit Risk Retention.” The retained notes are not registered under the Securities Act of 1933, as amended, and are not offered hereby. The depositor or an affiliate thereof initially may retain an additional amount or all of one or more classes of notes.

(2)
If the sum of LIBOR + ●% is less than 0.00% for any interest accrual period, then the interest rate for the Class A-2-B notes for such interest accrual period will be deemed to be 0.00%. For a description of how interest will be calculated on the Class A-2-B notes, see “The Notes—Payments of Interest.”






6

Table of Contents
The Class A-2-A notes and the Class A-2-B notes are sometimes referred to as the “Class A-2 notes.” The Class A-2-A notes rank pari passu with the Class A-2-B notes.

The allocation of the principal balance between the Class A-2-A notes and Class A-2-B notes will be determined no later than the day of pricing, although the principal balance of the Class A-2-B notes may not exceed 33.20% of the aggregate principal amount of the Class A-2 notes. Consequently, the allocation of the principal balance between the Class A-2-A notes and Class A-2-B notes may result in any number of possible allocation scenarios, including a scenario in which the entire principal balance of the Class A-2 notes is allocated to the fixed rate Class A-2-A notes and none of the principal balance is allocated to the floating rate Class A-2-B notes.

The interest rate for each class of notes will be a fixed rate or a combination of a fixed and floating rate if that class has both a fixed rate tranche and a floating rate tranche. For example, the Class A-2 notes are divided into fixed and floating rate tranches, and the Class A-2-A notes are the fixed rate notes and the Class A-2-B notes are the floating rate notes. We refer in this prospectus to notes that bear interest at a floating rate as “floating rate notes,” and to notes that bear interest at a fixed rate as “fixed rate notes.”

For a description of how interest will be calculated on the floating rate notes, see “The Notes—Payments of Interest.”

The notes are issuable in a minimum denomination of $1,000 and integral multiples of $1,000 in excess thereof.

The issuing entity expects to issue the notes on or about May ●, 2019, which we refer to as the “closing date.”

THE CERTIFICATES

The issuing entity will also issue one or more non-interest bearing “certificates,” which are not offered hereby. The certificates represent an equity interest in the issuing entity. The certificates will not be offered by this prospectus. The certificateholders will be entitled on each payment date only to amounts remaining after payments on the notes and payments of issuing entity expenses and other required amounts on such payment date. The depositor will be the initial holder of the issuing

entity’s certificates. Information about the certificates is set forth herein solely to provide a better understanding of the notes.

INTEREST AND PRINCIPAL

To the extent of funds available therefor, the issuing entity will pay interest and principal on the notes monthly, on the 15th day of each month (or, if that day is not a business day, on the next business day), which we refer to as the “payment date.” The first payment date is June 17, 2019. On each payment date, payments on the notes will be made to holders of record as of the close of business on the business day immediately preceding that payment date (except in limited circumstances where definitive notes are issued), which we refer to as the “record date.”

Interest Payments




The issuing entity will pay interest on the Class A-1 notes and the Class A-2-B notes on the basis of the actual number of days elapsed during the period for which interest is payable and a 360-day year. This means that the interest due on each payment date for the Class A-1 notes and the Class A-2-B notes, as applicable, will be the product of (i) the outstanding principal amount of the related class of notes, (ii) the related interest rate and (iii) the actual number of days from and including the previous payment date (or, in the case of the first payment date, from and including the closing date) to but excluding the current payment date, divided by 360.




The issuing entity will pay interest on the Class A-2-A notes, the Class A-3 notes and the Class A-4 notes on the basis of a 360-day year consisting of twelve 30-day months. This means that the interest due on each payment date for the Class A-2-A notes, the Class A-3 notes and the Class A-4 notes will be the product of (i) the outstanding principal amount of the related class of notes, (ii) the related interest rate and (iii) 30 (or in the case of the first payment date, ●), divided by 360.




Interest due and payable on any payment date but not paid on such payment date will be due on the next payment date, together with interest on such unpaid amount at the applicable interest rate (to the extent lawful).




Interest payments on all notes will have the same priority.






7

Table of Contents
Principal Payments




The issuing entity will generally pay principal sequentially to the earliest maturing class of notes monthly on each payment date in accordance with the payment priorities described below under “—Priority of Payments.”




The issuing entity will make principal payments of the notes based on the amount of collections and defaults on the receivables during the prior collection period.




This prospectus describes how available funds and amounts on deposit in the reserve account are allocated to principal payments of the notes.




On each payment date, prior to the acceleration of the notes following an event of default, which is described below under “—Events of Default,” the issuing entity will distribute funds available to pay principal of the notes as follows:



(1)
first, to the Class A-1 noteholders, until the Class A-1 notes are paid in full;



(2)
second, to the Class A-2-A noteholders and Class A-2-B noteholders, ratably, until the Class A-2-A notes and Class A-2-B notes are paid in full;



(3)
third, to the Class A-3 noteholders, until the Class A-3 notes are paid in full; and



(4)
fourth, to the Class A-4 noteholders until the Class A-4 notes are paid in full.

All unpaid principal of a class of notes will be due on the final scheduled payment date for that class.

Interest and Principal Payments after an Event of Default

After an event of default under the indenture occurs and the notes are accelerated, the priority of payments of principal and interest will change from the description in “—Interest Payments” and “—Principal Payments” above.

On each payment date after an event of default under the indenture occurs and the notes are accelerated, after payment of certain amounts to the trustees, the asset representations reviewer and the servicer, interest on the notes will be paid ratably to each class of notes. Principal payments of each class of notes

will then be made first to the Class A-1 noteholders until the Class A-1 notes are paid in full. Next, the noteholders of all other classes of notes will receive principal payments, ratably, based on the outstanding principal amount of each remaining class of notes until those other classes of notes are paid in full. See “The Indenture—Rights Upon Event of Default.”

If an event of default has occurred but the notes have not been accelerated, then interest and principal payments will be made in the priority set forth under “—Priority of Payments” below.

Optional Redemption of the Notes

The servicer will have the right at its option to exercise a “clean-up call” and to purchase (and/or to designate one or more other persons to purchase) the receivables and the other issuing entity property (other than the reserve account) from the issuing entity on any payment date if the following conditions are satisfied: (a) the then-outstanding net pool balance of the receivables as of the last day of the related collection period is less than or equal to 10% of the net pool balance as of the cut-off date and (b) the sum of the purchase price for the assets of the issuing entity (other than the reserve account) and available funds for such payment date would be sufficient to pay (x) the amounts required to be paid under clauses first through third and fifth, in accordance with “—Priority of Payments” set forth below and (y) the outstanding note amount (after giving effect to the payments described in the preceding clause (x)). (We use the term “net pool balance” to mean, as of any date, the aggregate outstanding principal balance of all receivables (other than defaulted receivables) of the issuing entity on such date.) If the servicer, or any successor to the servicer, purchases the receivables and other issuing entity property (other than the reserve account) the purchase price will equal the net pool balance plus accrued and unpaid interest on the receivables. It is expected that at the time this option becomes available to the servicer, or any successor to the servicer, only the Class A-4 notes will be outstanding.

Additionally, each of the notes is subject to redemption in whole, but not in part, on any payment date on which the sum of the amounts in the reserve account and the remaining available funds after the payments under clauses first through third and fifth, set forth in “—Priority of Payments” below would be sufficient to pay in full the aggregate unpaid note amount of all of the outstanding notes as determined by the servicer. On the business day prior to such






8

Table of Contents
payment date, the indenture trustee upon written direction from the servicer shall transfer all amounts on deposit in the reserve account (other than interest and investment income (net of losses and expenses)) to the collection account and on such payment date the outstanding notes shall be redeemed in whole, but not in part.

Notice of redemption under the indenture must be given by the indenture trustee not later than 10 days prior to the applicable redemption date to each holder of notes. All notices of redemption will state: (i) the redemption date; (ii) the redemption price; (iii) that the record date otherwise applicable to that redemption date is not applicable and that payments will be made only upon presentation and surrender of those notes, and the place where those notes are to be surrendered for payment of the redemption price; (iv) that interest on the notes will cease to accrue on the redemption date; and (v) the CUSIP numbers (if applicable) for the notes.

EVENTS OF DEFAULT

The occurrence of any one of the following events will be an “event of default” under the indenture:




a default in the payment of any interest on any note when the same becomes due and payable, and such default shall continue for a period of five business days or more;




default in the payment of the principal of any note at the related final scheduled payment date or the redemption date;




any failure by the issuing entity to duly observe or perform any of its covenants or agreements in the indenture (other than (i) a covenant or agreement, a default in the observance of which is elsewhere specifically addressed or (ii) a covenant or agreement pursuant to the FDIC Rule Covenant), which failure materially and adversely affects the interests of the noteholders, and which continues unremedied for 90 days after written notice is given to the issuing entity by the indenture trustee (to the extent a responsible officer of the indenture trustee has received written notice or has actual knowledge thereof) or noteholders evidencing at least a majority of the outstanding principal amount of the notes;




any representation or warranty of the issuing entity made in the indenture proves to have been incorrect in any material respect when made,


which failure materially and adversely affects the interests of the noteholders, and which failure continues unremedied for 90 days after written notice is given to the issuing entity by the indenture trustee (to the extent a responsible officer of the indenture trustee has received written notice or has actual knowledge thereof) or noteholders evidencing at least a majority of the notes; or




the occurrence of certain events (which, if involuntary, remain unstayed for more than 90 consecutive days) of bankruptcy, insolvency, receivership or liquidation of the issuing entity.

Notwithstanding the foregoing, a delay in or failure of performance referred to under the first four bullet points above for a period of 120 days will not constitute an event of default if that delay or failure was caused by force majeure or other similar occurrence.

The amount of principal required to be paid to noteholders under the indenture generally will be limited to amounts available to make such payments in accordance with the priority of payments. Thus, the failure to pay principal of a class of notes due to a lack of amounts available to make such a payment will not result in the occurrence of an event of default until the final scheduled payment date or redemption date for that class of notes.

ISSUING ENTITY PROPERTY

The primary assets of the issuing entity will be a pool of motor vehicle retail installment sale contracts and/or installment loans secured by a combination of new and used automobiles, light-duty trucks, vans and other motor vehicles and funds on deposit in the reserve account. We refer to these retail installment sales contracts and installment loans as “receivables,” to the pool of those receivables as the “receivables pool” and to the persons who financed their purchases or refinanced existing obligations with these contracts and loans as “obligors.” The receivables were underwritten in accordance with the originator’s underwriting criteria.

The receivables identified on the schedule of receivables delivered by FTH LLC on the closing date will be transferred to the depositor by FTH LLC and then transferred by the depositor to the issuing entity. The issuing entity will grant a security interest in the receivables and the other issuing entity property to the indenture trustee on behalf of the noteholders.






9

Table of Contents
The “issuing entity property” will include the following:




the receivables, including collections on the receivables after the cut-off date (the cut-off date for the receivables sold to the issuing entity on the closing date is the close of business on March 31, 2019, which we refer to as the “cut-off date”);




security interests in the vehicles financed by the receivables, which we refer to as the “financed vehicles”;




all receivable files relating to the original motor vehicle retail installment sale contracts and/or installment loans evidencing the receivables;




any other property securing the receivables;




all rights of the originator under agreements with the dealers relating to the receivables;




all rights of the originator to proceeds under insurance policies that cover the obligors under the receivables or the financed vehicles;




all rights of the originator to any refunds in connection with extended service agreements relating to the receivables;




amounts on deposit in the collection account, reserve account, principal distribution account (but not the designated certificateholder account) and permitted investments of the collection account and reserve account;




all rights of the issuing entity under the sale agreement, all rights of the depositor under the purchase agreement and all rights of FTH LLC under the receivables sale agreement; and




the proceeds of any and all of the above.

STATISTICAL INFORMATION

The statistical information in this prospectus is based on the receivables in the pool of receivables as of the cut-off date.

As of the close of business on the cut-off date, the receivables in the pool described in this prospectus had:


an aggregate principal balance of $1,433,531,134.87;




a weighted average contract rate of 5.77%;




a weighted average original maturity of 69.4 months;




a weighted average FICO® score of 755;




a weighted average loan-to-value ratio of 91.5%; and




a weighted average remaining maturity of 58.0 months.

For more information about the characteristics of the receivables in the pool, see “The Receivables Pool” in this prospectus. In connection with the offering of the notes, the depositor has performed a review of the receivables in the pool and certain disclosure in this prospectus relating to the receivables, as described under “The Receivables Pool—Review of Pool Assets” in this prospectus. Based on its review, the depositor has concluded that none of the receivables in the pool were originated with exceptions to Fifth Third Bank’s underwriting criteria.

In connection with the offering of the notes, the depositor has performed a review of the receivables in the pool and the disclosure regarding those receivables required to be included in this prospectus by Item 1111 of Regulation AB (such disclosure, the “Rule 193 Information”). This review was designed and effected to provide the depositor with reasonable assurance that the Rule 193 Information is accurate in all material respects. See “The Receivables Pool—Review of Pool Assets.”

In addition to the purchase of receivables from the issuing entity in connection with the exercise of the servicer’s “clean-up call” option as described above under “Interest and Principal—Optional Redemption of the Notes,” receivables may be repurchased from the issuing entity by the originator, in connection with the breach of certain representations and warranties concerning the characteristics of the receivables, and purchased by the servicer, in connection with the breach of certain servicing covenants, as described under “The Transaction Documents—Sale and Assignment of Receivables and Related Security Interests—Representations and Warranties of the Originator” and “The Servicer.”






10

Table of Contents
PRIORITY OF PAYMENTS

On each payment date, except after the acceleration of the notes following an event of default, the paying agent will make the following payments and deposits from available funds in the collection account (including funds, if any, deposited into the collection account from the reserve account) as directed by the servicer in the following amounts and order of priority:




first, to the servicer, the servicing fee and all unpaid servicing fees with respect to any prior collection period;




second, to the noteholders, interest on the notes;




third, to the principal distribution account for distribution to the noteholders, the First Allocation of Principal, if any;




fourth, to the reserve account, until the amount of funds in the reserve account is equal to the specified reserve account balance;




fifth, to the principal distribution account for distribution to the noteholders, the Regular Principal Distribution Amount;




sixth, to pay to the owner trustee (including as certificate paying agent), the Delaware trustee, the indenture trustee and the asset representations reviewer, accrued and unpaid fees and reasonable expenses (including indemnification amounts) due and owing under the applicable transaction documents, which have not been previously paid; provided, that with respect to the asset representations reviewer, such fees, expenses and indemnity payments must have been due and unpaid for more than 60 days; and




seventh, any remaining funds will be distributed to the designated certificateholder account.

The final distribution to any noteholder will be made only upon presentation and surrender of the physical certificate representing that noteholder’s notes (if applicable) at an office or agency of the indenture trustee specified in a notice from the indenture trustee, in the name of and on behalf of the issuing

entity. If any notes are not presented and surrendered for cancellation, any funds held by the indenture trustee or any paying agent for the payment of any amount due with respect to any note after the indenture trustee has taken certain measures to locate the related noteholders and those measures have failed, will be distributed to the holders of the issuing entity’s certificates.

Amounts deposited in the principal distribution account will be paid to the noteholders of the notes as described under “The Notes—Payments of Principal.”

FEES AND EXPENSES

Servicing Fee

The servicer will be entitled to receive a servicing fee for each collection period. The “servicing fee” for any payment date will be an amount equal product of (1) 1.00% per annum; (2) one-twelfth (or, in the case of the first payment date, a fraction, the numerator of which is the number of days from but not including the cut-off date to and including the last day of the first collection period and the denominator of which is 360) and (3) the net pool balance of the receivables as of the first day of the related collection period (or as of the cut-off date, in the case of the first payment date). As additional compensation, the servicer will be entitled to retain all supplemental servicing fees and investment earnings from amounts on deposit in the collection account and the reserve account. The servicing fee, together with any portion of the servicing fee that remains unpaid from prior payment dates, will be payable on each payment date from funds on deposit in the collection account with respect to the collection period preceding such payment date, including funds, if any, deposited into the collection account from the reserve account.

Indenture Trustee, Owner Trustee and Delaware Trustee Fees and Expenses

Each of the indenture trustee, the owner trustee and the Delaware trustee will be entitled to a fee and reimbursement in the form of indemnity payments in connection with the performance of their duties. For a discussion of the indemnity payments, see “The Transaction Documents—Indemnification of the Indenture Trustee, the Owner Trustee and the Delaware Trustee.”




The indenture trustee will be entitled to an annual fee equal to $4,000.






11

Table of Contents

The owner trustee will be entitled to an annual fee equal to $2,500.




The Delaware trustee will be entitled to an annual fee equal to $2,500.

The above expenses will be paid directly by the servicer. However, the fees, expenses and indemnity payments are payable out of available funds in the collection account in the order of priority set forth under “—Priority of Payments” above to the extent the servicer fails to make such payments.

Asset Representations Reviewer Fees and Expenses

The asset representations reviewer will be paid an annual fee of $5,000 by the servicer, and to the extent not so paid, as set forth above under “—Priority of Payments.” The asset representations reviewer will also be entitled to receive a fee of $200 for each receivable reviewed and will be entitled to be reimbursed for all costs and expenses incurred in connection with the performance of a review. All fees payable to, and expenses incurred by, the asset representations reviewer in connection with the review will be payable by Fifth Third Bank and, to the extent such fees and expenses remain unpaid after 60 days, they will be payable out of amounts on deposit in the collection account as described above under “—Priority of Payments.”

See “The Transaction Documents—Fees and Expenses” and “The Transaction Documents—Asset Representations Review—Fees and Expenses for Asset Review.”

CREDIT ENHANCEMENT

The credit enhancement provides protection for the notes against losses and delays in payment or other shortfalls of cash flow. The credit enhancement for the notes will be the subordination of the certificates, the reserve account, overcollateralization and the excess interest on the receivables. If the credit enhancement is not sufficient to cover all amounts payable on the notes, the notes having a later final scheduled payment date generally will bear a greater risk of loss than notes having an earlier final scheduled payment date. See also “Risk Factors—Your share of possible losses may not be proportional” and “The Transaction Documents—Priority of Payments.”

Certificates

The certificates will be subordinated to the notes to provide credit enhancement for the notes because no payments will be made on the certificates on any payment date until all payments on the notes required to be made on that payment date have been paid in full. See “—Priority of Payments” above. The certificates are not offered to you under this prospectus.

Reserve Account

On the closing date, the underwriters, at the direction of the depositor, will deposit from the proceeds of the sale of the notes an amount equal to at least 0.25% of the initial net pool balance in cash into the reserve account. Collections on the receivables and other available funds, to the extent available after payments and deposits of higher priority are made, will be added to the reserve account on each payment date until the amount on deposit in the reserve account is equal to the specified reserve account balance (as described below).

On each payment date, after giving effect to any withdrawals from the reserve account, if the amount of cash on deposit in the reserve account is less than the specified reserve account balance, available funds will be deposited in the reserve account in accordance with the priority of payments described above until the amount on deposit in the reserve account equals the specified reserve account balance. Except as provided in the following proviso, the “specified reserve account balance” is, on any payment date, an amount equal to 0.25% of the initial net pool balance; provided, however, on any payment date after the notes are no longer outstanding following payment in full of principal and interest on the notes, the specified reserve account balance will be $0.

On the business day prior to each payment date, the paying agent at the direction of the servicer pursuant to a monthly servicer report will withdraw funds from the reserve account to cover any shortfalls in the amounts required to be paid on that payment date with respect to clauses first through third under “—Priority of Payments” above.

On the business day prior to any payment date, if the amount in the reserve account (other than net investment earnings) exceeds the specified reserve account balance, such excess will be transferred to the collection account and distributed on that payment date as available funds. See “The






12

Table of Contents
Transaction Documents—The Accounts—Reserve Account.”

Overcollateralization

Overcollateralization is the amount by which the net pool balance exceeds the outstanding principal amount of the notes. Overcollateralization means that there will be additional assets generating collections that will be available to cover credit losses on the receivables. The amount of overcollateralization as a percentage of the net pool balance as of the cut-off date is expected to build from approximately 4.45% at the closing date to a target overcollateralization level of 5.05% of the net pool balance as of the cut-off date.

Excess Interest

Because more interest is expected to be paid by the obligors in respect of the receivables than is necessary to pay the related servicing fee and interest on the notes each month, there is expected to be “excess interest.” Any excess interest will be applied on each payment date as an additional source of available funds for distribution in accordance with the payment priorities described above under “—Priority of Payments” and will be applied, in part, to pay principal on the notes more rapidly than the amortization of the underlying receivables in order to reach the target overcollateralization amount.

FDIC RULE AND RISK RETENTION

The transaction contemplated by this prospectus is intended to comply with the Federal Deposit Insurance Corporation regulatory safe harbor entitled “Treatment of financial assets transferred in connection with a securitization or participation” (the “FDIC Rule”). For more information, see “Risk Factors—FDIC receivership or conservatorship of Fifth Third Bank could result in delays in payments or losses on your notes,” “The Indenture—FDIC Rule Covenant” and “Material Legal Aspects of the Receivables—FDIC Rule.”

REVIEW OF ASSET REPRESENTATIONS

As more fully described in “The Transaction Documents—Asset Representations Review,” if the aggregate amount of delinquent receivables exceeds a certain threshold, then noteholders or beneficial owners of the notes (“investors”) holding at least 5% of the aggregate outstanding principal amount of all the outstanding notes may elect to initiate a vote to determine whether the asset representations reviewer

will conduct a review. Investors representing at least a majority of the voting investors may then, subject to certain conditions, direct the asset representations reviewer to perform a review of the delinquent receivables for compliance with the representations and warranties made by Fifth Third Bank.

TAX STATUS

On the Closing Date, Mayer Brown LLP, special federal tax counsel to the depositor, will deliver an opinion, subject to the assumptions and qualifications therein, to the effect that the issuing entity will not be characterized as an association or a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, and the notes (other than such notes beneficially owned by the issuing entity or a person treated as the same person as the issuing entity for U.S. federal income tax purposes) will be treated as debt for U.S. federal income tax purposes.

Each holder of a note, by acceptance of a note, will agree to treat such note as debt for federal, state and local income and franchise tax purposes.

We encourage you to consult your own tax advisor regarding the U.S. federal income tax consequences of the purchase, ownership and disposition of the notes and the tax consequences arising under the laws of any state or other taxing jurisdiction.

See “Material U.S. Federal Income Tax Consequences.”

CERTAIN ERISA CONSIDERATIONS

Subject to the considerations disclosed in “Certain Considerations for ERISA and Other U.S. Benefit Plans” in this prospectus, the notes may be purchased by employee benefit plans and accounts. An employee benefit plan, any other retirement plan, and any entity deemed to hold “plan assets” of any employee benefit plan or other plan should consult with its counsel before purchasing the notes and are urged to review carefully the matters discussed in this prospectus.

MONEY MARKET INVESTMENT

The Class A-1 notes will be structured to be eligible securities for purchase by money market funds under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Rule 2a-7 includes additional criteria for investments by money market funds, including






13

Table of Contents
requirements and clarifications relating to portfolio credit risk analysis, maturity, liquidity and risk diversification. It is the responsibly solely of the money market fund and its advisor to settle those requirements. If you are a money market fund contemplating a purchase of Class A-1 notes, you or your advisor should consider these requirements before making a purchase.

CERTAIN VOLCKER RULE CONSIDERATIONS

The issuing entity will be relying on an exclusion or exemption from the definition of “investment company” under the Investment Company Act contained in Section 3(c)(5) of the Investment Company Act, although there may be additional exclusions or exemptions available to the issuing entity. The issuing entity is being structured so as not to constitute a “covered fund” as defined in the final regulations issued December 10, 2013, implementing the “Volcker Rule” (Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act).

CREDIT RISK RETENTION

Pursuant to the SEC’s credit risk retention rules, 17 C.F.R. Part 246 (“Regulation RR”), Fifth Third Bank is required to retain an economic interest in the credit risk of the securitized receivables, either directly or through a majority-owned affiliate. Fifth Third Bank intends to satisfy this obligation through the retention by the depositor, its wholly-owned affiliate, of an “eligible vertical interest” in an amount equal to at least 5% of the initial principal amount of each class of notes and the certificates issued by the issuing entity on the closing date.

The eligible vertical interest retained by the depositor will take the form of at least 5% of each class of notes and the certificates issued by the issuing entity, though the depositor may retain more than 5% of one or more classes of notes and will initially retain all of the certificates. The material terms of the notes are described under “The Notes.” The material terms of the issuing entity’s certificates are described under “The Certificates.”

The depositor may transfer all or a portion of the eligible vertical interest to another majority-owned

affiliate of Fifth Third Bank after the closing date. See “Credit Risk Retention.”

The transaction is not intended to comply with any risk retention rules in the European Economic Areas. See “Legal Investment—Requirements for Certain European Regulated Investors and Affiliates” in this prospectus.

RATINGS

The depositor expects that the notes will receive credit ratings from one or more credit rating agencies hired by the sponsor to rate the notes (the “hired agencies”).

Although the hired agencies are not contractually obligated to monitor the ratings on the notes, we believe that the hired agencies will continue to monitor the transaction while the notes are outstanding. The hired agencies’ ratings on the notes may be lowered, qualified or withdrawn at any time. In addition, a rating agency not hired by the sponsor to rate the transaction may provide an unsolicited rating that differs from (or is lower than) the ratings provided by the hired agencies. As of the date of this prospectus, we are not aware of any unsolicited ratings on the notes. A rating is based on each rating agency’s independent evaluation of the receivables and the availability of any credit enhancement for the notes. A rating, or a change or withdrawal of a rating, by one rating agency will not necessarily correspond to a rating, or a change or a withdrawal of a rating, from any other rating agency. See “Risk Factors—The ratings of the notes may be withdrawn or lowered, or the notes may receive an unsolicited rating, which may have an adverse effect on the liquidity or the market price of the notes.”

Registration Under the Securities Act

The depositor has filed a registration statement relating to the notes with the SEC on Form SF-3. The depositor has met the requirements for registration on Form SF-3 contained in General Instruction I.A.1 to Form SF-3.






14

Table of Contents
RISK FACTORS

An investment in the notes involves significant risks. Before you decide to invest, we recommend that you carefully consider the following risk factors.



The notes may not be a suitable investment for you
The notes are not a suitable investment for you if you require a regular or predictable schedule of payments or payment on any specific date. The notes are complex investments that should be considered only by investors who, either alone or with their financial, tax and legal advisors, have the expertise to analyze the prepayment, reinvestment, default and market risks, the tax consequences of an investment in the notes and the interaction of these factors.



You must rely for repayment only upon the issuing entity’s assets, which may not be sufficient to make full payments on your notes




Your notes are secured by the assets of the issuing entity. Your notes will represent an obligation of the issuing entity only and will not represent an obligation of Fifth Third Bancorp, Fifth Third Bank, the depositor or any of their other respective affiliates other than the issuing entity. Fifth Third Bank has limited obligations to repurchase receivables for the breach of certain representations and warranties regarding the characteristics of the receivables as described in this prospectus. Distributions on any class of notes will depend solely on the amount and timing of payments and other collections in respect of the related receivables and any credit enhancement for the notes. We cannot assure you that these amounts will be sufficient to make full and timely distributions on your notes. The notes and the receivables will not be insured or guaranteed, in whole or in part, by the United States or any governmental entity. If delinquencies and losses create shortfalls which exceed the available credit enhancement for your notes, you may experience delays in payments due to you and you could suffer a loss.

Credit scores and historical loss experience may not accurately predict the likelihood of delinquencies, defaults and losses on the receivables


Information regarding credit scores for the obligors obtained at the time of acquisition from the originating dealer of their contracts is presented in “The Receivables Pool” in this prospectus. A credit score purports only to be a measurement of the relative degree of risk a borrower represents to a lender, i.e., that a borrower with a higher score is statistically expected to be less likely to default in payment than a borrower with a lower score. However, none of the depositor, FTH LLC, the sponsor nor any other party makes any representations or warranties as to any obligor’s current credit score or actual performance of any motor vehicle receivable or that a particular credit score should be relied upon as a basis for an expectation that a receivable will be paid in accordance with its terms.


Additionally, historical loss and delinquency information set forth in this prospectus under “The Receivables Pool” was affected by several variables, including general economic conditions and market interest rates, that are likely to differ in the future. Therefore, there can be no assurance that the net loss experience calculated and presented in this prospectus with respect to Fifth Third Bank’s managed portfolio of



15

Table of Contents

contracts will reflect actual experience with respect to the receivables in the receivables pool. There can be no assurance that the future delinquency or loss experience of the servicer with respect to the receivables will be better or worse than that set forth in this prospectus with respect to Fifth Third Bank’s managed portfolio.



The rate of depreciation of the financed vehicles could exceed the amortization of the outstanding principal amount of the related receivables, which may result in losses


There can be no assurance that the value of any financed vehicle will be greater than the outstanding principal amount of the related receivable. For example, new vehicles normally experience an immediate decline in value after purchase because they are no longer considered new. As a result, it is highly likely that the principal amount of a receivable will exceed the value of the related financed vehicle during the early years of a receivable’s term. The lack of any significant equity in their vehicles may make it more likely that those obligors will default in their payment obligations if their personal financial conditions change. Defaults during these earlier years are likely to result in losses because the proceeds from liquidating the related financed vehicle are less likely to pay the full amount of interest and principal owed on the related receivable. Further, the frequency and amount of losses may be greater for receivables with longer terms because these receivables tend to have a somewhat greater frequency of delinquencies and defaults and because the slower rate of amortization of the principal balance of a longer term receivable may result in a longer period during which the value of the related financed vehicle is less than the remaining principal balance of the receivable. Additionally, although the frequency of delinquencies and defaults tends to be greater for receivables secured by used vehicles, loss severity tends to be greater with respect to receivables secured by new vehicles because of the higher rate of depreciation described above and the decline in used vehicle prices. Furthermore, specific makes, models and vehicle types may experience a higher rate of depreciation and a greater than anticipated decline in used vehicle prices under certain market conditions including, but not limited to, the discontinuation of a brand by a manufacturer or the termination of dealer franchises by a manufacturer.


The pricing of used vehicles is affected by the supply and demand for those vehicles, which, in turn, is affected by consumer tastes, economic factors (including the price of gasoline), the introduction and pricing of new vehicle models and other factors. Decisions by a manufacturer with respect to new vehicle production, pricing and incentives may affect used vehicle prices, particularly those for the same or similar models. Further, the insolvency of a manufacturer or a manufacturer recall may negatively affect used vehicle prices for vehicles manufactured by that company. An increase in the supply or a decrease in the demand for used vehicles may impact the resale value of the financed vehicles securing the receivables. Decreases in the value of those vehicles may, in turn, reduce the incentive of obligors to make payments on the receivables and decrease the proceeds realized by the issuing entity from repossessions of financed vehicles. In any of the foregoing cases, the delinquency, repossession and credit loss figures, shown in the tables appearing under “The Receivables Pool” in this prospectus, might be a less reliable indicator of the rates of



16

Table of Contents

delinquencies, repossessions and losses that could occur on the receivables than would otherwise be the case.

The geographic concentration of the obligors in the receivables pool and varying economic circumstances may increase the risk of losses or reduce the return on your notes


The concentration of the receivables in specific geographic areas may increase the risk of loss. A deterioration in economic conditions in the states where obligors reside could adversely affect the ability and willingness of obligors to meet their payment obligations under the receivables and may consequently affect the delinquency, default, loss and repossession experience of the issuing entity with respect to the receivables. As a result, you may experience payment delays and losses on your notes. An improvement in economic conditions could result in prepayments by the obligors of their payment obligations under the receivables. As a result, you may receive principal payments of your notes earlier than anticipated. No prediction can be made and no assurance can be given as to the effect of an economic downturn or economic growth on the rate of delinquencies, prepayments and/or losses on the receivables. See “—Your yield to maturity may be reduced by prepayments or slower than expected prepayments” below.


As of the cut-off date, FTH LLC’s records indicate that the billing addresses of
the obligors on the receivables in the pool were concentrated in the following
states:



State
Percentage of

Outstanding Aggregate

Principal Balance






Ohio

8.1%

Texas

8.0%

Florida

7.8%

California

7.4%



No other state accounts for more than 5.0% of the principal balance of the receivables as of the cut-off date. Economic factors such as unemployment, interest rates, the price of gasoline, the rate of inflation and consumer perceptions of the economy may affect the rate of prepayment and defaults on the receivables. Further, the effect of natural disasters, such as hurricanes and floods, on the performance of the receivables is unclear, but there may be a significant adverse effect on general economic conditions, consumer confidence and general market liquidity. Because of the concentration of the obligors in certain states, any adverse economic factors or natural disasters in those states may have a greater effect on the performance of the notes than if the concentration did not exist.


Additionally, during periods of economic slowdown or recession, delinquencies, defaults, repossessions and losses generally increase. These periods may also be accompanied by decreased consumer demand for new and used automobiles, light-duty trucks, vans or other motor vehicles and declining values of automobiles securing outstanding automobile loan contracts, which weakens collateral coverage and increases the amount of a loss in the event of default by an obligor. Significant increases in the inventory of used automobiles during periods of economic slowdown or recession may also depress the prices at which repossessed automobiles may be sold or delay the



17

Table of Contents

timing of these sales. All of these factors could result in losses on your notes.

An economic downturn may adversely affect the performance of the receivables, which could result in losses on your notes


An economic downturn may adversely affect the performance of the receivables. High unemployment and a general reduction in the availability of credit may lead to increased delinquencies and defaults by obligors, as well as decreased consumer demand for automobiles and reduced vehicle prices, which could increase the amount of a loss in the event of a default by an obligor. If an economic downturn is experienced for a prolonged period of time, delinquencies and losses on the receivables could increase, which could result in losses on your notes.

You may suffer losses due to receivables with low contract rates


The receivables pool may include receivables that have contract rates that are less than the interest rates on your notes. Interest paid on the higher contract rate receivables compensates for the lower contract rate receivables and to the extent such interest causes there to be excess interest during any collection period that excess interest may be paid by the issuing entity as principal on your notes and additional overcollateralization may be created. Excessive prepayments on the higher contract rate receivables may adversely impact your notes by reducing the interest payments available.

Prepayments, potential losses and a change in the order of priority of principal payments may result from an event of default under the indenture


An event of default under the indenture may result in payments on your notes being accelerated. As a result:


•   you may suffer losses on your notes if the assets of the issuing entity are insufficient to pay the amounts owed on your notes; and


•   your notes may be repaid earlier than scheduled, which may require you to reinvest your principal at a lower rate of return.

Prepayments on the receivables may adversely affect the average life of and rate of return on your notes


Faster than expected prepayments on the receivables will cause the issuing entity to make payments on the notes earlier than expected. You may not be able to reinvest the principal repaid to you at a rate of return that is equal to or greater than the rate of return on your notes. We cannot predict the effect of prepayments on the average life of your notes.


All the receivables by their terms may be prepaid at any time. Prepayments include:


•   prepayments in whole or in part by the obligor;


•   liquidations due to default;


•   partial payments with proceeds from physical damage, credit life and disability insurance policies;



18

Table of Contents

•   required purchases of receivables by the servicer or repurchases of receivables by the originator for specified breaches of its representations or covenants; and


•   an optional repurchase of the issuing entity’s receivables as described under “The Transaction Documents—Optional Redemption.”


A variety of economic, social and other factors will influence the rate of optional prepayments on the receivables and defaults.



The final payment of each class of notes is expected to occur prior to its final scheduled payment date because of the prepayment and purchase considerations set forth above. If sufficient funds are not available to pay any class of notes in full on its final payment date, an event of default will occur and final payment of such class of notes will occur later than such date.



For more information regarding the timing of repayments of the notes, see “Maturity and Prepayment Considerations.”

The failure to make principal payments on any notes will generally not result in an event of default under the indenture until the applicable final scheduled payment date


The amount of principal required to be paid on any class of notes prior to the applicable final scheduled payment date generally will be limited to amounts available for those purposes. Therefore, the failure to pay principal on any class of notes generally will not result in an event of default under the indenture until the applicable final scheduled payment date for that class of notes.

Risks associated with unknown allocation of Class A-2 notes


The allocation of the principal balance between the Class A-2-A notes and the Class A-2-B notes may not be known until the day of pricing, although the principal amount of the Class A-2-B notes may not exceed 33.20% of the aggregate principal amount of the Class A-2 notes. Consequently, the allocation of the principal amount between the Class A-2-A notes and the Class A-2-B notes may result in any number of possible allocation scenarios, including a scenario in which the entire principal amount of the Class A-2 notes is allocated to the fixed rate Class A-2-A notes and none of the principal amount is allocated to the floating rate Class A-2-B notes.


As the allocated principal amount of the floating rate Class A-2-B notes is increased (relative to the corresponding Class A-2-A fixed rate notes), there will be a greater amount of floating rate securities issued by the issuing entity, and therefore the issuing entity will have a greater exposure to increases in the floating rate payable on the floating rate notes. For more information on the risks associated with the issuance of floating rate notes, please see “—The issuing entity will issue floating rate notes, but the issuing entity will not enter into any interest rate hedge agreements and you may suffer losses on your notes if interest rates rise” below.


In addition, because the aggregate amount of Class A-2 notes is fixed as set forth on the cover of this prospectus, the division of the aggregate Class A-2 note principal amount between the Class A-2-A notes and



19

Table of Contents

the Class A-2-B notes may result in one of such classes being issued in only a very small principal amount, which may reduce the liquidity of such class of notes.

The issuing entity will issue floating rate notes, but the issuing entity will not enter into any interest rate hedge agreements and you may suffer losses on your notes if interest rates rise


The receivables sold to the issuing entity on the closing date will bear interest at a fixed rate, while the floating rate notes will bear interest at a floating rate based on LIBOR plus an applicable spread. Even though the issuing entity will issue floating rate notes, it will not enter into any interest rate swaps or interest rate caps in connection with the issuance of the notes.


If the floating rate payable by the issuing entity increases to the point where the amount of interest and principal due on the notes, together with other fees and expenses payable by the issuing entity, exceeds the amount of collections and other funds available to the issuing entity to make such payments, the issuing entity may not have sufficient funds to make payments on the notes. If the issuing entity does not have sufficient funds to make payments, you may experience delays or reductions in the interest and principal payments on your notes.


If market interest rates rise or other conditions change materially after the issuance of the notes and certificates, you may experience delays or reductions in interest and principal payments on your notes. The issuing entity will make payments on the floating rate notes out of its generally available funds—not from funds that are dedicated solely to the floating rate notes. Therefore, an increase in interest rates would reduce the amounts available for distribution to holders of all notes, not just the holders of the floating rate notes, and a decrease in interest rates would increase the amounts available to the holders of all notes.

Negative LIBOR rates would reduce the rate of interest on the Class A-2

notes




The interest rate to be borne by the Class A-2-B notes is based on a spread over LIBOR – the London Interbank Offered Rate (and as further described in this prospectus) – which serves as a global benchmark for home mortgages, student loans and what various issuers pay to borrow money.


Changes in LIBOR will affect the rate at which the Class A-2-B notes accrue interest and the amount of interest payments on the Class A-2-B notes. To the extent that LIBOR decreases below 0.00% for any interest accrual period, the rate at which the Class A-2-B notes accrue interest for such interest accrual period will be reduced by the amount by which LIBOR is negative, provided that the interest rate on the Class A-2-B notes for any interest accrual period will not be less than 0.00%. A negative LIBOR rate could result in the interest rate applied to the Class A-2-B notes decreasing to 0.00% for the related interest accrual period.

Uncertainty about the future of the LIBOR industry may have an adverse impact on your Class A-2-B notes




LIBOR may not accurately represent the offered rate applicable to loans in U.S. dollars for a one month period between leading European banks, and LIBOR’s prominence as a benchmark interest rate is unlikely to be preserved. LIBOR rates are calculated and published for



20

Table of Contents

various currencies and periods by the benchmark’s administrator, ICE Benchmark Administration Limited (“IBA”), which is regulated for such purposes by the United Kingdom’s Financial Conduct Authority (the “FCA”). It is uncertain whether LIBOR will continue to be calculated and published on the same (or a similar) basis to that currently in effect, or at all. In particular, the chief executive of the FCA, in a speech on July 27, 2017, indicated that the FCA expects, by no later than the end of 2021, to cease taking steps aimed at ensuring the continuing availability of LIBOR in its current form. On November 24, 2017, the FCA announced that the current panel banks will voluntarily sustain LIBOR until the end of 2021, although there can be no assurance that they will not cease to do so sooner. If LIBOR becomes unavailable for any interest period, the LIBOR rate used to calculate interest on the Class A-2-B notes for such interest period will be the LIBOR rate used to calculate interest on the Class A-2-B notes for the preceding interest period, which could result in the interest rate of the Class A-2-B notes becoming fixed until the maturity of the Class A-2-B notes. No prediction can be made as to future levels of the one-month LIBOR index, the timing of any changes thereto, the effect of the FCA’s announcements, or whether panel banks will continue to provide LIBOR submissions to the IBA, each of which could cause or contribute to market volatility and may directly affect the yield of the Class A-2-B notes and/or the liquidity of the Class A-2-B notes.

Retention of some or all of one or more classes of notes by the depositor or an affiliate of the depositor may reduce the liquidity of the notes




The depositor will retain at least 5% (by initial principal amount) of each of the classes of notes. The depositor or an affiliate thereof may retain an additional amount of one or more classes of notes on the closing date. Accordingly, the market for such a retained class of notes may be less liquid than would otherwise be the case. In addition, if any retained notes are subsequently sold in the secondary market, demand and market price for notes already in the market could be adversely affected. Additionally, if any retained notes are subsequently sold in the secondary market, the voting power of the noteholders of the outstanding notes may be diluted.

Interests of other persons in the receivables and financed vehicles could be superior to the issuing entity’s interest, which may result in reduced payments on your notes




If another person acquires an interest in a receivable that is superior to the issuing entity’s interest in the receivable, the proceeds of that receivable may not be available to make payments on the notes. The issuing entity could lose the priority of its security interest in a financed vehicle due to, among other things, liens for repairs or storage of a financed vehicle or for unpaid taxes of an obligor. Generally, no action will be taken to perfect the rights of the issuing entity in proceeds of any insurance policies covering individual financed vehicles or obligors. Therefore, the rights of a third party with an interest in the proceeds could prevail against the rights of the issuing entity prior to the time the proceeds are deposited by the servicer into the collection account. See “Material Legal Aspects of the Receivables—Security Interests in the Financed Vehicles.”


Furthermore, a creditor of a dealer that originated a receivable in electronic form may have an interest in that receivable that is prior to



21

Table of Contents

the interest of the issuing entity if the methods by which the authoritative copy of that electronic contract was assigned to the originator and by which the servicer maintains control over such authoritative copy are not sufficient under the applicable provisions of the UCC to perfect the assignment of such electronic contract to the originator.


In addition, after the transfer of receivables to the issuing entity, the servicer will retain possession of the paper contracts on behalf of the issuing entity and the servicer will maintain control over the authoritative copies of the electronic contracts on behalf of the issuing entity. A purchaser of the receivables who gives new value and is able to take possession of the paper contracts and/or obtain control over the electronic contracts in the ordinary course of its business will have priority over the issuing entity’s interest in the receivables if that purchaser acted in good faith without knowledge that the purchase of the receivables violated the rights of a third party. A purchaser could obtain possession of the paper contracts or control over the electronic contracts through the fraud, forgery, negligence or error of other parties.


None of the servicer, the sponsor, the originator, FTH LLC, the depositor or their affiliates will have any obligation to purchase or repurchase, as applicable, a receivable if these liens result in the loss of the priority of the security interest in the financed vehicle after the issuance of notes by the issuing entity.

Federal financial regulatory reform could have a significant impact on the servicer, the sponsor, the originator, the administrator, FTH LLC, the depositor or the issuing entity and could adversely affect the timing and amount of payments on your notes




The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) became effective on July 22, 2010. The Dodd-Frank Act is extensive and significant legislation that, among other things:


•   created a framework for the liquidation of certain bank holding companies and other nonbank financial companies, determined to be “covered financial companies,” in the event such a company is in default or in danger of default and the resolution of such a company under other applicable law would have serious adverse effects on financial stability in the United States, and also for the liquidation of certain of their respective subsidiaries, defined as “covered subsidiaries,” in the event such a subsidiary is also determined to be a “covered financial company” because it is, among other things, in default or in danger of default and the liquidation of such subsidiary would avoid or mitigate serious adverse effects on the financial stability or economic conditions of the United States;


•   created a new framework for the regulation of over-the-counter derivatives activities;


•   expanded the regulatory oversight of securities and capital markets activities by the SEC; and



22

Table of Contents

•   created the Consumer Financial Protection Bureau (“CFPB”), an agency responsible for, among other things, administering and enforcing the laws and regulations for consumer financial products and services and conducting examinations of large banks and their affiliates for purposes of assessing compliance with the requirements of consumer financial laws.


The Dodd-Frank Act also increased the regulation of the securitization markets. For example, it gives broader powers to the SEC to regulate credit rating agencies and adopt regulations governing these organizations and their activities.


Compliance with the implementing regulations under the Dodd-Frank Act or the oversight of the SEC, CFPB or other government entities, as applicable, has imposed costs on, created operational constraints for, and placed limits on pricing with respect to banks such as Fifth Third Bank. The ultimate impact of the Dodd-Frank Act and its effects on the financial markets and their participants will not be fully known for an extended period of time. No assurance can be given that requirements imposed by the Dodd-Frank Act will not have a significant impact on the servicing of the receivables, and on the regulation and supervision of the servicer, the sponsor, the originator, the administrator, FTH LLC, the depositor, the issuing entity and/or their respective affiliates.


In addition, no assurances can be given that the framework for the liquidation of “covered financial companies” or their “covered subsidiaries” determined to be “covered financial companies” would not apply to Fifth Third Bancorp or its nonbank affiliates, the issuing entity, FTH LLC or the depositor, or, if it were to apply, would not result in a repudiation of any of the transaction documents where further performance is required or an automatic stay or similar power preventing the indenture trustee or other transaction parties from exercising their rights. This repudiation power could also affect certain transfers of receivables pursuant to the transaction documents as further described under “Material Legal Aspects of the Receivables—Dodd-Frank Orderly Liquidation Framework” in this prospectus. Application of this framework could materially adversely affect the timing and amount of payments of principal and interest on your notes.

FDIC receivership or conservatorship of Fifth Third Bank could result in delays in payments or losses on your notes


Fifth Third Bank is an Ohio banking corporation and its deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”). If Fifth Third Bank were to become insolvent or were to violate applicable regulations, or if other similar circumstances were to occur, the FDIC could be appointed receiver or conservator of Fifth Third Bank. As receiver or conservator, the FDIC would have various powers under the Federal Deposit Insurance Act, including the repudiation and automatic stay powers described under “Material Legal Aspects of the Receivables—Certain Matters Relating to Insolvency” in this prospectus. To limit the FDIC’s potential use of any of these powers, Fifth Third Bank has structured this transaction to take advantage of a special regulatory safe harbor that the FDIC has created, entitled “Treatment of financial assets transferred in connection with a securitization or participation.” This FDIC regulatory safe harbor, which we refer to as the “FDIC Rule,” contains four separate safe



23

Table of Contents

harbors for transactions; in this prospectus, we describe the safe harbors applicable to securitizations that do not qualify for sale accounting treatment and securitizations that do satisfy the requirements for sale accounting treatment. See “Material Legal Aspects of the Receivables—FDIC Rule.” In this transaction, the certificates initially will be held by the depositor or an affiliate of the depositor. The FDIC Rule limits the rights of the FDIC, as conservator or receiver, to delay or prevent payments to noteholders in securitization transactions. If the depositor were to sell all or nearly all of the certificates, then the sponsor would record the transfer of receivables as a sale under generally accepted accounting principles at the time of such sale. Consequently, we also describe the safe harbor applicable to securitizations that qualify for sale accounting treatment in this prospectus. For a description of the FDIC Rule’s requirements and effects, including the uncertainty regarding its application and interpretation, see “Material Legal Aspects of the Receivables—FDIC Rule.”


If the FDIC were to successfully assert that this transaction does not comply with the FDIC Rule and that the transfer of receivables under the receivables sale agreement was not a legal true sale, then FTH LLC would be treated as having made a loan to Fifth Third Bank, secured by the transferred receivables. If the FDIC repudiated that loan, the amount of compensation that the FDIC would be required to pay would be limited to “actual direct compensatory damages,” as discussed under “Material Legal Aspects of the Receivables—Certain Matters Relating to Insolvency.”


If the FDIC were appointed as conservator or receiver for Fifth Third Bank, the FDIC could:


•   require the issuing entity, as assignee of the depositor, to go through an administrative claims procedure to establish its rights to payments collected on the receivables; or


•   request a stay of proceedings to liquidate claims or otherwise enforce contractual and legal remedies against Fifth Third Bank; or


•   repudiate without compensation Fifth Third Bank’s ongoing servicing obligations under the servicing agreement, such as its duty to collect and remit payments or otherwise service the receivables; or


•   argue that the automatic stay prevents the indenture trustee and other transaction parties from exercising their rights, remedies and interests for up to 90 days.


If the FDIC, as conservator or receiver for Fifth Third Bank, were to take any of the actions described above, payments and/or distributions of principal and interest on the notes issued by the issuing entity could be delayed or reduced. See “Material Legal Aspects of the Receivables—Certain Matters Relating to Insolvency.”


Additionally, Fifth Third Bank’s accounting treatment of the transfer of receivables may also affect whether the issuing entity would be a covered subsidiary of Fifth Third Bancorp under the Orderly Liquidation Authority created pursuant to the Dodd-Frank Act and thus potentially subject to an FDIC receivership under that statute in addition to potentially being a debtor in a case under the Bankruptcy



24

Table of Contents

Code. See “—Federal financial regulatory reform could have a significant impact on the servicer, the sponsor, the originator, the administrator, FTH LLC, the depositor or the issuing entity and could adversely affect the timing and amount of payments on your notes” above and “Material Legal Aspects of the Receivables—Certain Matters Relating to Insolvency.”

Failure to comply with consumer protection laws may result in losses on your investment


Federal and state consumer protection laws regulate the creation, collection and enforcement of consumer contracts such as the receivables. These laws impose specific statutory liabilities upon creditors who fail to comply with the provisions of these laws. Although the liability of the issuing entity to the obligor for violations of applicable federal and state consumer laws may be limited, these laws may make an assignee of a receivable, such as the issuing entity, liable to the obligor for any violation by the lender. In some cases, this liability could affect an assignee’s ability to enforce its rights related to secured loans such as the receivables. The originator is obligated to repurchase from the issuing entity any receivable that fails to comply with federal and state consumer protection laws. To the extent that the originator fails to make such a repurchase, or to the extent that a court holds the issuing entity liable for violating consumer protection laws regardless of such a repurchase, a failure to comply with consumer protection laws could result in required payments by the issuing entity. For a discussion of federal and state consumer protection laws which may affect the receivables, you should refer to “Material Legal Aspects of the Receivables—Consumer Protection Law” in this prospectus.


A regulatory interpretation of the Military Lending Act (the “MLA”) issued by the Department of Defense (the “DoD”) in December 2017 indicated that retail installment sale contracts that include credit-related ancillary products (guaranteed asset protection (GAP), credit life, and similar credit products) may need to comply with the requirements of the MLA. Regulations implementing the MLA limit the military annual percentage rate, adjust arbitration rules and require additional disclosures. Failure to comply with these requirements could render the related receivables void and/or subject the issuing entity to liability. Financial services industry groups are continuing to seek further clarification from the DoD on the interpretations of the MLA.


Each of the depositor and originator will make representations and warranties relating to the receivables’ compliance with law and the enforceability of the related contracts. If this interpretation with respect to the MLA is ultimately unchanged and if any of these laws or other federal or state consumer protection laws applicable to consumer loans such as the receivables have not been complied with, it could result in an obligation of the depositor and the originator to repurchase such receivables, thereby shortening the weighted average life of your notes, or may materially affect collection on such receivables and, in either event, you may experience delays in payments or losses on your notes. For a description of the impact of repurchases on the weighted average life of the notes, see “Weighted Average Life of the Notes” in this prospectus. For a discussion of federal and state consumer protection laws which may affect the receivables, you should refer to “Material Legal Aspects of the Receivables—Consumer Protection Law” in this prospectus.



25

Table of Contents
The return on your notes could be reduced by shortfalls due to application of the Servicemembers Civil Relief Act


The Servicemembers Civil Relief Act (“Relief Act”) and similar state legislation may limit the interest payable on a receivable during an obligor’s period of active military duty and a period of time after active duty. This legislation could adversely affect the ability of the servicer to collect full amounts of interest on a receivable as well as to foreclose on an affected receivable during and, in certain circumstances, after the obligor’s period of active military duty. This legislation may thus result in delays and losses in payments to noteholders. See “Material Legal Aspects of the Receivables—Servicemembers Civil Relief Act” in this prospectus.

A FTH LLC or depositor bankruptcy could delay or limit payments to you


Following a bankruptcy or insolvency of FTH LLC or the depositor, a court could conclude that the receivables are owned by FTH LLC or the depositor, instead of the issuing entity. This conclusion could be either because the court concluded that any transfer of the receivables was not a true sale or because the court concluded that the depositor or the issuing entity should be treated as the same entity as FTH LLC or the depositor for bankruptcy purposes. If this were to occur, you could experience delays in payments due to you or you may not ultimately receive all amounts due to you as a result of:


•   the automatic stay, which prevents a secured creditor from exercising remedies against a debtor in bankruptcy without permission from the court, and provisions of the United States Bankruptcy Code that permit substitution of collateral in limited circumstances;



•   tax or government liens on FTH LLC’s or the depositor’s property (that arose prior to the transfer of the receivables to the issuing entity) having a prior claim on collections before the collections are used to make payments on the notes; or



•   the fact that the issuing entity and the indenture trustee may not have a perfected security interest in any cash collections of the receivables held by the servicer at the time that a bankruptcy proceeding begins.


For a discussion of how a bankruptcy proceeding of FTH LLC or the depositor may affect the issuing entity and the notes, you should refer to “Material Legal Aspects of the Receivables—Certain Matters Relating to Bankruptcy” in this prospectus.

Adverse events with respect to Fifth Third Bank or its affiliates or third-party providers to whom Fifth Third Bank outsources its activities could affect the timing of payments on your notes or have other adverse effects on your notes






Adverse events with respect to Fifth Third Bank or any of its affiliates or a third-party provider to whom Fifth Third Bank or its affiliates outsource their activities could result in servicing disruptions or reduce the market value of your notes. In the event of a termination and replacement of Fifth Third Bank, as the servicer, there may be some



26

Table of Contents

disruption of the collection activity with respect to loans and therefore delinquencies and credit losses could increase. Similarly, if the originator or the servicer becomes unable to repurchase the receivables which do not comply with representations and warranties about the receivables made by the originator in the receivables sale agreement (for example, representations relating to the compliance of the receivables with applicable laws), then investors could suffer losses. In addition, adverse corporate developments with respect to servicers of asset-backed securities or their affiliates have in some cases also resulted in a reduction in the market value of the related asset-backed securities.

The servicer’s discretion over the servicing of the receivables may impact the amount and timing of funds available to make payments on the notes


The servicer is obligated to service the receivables in accordance with its customary practices. The servicer has discretion in servicing the receivables including the ability to grant payment extensions and to determine the timing and method of collection and liquidation procedures. In addition, the servicer’s customary practices may change from time to time and those changes could reduce collections on the receivables. The servicer also may offer obligors other programs, consistent with its customary practices, that permit extensions or deferrals of payments due on receivables following natural disasters in certain geographic areas. Although the servicer’s customary practices at any time will apply to all receivables serviced by the servicer, without regard to whether a receivable has been sold to the issuing entity, the servicer is not obligated to maximize collections from receivables. Consequently, the manner in which the servicer exercises its servicing discretion or changes its customary practices could have an impact on the amount and timing of collections on the receivables, which may impact the amount and timing of funds available to make payments on the notes.

The servicer’s commingling of funds with its own funds could result in a loss


To the extent specified and subject to the satisfaction of certain conditions set forth in “The Transaction Documents—The Accounts—The Collection Account,” the servicer may be able to commingle funds, such as collections from the loans and proceeds from the disposition of any repossessed financed vehicles, with its own funds for up to two business days following receipt thereof. Commingled funds may be used or invested by the servicer at its own risk and for its own benefit. If the servicer were unable to remit those funds or the servicer were to become a debtor under any insolvency laws, delays or reductions in distributions to you may occur.

The ratings of the notes may be withdrawn or lowered, or the notes may receive an unsolicited rating, which may have an adverse effect on the liquidity or the market price of the notes


Security ratings are not recommendations to buy, sell or hold the notes. Rather, ratings are an assessment by the applicable rating agency of the likelihood that any interest on a class of notes will be paid on a timely basis and that a class of notes will be paid in full by its final scheduled payment date. There can be no assurance that the notes will perform as



27

Table of Contents

expected, and rating agencies do not guarantee their assessments. Ratings do not consider the extent to which the notes will be subject to prepayment or the principal of any class of notes will be paid prior to the final scheduled payment date for that class of notes, nor do the ratings consider the prices of the notes or their suitability to a particular investor. A rating agency may revise or withdraw the ratings at any time in its sole discretion, including as a result of a failure by the sponsor to comply with its obligation to post information provided to the hired agencies on a website that is accessible by a rating agency that is not a hired agency. The ratings of any notes may be lowered by a rating agency (including the hired agencies) following the initial issuance of the notes as a result of losses on the related receivables in excess of the levels contemplated by a rating agency at the time of its initial rating analysis. None of the depositor, the sponsor or any of their respective affiliates will have any obligation to replace or supplement any credit support, or to take any other action to maintain any ratings of the notes.


Accordingly, there is no assurance that the ratings assigned to any note on the date on which the note is originally issued will not be lowered or withdrawn by any rating agency at any time thereafter. If any rating with respect to the notes is revised or withdrawn, the liquidity or the market value of your notes may be adversely affected.


It is possible that other rating agencies not hired by the sponsor may provide an unsolicited rating that differs from (or is lower than) the rating provided by the hired agencies. As of the date of this prospectus, the depositor was not aware of the existence of any unsolicited rating provided (or to be provided at a future time) by any rating agency not hired to rate the transaction. However, there can be no assurance that an unsolicited rating will not be issued prior to or after the closing date, and none of the sponsor, FTH LLC, the depositor or any underwriter is obligated to inform investors (or potential investors) in the notes if an unsolicited rating is issued after the date of this prospectus. Consequently, if you intend to purchase notes, you should monitor whether an unsolicited rating of the notes has been issued by a non-hired rating agency and should consult with your financial and legal advisors regarding the impact of an unsolicited rating on a class of notes. If any non-hired rating agency provides an unsolicited rating that differs from (or is lower than) the rating provided by the hired agencies, the liquidity or the market value of your notes may be adversely affected.

Potential rating agency conflict of interest may affect the market value of your notes


It may be perceived that the hired agencies have a conflict of interest that may have affected the ratings assigned to the notes where, as is the industry standard and the case with the ratings of the notes, the sponsor, the depositor or the issuing entity pays the fees charged by the rating agencies for their rating services. This potential conflict of interest may in turn have an adverse effect on the market value of your notes and your ability to resell your notes.

The absence of a secondary market for the notes could limit your ability toresell your notes


The notes will not be listed on any securities exchange. If you want to sell your notes you must locate a purchaser that is willing to purchase those notes. The underwriters intend to make a secondary market for the notes. The underwriters will do so by offering to buy the notes



28

Table of Contents

from investors that wish to sell. However, the underwriters will not be obligated to make offers to buy the notes and may stop making offers at any time. In addition, the prices offered, if any, may not reflect prices that other potential purchasers would be willing to pay, were they to be given the opportunity. There have been times in the past where there have been very few buyers of asset-backed securities, and there may be such times again in the future. As a result, you may not be able to sell your notes when you want to do so or you may not be able to obtain the price that you wish to receive.

If your notes are in book-entry form, your rights can only be exercised indirectly




If your notes are initially issued in book-entry form, you will be required to hold your interest in your notes through DTC in the United States, or Clearstream Banking Luxembourg S.A. (“Clearstream”) or Euroclear Bank S.A./NV as operator of the Euroclear System in Europe or Asia (“Euroclear”). Transfers of interests in the notes within DTC, Clearstream or Euroclear must be made in accordance with the usual rules and operating procedures of those systems. So long as the notes are in book-entry form, you will not be entitled to receive a definitive note representing your interest. The notes will remain in book-entry form except in the limited circumstances described under the caption “The Notes—Definitive Notes” in this prospectus. Unless and until the notes cease to be held in book-entry form, the related transaction parties will not recognize you as a holder of the related notes except in the limited circumstances relating to an investor vote with respect to an asset representations review as described under “The Transaction Documents—Asset Representations Review,” a request that the originator repurchase any of the receivables as described under “The Transaction Documents—Dispute Resolution,” and a request to the depositor to communicate with other noteholders as described under “The Notes—Noteholder Communication.”


As a result, you will only be able to exercise your rights as a noteholder indirectly through DTC (if in the United States) and its participating organizations, or Clearstream and Euroclear (in Europe or Asia) and their participating organizations. Holding the notes in book-entry form could also limit your ability to pledge or transfer your notes to persons or entities that do not participate in DTC, Clearstream or Euroclear. In addition, having the notes in book-entry form may reduce their liquidity in the secondary market since certain potential investors may be unwilling to purchase notes for which they cannot obtain physical notes.


Interest and principal on the notes will be paid by the issuing entity to DTC as the record holder of those notes while they are held in book-entry form. DTC will credit payments received from the issuing entity to the accounts of its participants which, in turn, will credit those amounts to noteholders either directly or indirectly through indirect participants. This process may delay your receipt of payments from the issuing entity.

Your yield to maturity may be reduced by prepayments or slower than expected prepayments


The pre-tax yield to maturity is uncertain and will depend on a number of factors including the following:



29

Table of Contents

•   The rate of return of principal is uncertain. The amount of payments of principal of your notes and the time when you receive those payments depends on the amount and times at which obligors make principal payments on the receivables. Those principal payments may be regularly scheduled payments or unscheduled payments resulting from prepayments or defaults on the receivables. For example, the servicer may engage in marketing practices or promotions, including refinancing, which may indirectly result in faster than expected payments on the receivables.



•   You may be unable to reinvest distributions in comparable investments. Asset-backed notes, like the notes, usually produce a faster return of principal to investors if market interest rates fall below the interest rates on the related receivables and produce a slower return of principal if market interest rates rise above the interest rates on the related receivables. As a result, you are likely to receive a greater amount of money on your notes to reinvest at a time when other investments generally are producing a lower yield than that on your notes, and are likely to receive a lesser amount of money on your notes when other investments generally are producing a higher yield than that on your notes. You will bear the risk that the timing and amount of payments on your notes will prevent you from attaining your desired yield.



•   An optional redemption of the notes will shorten the life of your investment, which may reduce your yield to maturity. If the receivables are sold upon exercise of a “clean-up call,” the issuing entity will redeem all notes then outstanding and you will receive the remaining principal balance of your notes plus accrued interest through the related payment date. Following payment to you of the remaining principal balance of your notes, plus accrued interest, your notes will no longer be outstanding and you will not receive the additional interest payments that you would have received had the notes remained outstanding. If you bought your notes at a premium, your yield to maturity will be lower than it would have been if the clean-up call had not been exercised.

Risk of loss or delay in payment may result from delays in the transfer of servicing due to the servicing fee structure and upon the occurrence of a servicer replacement event and termination of the servicer


Upon the occurrence of a servicer replacement event, the indenture trustee will, at the direction of holders of notes evidencing not less than a majority of the outstanding principal balance of the notes, terminate the servicer. In addition, the holders of notes evidencing not less than a majority of the outstanding principal balance of the notes have the ability to waive any servicer replacement event.



In addition, during the pendency of any servicing transfer or for some time thereafter, obligors may delay making their monthly payments or may inadvertently continue making payments to the predecessor servicer, potentially resulting in delays in payments on the notes. Delays in payments on the notes and possible reductions in the amount of such payments could occur with respect to any cash collections held by the servicer at the time that the servicer becomes the subject of a bankruptcy or similar proceeding.



30

Table of Contents

Because the servicing fee is structured as a percentage of the net pool balance of the receivables, the amount of the servicing fee payable to the servicer may be considered insufficient by potential replacement servicers if servicing is required to be transferred at a time when much of the net pool balance of the receivables has been repaid. Due to the reduction in servicing fee as described in the foregoing, it may be difficult to find a replacement servicer. Consequently, the time it takes to effect the transfer of servicing to a replacement servicer under such circumstances may result in delays and/or reductions in the interest and principal payments on your notes.

Book-entry system for the notes may decrease liquidity and delay payment


Because transactions in the notes generally can be effected only through DTC, participants and indirect participants:



•   your ability to pledge your beneficial interest in notes to someone who does not participate in the DTC system, or to otherwise take action relating to your beneficial interest in notes, may be limited due to the lack of a physical note;



•   you may experience delays in your receipt of payments with respect to your beneficial interest in the notes because payments will be made by the indenture trustee to Cede, as nominee for DTC, rather than directly to you; and



•   you may experience delays in your receipt of payments with respect to your beneficial interest in the notes in the event of misapplication of payments by DTC, participants or indirect participants or bankruptcy or insolvency of those entities and your recourse will be limited to your remedies against those entities.

Your share of possible losses may not be proportional


Principal payments on the notes generally will be made to the holders of the notes sequentially so that no principal will be paid on any class of notes until each class of notes with an earlier final scheduled payment date has been paid in full. As a result, a class of notes with a later maturity date may absorb more losses than a class of notes with an earlier maturity date.

The issuing entity’s interest in the receivables could be defeated because the contracts will not be delivered to the issuing entity


To the extent that contracts exist for any receivable, the servicer, in its capacity as custodian, will maintain possession of the original contracts in tangible form or “control” of the authoritative copies of the contracts in electronic form for each of the receivables and the original contracts will not be segregated or marked as belonging to the issuing entity. If the servicer sells or pledges and delivers original contracts for the receivables to another party in violation of its obligations under the agreements for the notes, this party could acquire an interest in the receivables having a priority over the issuing entity’s interest.


In addition, another person could acquire an interest in a receivable that is superior to the issuing entity’s interest in the receivable if the receivable is evidenced by an electronic contract and the servicer loses control over the authoritative copy of the contract and another party purchases the receivable evidenced by the contract without knowledge of the issuing entity’s interest. If the servicer loses control over the contract through fraud, forgery, negligence or error, or as a result of a



31

Table of Contents

computer virus or a hacker’s actions or otherwise, a person other than the issuing entity may be able to modify or duplicate the authoritative copy of the contract.



As a result of any of the above events, the issuing entity may not have a perfected security interest in certain receivables. The possibility that the issuing entity may not have a perfected security interest in the receivables may affect the issuing entity’s ability to repossess and sell the underlying financed vehicles. Therefore, you may be subject to delays in payment and may incur losses on your investment in the notes.



Furthermore, if the servicer becomes the subject of an insolvency proceeding, competing claims to ownership or security interests in the receivables could arise. These claims, even if unsuccessful, could result in delays in payments on the notes. If successful, the attempt could result in losses or delays in payments to you or an acceleration of the repayment of the notes.

The issuing entity’s security interest in the financed vehicles will not be noted on the certificates of title, which may cause losses on your notes


Upon the origination of a receivable, the originator takes a security interest in the financed vehicle by placing a lien on the title to the financed vehicle. In connection with each sale of receivables to the depositor, the originator will assign its security interests in the financed vehicles to FTH LLC, which will assign its security interests in the financed vehicles to the depositor, which will further assign its security interests in the financed vehicles to the issuing entity. Finally, the issuing entity will pledge its security interests in the financed vehicles as collateral for the notes. The lien certificates or certificates of title relating to the financed vehicles will not be amended or reissued to identify the issuing entity as the new secured party. In the absence of an amendment or reissuance, the issuing entity may not have a perfected security interest in the financed vehicles securing the receivables in some states. Fifth Third Bank is obligated to repurchase any receivable sold to the issuing entity which did not have a perfected security interest in the name of the originator in the financed vehicle.



Fifth Third Bank may be required to repurchase any receivable sold to the issuing entity as to which it failed to obtain or maintain a perfected security interest in the financed vehicle securing the receivable. All of these repurchases are limited to failures that affect the ability of the issuing entity to receive and retain payment in full on such receivable. If the issuing entity has failed to obtain or maintain a perfected security interest in a financed vehicle, its security interest would be subordinate to, among others, a bankruptcy trustee of the obligor, a subsequent purchaser of the financed vehicle or a holder of a perfected security interest in the financed vehicle or a bankruptcy trustee of such holder. If the issuing entity elects to attempt to repossess the related financed vehicle, it might not be able to realize any liquidation proceeds on the financed vehicle and, as a result, you may suffer a loss on your investment in the notes.



32

Table of Contents
The sponsor, FTH LLC, the servicer and the depositor have limited obligations to the issuing entity and will not make payments on the notes


The sponsor, FTH LLC, the servicer, the depositor and their affiliates, other than the issuing entity, are not obligated to make any payments to you on your notes. The sponsor, FTH LLC, the servicer, the depositor and their affiliates do not guarantee payments on the receivables or your notes. However, the originator will make representations and warranties about the characteristics of the receivables. Furthermore, the originator and the servicer will enter into covenants with respect to the receivables.



If a representation or warranty made by the originator with respect to a receivable is untrue, then the originator may be required to repurchase that receivable. If the originator fails to repurchase that receivable, you might experience delays and/or reductions in payments on your notes. In addition, if the servicer breaches certain covenants with respect to a receivable, then the servicer may be required to purchase the receivable. If the servicer fails to purchase the receivable, you might experience delays and/or reductions in payments on your notes.



See “The Transaction Documents—Sale and Assignment of Receivables and Related Security Interests—Representations and Warranties of the Originator” and “The Servicer.”

You may experience a loss or a delay in receiving payments on the notes if the assets of the issuing entity are liquidated


If certain events of default under the indenture occur and the notes are accelerated, the indenture trustee will, at the direction of the holders of a majority of the outstanding principal amount of the notes, liquidate the assets of the issuing entity. If a liquidation occurs close to the date when any class otherwise would have been paid in full, repayment of that class might be delayed while liquidation of the assets is occurring. The issuing entity cannot predict the length of time that will be required for liquidation of the assets of the issuing entity to be completed. In addition, liquidation proceeds may not be sufficient to repay the notes in full. Even if liquidation proceeds are sufficient to repay the notes in full, any liquidation that causes the outstanding principal balance of a class of notes to be paid before the related final scheduled payment date will involve the prepayment risks described above under “—Prepayments on the receivables may adversely affect the average life of and rate of return on your notes.”

Extensions and deferrals of payments on receivables could increase the average life of the notes


In some circumstances, the servicer may permit an extension on payments due on receivables on a case-by-case basis. In addition, the servicer may from time to time offer obligors an opportunity to defer payments. Any of these extensions or deferrals may extend the maturity of the receivables and increase the weighted average life of the notes. The weighted average life and yield on your notes may be adversely affected by extensions and deferrals on the receivables. However, the servicer will be required to purchase a receivable from the issuing entity if it extends the term of the receivable beyond the final scheduled payment date of the latest maturing class of notes.



33

Table of Contents
The return on your notes may be reduced due to varying economic circumstances


A deterioration in economic conditions could adversely affect the ability and willingness of obligors to meet their payment obligations under the receivables. The economic conditions could deteriorate in connection with an economic recession or could be due to events such as rising oil prices, housing price declines, terrorist events, extreme weather conditions or an increase of an obligor’s payment obligations under other indebtedness incurred by the obligor. As a result, you may experience payment delays and losses on your notes. An improvement in economic conditions could result in prepayments by the obligors of their payment obligations under the receivables. As a result, you may receive principal payments of your notes earlier than anticipated. No prediction or assurance can be made as to the effect of an economic downturn or economic growth on the rate of delinquencies, prepayments and/or losses on the receivables.

Federal or state bankruptcy or debtor relief laws as they affect obligors may impede collection efforts or alter the timing and amount of collections, which may result in acceleration of or reduction in payment on your notes


If an obligor sought protection under federal or state bankruptcy or debtor relief laws, a court could reduce or discharge completely the obligor’s obligations to repay amounts due on its receivable. As a result, that receivable would be written off as uncollectible. You could suffer a loss if no funds are available from credit enhancement or other sources allocated to the notes are insufficient to cover the applicable default amount.

The notes are not a suitable investment for investors subject to the EU Securitization Regulation


None of the sponsor, the depositor, the underwriters, their respective affiliates nor any other party to the transactions described in this prospectus intends or is required under the transaction documents to retain a material net economic interest in the securitization constituted by the issuance of the notes in a manner that would satisfy the requirements of Regulation (EU) 2017/2402 of the European Parliament and of the Council of December 12, 2017 (as amended, the “EU Securitization Regulation” and, together with any applicable regulatory technical standards, implementing technical standards and official guidance supplementing such regulation and any implementation measures in respect of such regulation in the European Union or the European Economic Area, the “European Securitization Rules”).



In addition, no such person undertakes to take any other action or refrain from taking any action prescribed or contemplated in, or for purposes of, or in connection with, compliance by any investor with any applicable requirement of, the European Securitization Rules. The arrangements described under “Credit Risk Retention” have not been structured with the objective of ensuring compliance with the requirements of the European Securitization Rules by any person.



Consequently, the notes may not be a suitable investment for investors who are subject to the European Securitization Rules. As a result, the price and liquidity of the notes in the secondary market may be adversely affected. Prospective investors are responsible for analyzing



34

Table of Contents

their own legal and regulatory position and are advised to consult with their own advisors regarding the suitability of the notes for investment and compliance with the European Securitization Rules. For more information regarding the European Securitization Rules, see “Legal Investment––Requirements for Certain European Regulated Investors and Affiliates” in this prospectus.



35

Table of Contents
USE OF PROCEEDS

The depositor will use the net proceeds from the offering of the notes:




to purchase the receivables from Fifth Third Holdings, LLC, a Delaware limited liability company (which we sometimes refer to as “FTH LLC”); and




to make (or cause to be made) the initial deposit into the reserve account.

The depositor or its affiliates may use all or a portion of the net proceeds of the offering of the notes to pay their respective debts and for general purposes. Any debt may be owed to the owner trustee, the Delaware trustee or the indenture trustee, so a portion of the proceeds that is used to pay debt may be paid to the owner trustee, the Delaware trustee, the indenture trustee or their respective affiliates.

THE ISSUING ENTITY

Limited Purpose and Limited Assets

Fifth Third Auto Trust 2019-1 is a statutory trust formed on March 26, 2019 under the laws of the State of Delaware by Fifth Third Holdings Funding, LLC (the “depositor”), a Delaware limited liability company and an indirect wholly-owned special purpose, bankruptcy remote subsidiary of Fifth Third Bank, an Ohio banking corporation (“Fifth Third Bank”) for the purpose of owning the receivables and issuing the notes. The trust is referred to in this prospectus as the “issuing entity.”

The issuing entity will be established and operated pursuant to a trust agreement. Fifth Third Bank will be the “administrator” of the issuing entity. The issuing entity will also issue certificates representing the residual interest in the issuing entity, which are not being offered by this prospectus. The depositor will be the initial certificateholder of the issuing entity, but may transfer the portion of the certificates not included in the eligible vertical interest on or after the closing date. On each payment date, the holders of the certificates will be entitled to any funds remaining on that payment date after all deposits and distributions of higher priority, as described in “The Transaction Documents—Priority of Payments.”

The issuing entity will engage in only the following activities:




issuing the notes and the certificates;




making payments on the notes and distributions to the designated certificateholder account;




selling, transferring and exchanging the notes and the certificates;




acquiring, holding and managing the receivables and other assets of the issuing entity;




making deposits to and withdrawals from the trust accounts;




paying the organizational, start-up and transactional expenses of the issuing entity;




pledging the receivables and other assets of the issuing entity pursuant to the indenture;




entering into and performing its obligations under the transfer agreements; and




taking any action necessary, suitable or convenient to fulfill the role of the issuing entity in connection with the foregoing activities, as may be required in connection with conservation of the assets of the issuing entity and the making of payments on the notes and distributions on the certificates.



36

Table of Contents
Capitalization and Liabilities of the Issuing Entity

The following table illustrates the expected assets of the issuing entity as of the closing date, as if the issuance and sale of the notes had taken place on such date:



Receivables

$ 1,433,531,134.87
Reserve Account

$ 3,583,827.84






Total

$ 1,437,114,962.71






The following table illustrates the expected liabilities of the issuing entity as of the closing date, as if the issuance and sale of the notes(1) had taken place on such date:



Class A-1 Asset Backed Notes

$ 300,000,000
Class A-2-A Asset Backed Notes

$ 500,000,000
Class A-2-B Asset Backed Notes

Class A-3 Asset Backed Notes

$ 430,000,000
Class A-4 Asset Backed Notes

$ 139,700,000






Total

$ 1,369,700,000








(1) The depositor will initially retain at least 5% of the initial principal amount of each class of notes. See “Credit Risk Retention.”

The issuing entity’s fiscal year ends on December 31st.

The issuing entity’s trust agreement, including its permissible activities, may be amended in accordance with the procedures described in “The Transaction Documents—Amendment Provisions.”

The issuing entity’s principal offices are located in care of The Bank of New York Mellon, as owner trustee, at the address listed in “The Trustees—The Owner Trustee” below.

For a description of the roles and responsibilities of the indenture trustee, see “The Trustees—The Indenture Trustee” in this prospectus.

The Issuing Entity Property

The notes will be collateralized by the issuing entity property. The primary assets of the issuing entity will be the receivables, which are amounts owed by individuals under motor vehicle retail installment sale contracts and/or installment loans with respect to new or used automobiles, light-duty trucks, vans and other motor vehicles originated by Fifth Third Bank. We refer to Fifth Third Bank in this capacity as the “originator.”

The issuing entity property will consist of all the right, title, interest, claims and demands of the issuing entity in and to:




the receivables acquired by the issuing entity from the depositor on the closing date and payments made on the receivables after the cut-off date;




all receivable files relating to the original motor vehicle retail installment sale contracts and/or loans evidencing the receivables;




the security interests in the financed vehicles;




all rights of the originator to any proceeds from (1) claims on any theft and physical damage insurance policy maintained by an obligor under a receivable providing coverage against loss or damage to or theft of the related financed vehicle or (2) claims on any credit life or credit disability insurance maintained by an obligor in connection with any receivable;




any other property securing the receivables;



37

Table of Contents

all rights of the originator under agreements with dealers relating to receivables;




all rights of the originator to any refunds in connection with extended service agreements relating to the receivables;




all rights of the issuing entity to funds on deposit in the reserve account, the collection account and the principal distribution account (but not the designated certificateholder account) established pursuant to the indenture or servicing agreement, and all cash, investment property and other property from time to time credited to the reserve account and the collection account and all proceeds thereof;




all rights of the issuing entity under the sale agreement, of the depositor, as buyer, under the purchase agreement and of FTH LLC, as buyer, under the receivables sale agreement; and




the proceeds of any and all of the above.

The issuing entity will pledge the issuing entity property to the indenture trustee under the indenture.

THE TRUSTEES

The Owner Trustee

The Bank of New York Mellon will act as “owner trustee” under the trust agreement. The Bank of New York Mellon is a New York banking corporation, and it has served as owner trustee for numerous asset-backed securitizations, including the structure referred to herein. The principal executive offices of The Bank of New York Mellon are located at 240 Greenwich Street, 7 East, New York, New York 10286, Attention: Asset Backed Securities Unit – Fifth Third Bank 2019-1.

In the ordinary course of business, The Bank of New York Mellon is named as a defendant in or made a party to pending and potential legal actions. In connection with its role as trustee of certain residential mortgage-backed securitization (“RMBS”) transactions, The Bank of New York Mellon has been named as a defendant in a number of legal actions brought by RMBS investors. These lawsuits allege that the trustee had expansive duties under the governing agreements, including the duty to investigate and pursue breach of representation and warranty claims against other parties to the RMBS transactions. While it is inherently difficult to predict the eventual outcomes of pending actions, The Bank of New York Mellon denies liability and intends to defend the litigations vigorously.

The owner trustee’s liability in connection with the issuance and sale of the notes is limited solely to the express obligations of the owner trustee set forth in the trust agreement. The depositor and its affiliates may maintain normal commercial banking or investment banking relations with the owner trustee and its affiliates. The servicer will be responsible for paying the owner trustee’s fees and for indemnifying the owner trustee against specified losses, liabilities or expenses incurred by the owner trustee in connection with the transaction documents. To the extent these fees and indemnification amounts are not paid by the servicer, they will be payable out of Available Funds as described in “The Transaction Documents—Priority of Payments.”

For a description of the roles and responsibilities of the owner trustee, see below under “—Role of the Owner Trustee, Delaware Trustee and Indenture Trustee.”

The Delaware Trustee

BNY Mellon Trust of Delaware is a Delaware banking corporation and an affiliate of The Bank of New York Mellon, a New York banking corporation, which provides support services on its behalf in this transaction. Its principal place of business is located at 301 Bellevue Parkway, 3rd Floor, Wilmington, Delaware 19809, Attention: Corporate Trust Administration. BNY Mellon Trust of Delaware has acted as owner trustee on numerous asset-backed transactions (with The Bank of New York Mellon providing administrative support), including the structure of the transaction referred to herein. While the structure of each transaction may differ, BNY Mellon Trust of Delaware and The Bank of New York Mellon on its behalf are experienced in administering transactions of this kind. You may contact BNY Mellon Trust of Delaware by calling (302) 791-3610.



38

Table of Contents
In the ordinary course of business, The Bank of New York Mellon is named as a defendant in or made a party to pending and potential legal actions. In connection with its role as trustee of certain RMBS transactions, The Bank of New York Mellon has been named as a defendant in a number of legal actions brought by RMBS investors. These lawsuits allege that the trustee had expansive duties under the governing agreements, including the duty to investigate and pursue breach of representation and warranty claims against other parties to the RMBS transactions. While it is inherently difficult to predict the eventual outcomes of pending actions, The Bank of New York Mellon denies liability and intends to defend the litigations vigorously.

The Indenture Trustee

Wilmington Trust, National Association (“WTNA”) (formerly called M & T Bank, National Association) — also referred to herein as the “indenture trustee”—is a national banking association with trust powers incorporated in 1995. The trustee’s principal place of business is located at 1100 North Market Street, Wilmington, Delaware 19890. WTNA is an affiliate of Wilmington Trust Company and both WTNA and Wilmington Trust Company are subsidiaries of Wilmington Trust Corporation. Since 1998, Wilmington Trust Company has served as trustee in numerous asset-backed securities transactions.

WTNA is subject to various legal proceedings that arise from time to time in the ordinary course of business. WTNA does not believe that the ultimate resolution of any of these proceedings will have a materially adverse effect on its services as indenture trustee.

WTNA has provided the above information and has not participated in the preparation of, and is not responsible for, any other information contained in this prospectus.

The indenture trustee will make each monthly statement available to the noteholders via the indenture trustee’s internet website at http://www.wilmingtontrustconnect.com. For assistance with regard to this service, investors may call the indenture trustee’s corporate trust office at (866) 829-1928.

The indenture trustee’s duties are limited to those duties specifically set forth in the indenture. The depositor and its affiliates may maintain normal commercial banking relations with the indenture trustee and its affiliates. The servicer will be responsible for paying the indenture trustee’s fees and expenses and for indemnifying the indenture trustee against specified losses, liabilities or expenses (including reasonable attorneys’ fees and expenses) incurred by the indenture trustee in connection with the transaction documents including those incurred in connection with any action, claim or suit brought to enforce the indenture trustee’s right to indemnification. To the extent these fees, expenses and indemnification amounts are not paid by the servicer, they will be payable out of Available Funds as described in “The Transaction Documents—Priority of Payments” in this prospectus.

Role of the Owner Trustee, the Delaware Trustee and the Indenture Trustee

None of the owner trustee, the Delaware trustee or the indenture trustee will make any representations as to the validity or sufficiency of the receivables sale agreement, the purchase agreement, the sale agreement, the servicing agreement, the trust agreement, the administration agreement, the asset representations review agreement, the indenture, the notes or any receivables or related documents. As of the closing date, none of the owner trustee, the Delaware trustee or the indenture trustee will have examined the receivables. If no event of default has occurred under the indenture, the owner trustee, the Delaware trustee and the indenture trustee will each be required to perform only those duties specifically required of it under the receivables sale agreement, the purchase agreement, the sale agreement, the servicing agreement, the trust agreement, the administration agreement, the asset representations review agreement or the indenture, as applicable. Generally, those duties are limited to the receipt of the various certificates, reports or other instruments required to be furnished to the owner trustee, the Delaware trustee or indenture trustee under the servicing agreement or indenture, as applicable, and the making of payments or distributions to noteholders and certificateholders in the amounts specified in certificates provided by the servicer.

None of the owner trustee, the Delaware trustee or the indenture trustee will be under any obligation to exercise any of the issuing entity’s powers or powers vested in it by the receivables sale agreement, the purchase agreement, the sale agreement, the servicing agreement, the trust agreement, the administration agreement or the indenture, as applicable, or to make any investigation of matters arising thereunder or to institute, conduct or defend any litigation thereunder or in relation thereto at the request, order or direction of any of the noteholders (other than



39

Table of Contents
requests, demands or directions relating to an asset representations review as described under “The Transaction Documents—Asset Representations Review” or to the investors’ dispute resolution rights described under “The Transaction Documents—Dispute Resolution”), unless, in the case of the indenture trustee, those noteholders have offered to the indenture trustee reasonable security or indemnity against the reasonable costs, expenses and liabilities which may be incurred therein or thereby, and in the case of the owner trustee, the owner trustee has been provided instruction pursuant to the trust agreement, advanced necessary costs and provided reasonable security or indemnity against the reasonable costs, expenses and liabilities which may be incurred therein or thereby.

The owner trustee, the Delaware trustee and the indenture trustee, and any of their affiliates, may hold securities in their own names. In addition, for the purpose of meeting the activities of the issuing entity under the Transaction Documents, including the legal requirements of local jurisdictions, the owner trustee and indenture trustee, in some circumstances, acting jointly with the depositor or the administrator, respectively, will have the power to appoint co-trustees or separate trustees of all or any part of the issuing entity property. In the event of the appointment of co-trustees or separate trustees, all rights, powers, duties and obligations conferred or imposed upon the owner trustee or indenture trustee by the sale agreement, servicing agreement, trust agreement, administration agreement or indenture, as applicable, will be conferred or imposed upon the owner trustee or indenture trustee and the separate trustee or co-trustee jointly, or, in any jurisdiction in which the owner trustee or indenture trustee is incompetent or unqualified to perform specified acts, or as otherwise set forth in its appointment document, singly upon the separate trustee or co-trustee who will exercise and perform any rights, powers, duties and obligations solely at the direction of the administrator, Majority Certificateholders or indenture trustee.

The sponsor, the servicer, FTH LLC and the depositor may maintain other banking relationships with the owner trustee, the Delaware trustee and the indenture trustee in the ordinary course of business.

The owner trustee, the Delaware trustee and the indenture trustee will be entitled to certain fees and indemnities described under “The Transaction Documents—Fees and Expenses.”

For a further description of the roles and responsibilities of the indenture trustee, see “The Indenture.”

THE DEPOSITOR

The depositor, Fifth Third Holdings Funding, LLC, a wholly-owned special purpose subsidiary of FTH LLC, was formed on June 28, 2007 as a Delaware limited liability company. The principal place of business of the depositor is at 1701 Golf Road, Tower 1, 8th Floor, Rolling Meadows, Illinois 60008. You may also reach the depositor by telephone at (847) 354-7341. The depositor was formed, among other things, to purchase, accept capital contributions of or otherwise acquire retail installment sale contracts and motor vehicle loans; to own, sell, and assign the receivables; and to issue and sell one or more series of securities. Since its inception, the depositor has been engaged in these activities solely as (i) the transferee of contracts from FTH LLC pursuant to purchase agreements, (ii) the transferor of contracts to securitization trusts pursuant to sale agreements, (iii) the depositor that may form various securitization trusts pursuant to trust agreements and (iv) the entity that executes underwriting agreements and purchase agreements in connection with issuances of asset-backed securities.

The depositor will have no ongoing obligations with respect to the notes issued by the issuing entity and will have no ongoing servicing obligations or responsibilities with respect to any financed vehicle. The depositor does not have, is not required to have, and is not expected in the future to have any significant assets other than the notes and certificates retained by the depositor.

The depositor intends that the transfer of the receivables from the depositor to the issuing entity constitutes a sale, rather than a pledge of the receivables to secure indebtedness of the depositor. However, if the depositor were to become a debtor under the federal bankruptcy code, it is possible that a creditor or trustee in bankruptcy of the depositor, as debtor-in-possession, may argue that the sale of the receivables by the depositor was a pledge of the receivables rather than a sale. This position, if presented to or accepted by a court, could result in a delay in or reduction of distributions to the noteholders.

None of the depositor, FTH LLC, Fifth Third Bank or any of their respective affiliates will insure or guarantee the receivables or the notes issued by the issuing entity.



40

Table of Contents
FIFTH THIRD HOLDINGS, LLC

Fifth Third Holdings, LLC (“FTH LLC”), a wholly-owned special purpose subsidiary of Fifth Third Bank, was formed on September 8, 2000 as a Delaware limited liability company. The principal place of business of FTH LLC is at 222 South Riverside Plaza, MD GRVR2F, Chicago, Illinois 60606. You may also reach FTH LLC by telephone at (312) 704-7351. FTH LLC is the seller of receivables to the depositor.

THE SPONSOR

Fifth Third Bank was formed in the State of Ohio in 1994 and is a wholly-owned indirect subsidiary of Fifth Third Bancorp (“Bancorp”), an Ohio corporation headquartered in Cincinnati, Ohio. Fifth Third Bank is a banking corporation chartered under the laws of the State of Ohio with its principal executive offices at 38 Fountain Square Plaza, Cincinnati, Ohio, 45263. Its telephone number is (800) 972-3030. Fifth Third Bank is a commercial bank offering a wide range of banking services to its customers. Fifth Third Bank is subject to the supervisory and enforcement authority of the Ohio Department of Commerce, Division of Financial Institutions, the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), the Consumer Financial Protection Bureau (the “CFPB”) and the Federal Deposit Insurance Corporation (the “FDIC”).

Bancorp is a financial holding company with assets totaling approximately $168 billion, making it among the 15 largest bank holding companies in the United States. As a registered financial holding company, Bancorp is subject to the supervision of the Federal Reserve Board. Bancorp and its subsidiaries provide retail and commercial financial products and services through approximately 1,207 full-service banking centers in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia and North Carolina.

Fifth Third Bank has been engaged in the securitization of motor vehicle receivables since 1996. Fifth Third Bank’s experience in and overall procedures for originating or acquiring receivables is described under “The Originator.” No securitizations sponsored by Fifth Third Bank have defaulted or experienced an early amortization triggering event.

Fifth Third Bank has participated in the structuring of the transaction described in this prospectus and has originated the receivables to be assigned to the issuing entity. Fifth Third Bank is responsible for servicing the receivables included in the receivables pool as described below. Fifth Third Bank is also the administrator of the issuing entity.

Fifth Third Securities Inc., one of the underwriters, is an affiliate of the sponsor.

THE ORIGINATOR

General

Fifth Third Bank and its affiliates (collectively, “Fifth Third”) provide vehicle financing to consumers indirectly through automotive dealerships. Motor vehicle retail installment sale contracts and installment loans for new and used cars are purchased and originated through motor vehicle dealers (“dealers”) by Fifth Third’s decentralized sales force that covers 44 states. Such motor vehicle retail installment contracts and motor vehicle installment loan notes are referred to as “contracts.” Each contract is secured by a financed vehicle. Each dealer is required to meet certain minimum standards and is periodically monitored by Fifth Third. Fifth Third has provided vehicle financing under currently outstanding contracts to approximately 620,000 consumers through a network of approximately 6,400 dealers.

Each dealer that originates contracts for Fifth Third has made representations and warranties with respect to the contracts and the security interests in the motor vehicles relating thereto. These representations and warranties do not relate to the creditworthiness of the obligors or the collectability of the contracts. Upon a breach of any representation or warranty made by a dealer with respect to a contract, Fifth Third has the right to require the dealer to repurchase the contract. Generally, the dealer agreements do not provide for recourse against the dealer in the event of a default by the obligor.

Additionally, in some states Fifth Third provides vehicle financing directly to consumers.



41

Table of Contents
Fifth Third operates two centralized processing centers located in Cincinnati, Ohio and Grand Rapids, Michigan. All required information regarding the borrowers and the financed vehicles is processed in one of these two processing centers.

Underwriting

Each application generated by a dealer is centrally underwritten by Fifth Third in accordance with a single set of uniform underwriting policies established by Fifth Third Bank. These underwriting policies are intended to assess the applicant’s ability and willingness to repay the amounts due on the contract and to establish the adequacy of the financed vehicle as collateral.

Fifth Third requires each applicant to complete an application form providing various items of general demographic information, financial information and employment history. In addition, specific information with respect to the motor vehicle to be financed is required to assess the adequacy of the financed vehicle as collateral. Fifth Third applies an automated decision algorithm for each application submitted, which is reviewed and revised periodically to optimize its predictive performance. Based on the automated evaluation of the provided information, each application is categorized into one of the three categories: Automated-Approval, Automated-Decline and Recommend-Investigate. Fifth Third then analyzes each application for which an automatic decision was not made. Each application for which an automatic decision was not made is reviewed, and a decision is made, by an underwriter.

The decision algorithm takes into account a number of factors, including FICO® score, custom score, term, payment to income, advance rate and geography. Fifth Third’s underwriting standards are designed to automatically reject applicants who are deemed to be “below Prime” credit based on their FICO® scores. Fifth Third may conduct additional verification investigations as it deems necessary.

With respect to those applications that are approved, either by automatic decision or by an underwriter, the amount and terms of the financing to be offered are determined. Fifth Third will generally advance up to 115% of the asset value plus dealer additions (i.e., insurance, extended warranties and other goods or services sold by the dealer and included in the amount financed). The available term for a contract is a function of the age of the motor vehicle, applicable FICO® score, custom score, payment to income and advance rate. Acceptable terms generally range from 24 to 84 months in length.

Fifth Third’s set of centrally established underwriting policies are intended to provide a consistent basis for lending decisions, but do not completely supersede all judgmental aspects of the credit granting process. Accordingly, certain contracts may not comply with all of these policies. Exceptions to Fifth Third’s underwriting policies are made at the discretion of the credit underwriters with appropriate approval authority. Higher levels of authority are required for loans with multiple exceptions. Underwriting exceptions are monitored by risk management of Fifth Third. Exceptions are managed to less than 5% of total originated dollars. See “The Receivables Pool—Exceptions to Underwriting Criteria.”

Fifth Third Bank originated all of the receivables included in the transaction described in this prospectus. The following table contains information about retail auto loans originated directly or indirectly by Fifth Third Bank during each of the periods indicated:



Year Ended December 31,
2018 2017 2016 2015 2014
Number of Receivables Originated

185,719 163,763 145,209 206,614 235,862
Aggregate Original Principal Balance

$4,328,064,057 $3,787,887,164 $3,384,690,186 $4,820,200,123 $5,494,388,736
Average Original Principal Balance

$23,304 $23,130 $23,309 $23,329 $23,295
Weighted Average Original Term (in months)(1)

69.1 69.1 69.3 69.0 69.0
Percentage by Principal Balance of New Vehicle

42.9% 42.9% 44.0% 48.4% 49.7%




(1)
Weighted by aggregate original principal balance.



42

Table of Contents
Tangible and Electronic Contracting

Following dealer and customer signing of a tangible contract, the dealer sends the documentation constituting the tangible record related to the applicable receivable to an imaging center, where a third-party contractor images the documentation and transmits the image directly to the servicer’s computer systems for review by the originator, and funding will occur if the documentation meets compliance and policy requirements. The imaged contract documents are available for use by personnel in the ordinary course of servicing the applicable receivable. Following the imaging, the original contract is shipped to a third-party document retention center that has various locations within the continental United States, which uses sophisticated vaulting and security conditions and techniques including advanced fire suppression technology. The servicer may request retrieval of the original contract from the document retention center in the event of the need for re-imaging or for various servicing, re-assignment or enforcement purposes.

Approximately 14.9% of the receivables (by aggregate initial principal balance as of the cut-off date) were originated as electronic contracts. Fifth Third Bank has contracted with a third-party to facilitate the process of creating and storing those electronic contracts. The third-party’s technology system permits transmission, storage, access and administration of electronic contracts and is comprised of proprietary and third-party software, hardware, network communications equipment, lines and services, computer servers, data centers, support and maintenance services, security devices and other related technology materials that enable electronic contracting in the automobile retail industry. The third-party’s system allows for the transmission, storage, access and administration of electronic contracts. Through use of the third-party’s system, a dealer originates electronic retail installment contracts and then transfers these electronic contracts to Fifth Third Bank.

The third-party system uses a combination of technological and administrative features that are designed to: (i) designate a single copy of the record or records comprising an electronic contract as being the single authoritative copy of the receivable; (ii) manage access to and the expression of the authoritative copy; (iii) identify Fifth Third Bank as the owner of record of the authoritative copy; and (iv) provide a means for transferring record ownership of, and the exclusive right of access to, the authoritative copy from the current owner of record to a successor owner of record.

THE SERVICER

Fifth Third Bank will be the servicer. Fifth Third Bank offers automotive consumer loan financing through (and to) approximately 6,400 dealers in the United States. Fifth Third Bank has been servicing motor vehicle receivables since its formation in 1994.

The aggregate amount of retail auto loans serviced by Fifth Third Bank that were originated by the originator and its affiliates is approximately $8.7 billion. The tables set forth below under “The Receivables Pool—Delinquency, Loss and Repossession Information” summarize the delinquency, repossession and loss experience of the portfolio of direct and indirect automobile contracts originated through motor vehicle dealers, owned by Fifth Third and serviced by Fifth Third Bank.

The servicer will, among other things, manage, service, administer and make collections on the receivables in accordance with its customary servicing practices, using the degree of skill and attention that the servicer exercises with respect to all comparable motor vehicle receivables that it services for itself or others. The servicer is permitted to delegate some or all of its duties to its affiliates or specific duties to sub-contractors who are in the business of performing such duties, although the servicer will remain liable for the performance of any duties that it delegates to another entity. The servicer will be responsible for determining the allocations of collections and other funds for the issuing entity to payments on the notes and other liabilities of the issuing entity and directing the trustees and paying agents for the issuing entity to make such payments. The servicer will also be responsible for providing monthly reports and filing periodic reports with the SEC.

Under the servicing agreement, the servicer will covenant not to release the financed vehicle securing each receivable from the security interest granted by that receivable in whole or in part, except as required by applicable law or court order or in the event of payment in full by or on behalf of the related obligor or payment in full less a deficiency which the servicer would not attempt to collect in accordance with its customary servicing practices or in connection with repossession or except as may be required by an insurer in order to receive proceeds from any



43

Table of Contents
insurance policy covering that financed vehicle. If this covenant is breached and not cured, under the servicing agreement, the servicer will be required to repurchase the related receivable if such breach materially and adversely affects the interests of the issuing entity or the noteholders in the related receivable. In addition, if the servicer extends the date for final payment by the obligor on any receivable beyond the last day of the collection period prior to the final scheduled payment date for the latest maturing class of notes or reduces the contract rate or outstanding principal balance with respect to any receivable, in either case, other than as required by applicable law, under the servicing agreement the servicer will be required to purchase the related receivable, if such change in the receivable would materially and adversely affect the interests of the issuing entity or the noteholders in such receivable; provided, however, that the servicer will not make a modification as described in this paragraph that would trigger a purchase pursuant to the servicing agreement for the sole purpose of purchasing a receivable from the issuing entity.

The servicer, in its capacity as custodian, will hold the receivable files for the benefit of the issuing entity and the indenture trustee as pledgee of the issuing entity. In performing its duties as custodian, the servicer will act in accordance with its customary servicing practices. The servicer may, in accordance with its customary servicing practices, (i) maintain all or a portion of the receivable files in electronic form and (ii) maintain custody of all or any portion of the receivable files with one or more of its agents or designees. The Servicer will maintain control of all electronic chattel paper evidencing a receivable. The servicer will maintain each receivable file in the United States, and will make available to the issuing entity and the indenture trustee (or their authorized representatives, attorneys or auditors) a list of locations of the receivable files upon request. The servicer, as custodian, will hold the receivable files in safekeeping with originals maintained in secured areas or facilities with limited access. Copies may consist of electronically imaged copies. Imaged copies of the documents will be accessible as “read only.” Each receivable file is fully imaged, with the original note and collateral documents retained and stored with individual service vendors. Documents will not be physically segregated from other similar receivable files that are in the servicer’s/vendor’s possession or stamped or marked to reflect the sale of the related receivables to the issuing entity. The servicer will provide access to the receivable files, and the related accounts, records and computer systems maintained by the servicer at such times as the issuing entity or indenture trustee direct (but only upon reasonable notice, in the presence of a specified officer of the servicer and during normal business hours, which do not unreasonably interfere with the servicer’s normal operations) at the respective offices of the servicer. Further, upon written instructions from the indenture trustee, the servicer will release any documents in the receivable files to the indenture trustee or its agent or designee. The servicer will not be responsible for any loss resulting from the failure of the indenture trustee or its agent or designee to return any document or any delay in doing so.

Servicing

Fifth Third Bank, as the servicer, will be responsible for managing, administering, servicing and making collections on the receivables. Fifth Third Bank will cease collection efforts when required by applicable law. Collection activities with respect to delinquent accounts are divided into the following areas: early-stage collections (1-29 days delinquent accounts), mid-stage collections (30-59 days delinquent accounts) and late-stage collections (60-plus days delinquent accounts). Under the servicer’s credit and collection policies, an account is past due when payments are not received by the due date. Using different variables such as loan balance, payment history, loan terms, or FICO® score, the servicer employs a behavioral model to establish calling campaign strategies for its automated dialing system in its collection of loans.

Depending on the perceived risk level of an obligor based on the above mentioned behavioral model, early-stage collection efforts can begin as early as 1 day past due or as late as 30 days past due. For accounts that are deemed high risk, domestic agents handle both outbound and inbound collection efforts. For low to mid risk accounts, the servicer utilizes an outside service provider for early stage collections of consumer loans serviced by the servicer. This third party has offshore call center capabilities. Outbound telephone calls for delinquent accounts between 1 and 29 days past due and inbound calls relating to collections are handled by the outsourcing company. However, all notes and all activity are input directly by the outside service provider into the servicer’s collection systems. All management and administration of collection strategies remain with the servicer. If the total amount past due plus any late fees is not collected by the 29th day of delinquency, the account is transferred to the servicer’s mid-stage collection process for additional collection efforts.

Accounts that are between 30 and 59 days past due are considered mid-stage collections. During this period, the servicer or a third-party service provider continues to contact the obligor by telephone seeking to obtain payment, with the level of collection activity based on state regulations and daily saturation goals.



44

Table of Contents
Accounts that are 60 days or more past due are considered late-stage collections. Repossession procedures usually begin when all other collection efforts are exhausted. Accounts typically are assigned for repossession at 62 days past due.

Repossessions are carried out pursuant to applicable state law. The servicer uses unaffiliated independent contractors to perform repossessions. All state laws provide an obligor with a right to redeem the repossessed motor vehicle. Some states permit reinstatement of the account upon payment of the amount past due. Motor vehicles that are not redeemed or reinstated are remarketed through dealer auction sales.

The current policy of the servicer is to charge-off the full value of all delinquent motor vehicle loans at the end of the month in which the account becomes 120 days delinquent unless the related motor vehicle has been previously repossessed or sold. If the vehicle has been repossessed, the account would be charged down to the value of the vehicle. If the vehicle has been sold, the deficiency balance related to such account would be charged off in the month of sale.

If the servicer receives verifiable proof that a customer has filed for bankruptcy, then the account is referred to the servicer’s internal Bankruptcy Unit for special handling. With respect to customers in bankruptcy proceedings, deficiency balances generally are pursued to the extent permitted by applicable law.

The servicer is permitted to delegate some or all of its duties to its affiliates or specific duties to sub-contractors who are in the business of performing such duties, although the servicer will remain liable for the performance of any duties that it delegates to another entity. As part of the servicer’s ongoing evaluation of opportunities to enhance its servicing and collection practices, the servicer may from time to time consider outsourcing additional responsibilities to third-party service providers. The performance of all third-party providers is reviewed and monitored by the servicer.

Extension Policy

Contract extensions are considered an acceptable means of bringing a delinquent account into current status. The servicer follows specific procedures with respect to contract extensions, which are subject to revision from time to time. Where the servicer believes there has been a temporary interruption of the customer’s ability to make payments but the servicer believes there is also a renewed willingness and ability to repay, the servicer may grant an extension. Although the criteria for granting extensions is modified periodically, the servicer generally requires that (i) the account has been opened for a minimum of nine months, (ii) the account has not been previously extended in the last 12 months, (iii) the account has not been extended more than twice within the last five years and (iv) the account has made a minimum of three consecutive monthly payments or the lump sum equivalent and such payments are not the result of an advance or loan from Fifth Third for this purpose. Extensions will not be granted if the related loan is deemed to be uncollectible. All extensions, including extensions exceeding the limits set forth in the credit and collection policy, are approved by an officer of the bank within the collection center.

In addition to contract extensions, in some situations the servicer may reduce the interest rate of the loan. Interest rate reductions may be coupled with contract extensions in some limited instances. In rare situations where repossession and sale of the vehicle poses a potential loss, the servicer may, in its discretion, permit a conditional “partial principal forgiveness modification,” which seeks to bring the payments to an affordable amount based on customer capacity during a time of financial hardship. Such modifications are conditioned upon the related obligor remaining current under the terms of the modified contract. If the servicer permits such a conditional modification and the related obligor becomes more than 31 days delinquent, the servicer reinstates the original terms of the obligor’s contract, including the original principal amount. Whenever possible, such partial principal reductions are offered without the additional concessions of interest rate reductions or contract extensions.

Prepayment Fees

No prepayment fees are imposed on any receivables originated since January 1, 2016. Certain of the receivables originated prior to January 2016 provide for prepayment fees of at least $150 in the event of full prepayments greater than six months prior to maturity. Any such prepayment fee will be retained by the servicer as a supplemental servicing fee. There are no prepayment fees imposed in the event of partial prepayments.



45

Table of Contents
Physical Damage and Liability Insurance

The contract for each motor vehicle loan requires the obligor to keep the financed vehicle fully insured against theft, collision and comprehensive losses until the loan is paid in full or the servicer sells the vehicle. The amount of such insurance must be at least equal to the outstanding indebtedness of the loan or the replacement cost of the vehicle, whichever is less.

If an obligor fails to maintain the required physical loss and damage insurance, the servicer may at its option obtain physical loss and damage insurance covering the related financed vehicle. Insurance obtained by a servicer is commonly referred to as “force-placed insurance” or “collateral protection insurance.” If the servicer purchases force-placed insurance for a financed vehicle, the obligor is required to repay the servicer for that premium. Fifth Third Bank stopped purchasing new force-placed insurance policies for financed vehicles on October 1, 2018, but did not cancel policies that had been placed prior to that date that were still in effect. Therefore, some force-placed insurance policies placed prior to October 1, 2018 are still in effect.

Debt Cancellation Agreements

Obligors may purchase an insurance policy or a debt cancellation agreement which provides for the cancellation or payment of all or a portion of the remaining principal balance of the relevant contract in certain events, including a casualty with respect to the related financed vehicle after application of any casualty insurance proceeds to the amount due on the contract. The premium for the debt cancellation agreement is generally included in the amount financed under the contract. The debt cancellation agreement may be provided by a third party or the originator of the loan. The servicer will deposit any amounts paid under a third-party debt cancellation agreement in respect of any of the receivables into the related collection account for distribution on the related distribution date. Amounts cancelled under debt cancellation agreements of the originator will not be paid by the originator to the issuing entity.

Material Servicing Changes During the Past Three Years

Fifth Third Bank regularly makes adjustments to its customary servicing practices over time. Most of these adjustments are introduced on a limited and controlled trial basis and are implemented program-wide after Fifth Third Bank determines that those adjustments will result in an overall improvement in servicing and collections.

Fifth Third Bank has not made any material changes to its customary servicing practice during the past three years.

CREDIT RISK RETENTION

Pursuant to Regulation RR, Fifth Third Bank is required to retain an economic interest in the credit risk of the securitized receivables, either directly or through a majority-owned affiliate. Fifth Third Bank intends to satisfy this obligation through the retention by the depositor, its wholly-owned affiliate, of an “eligible vertical interest” in an amount equal to at least 5% of the initial principal amount of each class of notes and the certificates issued by the issuing entity on the closing date. Fifth Third Bank, the depositor or any other holder of an “eligible vertical interest” is required to retain such interest and may not transfer (except to another majority-owned affiliate of Fifth Third Bank) or hedge such interest until the latest of two years after the Closing Date, the date the pool balance is 33% or less of the initial pool balance, or the date the aggregate principal amount of the notes is one-third or less of the original principal amount. Fifth Third Bank does not intend to transfer or hedge the retained interest during this period except as permitted by applicable law.

The vertical interest retained by the depositor is structured to be an “eligible vertical interest” and will take the form of at least 5% of the initial principal amount of each class of notes and the certificates issued by the issuing entity, though the depositor initially will retain all of the certificates and may retain an additional amount of all of one or more classes of notes.

By retaining the “eligible vertical interest,” the depositor will be a noteholder of at least 5% of each class of notes and will be entitled to receive at least 5% of all payments of interest and principal made on each class of notes and, if any class of notes incurs losses, will bear at least 5% of those losses. Each class of notes retained by the



46

Table of Contents
depositor as part of the “eligible vertical interest” will have the same terms as all other notes in that class. Notes retained by the depositor will not be included for purposes of determining whether a required percentage of any class of notes has taken any action under the indenture or any other transaction document as described in “The Notes—Notes Owned by Transaction Parties.” For a description of the notes and the certificates, and thus of the “eligible vertical interest,” and the credit enhancement available for the notes, see “The Notes,” “The Transaction Documents” and “The Certificates.”

In accordance with Regulation RR, if the percentage of each class of notes and the certificates retained by the depositor on the Closing Date is materially different from the percentage described above, then within a reasonable time after the Closing Date, the depositor will disclose the material difference on Form 10-D filed under the CIK number of the issuing entity.

The depositor may transfer all or a portion of the eligible vertical interest to another majority-owned affiliate of Fifth Third Bank on or after the Closing Date. To the extent the depositor’s retained economic interest is intended to satisfy the requirements of Regulation RR, the depositor will not transfer or enter into any hedging transaction with respect to its retained economic interest except as permitted by applicable law.

THE ASSET REPRESENTATIONS REVIEWER

Clayton Fixed Income Services LLC, a Delaware limited liability company, will be appointed as asset representations reviewer pursuant to an agreement among the servicer, the issuing entity and the asset representations reviewer. Clayton is a wholly-owned subsidiary of Radian Group, Inc. (NYSE: RDN). Clayton and its affiliates have provided independent due diligence loan review and servicer oversight services since 1989. Clayton has been engaged as the asset representations reviewer on more than 250 auto and equipment loan, lease and dealer floorplan and credit card securitization transactions since 2015.

Clayton and its affiliates are providers of targeted due diligence reviews of securitized assets and policies and procedures of originators and servicers to assess compliance with representations and warranties, regulatory and legal requirements, investor guidelines and settlement agreements. Clayton and its affiliates have performed over 12 million loan reviews and have provided ongoing oversight on over $2 trillion of securitization transactions on behalf of investors, sponsors, issuers and originators, including government-sponsored enterprises and other governmental agencies. These services have been performed primarily on residential mortgage loan and residential mortgage-backed security transactions, although Clayton and its affiliates have also performed these services for transactions involving auto loans, credit cards, commercial mortgage loans, student loans, timeshare loans and boat and recreational vehicle loans.

The asset representations reviewer is not affiliated with the sponsor, the servicer, FTH LLC, the depositor, the issuing entity, the indenture trustee, the Delaware trustee, the owner trustee or any of their affiliates, nor has the asset representations reviewer been hired by the sponsor or an underwriter to perform pre-closing due diligence work on the receivables. The asset representations reviewer may not resign unless the asset representations reviewer is merged into or becomes an affiliate of the sponsor, the servicer, FTH LLC, the depositor, the indenture trustee, the Delaware trustee, the owner trustee or any person hired by the sponsor or any underwriter to perform pre-closing due diligence work on the receivables. Upon the occurrence of such an event, the asset representations reviewer will promptly resign and the servicer will appoint a successor asset representations reviewer. All reasonable costs and expenses incurred in connection with the required resignation of the asset representations reviewer will be paid by the predecessor asset representations reviewer. Any resignation, removal or substitution of the asset representations reviewer, or the appointment of a new asset representations reviewer, will be reported by the depositor in the Form 10-D related to the collection period in which such change occurs, together with a description of the circumstances surrounding the change and, if applicable, information regarding the new asset representations reviewer.

The asset representations reviewer will be responsible for reviewing the Subject Receivables (as defined under “The Transaction Documents—Asset Representations Review”) for compliance with the Pool Asset Representations, as described in the asset representations review agreement. Under the asset representations review agreement, the asset representations reviewer will be entitled to be paid the fees and expenses set forth under “The Transaction Documents—Fees and Expenses” below. The asset representations reviewer is required to perform only those duties specifically required of it under the asset representations review agreement, as described in this section and “The Transaction Documents—Assets Representations Review.” The asset representations reviewer is not liable



47

Table of Contents
for any action taken, or not taken, in good faith under the asset representations review agreement. The servicer is required under the asset representations review agreement to provide the asset representations reviewer copies of the receivable files and to make available to the asset representations reviewer the related contracts and records maintained by it during normal business hours in connection with a review of the receivables. The asset representations reviewer will be required to keep all information about the receivables obtained by it confidential and may not disclose that information other than as required by the terms of the asset representations review agreement and applicable law. The servicer will indemnify the asset representations reviewer for liabilities and damages resulting from the asset representations reviewer’s performance of its obligations under the asset representations review agreement unless caused by the willful misconduct, bad faith or negligence (other than errors in judgment) of the asset representations reviewer or as a result of any breach of representations made by the asset representations reviewer in the asset representations review agreement.

AFFILIATIONS AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Fifth Third Bank, as originator, sponsor, servicer and administrator, is a wholly-owned indirect subsidiary of Bancorp. FTH LLC is a wholly-owned special purpose subsidiary of Fifth Third Bank. The depositor is a wholly-owned special purpose subsidiary of FTH LLC. The issuing entity is a wholly-owned special purpose subsidiary of the depositor. Additionally, Fifth Third Bank, FTH LLC, the depositor and Fifth Third Securities Inc., one of the underwriters, are affiliates. The owner trustee, the Delaware trustee and the indenture trustee are entities that the sponsor and its affiliates may have other banking relationships with directly or through their affiliates in the ordinary course of their businesses. In some instances the owner trustee, the Delaware trustee and the indenture trustee may be acting in similar capacities for other asset-backed transactions of the sponsor for similar or other asset types.

THE RECEIVABLES POOL

The Receivables

The issuing entity will own a pool of receivables consisting of motor vehicle retail installment sale contracts and motor vehicle installment loans secured by new and used automobiles, light-duty trucks, vans and other motor vehicles. The pool will consist of the receivables that the originator will sell to FTH LLC, which FTH LLC will in turn sell to the depositor on the closing date, and which the depositor will simultaneously transfer to the issuing entity on the closing date. The receivables will include payments on the receivables that are made on and after the cut-off date.

The Receivables Pool

The receivables to be sold, transferred, assigned, or otherwise conveyed to the issuing entity, also known as the “receivables pool,” will be selected based upon the satisfaction of several criteria, including that each receivable:




was originated out of the sale of or is secured by a new vehicle or a used vehicle;




requires substantially equal monthly payments to be made by the related obligor;




has an obligor which is not a government or governmental subdivision or agency and is not shown on the servicer’s records as a debtor in a pending bankruptcy proceeding; and




was not more than 30 days delinquent on the cut-off date.

Each of the receivables will be selected using selection procedures that were not known or intended by the depositor, FTH LLC or the originator to be adverse to the issuing entity.

Calculation Methods

Each of the receivables included in the receivables pool is a contract or loan where the allocation of each payment between interest and principal is calculated using the Simple Interest Method.



48

Table of Contents
Exceptions to Underwriting Criteria

As described in “The Originator—Underwriting,” under Fifth Third Bank’s origination process, credit applications are evaluated when received and are either automatically approved, automatically rejected or forwarded for review by a credit analyst based on Fifth Third Bank’s electronic decisioning model. Fifth Third Bank does not intend to include any motor vehicle loan that was originated as an exception to its underwriting policies in the pool of receivables to be sold to the issuing entity on the closing date. Fifth Third Bank, on behalf of the depositor, conducted a review of the receivables to be sold to the issuing entity on the closing date, to determine if any receivable was originated pursuant to an exception to Fifth Third Bank’s underwriting criteria. Based on the review, none of the receivables in the receivables pool were originated with exceptions to Fifth Third Bank’s underwriting criteria in effect at the time the respective receivable was originated.

Criteria Applicable to Selection of Receivables

The receivables sold to the issuing entity on the closing date will be selected for inclusion in the receivables pool by several criteria. These criteria include, among other things, the requirement that each receivable:




had a remaining term to maturity, as of the cut-off date, of at least 3 months;




had an original maturity of not more than 84 months;




had not been identified in the records of the servicer as relating to an obligor who was in bankruptcy proceedings, as of the cut-off date; and




had no payment more than 30 days past due, as of the cut-off date.

The receivables will be selected from the portfolio of retail installment sale contracts and installment loans for new and used vehicles acquired by the originator from dealers or originated directly by the originator and serviced by the servicer, in each case meeting the criteria described above. No selection procedures believed by the originator to be materially adverse to the noteholders will be utilized in selecting the receivables. As of the cut-off date, no receivable in the pool has a scheduled maturity later than April 24, 2026 and approximately 14.9% of the receivables in the pool were evidenced by electronic contracts.

As of the cut-off date, the receivables sold to the issuing entity on the closing date will have an aggregate initial principal balance of approximately $1,433,531,134.87.

The composition, geographic distribution by state of the obligor, distribution by outstanding principal balance, distribution by contract rate, distribution by remaining term and distribution by FICO® score, in each case of the receivables as of the cut-off date, are set forth in the tables below.



49

Table of Contents
Composition of the Receivables Pool

as of the Cut-off Date



Number of Receivables

80,027
Aggregate Outstanding Principal Balance

$ 1,433,531,134.87
Outstanding Principal Balance


Average

$17,913.09
Minimum

$1,002.95
Maximum

$92,706.04
Contract Rate


Weighted Average(1)

5.77%
Minimum

0.01%
Maximum

14.64%
Original Term (Months)


Weighted Average(1)

69.4 months
Minimum

24 months
Maximum

84 months
Remaining Term (Months)


Weighted Average(1)

58.0 months
Minimum

3 months
Maximum

84 months
Percentage By Principal Balance of New Vehicles

47.4%
Percentage By Principal Balance of Used Vehicles

52.6%
FICO® Score(2)


Weighted Average(1)

755
Minimum

650
Maximum

897
Weighted Average LTV(1)(3)

91.5%




(1)
Weighted by outstanding principal balance as of the cut-off date.

(2)
FICO® scores are calculated as of the origination of the related receivables and exclude obligors for which no FICO® score was available as of origination of the related receivable. FICO® is a federally registered trademark of Fair Isaac Corporation. A FICO® score is a measurement determined by Fair Isaac Corporation using information collected by the major credit bureaus to assess credit risk. Data from an independent credit reporting agency, such as FICO® score, is one of several factors that may be used by the originator in its credit scoring system to assess the credit risk associated with each applicant, see “The Originator” in this prospectus. FICO® scores are based on independent third-party information, the accuracy of which cannot be verified. FICO® scores should not necessarily be relied upon as a meaningful predictor of the performance of the receivables.

(3)
The LTV for a receivable secured by a new vehicle is equal to the original amount financed divided by the manufacturer’s suggested retail price for that vehicle. The LTV for a receivable secured by a used vehicle is equal to the original amount financed divided by the retail price for that vehicle as set forth in the applicable N.A.D.A. Official Used Car Guide or Kelly Bluebook. There can be no assurance that the retail price for a used vehicle set forth in the applicable N.A.D.A. Official Used Car Guide or Kelly Bluebook, as applicable, reflects the amount that could be realized upon a sale of the related vehicle, and such retail price represents N.A.D.A.’s or Kelly’s opinion, as applicable, of the retail price for such used vehicle. Amounts relating to LTV are calculated excluding LTVs for which no manufacturer’s suggested retail price or retail price for that vehicle was available.



50

Table of Contents
Geographic Distribution of the Receivables Pool

as of the Cut-off Date



State(1) Number of
Receivables Outstanding Principal
Balance Percentage of
Outstanding
Aggregate
Principal Balance(2)
Ohio

6,480 $ 115,648,534.44 8.1%
Texas

5,289 $ 114,848,943.82 8.0%
Florida

5,816 $ 112,232,910.25 7.8%
California

5,837 $ 105,500,578.33 7.4%
North Carolina

3,782 $ 67,528,389.71 4.7%
Minnesota

3,926 $ 66,678,944.15 4.7%
Illinois

3,596 $ 58,219,257.57 4.1%
Tennessee

2,990 $ 56,941,126.14 4.0%
Georgia

2,942 $ 55,586,258.20 3.9%
Indiana

2,715 $ 51,219,883.75 3.6%
Pennsylvania

3,464 $ 50,075,950.60 3.5%
Virginia

2,488 $ 44,061,203.96 3.1%
Michigan

2,654 $ 43,234,513.45 3.0%
Missouri

2,509 $ 40,752,561.08 2.8%
Kentucky

1,983 $ 36,748,613.18 2.6%
New York

2,054 $ 32,798,855.12 2.3%
Wisconsin

1,705 $ 27,940,639.76 1.9%
Colorado

1,339 $ 27,932,979.77 1.9%
Alabama

1,513 $ 26,559,201.04 1.9%
Oregon

1,371 $ 25,418,346.17 1.8%
Mississippi

1,252 $ 24,518,768.72 1.7%
Arizona

1,331 $ 23,737,586.86 1.7%
Iowa

1,300 $ 23,480,902.68 1.6%
New Jersey

1,444 $ 21,640,028.79 1.5%
North Dakota

911 $ 18,368,671.41 1.3%
South Carolina

891 $ 16,500,476.17 1.2%
Massachusetts

1,132 $ 16,391,675.47 1.1%
Arkansas

718 $ 15,084,256.05 1.1%
Kansas

829 $ 14,898,694.13 1.0%
Nebraska

801 $ 13,503,390.27 0.9%
Connecticut

832 $ 12,386,720.81 0.9%
Oklahoma

562 $ 11,182,238.71 0.8%
South Dakota

598 $ 11,172,897.97 0.8%
New Hampshire

471 $ 7,591,241.45 0.5%
Maine

529 $ 7,321,555.98 0.5%
West Virginia

386 $ 7,033,523.96 0.5%
Other(3)

1,587 $ 28,790,814.95 2.0%









Total:

80,027 $ 1,433,531,134.87 100.0%













(1)
Based on the billing addresses of the obligors as of the cut-off date.

(2)
May not add to 100.0% due to rounding.

(3)
“Other” represents those obligors whose state of residence comprises less than 0.5% of the total aggregate outstanding principal balance of the receivables.



51

Table of Contents
Distribution by Outstanding Principal Balance of the Receivables Pool

as of the Cut-off Date



Range of Outstanding Principal Balances ($) Number of
Receivables Outstanding
Principal Balance Percentage of
Aggregate
Outstanding
Principal
Balance(1)
0.01 - 5,000.00

6,999 $ 23,610,701.09 1.6 %
5,000.01 - 10,000.00

12,162 $ 91,865,889.59 6.4 %
10,000.01 - 15,000.00

16,874 $ 212,574,845.43 14.8 %
15,000.01 - 20,000.00

16,316 $ 283,829,609.77 19.8 %
20,000.01 - 25,000.00

10,918 $ 243,485,974.35 17.0 %
25,000.01 - 30,000.00

6,930 $ 189,218,309.72 13.2 %
30,000.01 - 35,000.00

3,990 $ 128,766,342.81 9.0 %
35,000.01 - 40,000.00

2,340 $ 87,265,893.00 6.1 %
40,000.01 - 45,000.00

1,423 $ 60,098,881.95 4.2 %
45,000.01 - 50,000.00

805 $ 38,062,870.93 2.7 %
50,000.01 - 55,000.00

488 $ 25,518,040.16 1.8 %
55,000.01 - 60,000.00

298 $ 17,070,712.57 1.2 %
60,000.01 - 65,000.00

228 $ 14,193,623.72 1.0 %
65,000.01 - 70,000.00

154 $ 10,383,079.80 0.7 %
70,000.01 - 75,000.00

70 $ 5,047,204.36 0.4 %
Greater than or Equal to 75,000.01

32 $ 2,539,155.62 0.2 %





















Total:

80,027 $ 1,433,531,134.87 100.0 %






















(1)
May not add to 100.0% due to rounding.

Distribution by Contract Rate of the Receivables Pool

as of the Cut-off Date



Range of Contract Rates (%) Number of
Receivables Outstanding
Principal Balance Percentage of
Aggregate
Outstanding
Principal Balance(1)
0.001 - 1.999

6 $ 17,602.97 0.0 % (2)
2.000 - 2.999

8,300 $ 68,480,565.45 4.8 %
3.000 - 3.999

11,668 $ 152,789,521.20 10.7 %
4.000 - 4.999

15,907 $ 308,065,602.65 21.5 %
5.000 - 5.999

15,738 $ 350,413,193.01 24.4 %
6.000 - 6.999

14,755 $ 295,412,283.87 20.6 %
7.000 - 7.999

6,532 $ 128,921,511.81 9.0 %
8.000 - 8.999

3,879 $ 71,717,757.52 5.0 %
9.000 - 14.640

3,242 $ 57,713,096.39 4.0 %





















Total:

80,027 $ 1,433,531,134.87 100.0 %






















(1)
May not add to 100.0% due to rounding.

(2)
Less than 0.05% but greater than 0.00%.



52

Table of Contents
Distribution by Remaining Term to Maturity of the Receivables Pool

as of the Cut-off Date



Range of Remaining Term to Maturity
(in months)(1) Number of
Receivables Outstanding
Principal Balance Percentage of
Aggregate
Outstanding
Principal Balance(2)
1 - 10

3,089 $ 8,920,898.26 0.6 %
11 - 20

8,016 $ 45,719,368.92 3.2 %
21 - 30

5,409 $ 49,685,637.35 3.5 %
31 - 40

2,551 $ 34,548,616.17 2.4 %
41 - 50

7,424 $ 121,513,130.33 8.5 %
51 - 60

23,322 $ 440,669,761.28 30.7 %
61 - 70

24,452 $ 575,516,036.56 40.1 %
71 - 84

5,764 $ 156,957,686.00 10.9 %





















Total:

80,027 $ 1,433,531,134.87 100.0 %























(1)
Assumes that all monthly payments of simple interest loans are made on their respective due dates.

(2)
May not add to 100.0% due to rounding.

Distribution by Original FICO® Score of the Receivables Pool

as of the Cut-off Date



Range of FICO Scores(1) Number of
Receivables Outstanding
Principal Balance Percentage of
Aggregate
Outstanding
Principal Balance(2)
650 - 679

7,841 $ 140,221,796.70 9.8 %
680 - 699

7,581 $ 143,214,909.70 10.0 %
700 - 719

10,033 $ 191,708,565.66 13.4 %
720 - 739

10,314 $ 188,850,254.90 13.2 %
740 - 759

9,125 $ 163,489,891.82 11.4 %
760 - 779

6,617 $ 117,194,699.41 8.2 %
780 - 799

6,468 $ 109,793,694.69 7.7 %
800 - 819

6,308 $ 102,566,280.96 7.2 %
820 - 839

7,542 $ 125,075,439.11 8.7 %
840 - 859

5,666 $ 101,851,577.86 7.1 %
860 - 879

2,232 $ 43,489,059.19 3.0 %
880 - 897

300 $ 6,074,964.87 0.4 %





















Total:

80,027 $ 1,433,531,134.87 100.0 %























(1)
FICO® scores are calculated as of the origination of the related receivables and exclude obligors for which no FICO® score was available as of origination of the related receivable. FICO® is a federally registered trademark of Fair Isaac Corporation. A FICO® score is a measurement determined by Fair Isaac Corporation using information collected by the major credit bureaus to assess credit risk. Data from an independent credit reporting agency, such as FICO® score, is one of several factors that may be used by the originator in its credit scoring system to assess the credit risk associated with each applicant, see “The Originator” in this prospectus. FICO® scores are based on independent third-party information, the accuracy of which cannot be verified. FICO® scores should not necessarily be relied upon as a meaningful predictor of the performance of the receivables.

(2)
May not add to 100.0% due to rounding.



53

Table of Contents
Delinquency, Loss and Repossession Information

The tables below summarize the delinquency, repossession and net credit loss experience of the portfolio of direct and indirect automobile receivables acquired from or arranged by a dealer that are originated by Fifth Third Bank and serviced by Fifth Third Bank. The data includes all automobile receivables currently owned by Fifth Third Bank, whether originated, purchased or acquired as the result of bank mergers and reflects automobile receivables that were originated or underwritten under criteria that may be different from the receivables held by the issuing entity. Accordingly, the delinquency and loss figures presented below may not be representative of the receivables held by the issuing entity and no assurances can be given that the repossession, delinquency and loss experience presented in the following tables will be indicative of the actual experience on the receivables held by the issuing entity.

Fifth Third Bank Managed Retail Portfolio

Delinquency Experience(1)(2)(3)(4)



As of December 31,
2018 2017 2016 2015 2014
Dollars Percent Dollars Percent Dollars Percent Dollars Percent Dollars Percent
Principal Outstanding

$8,442,640,971 100.00% $8,466,067,501 100.00% $9,182,313,652 100.00% $10,774,323,768 100.00% $11,357,525,304 100.00%
Delinquencies


30-59 days

$92,790,430 1.10% $81,890,743 0.97% $66,660,576 0.73% $59,128,993 0.55% $55,747,162 0.49%
60-89 days

$26,930,205 0.32% $22,998,143 0.27% $18,155,616 0.20% $15,100,123 0.14% $15,082,118 0.13%
90-119 days

$12,751,947 0.15% $10,017,331 0.12% $9,411,827 0.10% $7,766,742 0.07% $7,092,725 0.06%
120 or more days

$5,204,506 0.06% $4,316,724 0.05% $5,902,753 0.06% $6,512,601 0.06% $5,392,579 0.05%



















































Total Delinquencies

$137,677,088 1.63% $119,222,941 1.41% $100,130,772 1.09% $88,508,458 0.82% $83,314,584 0.73%























































(1)
Data presented in the table is based upon retail principal balances for new and used vehicles serviced by Fifth Third Bank.

(2)
Fifth Third Bank considers a payment to be past due or delinquent when an obligor fails to make at least 90% of the scheduled monthly payment by the related due date. Fifth Third Bank measures delinquency by the number of days elapsed from the date a payment is due under the loan contract.

(3)
Fifth Third Bank generally charges-off a receivable on the earlier of (i) the date on which proceeds from the sale of the vehicle securing that receivable are applied to the contract balance and (ii) the month in which the receivable reaches its 120 th day of delinquency.

(4)
Delinquencies include repossessions.



54

Table of Contents
Net Credit Loss and Repossession Experience(1)



At or for the 12 Months Ended December 31,
2018 2017 2016 2015 2014
Principal Amount of Receivables Outstanding $ 8,442,640,971 $ 8,466,067,501 $ 9,182,313,652 $ 10,774,323,768 $ 11,357,525,304
Number of Receivables Outstanding 598,739 622,024 672,353 753,686 781,808
Average Month End Principal Amount of Receivables Outstanding(2) $ 8,408,939,280 $ 8,649,691,377 $ 9,889,912,556 $ 11,127,527,607 $ 11,394,298,963
Gross Charge-Offs(3) $ 56,005,497 $ 50,115,369 $ 47,230,624 $ 38,395,391 $ 34,234,410
Gross Charge-Offs as a percentage of the Principal Amount of Receivables Outstanding at Period End(3) 0.66% 0.59% 0.51% 0.36% 0.30%
Gross Charge-Offs as a percentage of the Principal Amount of the Average Receivables Outstanding(2) 0.67% 0.58% 0.48% 0.35% 0.30%
Recoveries(4) $ 21,781,711 $ 19,869,244 $ 17,508,005 $ 15,276,832 $ 13,443,057
Net Charge-Offs(5) $ 34,223,786 $ 30,246,124 $ 29,722,620 $ 23,118,559 $ 20,791,354
Net Charge-Offs as a percentage of the Principal Amount of Receivables Outstanding at Period End 0.41% 0.36% 0.32% 0.21% 0.18%
Net Charge-Offs as a percentage of the Principal Amount of the Average Receivables Outstanding(2) 0.41% 0.35% 0.30% 0.21% 0.18%




(1)
Data presented in the table is based upon retail principal balances for new and used vehicles financed by Fifth Third, including those that have been sold but are serviced by Fifth Third Bank.

(2)
Averages are computed by taking a simple average of the month end outstanding amounts for each period presented.

(3)
Charge-offs generally represent the total aggregate net outstanding balance of the receivables determined to be uncollectible in the period less proceeds from disposition of the related vehicles, other than recoveries described in Note (4).

(4)
Recoveries generally include the net amounts received with respect to retail contracts previously charged off.

(5)
Net Charge-offs generally represent the total aggregate net outstanding balance of receivables determined to be uncollectible during the period less proceeds from the disposition of related vehicles, including net amounts received from customers with respect to accounts previously charged off.



55

Table of Contents
Delinquency Experience Regarding the Pool of Receivables

The servicer considers a receivable delinquent when an obligor fails to make at least 90% of a scheduled payment by the related due date. The period of delinquency is based on the number of days payments are contractually past due. None of the receivables in the pool sold to the issuing entity on the closing date will be more than 30 days delinquent as of the cut-off date. The following table sets forth the delinquency experience regarding the pool of receivables.



Historical Delinquency Status Number of
Receivables Percent of Total
Number of
Receivables Outstanding Principal
Balance Percent of
Total
Outstanding
Principal
Balance
Delinquent no more than once for 30-59 days(1)

78,711 98.36 % $1,416,190,470 98.79 %
Delinquent more than once for 30-59 days but never for 60 days or more 967 1.21 % $ 12,618,029 0.88 %
Delinquent at least once for 60 days or more

349 0.44 % $ 4,722,636 0.33 %


(1)
“Delinquent no more than once for 30-59 days” represents accounts that were delinquent 1 time but never exceeded 59 days past due.

Static Pool Information About Certain Previous Receivables Pools

Appendix A, attached to this prospectus, sets forth characteristics of all motor vehicle retail installment sale contracts and installment loans originated and serviced by Fifth Third Bank by vintage origination year and by publicly securitized receivables pool if such securitized pool had characteristics similar to this pool of receivables, including the number of receivables, the aggregate original and the month-end principal balance, the average original and the month-end principal balance, the weighted average contract rate, the weighted average age, the weighted average original term, the weighted average remaining term, the minimum FICO® score, the maximum FICO® score and the weighted average FICO® score, the distribution of the pool of receivables by the range of contract rate, the percentage new, the percentage used, the weighted average LTV, the pool factor, and the geographic distribution, and information with respect to the monthly delinquency rates, the monthly pool factor, the monthly prepayment speeds and the monthly cumulative net charge-off of the pool of receivables.

The static pool information is presented both by month for originations in the last five years and by securitized pool for each prior public securitization sponsored by Fifth Third Bank in the last five years if such securitized pool had characteristics similar to this pool of receivables.

The characteristics of receivables included in the static pool data discussed above, as well as the social, economic and other conditions existing at the time when those receivables were originated and repaid, may vary materially from the characteristics of the receivables in this transaction and the social, economic and other conditions existing at the time when the receivables in this transaction were originated and those that will exist in the future when the receivables in the current transaction are required to be repaid. As a result, there can be no assurance that the static pool data referred to above will correspond to or be an accurate predictor of the performance of this receivables securitization transaction.

Fifth Third Bank’s underwriting standards and procedures have remained stable over time; thus, the prior securitized portfolios are generally comparable to the pool of receivables described in this prospectus. Nevertheless, the original characteristics of each prior securitized portfolio will likely differ in certain respects from the pool of receivables described in this prospectus, and the losses, prepayments and delinquencies for the pool of receivables described in this prospectus may differ from the information shown in Appendix A for prior securitized portfolios.

Repurchase and Replacements

No assets securitized by Fifth Third Bank were the subject of a demand to repurchase or replace for breach of the representations and warranties during the three-year period ended March 31, 2019.



56

Table of Contents
Please refer to the Form ABS-15G filed by Fifth Third Bank on January 29, 2019 for additional information. The CIK number of Fifth Third Bank is 0000035528.

Review of Pool Assets

In connection with the offering of the notes, the depositor has performed a review of the receivables, including the initial asset-level data (as defined under “Asset Level Information”), in the pool as of the cut-off date and the disclosure regarding those receivables required to be included in this prospectus by Item 1111 of Regulation AB (such disclosure, the “Rule 193 Information”). This review was designed and effected to provide the depositor with reasonable assurance that the Rule 193 Information is accurate in all material respects.

As part of the review, Fifth Third Bank identified the Rule 193 Information to be covered and identified the review procedures for each portion of the Rule 193 Information. Descriptions consisting of factual information were reviewed and approved by Fifth Third Bank’s senior management to ensure the accuracy of such descriptions. Fifth Third Bank also reviewed the Rule 193 Information consisting of descriptions of portions of the transaction documents and compared that Rule 193 Information to the related transaction documents to ensure the descriptions were accurate. Members of Fifth Third Bank’s capital markets group also consulted with internal regulatory personnel and counsel, as well as external counsel, with respect to the description of the legal and regulatory provisions that may materially and adversely affect the performance of the receivables or payments on the notes.

In addition, Fifth Third Bank also performed a review of the receivables in the receivables pool to confirm that those receivables satisfied the criteria set forth under “The Receivables Pool—Criteria Applicable to Selection of Receivables” in this prospectus. The first aspect of that review tested the accuracy of the individual receivables data contained in Fifth Third Bank’s data tape. The data tape is an electronic record maintained by Fifth Third Bank, which includes certain attributes of the receivables. Fifth Third Bank selected a random sample of 125 receivable files, 125 of which relate to the receivables in the receivables pool, to confirm certain data points such as maturity date, monthly payment and interest rate conformed to the applicable information on the data tape. A second aspect of that review consisted of a comparison of the statistical information contained under “The Receivables Pool” and in the initial asset level data to data in, or derived from, the data tape and the initial asset level data. Statistical information relating to the receivables in the pool was recalculated using the applicable information on the data tape. In addition to this review, Fifth Third Bank performs periodic internal control reviews and internal audits of various processes, including its origination and reporting system processes.

Portions of the review of legal matters and the review of statistical information were performed with the assistance of third parties engaged by the depositor. The depositor determined the nature, extent and timing of the review and the sufficiency of the assistance provided by the third parties for purposes of its review. The depositor had ultimate authority and control over, and assumes all responsibility for, the review and the findings and conclusions of the review. The depositor attributes all finding and conclusions of the review to itself.

After undertaking the review described above, the depositor has found and concluded that it has reasonable assurance that the Rule 193 Information in this prospectus, including the initial asset level data, is accurate in all material respects.

ASSET LEVEL INFORMATION

The issuing entity has provided asset-level information regarding the receivables that will be owned by the issuing entity as of the Closing Date (the “asset-level data”) as an exhibit to a Form ABS-EE filed by the issuing entity by the date of the filing of this prospectus, which is hereby incorporated by reference. The asset-level data comprises each of the data points required with respect to automobile loans identified on Schedule AL to Regulation AB and generally includes, with respect to each receivable, the related asset number, the reporting period covered, general information about the receivable, information regarding the related financed vehicle, information about the related obligor, information about activity on the receivable, information about delinquencies on the receivables and information about modifications and charge-offs of the receivable since it was originated. In addition, the issuing entity will provide updated asset-level data with respect to the receivables each month as an exhibit to the monthly distribution reports filed with the SEC on Form 10-D.



57

Table of Contents
WEIGHTED AVERAGE LIFE OF THE NOTES

The weighted average life of the notes will generally be influenced by the rate at which the principal balances of the receivables are paid, which payments may be in the form of scheduled payments or prepayments. Each receivable is prepayable in full by the obligor at any time. Full and partial prepayments on motor vehicle receivables included in the issuing entity property will be paid or distributed to the related noteholders on the next payment date following the collection period in which they are received. To the extent that any receivable included in the issuing entity property is prepaid in full, whether by the obligor, or as the result of a repurchase by Fifth Third Bank, the actual weighted average life of the receivables included in the issuing entity property will be shorter than a weighted average life calculation based on the assumptions that payments will be made on schedule and that no prepayments will be made. Weighted average life means the average amount of time until the entire principal amount of a receivable is repaid. Full prepayments may also result from liquidations due to default, receipt of proceeds from theft, physical damage, credit life and credit disability insurance policies, repurchases by Fifth Third Bank as a result of the failure of a receivable to meet the criteria set forth in the transaction documents, as a result of a breach of covenants with respect to the receivables, or purchases made by the servicer as a result of a breach of covenants made by it related to its servicing duties in the transaction documents. In addition, early retirement of the notes may be effected at the option of the servicer to purchase the remaining receivables included in the issuing entity property when the outstanding balance of receivables has declined to a specified percentage. See “The Transaction Documents—Optional Redemption.”

The rate of full prepayments by obligors on the receivables may be influenced by a variety of economic, social and other factors. These factors include the unemployment rate, servicing decisions, seasoning of loans, destruction of vehicles by accident, loss of vehicles due to theft, sales of vehicles, market interest rates, the availability of alternative financing and restrictions on the obligor’s ability to sell or transfer the financed vehicle securing a receivable without the consent of the servicer. Any full prepayments or partial prepayments applied immediately will reduce the average life of the receivables.

The originator can make no prediction as to the actual prepayment rates that will be experienced on the receivables included in the issuing entity property in either stable or changing interest rate environments. Noteholders will bear all reinvestment risk resulting from the rate of prepayment of the receivables included in the issuing entity property.

MATURITY AND PREPAYMENT CONSIDERATIONS

The following information is provided solely to illustrate the effect of prepayments of the receivables on the unpaid principal balances of the notes and the weighted average life of the notes under the assumptions stated below, and is not a prediction of the prepayment rates that might actually be experienced with respect to the receivables.

Prepayments on receivables can be measured against prepayment standards or models. The model used in this prospectus, the absolute prepayment model, or “ABS,” assumes a rate of prepayment each month which is related to the original number of receivables in a pool of receivables. ABS also assumes that all of the receivables in a pool are the same size, that all of those receivables amortize at the same rate, and that for every month that any individual receivable is outstanding, payments on that particular receivable will either be made as scheduled or the receivable will be prepaid in full. For example, in a pool of receivables originally containing 10,000 receivables, if a 1% ABS were used, that would mean that 100 receivables would prepay in full each month. The percentage of prepayments that is assumed for ABS is not a historical description of prepayment experience on pools of receivables or a prediction of the anticipated rate of prepayment on either the pool of receivables involved in this transaction or on any pool of receivables. You should not assume that the actual rate of prepayments on the receivables will be in any way related to the percentage of prepayments that was assumed for ABS.



58

Table of Contents
The tables below which are captioned “Percent of the Initial Note Balance Outstanding at Various ABS Percentages” (the “ABS Tables”) are based on ABS and were prepared using the following assumptions:




the issuing entity holds 7 pools of receivables with the following characteristics:



Pool

Outstanding Principal
Balance Weighted
Average
Coupon Weighted Average
Original
Term to Maturity
(in Months) Weighted Average
Remaining Term to
Maturity
(in Months)
1

$ 14,832,100.81 3.323% 67 9
2

$ 58,358,506.60 3.519% 68 18
3

$ 48,917,524.57 3.861% 67 30
4

$ 96,819,713.80 4.702% 64 44
5

$ 482,129,566.53 5.755% 66 56
6

$ 688,256,735.92 6.243% 72 67
7

$ 44,216,986.64 6.837% 83 78
Total

$1,433,531,134.87











the scheduled payment for each receivable was calculated on the basis of the characteristics described in the assumptions set forth above and in such a way that each receivable would amortize in a manner that would be sufficient to repay the receivable balance of that receivable by its indicated remaining term to maturity;




all prepayments on the receivables each month are made in full at the specified constant percentage of ABS and there are no defaults, losses or repurchases;




interest accrues on the notes at the following per annum coupon rates: Class A-1 notes, 2.60600%; Class A-2-A notes, 2.740%; Class A-2-B notes, 2.713%; Class A-3 notes, 2.710%; and Class A-4 notes, 2.820%;




each scheduled payment on the receivables is made on the last day of each month commencing in April 2019, and each month has 30 days;




the initial note balance of the Class A-1 notes, the Class A-2 notes, the Class A-3 notes and the Class A-4 notes are equal to the initial note amount for that class of notes as set forth on the front cover of this prospectus; and the initial note amount of the Class A-2-A notes and Class A-2-B notes are $334,000,000 and $166,000,000, respectively;




payments on the notes are paid in cash on each payment date commencing June 15, 2019, and on the 15th calendar day of each subsequent month whether or not that day is a business day;




the notes are purchased on May 8, 2019;




the Class A-1 notes and the Class A-2-B notes will be paid interest on the basis of the actual number of days elapsed during the period for which interest is payable and a 360-day year;




the Class A-2-A notes, the Class A-3 notes and the Class A-4 notes will be paid interest on the basis of a 360-day year consisting of twelve 30-day months;




the scheduled payment for each receivable was calculated on the basis of the characteristics described in the ABS Tables and in such a way that each receivable would amortize in a manner that would be sufficient to repay the receivable balance of that receivable by its indicated remaining term to maturity;




except as indicated in the tables, the clean-up call option to redeem the notes will be exercised at the earliest opportunity;



59

Table of Contents

the servicing fee rate will be 1.00% per annum; and




the indenture trustee fee will be $333.33 per month, the owner trustee fee will be $208.33 per month, the Delaware trustee fee will be $208.33 per month and the asset representations reviewer fee will be $416.67 per month.

The ABS Tables were created relying on the assumptions listed above. The tables indicate the percentages of the original outstanding balances of each class of notes that would be outstanding after each of the listed payment dates if certain percentages of ABS are assumed. The ABS Tables also indicate the corresponding weighted average lives of each class of notes if the same percentages of ABS are assumed. The assumptions used to construct the ABS Tables are hypothetical and have been provided only to give a general sense of how the principal cash flows might behave under various prepayment scenarios. The actual characteristics and performance of the receivables may differ materially from the assumptions used to construct the ABS Tables.

As used in the ABS Tables, the “weighted average life” of a class of notes is determined by:




multiplying the amount of each principal payment on a note by the number of years from the date of the issuance of the note to the related payment date;




adding the results; and




dividing the sum by the related original outstanding balance of the note.

Percent of the Initial Outstanding Balance at Various ABS Percentages

Class A-1 Notes



Payment Date 0.5% 1.0% 1.3% 1.5% 1.8% 2.0%
Closing Date

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
June 2019

75.96% 70.26% 66.06% 62.34% 51.17% 36.99%
July 2019

64.87% 56.50% 50.37% 45.02% 31.01% 18.90%
August 2019

54.23% 43.33% 35.40% 28.59% 11.96% 1.67%
September 2019

43.64% 30.34% 20.74% 12.63% 0.00% 0.00%
October 2019

33.12% 17.54% 6.40% 0.00% 0.00% 0.00%
November 2019

22.65% 4.93% 0.00% 0.00% 0.00% 0.00%
December 2019

12.24% 0.00% 0.00% 0.00% 0.00% 0.00%
January 2020

1.89% 0.00% 0.00% 0.00% 0.00% 0.00%
February 2020

0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted Average Life (Years) to Call(1)

0.36 0.29 0.25 0.23 0.18 0.15
Weighted Average Life (Years) to Maturity(2)

0.36 0.29 0.25 0.23 0.18 0.15




(1) Assumes that the servicer exercises its clean-up call option at the earliest possible opportunity.

(2) Assumes that the servicer does not exercise its clean-up call option.



60

Table of Contents
Percent of the Initial Outstanding Balance at Various ABS Percentages

Class A-2 Notes



Payment Date 0.5% 1.0% 1.3% 1.5% 1.8% 2.0%
Closing Date

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
June 2019

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
July 2019

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
August 2019

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
September 2019

100.00% 100.00% 100.00% 100.00% 96.16% 90.88%
October 2019

100.00% 100.00% 100.00% 98.29% 86.18% 80.97%
November 2019

100.00% 100.00% 95.43% 89.29% 77.23% 71.29%
December 2019

100.00% 95.51% 87.21% 80.59% 68.46% 61.82%
January 2020

100.00% 88.18% 79.18% 72.17% 59.88% 52.58%
February 2020

95.27% 81.22% 71.51% 63.99% 51.48% 43.57%
March 2020

89.44% 74.36% 64.00% 56.04% 43.27% 34.78%
April 2020

83.64% 67.61% 56.65% 48.30% 35.25% 26.21%
May 2020

77.88% 60.95% 49.46% 40.78% 27.42% 17.88%
June 2020

72.15% 54.41% 42.43% 33.49% 19.78% 10.19%
July 2020

66.45% 47.96% 35.57% 26.41% 12.34% 2.68%
August 2020

60.79% 41.63% 28.88% 19.57% 5.08% 0.00%
September 2020

55.16% 35.40% 22.35% 12.96% 0.00% 0.00%
October 2020

49.56% 29.28% 16.00% 6.55% 0.00% 0.00%
November 2020

44.58% 23.68% 10.01% 0.29% 0.00% 0.00%
December 2020

39.63% 18.16% 4.13% 0.00% 0.00% 0.00%
January 2021

34.71% 12.73% 0.00% 0.00% 0.00% 0.00%
February 2021

29.82% 7.38% 0.00% 0.00% 0.00% 0.00%
March 2021

24.95% 2.11% 0.00% 0.00% 0.00% 0.00%
April 2021

20.11% 0.00% 0.00% 0.00% 0.00% 0.00%
May 2021

15.30% 0.00% 0.00% 0.00% 0.00% 0.00%
June 2021

10.52% 0.00% 0.00% 0.00% 0.00% 0.00%
July 2021

5.77% 0.00% 0.00% 0.00% 0.00% 0.00%
August 2021

1.05% 0.00% 0.00% 0.00% 0.00% 0.00%
September 2021

0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted Average Life (Years) to Call(1)

1.50 1.22 1.07 0.98 0.84 0.76
Weighted Average Life (Years) to Maturity(2)

1.50 1.22 1.07 0.98 0.84 0.76




(1) Assumes that the servicer exercises its clean-up call option at the earliest possible opportunity.

(2) Assumes that the servicer does not exercise its clean-up call option.



61

Table of Contents
Percent of the Initial Outstanding Balance at Various ABS Percentages

Class A-3 Notes



Payment Date 0.5% 1.0% 1.3% 1.5% 1.8% 2.0%
Closing Date

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
June 2019

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
July 2019

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
August 2019

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
September 2019

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
October 2019

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
November 2019

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
December 2019

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
January 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
February 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
March 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
April 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
May 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
June 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
July 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
August 2020

100.00% 100.00% 100.00% 100.00% 100.00% 94.59%
September 2020

100.00% 100.00% 100.00% 100.00% 97.71% 86.29%
October 2020

100.00% 100.00% 100.00% 100.00% 89.73% 78.20%
November 2020

100.00% 100.00% 100.00% 100.00% 82.08% 70.33%
December 2020

100.00% 100.00% 100.00% 93.23% 74.77% 62.68%
January 2021

100.00% 100.00% 98.12% 86.30% 67.65% 55.25%
February 2021

100.00% 100.00% 91.58% 79.55% 60.72% 48.05%
March 2021

100.00% 100.00% 85.19% 72.98% 53.98% 41.07%
April 2021

100.00% 96.44% 78.94% 66.59% 47.44% 34.32%
May 2021

100.00% 90.52% 72.83% 60.37% 41.10% 27.79%
June 2021

100.00% 84.70% 66.88% 54.34% 34.96% 21.50%
July 2021

100.00% 78.98% 61.07% 48.49% 29.02% 15.43%
August 2021

100.00% 73.37% 55.41% 42.83% 23.28% 9.60%
September 2021

95.77% 67.86% 49.90% 37.35% 17.75% 4.01%
October 2021

90.35% 62.45% 44.55% 32.06% 12.42% 0.00%
November 2021

85.29% 57.36% 39.43% 26.94% 7.29% 0.00%
December 2021

80.27% 52.35% 34.45% 21.98% 2.38% 0.00%
January 2022

75.27% 47.44% 29.61% 17.19% 0.00% 0.00%
February 2022

70.31% 42.63% 24.90% 12.56% 0.00% 0.00%
March 2022

65.37% 37.91% 20.33% 8.10% 0.00% 0.00%
April 2022

60.48% 33.29% 15.90% 3.80% 0.00% 0.00%
May 2022

55.61% 28.77% 11.61% 0.00% 0.00% 0.00%
June 2022

50.78% 24.34% 7.46% 0.00% 0.00% 0.00%
July 2022

45.98% 20.02% 3.45% 0.00% 0.00% 0.00%
August 2022

41.22% 15.79% 0.00% 0.00% 0.00% 0.00%
September 2022

36.49% 11.67% 0.00% 0.00% 0.00% 0.00%
October 2022

31.80% 7.65% 0.00% 0.00% 0.00% 0.00%
November 2022

27.14% 3.72% 0.00% 0.00% 0.00% 0.00%
December 2022

22.52% 0.00% 0.00% 0.00% 0.00% 0.00%
January 2023

18.35% 0.00% 0.00% 0.00% 0.00% 0.00%
February 2023

14.21% 0.00% 0.00% 0.00% 0.00% 0.00%
March 2023

10.11% 0.00% 0.00% 0.00% 0.00% 0.00%
April 2023

6.03% 0.00% 0.00% 0.00% 0.00% 0.00%
May 2023

1.99% 0.00% 0.00% 0.00% 0.00% 0.00%
June 2023

0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted Average Life (Years) to Call(1)

3.17 2.72 2.43 2.24 1.97 1.81
Weighted Average Life (Years) to Maturity(2)

3.17 2.72 2.43 2.24 1.97 1.81




(1) Assumes that the servicer exercises its clean-up call option at the earliest possible opportunity.

(2) Assumes that the servicer does not exercise its clean-up call option.



62

Table of Contents
Percent of the Initial Outstanding Balance at Various ABS Percentages

Class A-4 Notes



Payment Date 0.5% 1.0% 1.3% 1.5% 1.8% 2.0%
Closing Date

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
June 2019

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
July 2019

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
August 2019

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
September 2019

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
October 2019

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
November 2019

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
December 2019

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
January 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
February 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
March 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
April 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
May 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
June 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
July 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
August 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
September 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
October 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
November 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
December 2020

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
January 2021

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
February 2021

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
March 2021

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
April 2021

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
May 2021

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
June 2021

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
July 2021

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
August 2021

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
September 2021

100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
October 2021

100.00% 100.00% 100.00% 100.00% 100.00% 95.84%
November 2021

100.00% 100.00% 100.00% 100.00% 100.00% 80.81%
December 2021

100.00% 100.00% 100.00% 100.00% 100.00% 66.40%
January 2022

100.00% 100.00% 100.00% 100.00% 92.83% 52.63%
February 2022

100.00% 100.00% 100.00% 100.00% 78.99% 0.00%
March 2022

100.00% 100.00% 100.00% 100.00% 65.81% 0.00%
April 2022

100.00% 100.00% 100.00% 100.00% 53.46% 0.00%
May 2022

100.00% 100.00% 100.00% 99.00% 0.00% 0.00%
June 2022

100.00% 100.00% 100.00% 86.83% 0.00% 0.00%
July 2022

100.00% 100.00% 100.00% 75.18% 0.00% 0.00%
August 2022

100.00% 100.00% 98.70% 64.07% 0.00% 0.00%
September 2022

100.00% 100.00% 87.24% 53.49% 0.00% 0.00%
October 2022

100.00% 100.00% 76.23% 0.00% 0.00% 0.00%
November 2022

100.00% 100.00% 65.66% 0.00% 0.00% 0.00%
December 2022

100.00% 99.71% 55.55% 0.00% 0.00% 0.00%
January 2023

100.00% 89.03% 0.00% 0.00% 0.00% 0.00%
February 2023

100.00% 78.63% 0.00% 0.00% 0.00% 0.00%
March 2023

100.00% 68.52% 0.00% 0.00% 0.00% 0.00%
April 2023

100.00% 58.69% 0.00% 0.00% 0.00% 0.00%
May 2023

100.00% 0.00% 0.00% 0.00% 0.00% 0.00%
June 2023

93.80% 0.00% 0.00% 0.00% 0.00% 0.00%
July 2023

81.56% 0.00% 0.00% 0.00% 0.00% 0.00%
August 2023

69.43% 0.00% 0.00% 0.00% 0.00% 0.00%
September 2023

57.40% 0.00% 0.00% 0.00% 0.00% 0.00%
October 2023

0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted Average Life (Years) to Call(1)

4.35 3.93 3.59 3.33 2.93 2.68
Weighted Average Life (Years) to Maturity(2)

4.46 4.07 3.72 3.44 3.02 2.75




(1) Assumes that the servicer exercises its clean-up call option at the earliest possible opportunity.

(2) Assumes that the servicer does not exercise its clean-up call option.



63

Table of Contents
THE NOTES

General

The notes will be issued pursuant to the terms of the indenture, a form of which has been filed as an exhibit to the registration statement, to be dated as of the closing date between the issuing entity and the indenture trustee for the benefit of the noteholders. We will file a copy of the finalized indenture with the SEC concurrently with or prior to the time we filed this prospectus with the SEC. Each noteholder will have the right to receive payments made with respect to the receivables and other assets in the issuing entity property and certain rights and benefits available to the indenture trustee under the indenture. Wilmington Trust, National Association will be the “indenture trustee.” You may contact the indenture trustee at www.wilmingtontrustconnect.com or by calling (866) 829-1928.

All payments required to be made on the notes will be made monthly on each payment date, which will be the 15th day of each month or, if that day is not a business day, then the next business day beginning June 17, 2019.

The indenture trustee will distribute principal and interest on each payment date to holders in whose names the notes were registered on the latest record date.

For each class of book-entry notes, the “record date” for each payment date or redemption date is the close of business on the business day immediately preceding that payment date or redemption date. For notes issued as definitive notes, the record date for any payment date or redemption date is the close of business on the last business day of the calendar month immediately preceding the calendar month in which such payment date or redemption date occurs. See “The Notes—Definitive Notes.”

The initial principal amount, interest rate and final scheduled payment date for each class of notes is set forth on the cover page to this prospectus.

Distributions to the certificateholders will be subordinated to distributions of principal of and interest on the notes to the extent described in “The Transaction Documents—Priority of Payments.”

Delivery of Notes

The notes will be issued in the minimum denomination of $1,000 and in integral multiples of $1,000 in excess thereof (except for two notes of each class of notes which may be issued in a denomination other than an integral of $1,000) on or about the closing date in book-entry form through the facilities of DTC, Clearstream and Euroclear against payment in immediately available funds.

Book-Entry Registration

Each class of notes will be available only in book-entry form except in the limited circumstances described under “—Definitive Notes” below. All book-entry notes will be held by DTC, in the name of Cede & Co., as nominee of DTC. Investors’ interests in the notes will be represented through financial institutions acting on their behalf as direct and indirect participants in DTC. Investors may hold their notes through DTC, Clearstream, or Euroclear, which will hold positions on behalf of their customers or participants through their respective depositories, which in turn will hold such positions in accounts as DTC participants. The notes will be traded as home market instruments in both the U.S. domestic and European markets. Initial settlement and all secondary trades will settle in same-day funds.

Investors electing to hold their notes through DTC will follow the settlement practices applicable to U.S. corporate debt obligations. Investors electing to hold global securities through Clearstream or Euroclear accounts will follow the settlement procedures applicable to conventional eurobonds, except that there will be no temporary global securities and no “lock-up” or restricted period.

For notes held in book-entry form, actions of noteholders under the indenture will be taken by DTC upon instructions from its participants and all payments, notices, reports and statements to be delivered to noteholders will



64

Table of Contents
be delivered to DTC or its nominee as the registered holder of the book-entry notes for distribution to holders of book-entry notes in accordance with DTC’s procedures.

Investors should review the procedures of DTC, Clearstream and Euroclear for clearing, settlement and withholding tax procedures applicable to their purchase of the notes.

Definitive Notes

The notes will be issued in fully registered, certificated form to owners of beneficial interests in a global security or their nominees rather than to DTC or its nominee, only if:




the administrator advises the indenture trustee in writing that DTC is no longer willing or able to discharge properly its responsibilities as depository with respect to the notes, and the administrator or the indenture trustee, as applicable, is unable to locate a qualified successor;




the administrator, at its option, advises the indenture trustee in writing that it elects to terminate the book-entry system through DTC; or




after an event of default, beneficial note owners representing in the aggregate a majority of the outstanding principal amount of the notes, voting as a single class, advise the indenture trustee through DTC (or its successor) in writing that the continuation of a book-entry system through DTC (or its successor) is no longer in the best interest of those owners.

Payments or distributions of principal of, and interest on, the notes will be made by a paying agent in accordance with directions of the servicer directly to holders of notes in definitive registered form in accordance with the procedures set forth in this prospectus and the indenture. Payments or distributions on each payment date and on the final scheduled payment date will be made to holders in whose names the definitive notes were registered on the Record Date. Payments or distributions will be made by wire transfer if an account has been designated by the related noteholder three business days prior to the related payment date and otherwise by check mailed to the address of each noteholder as it appears on the register maintained by the indenture trustee. The final payment or distribution on any note, whether notes in definitive registered form or notes registered in the name of Cede & Co., however, will be made only upon presentation and surrender of the note at the office or agency specified in the notice of final payment or distribution to noteholders.

Notes in definitive registered form will be transferable and exchangeable at the offices of the indenture trustee or at the offices of a transfer agent or registrar named in a notice delivered to holders of notes in definitive registered form. No service charge will be imposed for any registration of transfer or exchange, but the issuing entity may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection therewith.

Notes Owned by Transaction Parties

In determining whether noteholders holding the requisite note balance have given any request, demand, authorization, direction, notice, consent, vote or waiver under any transaction document, notes owned by the depositor, Fifth Third Bank or any of their respective affiliates will be disregarded and deemed not to be “outstanding” unless all of the notes are then owned by the depositor, Fifth Third Bank or any of their respective affiliates.

Access to Noteholders Lists

If definitive notes are issued in the limited circumstances set forth above, or if the indenture trustee is not the registrar for the notes, the issuing entity will furnish or cause to be furnished to the indenture trustee a list of the names and addresses of the noteholders:




as of each Record Date, not more than five days after that Record Date; and



65

Table of Contents

within 30 days after receipt by the issuing entity of a written request from the indenture trustee for that list, as of a date not more than ten days before that list is furnished.

The indenture does not provide for the holding of annual or other meetings of noteholders.

Noteholder Communication

A noteholder or a beneficial owner of a note (collectively, the “Investors”) may send a request to the depositor at any time notifying the depositor that the Investor would like to communicate with other Investors with respect to an exercise of their rights under the terms of the transaction documents, including the right to request an asset representations review as set forth under “The Transaction Documents—Asset Representations Review” below. If the requesting Investor is not the record holder as reflected in the note register and is instead a beneficial owner of notes, the indenture trustee or the servicer may require no more verification than (1) a written certification from the Investor that it is a beneficial owner of notes and (2) an additional form of documentation, such as a trade confirmation, an account statement, a letter from the broker or dealer or other similar document. The depositor will include in each Form 10-D disclosure regarding any request received during the related collection period from an Investor to communicate with other Investors related to the Investors exercising their rights under the terms of the transaction documents. The disclosure in the Form 10-D regarding the request to communicate will include the name of the Investor making the request, the date the request was received, a statement to the effect that the issuing entity has received a request from the Investor, stating that the Investor is interested in communicating with other Investors with regard to the possible exercise of rights under the transaction documents and a description of the method other Investors may use to contact the requesting Investor. The servicer will bear any costs associated with including the above information in the Form 10-D.

Statements to Noteholders

On or prior to the second Business Day preceding each payment date, the servicer will provide to the indenture trustee, and the indenture trustee will on each payment date forward or otherwise make available to each noteholder, a statement (prepared by the servicer) setting forth for that payment date and the related collection period, the following information:




the amount of the distribution on or with respect to each class of the notes allocable to principal;




the amount of the distribution on or with respect to each class of the notes allocable to interest;




the aggregate distribution amount for that payment date;




the number of, and aggregate outstanding principal balance of, the related receivables which are delinquent as of the end of the related collection period;




the aggregate servicing fee paid to the servicer with respect to that collection period;




if applicable, the amount of payment or distribution, as the case may be, allocable to the certificate distribution account;




the amount of collections on the receivables for that collection period;




the amount of any principal or interest shortfall with respect to each class of notes and the amount required from the reserve account to pay any shortfall;




the aggregate amount of proceeds received by the servicer, net of reimbursable out-of-pocket expenses, in respect of a receivable which is a defaulted receivable;




the Pool Factor and/or the Note Factor;




the Net Pool Balance;



66

Table of Contents

if applicable, a statement that the servicer has received a communication request for a noteholder interested in communicating with other noteholders regarding the possible exercise of rights under the transaction documents, the name and contact information for the requesting noteholder and the date such request was received;




the Delinquency Percentage and whether the Delinquency Trigger has been met or exceeded;




a summary of the findings and conclusions of any asset representations review conducted by the asset representations reviewer;




if applicable, information with respect to any change in the asset representations reviewer as required by Item 1121(d)(2) of Regulation AB; and




any asset level information as required by Item 1111(h) and Item 1125 of Regulation AB.

Each month the servicer will compute either a Pool Factor or a Note Factor or both a Pool Factor and a Note Factor.

The indenture trustee will make available via its internet website all reports or notices required to be provided by it. However, for so long as the issuing entity’s filings described under “Reports to Noteholders” and amendments to those filings will be publicly available at the SEC’s website as http://www.sec.gov, the indenture trustee will not make available at its internet website any of the issuing entity’s filings. The servicer will provide electronic or paper copies of such filings and other reports free of charge upon request.

Within a reasonable period of time after the end of each calendar year, but not later than the latest date permitted by applicable law, the indenture trustee will make available information required to complete federal income tax returns to each person who on any Record Date during the calendar year was a registered noteholder.

Payments of Interest

Interest on the unpaid outstanding balance of each class of notes will accrue at the applicable interest rate listed on the cover of this prospectus and will be payable monthly on each payment date. Interest will accrue during each interest period at the applicable interest rate (a) for the Class A-1 notes and the Class A-2-B notes from and including the most recent payment date on which interest was paid (or from and including the closing date in the case of the first interest period) to but excluding the following payment date or (b) for the Class A-2-A notes, the Class A-3 notes and the Class A-4 notes from and including the 15th day of each calendar month preceding each payment date (or from and including the closing date in the case of the first payment period) to but excluding the 15th day of the month in which that payment date occurs.

Interest will accrue and will be calculated on the various classes of notes as follows:




Actual/360. Interest on the Class A-1 notes and the Class A-2-B notes will be calculated on the basis of the actual number of days elapsed during the applicable interest period, but assuming a 360-day year. This means that the interest due on each payment date for the Class A-1 notes and the Class A-2-B notes, as applicable, will be the product of (i) the outstanding principal amount of the related class of notes, (ii) the related interest rate and (iii) the actual number of days from and including the previous payment date (or, in the case of the first payment date, since the closing date) to but excluding the current payment date, divided by 360.




30/360. Interest on the Class A-2-A notes, the Class A-3 notes and the Class A-4 notes will be calculated on the basis of a 360-day year of twelve 30-day months. This means that the interest due on each payment date for the Class A-2-A notes, the Class A-3 notes and the Class A-4 notes will be the product of (i) the outstanding principal amount of the related class of notes, (ii) the related interest rate and (iii) 30 (or in the case of the first payment date, ●), divided by 360.




Interest Accrual Periods. Interest will accrue on the outstanding principal amount of each class of notes (a) with respect to the Class A-1 notes and the Class A-2-B notes from the prior payment date



67

Table of Contents

(after giving effect to all payments made on that date) (or in the case of the first payment date, the closing date) to but excluding the following payment date or (b) with respect to the Class A-2-A notes, the Class A-3 notes and the Class A-4 notes from the 15th day of each calendar month (after giving effect to all payments made on that date) (or in the case of the first payment date, the closing date) to but excluding the 15th day of the following month. Interest accrued as of any payment date but not paid on that payment date will be payable on the next payment date, together with interest on such amount at the applicable interest rate (to the extent lawful).

Interest on the floating rate notes will be calculated based on LIBOR plus the applicable spread set forth on the cover page to this prospectus; provided that, if the sum of LIBOR and such spread is less than 0.00% for any interest accrual period, then the interest rate for the Class A-2-B notes for such interest accrual period will be deemed to be 0.00%. For purposes of computing interest on the floating rate notes, the following terms have the following meanings:

“LIBOR” means, with respect to any interest period (including the first interest period), the London interbank offered rate for deposits in U.S. dollars having a maturity of one month commencing on the related LIBOR Determination Date which appears on Bloomberg Screen BTMM Page (or any successor page) as of 11:00 a.m., London time, on such LIBOR Determination Date. If the rates used to determine LIBOR do not appear on the Bloomberg Screen BTMM Page (or any successor page), the rates for that day will be determined on the basis of the rates at which deposits in U.S. dollars, having a maturity of one month and in a principal balance of not less than U.S. $1,000,000 are offered at approximately 11:00 a.m., London time, on such LIBOR Determination Date to prime banks in the London interbank market by the reference banks. The indenture trustee will request the principal London office of each of such reference banks to provide a quotation of its rate. If at least two such quotations are provided, the rate for that day will be the arithmetic mean to the nearest 1/100,000 of 1.00% (0.0000001), with five one-millionths of a percentage point rounded upward, of all such quotations. If fewer than two such quotations are provided, the rate for that day will be the arithmetic mean to the nearest 1/100,000 of 1.00% (0.0000001), with five one-millionths of a percentage point rounded upward, of the offered per annum rates that one or more leading banks in New York City, selected by the administrator, are quoting as of approximately 11:00 a.m., New York City time, on such LIBOR Determination Date to leading European banks for United States dollar deposits for that maturity; provided that if the banks selected as aforesaid are not quoting as mentioned in this sentence, LIBOR in effect for the applicable interest period will be LIBOR in effect for the previous interest period. The reference banks are the four major banks in the London interbank market selected by the administrator. The indenture trustee shall obtain LIBOR in accordance with the foregoing on the LIBOR Determination Date (or in the event that the LIBOR Determination Date is not a business day, the next succeeding business day) and shall provide such rate to the administrator or such person as directed by the administrator.

“LIBOR Determination Date” means the second London Business Day prior to the closing date with respect to the first payment date and, as to each subsequent payment date, the second London Business Day prior to the immediately preceding payment date.

“London Business Day” means any day other than a Saturday, Sunday or day on which banking institutions in London, England are authorized or obligated by law or government decree to be closed.

No assurance can be given that the rate displayed on the Bloomberg Screen BTMM Page (or any successor page) accurately represents the London interbank rate or the rate applicable to actual loans in U.S. dollars for a one-month period between leading European banks.

Interest on each note will be paid to the person in whose name that note is registered on the Record Date. (The holders of record of the notes are referred to as “noteholders” in this prospectus.) The final interest payment on each class of notes is due on the earlier of (a) the payment date (including any redemption date) on which the principal amount of that class of notes is reduced to zero or (b) the applicable final scheduled payment date for that class of notes. In this transaction, a “business day” will be any day other than a Saturday, a Sunday or a day on which banking institutions in the states of Delaware, Ohio, Illinois or New York, or in the state in which the corporate trust office of the indenture trustee is located, are authorized or obligated by law, executive order or government decree to be closed.



68

Table of Contents
A failure to pay the interest due on the notes on any payment date that continues for a period of five business days or more generally will result in an event of default. See “The Indenture—Events of Default.”

Payments of Principal

On each payment date, except as described below, the First Allocation of Principal and the Regular Principal Distribution Amount will be applied to make principal payments on the notes. Prior to an event of default, principal payments will be applied to the notes in sequential priority so that no principal payments will be made on any class of notes until all notes with an earlier final scheduled payment date have been paid in full. Thus, on each payment date, the amounts on deposit in the principal distribution account will be applied to the notes as follows:




first, to the Class A-1 notes, until the Class A-1 notes are paid in full;




second, to the Class A-2-A notes and Class A-2-B notes, ratably, until the Class A-2-A notes and Class A-2-B notes are paid in full;




third, to the Class A-3 notes, until the Class A-3 notes are paid in full; and




fourth, to the Class A-4 notes, until the Class A-4 notes are paid in full.

At any time that the outstanding amounts of the notes have been declared due and payable following the occurrence of an event of default under the indenture, principal payments will be made first to the Class A-1 noteholders until the Class A-1 notes are paid in full, and then ratably to all other noteholders on each payment date, based on the outstanding balance of each class of notes (other than the Class A-1 notes), until the notes have been paid in full. Such payments will be made from Available Funds and other amounts, including all amounts held on deposit in the reserve account.

To the extent not previously paid prior to those dates, the outstanding amount of each class of notes will be payable in full on the payment date specified below (each, a “final scheduled payment date”):




for the Class A-1 notes, the May 2020 payment date;




for the Class A-2-A notes and the Class A-2-B notes, the May 2022 payment date;




for the Class A-3 notes, the December 2023 payment date; and




for the Class A-4 notes, the November 2026 payment date.

Failure to pay the full principal amount of a class of notes by the applicable final scheduled payment date or redemption date will be an event of default under the indenture.



69

Table of Contents
Payments of Principal on each Payment Date (other than

Payment Dates after the Notes Have Been Accelerated

Following the Occurrence of an Event of Default)



LOGO

THE CERTIFICATES

The issuing entity will also issue one or more non-interest bearing “certificates,” which represent an equity interest in the issuing entity. The certificates are not offered hereby but will instead be issued by the issuing entity pursuant to the terms of the trust agreement. The depositor will be the initial holder of the issuing entity’s certificates. The certificates may be transferred pursuant to the terms of the trust agreement. The owner trustee shall maintain a register for the registration and transfer of certificates and the owner trustee or its agent shall promptly notify the indenture trustee of any change in the registered ownership of a certificate. On each payment date, the holders of the certificates will be entitled to any funds remaining on that payment date after all deposits and distributions of higher priority, as described in “The Transaction Documents—Priority of Payments.”

THE TRANSACTION DOCUMENTS

The following information in this section summarizes material provisions of the “receivables sale agreement” entered into between the originator and FTH LLC, the “purchase agreement” entered into between FTH LLC and the depositor, the “sale agreement” entered into among the depositor, the indenture trustee and the issuing entity and the “indenture” entered into between the issuing entity and the indenture trustee. We sometimes refer to these agreements collectively as the “transfer agreements.” This section also summarizes the “administration agreement” entered into among the issuing entity, Fifth Third Bank and the indenture trustee, the “servicing agreement” entered into among the servicer, the issuing entity and the indenture trustee, the “asset representations review agreement” entered into among the issuing entity, the servicer and the asset representations reviewer and the “trust agreement” entered into among the depositor, the Delaware trustee and the owner trustee.

We will file a copy of the actual transfer agreements, the servicing agreement, the administration agreement, the asset representations review agreement and the trust agreement concurrently with or prior to the time we file this prospectus with the SEC. This is not a complete description of the transfer agreements, the servicing agreement, the administration agreement, the asset representations review agreement or the trust agreement, and the summaries of the transfer agreements, the servicing agreement, the administration agreement, the asset representations review agreement and the trust agreement in this prospectus are subject to all of the provisions of the transfer agreements, the servicing agreement, the administration agreement, the asset representations review agreement and the trust agreement.



70

Table of Contents
Sale and Assignment of Receivables and Related Security Interests

Under the receivables sale agreement, Fifth Third Bank will sell, transfer, assign and otherwise convey to FTH LLC all of its right, title, interest, claims and demands in, to and under the receivables originated by Fifth Third Bank, Collections after the cut-off date, the receivables files and the related security relating to those receivables. The receivables sale agreement will create a first priority ownership/security interest in the property transferred thereunder in favor of FTH LLC.

Under the purchase agreement, FTH LLC will sell, transfer, assign and otherwise convey to the depositor all of its right, title, interest, claims and demands in, to and under the receivables, Collections after the cut-off date, the receivables files and the related security relating to those receivables. The purchase agreement will create a first priority ownership/security interest in that property in favor of the depositor.

Under the sale agreement, the depositor will sell, transfer, assign and otherwise convey to the issuing entity all of its right, title, interest, claims and demands in, to and under the receivables, Collections after the cut-off date, the receivable files, the related security relating to those receivables and related property. The sale agreement will create a first priority ownership/security interest in that property in favor of the issuing entity.

Under the indenture, the issuing entity will pledge all of its right, title, interest, claims and demands in, to and under the issuing entity property to the indenture trustee. The terms of the indenture create a first priority perfected security interest in the issuing entity property in favor of the indenture trustee for the benefit of the noteholders.

Representations and Warranties of the Originator. Pursuant to the receivables sale agreement, the originator will represent that each receivable sold and assigned under the receivables sale agreement will satisfy the criteria set forth above under “The Receivables Pool—Criteria Applicable to Selection of Receivables.”

If the originator discovers or is notified by a requesting party regarding a breach of any of the representations and warranties with respect to the eligibility criteria set forth in the receivables sale agreement at the time such representations and warranties were made, the originator will investigate the receivable to confirm the breach and determine if the breach materially and adversely affects the interests of the issuing entity or the noteholders and triggers a repurchase event. Any inaccuracy in the representations or warranties will be deemed not to constitute a breach if such inaccuracy does not affect the ability of the issuing entity to receive or retain payment in full on the related receivable. Upon discovery by any party to the receivables sale agreement of a repurchase event, the party discovering that breach will give prompt written notice of that breach to the originator; provided, that delivery of a monthly servicer’s certificate which identifies the receivables that are being or have been repurchased will be deemed to constitute prompt notice of that breach; provided, further, that the failure to give that notice will not affect any obligation of the originator under the receivables sale agreement. Following a repurchase event, the originator will either (a) correct or cure such breach or (b) repurchase such receivable from the issuing entity, in either case on or before the payment date following the end of the collection period which includes the 60th day (or if the originator elects, an earlier date) after the date that the originator became aware of or was notified and confirmed that breach. Any such purchase by the originator will be at a repurchase price equal to the outstanding principal balance of that receivable plus accrued interest. In consideration for that repurchase, the originator will pay (or will cause to be paid) the repurchase price by depositing the repurchase price into the collection account on that payment date. The repurchase obligation will constitute the sole remedy available to the noteholders or the indenture trustee for the failure of a receivable to meet any of the eligibility criteria set forth in the receivables sale agreement.

The servicer is required to purchase receivables as to which the servicer has breached its servicing covenants in any manner that materially and adversely affects the interest of the issuing entity or the noteholders and the servicer is unable to timely cure such breach.

Asset Representations Review

As discussed above under “—Sale and Assignment of Receivables and Related Security Interests—Representations and Warranties of the Originator,” the originator will make certain representations and warranties regarding the receivables. The asset representations reviewer will be responsible for reviewing the receivables for



71

Table of Contents
compliance with these representations and warranties (the “Pool Asset Representations”) when the following asset review conditions (the “Review Conditions”) have been satisfied:




The Delinquency Percentage for any payment date meets or exceeds the Delinquency Trigger for that payment date, as described below under “—Delinquency Trigger”; and




The required percentage of investors have voted to direct a review of the applicable Subject Receivables pursuant to the process described below under “—Asset Review Voting.”

If the Review Conditions are satisfied (the first date on which the Review Conditions are satisfied is referred to as the “Review Satisfaction Date”), then the asset representations reviewer will perform a review of the Subject Receivables for compliance with the Pool Asset Representations as described below under “—Asset Review.”

Delinquency Trigger

On or prior to each payment date, the servicer will calculate the Delinquency Percentage for the preceding calendar month. The “Delinquency Percentage” for each payment date is an amount equal to the ratio (expressed as a percentage) of (i) the Net Pool Balance of all 60-Day Delinquent Receivables as of the last day of the calendar month immediately preceding such payment date to (ii) the Net Pool Balance of all outstanding receivables held by the issuing entity as of the last day of the calendar month immediately preceding such payment date. “60-Day Delinquent Receivables” means all receivables outstanding and held by the issuing entity (other than repurchased receivables and charged-off receivables) that are 60 or more days delinquent, as determined in accordance with the servicer’s customary servicing practices. The “Delinquency Trigger” for any payment date and the related preceding calendar month is 5.28%.

The Delinquency Trigger was calculated as a multiple of 8 times the previous historical peak Delinquency Percentage. In determining the highest historical monthly peak Delinquency Percentage, Fifth Third Bank considered the monthly performance observed in each of its public securitization transactions with characteristics similar to this pool of receivables under the Fifth Third Auto Trust platform since 2008. Fifth Third Bank believes the Delinquency Trigger is appropriate based on its experience and observation of historical 60-Day Delinquent Receivables in its public securitization transactions with characteristics similar to this pool of receivables over time. The Delinquency Trigger has been set at a level in excess of historical peak Delinquency Percentage to assure that the Delinquency Trigger is not exceeded due to events unrelated to Fifth Third Bank’s underwriting, such as ordinary fluctuations in the economy, rising oil prices, housing price declines, terrorist events, extreme weather conditions or an increase of an obligor’s payment obligations under other indebtedness incurred by the obligor.

For prior pools of retail installment sale contracts that were securitized by Fifth Third Bank since 2008, the percentage of receivables that have been 60 or more days delinquent has ranged from 0.00% to 0.66%. For more information regarding 60 day or more delinquent asset statistics for certain of Fifth Third Bank’s prior securitized pools of retail installment sale contracts, see “Appendix A—Static Pool Information Regarding Certain Previous Receivables Pools.”

The servicer will monitor delinquent receivables and will include on the monthly statement to noteholders the delinquency information as to the receivables as of the last day of the related collection period and whether the Delinquency Percentage has met or exceeded the Delinquency Trigger for the related collection period. If the Delinquency Trigger has been met or exceeded for the related collection period, the servicer will provide a notice to the depositor and the indenture trustee, and will include a notice on the monthly servicer report and on the Form 10-D, that such trigger has been met.

“Subject Receivables” means, for any asset review, all receivables outstanding and held by the issuing entity which are 60 or more days delinquent as of the related Review Satisfaction Date. However, any receivable that becomes a repurchased receivable or is paid off after the Review Satisfaction Date will no longer be a Subject Receivable.



72

Table of Contents
Asset Review Voting

If the Delinquency Percentage on any payment date exceeds the Delinquency Trigger for that payment date, the servicer will notify the Investors of that occurrence on the periodic report filed by the depositor on Form 10-D. Investors in the aggregate holding at least 5% of the aggregate outstanding principal balance of all the outstanding notes, with noteholders voting together as a single class (the “Instituting Noteholders”) may then elect to initiate a vote of the Investors to determine whether the asset representations reviewer will conduct the review described under “—Asset Review” below by giving written notice to the indenture trustee of their desire to institute such a vote. If any Instituting Noteholder is not a record holder as reflected on the note register, the indenture trustee may require that investor to provide verification documents to confirm that the investor is, in fact, a beneficial owner. The indenture trustee may require no more verification than (1) a written certification from the investor that it is a beneficial owner of notes and (2) an additional form of documentation, such as a trade confirmation, an account statement, a letter from the broker or dealer or other similar document. Any such vote will be (i) initiated no later than 90 days after the filing of a Form 10-D reporting to Investors that the Delinquency Percentage on the related payment date exceeded the Delinquency Trigger for that payment date (the “Delinquency Trigger Notice Date”) and (ii) completed no later than 150 days after the Delinquency Trigger Notice Date.

If the Instituting Noteholders initiate a vote as described in the preceding paragraph, the noteholder direction will be deemed to have occurred if Investors representing at least a majority of the voting Investors vote in favor of directing a review by the asset representations reviewer. If the Instituting Noteholders elect to initiate a vote, then the servicer will pay the costs, expenses and liabilities incurred by the indenture trustee, the owner trustee and the issuing entity in connection with the voting process, including the costs and expenses of counsel (as described below under “—Fees and Expenses for Asset Review”). The servicer and the issuing entity are required under the indenture to cooperate with the indenture trustee to facilitate the voting process. The indenture trustee may set a record date for purposes of determining the identity of Investors entitled to vote in accordance with Section 316(c) of the Trust Indenture Act of 1939, as amended.

Within five Business Days of the Review Satisfaction Date, the indenture trustee will send a notice to the servicer and the asset representations reviewer specifying that the Review Conditions have been satisfied and providing the applicable Review Satisfaction Date. Within ten Business Days of receipt of such notice, the servicer will provide the asset representations reviewer, with a copy to the indenture trustee, a list of the Subject Receivables.

Fees and Expenses for Asset Review

As described below under “—Fees and Expenses,” the asset representations reviewer will be paid an annual fee of $5,000 by the servicer, and to the extent not so paid, as set forth under “—Priority of Payments” in accordance with the asset representations review agreement. However, that annual fee does not include the fees and expenses of the asset representations reviewer in connection with an asset review of the Subject Receivables. Under the asset representations review agreement, the asset representations reviewer will be entitled to receive a fee in connection with the asset review of $200 for each Subject Receivable (the “Review Fees”). The asset representations reviewer will pay all expenses incurred by it in connection with its review of the Subject Receivables. All fees payable to, and expenses incurred by, the asset representations reviewer in connection with the Asset Review (the “Review Expenses”) will be payable by Fifth Third Bank and, to the extent the Review Expenses remain unpaid after 60 days, they will be payable out of amounts on deposit in the collection account as described under “—Priority of Payments.”

Asset Review

The asset representations reviewer will perform a review of the Subject Receivables for compliance with the Pool Asset Representations (an “Asset Review”).

The Asset Review will be performed in accordance with the procedures set forth in the asset representations review agreement. These procedures will generally consist of tests designed to determine whether such Subject Receivable was or was not in compliance with the Pool Asset Representations made regarding such Subject Receivable. The Asset Review is not designed to establish cause, materiality or recourse for any failure of a receivable to comply with the Pool Asset Representations.



73

Table of Contents
Under the asset representations review agreement, the servicer will furnish to the asset representations reviewer a list of the Subject Receivables within ten (10) Business Days after receiving notice of the Review Satisfaction Date. The asset representations reviewer is required to complete its review of the Subject Receivables by the 60th day after receiving access to the review materials, which the servicer shall furnish to the asset representations reviewer within sixty (60) days after receiving notice of the Review Satisfaction Date; provided that such review period will be extended for thirty (30) days in order to allow the servicer to provide missing or additional review materials to the asset representations reviewer. If the asset representations reviewer reasonably determines that any of the review materials are missing or insufficient, the asset representations reviewer will notify the servicer promptly, and in any event no less than twenty (20) calendar days before completing the asset representations review, and the servicer will use reasonable efforts to provide access to such missing review materials or other documents or information to correct the insufficiency within fifteen (15) calendar days after receipt of notification. If missing or insufficient review materials have not been provided by the servicer within sixty (60) calendar days after receipt of notification, the Subject Receivable will have a test incomplete for the related test(s). Upon completion of its review, the asset representations reviewer will provide a report to the indenture trustee, the sponsor, the servicer and the issuing entity of the findings and conclusions of the review of the Subject Receivables within ten (10) days of the applicable review period, and the Form 10-D filed by the depositor with respect to the collection period in which the asset representations reviewer’s report is provided will include a summary of those findings and conclusions.

The asset representations reviewer will not be responsible for determining whether noncompliance with the Pool Asset Representations constitutes a breach of the receivables sale agreement or whether the originator would be required to repurchase a Subject Receivable. If the asset representations reviewer determines that there is an instance of noncompliance with the Pool Asset Representations, the servicer will, after reviewing the report of the asset representations reviewer, determine whether such noncompliance constitutes a breach of the Pool Asset Representations such that the originator would be required to repurchase a Subject Receivable.

Dispute Resolution

The originator is required to repurchase from the receivables pool any receivables that do not meet certain representations and warranties as described under “—Sale and Assignment of Receivables and Related Security Interests.” Any Investor (each, a “requesting party”) may request that the originator repurchase any receivable that does not satisfy the representations and warranties described under “—Sale and Assignment of Receivables and Related Security Interests.” In order to make a repurchase request, an Investor will be required to provide a notice stating the request to the originator. If the repurchase request has not been fulfilled or otherwise resolved to the reasonable satisfaction of the requesting party within 180 days of the receipt of notice of the request by the originator, the requesting party may refer the matter, at its discretion, to either mediation (including non-binding arbitration) or binding arbitration, whether or not the applicable receivables have previously been the subject of an asset representations review. The requesting party will provide notice of its intention to refer the matter to mediation (including non-binding arbitration) or binding arbitration, as applicable, to Fifth Third Bank, with a copy to FTH LLC, the issuing entity, the depositor, the owner trustee and the indenture trustee.

If the requesting party selects mediation, the mediation will be administered by a nationally recognized arbitration and mediation association selected by the requesting party. The fees and expenses of the mediation will be allocated as mutually agreed by the parties as part of the mediation. The mediator will be appointed from a list of neutrals maintained by the American Arbitration Association (the “AAA”).

If the requesting party selects non-binding or binding arbitration, the arbitration will be administered by a nationally recognized arbitration and mediation association selected jointly by the parties (or, if the requesting party and the originator are unable to agree on an association, by the AAA) according to such association’s arbitration rules then in effect. The arbitrator will be appointed from a list of neutrals maintained by the AAA. The arbitrator will make its final determination no later than ninety (90) days after appointment or as soon as practicable thereafter. The arbitrator will resolve the dispute in accordance with the terms of the receivables sale agreement, and may not modify or change the receivables sale agreement in any way. The arbitrator will not have the power to award punitive damages or consequential damages in any arbitration conducted by it, and the originator will not be required to pay more than the applicable repurchase price with respect to any receivable that the originator is required to repurchase. In its final determination, the arbitrator will determine and award the costs of the arbitration (including the fees of the arbitrator, cost of any record or transcript of the arbitration and administrative fees) and



74

Table of Contents
reasonable attorneys’ fees to the requesting party and the originator as determined by the arbitrator in its reasonable discretion.

Any mediation and arbitration described above will be held in New York, New York (or, such other location as the parties mutually agree upon) and will be subject to certain confidentiality restrictions and additional terms set forth in the receivables sale agreement, which will not prevent disclosure of information required by any applicable securities law. Any settlement agreement reached in a mediation and any decision by an arbitrator in binding arbitration will be binding upon the requesting party, the depositor, the issuing entity, the owner trustee and the indenture trustee with respect to the receivable that is the subject matter of the repurchase request, and, in that situation, issues relating to that receivable may not be re-litigated by the requesting party or the originator or become the subject of a subsequent repurchase request by the requesting party in mediation, arbitration, court or otherwise. By requesting binding arbitration, such requesting party will waive the right to sue in court, including the right to a trial by jury. Information regarding any mediation or arbitration will be provided to investors in a Form 10-D filing.

Administration Agreement

Fifth Third Bank will be the administrator under the administration agreement. The administrator will perform all of its duties as administrator under the administration agreement and the duties and obligations of the issuing entity under the servicing agreement, the sale agreement, the indenture, the note depository agreement, the trust agreement and the asset representations review agreement. However, except as otherwise provided in such documents, the administrator will have no obligation to make any payment required to be made by the issuing entity under any such document. The administrator will monitor the performance of the issuing entity and will advise the issuing entity when action is necessary to comply with the issuing entity’s duties and obligations under such documents. In furtherance of the foregoing, the administrator will take all appropriate action that is the duty of the issuing entity to take pursuant to such documents.

The administrator is permitted to delegate some or all of its duties to its affiliates or specific duties to sub-contractors who are in the business of performing such duties, although the administrator will remain liable for the performance of any duties that it delegates to another entity.

As compensation for the performance of the administrator and as a reimbursement for its expenses, the administrator will be entitled to receive $12,000 annually, which shall be solely an obligation of the servicer.

Trust Agreement

Fifth Third Auto Trust 2019-1 will be the issuing entity under the trust agreement and will have the purposes and powers specified therein, including the power and authority to acquire the receivables from the depositor and issue the notes and the certificates. The Bank of New York Mellon will be the owner trustee under the trust agreement and will have all of the rights, powers and duties set forth therein, including the authority to exercise the issuing entity’s powers on behalf of the issuing entity. BNY Mellon Trust of Delaware will be the Delaware trustee under the trust agreement and will have all of the rights, powers and duties set forth therein. Concurrently with the transfer of the receivables to the issuing entity pursuant to the sale agreement, the owner trustee will cause the certificates to be executed on behalf of the issuing entity, authenticated and delivered to the depositor. The Bank of New York Mellon will be the certificate paying agent under the trust agreement and will make distributions to certificateholders.

The depositor will cause the servicer to pay compensation from time to time to the owner trustee, the certificate paying agent and the Delaware trustee for their services pursuant to fee letters. Furthermore, the servicer will reimburse the owner trustee, the Delaware trustee and the certificate paying agent for all reasonable expenses, disbursements and advances that they incur, except any such expense as may be attributable to their willful misconduct, negligence (other than an error in judgment) or bad faith.

The Accounts

The issuing entity will cause the servicer to establish the following non-interest bearing bank accounts, which initially will be maintained at and in the name of the indenture trustee on behalf of the noteholders:



75

Table of Contents

the collection account;




the principal distribution account; and




the reserve account.

If the depositor or any of its affiliates is not the sole certificateholder, the issuing entity will also cause the servicer to establish a certificate distribution account for the benefit of the certificateholders. Neither the indenture trustee nor any noteholder will have any interest or claim to the certificate distribution account or funds on deposit in that account. The certificate distribution account will not be a trust account.

The Collection Account

Under the servicing agreement, so long as Fifth Third Bank is acting as servicer, the servicer will be required to deposit an amount equal to all Collections into the collection account within the time after its receipt thereof, not to exceed two business days, necessary to clear any payment received. Pending deposit in the collection account, Collections may be used by the servicer at its own risk and are not required to be segregated from its own funds.

On the business day prior to each payment date, the paying agent at the direction of the servicer will withdraw from the reserve account and deposit into the collection account any amount of funds required under the indenture to be withdrawn from the reserve account and distributed on that payment date.

Principal Distribution Account

On each payment date, the indenture trustee will make payments from amounts deposited in the principal distribution account on that date as directed by the servicer in the order of priority described above under “The Notes—Payments of Principal.”

Reserve Account

The servicer will establish the reserve account in the name of the indenture trustee for the benefit of the noteholders. To the extent that Collections on the receivables and amounts on deposit in the reserve account are insufficient to pay interest and principal of the notes, the noteholders will have no recourse to the assets of the certificateholders, the depositor, FTH LLC, the originator or the servicer as a source of payment.

The reserve account will be funded by a deposit from proceeds of the offering of the notes on the Closing Date in an amount equal to at least 0.25% of the initial Net Pool Balance of the receivables.

As of any payment date, the amount of funds actually on deposit in the reserve account may, in certain circumstances, be less than the “Specified Reserve Account Balance.” On each payment date, the issuing entity will, to the extent available, deposit the amount, if any, necessary to cause the amount of funds on deposit in the reserve account to equal the Specified Reserve Account Balance to the extent set forth below under “—Priority of Payments.”

The amount of funds on deposit in the reserve account may decrease on each payment date by withdrawals of funds to cover shortfalls in the amounts required to be distributed pursuant to clauses first through third under “—Priority of Payments” below.

If the amount of funds (other than net investment earnings) on deposit in the reserve account on any payment date, after giving effect to all deposits and withdrawals from the reserve account on that payment date, is greater than the Specified Reserve Account Balance for that payment date, then such amounts in excess of the Specified Reserve Account Balance shall constitute Available Funds and the servicer will instruct the indenture trustee to distribute the amount of the excess as specified under “—Priority of Payments” below.

In addition, if the sum of the amounts in the reserve account and the remaining Available Funds after the payments under clauses first through third and fifth under “—Priority of Payments” below on any payment date



76

Table of Contents
would be sufficient to pay in full the aggregate unpaid principal amount of all of the outstanding notes, then the indenture trustee will, if instructed by the servicer, withdraw such amounts from the reserve account to the extent necessary to pay all outstanding notes in full.

Permitted Investments

Amounts on deposit in the collection account and the reserve account may be invested by the indenture trustee at the direction of the servicer in one or more permitted investments that meet certain established investment criteria. Absent such direction, amounts on deposit in the collection account and the reserve account will remain uninvested. All such permitted investments are limited to obligations, instruments or securities that mature or can be liquidated on the next payment date. The servicer will be entitled to receive any investment earnings (net of investment losses and expenses) from such permitted investments.

Overcollateralization

Overcollateralization is the amount by which the Net Pool Balance exceeds the outstanding principal amount of the notes. Overcollateralization means that there will be additional assets generating collections that will be available to cover credit losses on the receivables. The amount of overcollateralization as a percentage of the Net Pool Balance as of the cut-off date is expected to build from approximately 4.45% at the Closing Date to a target overcollateralization level of 5.05% of the Net Pool Balance as of the cut-off date.

Priority of Payments

On each payment date, except after acceleration of the notes after an event of default under the indenture, the paying agent will make the following deposits and distributions (in accordance with the servicer’s instructions), to the extent of the Available Funds then on deposit in the collection account with respect to the collection period preceding such payment date and funds, if any, deposited into the collection account from the reserve account, in the following order of priority:

first, to the servicer, the servicing fee and all prior unpaid servicing fees with respect to prior periods;

second, to the noteholders, pro rata based on the amount of interest owed to each class of notes, the accrued note interest, which is the sum of (a) the aggregate amount of interest due and accrued for the related interest period on each class of the notes at their respective interest rates on the respective note balances as of the previous payment date (after giving effect to all payments of principal to the noteholders on prior payment dates); and (b) the excess, if any, of the amount of interest due and payable to the noteholders on prior payment dates over the amounts actually paid to the noteholders on those prior payment dates, plus interest on any such shortfall at the respective interest rates on each class of the notes (to the extent permitted by law);

third, to the principal distribution account for distribution pursuant to “The Notes—Payments of Principal” above, the First Allocation of Principal, if any;

fourth, to the Reserve Account, any additional amount required to reinstate the amount on deposit in the reserve account up to the Specified Reserve Account Balance;

fifth, to the Principal Distribution Account for distribution pursuant to “The Notes—Payments of Principal” above, the Regular Principal Distribution Amount, if any;

sixth, to the owner trustee (including as certificate paying agent), the Delaware trustee, the indenture trustee and the asset representations reviewer, accrued and unpaid fees, expenses and indemnity payments due and owing under the applicable transaction documents, which have not been previously paid; provided, that with respect to the asset representations reviewer, such fees, expenses and indemnity payments must have been due and unpaid for more than 60 days; and

seventh, to the designated certificateholder account, any funds remaining.



77

Table of Contents
“First Allocation of Principal” means, for any payment date, an amount not less than zero equal to the excess, if any, of (a) the note balance of the notes as of such payment date (before giving effect to any principal payments made on the notes on such payment date) over (b) the Net Pool Balance as of the last day of the related collection period; provided, however, that the First Allocation of Principal on and after the final scheduled payment date for any class of notes will not be less than the amount that is necessary to reduce the note balance of that class to zero (after the application of the First Allocation of Principal).

“Regular Principal Distribution Amount” means, for any payment date, an amount not less than zero equal to the excess of (a) the excess of (A) the note balance of the notes as of such payment date (before giving effect to any principal payments made on the notes on such payment date) over (B) the Net Pool Balance as of the end of the related collection period minus the Target Overcollateralization Amount over (b) the First Allocation of Principal for that payment date; provided, however, that the Regular Principal Distribution Amount on and after the final scheduled payment date for any class of notes will not be less than the amount that is necessary to reduce the note balance of that class to zero (after the application of the First Allocation of Principal).

“Target Overcollateralization Amount” means, for any payment date, 5.05% of the Net Pool Balance as of the cut-off date.

Upon and after any distribution to the designated certificateholder account of any amounts, the noteholders will not have any rights in, or claims to, those amounts. Amounts on deposit in the certificate distribution account, if any, will be distributed on each payment date by the certificate paying agent to the certificateholders, ratably, based on the Percentage Interest of each certificateholder.

If the sum of the amounts required to be distributed pursuant to clauses first through third above exceeds the sum of Available Funds for that payment date, the indenture trustee will withdraw from the reserve account and deposit in the collection account for distribution in accordance with the payment waterfall an amount equal to the lesser of the funds in the reserve account (other than net investment earnings) and the shortfall.

Excess Interest

Because more interest is expected to be paid by the obligors in respect of the receivables than is necessary to pay the related servicing fee and interest on the notes each month, there is expected to be excess interest. Any excess interest will be applied on each payment date as an additional source of Available Funds as described under “—Priority of Payments” above, to make principal payments on the notes outstanding to the extent necessary to reach the Target Overcollateralization Amount. Generally, excess interest provides a source of funds to absorb any losses on the receivables and reduce the likelihood of losses on the notes.

Fees and Expenses

The fees and expenses paid or payable from Available Funds are set forth in the table below. Those fees and expenses are paid on each payment date as described above under “—Priority of Payments.”



Recipient


Fees and Expenses Payable*

Servicer

The servicing fee as described below under “—Servicing Compensation and Expenses”
Administrator

$12,000 per annum, which is solely an expense of the servicer and will not be paid from Available Funds.
Indenture Trustee

$4,000 per annum plus reasonable expenses and indemnification payments**
Owner Trustee

$2,500 per annum plus reasonable expenses and indemnification payments**
Delaware Trustee

$2,500 per annum plus reasonable expenses and indemnification payments**
Asset Representations Reviewer

$5,000 per annum plus expenses and indemnification payments**
Asset Representations Reviewer

(Review Fees)

$200 per Subject Receivable.




*
The fees and expenses described above do not change upon an event of default although actual expenses incurred may be higher after an event of default.

**
The servicer has the primary obligation to pay the fees and expenses of the indenture trustee, the owner trustee, the Delaware trustee and the asset representations reviewer, including Review Expenses.



78

Table of Contents
The sponsor will pay the hired agencies fees, which include initial fees in an amount equal to approximately $545,000 and annual surveillance fees in an amount equal to approximately $30,000. None of these fees will be paid out of the Collections on the receivables. None of the hired agencies retain any risk of loss with respect to the receivables.

Risk Retention

At closing, the sponsor and the servicer do not plan to retain any risk of loss with respect to the receivables other than to the extent that any purchase or repurchase obligations resulting from certain breaches of representations and warranties can be deemed to be a risk of loss. However, the sponsor intends to satisfy the risk retention requirement in connection with the FDIC Rule by the retention by the depositor, its wholly-owned affiliate, of an “eligible vertical interest” in the form of at least 5% of the initial principal amount of each class of notes and the certificates issued by the issuing entity on the closing date. Additionally, so long as the depositor holds the certificates, the sponsor will indirectly be exposed to a risk of loss with respect to the receivables through its indirect ownership interest in the depositor.

Indemnification of the Indenture Trustee, the Owner Trustee and the Delaware Trustee

Under the indenture, the issuing entity will agree to cause the servicer to indemnify the indenture trustee for, and hold it harmless against, any loss, liability or expense (including any reasonable attorneys’ fees and expenses) incurred by it in connection with the administration of the trust thereunder or the performance of its duties as indenture trustee including in connection with any action, claim or suit to enforce the indenture trustee’s right to indemnification. However, the indenture trustee will not be indemnified by the administrator, the issuing entity, the depositor, FTH LLC, Fifth Third Bank or the servicer against any loss, liability or expense incurred by it or arising from (i) the indenture trustee’s own willful misconduct, negligence or bad faith, (ii) the inaccuracy of certain of the indenture trustee’s representations or warranties or (iii) taxes, fees or other charges on, based on or measured by, any fees, commissions or compensation received by the indenture trustee. To the extent that any such indemnities are not otherwise satisfied, they will be paid from Available Funds as described above under “—Priority of Payments.”

Under the trust agreement, the depositor will cause the servicer to indemnify the owner trustee, the Delaware trustee and the certificate paying agent from and against any and all loss, liability, expense, tax, penalty, action, suit, cost or claim (including reasonable legal fees and expenses (including, without limitation, any reasonable legal fees, costs and expenses incurred in connection with any enforcement (including any action, claim or suit brought) by the owner trustee, the certificate paying agent or the Delaware trustee of any indemnification or other obligation of the depositor)) of any kind and nature whatsoever which may at any time be imposed on, incurred by or asserted against the owner trustee, the certificate paying agent or the Delaware trustee in any way relating to or arising out of the trust agreement, the other transaction documents, the issuing entity property, administration of the issuing entity property or the action or inaction of the owner trustee, the certificate paying agent or the Delaware trustee. However, neither the depositor nor the servicer will be liable for or required to indemnify the owner trustee, the certificate paying agent or the Delaware trustee from and against any of the foregoing expenses arising or resulting from (i) the owner trustee’s, the certificate paying agent’s and the Delaware trustee’s own willful misconduct, bad faith or negligence, (ii) the inaccuracy of certain of the owner trustee’s and the Delaware trustee’s representations and warranties, (iii) liabilities arising from the failure of the owner trustee or the Delaware trustee to perform certain obligations or (iv) taxes, fees or other charges on, based on or measured by, any fees, commissions or compensation received by the owner trustee or the Delaware trustee. To the extent that any such indemnities are not otherwise satisfied, they will be paid from Available Funds as described above under “—Priority of Payments.”

Optional Redemption

The servicer (or its designee) may exercise its optional clean-up call to purchase the assets of the issuing entity (other than the reserve account) on any payment date if both of the following conditions are satisfied: (a) as of the last day of the related collection period the then-outstanding Net Pool Balance has declined to 10% or less of the Net Pool Balance as of the cut-off date and (b) the sum of the purchase price for the assets of the issuing entity (other than the reserve account) and Available Funds for such payment date would be sufficient to pay (x) the amounts required to be paid under clauses first through third and fifth in accordance with “—Priority of Payments”



79

Table of Contents
above (assuming that such payment date is not a redemption date) and (y) the outstanding note balance (after giving effect to the payments described in the preceding clause (x)), then the outstanding notes will be redeemed in whole, but not in part, on the payment date on which the servicer exercises this option. The purchase price will be equal to the Net Pool Balance plus accrued and unpaid interest in the receivables.

It is expected that, at the time this clean-up call option becomes available to the servicer, only the Class A-4 notes will be outstanding.

Additionally, each of the notes is subject to redemption in whole, but not in part, on any payment date on which the sum of the amounts in the reserve account and the remaining available funds after the payments under clauses first through third and fifth set forth in “—Priority of Payments” above would be sufficient to pay in full the aggregate unpaid note balance of all of the outstanding notes as determined by the servicer. On the business day prior to such payment date, the indenture trustee upon written direction from the servicer shall transfer all amounts on deposit in the reserve account (other than interest and investment income (net of losses and expenses)) to the collection account and on such payment date the outstanding notes shall be redeemed in whole, but not in part.

Notice of redemption under the indenture is required to be given by the indenture trustee not later than ten (10) days prior to the applicable redemption date to each holder of notes. All notices of redemption will state: (i) the redemption date; (ii) the redemption price; (iii) that the Record Date otherwise applicable to that redemption date is not applicable and that payments will be made only upon presentation and surrender of those notes, and the place where those notes are to be surrendered for payment of the redemption price; (iv) that interest on the notes will cease to accrue on the redemption date; and (v) the CUSIP numbers (if applicable) for the notes.

Collection of Receivable Payments

The servicer will make reasonable efforts to collect all payments called for under the terms and provisions of the receivables as and when the same become due in accordance with its customary servicing practices. Generally, the servicer may grant extensions, rebates, deferrals, amendments, modifications or adjustments with respect to any receivable in accordance with its customary servicing practices and the servicing agreement, subject to any limitations set forth in the servicing agreement; provided, however, that if the servicer (i) extends the date for final payment by the obligor of any receivable beyond the final scheduled payment date of the latest maturing class of notes or (ii) reduces the contract rate or the outstanding principal balance, in either case, other than as required by applicable law (including without limitation, the Servicemembers Civil Relief Act, as amended (the “Relief Act”)) or court order, or in certain other circumstances, it will promptly purchase such receivable; provided, however, that the servicer will not make a modification as described in this paragraph that would trigger a purchase pursuant to the servicing agreement for the sole purpose of purchasing a receivable from the issuing entity. Subject to the purchase obligation described in the proviso above, the servicer and its affiliates (each in its individual capacity) may engage in any marketing practice or promotion or any sale of any products, goods or services to obligors with respect to the receivables so long as such practices, promotions or sales are offered to obligors of comparable motor vehicle receivables serviced by the servicer for itself and others, whether or not such practices, promotions or sales might result in a decrease in the aggregate amount of payments on the receivables, prepayments or faster or slower timing of the payment of the receivables. The servicer and its affiliates (each in its individual capacity) may also sell insurance or debt cancellation products, including products which result in the cancellation of some or all of the amount of a receivable upon the death or disability of the related obligor or any casualty with respect to the financed vehicle. The servicer may in its discretion waive any late payment charge or any other fees that may be collected in the ordinary course of servicing a receivable. Additionally, the servicer may refinance any receivable and deposit the full outstanding principal balance of such receivable into the collection account. The receivable created by such refinancing shall not be property of the issuing entity.

Upon discovery of a breach of certain other servicing covenants set forth in the servicing agreement which materially and adversely affects the interests of the issuing entity or the noteholders, the party discovering that breach will give prompt written notice of that breach to the other parties to the servicing agreement; provided, that delivery of the monthly servicer’s certificate that describes the breach will be deemed to constitute prompt notice by the servicer and the issuing entity of that breach; provided, further, that the failure to give that notice will not affect any obligation of the servicer under the servicing agreement. If the breach materially and adversely affects the interests of the issuing entity or the noteholders, then the servicer will either (a) correct or cure that breach or (b) purchase that receivable from the issuing entity, in either case on or before the payment date following the end of



80

Table of Contents
the collection period which includes the 60th day (or if the servicer elects, an earlier date) after the date the servicer became aware or was notified of that breach. Such breach will be deemed not to materially and adversely affect such receivable if it does not affect the ability of the issuing entity to receive and retain timely payment in full on such receivable. Any such purchase by the servicer will be at a purchase price equal to the outstanding principal balance of that receivable plus unpaid accrued interest. In consideration for that purchase, the servicer will pay (or will cause to be paid) the purchase price by depositing the purchase price into the collection account on the date of purchase. The purchase obligation will constitute the sole remedy available to the issuing entity and the indenture trustee for a breach by the servicer of certain of its servicing covenants under the servicing agreement.

Unless required by law or court order, the servicer will not release the financed vehicle securing each receivable from the security interest granted by such receivable in whole or in part except in the event of payment in full by or on behalf of the obligor thereunder or payment in full less a deficiency which the servicer would not attempt to collect in accordance with its customary servicing practices or in connection with repossession or except as may be required by an insurer in order to receive proceeds from any insurance policy covering such financed vehicle.

Realization Upon Defaulted Receivables

On behalf of the issuing entity, the servicer will use commercially reasonable efforts, consistent with its customary servicing practices, to repossess or otherwise convert the ownership of and liquidate the financed vehicle securing any receivable as to which the servicer has determined eventual payment in full is unlikely unless it determines in its sole discretion that repossession will not increase the liquidation proceeds by an amount greater than the expense of such repossession or that the proceeds ultimately recoverable with respect to such receivable would be increased by forbearance. The servicer will follow such customary servicing practices as it deems necessary or advisable, which may include reasonable efforts to realize upon any recourse to any dealer and selling the financed vehicle at public or private sale. The foregoing will be subject to the provision that, in any case in which the financed vehicle has suffered damage, the servicer will not be required to expend funds in connection with the repair or the repossession of such financed vehicle unless it determines in its sole discretion that such repair and/or repossession will increase the liquidation proceeds by an amount greater than the amount of such expenses. The servicer may from time to time (but is not required to) sell any deficiency balance in accordance with its customary servicing practices; provided, however, that (i) such sale must be made at a price equal to the fair market value of such deficiency balance in immediately available funds and (ii) such sale must be without recourse, representation or warranty by the issuing entity or the servicer (other than any representation or warranty regarding the absence of liens, that the issuing entity has good title to the deficiency balance, or similar representation or warranty). Net proceeds of any such sale allocable to the receivable will constitute liquidation proceeds, and the sole right of the issuing entity and the indenture trustee, if any, with respect to any such sold receivables will be to receive such liquidation proceeds. Upon such sale, the servicer will mark its computer records indicating that any such receivable sold no longer belongs to the issuing entity. The servicer is authorized to take any and all actions necessary or appropriate on behalf of the issuing entity to evidence the sale of the receivable free from any lien or other interest of the issuing entity or the indenture trustee.

Servicing Compensation and Expenses

The servicer will be entitled to receive a servicing fee for each collection period. The “servicing fee” for any payment date will be an amount equal to the product of (1) one-twelfth (or, in the case of the first payment date, a fraction, the numerator of which is the number of days from but not including the cut-off date to and including the last day of the first collection period and the denominator of which is 360), (2) 1.00% per annum and (3) the Net Pool Balance of the receivables as of the first day of the related collection period (or as of the cut-off date, in the case of the first payment date). As additional compensation, the servicer will be entitled to retain all Supplemental Servicing Fees and to receive all investment earnings (net of investment losses and expenses) from the investment of funds on deposit in the collection account and the reserve account. The servicing fee, together with any portion of the servicing fee that remains unpaid from prior payment dates, will be payable on each payment date from funds on deposit in the collection account with respect to the collection period preceding that payment date, including funds, if any, deposited into the collection account from the reserve account. The servicer will pay all expenses (apart from certain expenses incurred in connection with liquidating a financed vehicle related to a receivable, such as auction, painting, repair or refurbishment in respect of that financed vehicle) incurred by it in connection with its servicing activities including any fees and disbursements of sub-servicers to whom it has delegated servicing responsibilities, independent accountants, taxes imposed on the servicer and expenses incurred in connection with distributions and



81

Table of Contents
reports to noteholders and the certificateholder. The servicer will have no responsibility, however, to pay any losses with respect to the receivables.

Servicer Replacement Events

The following events constitute “servicer replacement events” under the servicing agreement:




any failure by the servicer to deliver or cause to be delivered to the indenture trustee or the owner trustee for deposit into the collection account any payment required to be so delivered by the servicer under the terms of the servicing agreement, which failure continues unremedied for a period of five (5) business days after discovery thereof by an officer of the servicer or receipt by an officer of the servicer of written notice thereof from the indenture trustee (to the extent a responsible officer of the indenture trustee has received written notice or has actual knowledge thereof) or the noteholders evidencing at least a majority of the note balance (or, if no notes are outstanding, by the Majority Certificateholders);




any failure by the servicer to duly observe or perform in any material respect any other covenants or agreements, as the case may be, of the servicer set forth in the servicing agreement (other than a covenant or agreement pursuant to the FDIC Rule Covenant), which failure (i) materially and adversely affects the rights of the issuing entity or the noteholders or the certificateholders and (ii) continues unremedied for a period of ninety (90) days after discovery thereof by an officer of the servicer or receipt by the servicer of written notice thereof from the indenture trustee (to the extent a responsible officer of the indenture trustee has received written notice or has actual knowledge thereof) or the noteholders evidencing at least a majority of the note balance (or, if no notes are outstanding, by the Majority Certificateholders) (it being understood that no servicer replacement event will result from a breach by the servicer of any covenant for which the repurchase of the affected receivable is specified as the sole remedy pursuant to the servicing agreement);




any representation or warranty of the servicer made in any transaction document to which the servicer is a party or by which it is bound or any certificate delivered pursuant to the servicing agreement (other than a covenant or agreement pursuant to the FDIC Rule Covenant) proves to have been incorrect in any material respect when made, which failure materially and adversely affects the rights of the issuing entity, the noteholders or certificateholders, and which failure continues unremedied for ninety (90) days after discovery thereof by an officer of the servicer or receipt by an officer of the servicer of written notice thereof from the indenture trustee (to the extent a responsible officer of the indenture trustee has received written notice or has actual knowledge thereof) or the noteholders evidencing at least a majority of the note balance (or, if no notes are outstanding, by the Majority Certificateholders); and




the occurrence of certain events (which, if involuntary, remain unstayed for more than 90 days) of bankruptcy, insolvency, receivership or liquidation of the servicer.

Notwithstanding the foregoing, (A) if any delay or failure of performance referred to in the first bullet above shall have been caused by force majeure or other similar occurrence, the five (5) business day grace period will be extended for an additional sixty (60) calendar days and (B) if any delay or failure of performance referred to in the second or third bullet above was caused by force majeure or other similar occurrence, the ninety (90) day grace period referred to in the second and third bullet above will be extended for an additional sixty (60) calendar days.

The existence or occurrence of any “material instance of noncompliance” (within the meaning of Item 1122 of Regulation AB) shall not create any presumption that any event under the first three bullet points above has occurred.

Resignation, Removal or Replacement of the Servicer

If a servicer replacement event is unremedied, the indenture trustee acting at the direction of noteholders holding 66 2/3% of the outstanding principal amount of the notes (or, if no notes are outstanding, the owner trustee



82

Table of Contents
acting at the direction of the Majority Certificateholders), will terminate all of the servicing rights and obligations of the servicer with respect to the receivables. The indenture trustee or owner trustee, as applicable, will effect that termination by delivering notice to the servicer, the owner trustee, the issuing entity, the Delaware trustee, the administrator, the certificateholders and the noteholders. Any successor servicer must be an established institution having a net worth of not less than $100,000,000 and whose regular business includes the servicing of comparable motor vehicle receivables having an aggregate outstanding principal amount of not less than $50,000,000.

The servicer may not resign from its servicing obligations and duties except upon determination that the performance of its duties under the servicing agreement is no longer permissible under applicable law. No servicer resignation will become effective until a successor servicer has assumed the servicer’s obligations and duties and provided in writing the information reasonably requested by the depositor to comply with its reporting obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) with respect to a replacement servicer. The servicer may, at any time without notice or consent, delegate (a) any or all of its duties (including, without limitation, its duties as custodian) under the transfer agreements to any of its affiliates or (b) specific duties (including, without limitation, its duties as custodian) to sub-contractors who are in the business of performing similar duties. However, no delegation to affiliates or sub-contractors will release the servicer of its responsibility with respect to its duties, and the servicer will remain obligated and liable to the issuing entity and the indenture trustee for those duties as if the servicer alone were performing those duties.

Upon the servicer’s receipt of notice of termination, the predecessor servicer will continue to perform its functions as servicer only until the date specified in that termination notice or, if no date is specified therein, until receipt of that notice. If a successor servicer has not been appointed at the time when the predecessor servicer ceases to act as servicer of the receivables, the indenture trustee will automatically be appointed the successor servicer. However, if the indenture trustee is legally unable or is unwilling to act as servicer, the indenture trustee will appoint (or petition a court to appoint) a successor servicer.

Upon appointment of a successor servicer, the successor servicer will assume all of the responsibilities, duties and liabilities of the servicer with respect to the receivables (other than the obligations of the predecessor servicer that survive its termination as servicer, including indemnification obligations against certain events arising before its replacement). In a bankruptcy or similar proceeding for the servicer, a bankruptcy trustee or similar official may have the power to prevent the indenture trustee, the owner trustee or the noteholders from effecting a transfer of servicing to a successor servicer.

All reasonable costs and expenses incurred in connection with transferring the receivable files to the successor servicer and all other reasonable costs and expenses incurred in connection with the transfer to the successor servicer related to the performance by the servicer under the servicing agreement will be paid by the predecessor servicer upon presentation of reasonable documentation of such costs and expenses. In connection with the appointment of the successor servicer, the issuing entity may make such arrangement for the compensation of the successor servicer out of Available Funds as it and such successor servicer will agree; provided, however, that no such compensation will be in excess of the amount paid to the predecessor servicer under the servicing agreement.

Waiver of Past Servicer Replacement Events

The noteholders of a majority of the note balance (or, if no notes are outstanding, the Majority Certificateholders) may waive any servicer replacement event.

Evidence as to Compliance

The servicing agreement provides that on or before March 30 of each calendar year a report regarding the servicer’s assessment of compliance during the preceding calendar year with all applicable servicing criteria set forth in relevant SEC regulations for asset-backed securities transactions, including disclosure of any material instance of non-compliance identified by the servicer must be filed.

In addition, except as described below, each party that participates in the servicing function with respect to more than 5% of the receivables and other assets comprising the issuing entity will deliver annually to the issuing



83

Table of Contents
entity, a report (an “Assessment of Compliance”) that assesses compliance by that party with the servicing criteria set forth in Item 1122(d) of Regulation AB (17 C.F.R. 229.1122) and that contains the following:




a statement of the party’s responsibility for assessing compliance with the servicing criteria applicable to it;




a statement that the party used the criteria in Item 1122(d) of Regulation AB to assess compliance with the applicable servicing criteria;




the party’s Assessment of Compliance with the applicable servicing criteria during and as of the end of the prior calendar year, setting forth any material instance of noncompliance identified by the party; and




a statement that a registered public accounting firm has issued an Attestation Report on the party’s Assessment of Compliance with the applicable servicing criteria during and as of the end of the prior calendar year.

The servicing agreement will also provide that the servicer will deliver annually to the issuing entity and indenture trustee on or before March 30 of each calendar year, an officer’s certificate stating that (i) a review of the servicer’s activities during the preceding calendar year and of performance under the servicing agreement has been made under the supervision of the officer, and (ii) to the best of the officer’s knowledge, based on the review, the servicer has fulfilled all its obligations under the servicing agreement in all material respects throughout the year, or, if there has been a failure to fulfill any of these obligations in any material respect, specifying each failure known to the officer and the nature and status of the failure.

Further, except as described below, each party which is required to deliver an Assessment of Compliance will also be required to simultaneously deliver a report (an “Attestation Report”) of a registered public accounting firm, prepared in accordance with the standards for attestation engagements issued or adopted by the Public Company Accounting Oversight Board, that expresses an opinion, or states that an opinion cannot be expressed, concerning the party’s assessment of compliance with the applicable servicing criteria.

An annual report on Form 10-K will be filed with the SEC within 90 days after the end of each fiscal year. The annual report will contain the statements, certificates and reports discussed above.

The servicer will also give the issuing entity and the indenture trustee notice of any servicer replacement events under the servicing agreement.

Annual Compliance Statement

The issuing entity will be required to deliver annually to the indenture trustee a written officer’s statement as to the fulfillment of its obligations under the indenture which, among other things, will state that to the best of the officer’s knowledge, the issuing entity has complied with all conditions and covenants under the indenture throughout that year in all material respects or, if there has been a default in the compliance of any condition or covenant, specifying each default known to that officer and the nature and status of that default.

Amendment Provisions

The receivables sale agreement generally may be amended by the parties thereto without the consent of the noteholders or any other person; the purchase agreement generally may be amended by the parties thereto without the consent of the noteholders or any other person; the sale agreement generally may be amended by the depositor without the consent of the noteholders or any other person; the trust agreement generally may be amended by the parties thereto without the consent of the noteholders, any certificateholder or any other person; the servicing agreement generally may be amended by the servicer without the consent of the noteholders or any other person; and the administration agreement generally may be amended by the administrator without the consent of the noteholders or any other person, in each case, if one of the following requirements is met, subject to the second following paragraph of this section:



84

Table of Contents
(i) an opinion of counsel or officer’s certificate of FTH LLC, the depositor, the servicer or the administrator, as applicable, to the effect that such amendment will not materially and adversely affect the interests of the noteholders is delivered to the indenture trustee; or

(ii) the Rating Agency Condition is satisfied with respect to such amendment and the indenture trustee is so notified in writing.

Any amendment to the trust agreement, the administration agreement, the servicing agreement and the transfer agreements also may be made by the parties thereto with the consent of the noteholders holding not less than a majority of the note balance (voting as a single class) for the purpose of adding any provisions to or changing in any manner or eliminating any provision of the relevant agreement or of modifying in any manner the rights of the noteholders or the certificateholders.

Additionally, notwithstanding the first two paragraphs of this “—Amendment Provisions” section, the trust agreement, the administration agreement, the asset representations review agreement, the transfer agreements and the servicing agreement may only be amended by the parties thereto if (i) the Majority Certificateholders consent to such amendment or (ii) such amendment will not, as evidenced by an officer’s certificate of the appropriate party or an opinion of counsel delivered to the indenture trustee, the Delaware trustee and/or the owner trustee, as applicable, materially and adversely affect the interests of the certificateholders.

The asset representations review agreement may be amended by the parties thereto without the consent of the depositor, the indenture trustee, the owner trustee, the Delaware trustee, the noteholders, the certificateholders or any other person, if one of the following requirements is met:

(i) an opinion of counsel or an officer’s certificate of the servicer to the effect that such amendment will not materially and adversely affect the interests of the noteholders is delivered to the indenture trustee; or

(ii) the Rating Agency Condition is satisfied with respect to such amendment.

Additionally, any amendment to the asset representations review agreement also may be made by the parties thereto if the noteholders holding not less than a majority of the outstanding principal amount of the notes or the Majority Certificateholders consent to such amendment.

THE INDENTURE

The following summary describes the material terms of the indenture pursuant to which the notes will be issued. A form of indenture has been filed as an exhibit to the registration statement of which this prospectus is a part. We will file the actual indenture concurrently with or prior to the time we file this prospectus with the SEC. This summary does not purport to be complete and is subject to, and qualified in its entirety by reference to, all the provisions of the indenture and this prospectus.

Indenture Trustee’s Annual Report

If required by the Trust Indenture Act of 1939, as amended, the indenture trustee will be required to mail each year to all noteholders a brief report setting forth the following:




its eligibility and qualification to continue as indenture trustee under the indenture;




information regarding a conflicting interest of the indenture trustee;




any change to the amount, interest rate and maturity date of any indebtedness owing by the issuing entity to the indenture trustee in its individual capacity;




any change to the property and funds physically held by the indenture trustee in its capacity as indenture trustee;



85

Table of Contents

any release, or release and substitution, of property subject to the lien of the indenture that has not been previously reported;




any additional issue of notes by the issuing entity that has not been previously reported; and




any action taken by it that materially affects the notes or the issuing entity property and that has not been previously reported.

Material Covenants

The indenture will provide that the issuing entity will not, among other things:




except as expressly permitted by the transaction documents, sell, transfer, exchange or otherwise dispose of any of the assets of the issuing entity;




claim any credit on or make any deduction from the principal and interest payable in respect of the notes (other than amounts withheld under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), or applicable state law) or assert any claim against any present or former holder of the notes because of the payment of taxes levied or assessed upon any part of the issuing entity property;




dissolve or liquidate in whole or in part;




merge or consolidate with, or transfer substantially all of its assets to, any other person;




permit the validity or effectiveness of the indenture to be impaired or permit any person to be released from any covenants or obligations with respect to the notes under the indenture except as may be expressly permitted thereby;




permit any lien, charge, excise, claim, security interest, mortgage or other encumbrance (except certain permitted encumbrances) to be created on or extend to or otherwise arise upon or burden the assets of the issuing entity or any part thereof, or any interest therein or the proceeds thereof; or




incur, assume or guarantee any indebtedness other than indebtedness incurred in accordance with the transaction documents.

Events of Default

The occurrence of any one of the following events will be an “event of default” under the indenture:




a default in the payment of any interest on any note when the same becomes due and payable, and that default continues for a period of five business days or more;




a default in the payment of the principal of any note at the related final scheduled payment date or the redemption date;




any failure by the issuing entity to duly observe or perform any of its covenants or agreements in the indenture (other than (i) a covenant or agreement, a default in the observance or performance of which is elsewhere specifically addressed in the indenture or (ii) a covenant or agreement pursuant to the FDIC Rule Covenant), which failure materially and adversely affects the interests of the noteholders, and which failure continues unremedied for ninety (90) days after written notice is given to the issuing entity by the indenture trustee (to the extent a responsible officer of the indenture trustee has received written notice or has actual knowledge thereof) or noteholders evidencing at least a majority of the aggregate outstanding principal amount of the notes;




any representation or warranty of the issuing entity made in the indenture proves to have been incorrect in any material respect when made, which failure materially and adversely affects the interests of the



86

Table of Contents

noteholders, and which failure continues unremedied for ninety (90) days after written notice is given to the issuing entity by the indenture trustee (to the extent a responsible officer of the indenture trustee has received written notice or has actual knowledge thereof) or noteholders evidencing at least a majority of the aggregate outstanding principal amount of the notes; or




the occurrence of certain events (which, if involuntary, remain unstayed for a period of ninety (90) consecutive days) of bankruptcy, insolvency, receivership or liquidation of the issuing entity.

Notwithstanding the foregoing, a delay in or failure of performance referred to under the first four bullet points above for a period of one hundred twenty (120) days will not constitute an event of default if that delay or failure was caused by force majeure or other similar occurrence.

The amount of principal required to be paid to noteholders under the indenture generally will be limited to amounts available to make such payments in accordance with the priority of payments. Thus, the failure to pay principal on a class of notes due to a lack of amounts available to make such payments will not result in the occurrence of an event of default until the final scheduled payment date for that class of notes.

The failure to pay principal of a class of notes will not result in the occurrence of an event of default under the indenture until the final scheduled payment date for that class of notes or the redemption date.

Rights Upon Event of Default

Upon the occurrence and continuation of any event of default (other than an event of default resulting from an event of bankruptcy, insolvency, receivership or liquidation of the issuing entity), the indenture trustee will, at the direction of the holders of a majority of the outstanding principal amount of the notes, declare the notes to be immediately due and payable. Upon the occurrence of an event of default resulting from an event of bankruptcy, insolvency, receivership or liquidation of the issuing entity, the notes will automatically be accelerated, and all interest on and principal of the notes will be due and payable without any declaration or other act by the indenture trustee or the noteholders.

If an event of default is unremedied, the indenture trustee may institute proceedings to collect amounts due or foreclose on the issuing entity property, exercise remedies as a secured party, elect to maintain the receivables and other issuing entity property and continue to apply the proceeds from the receivables and other issuing entity property as if there had been no declaration of acceleration or sell the receivables and the other issuing entity property. Upon the occurrence of an event of default resulting in acceleration of the notes, the indenture trustee may sell the receivables or may elect to have the issuing entity maintain possession of the receivables and apply Collections as received. However, the indenture trustee is prohibited from selling the receivables following an event of default and acceleration of the notes unless:




the holders of 100% of the aggregate outstanding principal amount of the notes consent to a sale;




the proceeds of the sale are sufficient to pay in full the principal of and the accrued interest on all outstanding notes; or




the event of default relates to the failure to pay interest or principal when due (a “payment default”), the indenture trustee determines that the Collections on the receivables would not be sufficient on an ongoing basis to make all payments on the notes as those payments would have become due if those obligations had not been declared due and payable, and the indenture trustee obtains the consent of the holders of 66 2/3% of the outstanding principal amount of the notes.

In addition, if the event of default does not relate to a payment default or insolvency of the issuing entity, the indenture trustee is prohibited from selling the receivables and the other issuing entity property unless the holders of all outstanding notes consent to a sale or the proceeds of a sale are sufficient to pay in full the principal of and the accrued interest on the outstanding notes.

If an event of default occurs and is continuing, the indenture trustee will be under no obligation to exercise any of the rights or powers under the indenture at the request or direction of any of the noteholders, unless the



87

Table of Contents
indenture trustee believes in its sole discretion that the noteholders will offer to reasonably secure or indemnify the indenture trustee against the reasonable costs, expenses, advances and liabilities which might be incurred by it, its agents and its counsel in complying with such request. Subject to the provisions for indemnification and certain limitations contained in the indenture, the holders of not less than a majority of the aggregate outstanding principal amount of the notes will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the indenture trustee, and the holders of not less than a majority of the aggregate outstanding principal amount of the notes may, in certain cases, waive any event of default, except a default in payment of principal of or interest on any of the notes, a default in respect of a covenant or provision of the indenture that cannot be modified or amended without the consent of the noteholders of all of the outstanding notes or a default arising from certain events of bankruptcy, insolvency, receivership or liquidation with respect to the issuing entity.

Priority of Payments Will Change Upon Events of Default that Result in Acceleration

Following the occurrence and during the continuation of an event of default under the indenture which has resulted in an acceleration of the notes, and upon the liquidation of the receivables after any event of default, the priority of payments changes (including payments of principal on the notes). On each payment date after an event of default and acceleration of the notes, payments will be made from all funds available to the issuing entity in the following order of priority:

(1) first, to the indenture trustee, the owner trustee, the Delaware trustee, the certificate paying agent and the asset representations reviewer, any accrued and unpaid fees, indemnity payments and reasonable expenses permitted under the applicable transaction documents;

(2) second, to the servicer, the servicing fee and all unpaid servicing fees with respect to prior collection periods;

(3) third, to the noteholders, pro rata, the accrued note interest;

(4) fourth, to the Class A-1 noteholders in respect of principal thereon, until the Class A-1 notes have been paid in full;

(5) fifth, to the Class A-2-A noteholders, the Class A-2-B noteholders, the Class A-3 noteholders and the Class A-4 noteholders in respect of principal thereon, pro rata based on the aggregate outstanding principal amount of each remaining class of notes, until all classes of the notes have been paid in full; and

(6) sixth, any remaining funds to the designated certificateholder account.

Following the occurrence of any event of default under the indenture which has not resulted in an acceleration of the notes, the issuing entity will continue to pay interest and principal on the notes on each payment date in the manner set forth in this prospectus under “—Priority of Payments” above, until the notes are accelerated.

FDIC Rule Covenant

This transaction is intended to comply with the FDIC Rule. The FDIC Rule imposes a number of requirements on the issuing entity, the depositor, any other intermediate entity that may be a transferee, the sponsor and the servicer, and each such party will agree to facilitate compliance with these requirements by complying with its obligations in the FDIC Rule Covenant. See “Material Legal Aspects of the Receivables—FDIC Rule.” The indenture will contain an FDIC Rule Covenant, which will require, among other things, that:

(1) payment of principal and interest on the securitization obligations must be primarily based on the performance of the financial assets transferred to the issuing entity and, except for interest rate or currency mismatches between the financial assets and the obligations, shall not be contingent on market or credit events that are independent of such financial assets;

(2) information describing the financial assets, obligations, capital structure, compensation of the relevant parties and historical performance data must be made available to the noteholders, including (i)



88

Table of Contents
information about the obligations and securitized financial assets in compliance with Regulation AB, (ii) information about the transaction structure, performance of the obligations, priority of payments, subordination features, representations and warranties regarding the financial assets, remedies, liquidity facilities, credit enhancement, waterfall triggers or priority of payment reversal features and policies governing delinquencies, servicer advances, loss mitigation and write-offs, (iii) information with respect to the credit performance of the obligations and financial assets on an ongoing basis and (iv) the compensation paid to the originator, sponsor, servicer and any rating agency, third-party advisor and broker and changes to such amounts paid, and the extent to which the risk of loss is retained by any of them;

(3) the sponsor must retain an economic interest in a material portion (not less than 5 percent) of the credit risk of the financial assets;

(4) the obligations in the securitization cannot be predominantly sold to an affiliate (other than a wholly-owned subsidiary consolidated for accounting and capital purposes with the sponsor or to an affiliated broker-dealer who purchased such obligations with a view to promptly resell such obligations to persons or entities that are neither affiliates (other than a wholly-owned subsidiary consolidated for accounting and capital purposes with the sponsor) nor insiders of the sponsor in the ordinary course of such broker-dealers business) or insider of the sponsor;

(5) the sponsor must identify in its financial asset data bases and otherwise account for the financial assets transferred as specified by the FDIC Rule; and

(6) if the sponsor is acting as servicer, custodian or paying agent, the sponsor must not commingle collections for more than two business days. See “Material Legal Aspects of the Receivables—FDIC Rule” in this prospectus.

Each noteholder and each certificateholder, by accepting a note or certificate, as applicable, will acknowledge and agree that the purpose of the FDIC Rule Covenant is to facilitate compliance with the FDIC Rule by Fifth Third Bank, each intermediate transferee, the depositor, the sponsor, the servicer and the issuing entity, and that the provisions set forth in the FDIC Rule Covenant will have the effect and meanings that are appropriate under the FDIC Rule as such meanings change over time on the basis of evolving interpretations of the FDIC Rule.

List of Noteholders

Three or more holders of the notes or one or more holders of notes evidencing not less than 25% of the aggregate outstanding principal amount of the notes may, by request to the indenture trustee accompanied by a copy of the communication that the applicant proposes to send, obtain access to the list of all noteholders maintained by such indenture trustee for the purpose of communicating with other noteholders with respect to their rights under the indenture or under such notes.

Documents by Paying Agent to Noteholders

The paying agent, at the expense of the issuing entity, will deliver to each noteholder, not later than the latest date permitted by law, such information as may be required by law to enable such holder to prepare its federal and state income tax returns.

Satisfaction and Discharge of Indenture

The indenture will be discharged with respect to the collateral securing the notes upon the delivery to the related indenture trustee for cancellation of all the notes or, subject to specified limitations, upon deposit with the indenture trustee of funds sufficient for the payment in full of all of the notes and any other amounts due from the issuing entity under the indenture.

Modification of the Indenture

The issuing entity and the indenture trustee may, when authorized by an issuing entity order, with prior notice from the issuing entity to each hired agency, enter into supplemental indentures, without obtaining the



89

Table of Contents
consent of the noteholders or any other person, for the purpose of, among other things, adding any provisions to or changing in any manner or eliminating any of the provisions of the indenture or of modifying in any manner the rights of those noteholders; provided that (1) the issuing entity delivers to the indenture trustee an opinion of counsel or an officer’s certificate to the effect that such supplemental indenture will not materially and adversely affect the interest of any noteholder or (2) the Rating Agency Condition is satisfied with respect to such amendment and the issuing entity so notifies the indenture trustee in writing.

The issuing entity and the indenture trustee, when authorized by an issuing entity order, may also with prior notice from the issuing entity to each hired agency and with the consent of the noteholders of not less than a majority of the note balance, enter into supplemental indentures for the purpose of adding provisions to, changing in any manner or eliminating any provisions of, the indenture, or modifying in any manner the rights of the noteholders. Any such supplemental indenture that amends, modifies or supplements the rights of any noteholder in any of the following manners will require prior notice by the issuing entity to the hired agencies and the consent of the holders of 100% of the aggregate outstanding principal balance of each outstanding note affected thereby:




changes the coin or currency in which any note or any interest thereon is payable, reduces the interest rate or principal balance of any note, delays the final scheduled payment date of any note or changes the redemption price of any note;




reduces the percentage of the note balance, the consent of the holders of which is required for any supplemental indenture or the consent of the holders of which is required for any waiver of compliance with certain provisions of the indenture or of certain defaults thereunder and their consequences as provided for in the indenture;




modifies or alters the provisions of the indenture regarding the voting of notes held by the issuing entity, the depositor, the servicer or the administrator or an affiliate of any of them;




reduces the percentage of the note balance, the consent of the holders of which is required to direct the indenture trustee to direct the issuing entity to sell or liquidate the issuing entity property if the proceeds of the sale would be insufficient to pay the principal balance of and accrued but unpaid interest on the outstanding notes;




modifies any amendment provision requiring noteholder consent in any respect materially adverse to the interest of the noteholders;




permits the creation of any lien ranking prior to or on a parity with the lien of the indenture with respect to any part of the issuing entity property or, except as otherwise permitted or contemplated in the transaction documents, terminates the lien of the indenture on any property at any time or deprives the holder of any note of the security afforded by the lien of the indenture; or




impairs the right of the noteholders to institute suit for the enforcement of principal and interest payment on the notes that such noteholders own.

No amendment or supplemental indenture will be effective which affects the rights, protections or duties of the Delaware trustee, the indenture trustee or the owner trustee, as applicable, without the prior written consent of the Delaware trustee, the indenture trustee or the owner trustee, respectively.

Notwithstanding the above, if any provision of the FDIC Rule is amended, or any interpretive guidance regarding the FDIC Rule is provided by the FDIC or its staff, and the issuing entity determines that an amendment to the FDIC provisions of the indenture is necessary or desirable, then the issuing entity, the indenture trustee or the owner trustee, as applicable, will be authorized and entitled to amend the relevant provisions in accordance with such FDIC Rule amendment or guidance.

Additionally, notwithstanding the above, the indenture may only be amended by the parties thereto if (i) the Majority Certificateholders consent to such amendment or (ii) such amendment will not, as evidenced by an officer’s certificate of the appropriate party or an opinion of counsel delivered to the Delaware trustee, the indenture trustee and/or the owner trustee, as applicable, materially and adversely affect the interests of the certificateholders.



90

Table of Contents
MATERIAL LEGAL ASPECTS OF THE RECEIVABLES

Rights in the Receivables

The transfer of the receivables by the originator to FTH LLC, by FTH LLC to the depositor and by the depositor to the issuing entity, and the pledge thereof to the indenture trustee, the perfection of the security interests in the receivables and the enforcement of rights to realize on the related financed vehicles as collateral for the receivables are subject to a number of federal and state laws, including the Uniform Commercial Code and certificate of title acts as in effect in various states. The servicer and the depositor will take the actions described below to perfect the rights of the issuing entity and the indenture trustee in the receivables.

Under the servicing agreement, the servicer will be appointed by the issuing entity to act as the custodian of the receivables. The servicer, as the custodian, will have possession of the original contracts giving rise to the receivables. To the extent any of the receivables arise under or are evidenced by contracts in electronic form (such electronic contracts, together with the original contracts in tangible form, collectively “chattel paper”), the servicer, as the custodian, will have printed copies of the electronic contracts and the capability of accessing the electronic information. While neither the original contracts nor the printed copies of electronic contracts giving rise to the receivables will be marked to indicate the ownership interest thereof by the issuing entity, and the indenture trustee will not have “control” of the authoritative copy of those contracts that are in electronic form, appropriate UCC-1 financing statements reflecting the transfer and assignment of the receivables by the originator to the depositor and by the depositor to the issuing entity, and the pledge thereof to the indenture trustee will be filed to perfect that interest and give notice of the issuing entity’s ownership interest in, and the indenture trustee’s security interest in, the receivables and related chattel paper. If, through inadvertence or otherwise, any of the receivables were sold or pledged to another party who purchased (including a pledgee) the receivables in the ordinary course of its business and took possession of the original contracts in tangible form or “control” of the authoritative copy of the contracts in electronic form giving rise to the receivables, the purchaser would acquire an interest in the receivables superior to the interests of the issuing entity and the indenture trustee if the purchaser acquired the receivables for new value in good faith, in the ordinary course of the purchaser’s business and without knowledge that the purchase violates the rights of the issuing entity or the indenture trustee, which could cause investors to suffer losses on their securities.

Generally, the rights held by assignees of the receivables, including without limitation the issuing entity and the indenture trustee, will be subject to:




all the terms of the contracts related to or evidencing the receivable; and any defense or claim in recoupment arising from the transaction that gave rise to the contracts; and




any other defense or claim of the obligor against the assignor of such receivable which accrues before the obligor receives notification of the assignment.

Because none of the originator, FTH LLC, the depositor or the issuing entity is obligated to give the obligors notice of the assignment of any of the receivables, the issuing entity and the indenture trustee will be subject to defenses or claims of the obligor against the assignor even if such claims are unrelated to the receivable.

The originator typically takes physical possession of the signed original retail installment sale contracts to assure that it has priority in its rights in the receivables against the dealers and their respective creditors. Under the UCC, a purchaser of chattel paper who takes physical possession of the chattel paper may have priority over FTH LLC and its creditors in the event of FTH LLC’s bankruptcy. If a retail installment sale contract is amended and the purchaser does not or is unable to take physical possession of the signed original amendment, there is a risk that creditors of the selling dealer could have priority over the issuing entity’s rights in the contract.

Security Interests in the Financed Vehicles

Obtaining Security Interests in Financed Vehicles. In all states in which the receivables have been originated, motor vehicle retail installment sale contracts and/or installment loans such as the receivables evidence the purchase or refinancing of automobiles, light-duty trucks and/or other types of motor vehicles. The receivables also constitute personal property security agreements and include grants of security interests in the financed vehicles



91

Table of Contents
under the applicable Uniform Commercial Code. Perfection of security interests in the financed vehicles is generally governed by the motor vehicle registration laws of the state in which the financed vehicle is located. In most states, a security interest in an automobile, a light-duty truck and/or another type of motor vehicle is perfected by obtaining the certificate of title to the financed vehicle or the notation of the secured party’s lien on the vehicle’s certificate of title. However, in California and in certain other states, certificates of title and the notation of the related lien may be maintained solely in the electronic records of the applicable department of motor vehicles or the analogous state office. As a result, any reference to a certificate of title in this prospectus includes certificates of title maintained in physical form and electronic form which may also be held by third-party servicers. In some states, certificates of title maintained in physical form are held by the obligor and not the lienholder or a third-party servicer. Each transferor will warrant that it has taken all steps necessary to obtain a perfected first priority security interest with respect to all financed vehicles securing the receivables. If the originator fails, because of clerical errors or otherwise, to effect or maintain the notation of the security interest on the certificate of title relating to a financed vehicle, the issuing entity may not have a perfected first priority security interest in that financed vehicle.

If the originator did not take the steps necessary to cause its security interest to be perfected as described above until more than 30 days after the date the related obligor received possession of the financed vehicle, and the related obligor was insolvent on the date such steps were taken, the perfection of such security interest may be avoided as a preferential transfer under bankruptcy law if the obligor under the related receivable becomes the subject of a bankruptcy proceeding commenced within 90 days of the date of such perfection, in which case the originator, and subsequently, the depositor, the issuing entity and the indenture trustee would be treated as an unsecured creditor of such obligor.

Perfection of Security Interests in Financed Vehicles. The originator, either directly or indirectly, will sell the receivables and assign its security interest in each financed vehicle to the depositor. The depositor will sell the receivables and assign the security interest in each financed vehicle to the issuing entity. However, because of the administrative burden and expense of retitling, the servicer, the depositor and the issuing entity will not amend any certificate of title to identify the issuing entity as the new secured party on the certificates of title relating to the financed vehicles. Accordingly, the originator will continue to be named as the secured party on the certificates of title relating to the financed vehicles. In most states, assignments such as those under the transfer agreements are an effective conveyance of the security interests in the financed vehicles without amendment of the lien noted on the related certificate of title, and the new secured party succeeds to the assignor’s rights as the secured party. However, a risk exists in not identifying the issuing entity as the new secured party on the certificate of title because the security interest of the issuing entity could be released without the issuing entity’s consent, another person could obtain a security interest in the applicable financed vehicle that is higher in priority than the interest of the issuing entity or the issuing entity’s status as a secured creditor could be challenged in the event of a bankruptcy proceeding involving the obligor.

In the absence of fraud, forgery or neglect by the financed vehicle owner or administrative error by state recording officials, notation of the lien of the originator generally will be sufficient to protect the issuing entity against the rights of subsequent purchasers of a financed vehicle or subsequent lenders who take a security interest in a financed vehicle. If there are any financed vehicles as to which the originator has failed to perfect the security interest assigned to the issuing entity, that security interest would be subordinate to, among others, subsequent purchasers of the financed vehicles and holders of perfected security interests.

Under the Uniform Commercial Code if a security interest in a financed vehicle is perfected by any method under the laws of one state, and the financed vehicle is then moved to another state and titled in that other state, the security interest that was perfected under the laws of the original state remains perfected as against all persons other than a purchaser of the vehicle for value for as long as the security interest would have been perfected under the law of the original state. However, a security interest in a financed vehicle that is covered by a certificate of title from the original state becomes unperfected as against a purchaser of that financed vehicle for value and is deemed never to have been perfected as against that purchaser if the security interest in that financed vehicle is not perfected under the laws of that other state within four months after the financed vehicle became covered by a certificate of title from the other state. A majority of states require surrender of a certificate of title to re-register a vehicle. Therefore, the servicer will provide the department of motor vehicles or other appropriate state or county agency of the state of relocation with the certificate of title so that the owner can effect the re-registration. If the financed vehicle owner moves to a state that provides for notation of a lien on the certificate of title to perfect the security interests in the financed vehicle, absent clerical errors or fraud, the originator would receive notice of surrender of the certificate of title if its lien is noted thereon. Accordingly, the secured party will have notice and the opportunity to re-perfect the



92

Table of Contents
security interest in the financed vehicle in the state of relocation. If the financed vehicle owner moves to a state which does not require surrender of a certificate of title for registration of a motor vehicle, re-registration could defeat perfection. In the ordinary course of servicing its portfolio of motor vehicle receivables, the servicer takes steps to effect re-perfection upon receipt of notice of registration or information from the obligor as to relocation. Similarly, when an obligor under a receivable sells a financed vehicle, the servicer must provide the owner with the certificate of title, or the servicer will receive notice as a result of its lien noted thereon and accordingly will have an opportunity to require satisfaction of the related receivable before release of the lien. Under the servicing agreement, the servicer will, in accordance with its customary servicing practices, take such steps as are necessary to maintain perfection of the security interest created by each receivable in the related financed vehicle. The issuing entity will authorize the servicer to take such steps as are necessary to re-perfect the security interest on behalf of the issuing entity and the indenture trustee in the event of the relocation of a financed vehicle or for any other reason.

The requirements for the creation, perfection, transfer and release of liens in financed vehicles generally are governed by state law, and these requirements vary on a state-by-state basis. Failure to comply with these detailed requirements could result in liability to the issuing entity or the release of the lien on the vehicle or other adverse consequences. For example, the State of New York passed legislation allowing a dealer of used motor vehicles to have the lien of a prior lienholder in a motor vehicle released, and to have a new certificate of title with respect to that motor vehicle reissued without the notation of the prior lienholder’s lien, upon submission to the Commissioner of the New York Department of Motor Vehicles of evidence that the prior lien has been satisfied without any signature or formal release by the prior lienholder. It is possible that, as a result of fraud, forgery, negligence or error, a lien on a financed vehicle could be released without prior payment in full of the receivable.

Under the laws of most states, statutory liens such as liens for unpaid taxes, liens for towing, storage and repairs performed on a motor vehicle, motor vehicle accident liens and liens arising under various state and federal criminal statutes take priority over a perfected security interest in a financed vehicle. Under the Internal Revenue Code, federal tax liens that are filed have priority over a subsequently perfected lien of a secured party. In addition, certain states grant priority to state tax liens over a prior perfected lien of a secured party. The laws of most states and federal law permit the confiscation of motor vehicles by governmental authorities under some circumstances if used in or acquired with the proceeds of unlawful activities, which may result in the loss of a secured party’s perfected security interest in a confiscated vehicle. With respect to the issuing entity, the depositor will represent in the sale agreement that, as of the Closing Date, no state or federal liens exist with respect to any financed vehicle securing payment on any related receivable. However, liens could arise, or a confiscation could occur, at any time during the term of a receivable. It is possible that no notice will be given to the servicer in the event that a lien arises or a confiscation occurs, and any lien arising or confiscation occurring after the Closing Date would not give rise to Fifth Third Bank’s repurchase obligations under the receivables sale agreement.

Repossession

In the event of a default by an obligor, the holder of the related motor vehicle retail installment sale contract and/or installment loan has all the remedies of a secured party under the Uniform Commercial Code, except as specifically limited by other state laws. Among the Uniform Commercial Code remedies, the secured party has the right to repossess a financed vehicle by self-help means, unless those means would constitute a breach of the peace under applicable state law or is otherwise limited by applicable state law. Unless a financed vehicle is voluntarily surrendered, self-help repossession is accomplished simply by retaking possession of the financed vehicle. In cases where the obligor objects or raises a defense to repossession, or if otherwise required by applicable state law, a court order must be obtained from the appropriate state court, and the financed vehicle must then be recovered in accordance with that order. In some jurisdictions, the secured party is required to notify the obligor of the default and the intent to repossess the collateral and to give the obligor a time period within which to cure the default prior to repossession. Generally, this right to cure may only be exercised on a limited number of occasions during the term of the related receivable. Other jurisdictions permit repossession without prior notice if it can be accomplished without a breach of the peace (although in some states, a course of conduct in which the creditor has accepted late payments has been held to create a right by the obligor to receive prior notice). In some states, after the financed vehicle has been repossessed, the obligor may reinstate the related receivable by paying the delinquent installments and other amounts due.



93

Table of Contents
Notice of Sale; Redemption Rights

In the event of a default by the obligor, some jurisdictions require that the obligor be notified of the default and be given a time period within which the obligor may cure the default prior to repossession. Generally, this right of reinstatement may be exercised on a limited number of occasions in any one year period.

The Uniform Commercial Code and other state laws require the secured party to provide the obligor with reasonable notice concerning the disposition of the collateral including, among other things, the date, time and place of any public sale and/or the date after which any private sale of the collateral may be held and certain additional information if the collateral constitutes consumer goods. In addition, some states also impose substantive timing requirements on the sale of repossessed vehicles and/or various substantive timing and content requirements relating to those notices. In some states, after a financed vehicle has been repossessed, the obligor may reinstate the receivable by paying the delinquent installments and other amounts due, in which case the financed vehicle is returned to the obligor. The obligor has the right to redeem the collateral prior to actual sale or entry by the secured party into a contract for sale of the collateral by paying the secured party the unpaid outstanding principal balance of the obligation, accrued interest thereon, reasonable expenses for repossessing, holding and preparing the collateral for disposition and arranging for its sale, plus, in some jurisdictions, reasonable attorneys’ fees and legal expenses.

Deficiency Judgments and Excess Proceeds

The proceeds of resale of the repossessed vehicles generally will be applied first to the expenses of resale and repossession and then to the satisfaction of the indebtedness. While some states impose prohibitions or limitations on deficiency judgments if the net proceeds from resale do not cover the full amount of the indebtedness, a deficiency judgment can be sought in those states that do not prohibit or limit those judgments. However, the deficiency judgment would be a personal judgment against the obligor for the shortfall, and a defaulting obligor can be expected to have very little capital or sources of income available following repossession. Therefore, in many cases, it may not be useful to seek a deficiency judgment or, if one is obtained, it may be settled at a significant discount. In addition to the notice requirement, the Uniform Commercial Code requires that every aspect of the sale or other disposition, including the method, manner, time, place and terms, be “commercially reasonable.” Generally, in the case of consumer goods, courts have held that when a sale is not “commercially reasonable,” the secured party loses its right to a deficiency judgment. Generally, in the case of collateral that does not constitute consumer goods, the Uniform Commercial Code provides that when a sale is not “commercially reasonable,” the secured party may retain its right to at least a portion of the deficiency judgment.

The Uniform Commercial Code also permits the debtor or other interested party to recover for any loss caused by noncompliance with the provisions of the Uniform Commercial Code. In particular, if the collateral is consumer goods, the Uniform Commercial Code grants the debtor the right to recover in any event an amount not less than the credit service charge plus 10% of the principal amount of the debt. In addition, prior to a sale, the Uniform Commercial Code permits the debtor or other interested person to prohibit or restrain on appropriate terms the secured party from disposing of the collateral if it is established that the secured party is not proceeding in accordance with the “default” provisions under the Uniform Commercial Code.

Occasionally, after resale of a repossessed vehicle and payment of all expenses and indebtedness, there is a surplus of funds. In that case, the Uniform Commercial Code requires the creditor to remit the surplus to any holder of a subordinate lien with respect to the vehicle or if no subordinate lienholder exists, the Uniform Commercial Code requires the creditor to remit the surplus to the obligor.

Consumer Protection Law

Numerous federal and state consumer protection laws and related regulations impose substantial requirements upon lenders and servicers involved in consumer finance. These laws include the Truth-in-Lending Act, the Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Magnuson-Moss Warranty Act, the CFPB’s Regulations B and Z (formerly issued by the Federal Reserve Board), the Gramm-Leach-Bliley Act, the Relief Act, the Texas Credit Title, state adoptions of the National Consumer Act and of the Uniform Consumer Credit Code, state motor vehicle retail installment sale acts and other similar laws. Many states have adopted “lemon laws” that provide redress to consumers who purchase a vehicle that remains out of compliance with its manufacturer’s warranty after a specified number of attempts to



94

Table of Contents
correct a problem or a specified time period. Also, state laws impose finance charge ceilings and other restrictions on consumer transactions and require contract disclosures in addition to those required under federal law. These requirements impose specific statutory liabilities upon creditors who fail to comply with their provisions. In some cases, this liability could affect an assignee’s ability to enforce consumer finance contracts such as the receivables described above.

With respect to used vehicles, the Federal Trade Commission’s Rule on Sale of Used Vehicles (the “FTC Rule”) requires all sellers of used vehicles to prepare, complete and display a “Buyers’ Guide” that explains the warranty coverage for such vehicles. The Federal Magnuson-Moss Warranty Act and state lemon laws may impose further obligations on motor vehicle dealers. Holders of the receivables may have liability for or may be subject to claims and defenses under those statutes, the FTC Rule and similar state statutes.

The so-called “Holder-in-Due-Course” rule of the Federal Trade Commission (the “HDC Rule”), the provisions of which are generally duplicated by the Uniform Consumer Credit Code, other statutes or the common law in some states, has the effect of subjecting a seller (and specified creditors and their assignees) in a consumer transaction to all claims and defenses that the obligor in the transaction could assert against the seller of the goods. Liability under the HDC Rule is limited to the amounts paid by the obligor under the contract, and the holder of the receivable may also be unable to collect any balance remaining due under that contract from the obligor.

Most of the receivables will be subject to the requirements of the HDC Rule. Accordingly, the issuing entity, as holder of the related receivables, will be subject to any claims or defenses that the purchaser of the applicable financed vehicle may assert against the seller of the related financed vehicle. For each obligor, these claims are limited to a maximum liability equal to the amounts paid by the obligor on the related receivable. The originator will represent in the receivables sale agreement that each of the receivables, and the sale of the related financed vehicle thereunder, complied with all material requirements of applicable laws and the regulations issued pursuant thereto. Under most state motor vehicle dealer licensing laws, sellers of motor vehicles are required to be licensed to sell motor vehicles at retail sale. Furthermore, federal odometer regulations promulgated under the Motor Vehicle Information and Cost Savings Act require that all sellers of new and used vehicles furnish a written statement signed by the seller certifying the accuracy of the odometer reading. If the seller is not properly licensed or if a written odometer disclosure statement was not provided to the purchaser of the related financed vehicle, an obligor may be able to assert a defense against the seller of the vehicle. If an obligor were successful in asserting any of those claims or defenses, that claim or defense would, if it affects the ability of the issuing entity to receive and retain payment in full on the receivable, constitute a breach of the originator’s representations and warranties under the receivables sale agreement and would, if the breach materially and adversely affects the receivable or the interests of the noteholders, create an obligation of Fifth Third Bank to repurchase the receivable unless the breach is cured. See “The Transaction Documents—Sale and Assignment of Receivables and Related Security Interests” in this prospectus.

Any shortfalls or losses arising in connection with the matters described in the three preceding paragraphs, to the extent not covered by amounts payable to the noteholders from amounts available under a credit enhancement mechanism, could result in losses to noteholders.

Courts have applied general equitable principles to secured parties pursuing repossession and litigation involving deficiency balances. These equitable principles may have the effect of relieving an obligor from some or all of the legal consequences of a default.

In several cases, consumers have asserted that the self-help remedies of secured parties under the Uniform Commercial Code and related laws violate the due process protections provided under the 14th Amendment to the Constitution of the United States. Courts have generally upheld the notice provisions of the Uniform Commercial Code and related laws as reasonable or have found that the repossession and resale by the creditor do not involve sufficient state action to afford constitutional protection to obligors.

The CFPB is responsible for implementing and enforcing various federal consumer protection laws and supervising certain depository institutions and non-depository institutions offering financial products and services to consumers, including indirect automobile loans and retail automobile leases. Fifth Third Bank is subject to the CFPB’s supervisory and enforcement authority. The CFPB has taken action against banks and nonbanks regarding compliance with the fair lending requirements of the Equal Credit Opportunity Act, and its implementing regulation, concerning retail contracts where the dealer charged the consumer an interest rate that is higher than the minimum



95

Table of Contents
interest rate, absent additional discounts or reductions, at which a finance company will finance or purchase a retail installment sale contract from a dealer. We refer to this minimum interest rate that we have determined to be applicable to a consumer based on creditworthiness and other objective criteria as the “buy rate.” The consumer may agree with the automobile dealer to pay an interest rate that is different than the buy rate, which we refer to as the “contract rate.” The CFPB has been conducting fair lending examinations of automobile lenders, including Fifth Third Bank, and their dealer compensation policies.

On September 28, 2015, Fifth Third Bank reached a settlement with the U.S. Department of Justice (“DOJ”) and the CFPB and entered into related consent orders with each of the DOJ and the CFPB (the “Consent Orders”) regarding its indirect automobile lending and dealer compensation policy. Pursuant to the Consent Orders, Fifth Third Bank, without admitting or denying any of the findings of fact or conclusions of law (except to establish jurisdiction) agreed to implement a new dealer compensation policy, which went into effect on January 20, 2016. Under the new dealer compensation policy, a dealer assigning a loan to Fifth Third Bank may contract with a consumer for an interest rate below Fifth Third Bank’s buy rate only if the dealer provides certain information on a competitor’s similar offer for that application. For automobile loans assigned to Fifth Third Bank with an interest rate above Fifth Third Bank’s buy rate, if the term is 60 months or less, the dealer’s contract rate with the consumer may not be more than 125 basis points higher than Fifth Third Bank’s buy rate, and if the term is over 60 months, the contract rate may not be more than 100 basis points higher than Fifth Third Bank’s buy rate. The Consent Orders provide that Fifth Third Bank’s Board of Directors and Risk and Compliance Committee will oversee its compliance with the new dealer compensation policy. Fifth Third Bank also agreed, pursuant to the Consent Orders, to pay $18 million to compensate certain consumers who undertook loans under its prior dealer compensation policy.

Copies of the Consent Orders were filed with a Form 8-K as Exhibits 99.1 and 99.2 on September 29, 2015 by Fifth Third Bancorp. The description of the Consent Orders set forth above does not purport to be complete and is qualified by reference to their full text.

In addition, we understand that the CFPB has also been conducting investigations of automobile lenders concerning certain other automobile lending practices, including the sale of extended warranties, credit insurance and other add-on products. If any of these practices were found to violate applicable laws, the sponsor could be obligated to repurchase from the issuing entity any receivable that fails to comply with these laws. In addition, the depositor, the sponsor or the issuing entity could also possibly be subject to claims by the obligors on those contracts, and any relief granted by a court could potentially adversely affect the issuing entity. For additional discussion of how a failure to comply with consumer protection laws may impact the issuing entity, the receivables or your investment in the securities, see “Risk Factors—Failure to comply with consumer protection laws may result in losses on your investment.”

Fifth Third Bank also periodically performs reviews of its lending policies and analyses of both dealer-specific and portfolio-wide loan pricing data for potential disparities resulting from dealer markup and compensation policies. Depending upon the results of these reviews and analyses or any further regulatory agency actions, Fifth Third Bank may consider providing, or may be required to provide, remuneration, which could include reductions to the interest rates on the applicable automobile loans. Additionally, as described above, in connection with the Consent Orders, Fifth Third Bank has agreed to compensate obligors of impacted automobile loans.

Fifth Third Bank has, and in the future may, periodically enhance its compliance program or engage in voluntary remuneration, including reducing the interest rates on and making lump-sum cash payments to obligors of certain affected automobile loans, on the basis of sampling and without any determination of any violation of law. If Fifth Third Bank, as servicer, were to voluntarily reduce the interest rate on any automobile loan, it may be required under the applicable transaction documents to repurchase the affected receivables; however, under some circumstances the servicer would not be required under the applicable transaction documents to repurchase the affected receivables. See “The Servicer” for a discussion of the purchase obligations of the servicer.

Repurchase Obligation

The originator will make representations and warranties in the receivables sale agreement that each receivable complies with all requirements of law in all material respects. If any representation and warranty proves to be incorrect with respect to any receivable, affects the ability of the issuing entity to receive and retain payment in full on such receivable, has certain material and adverse effects and is not timely cured, the originator may be



96

Table of Contents
required under the receivables sale agreement to repurchase the affected receivables. The originator may be subject from time to time to litigation alleging that the receivables or its lending practices do not comply with applicable law. The commencement of any such litigation generally would not result in a breach of any of the representations or warranties with respect to the receivables.

Servicemembers Civil Relief Act

Under the terms of the Relief Act, an obligor who enters military service after the origination of such obligor’s receivable (including an obligor who was in reserve status and is called to active duty after origination of the receivable) may not be charged interest (including fees and charges) above an annual rate of 6% during the period of such obligor’s active duty status, unless a court orders otherwise upon application of the lender. Interest at a rate in excess of 6% that would otherwise have been incurred but for the Relief Act is forgiven. The Relief Act applies to obligors who are servicemembers and includes members of the Army, Navy, Air Force, Marines, National Guard, Reserves (when such enlisted person is called to active duty), Coast Guard, officers of the National Oceanic and Atmospheric Administration, officers of the U.S. Public Health Service assigned to duty with the Army or Navy and certain other persons as specified in the Relief Act. Because the Relief Act applies to obligors who enter military service (including reservists who are called to active duty) after origination of the related receivable, no information can be provided as to the number of receivables that may be affected by the Relief Act. Application of the Relief Act would adversely affect, for an indeterminate period of time, the ability of the servicer to collect full amounts of interest on certain of the receivables. Any shortfall in interest collections resulting from the application of the Relief Act or similar legislation or regulations which would not be recoverable from the related receivables, would result in a reduction of the amounts distributable to the securityholders. In addition, the Relief Act imposes limitations that would impair the ability of the servicer to foreclose on an affected receivable during the obligor’s period of active duty status, and, under certain circumstances, during an additional one year period thereafter. Also, the laws of some states impose similar limitations during the obligor’s period of active duty status and, under certain circumstances, during an additional period thereafter as specified under the laws of those states. Thus, in the event that the Relief Act or similar state legislation or regulations applies to any receivable which goes into default, there may be delays in payment and losses on your notes. Any other interest shortfalls, deferrals or forgiveness of payments on the receivables resulting from the application of the Relief Act or similar state legislation or regulations may result in delays in payments or losses on your notes.

Any shortfalls or losses arising in connection with the matters described above, to the extent not covered by amounts payable to the noteholders from amounts available under a credit enhancement mechanism, could result in losses to noteholders.

Other Limitations

In addition to the laws limiting or prohibiting deficiency judgments, numerous other statutory provisions, including the Bankruptcy Code and similar state laws, may interfere with or affect the ability of a secured party to realize upon collateral or to enforce a deficiency judgment. For example, if an obligor commences bankruptcy proceedings, a bankruptcy court may prevent a creditor from repossessing a vehicle, and, as part of the rehabilitation plan, reduce the amount of the secured indebtedness to the market value of the vehicle at the time of filing of the bankruptcy petition, as determined by the bankruptcy court, leaving the creditor as a general unsecured creditor for the remainder of the indebtedness. A bankruptcy court may also reduce the monthly payments due under a receivable or change the rate of interest and time of repayment of the receivable.

State and local government bodies across the United States generally have the power to create licensing and permit requirements. It is possible that the issuing entity could fail to have some required licenses or permits. In that event, the issuing entity could be subject to liability or other adverse consequences.

Any shortfalls or losses arising in connection with the matters described above, to the extent not covered by amounts payable to the noteholders from amounts available under a credit enhancement mechanism, could result in losses to noteholders.



97

Table of Contents
Certain Matters Relating to Bankruptcy

The depositor has been structured as a limited purpose entity and will engage only in activities permitted by its organizational documents. Under the depositor’s organizational documents, the depositor is limited in its ability to file a voluntary petition under the United States Bankruptcy Code (the “Bankruptcy Code”) or any similar applicable state law so long as the depositor is solvent and does not reasonably foresee becoming insolvent. There can be no assurance, however, that the depositor, or the originator, will not become insolvent and file a voluntary petition under the Bankruptcy Code or any similar applicable state law or become subject to a conservatorship or receivership, as may be applicable in the future.

The voluntary or involuntary petition for relief under the Bankruptcy Code or any similar applicable state law or the establishment of a conservatorship or receivership, as may be applicable, with respect to the originator should not necessarily result in a similar voluntary application with respect to the depositor so long as the depositor is solvent and does not reasonably foresee becoming insolvent either by reason of the originator’s insolvency or otherwise. The depositor has taken certain steps in structuring the transactions contemplated hereby that are intended to make it unlikely that any voluntary or involuntary petition for relief by the originator under applicable insolvency laws will result in the consolidation pursuant to such insolvency laws or the establishment of a conservatorship or receivership, of the assets and liabilities of the depositor with those of the originator. These steps include the organization of the depositor as a limited purpose entity pursuant to its limited liability company agreement containing certain limitations (including restrictions on the limited nature of the depositor’s business and on its ability to commence a voluntary case or proceeding under any insolvency law without an affirmative vote of all of its directors, including independent directors).

The depositor believes that, subject to certain assumptions (including the assumption that the books and records relating to the assets and liabilities of the originator will at all times be maintained separately from those relating to the assets and liabilities of the depositor, the depositor will prepare its own balance sheets and financial statements and there will be no commingling of the assets of the originator with those of the depositor), the assets and liabilities of the depositor should not be substantively consolidated with the assets and liabilities of the originator in the event of a petition for relief under the Bankruptcy Code with respect to the originator; and the transfer of receivables by the originator should constitute an absolute transfer, and, therefore, such receivables would not be property of the originator in the event of the filing of an application for relief by or against the originator under the Bankruptcy Code.

Further, with respect to the originator, counsel to the depositor will also render its opinion that:




subject to certain assumptions, the assets and liabilities of the depositor would not be substantively consolidated with the assets and liabilities of the originator in the event of a petition for relief under the Bankruptcy Code; and




the transfer of receivables by the originator constitutes an absolute transfer and would not be included in the originator’s bankruptcy estate or subject to the automatic stay provisions of the Bankruptcy Code.

If, however, a bankruptcy court for the originator or a creditor of the originator were to take the view that the originator and the depositor should be substantively consolidated or that the transfer of the receivables from the originator to the depositor should be recharacterized as a pledge of such receivables, then you may experience delays and/or shortfalls in payments on the notes.

Certain Matters Relating to Insolvency

If Fifth Third Bank were to become insolvent, were to violate applicable regulations, or if other similar circumstances were to occur, the FDIC could be appointed receiver or conservator of Fifth Third Bank. As receiver or conservator, the FDIC would have various powers under the Federal Deposit Insurance Act, including the power to repudiate any contract to which Fifth Third Bank was a party, if the FDIC determined that performance of the contract was burdensome and that repudiation would promote the orderly administration of Fifth Third Bank’s affairs. Among the contracts that might be repudiated is the receivables sale agreement, the servicing agreement and the administration agreement relating to your notes.



98

Table of Contents
Also, none of the parties to those contracts could exercise any right or power to terminate, accelerate, or declare a default under those transaction documents, or otherwise affect Fifth Third Bank’s rights under those transaction documents without the FDIC’s consent, for 90 days after the receiver is appointed or 45 days after the conservator is appointed, as applicable. During the same period, the FDIC’s consent would also be needed for any attempt to obtain possession of or exercise control over any property of Fifth Third Bank. The requirement to obtain the FDIC’s consent before taking these actions relating to a bank’s contracts or property is sometimes referred to as an “automatic stay.”

The FDIC’s repudiation power would enable the FDIC to repudiate Fifth Third Bank’s obligations as servicer or administrator and any ongoing repurchase or indemnity obligations under the receivables sale agreement relating to your notes but would not empower the FDIC to repudiate transfers of receivables made under the receivables sale agreement prior to the appointment of the receiver or conservator. However, if those transfers were not respected as legal true sales, then FTH LLC would be treated as having made a loan to Fifth Third Bank, secured by the transferred receivables. The FDIC ordinarily has the power to repudiate secured loans and then recover the collateral after paying damages (as described further below) to the lenders.

FDIC Rule

The FDIC has adopted a regulation entitled “Treatment of financial assets transferred in connection with a securitization or participation” (the “FDIC Rule”). The FDIC Rule contains four different safe harbors, each of which limits the powers that the FDIC can exercise in the insolvency of an insured depository institution when it is appointed as receiver or conservator (and references in this section to the FDIC are in its capacity as such). To qualify for a safe harbor, the securitization or participation must satisfy the requirements specified for that type of transaction. If one or more of the requirements specified in the safe harbor are not met, the FDIC’s powers would not be limited by the FDIC Rule. The relevant safe harbor for the issuing entity will be either the safe harbor for securitizations that do not satisfy the requirements for sale accounting treatment or the safe harbor for securitizations that satisfy the requirements for sale accounting treatment. The discussion of the FDIC Rule in this prospectus is limited to those two safe harbors.

The requirements imposed by the FDIC Rule include provisions that are required to be contained in the transaction documents. These provisions limit the structural features of the transaction in specified ways, impose obligations on one or more of the issuing entity, the depositor and any other intermediate entities that may be a transferee (which entities are jointly considered to be the “issuing entity” for purposes of the FDIC Rule), require the servicer and the sponsor to make specified disclosures, provide ongoing reporting on specified items and define specified aspects of the relationships among the parties. In order to satisfy the requirements of the FDIC Rule to include these provisions in the documentation, the indenture will contain a covenant (the “FDIC Rule Covenant”) that contains the requisite provisions and that obligates the “issuing entity” to perform each of the specified obligations, other than those obligations that are specifically assigned exclusively to the servicer or the sponsor. See “The Indenture—FDIC Rule Covenant.” Each transfer agreement and the servicing agreement will obligate FTH LLC, the depositor, the sponsor and the servicer to perform its specified functions under the FDIC Rule Covenant. The failure of the issuing entity to perform its obligations under the FDIC Rule Covenant will not constitute an event of default, nor will the failure of the servicer to perform its obligations under the FDIC Rule Covenant constitute a servicer default. However, the noteholders, the certificateholders and the indenture trustee will retain the right to exercise any other remedies permitted by the indenture or applicable law in respect of these breaches.

If the FDIC is appointed as conservator or receiver for an insured depository institution that has effected a securitization that is covered by the FDIC Rule, but for which accounting sale treatment does not apply, there are several possible series of events that could occur. The FDIC will succeed to the obligations of the insured depository institution, whether as servicer, sponsor or otherwise. If the FDIC becomes the servicer or otherwise controls distributions of collections, the FDIC would have the choice of whether or not to pay or apply collections from the financial assets in accordance with the transaction documents. If the FDIC chooses not to pay or apply the collections, it will be in monetary default, and the indenture trustee at the direction of the holders of at least a majority of the outstanding note balance, the servicer or the majority certificateholders will be entitled to deliver a notice and other information required by the FDIC Rule to the FDIC requesting the exercise of contractual rights under the transaction documents because of the FDIC’s monetary default. Upon delivery of such notice, the indenture trustee or the issuing entity, as applicable, may exercise any contractual rights such party may have in accordance with the transaction documents and the FDIC Rule. In exercising such contractual rights, the indenture trustee will act at the written direction of the holders of at least a majority of the outstanding note balance and the



99

Table of Contents
owner trustee on behalf of the issuing entity will act at the written direction of the majority certificateholders. If the FDIC does not cure the monetary default within ten business days, then the FDIC will have been deemed to have consented to the exercise of those contractual rights. However, the FDIC, as receiver or conservator, is not required to take any action under the FDIC Rule after a monetary default other than providing consents, waivers and execution of transfer documents as may be reasonably requested in the ordinary course of business in order to facilitate the exercise of such contractual rights.

Another series of events could occur if, following an insolvency, the FDIC seeks to exercise its power to repudiate contracts in connection with a transaction for which the safe harbor applicable to transactions which do not satisfy the requirements for accounting sale treatment applies. The FDIC Rule gives the FDIC the choice, following repudiation, either to pay damages within ten business days or to permit the exercise of contractual rights as described in the preceding paragraph. If the FDIC elects to pay damages, it is obligated to pay noteholders an amount equal to the par value of the notes outstanding on the date the FDIC is appointed as conservator or receiver of the insured depository institution, less any payments of principal received by the noteholders prior to and through the date of repudiation, plus unpaid, accrued interest through the date of repudiation in accordance with the transaction documents to the extent of collections actually received through the date of repudiation. If the damages paid by the FDIC do not include interest from the date of repudiation to the date of payment, the indenture will provide that the indenture trustee should apply available funds from the reserve account and the collection account to pay such shortfall. However, upon payment of these damages, the FDIC Rule provides that “all liens or claims on the financial assets created pursuant to the securitization documents shall be released.” If the FDIC were to assert successfully that the lien of the indenture trustee on the reserve account and the collection account were released and the assets in those accounts were transferred to the FDIC, then noteholders would not receive interest from the date of repudiation to the date of payment. To the extent that the certificates constitute “obligations” within the meaning of the FDIC Rule, the administrator or the owner trustee (based on written instructions setting forth the damages calculation provided by the majority certificateholders) on behalf of the issuing entity will notify the indenture trustee and the FDIC of the damages due to the certificateholders.

Damages paid by the FDIC will be distributed to noteholders and, if applicable, to certificateholders on the earlier of (1) the next payment date on which such damages could be distributed and (2) the earliest practicable date that the indenture trustee could declare a special payment date, subject to applicable provisions of the indenture, applicable law and the procedures of any applicable clearing agency. The indenture trustee will be authorized and instructed to maintain possession and control of the reserve account, the collection account and all amounts on deposit therein. If the date on which damages are to be distributed to noteholders and, if applicable, to certificateholders is not a regular payment date, then the amount of interest payable to the noteholders will be prorated to such date, as provided in the indenture. Subject to the risk noted above that the FDIC may attempt to assert that the amounts in the reserve account or collection account must be released to the FDIC, the indenture trustee will use amounts on deposit in the reserve account and the collection account, in addition to the amounts paid by the FDIC, to pay amounts owing to noteholders. Any damages with respect to the certificates paid by the FDIC following repudiation will be distributed by the certificate paying agent or owner trustee to the certificateholders on a pro rata basis.

Under the safe harbor, the FDIC as, receiver or conservator, could not exercise its statutory authority to reclaim, recover or recharacterize as property of the sponsor or the receivership the transferred financial assets. However, the FDIC could challenge whether the transaction satisfied the requirements for accounting sale treatment or whether the transaction satisfied the requirements of a safe harbor under the FDIC Rule. The transfers by Fifth Third Bank of the receivables and the issuance by the issuing entity of the notes are intended to satisfy all the applicable requirements of the FDIC Rule safe harbor applicable to securitizations that do not satisfy the requirements for sale accounting treatment, and the issuing entity will state in the indenture its belief that those requirements will have been met. As the FDIC Rule is an untested regulatory safe harbor, its interpretation remains uncertain. If any provision of the FDIC Rule is amended, or any interpretive guidance regarding the FDIC Rule is provided by the FDIC or its staff, as a result of which the issuing entity determines that an amendment to the FDIC Rule Covenant is necessary or desirable, then the issuing entity and the indenture trustee will be authorized to amend the FDIC Rule Covenant in accordance with such FDIC Rule amendment or guidance without noteholder or certificateholder consent.

One of the requirements imposed by the FDIC Rule is a “risk retention” requirement that requires compliance with Regulation RR. Fifth Third Bank intends to satisfy this risk retention requirement by the retention



100

Table of Contents
by the depositor, its wholly-owned affiliate, of an “eligible vertical interest” in the form of at least 5% of the initial principal amount of each class of notes and the certificates issued by the issuing entity on the Closing Date.

We will structure the transfers of receivables under the receivables sale agreement between Fifth Third Bank and FTH LLC with the intent that they would be characterized as legal true sales. If the transfers are so characterized, then the FDIC likely would not be able to recover the transferred receivables using its repudiation power even if your transaction does not satisfy all of the terms of the FDIC Rule. However, complying with the FDIC Rule would provide additional assurance that the FDIC would not seek to recover the transferred receivables using its repudiation power, as well as providing additional assurance that any automatic stay that could be imposed if Fifth Third Bank were in receivership or conservatorship would not interfere with servicing of the receivables and contractual payments relating to the notes and the certificates.

If the FDIC were to successfully assert that the transaction in which the notes and certificates were issued did not comply with the FDIC Rule and that the transfer of receivables under the receivables sale agreement was not a legal true sale, then FTH LLC would be treated as having made a loan to Fifth Third Bank, secured by the transferred receivables. If the FDIC repudiated that loan, the amount of compensation that the FDIC would be required to pay would be limited to “actual direct compensatory damages” determined as of the date of the FDIC’s appointment as conservator or receiver. There is no statutory definition of “actual direct compensatory damages,” but the term does not include damages for lost profits or opportunity.

Absent the application of a safe harbor under the FDIC Rule, the staff of the FDIC takes the position that, upon repudiation, damages would not include accrued and unpaid interest through the date of actual repudiation, so the issuing entity would have a claim for interest only through the date of the appointment of the FDIC as conservator or receiver. Since the FDIC may delay repudiation for up to 180 days following that appointment, the issuing entity may not have a claim for interest accrued during this 180 day period. In addition, in one case involving the repudiation by the Resolution Trust Corporation, formerly a sister agency of the FDIC, of certain secured zero-coupon bonds issued by a savings association, a United States federal district court held that “actual direct compensatory damages” in the case of a marketable security meant the market value of the repudiated bonds as of the date of repudiation. If that court’s view were applied to determine the “actual direct compensatory damages” in the circumstances described above, the amount of damages could, depending upon circumstances existing on the date of the repudiation, be less than the outstanding principal amount of the notes and the interest accrued thereon and unpaid to the date of payment.

Regardless of whether the FDIC Rule applies or the transfers under the receivables sale agreement are respected as legal true sales, as conservator or receiver for Fifth Third Bank the FDIC could:




require the issuing entity, as assignee of the related purchaser, to go through an administrative claims procedure to establish its rights to payments collected on the receivables; or




request a stay of proceedings to liquidate claims or otherwise enforce contractual and legal remedies against Fifth Third Bank; or




repudiate without compensation Fifth Third Bank’s ongoing servicing obligations under the servicing agreement, such as its duty to collect and remit payments or otherwise service the receivables; or




prior to any such repudiation of the servicing agreement, prevent any of the indenture trustee or the securityholders from appointing a successor servicer; or




argue that the automatic stay prevents the indenture trustee and other transaction parties from exercising their rights, remedies and interests for up to 90 days.

There are also statutory prohibitions on (1) any attachment or execution being issued by any court upon assets in the possession of the FDIC, as conservator or receiver, and (2) any property in the possession of the FDIC, as conservator or receiver, being subject to levy, attachment, garnishment, foreclosure or sale without the consent of the FDIC.



101

Table of Contents
If the FDIC, as conservator or receiver for Fifth Third Bank, were to take any of the actions described above, payments and/or distributions of principal and interest on the securities issued by the issuing entity could be delayed or reduced. See “Risk Factors—FDIC receivership or conservatorship of Fifth Third Bank could result in delays in payments or losses on your notes.”

Dodd-Frank Orderly Liquidation Framework

General. On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The Dodd-Frank Act, among other things, gives the FDIC authority to act as receiver of bank holding companies, financial companies and their respective subsidiaries in specific situations under the “Orderly Liquidation Authority” (“OLA”) as described in more detail below. The OLA provisions became effective on July 22, 2010. The proceedings, standards, powers of the receiver and many other substantive provisions of OLA differ from those of the Bankruptcy Code in several respects. In addition, because the legislation remains subject to clarification through FDIC regulations and has yet to be applied by the FDIC in any receivership, it is unclear exactly what impact these provisions could have on FTH LLC, the depositor or the issuing entity, or their respective creditors.

Potential Applicability to FTH LLC, the Depositor and the Issuing Entity. There is uncertainty about which companies could be subject to OLA rather than the Bankruptcy Code. For a company to become subject to OLA, the Secretary of the Treasury (in consultation with the President of the United States) must determine, among other things, that the company is in default or in danger of default, the failure of such company and its resolution under the Bankruptcy Code would have serious adverse effects on financial stability in the United States, no viable private sector alternative is available to prevent the default of the company and a liquidation of such company pursuant to OLA would mitigate these adverse effects. Because Fifth Third Bank is an insured depository institution, it would not be subject to OLA.

Under certain circumstances, FTH LLC, the depositor or the issuing entity could also be subject to the provisions of OLA as a “covered subsidiary” of Fifth Third Bancorp. For the issuing entity, FTH LLC or the depositor to be subject to receivership under OLA as a “covered subsidiary” of Fifth Third Bancorp (1) the FDIC would have to be appointed as receiver for Fifth Third Bancorp under OLA as described above and (2) the FDIC and the Secretary of the Treasury would have to jointly determine that (a) FTH LLC, the depositor or the issuing entity, as applicable, is in default or in danger of default, (b) appointment of the FDIC as receiver of the covered subsidiary would avoid or mitigate serious adverse effects on the financial stability or economic conditions of the United States and (c) such appointment would facilitate the orderly liquidation of Fifth Third Bancorp.

No assurance can be given that OLA would not apply to FTH LLC, the depositor, the issuing entity or their respective affiliates, or if it were to apply, that the timing and amounts of payments to the noteholders or certificateholders would not be less favorable than under the Bankruptcy Code.

FDIC’s Repudiation Power Under OLA. If the FDIC were appointed receiver of FTH LLC, the depositor or the issuing entity under OLA, the FDIC would have various powers under OLA, including the power to repudiate any contract to which FTH LLC, the depositor or the issuing entity was a party, if the FDIC determined that performance of the contract was burdensome and that repudiation would promote the orderly administration of the relevant entity’s affairs. In January 2011, the Acting General Counsel of the FDIC (the “Acting General Counsel”) issued an advisory opinion respecting, among other things, its intended application of the FDIC’s repudiation power under OLA. In that advisory opinion, the Acting General Counsel stated that nothing in the Dodd-Frank Act changes the existing law governing the separate existence of separate entities under other applicable law. As a result, the Acting General Counsel was of the opinion that the FDIC as receiver for a covered financial company, which could include FTH LLC, the depositor or the issuing entity, cannot repudiate a contract or lease unless it has been appointed as receiver for an entity that is party to that contract or lease or the separate existence of that entity may be disregarded under other applicable law. In addition, the Acting General Counsel was of the opinion that until such time as the FDIC Board of Directors adopts a regulation further addressing the application of Section 210(c) of the Dodd-Frank Act (which, among other things, grants the FDIC, as receiver, the power to repudiate certain contracts), if the FDIC were to become receiver for a covered financial company, which could include FTH LLC, the depositor or the issuing entity, the FDIC will not, in the exercise of its authority under Section 210(c) of the Dodd-Frank Act, reclaim, recover, or recharacterize as property of that covered financial company or the receivership assets transferred by that covered financial company prior to the end of the applicable transition period of a regulation



102

Table of Contents
provided that such transfer satisfies the conditions for the exclusion of such assets from the property of the estate of that covered financial company under the Bankruptcy Code. Although the Acting General Counsel’s advisory opinion does not bind the FDIC or its Board of Directors, and could be modified or withdrawn in the future, the advisory opinion also states that the Acting General Counsel will recommend that the FDIC Board of Directors incorporates a transition period of 90 days for any provisions in any further regulations affecting the statutory power to disaffirm or repudiate contracts. To the extent any future regulations or subsequent FDIC actions in an OLA proceeding involving FTH LLC, the depositor or the issuing entity, are contrary to this advisory opinion, payment or distributions of principal and interest on the securities issued by the issuing entity could be delayed or reduced.

We will structure the transfers of receivables under the receivables sale agreement, the purchase agreement and the sale agreement with the intent that they would be treated as legal true sales under applicable state law. If the transfers are so treated, based on the Acting General Counsel of the FDIC’s advisory opinion rendered in January 2011 and other applicable law, the sponsor believes that the FDIC would not be able to recover the receivables transferred by the relevant seller under the receivables sale agreement, the purchase agreement and the sale agreement using its repudiation power. However, if those transfers were not respected as legal true sales, then each purchaser under the receivables sale agreement, the purchase agreement and the sale agreement, in each case secured by the transferred receivables. The FDIC, as receiver, generally has the power to repudiate secured loans and then recover the collateral after paying actual direct compensatory damages to the lenders as described below. If FTH LLC or the depositor were placed in receivership under OLA, the FDIC could assert that FTH LLC or the depositor, as applicable, effectively still owned the transferred receivables because the transfers between FTH LLC to the depositor or by the depositor to the issuing entity were not true sales. In such case, the FDIC could repudiate that transfer of receivables and the issuing entity would have a secured claim for actual direct compensatory damages as described below. Furthermore, if the issuing entity were placed in receivership under OLA, this repudiation power would extend to the notes issued by such issuing entity. In such event, noteholders would have a secured claim in the receivership of such issuing entity. The amount of damages that the FDIC would be required to pay would be limited to “actual direct compensatory damages” determined as of the date of the FDIC’s appointment as receiver. There is no general statutory definition of “actual direct compensatory damages” in this context, but the term does not include damages for lost profits or opportunity. However, under OLA, in the case of any debt for borrowed money, actual direct compensatory damages are no less than the amount lent plus accrued interest plus any accreted original issue discount as of the date the FDIC was appointed receiver and, to the extent that an allowed secured claim is secured by property the value of which is greater than the amount of such claim and any accrued interest through the date of repudiation or disaffirmance, such accrued interest.

Regardless of whether the transfers under the receivables sale agreement, the purchase agreement and the sale agreement are respected as legal true sales, as receiver for FTH LLC, the depositor or the issuing entity, the FDIC could:




require the issuing entity, as assignee of FTH LLC and the depositor, to go through an administrative claims procedure to establish its rights to payments collected on the related receivables; or




if the FDIC were appointed receiver of the issuing entity under OLA, it could require the indenture trustee for the related notes or the owner trustee for the related certificates to go through an administrative claims procedure to establish the right to payments on the notes or certificates, as applicable; or




request a stay of proceedings to liquidate claims or otherwise enforce contractual and legal remedies against FTH LLC, the depositor or the issuing entity.

There are also statutory prohibitions on (1) any attachment or execution being issued by any court upon assets in the possession of the FDIC, as receiver, (2) any property in the possession of the FDIC, as receiver, being subject to levy, attachment, garnishment, foreclosure or sale without the consent of the FDIC and (3) any person exercising any right or power to terminate, accelerate or declare a default under any contract to which FTH LLC, the depositor or the issuing entity that is subject to OLA is a party, or to obtain possession of or exercise control over any property of FTH LLC, the depositor or the issuing entity or affect any contractual rights of FTH LLC, the depositor or the issuing entity that is subject to OLA, without the consent of the FDIC for 90 days after appointment of FDIC as receiver. The requirement to obtain the FDIC’s consent before taking these actions relating to a covered company’s contracts or property is comparable to the “automatic stay” under the Bankruptcy Code.



103

Table of Contents
If the FDIC, as receiver for FTH LLC, the depositor or the issuing entity, were to take any of the actions described above, payments and/or distributions of principal and interest on the securities issued by the issuing entity could be delayed and may be reduced.

FDIC’s Avoidance Power Under OLA. The proceedings, standards and many substantive provisions of OLA relating to preferential transfers differ from those of the Bankruptcy Code. If FTH LLC, the depositor or the issuing entity or any of their respective affiliates were to become subject to OLA, there is an interpretation under OLA that previous transfers of receivables by FTH LLC, the depositor or the issuing entity or those affiliates perfected for purposes of state law and the Bankruptcy Code could nevertheless be avoided as preferential transfers.

In December 2010, the Acting General Counsel of the FDIC issued an advisory opinion providing an interpretation of OLA which concludes that the treatment of preferential transfers under OLA was intended to be consistent with, and should be interpreted in a manner consistent with, the related provisions under the Bankruptcy Code. In addition, on July 6, 2011, the FDIC issued a final rule effective August 15, 2011 that, among other things, codified the Acting General Counsel’s advisory opinion. Based on the final rule, a transfer of the receivables perfected by the filing of a UCC financing statement against FTH LLC, the depositor and the issuing entity as provided in the applicable transfer agreement would not be avoidable by the FDIC as a preference under OLA due to any inconsistency between OLA and the Bankruptcy Code in defining when a transfer has occurred under the preferential transfer provisions of OLA. To the extent subsequent FDIC actions in an OLA proceeding are contrary to the final rule, payment or distributions of principal and interest on the securities issued by the issuing entity could be delayed and may be reduced.

LEGAL INVESTMENT

Money Market Investment

The Class A-1 notes will be structured to be “eligible securities” for purchase by money market funds under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Rule 2a-7 includes additional criteria for investments by money market funds, including requirements and clarifications relating to portfolio credit risk analysis, maturity, liquidity and risk diversification. It is the responsibility solely of the money market fund and its advisor to satisfy those requirements. Money market funds contemplating a purchase of the Class A-1 notes are encouraged to consult their counsel before making a purchase.

Certain Volcker Rule Considerations

The issuing entity will be relying on an exclusion or exemption from the definition of “investment company” under the Investment Company Act contained in Section 3(c)(5) of the Investment Company Act, although there may be additional exclusions or exemptions available to the issuing entity. The issuing entity is being structured so as not to constitute a “covered fund” as defined in the final regulations issued December 10, 2013, implementing the “Volcker Rule” (Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act).

Requirements for Certain European Regulated Investors and Affiliates

Regulation (EU) 2017/2402 of the European Parliament and of the Council of December 12, 2017 (the “EU Securitization Regulation”), places certain conditions on investments in or other exposures to securitizations (as defined in the EU Securitization Regulation) by “institutional investors”, which include (with certain exceptions) credit institutions and investment firms, insurance and reinsurance undertakings, alternative investment fund managers (“AIFMs”), undertakings for collective investment in transferable securities (“UCITS”) and their management companies, and institutions for occupational retirement provision (“IORPs”) and their investment managers or authorized entities. In the case of credit institutions and investments firms, certain of those requirements apply on a consolidated basis to investments and exposures by certain consolidated affiliates of those entities wherever located. The EU Securitization Regulation has direct effect in member states of the European Union (the “EU”) and is to be implemented by national legislation in other countries in the European Economic Area (the “EEA”). The EU Securitization Regulation, together with any relevant regulatory and/or implementing technical standards adopted by the European Commission in relation thereto, any relevant regulatory and/or implementing technical standards applicable in relation thereto pursuant to any transitional arrangements made



104

Table of Contents
pursuant to the EU Securitization Regulation, and, in each case, any relevant guidance published in relation thereto by the European Banking Authority or the European Securities and Markets Authority (or, in either case, any predecessor authority) or by the European Commission, are referred to in this Memorandum as the “EU Securitization Rules”.

Pursuant to Article 5 of the EU Securitization Regulation, prior to investing in (or otherwise holding an exposure to) a securitisation, an institutional investor, other than the originator, sponsor or original lender (each as defined in the EU Securitization Regulation) must, among other things: (a) verify that, where the originator or original lender is established in a third country (that is, not within the EU or the EEA), the originator or original lender grants all the credits giving rise to the underlying exposures on the basis of sound and well-defined criteria and clearly established processes for approving, amending, renewing and financing those credits and has effective systems in place to apply those criteria and processes to ensure that credit-granting is based on a thorough assessment of the obligor’s creditworthiness, (b) verify that, if established in a third country, the originator, sponsor or original lender retains on an ongoing basis a material net economic interest which, in any event, shall not be less than 5%, determined in accordance with Article 6 of the EU Securitization Regulation, and discloses the risk retention to institutional investors, and (c) verify that the originator, sponsor or securitisation special purpose entity (“SSPE”) has, where applicable, made available the information required by Article 7 of the EU Securitization Regulation (which sets out transparency requirements for originators, sponsors and SSPEs).

Although the sponsor will retain credit risk in accordance with Regulation RR as described in this prospectus under “Credit Risk Retention”, none of the sponsor, the depositor, the underwriters or any of their affiliates will retain or commit to retain a 5% net economic interest with respect to this transaction for the purposes of the EU Securitization Rules or to take or refrain from taking any other action in order to facilitate compliance by investors with any applicable requirements of the EU Securitization Rules. Lack of compliance with those requirements will preclude certain investors from purchasing the notes, and this lack of suitability may impair the marketability and liquidity of the notes.

Failure by an investor or investment manager to comply with any applicable requirements under the EU Securitization Rules with respect to an investment in the notes offered by this prospectus may result in the imposition of a penalty regulatory capital charge on that investment or of other regulatory sanctions. The EU Securitization Rules and any other changes to the regulation or regulatory treatment of the notes for some or all investors may negatively impact the regulatory position of affected investors and investment managers and have an adverse impact on the value and liquidity of the notes offered by this prospectus. Prospective investors should analyze their own regulatory position, and are encouraged to consult with their own investment and legal advisors, regarding application of and compliance with any applicable requirements of the EU Securitization Rules or other applicable regulations and the suitability of the offered notes for investment.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

Set forth below is a discussion of the material U.S. federal income tax consequences relevant to the purchase, ownership and disposition of the notes. This discussion is based upon current provisions of the Internal Revenue Code, existing and proposed Treasury Regulations thereunder, current administrative rulings, judicial decisions and other applicable authorities. The issuing entity will be provided with an opinion of Special Tax Counsel, regarding certain U.S. federal income tax matters discussed below. There are no cases or Internal Revenue Service (“IRS”) rulings on similar transactions involving debt with terms similar to those of the notes. As a result, there can be no assurance that the IRS will not challenge the conclusions reached in this prospectus, and no ruling from the IRS has been or will be sought on any of the issues discussed below. Furthermore, legislative, judicial or administrative changes may occur, perhaps with retroactive effect, which could affect the accuracy of the statements and conclusions set forth in the prospectus as well as the tax consequences to noteholders.

This discussion is not a complete analysis of all potential U.S. federal income tax consequences and does not address any tax consequences arising under any state, local or non-U.S. tax laws, any income tax treaties, or any other U.S. federal income tax laws, including U.S. federal estate and gift tax laws, the Medicare tax on unearned income, or the alternative minimum tax. It also does not purport to deal with all aspects of U.S. federal income taxation that may be relevant to the noteholders in light of their personal investment circumstances nor, except for limited discussions of particular topics, to holders subject to special treatment under the U.S. federal income tax laws, including:



105

Table of Contents

financial institutions;




broker-dealers;




life insurance companies;




tax-exempt organizations;




persons that hold the notes or certificates as a position in a “straddle” or as part of a synthetic security or “hedge,” “conversion transaction” or other integrated investment;




persons that have a “functional currency” other than the U.S. dollar; and




investors in pass-through entities.

Unless otherwise specified, this information is directed to prospective purchasers unrelated to the issuing entity who purchase notes at their issue price in the initial distribution thereof and who hold the notes or certificates as “capital assets” within the meaning of Section 1221 of the Internal Revenue Code. We suggest that prospective investors consult with their tax advisors as to the federal, state, local, foreign and any other tax consequences to them of the purchase, ownership and disposition of the notes or the certificates.

A “U.S. Person” or “United States Person” means (i) a citizen or resident of the United States, (ii) a corporation or other entity created or organized in or under the laws of the United States or any political subdivision thereof, including the District of Columbia, (iii) a trust which is subject to the primary supervision of a court within the United States and the substantial decisions of which are controlled by one or more U.S. Persons or (iv) an estate the income of which is subject to U.S. federal income taxation regardless of its source.

The following discussion addresses notes which the depositor, the servicer and the noteholders will agree to treat as indebtedness secured by the receivables. On the Closing Date, Special Tax Counsel will deliver an opinion, subject to the assumptions and qualifications therein, to the effect that, based on the terms of the notes, the transactions relating to the receivables as set forth herein and the applicable provisions of the issuing entity’s formation document and related documents, for U.S. federal income tax purposes, the notes (other than any notes beneficially owned by the issuing entity or a person treated as the same person as the issuing entity for U.S. federal income tax purposes) will be characterized as indebtedness; and the issuing entity will not be characterized as an association or publicly traded partnership taxable as a corporation. The tax opinion of Special Tax Counsel with respect to the issuing entity will be subject to certain assumptions, conditions and qualifications as described in detail below. Noteholders should be aware that, as of the closing date, no transaction closely comparable to that contemplated herein has been the subject of any judicial decision, Treasury Regulation or IRS revenue ruling. Although Special Tax Counsel will issue a tax opinion to the effect described above, the IRS may successfully take a contrary position and the tax opinions are not binding on the IRS or on any court. The following discussion assumes the notes are characterized as indebtedness for U.S. federal income tax purposes. For purposes of this discussion, references to a “holder” are to the beneficial owner of a note.

The term “U.S. Holder” means a holder of a note that is a U.S. Person for U.S. federal income tax purposes. The term “Non-U.S. Holder” means a holder of a note other than a U.S. Holder or an entity treated as a partnership for U.S. federal income tax purposes.

Special rules, not addressed in this discussion, may apply to persons purchasing notes through entities or arrangements treated for U.S. federal income tax purposes as partnerships, and any such partnership purchasing notes and persons purchasing notes through such a partnership should consult their own tax advisors in that regard.

U.S. Federal Income Tax Consequences to U.S. Holders of the Notes

Treatment of Stated Interest. Stated interest on a note that is treated as “qualified stated interest” is includible in income by a U.S. Holder when received or accrued in accordance with the holder’s method of accounting. “Qualified stated interest” is generally stated interest that is “unconditionally payable” at least annually at a single fixed rate or certain floating rates. Interest is considered “unconditionally payable” if reasonable legal



106

Table of Contents
remedies exist to compel timely payment or the terms and conditions of the debt instrument make the likelihood of late payment (other than late payment that occurs within a reasonable grace period) or nonpayment (ignoring the possibility of nonpayment due to default, insolvency or similar circumstances) a remote contingency. Interest received on a note may constitute “investment income” for purposes of some limitations of the Internal Revenue Code concerning the deductibility of investment interest expense.

Original Issue Discount. It is anticipated that no class of notes offered hereunder will be issued with more than a de minimis amount (i.e., with 1/4% or more of the principal amount of a class of notes multiplied by its weighted average life to maturity) of original issue discount (“OID”). In general, OID is the excess of the stated redemption price at maturity of a debt instrument over its issue price, unless that excess falls within a statutorily defined de minimis exception. A note’s stated redemption price at maturity is the aggregate of all payments required to be made under the note through maturity except qualified stated interest. Qualified stated interest is generally interest that is unconditionally payable in cash or property, other than debt instruments of the issuing entity, at fixed intervals of one year or less during the entire term of the instrument at specified rates. The issue price will be the first price at which a substantial amount of the notes are sold, excluding sales to bond holders, brokers or similar persons acting as underwriters, placement agents or wholesalers.

In the case of notes issued with de minimis OID, generally, a portion of such OID is taken into income upon each principal payment on the note. Such portion equals the de minimis OID times a fraction whose numerator is the amount of principal payment made and whose denominator is the stated principal amount of the note. Such income generally is capital gain.

If the notes offered hereunder are in fact issued at a greater than de minimis discount or are treated as having been issued with OID under the Treasury Regulations, a U.S. Holder would be required to include OID in income as interest over the term of the note under a constant yield method. In general, OID must be included in income in advance of the receipt of cash representing that income. Thus, each cash distribution would be treated as an amount already included in income, to the extent OID has accrued as of the date of the interest distribution and is not allocated to prior distributions, or as a repayment of principal. This treatment would have no significant effect on U.S. Holders using the accrual method of accounting. However, a U.S. Holder using the cash method of accounting may be required to report income on the notes in advance of the receipt of cash attributable to that income.

In the case of a debt instrument (such as a note) as to which the repayment of principal may be accelerated as a result of the prepayment of other obligations securing the debt instrument, under Section 1272(a)(6) of the Internal Revenue Code, the periodic accrual of OID is determined by taking into account (i) a reasonable prepayment assumption in accruing OID (generally, the assumption used to price the debt offering) and (ii) adjustments in the accrual of OID when prepayments do not conform to the prepayment assumption, and regulations could be adopted applying those provisions to the notes. It is unclear whether those provisions would be applicable to the notes in the absence of such regulations or whether use of a reasonable prepayment assumption may be required or permitted without reliance on these rules. If this provision applies to the notes, the amount of OID that will accrue in any given “accrual period” may either increase or decrease depending upon the actual prepayment rate. In the absence of such regulations (or statutory or other administrative clarification), any information reports or returns to the IRS and the U.S. Holders regarding OID, if any, will be based on the assumption that the receivables will prepay at a rate based on the assumption used in pricing the notes offered hereunder. However, no representation will be made regarding the prepayment rate of the receivables. See “Weighted Average Life of the Notes” in this prospectus. Accordingly, holders are advised to consult their own tax advisors regarding the impact of any prepayments under the receivables (and the OID rules) if the notes offered hereunder are issued with OID.

A holder of a Short-Term Note will generally not be required to include OID on the Short-Term Note in income as it accrues, provided the holder of the note is not an accrual method taxpayer, a bank, a broker or dealer that holds the note as inventory, a regulated investment company or common trust fund, or the beneficial owner of pass-through entities specified in the Internal Revenue Code, or provided the holder does not hold the instrument as part of a hedging transaction, or as a stripped bond or stripped coupon. Instead, the holder of a Short-Term Note would include the OID accrued on the note in gross income upon a sale or exchange of the note or at maturity, or if the note is payable in installments, as principal is paid thereon. A holder of a Short-Term Note would be required to defer deductions for any interest expense on an obligation incurred to purchase or carry the note to the extent it exceeds the sum of the interest income, if any, and OID accrued on the note. However, a holder may elect to include OID in income as it accrues on all obligations having a maturity of one year or less held by the holder in that taxable year or thereafter, in which case the deferral rule of the preceding sentence will not apply. For purposes of this



107

Table of Contents
paragraph, OID accrues on a Short-Term Note on a ratable, straight-line basis, unless the holder irrevocably elects, under regulations to be issued by the Treasury Department, to apply a constant interest method to such obligation, using the holder’s yield to maturity and daily compounding.

If the notes are not issued with OID but a U.S. Holder purchases a note at a discount greater than the de minimis amount set forth above, such discount will be market discount. Generally, a portion of each principal payment will be treated as ordinary income to the extent of the accrued market discount not previously recognized as income. Gain on a sale of such note is treated as ordinary income to the extent of the accrued but not previously recognized market discount. Market discount generally accrues ratably, absent an election to base accrual on a constant yield to maturity basis. A U.S. Holder who purchases a note at a premium will be subject to the “bond premium amortization” rules of the Internal Revenue Code.

Disposition of Notes. If a U.S. Holder sells a note, the holder will recognize capital gain or loss in an amount equal to the difference between the amount realized on the sale (other than amounts representing accrued and unpaid interest) and the holder’s adjusted tax basis in the note. The adjusted tax basis of the note to a particular U.S. Holder will equal the holder’s cost for the note, increased by any OID and market discount previously included by the noteholder in income from the note and decreased by any bond premium previously amortized and any principal payments previously received by the noteholder on the note. Any gain or loss will be capital gain or loss if the note was held as a capital asset, except for gain representing accrued interest or accrued market discount not previously included in income. Capital gain or loss will be long-term if the note was held by the holder for more than one year and otherwise will be short-term. Any capital losses realized generally may be used by a corporate taxpayer only to offset capital gains, and by an individual taxpayer only to the extent of capital gains plus $3,000 of other income.

Potential Acceleration of Income. An accrual method taxpayer that prepares an “applicable financial statement” (as defined in Section 451 of the Internal Revenue Code, which includes any GAAP financial statement, Form 10-K annual statement, audited financial statement or a financial statement filed with any federal agency for non-tax purposes) generally would be required to include certain items of income such as OID and possibly de minimis OID in gross income no later than the time such amounts are reflected on such a financial statement. This could result in an acceleration of income recognition for income items differing from the above description, although the precise application of this rule is unclear at this time.

Information Reporting and Backup Withholding. The issuing entity will be required to report annually to the IRS, and to each noteholder of record, the amount of interest paid on the notes, and the amount of interest withheld for U.S. federal income taxes, if any, for each calendar year, except as to exempt holders which are, generally, tax-exempt organizations, qualified pension and profit-sharing trusts, individual retirement accounts or nonresident aliens who provide certification as to their status. Each U.S. Holder will be required to provide to the issuing entity or other applicable paying agent, under penalties of perjury, IRS Form W-9 or other similar form containing the holder’s name, address, correct federal taxpayer identification number and a statement that the holder is not subject to backup withholding. If a nonexempt noteholder fails to provide the required certification, the issuing entity or other paying agent will be required to withhold at the currently applicable rate from interest otherwise payable to the holder, and remit the withheld amount to the IRS as a credit against the holder’s U.S. federal income tax liability. Holders should consult their tax advisors regarding the application of the backup withholding and information reporting rules to their particular circumstances.

Because the depositor will not treat the issuing entity as a partnership and will treat all notes as indebtedness for U.S. federal income tax purposes, the depositor will not comply with the tax reporting requirements that would apply under any alternative characterizations of the issuing entity.

U.S. Federal Income Tax Consequences to Non-U.S. Holders of the Notes

Interest (including OID) paid or accrued to a Non-U.S. Holder generally will be considered “portfolio interest,” and generally will not be subject to U.S. federal income tax or withholding if the interest is not effectively connected with the conduct of a trade or business within the United States by the Non-U.S. Holder (or under certain tax treaties is not attributable to a United States permanent establishment maintained by such Non-U.S. Holder) and:



108

Table of Contents

the Non-U.S. Holder is not actually or constructively a “10 percent shareholder” of the issuing entity or the depositor, including a holder of 10% of the outstanding certificates or other equity interests of the issuing entity, or a “controlled foreign corporation” (as defined in the Internal Revenue Code) with respect to which the issuing entity or the depositor is a “related person” within the meaning of the Internal Revenue Code;




the Non-U.S. Holder is not a bank receiving interest described in Section 881(c)(3)(A) of the Internal Revenue Code;




the interest is not contingent interest described in Section 871(h)(4) of the Internal Revenue Code; and




the Non-U.S. Holder provides the trustee or other person who is otherwise required to withhold U.S. tax with respect to the notes with a timely and properly executed IRS Form W-8BEN, W-8BEN-E or W-8IMY (with required attachments) or other appropriate form (or appropriate successor form), signed under penalties of perjury, certifying that the Non-U.S. Holder is a Foreign Person and providing the Foreign Person’s name and address.

If a Non-U.S. Holder does not qualify for the portfolio interest exemption from withholding, payments of interest, including payments relating to any accrued OID, may be subject to withholding tax at a tax rate of 30 percent. The foregoing rate is subject to reduction or elimination under any applicable tax treaty, if the Non-U.S. Holder supplies at the time of its initial purchase, and at all subsequent times as are required under the Treasury regulations, a properly executed IRS Form W-8BEN, W-8BEN-E, W-8IMY (with required attachments) or other appropriate form, (or appropriate successor form), signed under penalties of perjury, to report its eligibility for that reduced rate or exemption.

If a note beneficially owned by a Non-U.S. Holder is held through a securities clearing organization or certain financial institutions as an intermediary, the intermediary generally will be required to provide a duly completed and executed IRS Form W-8IMY (or any successor or substitute form) providing, among other information required to be submitted, certain identifying information with respect to the intermediary, whether the intermediary is a “Qualified Intermediary” or a “Non-Qualified Intermediary,” and appropriate certifications from its Non-U.S. Holders (e.g., IRS Form W-8BEN or W-8BEN-E) or other certifications with respect to such beneficial owners, relating to their status as Foreign Persons.

All Non-U.S. Holders will be required to update the relevant IRS forms listed above and any supporting documentation, in accordance with the requirements under the U.S. Treasury Regulations. These forms generally remain in effect for a period starting on the date the form is signed and ending on the last day of the third succeeding calendar year, unless a change in circumstances makes any information on the form incorrect. The issuing entity will not be obligated to pay any additional amounts to “gross up” payments to noteholders or beneficial owners of notes who are Foreign Persons, as a result of any withholding or deduction for, or on account of, any present or future taxes, duties, assessments or government charges with respect to payments in respect of the notes.

Any gain realized on the sale, redemption, retirement or other taxable disposition of a note by a Non-U.S. Holder will be exempt from U.S. federal income and withholding tax, provided that the gain is not effectively connected with the conduct of a trade or business in the United States by the Non-U.S. Holder (or under certain tax treaties is not attributable to a United States permanent establishment maintained by such Non-U.S. Holder) and in the case of a Non-U.S. Holder that is an individual, the Non-U.S. Holder is not present in the United States for 183 days or more in the taxable year.

Interest, gain and any other income on a note held by a Non-U.S. Holder that is effectively connected with the conduct of a trade or business within the United States by the Non-U.S. Holder (and under certain tax treaties is attributable to a United States permanent establishment maintained by such Non-U.S. Holder) is generally exempt from U.S. withholding, provided such noteholder provides the trustee or other person required to withhold with certain certifications on IRS Form W-8ECI (or a similar form). However, the Non-U.S. Holder generally will be subject to U.S. federal income tax on a net basis at the same U.S. federal income tax rates applicable to U.S. Persons. In the case of a Non-U.S. Holder that is a corporation, such effectively connected income and gain also may be subject to a U.S. branch profits tax at a rate of 30 percent, unless the Non-U.S. Holder qualifies for a lower rate under an applicable tax treaty.



109

Table of Contents
FATCA. Under Sections 1471 through 1474 of the Internal Revenue Code and applicable regulations thereunder (“FATCA”), a 30% withholding tax is imposed on “withholdable payments” made to foreign financial institutions unless the payee foreign financial institution agrees, among other things, to disclose the identity of any “U.S. account holder” of the institution (or the institution’s affiliates) and to report annually certain information about such account. “Withholdable payments” include (1) payments of interest (including original issue discount), dividends, and other items of fixed or determinable annual or periodical gains, profits, and income (“FDAP”), in each case, from sources within the United States, and (2) beginning January 1, 2019, gross proceeds from the sale of any property of a type which can produce interest or dividends from sources within the United States. Treasury Regulations were recently published in proposed form that eliminate withholding on payments of gross proceeds from such dispositions. Pursuant to these proposed Treasury Regulations, the issuing entity and any withholding agent may rely on this change to FATCA withholding until the final Treasury Regulations are issued. FATCA also requires withholding agents making withholdable payments to certain non-financial foreign entities that do not disclose the name, address, and taxpayer identification number of any substantial U.S. owners (or certify that they do not have any substantial United States owners) to withhold tax at a rate of 30%.

Withholding under FATCA, absent an applicable exception, will apply to all withholdable payments without regard to whether the beneficial owner of the payment is a U.S. person, or would otherwise be entitled to an exemption from the imposition of withholding tax pursuant to an applicable tax treaty with the United States or pursuant to U.S. domestic law. As such, a U.S. Holder or a Non-U.S. Holder may be subject to withholding of U.S. federal income tax at the current rate of 30% on payments of interest, and, beginning January 1, 2019, on the gross proceeds from the disposition of such a note (subject to the proposed Treasury Regulations described above), if (i) the holder is, or holds such note through, a “foreign financial institution,” unless such foreign financial institution is exempt or has entered into an agreement with the IRS to comply with the information reporting requirements discussed above or (ii) the holder is a “non-financial foreign entity,” unless the holder is exempt or has provided any required information with respect to its direct and indirect United States owners. Certain countries have entered into, and other countries are expected to enter into, agreements with the United States to facilitate the type of information reporting required under FATCA. While the existence of such agreements will not eliminate the risk that notes will be subject to FATCA withholding described above, these agreements are expected to reduce the risk of the withholding for investors in (or indirectly holding notes through intermediaries in) those countries. U.S. Holders and holders that are Foreign Persons should consult their own tax advisors regarding FATCA and whether it may be relevant to their purchase, ownership and disposition of the notes.

Possible Alternative Treatments of the Notes and the Issuing Entity

Although, as discussed above, Special Tax Counsel will deliver an opinion to the effect that the notes (other than any notes, if any, beneficially owned by the issuing entity or a person considered to be the same person as the issuing entity for U.S. federal income tax purposes) will be characterized as debt for U.S. federal income tax purposes, the IRS may take a contrary position. If the IRS were to contend successfully that any class of notes were not debt for U.S. federal income tax purposes, such notes might be treated as equity interests in the issuing entity. As a result, even if the depositor or another single person was the sole certificateholder of the issuing entity, the issuing entity would be considered to have multiple equity owners and might be classified for U.S. federal income tax purposes as an association taxable as a corporation or as a partnership. (Additionally, even if all the notes are treated as debt for U.S. federal income tax purposes, but there is more than one person (and all such persons are not treated as the same person for U.S. federal income tax purposes) holding a certificate (or interest therein), the issuing entity may be considered to have multiple equity owners and might be classified for U.S. federal income tax purposes as an association taxable as a corporation or as a partnership.)

A partnership is generally not subject to an entity level tax for U.S. federal income tax purposes, while an association or corporation is subject to an entity level tax. If the issuing entity were treated as a partnership (which most likely would not be treated as a publicly traded partnership taxable as a corporation) and one or more classes of notes were treated as equity interests in that partnership, each item of income, gain, loss, deduction, and credit generated through the ownership of the receivables by the partnership would be passed through to the partners, including the affected Holders, according to their respective interests therein. Under current law, the income reportable by Holders as partners in such a partnership could differ from the income reportable by the Holders as holders of debt. Generally, such differences are not expected to be material; however, certain Holders may have adverse tax consequences. For example, cash basis Holders might be required to report income when it accrues to the partnership rather than when it is received by the Holders. Payments on the recharacterized notes would likely be treated as “guaranteed payments,” in which case the amount and timing of income to a U.S. Holder would



110

Table of Contents
generally not be expected to materially differ from that which would be the case were the notes not recharacterized. On the other hand, if payments are not treated as “guaranteed payments,” note that U.S. Holders would be taxed on the partnership income regardless of when distributions are made to them and are not entitled to deduct miscellaneous itemized deductions (which may include their share of partnership expenses) for the tax years 2018-2025. In addition, to the extent partnership expenses are treated as allocable to a trade or business, the amount or value of interest expense deductions available to the holders of equity interests in the issuing entity with respect to the issuing entity’s interest expense may be limited under the rules of Section 163(j) of the Internal Revenue Code. Any income allocated to a Holder that is a tax-exempt entity may constitute unrelated business taxable income because all or a portion of the issuing entity’s taxable income may be considered debt-financed. The receipt of unrelated business taxable income by a tax-exempt holder could give rise to additional tax liability to such tax-exempt holder. Depending on the circumstances, a Non-U.S. Holder might be required to file a United States individual or corporate income tax return, as the case may be, and it is possible that (i) gross income allocated to such person may be subject to 30% withholding tax (i.e., unreduced by any interest deductions or other expenses) unless reduced or eliminated pursuant to an applicable tax treaty or (ii) such person may be subject to (x) tax (and withholding) on its allocable interest at regular U.S. rates and, in the case of a corporation, a 30% branch profits tax rate (unless reduced or eliminated pursuant to an applicable tax treaty) and (y) a withholding of tax on purchase price paid to it in the event of a disposition of the note (treated as a partnership interest).

In addition, as described above, new rules were enacted that apply to the audit of partnerships and entities treated as partnerships. As described above, the parties responsible for the tax administration of the issuing entity will have the authority to utilize, and intend to utilize, any exceptions available so that the issuing entity’s equity holders, to the fullest extent possible, rather than the issuing entity itself, will be liable for any taxes arising from audit adjustments to the issuing entity’s taxable income if the issuing entity is treated as a partnership. As such, holders of equity (including holders of notes recharacterized as equity) could be obligated to pay any such taxes and other costs, and may have to take the adjustment into account for the taxable year in which the adjustment is made rather than for the audited taxable year. Prospective investors are urged to consult with their tax advisors regarding the possible effect of the new rules on them.

If, alternatively, the issuing entity were treated as either an association taxable as a corporation or a publicly traded partnership taxable as a corporation, the issuing entity would be subject to U.S. federal income taxes at corporate tax rates on its taxable income generated by ownership of the receivables. Moreover, distributions by the issuing entity to all or some of the noteholders would probably not be deductible in computing the issuing entity’s taxable income and all or part of the distributions to noteholders would probably be treated as dividends. Such an entity-level tax could result in reduced distributions to noteholders and adversely affect the issuing entity’s ability to make payments of principal and interest with respect to the notes. To the extent distributions on such notes were treated as dividends, a non-U.S. Holder would generally be subject to tax (and withholding) on the gross amount of such dividends at a rate of 30% unless reduced or eliminated pursuant to an applicable income tax treaty.

The United States Department of the Treasury and the IRS recently issued Treasury Regulations under Section 385 of the Internal Revenue Code that address the debt or equity treatment of instruments held by certain parties related to the issuing entity. In particular, in certain circumstances, a note that otherwise would be treated as debt is treated as stock for U.S. federal income tax purposes during periods in which the note is held by an applicable related party (meaning a member of an “expanded group” that includes the issuing entity (or its owner(s)), generally based on a group of corporations or controlled partnerships connected through 80% direct or indirect ownership links). Under these Treasury Regulations, any notes treated as stock under these rules could result in adverse tax consequences to such related party noteholder, including that U.S. federal withholding taxes could apply to distributions on the notes. If the issuing entity were to become liable for any such withholding or failure to so withhold, the resulting impositions could reduce the cash flow that would otherwise be available to make payments on all notes. In addition, when a recharacterized note is acquired by a beneficial owner that is not an applicable related party, that note is generally treated as reissued for U.S. federal income tax purposes and thus may have tax characteristics differing from notes of the same class that were not previously held by a related party. The issuing entity does not expect that these Treasury Regulations will apply to any of the notes. However, the Treasury Regulations are complex and recently issued and thus have not yet been applied by the IRS or any court. In addition, the IRS has reserved certain portions of the Treasury Regulations pending its further consideration. Moreover, the depositor, the Delaware trustee and the owner trustee will be able to amend the trust agreement in the future without the consent of noteholders as required to prevent the application of such Treasury Regulations to the notes in the case of a sale of trust certificates to a third party. Prospective investors should note that the Treasury Regulations are complex, and are urged to consult their tax advisors regarding the possible effects of the new rules.



111

Table of Contents
STATE AND LOCAL TAX CONSEQUENCES

The above discussion does not address the tax treatment of the issuing entity, notes, or Holders under any state or local tax laws. The activities to be undertaken by the servicer in servicing and collecting on the receivables will take place throughout the United States and, therefore, many different state and local tax regimes potentially apply to different portions of these transactions. It is possible a state or local jurisdiction may assert its right to impose tax on the issuing entity with respect to its income related to receivables collected from customers located in such jurisdiction. It is also possible that a state may require that a certificateholder or a noteholder treated as an equity owner (including non-resident certificateholders and noteholders) file state income tax returns with the state pertaining to receivables collected from customers located in such state (and may require withholding by the issuing entity on related income). Certain states have also recently enacted partnership audit rules that mirror or connect with the audit rules that now apply to partnerships for U.S. federal income tax purposes, and similar considerations apply to those state partnership audit rules as apply to the current federal partnership audit rules. Prospective investors are urged to consult with their tax advisors regarding the state and local tax treatment of the issuing entity as well as any state and local tax consequences for them of purchasing, holding and disposing of notes.

The federal and state tax discussions set forth above are included for general information only and may not be applicable depending upon your particular tax situation. It is suggested that prospective investors consult their own tax advisors with respect to the tax consequences to them of the purchase, ownership and disposition of notes, including the tax consequences under state, local, foreign and other tax laws and the possible effects of changes in federal or other tax laws.

CERTAIN CONSIDERATIONS FOR ERISA AND

OTHER U.S. BENEFIT PLANS

Subject to the following discussion, the notes may be acquired with the assets of an “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is subject to Title I of ERISA, a “plan” as defined in and subject to Section 4975 of the Internal Revenue Code or an entity deemed to hold plan assets of the foregoing (each, a “Benefit Plan Investor”), as well as by governmental plans (as defined in Section 3(32) of ERISA), church plans (as defined in Section 3(33) of ERISA), and other plans and entities deemed to hold plan assets of the foregoing (collectively, with Benefit Plan Investors, referred to as “Plans”). Section 406 of ERISA and Section 4975 of the Internal Revenue Code prohibit Benefit Plan Investors from engaging in certain transactions with persons that are “parties in interest” under ERISA or “disqualified persons” under the Internal Revenue Code with respect to such Benefit Plan Investor. A violation of these “prohibited transaction” rules may result in an excise tax or other penalties and liabilities under ERISA and the Internal Revenue Code for such persons or the fiduciaries of such Benefit Plan Investor. In addition, Title I of ERISA requires fiduciaries of a Benefit Plan Investor subject to ERISA to make investments that are prudent, diversified and in accordance with the governing plan documents. Governmental plans are not subject to Title I of ERISA or Section 4975 of the Internal Revenue Code. However, such plans may be subject to similar restrictions under applicable federal, state, local or other law (“Similar Law”). Governmental and certain church plans are also subject to the prohibited transaction rules in Section 503(b) of the Internal Revenue Code.

Certain transactions involving the issuing entity might be deemed to constitute prohibited transactions under ERISA and the Internal Revenue Code with respect to a Benefit Plan Investor that acquired notes if assets of the issuing entity were deemed to be assets of the Benefit Plan Investor. Under a regulation issued by the U.S. Department of Labor, as modified by Section 3(42) of ERISA (the “Regulation”), the assets of the issuing entity would be treated as plan assets of a Benefit Plan Investor for the purposes of ERISA and the Internal Revenue Code only if the Benefit Plan Investor acquired an “equity interest” in the issuing entity and none of the exceptions to plan assets contained in the Regulation were applicable. An equity interest is defined under the Regulation as an interest other than an instrument which is treated as indebtedness under applicable local law and which has no substantial equity features. Although there is little guidance on the subject, it is anticipated that, at the time of their issuance, the notes should be treated as indebtedness of the issuing entity without substantial equity features for purposes of the Regulation. This determination is based upon the traditional debt features of the notes, including the reasonable expectation of purchasers of notes that the notes will be repaid when due, traditional default remedies, as well as on the absence of conversion rights, warrants and other typical equity features. The debt treatment of the notes for ERISA purposes could change subsequent to their issuance if the issuing entity incurs losses. This risk of recharacterization is enhanced for notes that are subordinated to other classes of securities. In the event of a



112

Table of Contents
withdrawal or downgrade to below investment grade of the rating of the notes, the subsequent acquisition of the notes or interest therein by a Benefit Plan Investor or a Plan that is subject to Similar Law is prohibited.

However, without regard to whether the notes are treated as an equity interest in the issuing entity for purposes of the Regulation, the acquisition or holding of notes by or on behalf of a Benefit Plan Investor could be considered to give rise to a prohibited transaction if the issuing entity, the depositor, the originator, the servicer, the administrator, the underwriters, the owner trustee, the Delaware trustee, any of their affiliates or the indenture trustee is or becomes a party in interest or a disqualified person with respect to such Benefit Plan Investor. Certain exemptions from the prohibited transaction rules could be applicable to the acquisition and holding of the notes by a Benefit Plan Investor depending on the type and circumstances of the plan fiduciary making the decision to acquire such notes and the relationship of the party in interest or disqualified person to the Benefit Plan Investor. Included among these exemptions are: Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Internal Revenue Code for certain transactions between a Benefit Plan Investor and persons who are parties in interest or disqualified persons solely by reason of providing services to the Benefit Plan Investor or being affiliated with such service providers; Prohibited Transaction Class Exemption (“PTCE”) 96-23, regarding transactions effected by “in-house asset managers;” PTCE 95-60, regarding investments by insurance company general accounts; PTCE 91-38, regarding investments by bank collective investment funds; PTCE 90-1, regarding investments by insurance company pooled separate accounts; and PTCE 84-14, regarding transactions effected by “qualified professional asset managers.” Even if the conditions specified in one or more of these exemptions are met, the scope of the relief provided by these exemptions might or might not cover all acts which might be construed as prohibited transactions. There can be no assurance that any of these, or any other exemption, will be available with respect to any particular transaction involving the notes, and prospective purchasers that are Benefit Plan Investors should consult with their legal advisors regarding the applicability of any such exemption.

By acquiring a note (or interest therein), each purchaser and transferee (and if the purchaser or transferee is a Plan, its fiduciary) is deemed to represent and warrant that either (i) it is not acquiring and will not hold the note (or interest therein) with the assets of a Benefit Plan Investor or Plan subject to Similar Law; or (ii) (a) the acquisition and holding of the note (or interest therein) will not give rise to a nonexempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code or a violation of Similar Law and (b) is rated investment grade by a nationally recognized statistical rating organization.

A Plan fiduciary considering the acquisition of notes should consult its legal advisors regarding the matters discussed above and other applicable legal requirements. None of the issuing entity, the underwriters, the servicer, the administrator nor any of their respective affiliates, agents or employees will act as a fiduciary to any Plan with respect to the Plan’s decision to invest in the notes.

UNDERWRITING

Subject to the terms and conditions set forth in the underwriting agreement relating to the notes, the depositor has agreed to sell and the underwriters named below have severally but not jointly agreed to purchase the principal amount of the notes set forth opposite its name below:



Underwriter Class A-1
Notes Class A-2-A
Notes Class A-2-B
Notes Class A-3
Notes Class A-4
Notes Total
Credit Suisse Securities (USA) LLC

$● $● $● $● $● $●
Citigroup Global Markets Inc.

$● $● $● $● $● $●
J.P. Morgan Securities LLC

$● $● $● $● $● $●
RBC Capital Markets, LLC

$● $● $● $● $● $●
Fifth Third Securities Inc.

$● $● $● $● $● $●


















Total

$285,000,000 $● $● $408,500,000 $132,715,000 $1,301,215,000


















The underwriting agreement provides that the obligations of the underwriters are subject to certain conditions precedent and that the underwriters will be obligated to purchase all the notes if any are purchased. The underwriting agreement provides that, in the event of a default by an underwriter, in certain circumstances the purchase commitments of the non-defaulting underwriter may be increased or the underwriting agreement may be terminated.



113

Table of Contents
The depositor has been advised by the underwriters that the underwriters propose to offer the notes to the public initially at the offering prices set forth on the cover page of this prospectus, and to certain dealers at these prices less the concessions and reallowance discounts set forth below:



Class

Selling Concession Reallowance Discount
Class A-1 Notes

●% ●%
Class A-2-A Notes

●% ●%
Class A-2-B Notes

●% ●%
Class A-3 Notes

●% ●%
Class A-4 Notes

●% ●%
After the initial public offering, the underwriters may change the public offering price and selling concessions and reallowance discounts to dealers.

There currently is no secondary market for any class of notes and there is no assurance that one will develop. The underwriters expect, but will not be obligated, to make a market in each class of notes. However, the underwriters are not obligated to make a market in the notes and any such market-making may be discontinued at any time at the sole discretion of the underwriters. Accordingly, we give no assurance regarding the liquidity of, or trading markets for, the notes. There is no assurance that a market for the notes will develop, or if one does develop, that it will continue or that it will provide sufficient liquidity.

Fifth Third Bank and the depositor have agreed to indemnify the underwriters against certain liabilities, including civil liabilities under the Securities Act, or to contribute to payments which the underwriters may be required to make in respect thereby. In the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and may, therefore, be unenforceable.

Until the distribution of the notes is completed, rules of the SEC may limit the ability of the underwriters and certain selling group members to bid for and purchase the notes. As an exception to these rules, the underwriters are permitted to engage in certain transactions that stabilize the prices of the notes. Such transactions consist of bids or purchases for the purpose of pegging, fixing or maintaining the price of such notes.

It is expected that delivery of the notes will be made against payment therefor on or about the Closing Date. Rule 15c6-1 of the SEC under the Exchange Act generally requires trades in the secondary market to settle in two business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade notes on the date hereof will be required, by virtue of the fact that the notes initially will settle more than two business days after the date hereof, to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement. It is suggested that purchasers of notes who wish to trade notes on the date hereof consult their own advisors.

Upon receipt of a request by an investor who has received an electronic prospectus from an underwriter or a request by that investor’s representative within the period during which there is an obligation to deliver a prospectus, Fifth Third Bank, the depositor or the underwriters will promptly deliver, or cause to be delivered, without charge, a paper copy of this prospectus.

In the ordinary course of its business one or more of the underwriters and affiliates have provided, and in the future may provide other investment banking and commercial banking services to the depositor, the servicer, the issuing entity and their affiliates.

As discussed under “Use of Proceeds” above, the depositor or its affiliates may apply all or any portion of the net proceeds of this offering to the repayment of debt, including debt secured by the receivables prior to their contribution to the issuing entity.

The indenture trustee, on behalf of the issuing entity and at the direction of the servicer, may from time to time invest the funds in the collection account or the reserve account in permitted investments acquired from the underwriters or their affiliates.



114

Table of Contents
The depositor will receive aggregate proceeds of approximately $● from the sale of the notes (representing approximately ●% of the initial note balance of the notes) after paying the aggregate underwriting discount of $● on the notes. Additional offering expenses are estimated to be $●.

Certain of the notes initially may be retained by the depositor or an affiliate of the depositor (the “Retained Notes”). Any Retained Notes will not be sold to the underwriters under the underwriting agreement. Retained Notes may be subsequently sold from time to time to purchasers directly by the depositor or through underwriters, broker-dealers or agents who may receive compensation in the form of discounts, concessions or commissions from the depositor or the purchasers of the Retained Notes. If the Retained Notes are sold through underwriters or broker-dealers, the depositor will be responsible for underwriting discounts or commissions or agent’s commissions. The Retained Notes may be sold in one or more transactions at fixed prices, prevailing market prices at the time of sale, varying prices determined at the time of sale or negotiated prices.

Any underwriter or agent participating in the distribution of securities, including notes offered by this prospectus, is, and any agent participating in the distribution of securities, including notes offered by this prospectus, may be deemed to be, an underwriter of those securities under the Securities Act and any discounts or commissions received by it and any profit realized by it on the sale or resale of the securities may be deemed to be underwriting discounts and commissions.

Underwriters may engage in over-allotment transactions, stabilizing transactions, syndicate covering transactions and penalty bids with respect to the securities in accordance with Regulation M under the Exchange Act. Over-allotment transactions involve syndicate sales in excess of the offering size, which creates a syndicate short position. The underwriters do not have an “overallotment” option to purchase additional securities in the offering, so syndicate sales in excess of the offering size will result in a naked short position. The underwriters must close out any naked short position through syndicate covering transactions in which the underwriters purchase securities in the open market to cover the syndicate short position. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the securities in the open market after pricing that would adversely affect investors who purchase in the offering. Stabilizing transactions permit bids to purchase the security so long as the stabilizing bids do not exceed a specified maximum. Syndicate coverage transactions involve purchases of the notes in the open market after the distribution has been completed in order to cover syndicate short positions. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the securities originally sold by the syndicate member are purchased in a syndicate covering transaction. These over-allotment transactions, stabilizing transactions, syndicate covering transactions and penalty bids may cause the prices of the securities to be higher than they would otherwise be in the absence of these transactions. Neither the depositor nor any of the underwriters will represent that they will engage in any of these transactions or that these transactions, once commenced, will not be discontinued without notice.

Offering Restrictions

Each underwriter has severally, and not jointly, represented to and agreed with the depositor and Fifth Third Bank that:




it will not offer or sell any notes within the United States, its territories or possessions or to persons who are citizens thereof or residents therein, except in transactions that are not prohibited by any applicable securities, bank regulatory or other applicable law that applies to such underwriter or to an offer of the notes; and




it will not offer or sell any notes in any other country, its territories or possessions or to persons who are citizens thereof or residents therein, except in transactions that are not prohibited by any applicable securities law.

United Kingdom

Each underwriter has further severally represented and agreed that:




it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of



115

Table of Contents

Section 21 of the FSMA) received by it in connection with the issue or sale of any notes in circumstances in which Section 21(1) of the FSMA does not apply to the issuing entity or the depositor; and




it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any notes in, from or otherwise involving the United Kingdom.

European Economic Area

Each underwriter will represent and agree that it has not offered, sold or otherwise made available and will not offer, sell or otherwise make available any notes to any retail investor in the European Economic Area. For the purposes of this provision:



(a)
the expression “retail investor” means a person who is one (or more) of the following: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended “ MiFID II”), (ii) a customer within the meaning of Directive (EU) 2016/97, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II or (iii) not a qualified investor as defined in the Prospectus Directive;



(b)
the expression “offer” includes the communication in any form and by any means of sufficient information on the terms of the offer and the notes to be offered so as to enable an investor to decide to purchase or subscribe the notes; and



(c)
the expression “Prospectus Directive” means Directive 2003/71/EC (as amended or superseded), and includes any relevant implementing measure in the Relevant Member State.

FORWARD-LOOKING STATEMENTS

This prospectus, including information included or incorporated by reference in this prospectus, may contain certain forward-looking statements. In addition, certain statements made in future SEC filings by Fifth Third Bancorp, Fifth Third Bank, the issuing entity or the depositor, in press releases and in oral and written statements made by or with Fifth Third Bank’s, the issuing entity’s or the depositor’s approval may constitute forward-looking statements. Statements that are not historical facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements include information relating to, among other things, continued and increased business competition, an increase in delinquencies (including increases due to worsening of economic conditions), changes in demographics, changes in local, regional or national business, economic, political and social conditions, regulatory and accounting initiatives, changes in customer preferences, and costs of integrating new businesses and technologies, many of which are beyond the control of Fifth Third Bank, FTH LLC, the issuing entity or the depositor. Forward-looking statements also include statements using words such as “expect,” “anticipate,” “hope,” “intend,” “plan,” “believe,” “estimate” or similar expressions. Fifth Third Bank, the issuing entity and the depositor have based these forward-looking statements on their current plans, estimates and projections, and you should not unduly rely on them.

Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions, including the risks discussed under “Risk Factors.” Future performance and actual results may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results and values are beyond the ability of Fifth Third Bank, FTH LLC, the issuing entity or the depositor to control or predict. The forward-looking statements made in this prospectus speak only as of the date stated on the cover of this prospectus. Fifth Third Bank, the issuing entity and the depositor undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than to the extent required under the federal securities laws.

LEGAL PROCEEDINGS

Other than disclosed in this prospectus, there are no legal or governmental proceedings pending, or to the knowledge of the sponsor, threatened, against the sponsor, depositor, FTH LLC, indenture trustee, owner trustee,



116

Table of Contents
Delaware trustee, asset representations reviewer, issuing entity, servicer or originator, or of which any property of the foregoing is the subject, that are material to noteholders.

LEGAL MATTERS

Certain legal matters relating to the notes will be passed upon for the servicer and the depositor by Mayer Brown LLP. Certain other legal matters with respect to the notes, including U.S. federal income tax matters, will be passed upon for the servicer and the depositor by Mayer Brown LLP. Mayer Brown LLP has from time to time represented Fifth Third and its affiliates in other transactions. Katten Muchin Rosenman LLP will provide opinions on certain legal matters relating to the notes for the underwriters.



117

Table of Contents
GLOSSARY

“Available Funds” means, for any payment date and the related collection period, an amount equal to the sum of the following amounts: (i) all Collections received by the servicer during such collection period, (ii) the sum of the repurchase prices deposited in the collection account with respect to each receivable that will be purchased by the depositor or servicer on that payment date, (iii) any amounts in the reserve account (excluding net investment earnings) in excess of the Specified Reserve Account Balance on that payment date and (iv) the optional purchase price deposited into the collection account in connection with the exercise of the optional purchase.

“certificate distribution account” means the account designated as such, established and maintained to the extent required by the indenture.

“certificateholder” means, as of any date, the person in whose name a certificate is registered on the certificate register on that date.

“Closing Date” means May ●, 2019.

“Collections” means, with respect to the receivables and to the extent received by the servicer after the cut-off date, (A) the sum of (i) any monthly payment by or on behalf of the obligor under that receivable, (ii) any full or partial prepayment of such receivables, (iii) all Liquidation Proceeds and (iv) any other amounts received by the servicer which, in accordance with the customary servicing practices, would customarily be applied to the payment of accrued interest or to reduce the outstanding principal balance of a receivable less (B) all Liquidation Expenses; provided, however, that the term Collections in no event will include (i) for any payment date, any amounts in respect of any receivable the repurchase price of which has been included in the Available Funds on a prior payment date, (ii) any Supplemental Servicing Fees or (iii) rebates of premiums with respect to the cancellation or termination of any insurance policy, extended warranty or service contract that was not financed by such receivable.

“cut-off date” means close of business on March 31, 2019.

“Defaulted Receivable” means a receivable (other than a repurchased receivables), which the servicer has charged off in accordance with its customary servicing practices.

“designated certificateholder account” means (a) so long as the depositor or any of its affiliates is the sole certificateholder, the account designated by such certificateholder and (b) at any time thereafter, the certificate distribution account.

“FDIC” means the Federal Deposit Insurance Corporation.

“FDIC Rule Covenant” has the meaning set forth in “Material Legal Aspects of the Receivables—FDIC Rule.”

“Financial Institution” means any securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business.

“Foreign Person” means any person other than (i) a citizen or resident of the United States, (ii) a corporation or partnership organized in or under the laws of the United States or any state or the District of Columbia, (iii) an estate the income of which is includable in gross income for U.S. federal income tax purposes, regardless of its source, or (iv) a trust, if a United States court is able to exercise primary supervision over the administration of such trust and one (1) or more U.S. Persons has the authority to control all substantial decisions of the trust or if it has made a valid election under U.S. Treasury regulations to be treated as a domestic trust.

“Issuing Entity Accounts” means the collection account and any other accounts to be established with respect to the issuing entity, including the principal distribution account, certificate distribution account or reserve account.

“Liquidation Expenses” means, in the case of each of clauses (a) through (c) of the definition of “Liquidation Proceeds,” any expenses (including, without limitation, any auction, painting, repair or refurbishment



118

Table of Contents
expenses in respect of the related financed vehicle) incurred by the servicer in connection therewith and any payments required by law to be remitted to the related obligor.

“Liquidation Proceeds” means, with respect to any receivable, (a) insurance proceeds received by the servicer with respect to any insurance policies relating to the related financed vehicle or maintained by the obligor in connection with a receivable, (b) amounts received by the servicer in connection with that receivable pursuant to the exercise of rights under that receivable and (c) the monies collected by the servicer (from whatever source, including proceeds of a sale of the related financed vehicle, a deficiency balance recovered from the related obligor after the charge-off of that receivable or as a result of any recourse against the related dealer, if any) on that receivable other than any monthly payments by or on behalf of the obligor thereunder or any full or partial prepayment of such receivable; provided, however, that the repurchase price for any receivable purchased by Fifth Third Bank or the servicer will not constitute Liquidation Proceeds.

“Majority Certificateholders” means certificateholders holding in the aggregate more than 50% of the Percentage Interests.

“Net Pool Balance” means, as of any date, the aggregate outstanding principal balance of the related receivables (other than defaulted receivables) as of that date.

“Note Factor” means, with respect to any class of notes issued by the issuing entity, a six-digit decimal which the servicer will compute each month indicating the outstanding note balance of that class of securities at the end of the month as a fraction of the original outstanding balance of that class of notes. The Note Factor for each class of notes will be 1.000000 as of the Closing Date; thereafter, each Note Factor will decline to reflect reductions in the outstanding balance of each class of notes. As a noteholder, your share of the principal balance of a particular class of notes is the product of (1) the original denomination of your note and (2) the applicable class Note Factor.

“Percentage Interest” means, with respect to a certificate, the individual percentage interest of such certificate, which will be specified on the face thereof and which will represent the percentage of certain distributions of the issuing entity beneficially owned by the related certificateholder. The sum of the Percentage Interests for all of the certificates shall be 100%.

“Pool Factor” means a six-digit decimal which the servicer will compute each month indicating the Net Pool Balance at the end of the month as a fraction of the original Net Pool Balance. The Pool Factor will be 1.000000 as of the Closing Date; thereafter, the Pool Factor will decline to reflect reductions in the Net Pool Balance. The amount of a noteholder’s pro rata share of the Net Pool Balance for a given month can be determined by multiplying the original denomination of the holder’s note by the Pool Factor for that month.

“Prepayment Assumption” means the method used to assume the anticipated rate of prepayments in pricing a debt instrument.

“Rating Agency Condition” means, with respect to any event or circumstance and each hired agency, either (a) written confirmation (which may be in the form of a letter, press release or other publication, or a change in such hired agency’s published ratings criteria to this effect) by such hired agency that the occurrence of such event or circumstance will not cause it to downgrade, qualify or withdraw its rating assigned to any of the notes or (b) that such hired agency shall have been given notice of such event or circumstance at least ten days prior to the occurrence of such event or circumstance (or, if ten days’ advance notice is impracticable, as much advance notice as is practicable) and such hired agency shall not have issued any written notice that the occurrence of such event or circumstance will cause it to downgrade, qualify or withdraw its rating assigned to the notes.

“Record Date” means, with respect to any payment date or redemption date, (i) for any definitive notes, the close of business on the last business day of the calendar month immediately preceding the calendar month in which such payment date or redemption date occurs or (ii) for any book-entry securities, the close of business on the business day immediately preceding such payment date.

“SEC” means the U.S. Securities and Exchange Commission.



119

Table of Contents
“Short-Term Note” means any note that has a fixed maturity date of not more than one year from the issue date of that note.

“Simple Interest Method” means the method of calculating interest due on a motor vehicle retail installment sale contract and/or installment loan on a daily basis based on the actual outstanding principal balance of the receivable on that date.

“Simple Interest Receivables” means receivables pursuant to which the payments due from the obligors during any month are allocated between interest, principal and other charges based on the actual date on which a payment is received and for which interest is calculated using the Simple Interest Method.

“Specified Reserve Account Balance” means an amount equal to 0.25% of the initial Net Pool Balance of the receivables; provided, however, on any payment date after the notes are no longer outstanding following payment in full of the principal and interest on the notes, the “Specified Reserve Account Balance” will be $0.

“Special Tax Counsel” means Mayer Brown LLP, as special federal tax counsel to the depositor.

“Supplemental Servicing Fees” means any and all (i) late fees, (ii) extension fees, (iii) non-sufficient funds charges, (iv) prepayment fees and (v) any and all other administrative fees or similar charges allowed by applicable law with respect to any receivable.



120

Table of Contents
INDEX OF PRINCIPAL TERMS



60-Day Delinquent Receivables

75
AAA

77
ABS

61
ABS Tables

61
Acting General Counsel

105
administration agreement

73
administrator

6, 36
AIFMs

107
Assessment of Compliance

87
asset representations review agreement

73
asset representations reviewer

6
Asset Review

76
asset-level data

59
Attestation Report

87
Available Funds

121
Bancorp

41
Bankruptcy Code

101
business day

71
Cede

2
certificate distribution account

121
certificateholder

121
certificates

7, 73
CFPB

23, 41
chattel paper

94
Class A-2 notes

7
clean-up call

8
Clearstream

29
closing date

7
Closing Date

121
Collections

121
Consent Orders

99
contracts

41
cut-off date

10, 121
dealers

41
Defaulted Receivable

121
Delaware trustee

6
Delinquency Percentage

75
Delinquency Trigger

75
Delinquency Trigger Notice Date

76
depositor

6, 36
designated certificateholder account

121
DoD

25
Dodd-Frank Act

22, 105
DOJ

99
DTC

2
EEA

107
EU

107
EU Securitization Regulation

34, 107
EU Securitization Rules

108
Euroclear

29
European Securitization Rules

34
event of default

9, 89
excess interest

13
Exchange Act

86
FATCA

113
FCA

21
FDAP

113
FDIC

23, 41, 121
FDIC Rule

13, 23, 102
FDIC Rule Covenant

102, 121
Federal Reserve Board

41
Fifth Third

41
Fifth Third Bank

2, 6, 36
final scheduled payment date

72
financed vehicles

10
Financial Institution

121
First Allocation of Principal

81
fixed rate notes

7
floating rate notes

7
Foreign Person

121
FSMA

3
FTC Rule

98
FTH LLC

2, 6, 36, 41
HDC Rule

98
hired agencies

14
IBA

21
indenture

73
indenture trustee

6, 67
Instituting Noteholders

76
Internal Revenue Code

89
Investment Company Act

13, 107
investors

13
Investors

69
IORPs

107
IRS

108
issuing entity

6, 36
Issuing Entity Accounts

121
issuing entity property

10
LIBOR

71
LIBOR Determination Date

71
Liquidation Expenses

121
Liquidation Proceeds

122
London Business Day

71
Majority Certificateholders

122
MiFID II

119
MiFID II

3
MLA

25
net pool balance

8
Net Pool Balance

122
Note Factor

122
noteholders

71
obligors

9
OID

110
OLA

105
Order

3
originator

6, 37
owner trustee

6
payment date

7



I-1

Table of Contents
payment default

90
Percentage Interest

122
Pool Asset Representations

75
Pool Factor

122
Prepayment Assumption

122
PRIIPs Regulation

3
Prospectus Directive

3
purchase agreement

73
Rating Agency Condition

122
receivables

9
receivables pool

9, 49
receivables sale agreement

73
record date

7, 67
Record Date

122
Regular Principal Distribution Amount

81
Regulation RR

14
Relevant Member State

3
RELEVANT PERSONS

3
Relief Act

26, 83
requesting party

77
Retained Notes

118
Review Conditions

75
Review Expenses

76
Review Fees

76
Review Satisfaction Date

75
RMBS

38
Rule 193 Information

10, 59
sale agreement

73
SEC

1, 122
servicer

6
servicer replacement events

85
servicing agreement

73
servicing fee

11, 84
Short Term Note

123
Simple Interest Method

123
Simple Interest Receivables

123
Special Tax Counsel

123
specified reserve account balance

12
Specified Reserve Account Balance

79, 123
sponsor

6
SSPE

108
Subject Receivables

75
Supplemental Servicing Fees

123
Target Overcollateralization Amount

81
transfer agreements

73
trust agreement

73
U.S. Person

109
UCITS

107
United States Person

109
Volcker Rule

14, 107
weighted average life

62
WTNA

39



I-2

Table of Contents
APPENDIX A

STATIC POOL INFORMATION REGARDING CERTAIN PREVIOUS RECEIVABLES POOLS

Characteristics of the Receivables

Appendix A, attached to this prospectus, sets forth characteristics of all motor vehicle retail installment sale contracts and installment loans originated and serviced by Fifth Third Bank by vintage origination year and by publicly securitized receivables pool if such securitized pool had characteristics similar to this pool of receivables, including the number of receivables, the aggregate original and the month-end principal balance, the average original and the month-end principal balance, the weighted average contract rate, the weighted average age, the weighted average original term, the weighted average remaining term, the minimum FICO® score, the maximum FICO® score and the weighted average FICO® score, the distribution of the pool of receivables by the range of contract rate, the percentage new, the percentage used, the weighted average LTV, the pool factor, and the geographic distribution, and information with respect to the monthly delinquency rates, the monthly pool factor, the monthly prepayment speeds and the monthly cumulative net charge-off of the pool of receivables. The information in this Appendix A is incorporated into this prospectus.



A-1

Table of Contents
Summary Characteristics of All Originated Receivables



2014 2015 2016 2017 2018
Aggregate Original Principal Balance

$5,494,388,736 $4,820,200,123 $3,384,690,186 $3,787,887,164 $4,328,064,057
Number of Receivables

235,862 206,614 145,209 163,763 185,719
Average Original Principal Balance

$23,295 $23,329 $23,309 $23,130 $23,304
Weighted Average Original Term (1)

69.0 69.0 69.3 69.1 69.1
Weighted Average Contract Rate (1)

3.94% 3.97% 4.64% 5.31% 6.32%
Weighted Average FICO (1) (2)

751 753 746 750 751
Minimum FICO (3)

596 630 630 623 630
Maximum FICO (3)

894 886 884 899 899
% New

49.7% 48.4% 44.0% 42.9% 42.9%
% Used

50.3% 51.6% 56.0% 57.1% 57.1%
Weighted Average LTV (1)(4)

91.5% 91.3% 92.0% 93.5% 93.3%
Aggregate Month-end Principal Balance

$474,318,952 $968,808,626 $1,208,904,756 $2,135,612,763 $3,525,615,099
Month-end Number of Receivables

83,684 104,683 91,379 123,797 165,204
Average Month-end Principal Balance

$5,668 $9,255 $13,230 $17,251 $21,341
Weighted Average Contract Rate (5)

4.10% 4.05% 4.69% 5.35% 6.38%
Weighted Average Age (5)

52.6 41.1 29.1 16.8 5.1
Weighted Average Remaining Term (5)

20.8 30.9 42.1 53.7 64.9
Pool Factor (6)

8.6% 20.1% 35.7% 56.4% 81.5%


(1)
Weighted by aggregate original principal balance.

(2)
Calculated excluding accounts for which no original FICO score is available. Less than 3% have no original FICO score.

(3)
Less than 5% of the original loan balance falls below the minimum FICO score and less than 5% of the aggregate original principal balance exceeds the maximum FICO score. The FICO range represents approximately 90% of the aggregate original principal balances.

(4)
The LTV for a receivable secured by a new vehicle is equal to the original amount financed divided by the manufacturer’s suggested retail price for that vehicle. The LTV for a receivable secured by a used vehicle is equal to the original amount financed divided by the retail price for that vehicle as set forth in the applicable N.A.D.A. Official Used Car Guide or Kelly Bluebook. Amounts relating to LTV are calculated excluding LTVs for which no manufacturer’s suggested retail price or retail price for that vehicle was available.

(5)
Weighted by aggregate month-end principal balance.

(6)
The pool factor represents (a) the aggregate outstanding month-end principal balance of receivables originated in the specified year divided by (b) the aggregate original principal balance of the receivables originated in the specified year.



A-2

Table of Contents
Distribution by States (as a percentage of the aggregate original principal balance) (1)(2)(3)



2014 2015 2016 2017 2018
Texas

10.4% 9.2% 9.9% 11.4% 11.1%
Florida

6.0% 6.6% 6.9% 8.8% 10.7%
Ohio

7.9% 9.4% 8.6% 8.8% 8.4%
California

5.9% 6.1% 4.5% 5.3% 5.9%
Georgia

1.9% 2.0% 2.4% 3.0% 4.5%
Other(4)

67.8% 66.6% 67.9% 62.7% 59.4%


(1)
As of December 31, 2018.

(2)
Based on the contract state of the obligors as of December 31, 2018.

(3)
Totals may not add to 100.0% due to rounding.

(4)
Category includes states representing less than 4.5% of total original principal balances as of December 31, 2018 that are not otherwise set forth above.



A-3

Table of Contents
Delinquency Experience

30-59 Day Delinquency Rates(1)(2)



30-59 Days Past Due
AGE (MONTHS)(3) 2014 2015 2016 2017 2018
1 0.01% 0.01% 0.03% 0.03% 0.03%
2 0.12% 0.13% 0.23% 0.28% 0.41%
3 0.15% 0.17% 0.28% 0.34% 0.42%
4 0.19% 0.22% 0.34% 0.47% 0.56%
5 0.25% 0.25% 0.38% 0.50% 0.63%
6 0.30% 0.31% 0.47% 0.63% 0.78%
7 0.33% 0.35% 0.52% 0.71% 1.04%
8 0.32% 0.37% 0.53% 0.70% 1.17%
9 0.35% 0.39% 0.57% 0.76% 1.08%
10 0.34% 0.43% 0.60% 0.76% 0.94%
11 0.37% 0.46% 0.62% 0.79% 0.98%
12 0.38% 0.45% 0.70% 0.79%
13 0.43% 0.51% 0.74% 0.87%
14 0.47% 0.51% 0.76% 0.94%
15 0.49% 0.57% 0.78% 0.99%
16 0.49% 0.60% 0.87% 0.97%
17 0.52% 0.55% 0.90% 1.05%
18 0.55% 0.61% 0.95% 1.19%
19 0.57% 0.57% 0.93% 1.19%
20 0.59% 0.64% 0.97% 1.30%
21 0.68% 0.68% 1.00% 1.26%
22 0.70% 0.68% 0.99% 1.38%
23 0.71% 0.73% 0.99% 1.68%
24 0.76% 0.76% 1.00%
25 0.77% 0.78% 1.07%
26 0.78% 0.84% 1.02%
27 0.75% 0.83% 1.10%
28 0.81% 0.88% 1.04%
29 0.81% 0.91% 1.06%
30 0.85% 0.92% 1.04%
31 0.85% 0.92% 1.10%
32 0.87% 0.96% 1.14%
33 0.89% 0.98% 1.19%
34 0.92% 0.97% 1.24%
35 0.93% 0.96% 1.35%
36 1.01% 0.98%
37 1.06% 1.04%
38 1.09% 0.99%
39 1.13% 1.07%
40 1.14% 1.04%
41 1.22% 1.16%
42 1.20% 1.18%
43 1.18% 1.24%
44 1.22% 1.23%
45 1.25% 1.28%
46 1.27% 1.26%
47 1.26% 1.48%
48 1.27%
49 1.31%
50 1.40%
51 1.32%
52 1.28%
53 1.44%
54 1.48%
55 1.50%
56 1.46%
57 1.52%
58 1.53%
59 1.61%




(1)
The percentages set forth above represent (a) the aggregate outstanding principal balance of receivables originated in the specified year that are 30-59 days past due at the end of the specified number of months since origination divided by (b) the aggregate outstanding principal balance of all receivables originated in the specified year at the end of the specified number of months since origination.

(2)
As of December 31, 2018.

(3)
“Age (Months)” represents the number of months that have elapsed since origination for receivables originated in the specified year.



A-4

Table of Contents
60-89 Day Delinquency Rates(1)(2)



60-89 Days Past Due
AGE (MONTHS)(3) 2014 2015 2016 2017 2018
1 0.00% 0.00% 0.00% 0.00% 0.00%
2 0.00% 0.00% 0.01% 0.01% 0.00%
3 0.05% 0.06% 0.10% 0.13% 0.18%
4 0.06% 0.07% 0.11% 0.12% 0.16%
5 0.05% 0.08% 0.11% 0.17% 0.22%
6 0.08% 0.07% 0.13% 0.18% 0.23%
7 0.10% 0.08% 0.16% 0.20% 0.28%
8 0.10% 0.09% 0.17% 0.24% 0.37%
9 0.11% 0.12% 0.19% 0.25% 0.46%
10 0.12% 0.13% 0.18% 0.26% 0.44%
11 0.11% 0.13% 0.20% 0.28% 0.27%
12 0.12% 0.14% 0.19% 0.26%
13 0.12% 0.12% 0.21% 0.23%
14 0.11% 0.15% 0.23% 0.28%
15 0.13% 0.15% 0.23% 0.30%
16 0.15% 0.17% 0.24% 0.29%
17 0.13% 0.17% 0.26% 0.30%
18 0.12% 0.16% 0.26% 0.31%
19 0.16% 0.17% 0.26% 0.37%
20 0.17% 0.16% 0.26% 0.32%
21 0.15% 0.18% 0.29% 0.37%
22 0.18% 0.18% 0.27% 0.34%
23 0.18% 0.20% 0.30% 0.33%
24 0.16% 0.23% 0.28%
25 0.19% 0.21% 0.30%
26 0.20% 0.25% 0.30%
27 0.19% 0.22% 0.29%
28 0.20% 0.24% 0.31%
29 0.20% 0.27% 0.29%
30 0.21% 0.30% 0.29%
31 0.23% 0.30% 0.27%
32 0.23% 0.26% 0.23%
33 0.23% 0.29% 0.27%
34 0.24% 0.30% 0.31%
35 0.26% 0.30% 0.30%
36 0.26% 0.30%
37 0.28% 0.29%
38 0.30% 0.31%
39 0.30% 0.25%
40 0.31% 0.28%
41 0.30% 0.27%
42 0.30% 0.30%
43 0.31% 0.27%
44 0.32% 0.31%
45 0.35% 0.31%
46 0.35% 0.30%
47 0.35% 0.31%
48 0.32%
49 0.34%
50 0.39%
51 0.43%
52 0.38%
53 0.41%
54 0.40%
55 0.42%
56 0.44%
57 0.36%
58 0.36%
59 0.38%




(1)
The percentages set forth above represent (a) the aggregate outstanding principal balance of receivables originated in the specified year that are 60-89 days past due at the end of the specified number of months since origination divided by (b) the aggregate outstanding principal balance of all receivables originated in the specified year at the end of the specified number of months since origination.

(2)
As of December 31, 2018.

(3)
“Age (Months)” represents the number of months that have elapsed since origination for receivables originated in the specified year.



A-5

Table of Contents
90-119 Day Delinquency Rates(1)(2)



90-119 Days Past Due
AGE (MONTHS)(3) 2014 2015 2016 2017 2018
1 0.00% 0.00% 0.00% 0.00% 0.00%
2 0.00% 0.00% 0.00% 0.00% 0.00%
3 0.00% 0.00% 0.00% 0.01% 0.00%
4 0.03% 0.04% 0.07% 0.11% 0.13%
5 0.03% 0.04% 0.07% 0.08% 0.09%
6 0.03% 0.06% 0.07% 0.10% 0.13%
7 0.05% 0.05% 0.09% 0.09% 0.15%
8 0.06% 0.06% 0.10% 0.11% 0.16%
9 0.05% 0.06% 0.10% 0.13% 0.18%
10 0.06% 0.06% 0.09% 0.14% 0.24%
11 0.07% 0.08% 0.08% 0.12% 0.32%
12 0.06% 0.07% 0.11% 0.15%
13 0.07% 0.09% 0.10% 0.15%
14 0.07% 0.06% 0.09% 0.08%
15 0.06% 0.08% 0.10% 0.12%
16 0.08% 0.08% 0.10% 0.14%
17 0.08% 0.10% 0.11% 0.16%
18 0.08% 0.08% 0.12% 0.18%
19 0.07% 0.08% 0.13% 0.18%
20 0.08% 0.09% 0.13% 0.17%
21 0.10% 0.07% 0.12% 0.14%
22 0.08% 0.09% 0.14% 0.13%
23 0.11% 0.09% 0.14% 0.17%
24 0.10% 0.10% 0.15%
25 0.09% 0.11% 0.12%
26 0.10% 0.11% 0.15%
27 0.11% 0.12% 0.14%
28 0.11% 0.11% 0.13%
29 0.11% 0.10% 0.12%
30 0.11% 0.12% 0.15%
31 0.11% 0.13% 0.11%
32 0.10% 0.12% 0.12%
33 0.12% 0.13% 0.12%
34 0.13% 0.13% 0.09%
35 0.11% 0.14% 0.09%
36 0.12% 0.14%
37 0.13% 0.14%
38 0.14% 0.12%
39 0.15% 0.14%
40 0.14% 0.13%
41 0.14% 0.10%
42 0.13% 0.11%
43 0.16% 0.13%
44 0.14% 0.12%
45 0.15% 0.16%
46 0.15% 0.14%
47 0.18% 0.11%
48 0.18%
49 0.15%
50 0.15%
51 0.17%
52 0.21%
53 0.17%
54 0.17%
55 0.14%
56 0.13%
57 0.20%
58 0.19%
59 0.16%




(1)
The percentages set forth above represent (a) the aggregate outstanding principal balance of receivables originated in the specified year that are 90-119 days past due at the end of the specified number of months since origination divided by (b) the aggregate outstanding principal balance of all receivables originated in the specified year at the end of the specified number of months since origination.

(2)
As of December 31, 2018.

(3)
“Age (Months)” represents the number of months that have elapsed since origination for receivables originated in the specified year.



A-6

Table of Contents
120+ Day Delinquency Rates(1)(2)



120+ Days Past Due
AGE (MONTHS)(3) 2014 2015 2016 2017 2018
1 0.00% 0.00% 0.00% 0.00% 0.00%
2 0.00% 0.00% 0.00% 0.00% 0.00%
3 0.00% 0.00% 0.00% 0.00% 0.00%
4 0.00% 0.00% 0.00% 0.00% 0.00%
5 0.00% 0.00% 0.01% 0.03% 0.04%
6 0.00% 0.00% 0.02% 0.04% 0.05%
7 0.00% 0.01% 0.02% 0.04% 0.02%
8 0.00% 0.01% 0.03% 0.04% 0.03%
9 0.01% 0.01% 0.04% 0.05% 0.06%
10 0.00% 0.01% 0.05% 0.05% 0.03%
11 0.01% 0.02% 0.03% 0.05% 0.07%
12 0.01% 0.02% 0.03% 0.03%
13 0.01% 0.03% 0.05% 0.05%
14 0.01% 0.03% 0.05% 0.04%
15 0.01% 0.03% 0.05% 0.04%
16 0.01% 0.04% 0.05% 0.05%
17 0.01% 0.04% 0.05% 0.05%
18 0.02% 0.04% 0.05% 0.06%
19 0.02% 0.03% 0.06% 0.07%
20 0.02% 0.05% 0.05% 0.07%
21 0.02% 0.04% 0.06% 0.08%
22 0.03% 0.04% 0.06% 0.09%
23 0.03% 0.05% 0.06% 0.12%
24 0.04% 0.04% 0.07%
25 0.06% 0.05% 0.06%
26 0.05% 0.05% 0.07%
27 0.06% 0.05% 0.06%
28 0.08% 0.05% 0.06%
29 0.07% 0.05% 0.08%
30 0.07% 0.06% 0.06%
31 0.08% 0.06% 0.08%
32 0.08% 0.06% 0.08%
33 0.08% 0.06% 0.06%
34 0.07% 0.06% 0.10%
35 0.06% 0.06% 0.07%
36 0.07% 0.07%
37 0.07% 0.08%
38 0.08% 0.09%
39 0.08% 0.10%
40 0.09% 0.08%
41 0.10% 0.08%
42 0.11% 0.09%
43 0.11% 0.08%
44 0.12% 0.12%
45 0.14% 0.14%
46 0.13% 0.14%
47 0.14% 0.13%
48 0.18%
49 0.19%
50 0.18%
51 0.19%
52 0.21%
53 0.23%
54 0.23%
55 0.23%
56 0.24%
57 0.23%
58 0.26%
59 0.26%




(1)
The percentages set forth above represent (a) the aggregate outstanding principal balance of receivables originated in the specified year that are 120+ days past due at the end of the specified number of months since origination divided by (b) the aggregate outstanding principal balance of all receivables originated in the specified year at the end of the specified number of months since origination.

(2)
As of December 31, 2018.

(3)
“Age (Months)” represents the number of months that have elapsed since origination for receivables originated in the specified year.



A-7

Table of Contents
Prepayment Speed Information

Prepayment Speeds (ABS)(1)(2)



Quarter Originated
Age

(Months)(3)

2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3
Original Term 68.8 69.2 69.1 69.1 69.0 68.8 69.1 69.0 69.4 69.3 69.4
Original FICO 752.9 749.3 750.3 751.3 753.3 755.3 752.1 749.5 748.1 747.2 743.9
LTV

90.3% 91.6% 92.0% 92.3% 90.9% 90.9% 91.5% 92.1% 90.4% 91.7% 93.4%
% Used

47.7% 50.1% 53.0% 50.2% 52.4% 50.9% 50.6% 53.1% 57.1% 57.1% 54.7%
Origination

Amt($)

1,439,392,270 1,350,273,652 1,458,842,940 1,245,879,873 1,186,329,912 1,392,666,474 1,278,598,311 962,605,427 909,055,852 799,688,912 895,066,936
1

2.31% 2.19% 2.34% 2.24% 2.26% 2.20% 2.59% 2.32% 3.26% 3.11% 3.30%
2

1.77% 1.54% 1.58% 1.71% 1.71% 1.60% 1.70% 1.64% 2.05% 2.04% 1.76%
3

1.39% 1.36% 1.16% 1.38% 1.47% 1.28% 1.24% 1.48% 1.57% 1.54% 1.53%
4

1.35% 1.23% 1.00% 1.21% 1.30% 1.08% 1.21% 1.43% 1.42% 1.58% 1.60%
5

1.19% 1.10% 1.09% 1.28% 1.25% 1.09% 1.12% 1.30% 1.45% 1.29% 1.26%
6

1.30% 1.20% 1.30% 1.29% 1.31% 1.15% 1.21% 1.32% 1.24% 1.33% 1.68%
7

1.24% 1.10% 1.22% 1.27% 1.23% 0.98% 1.25% 1.19% 1.37% 1.34% 1.32%
8

1.24% 1.07% 1.35% 1.27% 1.07% 1.04% 1.25% 1.20% 1.15% 1.24% 1.41%
9

1.15% 1.14% 1.20% 1.35% 1.21% 1.07% 1.19% 1.27% 1.19% 1.33% 1.28%
10

1.00% 1.26% 1.20% 1.19% 1.10% 1.19% 1.14% 1.27% 1.18% 1.23% 1.22%
11

1.09% 1.32% 1.41% 1.24% 1.15% 1.22% 1.17% 1.19% 1.24% 1.31% 1.26%
12

1.27% 1.32% 1.37% 1.29% 1.33% 1.30% 1.30% 1.21% 1.26% 1.31% 1.26%
13

1.36% 1.35% 1.37% 1.20% 1.33% 1.23% 1.19% 1.26% 1.33% 1.25% 1.34%
14

1.29% 1.35% 1.26% 1.14% 1.37% 1.24% 1.20% 1.19% 1.30% 1.31% 1.11%
15

1.37% 1.33% 1.21% 1.17% 1.29% 1.23% 1.17% 1.25% 1.25% 1.20% 1.22%
16

1.32% 1.30% 1.13% 1.27% 1.21% 1.20% 1.10% 1.25% 1.29% 1.30% 1.20%
17

1.38% 1.22% 1.17% 1.29% 1.31% 1.22% 1.18% 1.31% 1.28% 0.97% 1.22%
18

1.27% 1.18% 1.23% 1.25% 1.30% 1.12% 1.17% 1.15% 1.18% 1.16% 1.28%
19

1.33% 1.24% 1.27% 1.31% 1.23% 1.16% 1.20% 1.26% 1.31% 1.17% 1.10%
20

1.25% 1.22% 1.28% 1.32% 1.23% 1.13% 1.27% 1.12% 0.93% 1.37% 1.26%
21

1.26% 1.28% 1.26% 1.34% 1.23% 1.32% 1.18% 1.17% 1.15% 1.13% 1.22%
22

1.20% 1.39% 1.27% 1.30% 1.20% 1.13% 1.27% 1.34% 1.14% 1.23% 1.19%
23

1.21% 1.37% 1.30% 1.29% 1.12% 1.33% 1.22% 0.93% 1.24% 1.26% 1.26%
24

1.29% 1.31% 1.41% 1.20% 1.31% 1.23% 1.26% 1.11% 1.35% 1.34% 1.30%
25

1.38% 1.32% 1.38% 1.18% 1.32% 1.24% 1.29% 1.14% 1.33% 1.29% 1.24%
26

1.25% 1.34% 1.23% 1.19% 1.29% 1.26% 0.97% 1.31% 1.31% 1.23% 1.21%
27

1.26% 1.32% 1.21% 1.29% 1.29% 1.17% 1.16% 1.23% 1.25% 1.20% 1.14%
28

1.29% 1.20% 1.15% 1.13% 1.25% 1.20% 1.12% 1.25% 1.17% 1.20%
29

1.37% 1.15% 1.14% 1.30% 1.22% 1.00% 1.24% 1.26% 1.23% 1.17%
30

1.29% 1.21% 1.23% 1.21% 1.18% 1.14% 1.22% 1.26% 1.27% 1.14%
31

1.25% 1.13% 1.23% 1.26% 1.24% 1.13% 1.17% 1.19% 1.14%
32

1.20% 1.19% 1.19% 1.26% 0.99% 1.29% 1.24% 1.24% 1.08%
33

1.15% 1.21% 1.22% 1.20% 1.16% 1.20% 1.11% 1.09% 1.13%
34

1.21% 1.15% 1.32% 1.24% 1.15% 1.18% 1.14% 1.16%
35

1.25% 1.25% 1.23% 1.07% 1.26% 1.24% 1.20% 1.17%


A-8

Table of Contents
Quarter Originated
Age

(Months)(3)

2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3
Original Term

68.8 69.2 69.1 69.1 69.0 68.8 69.1 69.0 69.4 69.3 69.4
Original FICO

752.9 749.3 750.3 751.3 753.3 755.3 752.1 749.5 748.1 747.2 743.9
LTV

90.3% 91.6% 92.0% 92.3% 90.9% 90.9% 91.5% 92.1% 90.4% 91.7% 93.4%
% Used

47.7% 50.1% 53.0% 50.2% 52.4% 50.9% 50.6% 53.1% 57.1% 57.1% 54.7%
Origination

Amt($)

1,439,392,270 1,350,273,652 1,458,842,940 1,245,879,873 1,186,329,912 1,392,666,474 1,278,598,311 962,605,427 909,055,852 799,688,912 895,066,936
36

1.29% 1.20% 1.22% 1.19% 1.29% 1.21% 1.20% 1.12%
37

1.23% 1.26% 1.21% 1.17% 1.18% 1.18% 1.19%
38

1.23% 1.18% 0.98% 1.25% 1.21% 1.17% 1.14%
39

1.18% 1.18% 1.11% 1.14% 1.18% 1.18% 1.11%
40

1.18% 1.19% 1.07% 1.15% 1.20% 1.14%
41

1.19% 0.97% 1.27% 1.20% 1.21% 1.07%
42

1.12% 1.11% 1.12% 1.12% 1.08% 1.09%
43

1.11% 1.06% 1.15% 1.16% 1.11%
44

0.96% 1.15% 1.19% 1.20% 1.00%
45

1.14% 1.16% 1.10% 1.14% 1.14%
46

1.08% 1.13% 1.16% 1.12%
47

1.23% 1.20% 1.16% 1.06%
48

1.19% 1.08% 1.13% 1.17%
49

1.12% 1.13% 1.10%
50

1.15% 1.11% 1.03%
51

1.09% 1.08% 1.04%
52

1.11% 1.07%
53

1.10% 1.04%
54

1.10% 1.07%
55

1.05%
56

0.95%
57

1.05%


A-9

Table of Contents
Quarter Originated
Age

(Months)(3)

2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4
Original Term 69.1 68.9 69.3 69.1 69.0 69.4 69.3 69.4 69.1
Original FICO 743.8 742.9 751.2 752.1 749.5 748.1 747.2 743.9 743.8
LTV 92.7% 93.3% 93.5% 9153.5% 9211.5% 9042.8% 9165.9% 9337.0% 9272.9%
% Used 54.9% 60.8% 56.2% 50.6% 53.1% 57.1% 57.1% 54.7% 54.9%
Origination

Amt($)

780,878,485 794,751,574 930,724,431 1,278,598,311 962,605,427 909,055,852 799,688,912 895,066,936 780,878,485
1

3.19% 3.78% 3.42% 3.51% 2.66% 3.75% 3.55% 3.80%
2

2.36% 2.40% 2.01% 1.75% 2.94% 2.55% 2.63% 2.29%
3

1.70% 1.68% 1.58% 1.70% 2.10% 1.86% 1.95% 1.78%
4

1.81% 1.72% 1.48% 1.66% 1.66% 1.79% 1.77%
5

1.90% 1.56% 1.22% 1.76% 1.74% 1.59% 1.33%
6

1.60% 1.35% 1.43% 1.51% 1.58% 1.65% 1.56%
7

1.46% 1.48% 1.24% 1.50% 1.62% 1.57%
8

1.42% 1.13% 1.37% 1.40% 1.51% 1.27%
9

1.23% 1.39% 1.42% 1.41% 1.34% 1.36%
10

1.39% 1.12% 1.40% 1.29% 1.32%
11

1.19% 1.39% 1.37% 1.30% 1.31%
12

1.22% 1.50% 1.33% 1.28% 1.35%
13

1.22% 1.47% 1.31% 1.22%
14

1.37% 1.43% 1.35% 1.21%
15

1.39% 1.35% 1.15% 1.21%
16

1.25% 1.35% 1.29%
17

1.36% 1.22% 1.15%
18

1.29% 1.25% 1.22%
19

1.22% 1.42%
20

1.27% 1.17%
21

1.30% 1.17%
22

1.27%
23

1.15%
24

1.30%




(1)
The ABS speed is a measurement of the non-scheduled amortization of the pool of receivables and is derived by calculating a monthly single month mortality rate, or SMM, which is the sum of the non-scheduled reduction in the balance of the pool of receivables, including prepayments and defaults, divided by the beginning of month receivables pool balance less any scheduled payments received. The scheduled principal is calculated assuming the receivables have been aggregated into a single pool. The non-scheduled amortization is assumed to be the difference between the beginning receivables pool balance less the scheduled principal minus the actual ending receivables pool balance. The SMM is converted into the ABS speed by dividing (a) the SMM by (b) the sum of (i) one and (ii) the SMM multiplied by the age of the pool, in months, minus one. The age of the pool is assumed to be the weighted average age of the pool at the first day of the applicable month minus the number of months since the first day of the applicable month.

(2)
As of the December 31, 2018.

(3)
“Age (Months)” represents the number of months that have elapsed since origination for receivables originated in the specified quarter.



A-10

Table of Contents
Cumulative Loss Experience

Cumulative Net Charge-Off(1)(2)



Quarter Originated
Age

(Months)(3)

2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3
Original Term 68.8 69.2 69.1 69.1 69.0 68.8 69.1 69.0 69.4 69.3 69.4
Original FICO 752.9 749.3 750.3 751.3 753.3 755.3 752.1 749.5 748.1 747.2 743.9
LTV 90.3% 91.6% 92.0% 92.3% 90.9% 90.9% 91.5% 92.1% 90.4% 91.7% 93.4%
% Used 47.7% 50.1% 53.0% 50.2% 52.4% 50.9% 50.6% 53.1% 57.1% 57.1% 54.7%
Origination

Amt($)

1,439,392,270 1,350,273,652 1,458,842,940 1,245,879,873 1,186,329,912 1,392,666,474 1,278,598,311 962,605,427 909,055,852 799,688,912 895,066,936
1

0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2

0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3

0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.01% 0.00% 0.00%
4

0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.00% 0.01%
5

0.02% 0.04% 0.03% 0.02% 0.03% 0.02% 0.04% 0.04% 0.02% 0.03% 0.05%
6

0.03% 0.05% 0.06% 0.04% 0.04% 0.03% 0.07% 0.05% 0.04% 0.05% 0.10%
7

0.05% 0.07% 0.07% 0.04% 0.06% 0.06% 0.10% 0.09% 0.07% 0.07% 0.14%
8

0.07% 0.09% 0.10% 0.08% 0.08% 0.07% 0.12% 0.09% 0.09% 0.12% 0.20%
9

0.08% 0.10% 0.11% 0.10% 0.11% 0.09% 0.14% 0.11% 0.11% 0.16% 0.24%
10

0.10% 0.12% 0.13% 0.12% 0.12% 0.12% 0.15% 0.15% 0.14% 0.19% 0.24%
11

0.12% 0.13% 0.15% 0.15% 0.14% 0.13% 0.17% 0.17% 0.17% 0.20% 0.27%
12

0.13% 0.14% 0.18% 0.17% 0.15% 0.16% 0.20% 0.20% 0.19% 0.23% 0.28%
13

0.14% 0.15% 0.20% 0.19% 0.17% 0.17% 0.22% 0.24% 0.20% 0.24% 0.30%
14

0.17% 0.16% 0.23% 0.22% 0.20% 0.20% 0.24% 0.26% 0.23% 0.25% 0.34%
15

0.17% 0.19% 0.25% 0.24% 0.21% 0.21% 0.26% 0.29% 0.24% 0.27% 0.35%
16

0.18% 0.20% 0.27% 0.25% 0.24% 0.22% 0.30% 0.31% 0.25% 0.31% 0.37%
17

0.19% 0.22% 0.30% 0.27% 0.24% 0.23% 0.33% 0.33% 0.26% 0.33% 0.40%
18

0.21% 0.25% 0.31% 0.29% 0.25% 0.25% 0.37% 0.34% 0.27% 0.35% 0.45%
19

0.22% 0.27% 0.32% 0.30% 0.28% 0.27% 0.38% 0.34% 0.29% 0.39% 0.47%
20

0.23% 0.28% 0.33% 0.30% 0.30% 0.28% 0.39% 0.35% 0.31% 0.41% 0.50%
21

0.24% 0.32% 0.34% 0.32% 0.33% 0.32% 0.40% 0.37% 0.31% 0.42% 0.51%
22

0.25% 0.33% 0.35% 0.33% 0.34% 0.34% 0.40% 0.38% 0.34% 0.44% 0.51%
23

0.26% 0.34% 0.37% 0.35% 0.35% 0.35% 0.41% 0.39% 0.36% 0.45% 0.53%
24

0.27% 0.35% 0.40% 0.37% 0.37% 0.36% 0.42% 0.40% 0.39% 0.47% 0.55%
25

0.28% 0.36% 0.42% 0.39% 0.39% 0.37% 0.45% 0.41% 0.41% 0.49% 0.57%
26

0.29% 0.38% 0.43% 0.40% 0.39% 0.38% 0.46% 0.43% 0.42% 0.51% 0.57%
27

0.30% 0.38% 0.45% 0.42% 0.40% 0.39% 0.49% 0.45% 0.43% 0.53% 0.61%
28

0.31% 0.40% 0.46% 0.44% 0.42% 0.41% 0.50% 0.47% 0.45% 0.54%
29

0.33% 0.41% 0.48% 0.45% 0.42% 0.43% 0.52% 0.47% 0.44% 0.56%
30

0.34% 0.44% 0.50% 0.46% 0.42% 0.44% 0.54% 0.48% 0.46% 0.58%
31

0.35% 0.45% 0.51% 0.46% 0.43% 0.46% 0.55% 0.49% 0.47%
32

0.37% 0.47% 0.52% 0.47% 0.47% 0.47% 0.56% 0.51% 0.48%
33

0.39% 0.48% 0.52% 0.47% 0.48% 0.48% 0.56% 0.51% 0.48%
34

0.39% 0.50% 0.54% 0.48% 0.49% 0.50% 0.57% 0.53%
35

0.41% 0.51% 0.54% 0.50% 0.51% 0.51% 0.58% 0.55%
36

0.42% 0.52% 0.55% 0.51% 0.52% 0.51% 0.59% 0.57%
37

0.43% 0.54% 0.56% 0.53% 0.53% 0.52% 0.59%


A-11

Table of Contents
Quarter Originated
Age

(Months)(3)

2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3
Original Term 68.8 69.2 69.1 69.1 69.0 68.8 69.1 69.0 69.4 69.3 69.4
Original FICO 752.9 749.3 750.3 751.3 753.3 755.3 752.1 749.5 748.1 747.2 743.9
LTV 90.3% 91.6% 92.0% 92.3% 90.9% 90.9% 91.5% 92.1% 90.4% 91.7% 93.4%
% Used 47.7% 50.1% 53.0% 50.2% 52.4% 50.9% 50.6% 53.1% 57.1% 57.1% 54.7%
Origination

Amt($)

1,439,392,270 1,350,273,652 1,458,842,940 1,245,879,873 1,186,329,912 1,392,666,474 1,278,598,311 962,605,427 909,055,852 799,688,912 895,066,936
38

0.43% 0.54% 0.57% 0.54% 0.54% 0.53% 0.60%
39

0.44% 0.55% 0.58% 0.55% 0.54% 0.53% 0.61%
40

0.45% 0.56% 0.59% 0.55% 0.55% 0.53%
41

0.45% 0.57% 0.60% 0.56% 0.56% 0.54%
42

0.45% 0.58% 0.61% 0.56% 0.57% 0.54%
43

0.46% 0.59% 0.62% 0.57% 0.58%
44

0.46% 0.60% 0.62% 0.58% 0.58%
45

0.47% 0.61% 0.62% 0.57% 0.58%
46

0.48% 0.60% 0.62% 0.58%
47

0.48% 0.61% 0.63% 0.57%
48

0.48% 0.61% 0.63% 0.58%
49

0.48% 0.61% 0.63%
50

0.49% 0.62% 0.64%
51

0.49% 0.62% 0.64%
52

0.49% 0.62%
53

0.49% 0.62%
54

0.49% 0.62%
55

0.49%
56

0.49%
57

0.49%


A-12

Table of Contents
Quarter Originated
Age

(Months)(3)

2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4
Original Term 69.1 68.9 69.3 69.1 69.0 69.4 69.3 69.4 69.1
Original FICO 743.8 742.9 751.2 752.1 749.5 748.1 747.2 743.9 743.8
LTV 92.7% 93.3% 93.5% 9153.5% 9211.5% 9042.8% 9165.9% 9337.0% 9272.9%
% Used 54.9% 60.8% 56.2% 50.6% 53.1% 57.1% 57.1% 54.7% 54.9%
Origination

Amt($)

780,878,485 794,751,574 930,724,431 1,278,598,311 962,605,427 909,055,852 799,688,912 895,066,936 780,878,485
1

0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2

0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3

0.01% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4

0.01% 0.01% 0.01% 0.01% 0.01% 0.00% 0.01%
5

0.05% 0.03% 0.06% 0.06% 0.06% 0.05% 0.07%
6

0.10% 0.07% 0.10% 0.09% 0.09% 0.07% 0.12%
7

0.15% 0.10% 0.13% 0.14% 0.15% 0.12%
8

0.17% 0.16% 0.17% 0.17% 0.17% 0.18%
9

0.20% 0.18% 0.22% 0.20% 0.22% 0.24%
10

0.25% 0.22% 0.27% 0.23% 0.28%
11

0.33% 0.28% 0.27% 0.28% 0.31%
12

0.34% 0.34% 0.30% 0.30% 0.38%
13

0.38% 0.36% 0.33% 0.32%
14

0.41% 0.39% 0.36% 0.35%
15

0.44% 0.41% 0.38% 0.37%
16

0.45% 0.43% 0.42%
17

0.47% 0.44% 0.44%
18

0.50% 0.49% 0.47%
19

0.51% 0.55%
20

0.55% 0.57%
21

0.58% 0.61%
22

0.59%
23

0.63%
24

0.66%




(1)
The percentages set forth above represent (a) the aggregate outstanding principal balance of receivables originated in the specified year that are charged off at the end of the specified number of months since origination divided by (b) the aggregate original outstanding principal balance of all receivables originated in the specified year at the end of the specified number of months since origination.

(2)
As of December 31, 2018.

(3)
“Age (Months)” represents the number of months that have elapsed since origination for receivables originated in the specified quarter.



A-13

Table of Contents
Fifth Third Bank-Indirect Auto Pool Factor(1)(2)



Quarter Originated
Age

(Months)(3)

2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3
Original Term

68.8 69.2 69.1 69.1 69.0 68.8 69.1 69.0 69.4 69.3 69.4
Original FICO

752.9 749.3 750.3 751.3 753.3 755.3 752.1 749.5 748.1 747.2 743.9
LTV

90.3% 91.6% 92.0% 92.3% 90.9% 90.9% 91.5% 92.1% 90.4% 91.7% 93.4%
% Used

47.7% 50.1% 53.0% 50.2% 52.4% 50.9% 50.6% 53.1% 57.1% 57.1% 54.7%
Origination

Amt($)

1,439,392,270 1,350,273,652 1,458,842,940 1,245,879,873 1,186,329,912 1,392,666,474 1,278,598,311 962,605,427 909,055,852 799,688,912 895,066,936
1

95.36% 95.24% 95.13% 95.20% 95.16% 95.22% 94.88% 94.93% 94.02% 93.94% 93.74%
2

92.37% 92.49% 92.35% 92.28% 92.24% 92.39% 91.98% 92.09% 90.84% 90.78% 90.85%
3

89.79% 89.95% 90.00% 89.72% 89.59% 89.91% 89.57% 89.44% 88.16% 88.13% 88.22%
4

87.27% 87.56% 87.83% 87.35% 87.14% 87.66% 87.20% 86.88% 85.67% 85.48% 85.56%
5

84.94% 85.32% 85.59% 84.95% 84.77% 85.41% 84.96% 84.48% 83.18% 83.15% 83.25%
6

82.54% 83.02% 83.18% 82.56% 82.37% 83.14% 82.65% 82.08% 80.92% 80.81% 80.58%
7

80.23% 80.84% 80.87% 80.23% 80.07% 81.05% 80.33% 79.84% 78.55% 78.48% 78.28%
8

77.94% 78.70% 78.46% 77.92% 77.96% 78.92% 78.03% 77.61% 76.43% 76.28% 75.93%
9

75.76% 76.53% 76.24% 75.56% 75.73% 76.80% 75.83% 75.34% 74.30% 74.03% 73.74%
10

73.75% 74.26% 74.04% 73.39% 73.63% 74.58% 73.70% 73.11% 72.20% 71.89% 71.62%
11

71.68% 71.97% 71.66% 71.20% 71.52% 72.36% 71.57% 70.97% 70.07% 69.71% 69.50%
12

69.46% 69.71% 69.36% 68.99% 69.26% 70.09% 69.34% 68.85% 67.94% 67.55% 67.41%
13

67.19% 67.45% 67.08% 66.89% 67.04% 67.92% 67.24% 66.70% 65.79% 65.49% 65.26%
14

65.02% 65.23% 64.95% 64.87% 64.81% 65.77% 65.17% 64.66% 63.68% 63.39% 63.19%
15

62.81% 63.06% 62.90% 62.86% 62.69% 63.67% 63.15% 62.58% 61.66% 61.42% 61.21%
16

60.68% 60.95% 60.95% 60.78% 60.67% 61.62% 61.21% 60.54% 59.62% 59.39% 59.33%
17

58.53% 58.95% 59.00% 58.71% 58.59% 59.59% 59.24% 58.47% 57.62% 57.52% 57.55%
18

56.51% 57.02% 57.01% 56.71% 56.55% 57.67% 57.30% 56.57% 55.75% 55.68% 55.59%
19

54.47% 55.06% 55.02% 54.68% 54.61% 55.74% 55.36% 54.61% 53.79% 53.87% 53.82%
20

52.53% 53.14% 53.05% 52.69% 52.70% 53.87% 53.39% 52.80% 52.00% 52.01% 51.94%
21

50.62% 51.20% 51.12% 50.70% 50.82% 51.85% 51.53% 50.97% 50.30% 50.27% 50.13%
22

48.80% 49.19% 49.22% 48.79% 49.00% 50.04% 49.61% 49.02% 48.60% 48.47% 48.37%
23

46.99% 47.23% 47.33% 46.92% 47.27% 48.08% 47.78% 47.33% 46.89% 46.66% 46.58%
24

45.14% 45.37% 45.36% 45.16% 45.40% 46.25% 45.94% 45.66% 45.03% 44.81% 44.78%
25

43.25% 43.54% 43.46% 43.45% 43.56% 44.44% 44.11% 43.94% 43.22% 43.04% 43.06%
26

41.51% 41.72% 41.74% 41.77% 41.78% 42.65% 42.46% 42.29% 41.46% 41.37% 41.40%
27

39.80% 39.96% 40.07% 40.03% 40.04% 40.97% 40.82% 40.58% 39.79% 39.75% 39.84%
28

38.09% 38.34% 38.49% 38.46% 38.37% 39.30% 39.21% 38.89% 38.22% 38.16% 38.53%
29

36.35% 36.79% 36.94% 36.77% 36.75% 37.68% 37.67% 37.23% 36.63% 36.62%
30

34.72% 35.22% 35.34% 35.19% 35.20% 36.13% 36.05% 35.59% 35.03% 35.13%
31

33.15% 33.75% 33.77% 33.60% 33.63% 34.59% 34.51% 34.05% 33.57% 33.36%
32

31.67% 32.26% 32.27% 32.05% 32.15% 33.09% 32.94% 32.51% 32.19%
33

30.25% 30.78% 30.78% 30.58% 30.76% 31.57% 31.51% 31.11% 30.80%
34

28.81% 29.38% 29.24% 29.11% 29.36% 30.10% 30.08% 29.69% 29.18%
35

27.38% 27.93% 27.80% 27.70% 27.98% 28.61% 28.64% 28.30%
36

25.96% 26.56% 26.42% 26.36% 26.52% 27.18% 27.23% 26.98%
37

24.63% 25.18% 25.09% 25.06% 25.21% 25.83% 25.88% 25.61%
38

23.33% 23.91% 23.87% 23.82% 23.91% 24.51% 24.60%


A-14

Table of Contents
Quarter Originated
Age

(Months)(3)

2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3
Original Term 68.8 69.2 69.1 69.1 69.0 68.8 69.1 69.0 69.4 69.3 69.4
Original FICO 752.9 749.3 750.3 751.3 753.3 755.3 752.1 749.5 748.1 747.2 743.9
LTV 90.3% 91.6% 92.0% 92.3% 90.9% 90.9% 91.5% 92.1% 90.4% 91.7% 93.4%
% Used 47.7% 50.1% 53.0% 50.2% 52.4% 50.9% 50.6% 53.1% 57.1% 57.1% 54.7%
Origination

Amt($)

1,439,392,270 1,350,273,652 1,458,842,940 1,245,879,873 1,186,329,912 1,392,666,474 1,278,598,311 962,605,427 909,055,852 799,688,912 895,066,936
39

22.10% 22.66% 22.66% 22.61% 22.65% 23.22% 23.36%
40

20.90% 21.44% 21.50% 21.42% 21.41% 21.99% 22.07%
41

19.73% 20.30% 20.34% 20.21% 20.21% 20.84%
42

18.64% 19.22% 19.22% 19.10% 19.11% 19.70%
43

17.58% 18.16% 18.12% 18.00% 18.03% 18.54%
44

16.54% 17.15% 17.01% 16.89% 17.04%
45

15.55% 16.09% 16.00% 15.86% 16.00%
46

14.59% 15.08% 14.97% 14.87% 14.88%
47

13.62% 14.05% 13.98% 13.94%
48

12.66% 13.14% 13.04% 12.98%
49

11.79% 12.24% 12.16% 12.19%
50

10.93% 11.38% 11.35%
51

10.14% 10.56% 10.56%
52

9.35% 9.77% 9.80%
53

8.60% 9.03%
54

7.88% 8.29%
55

7.21% 7.56%
56

6.60%
57

5.98%
58

5.29%


A-15

Table of Contents
Quarter Originated
Age

(Months)(3)

2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4
Original Term 69.1 68.9 69.3 69.1 69.0 69.4 69.3 69.4 69.1
Original FICO 743.8 742.9 751.2 752.1 749.5 748.1 747.2 743.9 743.8
LTV 92.7% 93.3% 93.5% 9153.5% 9211.5% 9042.8% 9165.9% 9337.0% 9272.9%
% Used 54.9% 60.8% 56.2% 50.6% 53.1% 57.1% 57.1% 54.7% 54.9%
Origination

Amt($)

780,878,485 794,751,574 930,724,431 1,278,598,311 962,605,427 909,055,852 799,688,912 895,066,936 780,878,485
1

93.71% 93.23% 93.46% 93.46% 93.63% 93.18% 93.28% 93.13%
2

90.24% 89.75% 90.35% 90.26% 90.27% 89.58% 89.56% 89.66%
3

87.47% 87.02% 87.71% 87.52% 87.14% 86.71% 86.60% 86.86%
4

84.63% 84.28% 85.19% 84.93% 84.47% 83.95% 83.87%
5

81.75% 81.74% 82.68% 82.41% 81.76% 81.42% 81.58%
6

79.21% 79.43% 80.34% 79.93% 79.25% 78.87% 79.12%
7

76.82% 77.03% 78.20% 77.50% 76.73% 76.43%
8

74.51% 74.76%