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As filed with the Securities and Exchange Commission on July 22, 1997
Registration No. 33-488/811-4416
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
POST-EFFECTIVE AMENDMENT NO. 35 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. 34 [x]
Armada Funds (formerly known as "NCC Funds")
(Exact Name of Registrant as Specified in Charter)
Oaks, Pennsylvania, 19456
(Address of Principal Executive Officers)
Registrant's Telephone Number:
1-800-622-FUND
W. Bruce McConnel, III, Esq.
DRINKER BIDDLE & REATH LLP
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
(Name and Address of Agent for Service)
Copy to:
Thomas F. Harvey, Esq.
National City Bank
National City Center
P.O. Box 5756
Cleveland, Ohio 44101-0756
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on date pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (b)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[X] on (July 25, 1997) pursuant to paragraph (a)(iii) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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The purpose of this filing is to designate the sub-adviser which will
manage the Small Cap Growth Fund. The Registrant seeks acceleration of
effectiveness of this Post-Effective Amendment to July 25, 1997, or as soon
thereafter as is reasonably practicable.
The Registrant has previously filed a declaration of indefinite
registration of its shares of beneficial interest pursuant to Rule 24f-2 under
the Investment Company Act of 1940, as amended. Registrant's Rule 24f-2 Notice
with respect to the Money Market, Government, Treasury, Tax Exempt, Equity,
Fixed Income, Ohio Tax Exempt, Equity Income, Mid Cap Regional, Enhanced Income
and Total Return Advantage Funds for the fiscal year ended May 31, 1996 was
filed on July 23, 1996.
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CROSS REFERENCE SHEET
---------------------
Small Cap Growth Fund
Form N-1A Part A Item Prospectus Caption
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1. Cover Page..................................... Cover Page
2. Synopsis....................................... Expense Table
3. Condensed Financial Information................ Financial Highlights;
Yield and Performance
Information
4. General Description of Registrant.............. Investment Objectives and
Policies; Investment
Limitations; Description
of the Trust and Its
Shares
5. Management of the Trust........................ Management of the Trust;
Custodian and Transfer
Agent; Yield and
Performance Information;
Expenses; Miscellaneous
5A. Management's Discussion of..................... Not Applicable
Registrant's Performance
6. Capital Stock and Other Securities............. How to Purchase and Redeem
Shares; Dividends and
Distributions; Taxes;
Description of the Trust
and Its Shares;
Miscellaneous; Shareholder
Services Plan
7. Purchase of Securities......................... Pricing of Shares; How
Being Offered to Purchase and Redeem
Shares; Distribution
Agreement
8. Redemption or Repurchase....................... How to Purchase and Redeem
Shares
9. Pending Legal Proceedings...................... Inapplicable
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CROSS REFERENCE SHEET
---------------------
Small Cap Growth Fund
Form N-1A Part B Item Statement of Additional
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Information Caption
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10. Cover Page.................................... Cover Page
11. Table of Contents............................. Table of Contents
12. General Information and History............... Statement of
Additional Information
13. Investment Objectives and Policies............ Investment Objectives
and Policies
14. Management of Registrant...................... Trustees and Officers
15. Control Persons and Principal................. Description of Shares
Holders of Securities
16. Investment Advisory and Other................. Advisory, Sub-
Advisory, Services
Management,
Administration,
Distribution, Custody
and Transfer Agency
Agreements
17. Brokerage Allocation and Other............... Investment Practices
Objectives and
Policies
18. Capital Stock and Other Securities........... Additional Purchase
and Redemption
Information
19. Purchase, Redemption and Pricing............. Additional Purchase
of Securities Being Offered.................. and Redemption
Information
20. Tax Status................................... Additional Information
Concerning Taxes
21. Underwriters................................. Not Applicable
22. Calculation of Performance Data.............. Performance
Information
23. Financial Statements......................... Independent Auditors
Part C
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Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
<PAGE> 5
ARMADA FUNDS
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Oaks, Pennsylvania 19456 If you purchased your shares through NatCity
Investments, Inc., please call your Investment
Consultant for information.
For current performance, fund information, account
redemption information, and to purchase shares,
please call 1-800-622-FUND (3863).
This Prospectus describes the Small Cap Growth Fund (the "Fund") of
Armada Funds (the "Trust"):
SMALL CAP GROWTH FUND'S investment objective is to seek long term
capital appreciation. The Fund will normally invest at least 90% of its total
assets in securities of companies with stock market capitalizations of under $1
billion at the time of purchase.
The net asset value per share of the Fund will fluctuate as the value
of its investment portfolio changes in response to changing market prices and
other factors.
National City Bank ("National City") serves as investment adviser to
the Fund (the "adviser"). Wellington Management Company, LLP serves as the
investment sub-adviser to the Fund (the "sub-adviser").
SEI Investments Distribution Co. (the "Distributor") serves as the
Trust's sponsor and distributor. The Fund pays a fee to the Distributor for
distributing its shares. See "Distribution Agreement."
This Prospectus sets forth concisely the information about the Fund
that a prospective investor should consider before investing. Investors should
carefully read this Prospectus and retain it for future reference. Additional
information about the Fund, contained in a Statement of Additional Information,
has been filed with the Securities and Exchange Commission ("SEC") and is
available upon request without charge by contacting the Trust at its telephone
number or address shown above. The Statement of Additional Information bears the
same date as this Prospectus and is incorporated by reference in its entirety
into this Prospectus.
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SHARES OF THE TRUST ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED OR OTHERWISE SUPPORTED BY, NATIONAL CITY BANK, ITS PARENT
COMPANY OR ANY OF ITS AFFILIATES, AND ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY GOVERNMENTAL
AGENCY OR STATE. INVESTMENT IN THE TRUST INVOLVES RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
___________________, 1997
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<TABLE>
<CAPTION>
EXPENSE TABLE
SMALL CAP SMALL CAP
GROWTH GROWTH
RETAIL INSTITUTIONAL
SHARES 1,2 SHARES 2
---------- --------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases 3.75% None
Sales Charge Imposed
on Reinvested Dividends None None
Deferred Sales Charge None None
Redemption Fee None None
Exchange Fee None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net
assets)
Management Fees 0.75% 0.75%
12b-1 Fees(4) (after fee
waivers) 0.06%(2) 0.06%(2)
Other Expenses(3) (after fee
waivers) 0.42%(4) 0.17%(4)
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TOTAL FUND OPERATING
EXPENSES(3) (after fee
waivers) 1.23%(4) 0.98%(4)
<FN>
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1 The Trust has implemented a Shareholder Services Plan (the "Services
Plan") with respect to Retail shares in the Fund. Pursuant to the
Services Plan, the Trust may enter into shareholder servicing agreements
with certain financial institutions under which they agree to provide
shareholder administrative services to their customers who beneficially
own Retail shares in consideration for the payment of up to .25% (on an
annualized basis) of the net asset value of Retail shares.
2 As of the date of this Prospectus, the Fund had not commenced
investment operations, and therefore, the other expenses for this Fund
are estimates only.
3 Without fee waivers by the Administrator, Other Expenses and Total
Fund Operating Expenses would be 0.52% and 1.33%, respectively, for
the Retail Shares and 0.27% and 1.08%, respectively, for the
Institutional Shares of the Fund. Additionally, if the maximum
distribution fee permitted under the 12b-1 Plan were imposed,
Total Fund Operating Expenses would be 1.37%
</TABLE>
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and 1.12% for the Retail and Institutional Shares, respectively.
4 The Fund has in effect a 12b-1 Plan pursuant to which it may bear fees
in an amount of up to .10% of average daily net assets. As a result of
the payment of sales charges and 12b-1 fees, long-term shareholders may
pay more than the economic equivalent of the maximum front-end sales
charge permitted by the National Association of Securities Dealers,
Inc. ("NASD"). The NASD has adopted rules which generally limit the
aggregate sales charges and payments under the Trust's Service and
Distribution Plan ("Distribution Plan") and Services Plan to a certain
percentage of total new gross share sales, plus interest. The Trust
would stop accruing 12b-1 and related fees if, to the extent, and for
as long as, such limit would otherwise be exceeded.
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EXAMPLE
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For example, you would pay the following expenses on a hypothetical $1,000
investment, assuming: (1) a 5% annual return (a hypothetical return required by
SEC regulations); (2) the redemption of your investment at the end of the
following time periods (the Fund does not charge a redemption fee); and (3) the
imposition of the maximum sales charge at the beginning of the period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Retail Shares.............................. $50 $75
Institutional Shares....................... $10 $31
</TABLE>
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES AND RATES OF RETURN MAY BE
GREATER OR LESS THAN THOSE SHOWN.
The purpose of this Expense Table is to assist an investor in
understanding the various costs and expenses that an investor in the Fund will
bear directly or indirectly. For more complete descriptions of these costs and
expenses, see "Management of the Trust" and "Distribution Agreement" in this
Prospectus. Any fees that are charged by affiliates of the adviser or other
institutions directly to their customer accounts for services related to an
investment in Retail shares of the
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Fund are in addition to and not reflected in the fees and expenses described
above.
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INTRODUCTION
The Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The Fund consists of a pool of assets with investment objectives and
policies as described below under "Investment Objectives and Policies." The Fund
is classified as a diversified investment fund under the 1940 Act.
Shares of the Fund have been classified into two separate
classes -- Retail shares and Institutional shares. Retail shares and
Institutional shares represent equal pro rata interests in the Fund except that,
as described more fully below under "Shareholder Services Plan," the Trust has
implemented the Services Plan with respect to Retail shares of the Fund. Under
the Services Plan, only the beneficial owners of Retail shares bear the expenses
of shareholder administrative services which are provided by financial
institutions for their benefit (not to exceed .25% annually). See "Shareholder
Services Plan," "Dividends and Distributions" and "Description of the Trust and
Its Shares" for a description of the impact that the Services Plan may have on
holders of Retail shares.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Fund is to provide long term
capital appreciation. The Fund will normally invest at least 90% of its total
assets in equity securities of companies with stock market capitalizations of
under $1 billion at the time of purchase. The Fund's investment objective and
investment policies may be changed without a vote of shareholders. There can be
no assurance that the Fund will achieve its objective.
The Fund generally invests in equity securities of small
public companies. As discussed below, while such stocks may at times yield
greater returns on investment than stocks of larger, more established companies,
their positions in the market may be more tenuous, subjecting them to increased
price volatility, which can result in a fund share price with wider or more
frequent fluctuations than those of other equity portfolios. The Fund may also
hold other instruments with equity characteristics, such as preferred stocks,
convertible securities, rights, and warrants. In selecting stocks, the
sub-adviser will consider the relationship between price and book value, and
other factors such as trading volume and bid-ask spreads in an effort to allow
the Fund to achieve diversification.
In addition to investing in equity securities, the Fund is
authorized to invest in cash equivalents to provide cash
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reserves. With respect to the remaining portion of its total assets, the Fund
may hold temporary cash balances which may be invested in U.S. government
obligations and money market instruments. The Fund may also engage in options
and futures transactions, and may enter into repurchase agreements, reverse
repurchase agreements, and lend its portfolio securities. For further
information, see "Investment Objectives and Policies" in the Statement of
Additional Information.
SPECIAL RISK FACTORS -- SMALL CAPITALIZATION STOCKS
As mentioned above, securities held by the Fund will generally
be issued by public companies with small capitalizations relative to those which
predominate the major market indices, such as the Standard & Poor's 500 Index or
the Dow Jones Industrial Average. The market capitalization of the issuers of
securities purchased by the Fund will normally be less than $1 billion at the
time of purchase. The sub-adviser will seek companies with above-average growth
prospects. Factors considered in selecting such issuers include participation in
a fast growing industry, a strategic niche position in a specialized market, and
fundamental value.
The Fund has been designed to provide investors with
potentially greater long-term rewards than those provided by an investment in a
fund that seeks capital appreciation from equity securities of larger, more
established companies. Since small capitalization companies are generally not as
well-known to investors and have less of an investor following than larger
companies, they may provide opportunities for greater investment gains as a
result of inefficiencies in the marketplace.
Small capitalization companies typically are subject to a
greater degree of change in earnings and business prospects than larger, more
established companies. In addition, securities of smaller capitalized companies
are traded in lower volume than those issued by larger companies and may be more
volatile. As a result, the Fund may be subject to greater price volatility than
a fund consisting of larger capitalization stocks. By maintaining a broadly
diversified portfolio, the sub-adviser will attempt to reduce this volatility.
OTHER INVESTMENT POLICIES
Investment methods described in this Prospectus are among
those which the Fund has the power to utilize. Some may be employed on a regular
basis; others may not be used at all. Accordingly, reference to any particular
method or technique
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carries no implication that it will be utilized or, if it is, that it will be
successful.
-8-
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Foreign Securities and American Depository Receipts ("ADRs")
The Fund may invest in securities issued by foreign issuers
either directly or indirectly through investments in ADRs. ADRs are receipts
issued by an American bank or trust company evidencing ownership of underlying
securities issued by foreign issuers. ADRs may be listed on a national
securities exchange or may be traded in the over-the-counter market. ADR prices
are denominated in U.S. dollars; the underlying security may be denominated in a
foreign currency.
Investments in foreign securities involve certain inherent
risks, such as political or economic instability of the issuer or the country of
issue, the difficulty of predicting international trade patterns, changes in
exchange rates of foreign currencies and the possibility of adverse changes in
investment or exchange control regulations. There may be less publicly available
information about a foreign company than about a domestic company. Foreign
companies generally are not subject to uniform accounting, auditing and
financial reporting standards comparable to those applicable to domestic
companies. Further, foreign stock markets are generally not as developed or
efficient as those in the U.S., and in most foreign markets volume and liquidity
are less than in the U.S. Fixed commissions on foreign stock exchanges are
generally higher than the negotiated commissions on U.S. exchanges, and there is
generally less government supervision and regulation of foreign stock exchanges,
brokers and companies than in the U.S. With respect to certain foreign
countries, there is a possibility of expropriation or confiscatory taxation,
limitations on the removal of funds or other assets, or diplomatic developments
that could affect investment within those countries. Because of these and other
factors, securities of foreign companies acquired by the Fund may be subject to
greater fluctuation in price than securities of domestic companies. For further
information, see "Investment Objectives and Policies" in the Statement of
Additional Information.
Options
The Fund may write covered call options, buy put options, buy
call options and sell or "write" secured put options on a national securities
exchange and issued by the Options Clearing Corporation for hedging purposes.
Such transactions may be effected on a principal basis with primary reporting
dealers in U.S. government securities in an amount not exceeding 5% of a Fund's
net assets, as described further in the Statement of Additional Information.
Such options may relate to particular securities or financial instruments, or to
various stock indices or bond indices. Purchasing options is a specialized
investment
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technique which entails a substantial risk of a complete loss of the amounts
paid as premiums to the writer of the option.
A call option for a particular security gives the purchaser of
the option the right to buy, and a writer the obligation to sell, the underlying
security at the stated exercise price at any time prior to the expiration of the
option, regardless of the market price of the security. The premium paid to the
writer is the consideration for undertaking the obligations under the option
contract. A put option for a particular security gives the purchaser the right
to sell the underlying security at the stated exercise price at any time prior
to the expiration date of the option, regardless of the market price of the
security. In contrast to an option on a particular security, an option on a
securities index provides the holder with the right to make or receive a cash
settlement upon exercise of the option.
The Fund may purchase and sell put options on portfolio
securities at or about the same time that it purchases the underlying security
or at a later time. By buying a put, the Fund limits its risk of loss from a
decline in the market value of the security until the put expires. Any
appreciation in the value of and yield otherwise available from the underlying
security, however, will be partially offset by the amount of the premium paid
for the put option and any related transaction costs. Call options may be
purchased by the Fund in order to acquire the underlying security at a later
date at a price that avoids any additional cost that would result from an
increase in the market value of the security. The Fund may also purchase call
options to increase its return to investors at a time when the call is expected
to increase in value due to anticipated appreciation of the underlying security.
Prior to its expiration, a purchased put or call option may be sold in a closing
sale transaction (a sale by the Fund, prior to the exercise of an option that it
has purchased, of an option of the same series), and profit or loss from the
sale will depend on whether the amount received is more or less than the premium
paid for the option plus the related transaction costs.
In addition, the Fund may write covered call and secured put
options. A covered call option means that the Fund owns or has the right to
acquire the underlying security subject to call at all times during the option
period. A secured put option means that the Fund maintains in a segregated
account with its custodian cash or U.S. government securities in an amount not
less than the exercise price of the option at all times during the option
period. Such options will be listed on a national securities exchange and issued
by the Options Clearing Corporation and may be effected on a principal basis
with primary reporting dealers in the U.S.
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The aggregate value of the securities subject to options
written by the Fund will not exceed 25% of the value of its net assets. In order
to close out an option position prior to maturity, the Fund may enter into a
"closing purchase transaction" by purchasing a call or put option (depending
upon the position being closed out) on the same security with the same exercise
price and expiration date as the option which it previously wrote.
Options trading is a highly specialized activity and carries
greater than ordinary investment risk. Purchasing options may result in the
complete loss of the amounts paid as premiums to the writer of the option. In
writing a covered call option, the Fund gives up the opportunity to profit from
an increase in the market price of the underlying security above the exercise
price (except to the extent the premium represents such a profit). Moreover, it
will not be able to sell the underlying security until the covered call option
expires or is exercised or the Fund closes out the option. In writing a secured
put option, the Fund assumes the risk that the market value of the security will
decline below the exercise price of the option. The use of covered call and
secured put options will not be a primary investment technique of the Fund.
During temporary defensive periods the Fund may invest in
various short term obligations described below.
Futures Contracts and Options
Futures contracts obligate the Fund, at maturity, to take or
make delivery of certain securities or financial instruments or the cash value
of a securities index. The Fund may sell a futures contract in order to offset a
decrease in the market value of its portfolio securities that might otherwise
result from a market decline. The Fund may do so either to hedge the value of
its portfolio of securities as a whole or to protect against declines occurring
prior to sales of securities in the value of the securities to be sold.
Conversely, the Fund may purchase a futures contract in anticipation of
purchases of securities. In addition, the Fund may utilize futures contracts in
anticipation of changes in the composition of its holdings.
The Fund may purchase and sell call and put options on futures
contracts traded on an exchange or board of trade. When the Fund purchases an
option on a futures contract, it has the right to assume a position as a
purchaser or seller of a futures contract at a specified exercise price at any
time during the option period. When the Fund sells an option on a futures
contract, it becomes obligated to purchase or sell a futures contract if the
option is exercised. In anticipation of a market advance, the Fund may purchase
call options on futures contracts
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to hedge against a possible increase in the price of securities which the Fund
intends to purchase. Similarly, if the value of the Fund's securities is
expected to decline, the Fund might purchase put options or sell call options on
futures contracts rather than sell futures contracts.
The Fund intends to comply with the regulations of the
Commodity Futures Trading Commission ("CFTC") exempting it from registration as
a "commodity pool operator." The Fund's commodities transactions must constitute
bona fide hedging or other permissible transactions pursuant to such
regulations. In addition, the Fund may not engage in such transactions if the
sum of the amount of initial margin deposits and premiums paid for unexpired
commodity options, other than for bona fide hedging transactions, would exceed
5% of the liquidation value of its assets, after taking into account unrealized
profits and unrealized losses on such contracts it has entered into; provided,
however, that in the case of an option that has reached or exceeded its strike
price at the time of purchase, the amount in excess of the strike price may be
excluded in calculating the percentage limitation. In connection with the Fund's
position in a futures contract or option thereon, it will create a segregated
account of liquid assets, such as cash, U.S. government securities or other
liquid high grade debt obligations, or will otherwise cover its position in
accordance with applicable requirements of the SEC.
The primary risks associated with the use of futures contracts
and options are:
(i) an imperfect correlation between the change in market
value of the securities or currencies held by the Fund and the price of the
futures contracts and options;
(ii) possible lack of a liquid secondary market for a futures
contract and the resulting inability to close a futures contract when desired;
(iii) losses greater than the amount of the principal invested
as initial margin due to unanticipated market movements which are potentially
unlimited; and
(iv) the sub-adviser's ability to predict correctly the
direction of securities prices, interest rates and other economic factors.
For further information, see "Investment Objectives and
Policies Futures Contracts and Options" and Appendix B in the Statement of
Additional Information.
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Illiquid Securities
The Fund will not invest more than 15% of the value of its net
assets in securities that are illiquid. Illiquid securities include certain
securities which are subject to trading restrictions because they are not
registered under the Securities Act of 1933, as amended (the "1933 Act"). If the
Fund exceeds the limitation on the holding of illiquid securities, it will sell
illiquid securities as necessary to maintain the required liquidity when the
sub-adviser believes that it is in the best interests of the Fund to do so.
The Fund may purchase securities which are not registered
under the 1933 Act but which can be sold to "qualified institutional buyers" in
accordance with Rule 144A under the 1933 Act. Any such security will not be
considered illiquid so long as it is determined by the Board of Trustees or the
Fund's sub-adviser, acting under guidelines approved and monitored by the Board,
that an adequate trading market exists for that security. This investment
practice could have the effect of increasing the level of illiquidity in the
Fund during any period that qualified institutional buyers become uninterested
in purchasing these restricted securities.
Short Term Obligations
During temporary defensive periods the Fund may invest up to
100% of its assets in short term obligations (with maturities of 18 months or
less) such as repurchase agreements, reverse repurchase agreements, domestic
commercial paper, bankers' acceptances, certificates of deposit and demand and
time deposits of U.S. banks, foreign branches of U.S. banks and foreign banks.
In the case of repurchase agreements, default or bankruptcy of the seller may
expose a Fund to possible loss because of adverse market action or delays
connected with the disposition of the underlying obligations. Further, it is
uncertain whether the Fund would be entitled, as against a claim by such seller
or its receiver or trustee in bankruptcy, to retain the underlying securities.
Reverse repurchase agreements involve the risk that the market value of the
securities held by the Fund may decline below the price of the securities it is
obligated to repurchase. For further information, see "Investment Objectives and
Policies" in the Statement of Additional Information.
Lending Portfolio Securities
In order to generate additional income, the Fund may, from
time to time, lend its portfolio securities to broker-dealers, banks or other
institutional borrowers. The Fund must receive 100% collateral in the form of
cash or U.S. government
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<PAGE> 18
securities. This collateral must be valued daily by the Fund's custodian and the
borrower will be required to provide additional collateral should the market
value of the loaned securities increase. During the time portfolio securities
are on loan, the borrower pays the Fund involved any dividends or interest paid
on such securities. Loans are subject to termination by the Fund or the borrower
at any time. While a Fund does not have the right to vote securities on loan, it
intends to terminate the loan and regain the right to vote if this is considered
important with respect to the investment. The Fund will only enter into loan
arrangements with broker-dealers, banks or other institutions which its
sub-adviser has determined are creditworthy under guidelines established by the
Trust's Board of Trustees.
Securities of Other Investment Companies
Subject to 1940 Act limitations, the Fund may invest in
securities issued by other investment companies which invest in high quality,
short-term debt securities and which determine their net asset value per share
based on the amortized cost or penny-rounding method. As a shareholder of
another investment company, the Fund would bear, along with other shareholders,
its pro rata portion of that company's expenses, including advisory fees. These
expenses would be in addition to the advisory and other expenses that the Fund
bears directly in connection with its own operations. Investment companies in
which the Fund may invest may also impose a sales or distribution charge in
connection with the purchase or redemption of their shares and other types of
commissions or charges. Such charges will be payable by the Fund and, therefore,
will be borne indirectly by its shareholders. For further information, see
"Investment Objectives and Policies" in the Statement of Additional Information.
INVESTMENT LIMITATIONS
The Fund is subject to a number of investment limitations. The
following investment limitations are matters of fundamental policy and may not
be changed without the affirmative vote of the Fund's outstanding shares (as
defined under "Miscellaneous"). (Other investment limitations that also cannot
be changed without a vote of shareholders are contained in the Statement of
Additional Information under "Investment Objectives and Policies.")
The Fund may not:
1. Purchase any securities which would cause 25% or more of
the value of its total assets at the time of purchase to be invested in the
securities of one or more issuers conducting
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<PAGE> 19
their principal business activities in the same industry, provided that
(a) there is no limitation with respect to obligations issued or
guaranteed by the U.S. government, any state, territory or possession
of the United States, the District of Columbia or any of their
authorities, agencies, instrumentalities or political subdivisions, and
repurchase agreements secured by such instruments
(b) wholly-owned finance companies will be considered to be in the
industries of their parents if their activities are primarily related
to financing the activities of the parents
(c) utilities will be divided according to their services, for example,
gas, gas transmission, electric and gas, electric and telephone will
each be considered a separate industry
(d) personal credit and business credit businesses will be considered
separate industries.
2. Make loans, except that it may purchase and hold debt
instruments and enter into repurchase agreements in accordance with its
investment objective and policies and may lend portfolio securities in an amount
not exceeding one-third of its total assets.
3. Borrow money, issue senior securities or mortgage, pledge
or hypothecate its assets except to the extent permitted under the 1940 Act.
4. Purchase securities of any one issuer, other than
securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities if, immediately after such purchase, more than 5% of the value
of the Fund's total assets would be invested in such issuer or the Fund would
hold more than 10% of any class of securities of the issuer or more than 10% of
the outstanding voting securities of the issuer, except that up to 25% of the
value of the Fund's total assets may be invested without regard to such
limitations.
Generally, if a percentage limitation is satisfied at the time
of investment, a later increase or decrease in such percentage resulting from a
change in the value a Fund's portfolio securities will not constitute a
violation of such limitation for purposes of the 1940 Act.
For purposes of investment limitation No. 1 the Fund treats,
as a matter of non-fundamental policy that may be changed without a vote of
shareholders, all supranational organizations
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<PAGE> 20
as a single industry and each foreign government (and all of its agencies) as a
separate industry.
PERFORMANCE INFORMATION
From time to time, the Trust may provide in advertisements or
in reports to shareholders the Fund's total return data for its Institutional
shares and Retail shares.
The Fund calculates its total return for each class of shares
on an "average annual total return" basis for various periods from the date of
commencement of investment operations and for other periods as permitted under
the rules of the SEC. Average annual total return reflects the average annual
percentage change in value of an investment in the class over the measuring
period. Total returns for each class of shares may also be calculated on an
"aggregate total return" basis for various periods. Aggregate total return
reflects the total percentage change in value over the measuring period. Both
methods of calculating total return reflect changes in the price of the shares
and assume that any dividends and capital gain distributions made by the Fund
with respect to a class during the period are reinvested in shares of that
class. When considering average total return figures for periods longer than one
year, it is important to note that the annual total return of a class for any
one year in the period might have been greater or less than the average for the
entire period. The Fund may also advertise, from time to time, the total returns
of one or more classes of shares on a year-by-year or other basis for various
specified periods by means of quotations, charts, graphs or schedules.
Investors may compare the performance of each class of shares
of the Fund to the performance of other mutual funds with comparable investment
objectives, to various mutual fund or market indices, such as the S&P 500, and
to data or rankings prepared by independent services such as Lipper Analytical
Services, Inc. or other financial or industry publications that monitor the
performance of mutual funds. Comparisons may also be made to indices or data
published in Money Magazine, Forbes, Barron's, The Wall Street Journal, The New
York Times, Business Week, U.S.A. Today, CDA/Weisenberger, The American Banker,
Morningstar, Incorporated and other publications of a local, regional or
financial industry nature.
The past performance of each class of shares of the Fund is
based on historical earnings and is not intended to indicate future performance.
The investment return and principal value of an investment in a class will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost. Performance data may not provide a basis
-16-
<PAGE> 21
for comparison with bank deposits and other investments which provide a fixed
yield for a stated period of time. Changes in the net asset value of a class
should be considered in ascertaining the total return to shareholders for a
given period. Yield and total return data should also be considered in light of
the risks associated with the Fund's portfolio composition, quality, maturity,
operating expenses and market conditions. Any fees charged by financial
institutions (as described in "How to Purchase and Redeem Shares") are not
included in the computation of performance data but will reduce a shareholder's
net return on an investment in the Fund.
Further information about the performance of the Fund is
available in the annual and semi-annual reports to shareholders. Shareholders
may obtain these materials from the Trust free of charge by calling
1-800-622-FUND (3863).
PRICING OF SHARES
For purposes of pricing purchases and redemption orders, the
net asset value per share of the Fund is calculated as of the close of trading
on the New York Stock Exchange (the "Exchange") (generally, 4:00 p.m. Eastern
Time). Net asset value per share is determined on each business day, except
those holidays which the Exchange, or banks and trust companies which are
affiliated with National City Corporation (the "Banks"), observe (currently New
Year's Day, Dr. Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving Day and Christmas Day) ("Business Day"). Net asset value per share
of a particular class in the Fund is calculated by dividing the value of all
securities and other assets belonging to the Fund allocable to such class, less
the liabilities charged to that class, by the number of the outstanding shares
of that class.
The Fund's investments in securities for which market
quotations are readily available are valued at their market values determined on
the basis of closing sales prices, if the principal market is an exchange, or
the mean between their current available bid and asked prices, for unlisted
securities, or for securities traded on a national securities market. Securities
and other assets for which quotations are not readily available are valued at
their fair value under procedures approved by the Board of Trustees. Absent
unusual circumstances, short-term investments having maturities of 60 days or
less are valued on the basis of amortized cost unless the Trust's Board of
Trustees determines that this does not represent fair value. The net asset value
per share of each class of shares of the Fund will fluctuate as the value of its
investment fund changes.
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<PAGE> 22
HOW TO PURCHASE AND REDEEM SHARES
DISTRIBUTOR
Shares in the Fund are sold on a continuous basis by the
Trust's sponsor and distributor. The Distributor is a registered broker/dealer
with principal offices located at Oaks, Pennsylvania 19456.
From time to time, the Distributor, at its expense, may offer
promotional incentives to dealers. As of the date of this Prospectus, the
Distributor intends to offer certain promotional incentives, including trips and
monetary awards, to NatCity Investments, Inc. and other affiliates of National
City.
PURCHASE OF RETAIL SHARES
Retail shares are sold to the public ("Investors") primarily
through financial institutions such as banks, brokers and dealers. Investors may
purchase Retail shares directly in accordance with the procedures set forth
below or through procedures established by their financial institutions in
connection with the requirements of their accounts.
Financial institutions may charge certain account fees
depending on the type of account the Investor has established with the
institution. (For information on such fees, the Investor should review his
agreement with the institution or contact it directly.) In addition, certain
financial institutions may enter into shareholder servicing agreements with the
Trust whereby a financial institution would perform various administrative
support services for its customers who are the beneficial owners of Retail
shares and would receive fees from the Fund for such services of up to .25% (on
an annualized basis) of the average daily net asset value of such shares. See
"Shareholder Services Plan." To purchase shares, Investors should call
1-800-622-FUND (3863) or visit their local NatCity Investments, Inc. office:
Akron 1-800-229-0295
Cleveland 1-800-624-6450
Columbus 1-800-345-0278
Dayton 1-800-755-8723
Indianapolis 1-800-826-2868
Louisville 1-800-727-5656
Pittsburgh 1-800-282-1078
Toledo 1-800-331-8275
Youngstown 1-800-742-4098
Shares may be purchased in conjunction with an individual
retirement account ("IRA") and rollover IRAs where a
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<PAGE> 23
designated custodian acts as custodian. Investors should contact NatCity
Investments, Inc., the Distributor or their financial institutions for
information as to applications and annual fees. Investors should also consult
their tax advisers to determine whether the benefits of an IRA are available or
appropriate.
The minimum investment for the initial purchase of Retail
shares in each Fund is $2,500, except for purchases for an IRA or other
retirement plan in which event the minimum initial investment is $500. All
subsequent investments for Retail shares and IRAs are subject to a minimum
investment of $250. Investments made in Retail shares through a monthly savings
program described below are not subject to the minimum initial and subsequent
investment requirements or any minimum account balance requirements described in
"Other Redemption Information." Purchases for an IRA through the monthly savings
program will be considered as contributions for the year in which the purchases
are made.
Under a monthly savings program, Investors may add to their
investment in the Retail shares of a Fund, in a consistent manner twice each
month, with a minimum amount of $50 per month. Monies may be automatically
withdrawn from a shareholder's checking or savings account available through
an Investor's financial institution and invested in additional Retail shares at
the Public Offering Price next determined after an order is received by the
Trust. An Investor may apply for participation in a monthly program by
completing an application obtained through a financial institution, such as
banks, brokers, or dealers selling Retail shares of the Fund, or by calling
1-800-622-FUND (3863). The program may be modified or terminated by an Investor
on 30 days written notice or by the Trust at any time.
All shareholders of record will receive confirmations of share
purchases and redemptions. Financial institutions will be responsible for
transmitting purchase and redemption orders to the Trust's transfer agent, State
Street Bank and Trust Company (the "Transfer Agent"), on a timely basis.
The Trust reserves the right to reject any purchase order.
SALES CHARGES APPLICABLE TO PURCHASES OF RETAIL SHARES
The Public Offering Price for Retail shares of the Fund is the
sum of the net asset value of the shares being purchased plus any applicable
sales charge per account, which is assessed as follows:
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<PAGE> 24
<TABLE>
<CAPTION>
As a % As a % Dealers'
of offering of net Reallowance
price per asset value as a % of
Amount of Transaction share per share offering price
- --------------------- ----- --------- --------------
<S> <C> <C> <C>
Less than $100,000 3.75 3.90 3.75
$100,000 but less
than $250,000 2.75 2.83 2.75
$250,000 but less
than $500,000 2.00 2.04 2.00
$500,000 but less
than $1,000,000 1.25 1.27 1.25
$1,000,000 or more 0.00 0.00 0.00
</TABLE>
Under the 1933 Act, the term "underwriter" includes persons
who offer or sell for an issuer in connection with the distribution of a
security or have a direct or indirect participation in such undertaking, but
excludes persons whose interest is limited to a commission from an underwriter
or dealer not in excess of the usual and customary distributors' or sellers'
commission. The Staff of the SEC has expressed the view that persons who receive
90% or more of a sales load may be deemed to be underwriters within the meaning
of this definition. The Dealers' Reallowance may be changed from time to time.
No sales charge will be assessed on purchases of Retail shares
made by:
(a) trustees and officers of the Trust
(b) directors, employees and participants in employee
benefit/retirement plans (annuitants) of National City
Corporation or any of its affiliates
(c) the spouses, children, grandchildren, and parents
of individuals referred to in clauses (a) and (b) above
(d) qualified retirement plans purchasing shares
through NatCity Investments, Inc.
(e) individuals investing in the Fund by way of a direct
transfer or a rollover from a qualified plan distribution and
subsequent transactions into the same account where affiliates
of National City Corporation are serving as a trustee or agent
(f) investors purchasing Fund shares through a payroll
deduction plan
-20-
<PAGE> 25
(g) individuals investing in the Fund by way of an asset
allocation program sponsored by financial institutions,
although certain account level fees may apply
REDUCED SALES CHARGES APPLICABLE TO PURCHASES OF RETAIL SHARES
The applicable sales charge may be reduced on purchases of
Retail shares of the Fund made under the Right of Accumulation or Letter of
Intent, as described below. To qualify for a reduced sales charge, Investors
must so notify their financial institutions or the Trust directly by calling
1-800-622-FUND (3863) at the time of purchase. Reduced sales charges may be
modified or terminated at any time and are subject to confirmation of an
Investor's holdings.
Right of Accumulation.
Investors may use their aggregate investments in Retail shares
in determining the applicable sales charge. An Investor's aggregate investment
in Retail shares is the total value (based on the higher of current net asset
value or any Public Offering Price originally paid) of
(a) current purchases
(b) Retail shares that are already beneficially owned
by the Investor for which a sales charge has been paid
(c) Retail shares that are already beneficially owned by the
Investor which were purchased prior to July 22, 1990
(d) Retail shares purchased by dividends or capital
gains that are reinvested
If, for example, an Investor beneficially owns Retail shares
of the Fund with an aggregate current value of $90,000 and subsequently
purchases Retail shares of the Fund having a current value of $10,000, the sales
charge applicable to the subsequent purchase would be reduced to 2.75% of the
Public Offering Price.
Letter of Intent.
An Investor may qualify for a reduced sales charge immediately
upon signing a nonbinding Letter of Intent stating the Investor's intention to
invest during the next 13 months a specified amount which, if made at one time,
would qualify for a reduced sales charge. The Letter of Intent option is
included on the account application which may be obtained from the Investor's
financial institution or directly from the Trust by calling 1-
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<PAGE> 26
800-622-FUND (3863). If an Investor so elects, the 13-month period may begin up
to 30 days prior to the Investor's signing the Letter of Intent. The initial
investment under the Letter of Intent must be equal to at least 4.0% of the
amount indicated in the Letter of Intent. During the term of a Letter of Intent,
the Transfer Agent will hold Retail shares representing 4.0% of the amount
indicated in the Letter of Intent in escrow for payment of a higher sales charge
if the entire amount is not purchased. Upon completing the purchase of the
entire amount indicated in the Letter of Intent, the escrowed shares will be
released. If the entire amount is not purchased within the 13-month period or is
redeemed within one year from the time of fulfillment, the Investor will be
required to pay an amount equal to the difference in the dollar amount of sales
charge actually paid and the amount of sales charge the Investor would have had
to pay on the aggregate purchases if the total of such purchases had been made
at a single time.
PURCHASE OF INSTITUTIONAL SHARES
Institutional shares are sold primarily to the Banks and NAM
customers ("Customers") that are large institutions. Institutional shares are
sold without a sales charge imposed by the Trust or the Distributor. However,
depending on the terms governing the particular account, the Banks or NAM may
impose account charges such as account maintenance fees, compensating balance
requirements or other charges based upon account transactions, assets or income
which will have the effect of reducing the shareholder's net return on his
investment in the Fund. There is no minimum investment.
It is the responsibility of the Banks and NAM to transmit
their Customers' purchase orders to the Transfer Agent and to deliver required
funds on a timely basis, in accordance with the procedures stated above.
Institutional shares will normally be held of record by the Banks or NAM.
Confirmations of share purchases and redemptions will be sent to the Banks and
NAM. Beneficial ownership of Institutional shares will be recorded by the Banks
or NAM and reflected in the account statements provided by them to their
Customers.
The Trust reserves the right to reject any purchase order.
EFFECTIVE TIME OF PURCHASES
Purchase orders for shares of the Fund which are received by
the Transfer Agent prior to 4:00 p.m. (Eastern Time) on any Business Day are
priced according to the net asset value per share determined on that day plus
any applicable sales charge (the "Public Offering Price"). Immediately available
funds must
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<PAGE> 27
be received by the Trust's custodian prior to 2:00 p.m. (Eastern Time) on the
third Business Day following the receipt of such order, at which time the order
will be executed. If funds are not received by such date, the order will not be
accepted and notice thereof will be given to the Bank or financial institution
placing the order. Purchase orders for which payment has not been received or
accepted will be returned after prompt inquiry to the sending Bank or
institution.
REDEMPTION OF RETAIL SHARES
Redemption orders must be placed in writing or by telephone to
the same financial institution that placed the original purchase order. It is
the responsibility of the financial institutions to transmit redemption orders
to the Transfer Agent. Investors who purchased shares directly from the Trust
may redeem shares in any amount by calling 1-800-622-FUND (3863). Redemption
proceeds are paid by check or credited to the Investor's account with his
financial institution.
REDEMPTION OF INSTITUTIONAL SHARES
Customers may redeem all or part of their Institutional shares
in accordance with instructions and limitations pertaining to their accounts at
the Banks or NAM. It is the responsibility of the Banks or NAM to transmit
redemption orders to the Transfer Agent and credit their Customers' accounts
with the redemption proceeds on a timely basis. Redemption orders are effected
at the net asset value per share next determined after receipt of the order by
the Transfer Agent. No charge for wiring redemption payments is imposed by the
Trust, although the Banks or NAM may charge their Customers' accounts for
services. Information relating to such services and charges, if any, is
available from the Banks or NAM.
If a Customer has agreed with a particular Bank to maintain a
minimum balance in his account at the Bank and the balance in such account falls
below that minimum, the Customer may be obliged to redeem all or part of his
Institutional shares to the extent necessary to maintain the required minimum
balance. Customers who have instructed that automatic purchases and redemptions
be made for their accounts receive monthly confirmations of share transactions.
WRITTEN REDEMPTION PROCEDURES
A shareholder of record may redeem shares in any amount by
sending a written request to Armada Funds, P.O. Box 8421, Boston, Massachusetts
02266-8421. Redemption requests must be signed by each shareholder, including
each joint owner on redemption requests for joint accounts, in the exact manner
as
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<PAGE> 28
the Fund account is registered, and must state the number of shares or the
amount to be redeemed and identify the shareholder account number and tax
identification number. For a redemption amount of $10,000 or more, each
signature on the written request must be guaranteed by a commercial bank or
trust company which is a member of the Federal Reserve System or FDIC, a member
firm of a national securities exchange or a savings and loan association. A
signature guaranteed by a savings bank or notarized by a notary public is not
acceptable. For a redemption amount of less than $10,000, no signature guarantee
is needed. The Trust may require additional supporting documents for redemptions
made by corporations, fiduciaries, executors, administrators, trustees,
guardians and institutional investors.
TELEPHONE REDEMPTION PROCEDURES
A shareholder of record may redeem shares in any amount by
calling 1-800-622-FUND (3863) provided the appropriate election was made on the
shareholder's account application.
During periods of unusual economic or market changes,
telephone redemptions may be difficult to implement. In such event, shareholders
should mail their redemption requests to their financial institutions or Armada
Funds at the address shown above. Neither the Trust nor its Transfer Agent will
be responsible for the authenticity of instructions received by telephone that
are reasonably believed to be genuine. In attempting to confirm that telephone
instructions are genuine, the Trust and its Transfer Agent will use such
procedures as are considered reasonable, including recording those instructions
and requesting information as to account registration (such as the name in which
an account is registered, the account number and recent transactions in the
account). To the extent that the Trust and its Transfer Agent fail to use
reasonable procedures to verify the genuineness of telephone instructions, they
may be liable for such instructions that prove to be fraudulent and
unauthorized. In all other cases, shareholders will bear the risk of loss for
fraudulent telephone transactions. The Trust reserves the right to refuse a
telephone redemption if it believes it is advisable to do so. Procedures for
redeeming Retail shares by telephone may be modified or terminated at any time
by the Trust or the Transfer Agent.
OPTION TO MAKE SYSTEMATIC WITHDRAWALS
The Trust has available a Systematic Withdrawal Plan (the
"Plan") for a shareholder who owns shares of any fund of the Trust held on the
Transfer Agent's system. The Plan allows the shareholder to have a fixed minimum
sum of $250 distributed at regular intervals. The shareholder's account must
have a minimum
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<PAGE> 29
value of $5,000 to be eligible for the Plan. Additional information regarding
this service may be obtained from an Investor's financial institution or the
Transfer Agent at 1-800-622-FUND (3863).
OTHER REDEMPTION INFORMATION
Due to the relatively high cost of maintaining small accounts,
the Trust reserves the right to redeem, at net asset value, any account
maintained by a shareholder that has a value of less than $1,000 due to
redemptions where the shareholder does not increase the amount in the account to
at least $1,000 upon 60 days' notice.
If any portion of the shares to be redeemed represents an
investment made by personal check, the Trust reserves the right to delay payment
of the redemption proceeds until the Transfer Agent is reasonably satisfied that
the check has been collected, which could take up to 15 calendar days from the
date of purchase. A shareholder who anticipates the need for more immediate
access to his investment should purchase shares by federal funds, bank wire,
certified or cashier's check. Financial institutions normally impose a charge in
connection with the use of bank wires, as well as certified checks, cashier's
checks and federal funds.
Payment to shareholders for shares redeemed will be made
within seven days after receipt of the request for redemption or such shorter
time period as may be required by the Securities Exchange Act of 1934.
EXCHANGE PRIVILEGE APPLICABLE TO RETAIL SHARES
The Trust offers an exchange program whereby Investors who
have paid a sales charge to purchase Retail shares of the Fund or another
investment portfolio of the Trust (each a "load Fund") may exchange those Retail
shares for Retail shares of another load Fund offered by the Trust, or another
investment fund offered by the Trust without the imposition of a sales charge
(each a "no load Fund") at the net asset value per share on the date of
exchange, provided that such other Retail shares may be legally sold in the
state of the shareholder's residence. As a result, no additional sales charge
will be incurred with respect to such an exchange.
Shareholders may also exchange Retail shares of a no load Fund
for Retail shares of another no load Fund at the net asset value per share
without payment of a sales charge.
In addition, shareholders of a no load Fund may exchange
Retail shares for Retail shares of a load Fund subject
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<PAGE> 30
to payment of the applicable sales charge. However, shareholders exchanging
Retail shares of a no load Fund which were received in a previous exchange
transaction involving Retail shares of a load Fund will not be required to pay
an additional sales charge upon notification of the reinvestment of the
equivalent amount into the Retail shares of a load Fund.
Shareholders contemplating an exchange should carefully review
the Prospectus of the fund into which the exchange is being considered. An
Armada Funds Prospectus may be obtained from NatCity Investments, Inc., an
Investor's financial institution, or by calling 1-800-622-FUND (3863).
Any Retail shares exchanged must have a value at least equal
to the minimum initial investment required by the particular investment fund
into which the exchange is being made. Investors should make their exchange
requests in writing or by telephone to the financial institutions through which
they purchased their original Retail shares. It is the responsibility of
financial institutions to transmit exchange requests to the Transfer Agent.
Investors who purchased shares directly from the Trust should transmit exchange
requests directly to the Transfer Agent. Exchange requests received by the
Transfer Agent prior to 4:00 p.m. (Eastern Time) will be processed as of the
close of business on the day of receipt; requests received by the Transfer Agent
after 4:00 p.m. (Eastern Time) will be processed on the next Business Day. The
Trust reserves the right to reject any exchange request. During periods of
unusual economic or market changes, telephone exchanges may be difficult to
implement. In such event, an Investor should mail the exchange request to his
financial institution, and an Investor who directly purchased shares from the
Trust should mail the exchange request to the Transfer Agent. The exchange
privilege may be modified or terminated at any time upon 60 days notice to
shareholders.
SYSTEMATIC EXCHANGE PROGRAM APPLICABLE TO RETAIL SHARES
Shares of a Fund may also be purchased through automatic
monthly deductions from a shareholder's account from any Armada money market
fund. Under a systematic exchange program, a shareholder enters an agreement to
purchase shares of one or more specified funds over a specified period of time,
and initially purchases shares of one Armada money market fund in an amount
equal to the total amount of the investment. On a monthly basis, a specified
dollar amount of shares of the Armada money market fund is exchanged for shares
of the Funds specified.
The systematic exchange program of investing a fixed dollar
amount at regular intervals over time has the effect of reducing the average
cost per share of the Funds. This effect also can be achieved through the
systematic investment program
-26-
<PAGE> 31
described previously in this prospectus. Because purchases of Retail Shares are
subject to an initial sales charge, it may be beneficial for an investor to
execute a Letter of Intent in connection with the systematic exchange program. A
shareholder may apply for participation in this program through his or her
financial institution or by calling 1-800-622-FUND (3863).
Additional Transaction Fee Imposed on Share Purchases and
Redemptions
The Fund requires the payment of an additional transaction fee
on purchases and redemptions of shares of the Fund equal to 0.75% of the dollar
amount invested. The additional transaction fee is paid to the Fund, not to the
adviser, distributor or transfer agent. It is not a sales charge. The fee
applies to initial investments in the Fund, all subsequent purchases (including
purchases made by exchange from the other Funds of the Trust) and redemptions
from the Fund, but not to reinvested dividends or capital gain distributions.
The purpose of the additional transaction fee is to indirectly allocate
transaction costs associated with new purchases or redemptions to investors
making those purchases or redemptions, thus protecting existing shareholders.
These costs include: (1) brokerage costs; (2) market impact costs -- i.e., the
increase in market prices which may result when the Fund purchases or sells
certain securities; and (3) the effect of the "bid-ask" spread in the
over-the-counter market. The 0.75% amount represents the Fund's estimate of the
brokerage and other transaction costs which may be incurred by the Fund in
acquiring or disposing of stocks in which the Fund may invest. Without the
additional transaction fee, the Fund would generally be selling its shares at a
price less than the cost to the Fund of acquiring the portfolio securities
necessary to maintain its investment characteristics, resulting in reduced
investment performance for all shareholders in the Fund. With the additional
transaction fee, the transaction costs of acquiring or selling additional stocks
are not borne by all existing shareholders, but the source of funds for these
costs is the transaction fee paid by those investors making additional purchases
or redemptions.
DISTRIBUTION AGREEMENT
Under the Trust's Distribution Agreement and related
Distribution Plan adopted pursuant to Rule 12b-1 under the 1940 Act, the Trust
compensates the Distributor monthly for the direct and indirect expenses
incurred by the Distributor for services provided and expenses assumed in
providing such fund advertising, marketing, prospectus printing and other
distribution services up to a maximum of .10% per annum of the average net
assets of the
-27-
<PAGE> 32
fund, inclusive of an annual base fee of $1,250,000 plus incentive fees related
to asset growth. Such fees are payable monthly and accrued daily among the
investment funds with respect to which the Distributor is distributing shares.
SHAREHOLDER SERVICES PLAN
The Trust has implemented the Services Plan with respect to
Retail shares of the Fund. Pursuant to the Services Plan, the Trust enters into
shareholder servicing agreements with certain financial institutions pursuant to
which the institutions render shareholder administrative services to their
customers who are the beneficial owners of Retail shares of the Fund in
consideration for the payment of up to .25% (on an annualized basis) of the
average daily net asset value of such shares. Persons entitled to receive
compensation for servicing Retail shares may receive different compensation with
respect to those shares than with respect to Institutional shares in the same
Fund. Shareholder administrative services may include aggregating and processing
purchase and redemption orders, processing dividend payments from the Trust on
behalf of customers, providing information periodically to customers showing
their position in Retail shares, and providing sub-transfer agent services or
the information necessary for subaccounting, with respect to Retail shares
beneficially owned by customers. Since financial institutions may charge their
customers fees depending on the type of customer account the Investor has
established, beneficial owners of Retail shares should read this Prospectus in
light of the terms and fees governing their accounts with financial
institutions.
DIVIDENDS AND DISTRIBUTIONS
Dividends from the net investment income of the Fund are
declared daily and paid quarterly. Any net realized capital gains will be
distributed at least annually. Dividends and distributions will reduce the
Fund's net asset value per share by the per share amount thereof.
Shareholders may elect to have their dividends reinvested in
additional full and fractional Fund shares of the same class or series at the
net asset value of such shares on the payment date. Shareholders must make such
election, or any revocation thereof, in writing to his Bank or financial
institution. The election will become effective with respect to dividends and
distributions paid after its receipt.
Under the Services Plan, the amount of the Fund's net
investment income available for distribution to the holders of
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<PAGE> 33
Retail shares is reduced by the amount of shareholder servicing fees payable to
financial institutions under the Services Plan.
TAXES
The Fund intends to qualify as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"). Such
qualification generally relieves the Fund of liability for federal income taxes
to the extent its earnings are distributed in accordance with the Code.
Qualification as a regulated investment company under the Code
for a taxable year requires, among other things, that the Fund distribute to its
shareholders an amount equal to at least the sum of 90% of its investment
company taxable income and 90% of its tax-exempt interest income (if any) net of
certain deductions for such year. In general, the Fund's investment company
taxable income will be its taxable income (including any dividends, interest and
short-term capital gains) subject to certain adjustments and excluding the
excess of any net long-term capital gain for the taxable year over the net
short-term capital loss, if any, for such year. The Fund intends to distribute
substantially all of its investment company taxable income and net tax-exempt
income each taxable year. Such distributions by the Fund will be taxable as
ordinary income to its shareholders who are not currently exempt from federal
income taxes, whether such income is received in cash or reinvested in
additional shares. (Federal income taxes for distributions to an IRA or to a
qualified retirement plan are deferred under the Code.) For corporate
shareholders, the dividends received deduction will apply to such distributions
to the extent of the gross amount of qualifying dividends received by the Fund
from domestic corporations for the taxable year.
Substantially all of the Fund's net realized long-term capital
gains, if any, will be distributed at least annually to Fund shareholders. The
Fund generally will have no tax liability with respect to such gains, and the
distributions will be taxable to Fund shareholders who are not currently exempt
from federal income taxes as long-term capital gains, regardless of how long the
shareholders have held Fund shares and whether such gains are received in cash
or reinvested in additional shares.
Dividends declared in December of any year payable to
shareholders of record on a specified date in such month will be deemed to have
been received by shareholders and paid by the Fund on December 31 of such year
in the event such dividends are actually paid during January of the following
year.
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<PAGE> 34
Prior to purchasing Fund shares, the impact of dividends or
distributions which are expected to be declared or have been declared, but not
paid, should be carefully considered. Any dividend or distribution paid shortly
after a purchase of shares prior to the record date will have the effect of
reducing the per share net asset value by the per share amount of the dividend
or distribution. All or a portion of such dividend or distribution, although in
effect a return of capital, may be subject to tax.
A taxable gain or loss may be realized by a shareholder upon
his redemption, transfer or exchange of Fund shares depending upon the tax basis
of such shares and their price at the time of redemption, transfer or exchange.
If a shareholder has held shares for six months or less and during that time
received a distribution taxable as a long-term capital gain, then any loss the
shareholder might realize on the sale of those shares will be treated as a
long-term capital loss to the extent of the earlier capital gain distribution.
Generally, a shareholder may include sales charges incurred upon the purchase of
Fund shares in his tax basis for such shares for the purpose of determining gain
or loss on a redemption, transfer or exchange of such shares. However, if the
shareholder effects an exchange of such shares for shares of another Fund within
90 days of the purchase and is able to avoid the sales charges applicable to the
new shares (by virtue of the Trust's exchange privilege), the original sales
charges will be included in the tax basis of the new shares rather than the
exchanged shares.
Shareholders of the Fund will be advised at least annually as
to the federal income tax consequences of distributions made to them each year.
Shareholders are advised to consult their tax advisers concerning the
application of state and local taxes which may differ from federal tax
consequences described above.
The foregoing discussion is based on tax laws and regulations
which were in effect as of the date of this Prospectus; such laws and
regulations may be changed by legislative or administrative actions. The
foregoing summarizes some of the important tax considerations generally
affecting the Fund and its shareholders and is not intended as a substitute for
careful tax planning. Accordingly, potential investors should consult their tax
advisers with specific reference to their own tax situation.
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<PAGE> 35
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The business and affairs of the Trust are managed under the direction
of the Trust's Board of Trustees. The trustees of the Trust, their addresses,
principal occupations during the past five years, other affiliations, and the
compensation paid by the Trust and the fees and reimbursed expenses they receive
in connection with each meeting of the Board of Trustees they attend are
included in the Statement of Additional Information.
INVESTMENT ADVISER
National City serves as the investment adviser to the Fund.
The adviser is a wholly owned subsidiary of National City Corporation. The
adviser provides trust and banking services to individuals, corporations, and
institutions, both nationally and internationally, including investment
management, estate and trust administration, financial planning, corporate trust
and agency, and personal and corporate banking. The adviser is a member bank of
the Federal Reserve System and the Federal Deposit Insurance Corporation.
On December 31, 1996, the Trust Department of National City
had approximately $9.9 billion in assets under management, and had approximately
$18.6 billion in total trust assets. National City has its principal offices at
1900 East Ninth Street, Cleveland, Ohio 44114.
Subject to the general supervision of the Trust's Board of
Trustees and in accordance with the Fund's investment policies, the adviser has
agreed to manage the Fund, make decisions with respect to and place orders for
all purchases and sales of the Fund's securities, and maintain the Fund's
records relating to such purchases and sales.
For the services provided and expenses assumed pursuant to the
Advisory Agreement relating to the Fund, the adviser is entitled to receive an
advisory fee, computed daily and payable monthly, at the annual rate of .35% of
the average net assets of the Fund. Shareholders should note that these fees are
higher than those payable by other investment companies. The adviser may from
time to time waive all or a portion of its advisory fees to increase the net
income of the Fund available for distribution as dividends.
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<PAGE> 36
SUB-INVESTMENT ADVISER
Wellington Management Company, LLP serves as the investment
adviser to the Fund under a sub-advisory agreement (the Sub-Advisory Agreement")
with the adviser.
Pursuant to the Sub-Advisory Agreement and subject to the
supervision of the adviser and of the Trust's Board of Trustees and in
accordance with the Fund's investment policies, the sub-adviser has agreed to
assist the adviser in providing a continuous investment program for the Fund and
in determining investments for the Fund. The sub-adviser will maintain the
Trust's records relating to purchases and sales effected by it. For the services
provided and expenses assumed pursuant to the Sub-Advisory Agreement, the
sub-adviser is entitled to an advisory fee, payable by the adviser, calculated
daily and payable monthly, at the maximum annual rate of .75% of the average
daily net assets of the Fund. The sub-adviser may occasionally waive all or a
portion of its fee from the adviser.
ADMINISTRATOR
PFPC Inc. ("PFPC"), located at 400 Bellevue Parkway,
Wilmington, Delaware 19809, serves as the administrator to the Fund. PFPC is an
indirect, wholly-owned subsidiary of PNC Bank Corp., a multi-bank holding
company.
Under its Administration and Accounting Services Agreement
with the Trust, PFPC has agreed to provide the following services with respect
to the Fund: statistical data, data processing services and accounting and
bookkeeping services; prepare tax returns and certain reports filed with the
SEC; assist in the preparation of reports to shareholders and the preparation of
the Trust's registration statement; maintain the required fidelity bond
coverage; calculate the Fund's net asset value per share, net income, and
realized capital gains (losses); and generally assist the Fund with respect to
all aspects of its administration and operation. PFPC is entitled to receive
with respect to the Fund an administrative fee, computed daily and paid monthly,
at the annual rate of .10% of the first $200,000,000 of its net assets, .075% of
the next $200,000,000 of its net assets, .045% of the next $200,000,000 of its
net assets and .02% of its net assets over $600,000,000 and is entitled to be
reimbursed for its out-of-pocket expenses incurred on behalf of the Fund.
DESCRIPTION OF THE TRUST AND ITS SHARES
The Trust was organized as a Massachusetts business trust on
January 28, 1986. The Trust is a series fund authorized
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<PAGE> 37
to issue 40 separate classes or series of shares of beneficial interest
("shares"). Two of these classes or series, which represent interests in the
Fund (Class X and Class X - Special Series 1) are described in this Prospectus.
Class X shares constitute the Institutional class or series of shares; and Class
X - Special Series 1 shares constitute the Retail class or series of shares. The
other Funds of the Trust are:
Money Market Fund (Class A and Class A - Special Series 1)
Government Fund (Class B and Class B - Special Series 1)
Treasury Fund (Class C and Class C - Special Series 1)
Tax Exempt Fund (Class D and Class D - Special Series 1)
Equity Growth Fund (Class H and Class H - Special Series 1)
Fixed Income Fund (Class I and Class I - Special Series 1)
Ohio Tax Exempt Fund (Class K and Class K - Special Series 1)
National Tax Exempt Fund (Class L and Class L - Special Series 1)
Equity Income Fund (Class M and Class M - Special Series 1)
Mid Cap Regional Fund (Class N and Class N - Special Series 1)
Enhanced Income Fund (Class O and Class O - Special Series 1)
Total Return Advantage Fund (Class P and Class P - Special
Series 1)
Pennsylvania Tax Exempt Fund (Class Q and Class Q - Special Series 1)
GNMA Fund (Class S and Class S - Special Series 1)
Pennsylvania Municipal Fund (Class T and Class T - Special
Series 1)
International Equity Fund (Class U and Class U - Special Series 1)
Real Income Protection Fund (Class Y and Class Y - Special
Series 1)
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<PAGE> 38
Core Equity Fund (Class W and Class W - Special Series 1)
Equity Index Fund (Class V and Class V - Special Series 1)
Each share has no par value, represents an equal proportionate
interest in the investment fund with other shares of the same class or series
outstanding, and is entitled to such dividends and distributions out of the
income earned on the assets belonging to such fund as are declared in the
discretion of the Trust's Board of Trustees. The Trust's Declaration of Trust
authorizes the Board of Trustees to classify or reclassify any unissued shares
into any number of additional classes of shares and to classify or reclassify
any class of shares into one or more series of shares.
Shareholders are entitled to one vote for each full share
held, and a proportionate fractional vote for each fractional share held.
Shareholders will vote in the aggregate and not by investment fund, except as
otherwise expressly required by law or when the Board of Trustees determines
that the matter to be voted on affects only the interests of shareholders of a
particular investment fund. The Statement of Additional Information gives
examples of situations in which the law requires voting by investment fund. In
addition, shareholders of each of the investment funds will vote in the
aggregate and not by class or series, except as otherwise expressly required by
law or when the Board of Trustees determines the matter to be voted on affects
only the interests of the holders of a particular class or series of shares.
Under the Services Plan, only the holders of Retail shares in an investment fund
are, or would be entitled to vote on matters submitted to a vote of shareholders
(if any) concerning the Services Plan. Voting rights are not cumulative, and
accordingly, the holders of more than 50% of the aggregate shares of the Trust
may elect all of the trustees irrespective of the vote of the other
shareholders.
As stated previously in the text of this document, the Trust
is organized as a trust under the laws of Massachusetts. Shareholders of such a
trust may, under certain circumstances, be held personally liable (as if they
were partners) for the obligations of the Trust. The Declaration of Trust of the
Trust provides for indemnification out of the Trust property for any shareholder
held personally liable solely by reason of his being or having been a
shareholder and not because of his acts or omissions or some other reason.
The Trust does not presently intend to hold annual meetings of
shareholders except as required by the 1940 Act or other applicable law. The
Trust's Code of Regulations provides that special meetings of shareholders shall
be called at the written request of shareholders entitled to cast at least 10%
of
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<PAGE> 39
the votes entitled to be cast at such meeting. Such meeting may be called by
shareholders to consider the removal of one or more trustees. Shareholders will
receive shareholder communication assistance with respect to such matter as
required by the 1940 Act.
CUSTODIAN AND TRANSFER AGENT
National City Bank serves as the custodian of the Trust's
assets. State Street Bank and Trust Company serves as the Trust's transfer and
dividend disbursing agent. Communications to the Transfer Agent should be
directed to P.O. Box 8421, Boston, Massachusetts 02266-8421. The fees payable by
the Trust for these services are described in the Statement of Additional
Information.
EXPENSES
Except as noted below, the Trust's advisers and sub-adviser
bear all expenses in connection with the performance of their services. The Fund
bears its own expenses incurred in its operations including: taxes; interest;
fees (including fees paid to its trustees and officers); SEC fees; state
securities qualification fees; costs of preparing and printing prospectuses for
regulatory purposes and for distribution to existing shareholders; expenses
related to the Distribution Plan; advisory fees; administration fees and
expenses; charges of the custodian and Transfer Agent; certain insurance
premiums; outside auditing and legal expenses; costs of shareholders' reports
and shareholder meetings; and any extraordinary expenses. The Fund also pays for
brokerage fees and commissions in connection with the purchase of its portfolio
securities. Under the Services Plan, the Retail shares in the Fund also bear the
expense of shareholder servicing fees.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports and
annual financial statements audited by independent auditors.
Pursuant to Rule 17f-2, as National City serves the Trust as
both the custodian and investment adviser, a procedure has been established
requiring three annual verifications, two of which are to be unannounced, of all
investments held pursuant to the Custodian Services Agreement, to be conducted
by the Trust's independent auditors.
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<PAGE> 40
As used in this Prospectus, a "vote of the holders of a
majority of the outstanding shares" of the Trust or the Fund means, with respect
to the approval of an investment advisory agreement, a distribution plan or a
change in a fundamental investment policy, the affirmative vote of the lesser of
(a) 50% or more of the outstanding shares of the Trust or the fund or (b) 67% or
more of the shares of the Trust or the fund present at a meeting if more than
50% of the outstanding shares of the Trust or the fund are represented at the
meeting in person or by proxy.
The portfolio managers of the Funds and other investment
professionals may from time to time discuss in advertising, sales literature or
other material, including periodic publications, various topics of interest to
shareholders and prospective investors. The topics may include, but are not
limited to, the advantages and disadvantages of investing in tax-deferred and
taxable investments; Fund performance and how such performance may compare to
various market indices; shareholder profiles and hypothetical investor
scenarios; the economy; the financial and capital markets; investment strategies
and techniques; investment products and tax, retirement and investment planning.
Inquiries regarding the Trust or any of its investment funds
may be directed to 1-800-622-FUND (3863).
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<PAGE> 41
<TABLE>
<CAPTION>
ARMADA FUNDS
INVESTMENT ADVISER
AFFILIATE OF NATIONAL
CITY CORPORATION
National City Bank
1900 East Ninth Street
Cleveland, Ohio 44114
SUB-INVESTMENT ADVISER
<S> <C>
EXPENSE TABLE......................................... 3
INTRODUCTION.......................................... 6
INVESTMENT OBJECTIVES AND
POLICIES..................................... 6
INVESTMENT LIMITATIONS................................ 14
PERFORMANCE INFORMATION............................... 16
PRICING OF SHARES..................................... 17
HOW TO PURCHASE AND REDEEM
SHARES....................................... 18
DISTRIBUTION AGREEMENT................................ 27
SHAREHOLDER SERVICES PLAN............................. 28
DIVIDENDS AND DISTRIBUTIONS........................... 28
TAXES ............................................. 29
MANAGEMENT OF THE TRUST............................... 31
DESCRIPTION OF THE TRUST AND
ITS SHARES................................... 32
CUSTODIAN AND TRANSFER AGENT.......................... 35
EXPENSES ............................................. 35
MISCELLANEOUS......................................... 35
</TABLE>
ARMADA FUNDS
PROSPECTUS
______________, 1997
Small Cap Growth Fund
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<PAGE> 42
- --------------------------------------------------------------------------------
- - SHARES OF THE ARMADA FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED OR OTHERWISE SUPPORTED BY, NATIONAL CITY BANK; NATIONAL
CITY BANK, COLUMBUS; NATIONAL CITY BANK, KENTUCKY; NATIONAL ASSET MANAGEMENT
CORPORATION, THEIR PARENT COMPANY OR ANY OF THEIR AFFILIATES OR ANY BANK.
- - SHARES OF THE ARMADA FUNDS ARE NOT INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT, FDIC, OR ANY GOVERNMENTAL AGENCY OR STATE.
- - AN INVESTMENT IN THE ARMADA FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
National City Bank and certain of its affiliates serve as investment
advisers to Armada Funds for which they receive an investment advisory fee. Past
performance is not indicative of future performance, and the investment return
will fluctuate, so that you may have a gain or loss when you sell your shares.
- -------------------------------------------------------------------------------
No person has been authorized to give any information or to make any
representations not contained in this Prospectus in connection with the offering
made by this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the Trust
or its Distributor. This Prospectus does not constitute an offering by the Trust
or by the Distributor in any jurisdiction in which such offering may not
lawfully be made.
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<PAGE> 43
ARMADA FUNDS
STATEMENT OF ADDITIONAL INFORMATION
__________ __, 1997
SMALL CAP GROWTH FUND
This Statement of Additional Information is not a prospectus but should be read
in conjunction with the current Prospectus for the above Fund of Armada Funds
(the "Trust"), dated _________ __, 1997 (the "Prospectus"). A copy of the
Prospectus may be obtained by calling or writing the Trust at 1- 800-622-FUND
(3863), Oaks, Pennsylvania 19456.
<PAGE> 44
TABLE OF CONTENTS
Page
----
STATEMENT OF ADDITIONAL INFORMATION....................................... 1
INVESTMENT OBJECTIVES AND POLICIES........................................ 1
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION............................ 7
DESCRIPTION OF SHARES..................................................... 9
ADDITIONAL INFORMATION CONCERNING TAXES................................... 11
TRUSTEES AND OFFICERS..................................................... 13
ADVISORY, ADMINISTRATION, DISTRIBUTION, CUSTODIAN
SERVICES AND TRANSFER AGENCY AGREEMENTS................................... 19
SHAREHOLDER SERVICES PLAN................................................. 23
PORTFOLIO TRANSACTIONS.................................................... 23
AUDITORS ................................................................. 24
COUNSEL ................................................................. 25
PERFORMANCE INFORMATION................................................... 25
MISCELLANEOUS............................................................. 27
APPENDIX A.............................................................. A-1
APPENDIX B.............................................................. B-1
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<PAGE> 45
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
This Statement of Additional Information should be read in
conjunction with the Prospectus of Armada Funds (the "Trust") that describes the
Small Cap Growth Fund. The information contained in this Statement of Additional
Information expands upon matters discussed in the Prospectus. No investment in
shares of the Fund should be made without first reading the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
----------------------------------
ADDITIONAL INFORMATION ON FUND MANAGEMENT
Further information on the adviser's or sub-adviser's
investment management strategies, techniques, policies and related matters may
be included from time to time in advertisements, sales literature,
communications to shareholders and other materials. See also, "Performance
Information" below.
Attached to this Statement of Additional Information is
Appendix A which contains descriptions of the rating symbols used by S&P, Fitch,
Duff, IBCA and Moody's for securities which may be held by the Fund.
AMERICAN DEPOSITORY RECEIPTS ("ADRS")
The Fund may invest its assets in ADRs, which are receipts
issued by an American bank or trust company evidencing ownership of underlying
securities issued by a foreign issuer. ADRs may be listed on a national
securities exchange or may trade in the over-the-counter market. ADR prices are
denominated in United States dollars. The securities underlying an ADR will
normally be denominated in a foreign currency. The underlying securities may be
subject to foreign government taxes which could reduce the yield on such
securities. Investments in foreign securities involve certain inherent risks,
such as political or economic instability of the issuer or the country of issue
and the difficulty of predicting international trade patterns; the possible
imposition of foreign withholding taxes on interest income payable on such
instruments; the possible establishment of exchange controls; and the possible
seizure or nationalization of foreign deposits or the adoption of other foreign
branches of U.S. banks. As with any foreign security, the issuers of securities
underlying ADRs may be subject to less stringent reserve requirements and to
different accounting, auditing, reporting and recordkeeping standards than those
applicable to domestic issuers, and securities of foreign issuers may be less
liquid and their prices more volatile than those of comparable domestic issuers.
-1-
<PAGE> 46
WARRANTS
Warrants enable the owner to subscribe to and purchase a
specified number of shares of the issuing corporation at a specified price
during a specified period of time. The prices of warrants do not necessarily
correlate with the prices of the underlying securities. The purchase of warrants
involves the risk that the purchaser could lose the purchase value of the
warrant if the right to subscribe to additional shares is not exercised prior to
the warrant's expiration. Also, the purchase of warrants involves the risk that
the effective price paid for the warrant added to the subscription price of the
related security may exceed the value of the subscribed security's market price
such as when there is no movement in the level of the underlying security.
CONVERTIBLE SECURITIES
Convertible securities entitle the holder to receive interest
paid or accrued on debt or the dividend paid on preferred stock until the
securities mature or are redeemed, converted or exchanged. Prior to conversion,
convertible securities have characteristics similar to ordinary debt securities
in that they normally provide a stable stream of income with generally higher
yields than those of common stock of the same or similar issuers. Convertible
securities rank senior to common stock in a corporation's capital structure and
therefore generally entail less risk than the corporation's common stock. The
value of the convertibility feature depends in large measure upon the degree to
which the convertible security sells above its value as a fixed income security.
In selecting convertible securities, the sub-adviser will
consider, among other factors, the creditworthiness of the issuers of the
securities; the interest or dividend income generated by the securities; the
potential for capital appreciation of the securities and the underlying common
stocks; the prices of the securities relative to other comparable securities and
to the underlying common stocks; whether the securities are entitled to the
benefits of sinking funds or other protective conditions; diversification of the
Fund's portfolio as to issuers; and the ratings of the securities. Since credit
rating agencies may fail to timely change the credit ratings of securities to
reflect subsequent events, the sub-adviser will consider whether such issuers
will have sufficient cash flow and profits to meet required principal and
interest payments. The Fund may retain a portfolio security whose rating has
been changed if the sub-adviser deems that retention of such security is
warranted.
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<PAGE> 47
VARIABLE AND FLOATING RATE OBLIGATIONS
The Fund may purchase variable and floating rate obligations
(including variable amount master demand notes) which are unsecured instruments
that permit the indebtedness thereunder to vary and provide for periodic
adjustments in the interest rate. Because variable and floating rate obligations
are direct lending arrangements between the Fund and the issuer, they are not
normally traded although certain variable and floating rate obligations, such as
Student Loan Marketing Association variable rate obligations, may have a more
active secondary market because they are issued or guaranteed by the U.S.
Government or its agencies or instrumentalities. Even though there may be no
active secondary market in such instruments, the Fund may demand payment of
principal and accrued interest at a time specified in the instrument or may
resell them to a third party. Such obligations may be backed by bank letters of
credit or guarantees issued by banks, other financial institutions or the U.S.
Government, its agencies or instrumentalities. The quality of any letter of
credit or guarantee will be rated high quality or, if unrated, will be
determined to be of comparable quality by the sub-adviser. In the event an
issuer of a variable or floating rate obligation defaulted on its payment
obligation, the Fund might be unable to dispose of the instrument because of the
absence of a secondary market and could, for this or other reasons, suffer a
loss to the extent of the default.
SHORT TERM OBLIGATIONS
The Fund may invest in various short term obligations
including those described below.
Investments include commercial paper and other short term
promissory notes issued by corporations (including variable and floating rate
instruments).
Bank obligations include bankers' acceptances, negotiable
certificates of deposit, and non-negotiable demand and time deposits issued for
a definite period of time and earning a specified return by a U.S. bank (which
is a member of the Federal Reserve System), a foreign branch of a U.S. bank, or
a foreign bank. Bank obligations also include U.S. dollar denominated bankers'
acceptances, certificates of deposit and time deposits issued by foreign
branches of U.S. banks or foreign banks. Investment in bank obligations is
limited to the obligations of financial institutions having more than $1 billion
in total assets at the time of purchase. The Fund may also make interest bearing
savings deposits in commercial and savings banks not in excess of 5% of its
total assets. Investment in non-negotiable time deposits is limited to no more
than 5% of a Fund's total assets at the time of purchase.
-3-
<PAGE> 48
The Fund may also make limited investments in Guaranteed
Investment Contracts ("GICs") issued by U.S. insurance companies. When investing
in GICs, the Fund makes cash contributions to a deposit fund or an insurance
company's general account. The insurance company then credits to the Fund
monthly a guaranteed minimum interest which is based on an index. The insurance
company may assess periodic charges against a GIC for expense and service costs
allocable to it, and the charges will be deducted from the value of the deposit
fund. The Fund will purchase a GIC only when its advisers or sub-adviser have
determined, under guidelines established by the Board of Trustees, that the GIC
presents minimal credit risks to the Fund and is of comparable quality to
instruments that are rated high quality by one or more rating agencies.
REPURCHASE AGREEMENTS
Securities held by the Fund may be subject to repurchase
agreements. Under the terms of a repurchase agreement, the Fund purchases
securities from financial institutions such as banks and broker-dealers which
the Fund's advisers or sub-adviser deem creditworthy under guidelines approved
by the Board of Trustees, subject to the seller's agreement to repurchase such
securities at a mutually agreed-upon date and price. The repurchase price
generally equals the price paid by the Fund plus interest negotiated on the
basis of current short term rates, which may be more or less than the rate on
the underlying portfolio securities. The seller under a repurchase agreement
will be required to maintain the value of collateral held pursuant to the
agreement at not less than the repurchase price (including accrued interest). If
the seller were to default on its repurchase obligation or become insolvent, the
Fund holding such obligation would suffer a loss to the extent that the proceeds
from a sale of the underlying portfolio securities were less than the repurchase
price under the agreement, or to the extent that the disposition of such
securities by the Fund were delayed pending court action. Although there is no
controlling legal precedent confirming that a Fund would be entitled, as against
a claim by such seller or its receiver or trustee in bankruptcy, to retain the
underlying securities, the Board of Trustees of the Trust believes that, under
the regular procedures normally in effect for custody of a Fund's securities
subject to repurchase agreements and under Federal laws, a court of competent
jurisdiction would rule in favor of the Trust if presented with the question.
Securities subject to repurchase agreements will be held by the Trust's
custodian or another qualified custodian or in the Federal Reserve/Treasury
book-entry system. Repurchase agreements are considered to be loans by a Fund
under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS
-4-
<PAGE> 49
The Fund may borrow funds for temporary purposes by entering
into reverse repurchase agreements in accordance with its investment
restrictions. Pursuant to such agreements, the Fund would sell portfolio
securities to financial institutions such as banks and broker-dealers, and agree
to repurchase them at a mutually agreed-upon date and price. The Fund intends to
enter into reverse repurchase agreements only to avoid otherwise selling
securities during unfavorable market conditions to meet redemptions. At the time
the Fund enters into a reverse repurchase agreement, it will place in a
segregated custodial account assets such as U.S. Government securities or other
liquid, high grade debt securities consistent with the Fund's investment
restrictions having a value equal to the repurchase price (including accrued
interest), and will subsequently monitor the account to ensure that such
equivalent value is maintained. Reverse repurchase agreements involve the risk
that the market value of the securities sold by a Fund may decline below the
price at which it is obligated to repurchase the securities. Reverse repurchase
agreements are considered to be borrowings by the Fund under the Investment
Company Act of 1940.
U.S. GOVERNMENT OBLIGATIONS
The Fund may purchase obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. Some of these obligations
are supported by the full faith and credit of the U.S. Treasury, such as
obligations issued by the Government National Mortgage Association. Others, such
as those of the Export-Import Bank of the United States, are supported by the
right of the issuer to borrow from the U.S. Treasury; others, such as those of
the Federal National Mortgage Association, are supported by the discretionary
authority of the U.S. Government to purchase the agency's obligations; and still
others, such as those of the Student Loan Marketing Association, are supported
only by the credit of the agency or instrumentality issuing the obligation. No
assurance can be given that the U.S. Government would provide financial support
to U.S. Government-sponsored agencies or instrumentalities if it is not
obligated to do so by law. The Fund will invest in the obligations of such
agencies or instrumentalities only when the adviser or sub-adviser believes that
the credit risk with respect thereto is minimal.
FUTURES CONTRACTS AND RELATED OPTIONS
The Fund may purchase and sell futures contracts on particular
securities, financial instruments and stock indexes and may purchase and sell
call and put options on futures contracts. For a detailed description of futures
contracts and related options, see Appendix B to this Statement of Additional
Information.
-5-
<PAGE> 50
SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund currently intends to limit its investments in
securities issued by other investment companies so that, as determined
immediately after a purchase of such securities is made: (i) not more than 5% of
the value of the Fund's total assets will be invested in the securities of any
one investment company; (ii) not more than 10% of the value of its total assets
will be invested in the aggregate in securities of investment companies as a
group; and (iii) not more than 3% of the outstanding voting stock of any one
investment company will be owned by the Fund or by the Trust as a whole.
PORTFOLIO TURNOVER
The Fund may engage in short term trading and may sell
securities which have been held for periods ranging from several months to less
than a day. Portfolio turnover will tend to rise during periods of economic
turbulence and decline during periods of stable growth. The Fund's annual
portfolio turnover is not expected to exceed 100% under normal market
conditions. The portfolio turnover rate for the Fund is calculated by dividing
the lesser of purchases or sales of portfolio securities for the year by the
monthly average value of the portfolio securities. The calculation excludes U.S.
Government securities and all securities whose maturities at the time of
acquisition were one year or less. Portfolio turnover may vary greatly from year
to year as well as within a particular year, and may also be affected by cash
requirements for redemptions of shares and by requirements which enable the Fund
to receive certain favorable tax treatment. Portfolio turnover will not be a
limiting factor in making fund decisions.
ADDITIONAL INVESTMENT LIMITATIONS
In addition to the investment limitations disclosed in the
Prospectus, the Fund is subject to the following investment limitations which
may not be changed without approval of the holders of a majority of the
outstanding shares of the Fund (as defined under "Description of Shares" below).
The Fund may not:
1. Purchase or sell real estate, except that it may purchase
securities of issuers which deal in real estate and may purchase securities
which are secured by interests in real estate.
2. Invest in commodities, except that as consistent with its
investment objective and policies the Fund may: 1) purchase and sell options,
forward contracts, futures contracts, including without limitation those
relating to indices; 2) purchase and sell options on futures contracts or
indices; 3) purchase
-6-
<PAGE> 51
publicly traded securities of companies engaging in whole or in part in such
activities.
3. Act as an underwriter of securities within the meaning of
the Securities Act of 1933 except insofar as it might be deemed to be an
underwriter upon the disposition of portfolio securities acquired within the
limitation on purchases of illiquid securities and except to the extent that the
purchase of obligations directly from the issuer thereof in accordance with its
investment objective, policies and limitations may be deemed to be underwriting.
In addition to the above fundamental limitations, the Fund is
subject to the following non- fundamental limitations, which may be changed
without a shareholder vote:
The Fund may not:
1. Acquire any other investment company or investment company
security except in connection with a merger, consolidation, reorganization or
acquisition of assets or where otherwise permitted under the 1940 Act.
2. Write or sell put options, call options, straddles,
spreads, or any combination thereof, except as consistent with the Fund's
investment objective and policies, for transactions in options on securities or
indices of securities, futures contracts and options on futures contracts and in
similar investments.
3. Purchase securities on margin, make short sales of
securities or maintain a short position, except that (a) this investment
limitation shall not apply to its transactions in futures contracts and related
options, options on securities or indices of securities and similar instruments,
and (b) it may obtain short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities.
4. Purchase securities of companies for the purpose of
exercising control.
5. Invest more than 15% of its net assets in illiquid
securities.
The Fund does not intend to purchase securities while its
outstanding borrowings are in excess of 5% of its assets. Securities held in
escrow or separate accounts in connection with its investment practices are not
deemed to be pledged for purposes of this limitation.
-7-
<PAGE> 52
The Fund reserves the right to engage in securities lending,
although it does not presently have the intent of doing so.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
----------------------------------------------
Shares in the Trust are sold on a continuous basis by SEI
Financial Services Company (the "Distributor"), which has agreed to use
appropriate efforts to solicit all purchase orders. The issuance of shares is
recorded on the books of the Trust. To change the commercial bank or account
designated to receive redemption proceeds, a written request must be sent to an
investor's financial institution at its principal office. Such requests must be
signed by each shareholder, with each signature guaranteed by a U.S. commercial
bank or trust company or by a member firm of a national securities exchange.
Guarantees must be signed by an authorized signatory and "Signature Guaranteed"
must appear with the signature. An investor's financial institution may request
further documentation from corporations, executors, administrators, trustees or
guardians, and will accept other suitable verification arrangements from foreign
investors, such as consular verification.
The Trust may suspend the right of redemption or postpone the
date of payment for more than seven days for shares during any period when (a)
trading on the New York Stock Exchange is restricted by applicable rules and
regulations of the Securities and Exchange Commission ("SEC"); (b) the Exchange
is closed for other than customary weekend and holiday closings; (c) the SEC has
by order permitted such suspension; or (d) an emergency exists as determined by
the SEC.
There is no sales load charged on shares acquired through the
reinvestment of dividends or distributions on such shares.
Automatic investment programs such as the monthly savings
program ("Program") described in the Prospectus offered by the Fund permit an
investor to use "dollar cost averaging" in making investments. Under this
Program, an agreed upon fixed dollar amount is invested in Fund shares at
predetermined intervals. This may help investors to reduce their average cost
per share because the Program results in more shares being purchased during
periods of lower share prices and fewer shares during periods of higher share
prices. In order to be effective, dollar cost averaging should usually be
followed on a sustained, consistent basis. Investors should be aware, however,
that dollar cost averaging results in purchases of shares regardless of their
price on the day of investment or market trends and does not ensure a profit,
protect against losses in a declining market, or prevent a loss if an investor
ultimately redeems his shares at a price which is lower than their purchase
price. An investor may want to consider his
-8-
<PAGE> 53
financial ability to continue purchases through periods of low price levels.
From time to time, in advertisements, sales literature, communications to
shareholders and other materials ("Materials"), the Trust may illustrate the
effects of dollar cost averaging through use of or comparison to an index such
as the Standard & Poor's 500 Composite Stock Price Index.
OFFERING PRICE PER RETAIL SHARE OF THE FUNDS
An illustration of the computation of the offering price per
Retail share of the Fund, based upon the estimated value of its net assets and
number of shares outstanding on its commencement date, is as follows:
<TABLE>
<CAPTION>
TABLE
<S> <C>
Net Assets of Retail Shares....................... $10,000,000
Outstanding Retail Shares......................... 1,000,000
Net Asset Value Per Share......................... $ 10.00
($10,000,000 / 1,000,000)
Sales Charge, 3.75% of offering
price (3.90% of net asset value
per share)...................................... $ .39
Offering to Public................................ $ 10.39
<FN>
* Amounts are estimated as the Fund has not commenced operations.
</TABLE>
EXCHANGE PRIVILEGE
Investors may exchange all or part of their Retail shares as
described in the Prospectus. Upon the exchange of Retail shares of one Fund for
Retail shares of another Fund, any rights an Investor may have had for a reduced
or eliminated sales load in connection with the purchase of Retail shares of the
first Fund shall apply as well to Retail shares of the other Fund. The exchange
privilege may be modified or terminated at any time upon 60 days' notice to
shareholders.
By use of the exchange privilege, the Investor authorizes the
Trust's Transfer Agent or his financial institution to act on telephonic or
written instructions from any person representing himself or herself to be the
shareholder and believed by the Transfer Agent or the financial institution to
be genuine. The Investor or his financial institution must notify the Transfer
Agent of his prior ownership of Retail shares and account number. The Transfer
Agent's records of such instructions are binding.
-9-
<PAGE> 54
DESCRIPTION OF SHARES
---------------------
The Trust is a Massachusetts business trust. The Trust's
Declaration of Trust authorizes the Board of Trustees to issue an unlimited
number of shares of beneficial interest and to classify or reclassify any
unissued shares of the Trust into one or more additional classes or series by
setting or changing in any one or more respects their respective preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption. Pursuant to
such authority, the Board of Trustees has authorized the issuance of 42 classes
or series of shares. Two of these classes or series, which represent interests
in the Small Cap Growth Fund (Class X and Class X - Special Series 1) are
described in this Statement of Additional Information and the related
Prospectus.
Shares have no preemptive rights and only such conversion or
exchange rights as the Board of Trustees may grant in its discretion. When
issued for payment as described in the Prospectus, the Trust's shares will be
fully paid and non-assessable. In the event of a liquidation or dissolution of
the Trust or an individual Fund, shareholders of the 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 of the Trust not belonging to any
particular Fund which are available for distribution.
Rule 18f-2 under the 1940 Act provides that any matter
required by the 1940 Act, applicable state law, or otherwise, to be submitted to
the holders of the outstanding voting securities of an investment company such
as the Trust shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each
investment fund affected by such matter. Rule 18f-2 further provides that an
investment fund is affected by a matter unless the interests of each fund in the
matter are substantially identical or the matter does not affect any interest of
the fund. Under the Rule, the approval of an investment advisory agreement or
any change in a fundamental investment policy would be effectively acted upon
with respect to an investment fund only if approved by a majority of the
outstanding shares of such fund. However, the Rule also provides that the
ratification of the appointment of independent public accountants, the approval
of principal underwriting contracts, and the election of trustees may be
effectively acted upon by shareholders of the Trust voting together in the
aggregate without regard to a particular fund. In addition, shareholders of each
class in a particular investment fund have equal voting rights except that only
Retail shares of an investment fund will be entitled to vote on matters
submitted to a vote of shareholders (if
-10-
<PAGE> 55
any) relating to shareholder servicing fees that are allocable to such shares.
Although the following types of transactions are normally
subject to shareholder approval, the Board of Trustees may, under certain
limited circumstances, (a) sell and convey the assets of an investment fund to
another management investment company for consideration which may include
securities issued by the purchaser and, in connection therewith, to cause all
outstanding shares of such fund involved to be redeemed at a price which is
equal to their net asset value and which may be paid in cash or by distribution
of the securities or other consideration received from the sale and conveyance;
(b) sell and convert an investment fund's assets into money and, in connection
therewith, to cause all outstanding shares of such fund involved to be redeemed
at their net asset value; or (c) combine the assets belonging to an investment
fund with the assets belonging to another investment fund of the Trust, if the
Board of Trustees reasonably determines that such combination will not have a
material adverse effect on shareholders of any fund participating in such
combination, and, in connection therewith, to cause all outstanding shares of
any fund to be redeemed at their net asset value or converted into shares of
another class of the Trust shares at net asset value. In the event that shares
are redeemed in cash at their net asset value, a shareholder may receive in
payment for such shares an amount that is more or less than his original
investment due to changes in the market prices of the fund's securities.
ADDITIONAL INFORMATION CONCERNING TAXES
---------------------------------------
The following summarizes certain additional tax considerations
generally affecting the Trust and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Trust or its shareholders or possible legislative changes, and
the discussion here and in the Prospectus is not intended as a substitute for
careful tax planning. Potential investors should consult their tax advisers with
specific reference to their own tax situation.
Each Fund of the Trust will be treated as a separate corporate
entity under the Code and intends to qualify as a regulated investment company.
In order to qualify for tax treatment as a regulated investment company under
the Code, each Fund must satisfy, in addition to the distribution requirement
described in the Prospectus, certain requirements with respect to the source of
its income during a taxable year. At least 90% of the gross income of each Fund
must be derived from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stocks, securities or foreign
-11-
<PAGE> 56
currencies, and other income (including but not limited to gains from options,
futures, or forward contracts) derived with respect to the Fund's business of
investing in such stock, securities or currencies. The Treasury Department may
by regulation exclude from qualifying income foreign currency gains which are
not directly related to the Fund's principal business of investing in stock or
securities, or options and futures with respect to stock or securities. Any
income derived by a Fund from a partnership or trust is treated as derived with
respect to the Fund's business of investing in stock, securities or currencies
only to the extent that such income is attributable to items of income which
would have been qualifying income if realized by the Fund in the same manner as
by the partnership or trust.
Another requirement for qualification as a regulated
investment company under the Code is that less than 30% of a Fund's gross income
for a taxable year must be derived from gains realized on the sale or other
disposition of the following investments held for less than three months: (1)
stock and securities (as defined in Section 2(a)(36) of the 1940 Act; (2)
options, futures and forward contracts other than those on foreign currencies;
and (3) foreign currencies (and options, futures and forward contracts on
foreign currencies) that are not directly related to a Fund's principal business
of investing in stock and securities (and options and futures with respect to
stocks and securities). Interest (including original issue discount and, with
respect to taxable debt securities and non taxable debt securities acquired
after April 30, 1993, accrued market discount) received by a Fund upon maturity
or disposition of a security held for less than three months will not be treated
as gross income derived from the sale or other disposition of such security
within the meaning of this requirement. However, any other income which is
attributable to realized market appreciation will be treated as gross income
from the sale or other disposition of securities for this purpose.
Some investments held by a Fund may be subject to special
rules which govern the federal income tax treatment of certain transactions
denominated in terms of a currency other than the U.S. dollar or determined by
reference to the value of one or more currencies other than the U.S. dollar. The
types of transactions covered by the special rules include the following: (1)
the acquisition of, or becoming the obligor under, a bond or other debt
instrument (including, to the extent provided in Treasury regulations, preferred
stock); (2) the accruing of certain trade receivables and payables; and (3) the
entering into or acquisition of any forward contract, futures contract, option
and similar financial instrument. The disposition of a currency other than the
U.S. dollar by a U.S. taxpayer is also treated as a transaction subject to the
special currency rules. With respect to transactions covered by the special
rules, foreign currency gain or loss is calculated separately from any gain or
loss on the
-12-
<PAGE> 57
underlying transaction and is normally taxable as ordinary gain or loss. The
Treasury Department has issued regulations under which certain transactions
subject to the special currency rules that are part of a "section 988 hedging
transaction" are not subject to the mark-to-market or loss deferral rules under
the Code. Gain or loss attributable to the foreign currency component of
transactions engaged in by a Fund which are not subject to the special currency
rules (such as foreign equity investments other than certain preferred stocks)
will be treated as capital gain or loss and will not be segregated from the gain
or loss on the underlying transaction.
The Trust will designate any distribution of long-term capital
gains of a Fund as a capital gain dividend in a written notice mailed to
shareholders within 60 days after the close of the Trust's taxable year.
Shareholders should note that, upon the sale or exchange of Fund shares, if the
shareholder has not held such shares for at least six months, any loss on the
sale or exchange of those shares will be treated as long-term capital loss to
the extent of the capital gain dividends received with respect to the shares.
A 4% non-deductible excise tax is imposed on regulated
investment companies that fail to currently distribute an amount equal to
specified percentages of their ordinary taxable income and capital gain net
income (excess of capital gains over capital losses). Each Fund intends to make
sufficient distributions or deemed distributions of its ordinary taxable income
and capital gain net income each calendar year to avoid liability for this
excise tax.
If for any taxable year a Fund does not qualify for federal
tax treatment as a regulated investment company, all of such Fund's taxable
income will be subject to federal income tax at regular corporate rates without
any deduction for distributions to its shareholders. In such event, dividend
distributions (including amounts derived from interest on Municipal Bonds) would
be taxable as ordinary income to the Fund's shareholders to the extent of the
Fund's current and accumulated earnings and profits, and would be eligible for
the dividends received deduction for corporations.
Each Fund may be required in certain cases to withhold and
remit to the U.S. Treasury 31% of taxable dividends or gross proceeds realized
upon sale paid to shareholders who have failed to provide a correct tax
identification number in the manner required, or who are subject to withholding
by the Internal Revenue Service for failure to properly include on their return
payments of taxable interest or dividends, or who have failed to certify to the
Fund that they are not subject to backup withholding when required to do so or
that they are "exempt recipients".
-13-
<PAGE> 58
TRUSTEES AND OFFICERS
---------------------
The Trustees and officers of the Trust, their addresses,
principal occupations during the past five years, and other affiliations are as
follows:
-14-
<PAGE> 59
PRINCIPAL OCCUPATION
POSITION WITH DURING PAST 5 YEARS
NAME AND ADDRESS THE TRUST AND OTHER AFFILIATIONS
- ---------------- ------------- ----------------------
Robert D. Neary* Chairman of the Retired Co-Chairman of
32980 Creekside Drive Board and Trustee Ernst & Young, April
Pepper Pike, OH 44124 1984-September 1993;
Age 63 Director, Cold Metal
Products, Inc., since
March 1994; Director, Zurn
Industries, Inc.,
(plumbing products and
engineering and
construction services)
since June 1995.
Herbert R. Martens President Chairman and Chief
c/o NatCity Investments Executive Officer, NatCity
1965 E. Sixth Street Investments, Inc., since
Cleveland, OH 44114 July 1995 (investment
Age 45 banking); President,
Reserve Capital Group,
since November 1992
(broker dealer); Chief
Executive Officer,
Raffensperger, Hughes &
Co., since November
1992 (broker dealer).
-15-
<PAGE> 60
PRINCIPAL OCCUPATION
POSITION WITH DURING PAST 5 YEARS
NAME AND ADDRESS THE TRUST AND OTHER AFFILIATIONS
- ---------------- ------------- ----------------------
Leigh Carter* Trustee Retired President and
13901 Shaker Blvd., #6B Chief Operating Officer,
Cleveland, OH 44120 BFGoodrich Company,
Age 71 August 1986 to September
1990; Director, Adams
Express Company
(closed-end investment
company), since April
1982; Director, Lamson &
Sessions Co. (producer of
electrical supplies for
construction, consumer
power and communications
industry), since April
1991; Director, Petroleum
& Resources Corp., since
April 1987; Director,
Morrison Products
(manufacturer of blower
fans and air moving
equipment), since April
1983.
John F. Durkott Trustee President and Chief
8600 Allisonville Road Operating Officer,
Indianapolis, IN 46250 Kittle's Home
Age 52 Furnishings Center,
Inc., since January 1982;
partner, Kittles
Bloomington Property
Company, since January
1981; partner, KK&D
(Affiliated Real Estate
Companies of Kittle's Home
Furnishings Center), since
January 1989.
-16-
<PAGE> 61
PRINCIPAL OCCUPATION
POSITION WITH DURING PAST 5 YEARS
NAME AND ADDRESS THE TRUST AND OTHER AFFILIATIONS
- ---------------- ------------- ----------------------
Richard W. Furst, Dean Trustee Professor of Finance and
600 Autumn Lane Dean, Carol Martin
Lexington, KY 40502 Gatton College of
Age 58 Business and Economics,
University of Kentucky,
since 1981; Director, The
Seed Corporation
(restaurant group), since
1990; Director, Foam
Design, Inc. (manufacturer
of industrial and
commercial foam products),
since 1993; Director,
Studio Plus Hotels, Inc.,
since 1994.
J. William Pullen Trustee President and Chief
Whayne Supply Company Executive Officer,
1400 Cecil Avenue Whayne Supply Co.
P.O. Box 35900 (engine and heavy
Louisville, KY 40232-5900 equipment distribution),
Age 58 since 1986; President
and Chief Executive
Officer, American
Contractors Rentals &
Sales (rental subsidiary
of Whayne Supply Co.),
since 1988.
-17-
<PAGE> 62
PRINCIPAL OCCUPATION
POSITION WITH DURING PAST 5 YEARS
NAME AND ADDRESS THE TRUST AND OTHER AFFILIATIONS
- ---------------- ------------- ----------------------
Richard B. Tullis Trustee Chairman Emeritus,
5150 Three Village Drive Harris Corporation
Lyndhurst, OH 44124 (electronic communi-
Age 83 cation and information
processing equipment),
since October 1985;
Director, NACCO Materials
Handling Group, Inc.
(manufacturer of
industrial fork lift
trucks), since 1984;
Director, Hamilton
Beach/Proctor-Silex, Inc.
(manufacturer of household
appliances), since 1990;
Director, Waste-Quip, Inc.
(waste handling
equipment), since 1989.
Gerald L. Gherlein Trustee Executive Vice-President
3679 Greenwood Drive and General Counsel,
Pepper Pike, OH 44124 Eaton Corporation, since
Age 59 1991 (global
manufacturing); Trustee,
Cleveland Initiative for
Education; Trustee,
Meridia Health System,
Vice Chairman, Trustee and
Executive Committee Member,
WVIZ Educational
Television.
W. Bruce McConnel, III Secretary Partner of law firm
Philadelphia National Drinker Biddle & Reath
Bank Building LLP,
1345 Chestnut Street Philadelphia,
Suite 1100 Pennsylvania.
Philadelphia, PA 19107
Age 54
Neal J. Andrews Treasurer Vice President and
PFPC, Inc. Director of Investment
400 Bellevue Parkway Accounting, PFPC, Inc.,
Wilmington, DE 19809 since 1992, prior
Age 31 thereto, Senior Auditor,
Price Waterhouse, LLP
- --------------------
* Mr. Carter is considered by the Trust to be an "interested
person" of the Trust as defined in the 1940 Act.
W. Bruce McConnel, III, Esq., Secretary of the Trust, is a
partner of the law firm of Drinker Biddle & Reath LLP, which receives fees as
counsel to the Trust. Neal J. Andrews, Treasurer of the Trust, is employed by
PFPC, Inc., which receives fees as Administrator to the Trust.
-18-
<PAGE> 63
Each trustee receives an annual fee of $7,500 plus $2,500 for
each Board meeting attended and reimbursement of expenses incurred in attending
meetings. The Chairman of the Board is entitled to receive an additional $2,500
per annum for services in such capacity. For the year ended May 31, 1996, the
Trust's trustees and officers as a group received aggregate fees of $69,875. The
trustees and officers of the Trust own less than 1% of the shares of the Trust.
The following table summarizes the compensation for each of
the Trustees of the Trust for the fiscal year ended May 31, 1996:
<TABLE>
<CAPTION>
Pension or
Retirement
Benefits Accrued Total
Aggregate as Part of the Estimated Compensation
Name of Compensation Trust's Approval Benefits from the
Person, Position from the Trust Expenses Upon Retirement Trust
---------------- -------------- -------- --------------- -----
<S> <C> <C> <C> <C>
Richard B. Tullis, $18,750 $0 $0 $18,750
Chairman, President
and Trustee
Thomas R. Benua, Jr.,* $17,500 $0 $0 $17,500
Trustee
Leigh Carter, Trustee $17,500 $0 $0 $17,500
John F. Durkott, $17,500 $0 $0 $17,500
Trustee
Richard W. Furst, $17,500 $0 $0 $17,500
Trustee
J. William Pullen, $17,500 $0 $0 $17,500
Trustee
Robert D. Neary, $18,750 $0 $0 $18,750
Trustee
</TABLE>
SHAREHOLDER AND TRUSTEE LIABILITY
- ---------------------------------
Under Massachusetts law, shareholders of a business trust may,
under certain circumstances, be held personally liable as partners for the
obligations of the trust. However, the Trust's Declaration of Trust provides
that shareholders shall not be subject to any personal liability for the acts or
obligations of the Trust, and that every note, bond, contract, order, or other
undertaking made by the Trust shall contain a provision to the effect that the
shareholders are not personally liable thereunder. The Declaration of Trust
provides for indemnification out of the trust property of any shareholder held
personally liable solely by reason of his being or having been a shareholder and
not because of his acts or omissions or some other reason. The Declaration of
Trust also provides that the Trust shall, upon request, assume the defense of
any claim made against any shareholder for any act or
* Mr. Benua resigned as trustee as of July 17, 1997.
-19-
<PAGE> 64
obligation of the Trust, and shall satisfy any judgment thereon. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be unable to meet its
obligations.
The Declaration of Trust states further that no trustee,
officer, or agent of the Trust shall be personally liable for or on account of
any contract, debt, tort, claim, damage, judgment or decree arising out of or
connected with the administration or preservation of the trust estate or the
conduct of any business of the Trust; nor shall any trustee be personally liable
to any person for any action or failure to act except by reason of his own bad
faith, willful misfeasance, gross negligence, or reckless disregard of his
duties as trustee. The Declaration of Trust also provides that all persons
having any claim against the trustees or the Trust shall look solely to the
trust property for payment. With the exceptions stated, the Declaration of Trust
provides that a trustee is entitled to be indemnified against all liabilities
and expense, reasonably incurred by him in connection with the defense or
disposition of any proceeding in which he may be involved or with which he may
be threatened by reason of his being or having been a trustee, and that the
trustees, have the power, but not the duty, to indemnify officers and employees
of the Trust unless any such person would not be entitled to indemnification had
he been a trustee.
ADVISORY, ADMINISTRATION, DISTRIBUTION, CUSTODIAN
SERVICES AND TRANSFER AGENCY AGREEMENTS
-------------------------------------------------
ADVISORY AGREEMENT
- ------------------
As described in the Prospectus, National City serves as
investment adviser to the Small Cap Growth Fund. The adviser is an affiliate of
National City Corporation, a bank holding company with $51 billion in assets,
and headquarters in Cleveland, Ohio and nearly 900 branch offices in four
states. Through its subsidiaries, National City Corporation has been managing
investments for individuals, pension and profit-sharing plans and other
institutional investors for over 75 years and currently manages over $38 billion
in assets. From time to time, the adviser may voluntarily waive fees or
reimburse the Trust for expenses.
The Advisory Agreement provides that the adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with the performance of the Advisory Agreement, except a
loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the adviser in the performance of its
duties or from its reckless disregard of its duties and
-20-
<PAGE> 65
obligations thereunder. In addition, the adviser has undertaken in the Advisory
Agreement to maintain its policy and practice of conducting its Trust Department
independently of its Commercial Department.
The Advisory Agreement relating to the Fund was approved by
its sole shareholder prior to the Fund's commencement of investment operations.
Unless sooner terminated, the Advisory Agreement will continue in effect with
respect to the Fund until September 30, 1997 and from year to year thereafter,
subject to annual approval by the Trust's Board of Trustees, or by a vote of a
majority of the outstanding shares of the Fund (as defined in the Fund's
Prospectus) and a majority of the trustees who are not parties to the Agreement
or interested persons (as defined in the 1940 Act) of any party by votes cast in
person at a meeting called for such purpose. The Advisory Agreement may be
terminated by the Trust or the adviser on 60 days written notice, and will
terminate immediately in the event of its assignment.
Wellington Management Company, LLP (the "sub-adviser"), with
principal offices at 75 State Street, Boston, Massachusetts 02109, serves as
sub-adviser to the Fund. The sub-adviser is a professional investment
counselling firm that provides investment services to investment companies and
other entities.
AUTHORITY TO ACT AS INVESTMENT ADVISER
- --------------------------------------
Banking laws and regulations, including the Glass-Steagall
Act as presently interpreted by the Board of Governors of the Federal Reserve
System, (a) prohibit a bank holding company registered under the Federal Bank
Holding Company Act of 1956 or any affiliate thereof from sponsoring,
organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its shares, but (b) do not prohibit such
a bank holding company or affiliate from acting as investment adviser, transfer
agent, or custodian to such an investment company. The adviser believes that it
may perform the services for the Fund contemplated by its Advisory Agreement
with the Trust as described in such agreement without violation of applicable
banking laws or regulations. However, there are no controlling judicial
precedents and future changes in legal requirements relating to the permissible
activities of banks and their affiliates, as well as future interpretations of
present requirements, could prevent the adviser from continuing to perform
services for the Trust. If the adviser were prohibited from providing services
to the Fund, the Board of Trustees would consider selecting another qualified
firm. Any new investment advisory agreement would be subject to shareholder
approval.
Should future legislative, judicial, or administrative action
prohibit or restrict the proposed activities of the adviser, or its affiliated
and correspondent banks in connection with shareholder purchases of Fund shares,
the adviser and its affiliated and correspondent banks might be required to
alter materially or discontinue the services offered by them to shareholders. It
is not anticipated, however, that any resulting change in the Trust's method of
operations would affect its net
-21-
<PAGE> 66
asset value per share or result in financial losses to any shareholder.
If current restrictions preventing a bank or its affiliates
from legally sponsoring, organizing, controlling, or distributing shares of an
investment company were relaxed, the adviser, or an affiliate of the adviser,
would consider the possibility of offering to perform additional services for
the Trust. Legislation modifying such restrictions has been proposed in past
sessions in Congress. It is not possible, of course, to predict whether or in
what form such legislation might be enacted or the terms upon which the adviser,
or such an affiliate, might offer to provide such services.
ADMINISTRATION AND ACCOUNTING SERVICE AGREEMENT
- -----------------------------------------------
PFPC serves as the administrator and accounting agent to the
Trust. The services provided as administrator and accounting agent and current
fees are described in the Prospectus.
DISTRIBUTION PLAN AND RELATED AGREEMENT
- ---------------------------------------
The Distributor acts as distributor of the Fund's shares
pursuant to its Distribution Agreement with the Trust as described in the
Prospectus. Shares are sold on a continuous basis.
Pursuant to Rule 12b-1 of the 1940 Act, the Trust has adopted
a Distribution Plan (the "Plan") which permits the Trust to bear certain
expenses in connection with the distribution of its shares. As required by Rule
12b-1, the Trust's 12b-1 Plan and related distribution agreement have been
approved, and are subject to annual approval by, a majority of the Trust's Board
of Trustees, and by a majority of the trustees who are not interested persons of
the Trust and have no direct or indirect interest in the operation of the Plan
or any agreement relating to the Plan, by vote cast in person at a meeting
called for the purpose of voting on the Plan and related agreement. In
compliance with the Rule, the trustees requested and evaluated information they
thought necessary to an informed determination of whether the Plan and related
agreement should be implemented, and concluded, in the exercise of reasonable
business judgment and in light of their fiduciary duties, that there is a
reasonable likelihood that the Plan and related agreement will benefit the Trust
and its shareholders.
Rule 12b-1 also requires that persons authorized to direct the
disposition of monies payable by a fund (in the Trust's case, the Distributor)
provide for the trustees' review of
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<PAGE> 67
quarterly reports on the amounts expended and the purposes for the expenditures.
Any change in the Plan that would materially increase the
distribution expenses of the Fund requires approval by its shareholders, but
otherwise, the Plan may be amended by the trustees, including a majority of the
disinterested trustees who do not have any direct or indirect financial interest
in the Plan or related agreement. The Plan and related agreement may be
terminated as to the Fund by a vote of the Trust's disinterested trustees or by
vote of the shareholders of the Fund, on not more than 60 days written notice.
The selection and nomination of disinterested trustees has been committed to the
discretion of such disinterested trustees as required by the Rule.
The Trust's Plan provides that each Fund will compensate the
Distributor for distribution expenses in an amount not to exceed .10% of the
Fund's average net assets. Distribution expenses payable by the Distributor
pursuant to the Plan include direct and indirect costs and expenses incurred in
connection with advertising and marketing a Fund's shares, and direct and
indirect costs and expenses of preparing, printing and distributing its
prospectuses to other than current shareholders. The Plan provides that the
Trust will pay the Distributor an annual base fee of $1,250,000 plus incentive
fees based upon asset growth payable monthly and accrued daily by all of the
Trust's investment funds with respect to which the Distributor is distributing
shares.
The Plan has been approved, and will continue in effect for
successive one year periods, provided that such continuance is specifically
approved by (1) the vote of a majority of the trustees who are not parties to
the Plan or interested persons of any such party and who have no direct or
indirect financial interest in the Plan and (2) the vote of a majority of the
entire Board of Trustees.
CUSTODIAN SERVICES AND TRANSFER AGENCY AGREEMENTS
- -------------------------------------------------
National City Bank serves as the Trust's custodian with
respect to the Fund. Under its Custodian Services Agreement, National City Bank
has agreed to: (i) maintain a separate account or accounts in the name of the
Fund; (ii) hold and disburse portfolio securities on account of the Fund; (iii)
collect and make disbursements of money on behalf of the Fund; (iv) collect and
receive all income and other payments and distributions on account of the Fund's
portfolio securities; (v) respond to correspondence by security brokers and
others relating to its duties; and (vi) make periodic reports to the Board of
Trustees concerning the Fund's operations. National City Bank is authorized to
select one or more banks or trust companies to serve as sub-custodian on behalf
of the Fund, provided that it shall remain responsible for
-23-
<PAGE> 68
the performance of all of its duties under the Custodian Services Agreement and
shall hold the Fund harmless from the acts and omissions of any bank or trust
company serving as sub-custodian. The Fund reimburses National City Bank for its
direct and indirect costs and expenses incurred in rendering custodial services,
except that the costs and expenses borne by the Fund in any year may not exceed
$.225 for each $1,000 of average gross assets of the Fund.
State Street Bank and Trust Company (the "Transfer Agent")
serves as the Trust's transfer agent and dividend disbursing agent with respect
to the Fund. Under its Transfer Agency Agreement, it has agreed to: (i) issue
and redeem shares of the Fund; (ii) transmit all communications by the Fund to
its shareholders of record, including reports to shareholders, dividend and
distribution notices and proxy materials for meetings of shareholders; (iii)
respond to correspondence by security brokers and others relating to its duties;
(iv) maintain shareholder accounts; and (v) make periodic reports to the Board
of Trustees concerning the Fund's operations. The Transfer Agent sends each
shareholder of record a statement (not less frequently than quarterly) showing
the total number of shares owned as of the last business day of the month (as
well as the dividends paid during the current month and year), and provides each
shareholder of record with a daily transaction report for each day on which a
transaction occurs in the shareholder's account with the Fund.
SHAREHOLDER SERVICES PLAN
-------------------------
As stated in the Prospectus, the Trust has implemented the
Services Plan with respect to Retail shares in the Fund. Pursuant to the
Services Plan, the Trust may enter into agreements with financial institutions
pertaining to the provision of administrative services to their customers who
are the beneficial owners of Retail shares in consideration for the payment of
up to .25% (on an annualized basis) of the net asset value of such shares. Such
services may include: (i) aggregating and processing purchase and redemption
requests from customers; (ii) providing customers with a service that invests
the assets of their accounts in Retail shares; (iii) processing dividend
payments from the Funds; (iv) providing information periodically to customers
showing their position in Retail shares; (v) arranging for bank wires; (vi)
responding to customer inquiries relating to the services performed with respect
to Retail shares beneficially owned by customers; (vii) forwarding shareholder
communications; and (viii) other similar services requested by the Trust.
Agreements between the Trust and financial institutions will be terminable at
any time by the Trust without penalty.
-24-
<PAGE> 69
PORTFOLIO TRANSACTIONS
----------------------
Pursuant to the Advisory Agreement with the Trust, and the
sub-advisory agreement with the adviser, Wellington Management Company, LLP and
National City Bank are responsible for making decisions with respect to and
placing orders for all purchases and sales of portfolio securities for the
Fund. The sub-adviser purchases portfolio securities either directly from the
issuer or from an underwriter or dealer making a market in the securities
involved. Purchases from an underwriter of portfolio securities include a
commission or concession paid by the issuer to the underwriter and purchases
from dealers serving as market makers may include the spread between the bid
and asked price. Transactions on stock exchanges involve the payment of
negotiated brokerage commissions. There is generally no stated commission in
the case of securities traded in the over-the-counter market, but the price
includes an undisclosed commission or mark-up.
While the sub-adviser generally seeks competitive spreads or
commissions, it may not necessarily allocate each transaction to the underwriter
or dealer charging the lowest spread or commission available on the transaction.
Allocation of transactions, including their frequency, to various dealers is
determined by its best judgment and in a manner deemed fair and reasonable to
shareholders. The primary consideration is prompt execution of orders in an
effective manner at the most favorable price. Subject to this consideration,
dealers who provide supplemental investment research to the sub-adviser may
receive orders for transactions by the Fund. Information so received is in
addition to and not in lieu of services required to be performed by the
sub-adviser and does not reduce the fees payable to the sub-adviser or adviser
by the Fund. Such information may be useful to the adviser and sub-adviser in
serving both the Trust and other clients, and, similarly, supplemental
information obtained by the placement of business of other clients may be useful
to the adviser and sub-adviser in carrying out its obligations to the Trust.
Portfolio securities will not be purchased from or sold to the
Fund's adviser or sub-adviser, the Distributor, or any "affiliated person" (as
such term is defined under the 1940 Act) of any of them acting as principal,
except to the extent permitted by the SEC. In addition, the Fund will not give
preference to its adviser's or sub-adviser's correspondents with respect to such
transactions, securities, savings deposits, repurchase agreements and reverse
repurchase agreements.
Investment decisions for the Fund are made independently from
those for the other Funds and for other investment companies and accounts
advised or managed by the adviser or sub-adviser. Such other Funds, investment
companies and accounts may also invest in the same securities as such Fund. When
a purchase or sale of the same security is made at substantially the same time
on behalf
-25-
<PAGE> 70
of the Fund and another investment company or account, the transaction
will be averaged as to price, and available investments allocated as to amount,
in a manner which the adviser or sub-adviser believes to be equitable to the
Fund and such other investment company or account. In some instances, this
investment procedure may adversely affect the price paid or received by the Fund
or the size of the position obtained or sold by the Fund. To the extent
permitted by law, the adviser and sub-adviser may aggregate the securities to be
sold or purchased for the Fund with those to be sold or purchased for other
investment companies or accounts in order to obtain best execution.
AUDITORS
--------
Ernst & Young LLP, independent auditors, with offices at Two
Commerce Square, 2001 Market Street, Suite 4000, Philadelphia, Pennsylvania
19103, serve as independent auditors of the Trust.
COUNSEL
-------
Drinker Biddle & Reath LLP (of which Mr. McConnel, Secretary
of the Trust, is a partner), with offices at 1345 Chestnut Street, Philadelphia,
Pennsylvania 19107, are counsel to the Trust and will pass upon certain legal
matters for the Trust.
PERFORMANCE INFORMATION
-----------------------
The Fund computes its "average annual total return" by
determining the average annual compounded rate of return during specified
periods that would equate the initial amount invested to the ending redeemable
value of such investment by dividing the ending redeemable value of a
hypothetical $1,000 initial payment by $1,000 and raising the quotient to a
power equal to one divided by the number of years (or fractional portion
thereof) covered by the computation and subtracting one from the result.
This calculation can be expressed as follows:
ERV 1/n
T = [(-----) - 1]
P
Where: T = average annual total return
ERV = ending redeemable value at the end of the
period covered by the computation of a
hypothetical $1,000 payment made at the
beginning of the period
-26-
<PAGE> 71
P = hypothetical initial payment of $1,000
n = period covered by the computation, expressed
in terms of years
The Fund computes its aggregate total returns by determining
the aggregate rates of return during specified periods that likewise equate the
initial amount invested to the ending redeemable value of such investment. The
formula for calculating aggregate total return is as follows:
ERV
T = (---) - 1
P
The calculations of average annual total return and aggregate
total return assume the reinvestment of all dividends and capital gain
distributions on the reinvestment dates during the period and include all
recurring fees charged to all shareholder accounts, assuming an account size
equal to the Fund's mean (or median) account size for any fees that vary with
the size of the account. The maximum sales load and other charges deducted from
payments are deducted from the initial $1,000 payment (variable "P" in the
formula). The ending redeemable value (variable "ERV" in the formula) is
determined by assuming complete redemption of the hypothetical investment and
the deduction of all nonrecurring charges at the end of the measuring period
covered by the computation.
The Fund may also from time to time include in Materials a
total return figure that is not calculated according to the formulas set forth
above in order to compare more accurately the Fund's performance with other
measures of investment return. For example, in comparing a Fund's total return
with data published by Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc. or Weisenberger Investment Company Service, or with the
performance of an index, the Fund may calculate its aggregate total return for
the period of time specified in the advertisement or communication by assuming
the investment of $10,000 in shares and assuming the reinvestment of each
dividend or other distribution at net asset value on the reinvestment date.
Percentage increases are determined by subtracting the initial value of the
investment from the ending value and by dividing the remainder by the beginning
value. The Fund does not, for these purposes, deduct from the initial value
invested any amount representing sales charges. The Fund will, however, disclose
the maximum sales charge and will also disclose that the performance data do not
reflect sales charges and that inclusion of sale charges would reduce the
performance quoted.
The Fund may also from time to time include discussions or
illustrations of the effects of compounding in Materials.
-27-
<PAGE> 72
"Compounding" refers to the fact that, if dividends or other distributions on
the Fund investment are reinvested by being paid in additional Fund shares, any
future income or capital appreciation of the Fund would increase the value, not
only of the original Fund investment, but also of the additional Fund shares
received through reinvestment. As a result, the value of the Fund investment
would increase more quickly than if dividends or other distributions had been
paid in cash.
In addition, the Fund may also include in Materials
discussions and/or illustrations of the potential investment goals of a
prospective investor, investment management strategies, techniques, policies or
investment suitability of the Fund, high-quality investments, economic
conditions, the relationship between sectors of the economy and the economy as a
whole, various securities markets, the effects of inflation and historical
performance of various asset classes, including but not limited to, stocks,
bonds and Treasury securities. From time to time, Materials may summarize the
substance of information contained in shareholder reports (including the
investment composition of the Fund), as well as the views of the adviser as to
current market, economic, trade and interest rate trends, legislative,
regulatory and monetary developments, investment strategies and related matters
believed to be of relevance to the Fund. The Fund may also include in Materials
charts, graphs or drawings which compare the investment objective, return
potential, relative stability and/or growth possibilities of the Fund and/or
other mutual funds, or illustrate the potential risks and rewards of investment
in various investment vehicles, including but not limited to, stocks, bonds,
Treasury securities and shares of the Fund and/or other mutual funds. Materials
may include a discussion of certain attributes or benefits to be derived by an
investment in the Fund and/or other mutual funds (such as value investing,
market timing, dollar cost averaging, asset allocation, constant ratio transfer,
automatic accounting rebalancing, the advantages and disadvantages of investing
in tax-deferred and taxable investments), shareholder profiles and hypothetical
investor scenarios, timely information on financial management, tax and
retirement planning and investment alternatives to certificates of deposit and
other financial instruments. Such Materials may include symbols, headlines or
other material which highlight or summarize the information discussed in more
detail therein.
-28-
<PAGE> 73
MISCELLANEOUS
-------------
The Fund bears all costs in connection with its organization,
including the fees and expenses of registering and qualifying its shares for
distribution under federal and state securities regulations. All organization
expenses are being amortized on the straight-line method over a period of five
years from the date of commencement of operations.
As used in the Prospectus, "assets belonging to the Fund"
means the consideration received by the Trust upon the issuance of shares in
that particular Fund, together with all income, earnings, profits, and proceeds
derived from the investment thereof, including any proceeds from the sale of
such investments, any funds or payments derived from any reinvestment of such
proceeds, and a portion of any general assets of the Trust not belonging to a
particular Fund. In determining the Fund's net asset value, assets belonging to
the Fund are charged with the liabilities in respect of that Fund.
-29-
<PAGE> 74
APPENDIX A
----------
DESCRIPTION OF RATINGS
COMMERCIAL PAPER RATINGS
- ------------------------
A Standard & Poor's commercial paper rating is a current
assessment of the likelihood of timely payment of debt considered short-term in
the relevant market. The following summarizes the highest rating category used
by Standard and Poor's for commercial paper:
"A-1" - Issue's degree of safety regarding timely
payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted "A-1+."
Moody's commercial paper ratings are opinions of the ability
of issuers to repay punctually promissory obligations not having an original
maturity in excess of 9 months. The following summarizes the highest rating
category used by Moody's for commercial paper:
"Prime-1" - Issuer or related supporting institutions are
considered to have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by the
following characteristics: leading market positions in well established
industries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protection; broad
margins in earning coverage of fixed financial charges and high internal cash
generation; and well established access to a range of financial markets and
assured sources of alternate liquidity.
Duff & Phelps employs three designations, "D-1+," "D-1" and
"D-1-," within the highest rating category. The following summarizes the highest
rating category used by Duff & Phelps for commercial paper:
"D-1+" - Debt possesses highest certainty of timely payment.
Short-term liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.
"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.
A-1
<PAGE> 75
"D-1-" - Debt possesses high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.
Fitch short-term ratings apply to debt obligations that are
payable on demand or have original maturities of generally up to three years.
The following summarizes the highest rating category used by Fitch for
short-term obligations such as short-term notes, municipal notes, variable rate
demand instruments and commercial paper:
"F-1+" - Securities possess exceptionally strong credit
quality. Issues assigned this rating are regarded as having the strongest degree
of assurance for timely payment.
"F-1" - Securities possess very strong credit quality. Issues
assigned this rating reflect an assurance of timely payment only slightly less
in degree than issues rated "F-1+."
IBCA assesses the investment quality of unsecured debt with an
original maturity of less than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
highest rating category used by IBCA for short-term notes including commercial
paper:
"A1+" - Obligations which posses a particularly strong credit
feature are supported by the highest capacity for timely repayment.
"A1" - Obligations are supported by the highest
capacity for timely repayment.
A-2
<PAGE> 76
APPENDIX B
As stated in the Prospectus, the Small Cap Growth Fund (the
"Fund") may enter into certain futures transactions and options for hedging
purposes. Such transactions are described in this Appendix.
I. Index Futures Contracts
-----------------------
GENERAL. A stock index assigns relative values to the stocks
included in the index and the index fluctuates with changes in the market values
of the stocks included. Some stock index futures contracts are based on broad
market indexes, such as the Standard & Poor's Ratings Group 500 or the New York
Stock Exchange Composite Index. In contrast, certain exchanges offer futures
contracts on narrower market indexes or indexes based on an industry or market
segment, such as oil and gas stocks.
Futures contracts are traded on organized exchanges regulated
by the Commodity Futures Trading Commission. Transactions on such exchanges are
cleared through a clearing corporation, which guarantees the performance of the
parties to each contract.
The Fund may sell index futures contracts in order to offset a
decrease in market value of its portfolio securities that might otherwise result
from a market decline. The Fund may do so either to hedge the value of its Fund
as a whole, or to protect against declines, occurring prior to sales of
securities, in the value of the securities to be sold. Conversely, the Fund will
purchase index futures contracts in anticipation of purchases of securities. A
long futures position may be terminated without a corresponding purchase of
securities.
In addition, the Fund may utilize index futures contracts in
anticipation of changes in the composition of its Fund holdings. For example, in
the event that the Fund expects to narrow the range of industry groups
represented in its holdings it may, prior to making purchases of the actual
securities, establish a long futures position based on a more restricted index,
such as an index comprised of securities of a particular industry group. The
Fund may also sell futures contracts in connection with this strategy, in order
to protect against the possibility that the value of the securities to be sold
as part of the restructuring of the Fund will decline prior to the time of sale.
B-1
<PAGE> 77
II. Margin Payments
---------------
Unlike purchases or sales of portfolio securities, no price is
paid or received by the Fund upon the purchase or sale of a futures contract.
Initially, the Fund will be required to deposit with the broker or in a
segregated account with the Custodian an amount of cash or cash equivalents,
known as initial margin, based on the value of the contract. The nature of
initial margin in futures transactions is different from that of margin in
security transactions in that futures contract margin does not involve the
borrowing of funds by the customer to finance the transactions. Rather, the
initial margin is in the nature of a performance bond or good faith deposit on
the contract which is returned to the Fund upon termination of the futures
contract assuming all contractual obligations have been satisfied. Subsequent
payments, called variation margin, to and from the broker, will be made on a
daily basis as the price of the underlying instruments fluctuates making the
long and short positions in the futures contract more or less valuable, a
process known as marking-to-the-market. For example, when a particular Fund has
purchased a futures contract and the price of the contract has risen in response
to a rise in the underlying instruments, that position will have increased in
value and the Fund will be entitled to receive from the broker a variation
margin payment equal to that increase in value. Conversely, where the Fund has
purchased a futures contract and the price of the future contract has declined
in response to a decrease in the underlying instruments, the position would be
less valuable and the Fund would be required to make a variation margin payment
to the broker. At any time prior to expiration of the futures contract, the
adviser may elect to close the position by taking an opposite position, subject
to the availability of a secondary market, which will operate to terminate the
Fund's position in the futures contract. A final determination of variation
margin is then made, additional cash is required to be paid by or released to
the Fund, and the Fund realizes a loss or gain.
III. Risks of Transactions in Futures Contracts
------------------------------------------
There are several risks in connection with the use of futures
by the Fund as a hedging device. One risk arises because of the imperfect
correlation between movements in the price of the futures and movements in the
price of the instruments which are the subject of the hedge. The price of the
future may move more than or less than the price of the instruments being
hedged. If the price of the futures moves less than the price of the instruments
which are the subject of the hedge, the hedge will not be fully effective but,
if the price of the instruments being hedged has moved in an unfavorable
direction, the Fund would be in a better position than if it had not hedged at
all. If the price of the instruments being hedged has moved in a favorable
direction, this
B-2
<PAGE> 78
advantage will be partially offset by the loss on the futures. If the price of
the futures moves more than the price of the hedged instruments, the Fund
involved will experience either a loss or gain on the futures which will not be
completely offset by movements in the price of the instruments which are the
subject of the hedge. To compensate for the imperfect correlation of movements
in the price of instruments being hedged and movements in the price of futures
contracts, the Fund may buy or sell futures contracts in a greater dollar amount
than the dollar amount of instruments being hedged if the volatility over a
particular time period of the prices of such instruments has been greater than
the volatility over such time period of the futures, or if otherwise deemed to
be appropriate by the adviser. Conversely, the Fund may buy or sell fewer
futures contracts if the volatility over a particular time period of the prices
of the instruments being hedged is less than the volatility over such time
period of the futures contract being used, or if otherwise deemed to be
appropriate by the adviser. It is also possible that, where the Fund has sold
futures to hedge its Fund against a decline in the market, the market may
advance and the value of instruments held in the Fund may decline. If this
occurred, the Fund would lose money on the futures and also experience a decline
in value in its portfolio securities.
When futures are purchased to hedge against a possible
increase in the price of securities before the Fund is able to invest its cash
(or cash equivalents) in an orderly fashion, it is possible that the market may
decline instead; if the Fund then concludes not to invest its cash at that time
because of concern as to possible further market decline or for other reasons,
the Fund will realize a loss on the futures contract that is not offset by a
reduction in the price of the instruments that were to be purchased.
In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the futures and the
instruments being hedged, the price of futures may not correlate perfectly with
movement in the cash market due to certain market distortions. Rather than
meeting additional margin deposit requirements, investors may close futures
contracts through off-setting transactions which could distort the normal
relationship between the cash and futures markets. Second, with respect to
financial futures contracts, the liquidity of the futures market depends on
participants entering into off-setting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced thus producing distortions. Third, from
the point of view of speculators, the deposit requirements in the futures market
are less onerous than margin requirements in the securities market. Therefore,
increased participation by speculators in the futures market may also cause
temporary price
B-3
<PAGE> 79
distortions. Due to the possibility of price distortion in the futures market,
and because of the imperfect correlation between the movements in the cash
market and movements in the price of futures, a correct forecast of general
market trends or interest rate movements by the adviser may still not result in
a successful hedging transaction over a short time frame.
Positions in futures may be closed out only on an exchange or
board of trade which provides a secondary market for such futures. Although the
Fund intends to purchase or sell futures only on exchanges or boards of trade
where there appear to be active secondary markets, there is no assurance that a
liquid secondary market on any exchange or board of trade will exist for any
particular contract or at any particular time. In such event, it may not be
possible to close a futures investment position, and in the event of adverse
price movements, the Fund will continue to be required to make daily cash
payments of variation margin. However, in the event futures contracts have been
used to hedge portfolio securities, such securities will not be sold until the
futures contract can be terminated. In such circumstances, an increase in the
price of the securities, if any, may partially or completely offset losses on
the futures contract. However, as described above, there is no guarantee that
the price of the securities will in fact correlate with the price movements in
the futures contract and thus provide an offset on a futures contract.
Further, it should be noted that the liquidity of a secondary
market in a futures contract may be adversely affected by "daily price
fluctuation limits" established by commodity exchanges which limit the amount of
fluctuation in a futures contract price during a single trading day. Once the
daily limit has been reached in the contract, no trades may be entered into at a
price beyond the limit, thus preventing the liquidation of open futures
positions. The trading of futures contracts is also subject to the risk of
trading halts, suspensions, exchange or clearing house equipment failures,
government intervention, insolvency of a brokerage firm or clearing house or
other disruptions of normal activity, which could at times make it difficult or
impossible to liquidate existing positions or to recover excess variation margin
payments.
Successful use of futures by the Fund is also subject to the
advisers ability to predict correctly movements in the direction of the market.
For example, if the Fund has hedged against the possibility of a decline in the
market adversely affecting securities held by it and securities prices increase
instead, the Fund will lose part or all of the benefit to the increased value of
its securities which it has hedged because it will have offsetting losses in its
futures positions. In addition, in such situations, if the Fund has insufficient
cash, it may have to sell securities to meet daily variation margin
requirements.
B-4
<PAGE> 80
Such sales of securities may be, but will not necessarily be, at increased
prices which reflect the rising market. The Fund may have to sell securities at
a time when it may be disadvantageous to do so.
IV. Options on Futures Contracts
----------------------------
The Fund may purchase and write options on the futures
contracts described above. A futures option gives the holder, in return for the
premium paid, the right to buy (call) from or sell (put) to the writer of the
option a futures contract at a specified price at any time during the period of
the option. Upon exercise, the writer of the option is obligated to pay the
difference between the cash value of the futures contract and the exercise
price. Like the buyer or seller of a futures contract, the holder, or writer, of
an option has the right to terminate its position prior to the scheduled
expiration of the option by selling, or purchasing an option of the same series,
at which time the person entering into the closing transaction will realize a
gain or loss. The Fund will be required to deposit initial margin and variation
margin with respect to put and call options on futures contracts written by it
pursuant to brokers' requirements similar to those described above. Net option
premiums received will be included as initial margin deposits.
Investments in futures options involve some of the same
considerations that are involved in connection with investments in futures
contracts (for example, the existence of a liquid secondary market). In
addition, the purchase or sale of an option also entails the risk that changes
in the value of the underlying futures contract will not correspond to changes
in the value of the option purchased. Depending on the pricing of the option
compared to either the futures contract upon which it is based, or upon the
price of the securities being hedged, an option may or may not be less risky
than ownership of the futures contract or such securities. In general, the
market prices of options can be expected to be more volatile than the market
prices on the underlying futures contract. Compared to the purchase or sale of
futures contracts, however, the purchase of call or put options on futures
contracts may frequently involve less potential risk to the Fund because the
maximum amount at risk is the premium paid for the options (plus transaction
costs). The writing of an option on a futures contract involves risks similar to
those risks relating to the sale of futures contracts.
V. Other Matters
-------------
Accounting for futures contracts will be in accordance with
generally accepted accounting principles.
B-5
<PAGE> 81
FORM N-1A
---------
Part C - Other Information
--------------------------
Item 24. Financial Statements and Exhibits
---------------------------------
(A) Financial Statements
--------------------
(1) Included in Parts A of the Registration Statement:
None.
(2) Incorporated by reference in Parts B of the
Registration Statement:
None.
(B) Exhibits
--------
(1) Declaration of Trust dated January 28, 1986 is
incorporated herein by reference to Exhibit 1 to Post-
Effective Amendment No. 1 to Registrant's Registration
Statement filed on December 16, 1986 ("PEA No. 1").
(a) Amendment No. 1 to Declaration of Trust is
incorporated herein by reference to Exhibit 1(a) to
Post-Effective Amendment No. 6 to Registrant's Registration
Statement filed on August 1, 1989 ("PEA No. 6").
(b) Amendment No. 2 to Declaration of Trust is
incorporated herein by reference to Exhibit 1(b) to
Post-Effective Amendment No. 23 to Registrant's Registration
Statement filed on May 11, 1995 ("PEA No. 23").
(c) Certificate of Classification of Shares
reflecting the creation of the Tax Exempt Portfolio (Trust) as
filed with the Office of Secretary of State of Massachusetts
on October 16, 1989 is incorporated herein by reference to
Exhibit 1(c) to Post-Effective Amendment No. 26 to
Registrant's Registration Statement filed on May 15, 1996
("PEA No. 26").
(d) Certificate of Classification of Shares
reflecting the creation of Special Series 1 in the Money
Market, Government, Treasury, Tax Exempt, Equity, Bond and
Ohio Tax Exempt Portfolios as filed with the Office of
Secretary of State of Massachusetts on December 11, 1989 is
incorporated herein by reference to Exhibit 1(d) to PEA No.
26.
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(e) Certificate of Classification of Shares
reflecting the creation of Special Series 1 in the Money
Market, Government, Treasury, Tax Exempt, Equity, Bond and
Ohio Tax Exempt Portfolios as filed with the Office of the
Secretary of State of Massachusetts on September 12, 1990 is
incorporated herein by reference to Exhibit 1(e) to PEA No.
26.
(f) Certificate of Classification of Shares
reflecting the creation of Class L and Class L-Special Series
1 shares, Class M and Class M-Special Series 1, Class N and
Class N-Special Series 1, Class O and Class O-Special Series
1, and Class P and Class P-Special Series 1 representing
interests in the National Tax Exempt Portfolio, Equity Income
Portfolio, Mid Cap Regional Equity Portfolio, Enhanced Income
Fund and Total Return Advantage Fund, respectively, as filed
with the Office of Secretary of State of Massachusetts on June
30, 1994 is incorporated herein by reference to Exhibit 1(e)
to PEA No. 26.
(g) Certificate of Classification of Shares
reflecting the creation of Class Q and Class Q-Special Series
1 shares, Class R and Class R-Special Series 1, Class S and
Class S-Special Series 1 shares, and Class T and Class
T-Special Series 1 shares representing interests in the
Pennsylvania Tax Exempt, Intermediate Government, GNMA and
Pennsylvania Municipal Funds, respectively, as filed with the
Office of the Secretary of State of Massachusetts on September
10, 1996 is incorporated herein by reference to Exhibit 1(g)
to Post-Effective Amendment No. 33 to Registrant's
Registration Statement filed on April 11, 1997 ("PEA No. 33").
(h) Certificate of Classification of Shares
reflecting the creation of Class U and Class U-Special Series
1 shares, Class V and Class V-Special Series 1 shares and
Class W and Class W-Special Series 1 shares representing
interests in the International Equity, Equity Index and Core
Equity Funds, respectively, as filed with the Office of the
Secretary of State of Massachusetts on June 27, 1997.
(i) Certificate of Classification of Shares
reflecting the creation of Class X and Class X-Special Series
1 shares and Class Y and Class Y-Special Series 1 shares
representing interests in the Small Cap Growth Fund and Real
Return Advantage Funds, respectively, as filed with the Office
of the Secretary of State of Massachusetts on June 27, 1997.
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(2) Code of Regulations as approved and adopted by
Registrant's Board of Trustees on January 28, 1986 is
incorporated herein by reference to Exhibit 2 to Pre-
Effective Amendment No. 2 to Registrant's Registration
Statement filed on January 30, 1986 ("Pre-Effective
Amendment No. 2").
(a) Amendment No. 1 to Code of Regulations is
incorporated herein by reference to Exhibit 2(a) to PEA No. 6.
(b) Amendment No. 2 to Code of Regulations as
approved and adopted by Registrant's Board of Trustees on
July 17, 1997.
(3) None.
(4) (a) Specimen copy of share certificate for Class A
units of beneficial interest is incorporated herein by
reference to Exhibit 4(a) to Pre-Effective Amendment No. 2.
(b) Specimen copy of share certificate for Class A -
Special Series 1 units of beneficial interest is incorporated
herein by reference to Exhibit 4(b) to Post-Effective
Amendment No. 13 to the Registrant's Registration Statement
filed on July 27, 1990 ("PEA No. 13").
(c) Specimen copy of share certificate for Class B
units of beneficial interest is incorporated herein by
reference to Exhibit 4(b) to Pre-Effective Amendment No. 2.
(d) Specimen copy of share certificate for Class
B - Special Series 1 units of beneficial interest is
incorporated herein by reference to Exhibit 4(d) to PEA
No. 13.
(e) Specimen copy of share certificate for Class C
units of beneficial interest is incorporated herein by
reference to Exhibit 4(c) to Pre-Effective Amendment No. 2.
(f) Specimen copy of share certificate for Class
C - Special Series 1 units of beneficial interest is
incorporated herein by reference to Exhibit 4(f) to PEA
No. 13.
(g) Specimen copy of share certificates for Class D
units of beneficial interest is incorporated herein by
reference to Exhibit 4(d) to Pre-Effective Amendment No. 2.
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<PAGE> 84
(h) Specimen copy of share certificate for Class D -
Special Series 1 units of beneficial interest is incorporated
hereby by reference to Exhibit 4(h) to PEA No. 13.
(i) Specimen copy of share certificate for Class H
units of beneficial interest is incorporated herein by
reference to Exhibit 4(i) to Post-Effective Amendment No. 10
to Registrant's Registration Statement filed on April 17, 1990
("PEA No. 10").
(j) Specimen copy of share certificate for Class H -
Special Series 1 units of beneficial interest is incorporated
herein by reference to Exhibit 4(j) to PEA No. 10.
(k) Specimen copy of share certificate for Class
I units of beneficial interest is incorporated herein
by reference to Exhibit 4(k) to PEA No. 10.
(l) Specimen copy of share certificate for Class I -
Special Series 1 units of beneficial interest is incorporated
herein by reference to Exhibit 4(l) to PEA No. 10.
(m) Specimen copy of share certificate for Class K
units of beneficial interest is incorporated herein by
reference to Exhibit 4(m) to PEA No. 10.
(n) Specimen copy of share certificate for Class K -
Special Series 1 units of beneficial interest is incorporated
herein by reference to Exhibit 4(n) to PEA No. 10.
(5) (a) Investment Advisory Agreement for the Money
Market Portfolio, Government Portfolio, Treasury Portfolio,
Tax Exempt Portfolio, Equity Portfolio, Bond Portfolio and
Ohio Tax Exempt Portfolio among Registrant, National City
Bank, BancOhio National Bank and First National Bank of
Louisville dated September 26, 1990 is incorporated herein by
reference to Exhibit 5(f) to Post-Effective Amendment No. 14
to Registrant's Registration Statement filed on September 5,
1990 ("PEA No. 14").
(b) Investment Advisory Agreement for the Money
Market Portfolio (Trust), Government Portfolio (Trust),
Treasury Portfolio (Trust) and Tax Exempt Portfolio (Trust)
among Registrant, National City Bank, BancOhio National Bank
and First National Bank of Louisville
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<PAGE> 85
dated September 26, 1990 is incorporated herein by reference
to Exhibit 5(g) to PEA No. 14.
(c) Investment Advisory Agreement for the Enhanced
Income Fund and the Total Return Advantage Fund between
Registrant and National Asset Management Corporation dated
July 5, 1994, is incorporated herein by reference to Exhibit
5(h) to Post-Effective Amendment No. 21 to Registrant's
Registration Statement filed on August 31, 1994 ("PEA No.
21").
(d) Investment Advisory Agreement for the Equity
Income Portfolio among Registrant, National City Bank,
National City Bank, Columbus and National City Bank, Kentucky
dated June 30, 1994, is incorporated herein by reference to
Exhibit 5(i) to PEA No. 21.
(e) Investment Advisory Agreement for the Mid Cap
Regional Equity Portfolio between Registrant and National City
Bank dated July 25, 1994, is incorporated herein by reference
to Exhibit 5(j) to PEA No. 21.
(f) Investment Advisory Agreement for the National
Tax Exempt Portfolio among Registrant, National City Bank,
National City Bank, Columbus, National City Bank, Kentucky and
National City Bank, Indiana is incorporated herein by
reference to Exhibit 5(l) to Post-Effective Amendment No. 20
to Registrant's Registration Statement filed on February 11,
1994 ("PEA No. 20").
(g) Investment Advisory Agreement for the
Pennsylvania Tax Exempt, Intermediate Government, GNMA and
Pennsylvania Municipal Funds between Registrant and National
City Bank dated September 9, 1996, is incorporated herein by
reference to Exhibit 5(g) to PEA No. 33.
(h) Sub-Advisory Agreement for the Pennsylvania Tax
Exempt and Pennsylvania Municipal Funds between National City
Bank and Weiss, Peck & Greer L.L.C. dated September 9, 1996,
is incorporated herein by reference to Exhibit 5(h) to PEA No.
33.
(i) Form of Investment Advisory Agreement for the
Core Equity Fund between Registrant and National Asset
Management Corporation is incorporated herein by reference to
Exhibit 5(i) to PEA No. 33.
(j) Form of Investment Advisory Agreement for the
Foreign Equity and Equity Index Funds among Registrant
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<PAGE> 86
and National City Bank is incorporated herein by reference to
Exhibit 5(j) to PEA No. 33.
(k) Form of Investment Advisory Agreement for the
Small Cap Growth and Real Return Advantage Funds between
Registrant and National City Bank is incorporated herein by
reference to Exhibit 5(k) to PEA No. 33.
(l) Form of Sub-Advisory Agreement between National
City Bank and Wellington Management Company, LLP with respect
to the Small Cap Growth Fund.
(6) Distribution Agreement between Registrant and SEI
Financial Services Company dated March 8, 1997, is
incorporated herein by reference to Exhibit 6 to PEA No. 33.
(7) None.
(8) (a) Custodian Services Agreement between Registrant
and National City Bank, dated November 7, 1994, is
incorporated herein by reference to Exhibit 8(a) to
Post-Effective Amendment No. 22 to Registrant's Registration
Statement filed on December 30, 1994 ("PEA No. 22").
(b) Sub-Custodian Agreement between National City
Bank and The Bank of California, National Association, dated
November 7, 1994, is incorporated herein by reference to
Exhibit 8(a) to PEA No. 22.
(c) Exhibit A to the Custodian Services Agreement
between Registrant and National City Bank dated September 9,
1996, is incorporated herein by reference to Exhibit 8(c) to
PEA No. 33.
(d) Form of Exhibit A to the Custodian Services
Agreement between Registrant and National City Bank.
(9) (a) Administration and Accounting Services Agreement
between Registrant and PFPC Inc., dated March 1, 1993 is
incorporated by reference to Exhibit 9(l) to Post-Effective
Amendment No. 16 to Registrant's Registration Statement filed
on March 1, 1993 ("PEA No. 16").
(b) Exhibit A to the Administration and Accounting
Services Agreement dated March 1, 1993 between Registrant and
PFPC Inc., dated September 9,
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<PAGE> 87
1996, is incorporated herein by reference to Exhibit 9(b) to
PEA No. 33.
(c) Form of Exhibit A to the Administration and
Accounting Services Agreement dated March 1, 1993 between
Registrant and PFPC Inc. is incorporated herein by reference
to Exhibit 9(c) to PEA No. 33.
(d) Transfer Agency and Service Agreement (the
"Transfer Agency Agreement") between Registrant and State
Street Bank and Trust Company dated March 1, 1997, is
incorporated herein by reference to Exhibit 9(d) to PEA No.
33.
(e) Revised Shareholder Services Plan and Servicing
Agreement adopted by the Board of Trustees February 15, 1997,
is incorporated herein by reference to Exhibit 9(e) to PEA No.
33.
(f) Blue Sky Services Agreement between the
Registrant and SEI Fund Resources dated December 2, 1996, is
incorporated herein by reference to Exhibit 9(f) to PEA No.
33.
(1)(10) Opinion and consent of counsel.
(11) (a) Consent of Drinker Biddle & Reath LLP.
(b) Consent of Ernst & Young LLP.
(12) Inapplicable.
(13) Purchase Agreements between Registrant and
McDonald & Company Securities, Inc. are incorporated
herein by reference to Exhibit 13 to PEA No. 1.
(a) Purchase Agreement between Registrant and
McDonald & Company Securities, Inc. with respect to the Tax
Exempt Portfolio dated July 19, 1988 is incorporated by
reference to Exhibit 13(a) to Post-Effective Amendment No. 5
to Registrant's Registration Statement filed on January 19,
1989 ("PEA No. 5").
(b) Purchase Agreement between Registrant and
McDonald & Company Securities, Inc. with respect to the Tax
Exempt Portfolio (Trust) dated October 17, 1989 is
incorporated herein by reference to Exhibit 13(b) to PEA No.
13.
- --------
1. To be filed under Rule 24f-2 as part of Registrant's Rule 24f-2 Notice.
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<PAGE> 88
(c) Purchase Agreement between Registrant and
McDonald & Company Securities, Inc. with respect to the Equity
Portfolio and Bond Portfolio dated December 20, 1989 is
incorporated herein by reference to Exhibit 13(c) to PEA No.
13.
(d) Purchase Agreement between Registrant and
McDonald & Company Securities, Inc. with respect to the Ohio
Tax Exempt Portfolio dated January 5, 1990 is incorporated
herein by reference to Exhibit 13(d) to PEA No. 13.
(e) Purchase Agreement between Registrant and
Allmerica Investments, Inc. with respect to the Enhanced
Income Fund dated July 5, 1994, is incorporated herein by
reference to Exhibit 13(e) to PEA No. 21.
(f) Purchase Agreement between Registrant and
Allmerica Investments, Inc. with respect to the Equity Income
Portfolio dated June 30, 1994, is incorporated herein by
reference to Exhibit 13(g) to PEA No. 21.
(g) Purchase Agreement between Registrant and
Allmerica Investments, Inc. with respect to the Mid Cap
Regional Equity Portfolio dated July 25, 1994, is incorporated
herein by reference to Exhibit 13(h) to PEA No. 21.
(h) Purchase Agreement between Registrant and
Allmerica Investments, Inc. with respect to the Total Return
Advantage Fund dated July 5, 1994 is incorporated herein by
reference to Exhibit 13(f) to PEA No. 21.
(i) Purchase Agreement between Registrant and
Allmerica Investments, Inc. with respect to the
National Tax Exempt Portfolio is incorporated herein by
reference to Exhibit 13(e) to PEA No. 20.
(j) Purchase Agreement between Registrant and 440
Financial Distributors, Inc. with respect to the Pennsylvania
Tax Exempt Fund dated September 6, 1996, is incorporated
herein by reference to Exhibit 13(j) to PEA No. 33.
(k) Purchase Agreement between Registrant and 440
Financial Distributors, Inc. with respect to the
Intermediate Government Fund dated September 6, 1996, is
incorporated herein by reference to Exhibit 13(k) to PEA No.
33.
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<PAGE> 89
(l) Purchase Agreement between Registrant and 440
Financial Distributors, Inc. with respect to the GNMA Fund
dated September 6, 1996, is incorporated herein by reference
to Exhibit 13(l) to PEA No. 33.
(m) Purchase Agreement between Registrant and 440
Financial Distributors, Inc. with respect to the Pennsylvania
Municipal Fund dated September 6, 1996, is incorporated herein
by reference to Exhibit 13(m) to PEA No. 33.
(n) Form of Purchase Agreement between Registrant and
SEI Financial Services Company ("SEI") with respect to the
Core Equity Fund is incorporated herein by reference to
Exhibit 13(n) to PEA No. 33.
(o) Form of Purchase Agreement between Registrant and
SEI with respect to the Foreign Equity Fund is incorporated
herein by reference to Exhibit 13(o) to PEA No. 33.
(p) Form of Purchase Agreement between Registrant and
SEI with respect to the Equity Index Fund is incorporated
herein by reference to Exhibit 13(p) to PEA No. 33.
(q) Form of Purchase Agreement between Registrant and
SEI with respect to the Real Return Advantage Fund is
incorporated herein by reference to Exhibit 13(q) to PEA No.
33.
(r) Form of Purchase Agreement between Registrant and
SEI with respect to the Small Cap Growth Fund is incorporated
herein by reference to Exhibit 13(r) to PEA No. 33.
(14) None.
(15) (a) Registrant's 12b-1 Plan is incorporated
herein by reference to Exhibit 15 to Pre-Effective Amendment
No. 1 to Registrant's Registration Statement filed on January
13, 1986 ("Pre-Effective Amendment No.1").
(b) Registrant's Revised Service and Distribution
Plan, is incorporated herein by reference to Exhibit 15(b) to
PEA No. 33.
(16) (a) Schedules for Computation of Performance
Quotations are incorporated herein by reference to
Exhibit 16 to Post-Effective Amendment No. 15 to
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<PAGE> 90
Registrant's Registration Statement filed on
September 18, 1992 ("PEA No. 15").
(b) Schedules for Computation of Performance
Quotations for the Treasury, Mid Cap Regional Equity and
Equity Income Portfolios and the Enhanced Income and Total
Return Advantage Funds are incorporated herein by reference to
Exhibit 16 to PEA No. 22.
(17) Inapplicable.
(18) Revised Plan Pursuant to Rule 18f-3 for Operation
of a Dual-Class System, is incorporated herein by
reference to Exhibit 18 to PEA No. 33.
Item 25. Persons Controlled By or Under
Common Control with Registrant
------------------------------
Registrant is controlled by its Board of Trustees.
McDonald & Company Securities, Inc. ("McDonald"), the former
distributor of NCC Funds, provided the initial capitalization of Registrant.
Item 26. NUMBER OF HOLDERS OF SECURITIES. The following information is as of
June 30, 1997:
<TABLE>
<CAPTION>
Total
Number of Record
Title of Class Holders Institutional Retail
-------------- ---------------- ------------- ------
<S> <C> <C> <C>
Class A units of
beneficial interest
(Money Market
Fund) 40,588 19,748 20,840
Class B units of
beneficial interest
(Government Fund) 4,523 2,715 1,808
Class C units of
beneficial interest
(Treasury Fund) 2,600 2,357 243
Class D units of
beneficial interest
(Tax Exempt Fund) 2,598 2,096 502
Class H units of
beneficial interest
(Equity Growth Fund) 6,036 5,534 502
</TABLE>
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<PAGE> 91
<TABLE>
<CAPTION>
Total
Number of Record
Title of Class Holders Institutional Retail
-------------- ---------------- ------------- ------
<S> <C> <C> <C>
Class I units of
beneficial interest
(Fixed Income
Fund) 2,491 2,326 165
Class K units of
beneficial interest
(Ohio Tax Exempt
Fund) 940 834 106
Class M units of
beneficial interest
(Equity Income
Fund) 3,472 3,416 56
Class N units of
beneficial interest
(Mid Cap Regional
Fund) 4,536 3,949 587
Class O units of
beneficial interest
(Enhanced Income
Fund) 295 270 25
Class P units of
beneficial interest
(Total Return
Advantage Fund) 1,013 996 17
Class Q units of
beneficial interest
(Pennsylvania Tax
Exempt Fund) 790 694 96
Class R units of
beneficial interest
(Intermediate
Government Fund) 2,875 2,868 7
Class S units of
beneficial interest
(GNMA Fund) 2,980 2,962 18
Class T units of
beneficial interest
(Pennsylvania
Municipal Fund) 403 394 9
Class U units of
beneficial interest
(International Equity
Fund) 0 0 0
</TABLE>
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<PAGE> 92
<TABLE>
<CAPTION>
Total
Number of Record
Title of Class Holders Institutional Retail
-------------- ---------------- ------------- ------
<S> <C> <C> <C>
Class V units of
beneficial interest
(Equity Index Fund) 0 0 0
Class W units of
beneficial interest
(Core Equity Fund) 0 0 0
Class X units of
beneficial interest
(Small Cap Growth Fund) 0 0 0
Class Y units of
beneficial interest
(Real Return Advantage
Fund) 0 0 0
</TABLE>
Item 27. Indemnification
---------------
Indemnification of Registrant's principal underwriter,
custodian and transfer agent against certain losses is provided for,
respectively, in Article 6 of the Distribution Agreement, incorporated by
reference as Exhibit (6) hereto, and Sections 12 and 6, respectively, of the
Custodian Services and Transfer Agency Agreements, incorporated by reference as
Exhibits (8)(a) and (9)(h) hereto. In Article 6 of the Distribution Agreement,
the Trust agrees to indemnify and hold harmless the Distributor and each of its
directors and officers and each person, if any, who controls the Distributor
within the meaning of Section 15 of the 1933 Act against any loss, liability,
claim, damages or expense (including the reasonable cost of investigating or
defending any alleged loss, liability, claim, damages or expense and reasonable
counsel fees and disbursements incurred in connection therewith), arising by
reason of any person acquiring any Shares, based upon the ground that the
registration statement, prospectus, Shareholder reports or other information
filed or made public by the Trust (as from time to time amended) included an
untrue statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements made not misleading.
However, the Trust does not agree to indemnify the Distributor or hold it
harmless to the extent that the statements or omission was made in reliance
upon, and in conformity with, information furnished to the Trust by or on behalf
of the Distributor.
In addition, Section 9.3 of Registrant's Declaration of Trust
dated January 28, 1986, incorporated by reference as Exhibit (1) hereto,
provides as follows:
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<PAGE> 93
9.3 INDEMNIFICATION OF TRUSTEES, REPRESENTATIVES AND
EMPLOYEES. The Trust shall indemnify each of its Trustees
against all liabilities and expenses (including amounts paid
in satisfaction of judgments, in compromise, as fines and
penalties, and as counsel fees) reasonably incurred by him in
connection with the defense or disposition of any action, suit
or other proceeding, whether civil or criminal, in which he
may be involved or with which he may be threatened, while as a
Trustee or thereafter, by reason of his being or having been
such a Trustee EXCEPT with respect to any matter as to which
he shall have been adjudicated to have acted in bad faith,
willful misfeasance, gross negligence or reckless disregard of
his duties, PROVIDED that as to any matter disposed of by a
compromise payment by such person, pursuant to a consent
decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless the
Trust shall have received a written opinion from independent
legal counsel approved by the Trustees to the effect that if
either the matter of willful misfeasance, gross negligence or
reckless disregard of duty, or the matter of bad faith had
been adjudicated, it would in the opinion of such counsel have
been adjudicated in favor of such person. The rights accruing
to any person under these provisions shall not exclude any
other right to which he may be lawfully entitled, PROVIDED
that no person may satisfy any right of indemnity or
reimbursement hereunder except out of the property of the
Trust. The Trustees may make advance payments in connection
with the indemnification under this Section 9.3, PROVIDED that
the indemnified person shall have provided a secured written
undertaking to reimburse the Trust in the event it is
subsequently determined that he is not entitled to such
indemnification.
The Trustees shall indemnify representatives and employees of
the Trust to the same extent that Trustees are entitled to
indemnification pursuant to this Section 9.3.
Section 12 of Registrant's Custodian Services Agreement
provides as follows:
12. INDEMNIFICATION. The Trust, on behalf of each of the
Funds, agrees to indemnify and hold harmless the Custodian and
its nominees from all taxes, charges, expenses, assessments,
claims and liabilities (including, without limitation,
liabilities arising under the 1933 Act, the 1934 Act, the 1940
Act, the
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<PAGE> 94
CEA, and any state and foreign securities and blue sky laws,
and amendments thereto), and expenses, including (without
limitation) reasonable attorneys' fees and disbursements,
arising directly or indirectly from any action which the
Custodian takes or does not take (i) at the request or on the
direction of or in reliance on the advice of the Fund or (ii)
upon Oral or Written Instructions. Neither the Custodian, nor
any of its nominees, shall be indemnified against any
liability to the Trust or to its shareholders (or any expenses
incident to such liability) arising out of the Custodian's or
its nominees' own willful misfeasance, bad faith, negligence
or reckless disregard of its duties and obligations under this
Agreement.
In the event of any advance of cash for any purpose made by
the Custodian resulting from Oral or Written Instructions of
the Trust, or in the event that the Custodian or its nominee
shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in respect of the Trust or
any Fund in connection with the performance of this Agreement,
except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful
misconduct, any Property at any time held for the account of
the relevant Fund or the Trust shall be security therefor.
Section 6 of Registrant's Transfer Agency Agreement provides
as follows:
6. Indemnification
---------------
6.1 The Bank shall not be responsible for, and the Fund
shall on behalf of the applicable Portfolio indemnify
and hold the Bank harmless from and against, any and
all losses, damages, costs, charges, counsel fees,
payments, expenses and liability arising out of or
attributable to:
(a) All actions of the Bank or its agents or
subcontractors required to be taken pursuant
to this Agreement, provided that such
actions are taken in good faith and without
negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or
willful misconduct which arise out of the
breach of any representation or warranty of
the Fund hereunder.
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<PAGE> 95
(c) The reliance on or use by the Bank or its
agents or subcontractors of information,
records, documents or services which (i) are
received by the Bank or its agents or
subcontractors, and (ii) have been prepared,
maintained or performed by the Fund or any
other person or firm on behalf of the Fund
including but not limited to any previous
transfer agent or registrar.
(d) The reliance on, or the carrying out by the
Bank or its agents or subcontractors of any
instructions or requests of the Fund on
behalf of the applicable Portfolio.
(e) The offer or sale of Shares in violation of
any requirement under the federal securities
laws or regulations or the securities laws
or regulations of any state that such Shares
be registered in such state or in violation
of any stop order or other determination or
ruling by any federal agency or any state
with respect to the offer or sale of such
Shares in such state.
(f) The negotiations and processing of checks
made payable to prospective or existing
Shareholders tendered to the Bank for the
purchase of Shares, such checks are commonly
known as "third party checks."
6.2 At any time the Bank may apply to any officer of
the Fund for instructions, and may consult with
legal counsel with respect to any matter arising
in connection with the services to be performed by
the Bank tinder this Agreement, and the Bank and
its agents or subcontractors shall not be liable
and shall be indemnified by the Fund oil behalf of
the applicable Portfolio for any action taken or
omitted by it in reliance upon such instructions
or upon the opinion of such counsel (provided such
counsel is reasonably satisfactory to the Fund).
The Bank, its agents and subcontractors shall be
protected and indemnified in acting upon any paper
or document, reasonably believed to be genuine and
to have been signed by the proper person or
persons, or upon any instruction, information,
data, records or documents provided the Bank or
its agents or subcontractors by machine readable
input, telex, CRT data entry or other similar
means authorized by the Fund, and shall not be
C-15
<PAGE> 96
held to have notice of any change of authority of
any person, until receipt of written notice
thereof from the Fund. The Bank, its agents and
subcontractors shall also be protected and
indemnified in recognizing stock certificates
which are reasonably believed to bear the proper
manual or facsimile signatures of the officers of
the Fund, and the proper countersignature of any
former transfer agent or former registrar, or of a
co-transfer agent or co-registrar.
6.3 In the event either party is unable to perform its
obligations under the terms of this Agreement
because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond
its control, or other causes reasonably beyond its
control, such party shall not be liable for
damages to the other for any damages resulting
from such failure to perform or otherwise from
such causes.
6.4 In order that the indemnification provisions
contained in this Section 6 shall apply, upon the
assertion of a claim for which the Fund may be
required to indemnify the Bank, the Bank shall
promptly notify the Fund of such assertion, and
shall keep the Fund advised with respect to all
developments concerning such claim. The Fund shall
have the option to participate with the Bank in
the defense of such claim or to defend against said
claim in its own name or in the name of the Bank. The
Bank shall in no case confess any claim or make any
compromise in any case in which the Fund may be
required to indemnify the Bank except with the Fund's
prior written consent.
Registrant has obtained from a major insurance carrier a
directors' and officers' liability policy covering certain types of errors and
omissions. In no event will Registrant indemnify any of its trustees, officers,
employees or agents against any liability to which such person would otherwise
be subject by reason of his willful misfeasance, bad faith or gross negligence
in the performance of his duties, or by reason of his reckless disregard of the
duties involved in the conduct of his office or under his agreement with
Registrant. Registrant will comply with Rule 484 under the Securities Act of
1933 and Release No. 11330 under the Investment Company Act of 1940 in
connection with any indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors,
C-16
<PAGE> 97
officers, and controlling persons of Registrant pursuant to the foregoing
provisions, or otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a trustee, officer, or controlling
person of Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such trustee, officer, or controlling person in
connection with the securities being registered, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 28. Business and Other Connections
of Investment Advisers
------------------------------
(a) Investment Adviser: National City Bank
National City Bank performs investment advisory services for
Registrant and certain other investment advisory customers. National City Bank
has been in the business of managing the investments of fiduciary and other
accounts throughout Ohio since October 1919. In addition to its trust business,
National City Bank provides commercial banking services.
To the knowledge of Registrant, none of the directors or
officers of National City Bank, except those set forth below, is or has been, at
any time during the past two calendar years, engaged in any other business,
profession, vocation or employment of a substantial nature, except that certain
directors and officers also hold various positions with, and engage in business
for, National City Corporation, which owns all the outstanding stock of National
City Bank, or other subsidiaries of National City Corporation. Set forth below
are the names and principal businesses of the directors and certain of the
senior executive officers of National City Bank who are engaged in any other
business, profession, vocation or employment of a substantial nature.
C-17
<PAGE> 98
<TABLE>
<CAPTION>
NATIONAL CITY BANK
Position Other
with National Business Type of
Name City Bank Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
Edward B. Brandon Director Retired Chairman, Bank holding
National City company
Corporation
Director, The Automobile parts
Standard Products and supplies
Company
Director, Manufacturer of
RPM, Inc. protective coatings,
roofing materials and
paint
Director, Premier Electronics
Industrial Corp. distribution
John G. Breen Director Chairman and Manufacturer
Chief Executive of paints,
Officer, The coatings, and
Sherwin-Williams containers
Company
Steve D. Bullock Director Chief Executive Non-Profit
Officer and organization
Chapter Manager,
American Red
Cross
Werner F. Bush Director Retired Executive Manufacturer
Vice President and of specialty
and Chief Oper- chemicals
ating Officer,
Ferro Corp.
Duane E. Collins Director President and Manufacturer
Chief Executive of hydraulic and
Officer, Parker and automotive
Hannifin Corp. equipment
David A. Daberko Director Chairman and Bank holding
Chief Executive company
Officer, National
City Corporation
Director, Bank
National City
Bank of Columbus
Director, Bank
National City
Bank, Northeast
Director, Bank
National City
Bank of Dayton
</TABLE>
C-18
<PAGE> 99
<TABLE>
<CAPTION>
Position Other
with National Business Type of
Name City Bank Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
Director, Bank
National City
Bank, Northwest
Director,
National City Bank
Bank of Indiana
Director, Bank
National City
Bank of Kentucky
Officer and Tractor sales
Director, Hudson
Tractor Sales,
Inc.
Director,
Student Loan
Marketing
Association
Robert J. Farling Director Chairman, President Electric utility
and Chief Executive
Officer, Centerior
Energy Corporation
Russell R. Gifford Director Retired President, Natural gas
CNG Energy Services
Corporation
Henry J. Goodman Director Chairman and Furniture company
Chief Executive
Officer,
H. Goodman, Inc.
Gordon D. Harnett Director President, Manufacturer of
Chairman and engineered
Chief Executive material
Officer, Brush Wellman,
Inc.
Preston B. Director Retired Electronic
Heller, Jr. Chairman and Chief component
Executive Officer, distributor
Pioneer Standard
Electronics, Inc.
Leon J. Hendrix, Director Partner, Private
Jr. Clayton, Dubilier investment
& Rice, Inc. firm
J. Peter Kelly Director President and Manufacturer
Chief Operating of
Officer, LTV Steel steel
Company
</TABLE>
C-19
<PAGE> 100
<TABLE>
<CAPTION>
Position Other
with National Business Type of
Name City Bank Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
William E. Chairman, Director and Execu-
MacDonald III President, Chief tive Vice President, Bank holding
Executive National City company
Officer and Corporation
Director
William P. Madar Director Vice Chairman and Manufacturer
Chief Executive of machinery
Officer, Nordson
Corporation
H. Gene Nau Director President and Chief Travel agency
Executive Officer,
Travel One Midwest
William F. Patient Director Chairman, PVC manufacturer
President and Chief
Executive Officer,
The Geon Company
William R. Robertson Director President, Bank holding
National City company
Corporation
Shelley B. Roth Director President, Ice cream
Pierre's French
Ice Cream Company
Thomas C. Sullivan Director Chairman of the Manufacturer
Board and Chief of protective
Executive Officer, coatings, roofing
RPM, Inc. material and paint
Dr. Jerry S. Director President, Education
Thornton Cuyahoga
Community
College
Morry Weiss Director Chairman and Greeting cards
Chief Executive
Officer, American
Greetings
Corporation
Theodore K. Zampetis Director President and Manufacturer of
Chief Operating rubber and plastic
Officer, The parts for automotive
Standard Products original equipment
Co. industry
W. Douglas Bannerman Executive Vice Senior Vice Bank holding
President, Cor- President, company
porate Banking National City
Corporation
Jeffrey M. Biggar Executive Vice Senior Vice Bank holding
President, President, company
</TABLE>
C-20
<PAGE> 101
<TABLE>
<CAPTION>
Position Other
with National Business Type of
Name City Bank Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
Private Client National City
Group Corporation
Jane Grebenc Executive Vice None
President, Retail
Banking
Jeffrey D. Kelly Executive Vice Executive Vice Bank holding
President, President, company
Investments National City
Corporation
Bruce T. Muddell Executive Vice None
President, Credit
Administration
Harold B. Todd, Jr. Executive Vice Executive Vice Bank holding
President, President, company
Institutional National City
Trust and Asset Corporation
Management
</TABLE>
(b) Investment Adviser: National City Bank of Columbus
("National City") performs investment advisory services for Registrant and
certain other investment advisory customers. National City Bank of Columbus has
been in the business of managing the investments of fiduciary and other accounts
throughout Ohio since 1915. In addition to its trust business, National City
provides commercial banking services.
To the knowledge of Registrant, none of the directors or
officers of National City, except those set forth below, is or has been, at any
time during the past two calendar years, engaged in any other business,
profession, vocation or employment of a substantial nature, except that certain
directors and officers also hold various positions with, and engage in business
for, National City Corporation, which owns all the outstanding stock of National
City. Set forth below are the names and principal businesses of the directors
and certain of the senior executive officers of National City who are engaged in
any other business, profession, vocation or employment of a substantial nature.
C-21
<PAGE> 102
<TABLE>
<CAPTION>
NATIONAL CITY BANK OF COLUMBUS
Position Other
with National Business Type of
Name City Columbus Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
Eric D. Chapman, III Director President and Health care
Chief Executive industry consulting
Officer, Chapman
Health International,
Inc.
David A. Daberko Director Chairman and Bank holding
Chief Executive company
Officer, National
City Corporation
Director, National Bank
City Bank, Northeast
Director, Bank
National City
Bank of Dayton
Director, Bank
National City
Bank, Northwest
Director, National Bank
City Bank of
Indiana
Director, National Bank
City Bank
Director, National Bank
City Bank of
Kentucky
Officer and Tractor sales
Director, Hudson
Tractor Sales,
Inc.
Director, Student Loan
Marketing Association
Vincent A. DiGirolamo Director Vice Chairman, Bank holding
National City company
Corporation
Daniel E. Evans Director Chairman, Food proc-
Bob Evans Farms, essing
Inc. wholesale &
retail
Director, National Bank
City Corporation holding company
</TABLE>
C-22
<PAGE> 103
<TABLE>
<CAPTION>
Position Other
with National Business Type of
Name City Columbus Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
Thomas J. Fitzpatrick Director Chairman and General
Chief Executive contractor
Officer, Elford,
Inc.
James H. Gilmour Director Chairman, Credit card
National City Card company
Services
Gary A. Glaser Director, Executive Vice Bank holding
President President, company
and Chief National City
Executive Officer Corporation
Director, Bank
National City
Bank, Dayton
Arthur D. Herrmann Director Retired Chairman, Bank
National City Bank
of Columbus
William G. Kelley Director Chairman and Retail
Chief Executive,
Officer, Consoli-
dated Stores Corp.
James H. Miller Director Retired, Tire manu-
Gencorp. Inc. facturer
J. Frederick Reid Director Retired Chairman, Insurance
Grange Insurance
Companies
Carol L. Scott Director Retired, Mid- Governmental
western Regional agency
Neighborhood
Reinvestment Corp.
Dr. K. Wayne Smith Director President and Computerized
Chief Executive library
Officer, OCLC
Online Computer
Library Center, Inc.
William W. Wilkins Director President and Chief Health care
Executive Officer,
U.S. Health
Corporation
Dorothy M. Horvath Executive Vice None -
President,
Credit
Administration
</TABLE>
C-23
<PAGE> 104
<TABLE>
<CAPTION>
Position Other
with National Business Type of
Name City Columbus Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
Kelly E. Law Senior Vice None -
President,
Human Resources
Division
Stephen B. McLane Executive Vice None -
President,
Corporate Banking
Richard A. Ray Executive Vice None -
President,
Private Client
Group
Gregory L. Tunis Executive Vice None -
President,
Retail Banking
</TABLE>
(c) Investment Adviser: National City Bank, Kentucky
("National City Kentucky")
National City Kentucky, a member of the $32 billion National
City Corporation holding company, was chartered in 1863 and is the oldest
national bank in the South. National City Kentucky has a long history of
innovative financial services to its clients, including being the first to use
discretionary agency accounts for managing individuals' funds. In addition, it
owned the rights to the name "Master Charge" and its affiliate, National City
Processing Company (one of the largest item processing companies in the world).
The address of National City Kentucky and its affiliates is Box 36000,
Louisville, Kentucky 40233. On July 29, 1988, First Kentucky National
Corporation, which owned all of the stock of National City Kentucky, merged into
a wholly-owned subsidiary of National City Corporation.
To the knowledge of Registrant, none of the directors or
officers of National City Kentucky, except those set forth below, is or has been
at any time during the past two calendar years engaged in any other business,
profession, vocation or employment of a substantial nature, except that certain
directors and officers of National City Kentucky also hold positions with
National City Corporation or its subsidiaries. Set forth below are the names and
principal business of the directors and certain of the senior executive officers
of National City Kentucky who are engaged in any other business, profession,
vocation, or employment of a substantial nature.
C-24
<PAGE> 105
NATIONAL CITY KENTUCKY
<TABLE>
<CAPTION>
Position Other
with National Business Type of
Name City Kentucky Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
James R. Bell III Director, Executive Vice Bank holding
President and President, National company
Chief Executive City Corporation
Officer
Morton Boyd Director None
Timothy C. Brown Director Chairman, Manufacturer
President and of lighting and
Chief Executive compressor and
Officer, Thomas vacuum pumps
Industries, Inc.
Robert E. Champagne Director Chairman, Paint and
Courtaulds industrial
United States, Inc. coatings
manufacturer
David A. Daberko Director Chairman and Chief Bank holding
Executive Officer, company
National City
Corporation
Director, Bank
National City
Bank of Columbus
Director, Bank
National City
Bank, Northeast
Director, Bank
National City
Bank of Dayton
Director, Bank
National City
Bank, Northwest
Director, Bank
National City
Bank of Indiana
Director, Bank
National City
Bank
Officer and Tractor sales
Director, Hudson
Tractor Sales,
Inc.
Director,
Student Loan
Marketing Association
</TABLE>
C-25
<PAGE> 106
<TABLE>
<CAPTION>
Position Other
with National Business Type of
Name City Kentucky Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
Robert R. Dawson, Jr. Director Partner, R.R. Bridge
Dawson Bridge and road
Company construction
Margaret H. Greene Director Vice President Telecommunications
and General
Counsel, BellSouth
Telecommunications
Leonard V. Hardin Director and None
Chairman of
the Board
R. Larry Jones Director Executive Vice Plastic
President, Jones manufacturer
Plastic and
Engineering
Corporation
George N. King, Sr. Director President, Maintenance
King's Management
Group, Inc.
W. Bruce Lunsford Director Chairman, Health service
President & Chief
Executive Officer,
Vencor Incorporated
Carl F. Pollard Director Hermitage Farm Commercial
thoroughbred
breeding
farm
James L. Rose Director and Former Chairman, Bank holding
Chairman, President and Chief company
Southeast Area Executive Officer,
United Bancorp of
Kentucky, Inc.
President and Real estate
Director, TSR
Investments, Inc.
Director, Tri-State Real estate
Realty, Inc.
Limited Partner, Real estate
Lexington Financial
Center
John H. Schnatter Director Chairman and Food industry
Chief Executive
Officer, Papa
John's
International, Inc.
</TABLE>
C-26
<PAGE> 107
<TABLE>
<CAPTION>
Position Other
with National Business Type of
Name City Kentucky Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
Dr. John W. Shumaker Director President, Education
University of
Louisville
William M. Street Director Vice Chairman, Consumer products
Brown-Forman
Corporation
James E. Barber President, None
Bowling Green
Area
William I. Executive Vice None
Cornett, Jr. President,
Corporate Banking
Roger M. Dalton President, None
Lexington Area
Robert E. Hawkins Executive Vice None
President,
Credit Admin-
istration
Harvey E. Hensley President, None
Southeast Area
David E. Jones President, None
Ashland Area
Larry R. Mayfield President, None
Owensboro Area
Donna M. Paccioni Executive None
Vice President,
Retail Banking
Charles R. Stoess President, None
Crestwood Area
Lawrence A. Warner Executive None
Vice President,
Trust
</TABLE>
(d) Investment Adviser: National City Bank of Indiana
("National City Indiana")
On May 2, 1992, National City Corporation acquired National
City Indiana (formerly, Merchants National Bank and Trust Company, chartered in
1865).
To the knowledge of Registrant, none of the directors or
officers of National City Indiana, except those set forth below, is or has been
at any time during the past two calendar
C-27
<PAGE> 108
years engaged in any other business, profession, vocation or employment of a
substantial nature, except that certain directors and officers of National City
Indiana also hold positions with National City Corporation or its subsidiaries.
Set forth below are the names and principal business of the directors and
certain of the senior executive officers of National City Indiana who are
engaged in any other business, profession, vocation, or employment of a
substantial nature.
NATIONAL CITY, INDIANA
<TABLE>
<CAPTION>
Position Other
with National Business Type of
Name City Indiana Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
Eleanor F. Bookwalter Director Member, Finance Historical
Committee, Historic landmarks
Landmarks, Indiana
Member, Indiana
State Office
Building Commission
William E. Corley Director President, Community Hospital
Hospitals of Indiana,
Inc.
President, Community Healthcare
Health Services, Inc.
President, Voluntary Healthcare
Enterprises, Inc.
President, Indianapolis Physician
Medical Management, recruitment
Inc.
President, Healthcare
Affiliated Hospitals
Heart Institute of
Indiana, Inc.
Board Member, HMO
ProHealth Network,
President
David A. Daberko Director Chairman and Chief Bank holding
Executive Officer, company
National City
Corporation
Director, Bank
National City
Bank of Columbus
Director, Bank
National City
Bank, Northeast
</TABLE>
C-28
<PAGE> 109
<TABLE>
<CAPTION>
Position Other
with National Business Type of
Name City Indiana Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
Director, Bank
National City
Bank of Dayton
Director, Bank
National City
Bank, Northwest
Director, National City Bank
Bank
Director, National Bank
City Bank of Kentucky
Officer and Tractor sales
Director, Hudson
Tractor Sales,
Inc.
Director, Student Loan
Marketing Association
Vincent A. DiGirolamo Director Vice Chairman, Bank holding
National City company
Corporation
Lawrence A. Ferger Director Director, President Utility
and Chief Executive
Officer, Indiana Gas
Company, Inc.
Director and President, Non-utility
IEI Investments Inc holding co.
Director, IGC Energy Non-utility
Inc. investments
Director and President, Utility
Richmond Gas Corp.
Director, Terre Utility
Haute Gas Corp.
Director and President, Real estate
Energy Realty, Inc. development
Otto N. Frenzel III Director Director, Indianapolis Utility
Power & Light Co.
Director, IPALCO Utility
Enterprises holding
company
Director, Indianapolis Utility
Water Company
</TABLE>
C-29
<PAGE> 110
<TABLE>
<CAPTION>
Position Other
with National Business Type of
Name City Indiana Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
Director, IWC Utility
Resources holding
company
Director, Indiana Utility
Gas Company
Director, Indiana Utility
Energy, Inc. holding
company
Director, American Insurance
United Life Insurance
Co.
Director, Baldwin & Insurance
Lyons, Inc.
Director, Indianapolis
Ballet
Director, Indianapolis Art museum
Museum of Art
Director, Indianapolis Non-profit
Humane Society organization
Chairman, Riley
Memorial Association
Inc.
Edwin J. Goss Director Director, American Insurance
States Insurance Co.
Director, American Insurance
Economy Insurance Co.
Director, American Insurance
States Preferred
Insurance Co.
Director, American Insurance
States Insurance
Company of Texas
Director, American Insurance
States Life
Insurance Co.
Director, IPALCO Utility
Enterprises, Inc. holding
co.
Director, Indianapolis Utility
Power & Light Co.
J. Christopher Director, Director, Greater
</TABLE>
C-30
<PAGE> 111
<TABLE>
<CAPTION>
Position Other
with National Business Type of
Name City Indiana Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
Graffeo President Indianapolis Progress
and Chief Committee
Executive
Officer
Director, Corporate
Community Council
Director, Indiana
Community Business
Credit Corp.
Director, Community
Hospital Foundation
Board
Director, Indianapolis Art museum
Museum of Art
Director, Indiana
Repertory Theater
John A. Hillenbrand II Director Vice-Chairman of Manufacturing
Board, Pri-Pak Inc.
Director, Physicians
Practices Management
Director, PSI Energy Utility
Chairman of Board,
Able Body Corp.
Director, Manufacturing
Hillenbrand
Industries, Inc.
President, Director, Investment
and Chief Executive company
Officer ,Glynnadam, Inc.
Chairman of Board, Manufacturing
Nambe Mills, Inc.
Director, Southern Resort
Cross Club
Don E. Marsh Director President, Chief Retail
Executive Officer, grocery
and Chairman, Marsh
Supermarkets, Inc.
Director, Indiana Utility
Energy, Inc.
</TABLE>
C-31
<PAGE> 112
<TABLE>
<CAPTION>
Position Other
with National Business Type of
Name City Indiana Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
James D. Massey Director Director, Conseco Insurance
Capital Partners
Insurance, Inc.
James T. Morris Director Director, American Insurance
United Life Insurance
Co.
Director, MSA Realty Real estate
Chairman, Chief Utility
Executive Officer and holding
Director, IWC co.
Resources
Chairman, Chief Utility
Executive Officer and
Director, Indianapolis
Water Company
John M. Mutz Director Director, PSI Utility
Resources, Inc. holding
co.
Director, PSI Utility
Argentina, Inc.
President, PSI Utility
Energy, Inc.
Director, Indianapolis Chamber of
Chamber of Commerce commerce
Director, Integrated Research and
Biotechnology Corp. development
Director, T. M. Venture
Englehart Corp. capital
Director, Security Lock manufac-
Group, Inc. turing and
security services
Director, CCP Insurance
Insurance, Inc. holding company
Director, ADESA Auto auction
Corp.
Director, PSI Utility
Resources, Inc. holding
co.
Stanley K. Paulsen Director Partner, Edinburgh Shopping
Enterprises center
</TABLE>
C-32
<PAGE> 113
<TABLE>
<CAPTION>
Position Other
with National Business Type of
Name City Indiana Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
Partner, Restaurant Real
Realty Co. estate
Partner, S & P Investments
Enterprises
President and Chief Leasing
Executive Officer,
Circle Business
Credit
Director, T. M.
Englehart Co.
Fred A. Poole Director General Manager, Airline company
United Airlines
Indianapolis
N. Clay Robbins Director President, Charitable
Lilly Endowment, Inc. foundation
Dr. Gene E. Sease Director Chairman, Sease, Public
Gerig & Associates relations
Director, Indianapolis Insurance
Life Insurance Co.
Director, Indiana Trains/Rail
Hi-Rail Corp.
Director, Marine
Star, Inc.
Director, Indiana Chamber
Chamber of Commerce of commerce
Director, Chamber
Indianapolis of commerce
Chamber of Commerce
Director, Commission Building
on Downtown commission
Director, Greater
Indianapolis Progress
Committee
Stephen A. Stitle Chairman Director, Indianapolis
of the Board Chamber of Commerce
Director, Indiana
University Foundation
Director, 400 Festival
Director, Indianapolis
Festival, Inc.
</TABLE>
C-33
<PAGE> 114
<TABLE>
<CAPTION>
Position Other
with National Business Type of
Name City Indiana Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
Director, Indianapolis
Downtown, Inc.
Director, United Way of
Central Indiana
Director, Center for
Leadership Development
Donald W. Tanselle Director Chairman, MSA Realty Real estate
Inc.
Chairman, Indiana State fair
Fair Commission
Partner, Washington Real estate
Square Associates
Eiteljorg Museum Museum
Childrens Museum Museum
Methodist Hospital Hospital
Partner, L. H. Chaney
Associates
Director, Pooled
Certificates Inc.
Randolph P. Wilson Director None
Michael C. Rechin Executive Vice None
President,
Corporate
Banking
Administration
Janice L. Faherty Executive Vice None
President,
Statewide Bank
Administration
Glenn R. Knific Executive Vice None
President, Credit
Administration
William H. Olds, Jr. Executive Vice None
President, Trust
Administration
John V. White Executive Vice None
President, Retail
Administration
</TABLE>
C-34
<PAGE> 115
(e) Investment Adviser: National Asset Management Corporation
("National Asset Management")
To the knowledge of Registrant, none of the directors or
officers of National Asset Management, except those set forth below, is or has
been at any time during the past two calendar years engaged in any other
business, profession, vocation or employment of a substantial nature, except
that certain directors and officers of National Asset Management also hold
positions with National City Corporation or its subsidiaries. Set forth below
are the names and principal business of the directors and certain of the senior
executive officers of National Asset Management who are engaged in any other
business, profession, vocation, or employment of a substantial nature.
NATIONAL ASSET MANAGEMENT
<TABLE>
<CAPTION>
Position with Other
National Asset Business Type of
Name Management Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
James R. Bell, III Director Director, President Bank
and Chief
Executive Officer,
National City Bank of
Kentucky
Executive Vice Bank holding
President, company
National City
Corporation
William F. Director, None
Chandler, Jr. Managing Director
and Principal
Leonard V. Hardin Director Director and Bank
Chairman of the
Board, National City
Bank of Kentucky
William R. Robertson Director, President, Bank holding
National City company
Corporation
Director, Chairman of Bank
Trust committee, Member
of Executive committee,
National City Bank
Harold B. Todd, Jr. Director Executive Vice Presi- Bank holding
dent, National City company
Corporation
Executive Vice Presi- Bank
dent, Institutional
Trust and Asset Manage-
</TABLE>
C-35
<PAGE> 116
<TABLE>
<CAPTION>
Position with Other
National Asset Business Type of
Name Management Connections Business
- ---- ------------- ----------- ---------
<S> <C> <C> <C>
ment, National City Bank
Lawrence A. Warner Director Executive Vice Bank
President, National
City Bank of Kentucky
Carl W. Hafele Director, None
Managing Director
and Principal
Michael C. Heyman Principal None
David B. Hiller Managing None
Director
and Principal
Stephen G. Mullins Principal None
Larry J. Walker Principal None
John W. Ferreby Principal None
Catherine R. Senior None
Stodghill Investment Manager
Erik N. Evans Investment None
Manager
Brett A. Bell Investment None
Manager
Randall T. Zipfel Manager, None
Information Systems
</TABLE>
(f) Sub-Investment Adviser: Weiss, Peck & Greer, LLC
Weiss, Peck & Greer, LLC performs sub-investment advisory
services for the Registrant's Pennsylvania Tax Exempt and Pennsylvania Municipal
Funds.
To the knowledge of Registrant, none of the principals of
Weiss, Peck & Greer, except as set forth below, is or has been at any time
during the past two calendar years engaged in any other business, profession,
vocation or employment of a substantial nature. Set forth below are the names
and principal businesses of the principals of Weiss, Peck & Greer, if any, who
are engaged in any other business, profession, vocation or employment of a
substantial nature.
WEISS, PECK & GREER, LLC
<TABLE>
<CAPTION>
Position with
Weiss, Peck & Other Business Type of
Name Greer, LLC Connections Business
- ---- ------------- -------------- --------
<S> <C> <C> <C>
</TABLE>
C-36
<PAGE> 117
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Samuel H. Armacost Principal Director, Chevron; Oil and gas;
Director, Failure scientific
Group; consulting;
Director, Scios technology
Nova
Annette Bianchi Principal
Gill Cogan Principal Director, Harmonic Technology
Lightwaves;
Director, Micro
Linear; Director,
Number Nine Visual
Technology;
Director, P-COM;
Director,
Electronics for
Imaging; Director,
Integrated
Packaging Assembly
Corp. Director,
Visigenic Software
Ellen M. Feeney Principal Director,
Heartstream
Janet Fiorenza Principal None
Margery Z. Flicker Principal None
Anthony J. Giammalva Principal None
Mitchell E. Cantor Principal None
Daniel Cardell Principal None
Philip Greer* Principal Director, Network Technology;
Computing Devices; package
Director, Federal delivery;
Express; Director, wine
Robert Mondavi
Ronald M. Hoffner* Principal None
Steven N. Hutchinson Principal Director, Chyron Technology;
Corporation; Toys
Director, Empire
of Carolina
James W. Kiley Principal None
A. Roy Knutsen Principal None
Alan D. Kohn Principal None
Wesley W. Lang, Jr.* Principal Director, Chyron Technology;
Corporation; Manufacturer
Director, Durakon
Industries
Steven S. Lear Principal None
Gary R. Lisk Principal None
</TABLE>
C-37
<PAGE> 118
<TABLE>
<S> <C> <C>
Marvin B. Markowitz Principal None
Howard G. Mattson Principal None
Kathleen A. McCarragher Principal None
Bradford R. Peck Principal None
Peter B. Pfister Principal Director,
Empire/Toys
of Carolina
Richard S. Pollack Principal None
Steven Pomerantz Principal None
Lee McGehee Porter, III Principal None
Jay C. Nadel Principal None
Stuart W. Porter Principal None
Francis H. Powers Principal None
R. Scott Richter Principal None
Nelson Schaenen, Jr. Principal None
James S. Schainuck Principal None
Gary E. Scheier Principal None
David J. Schilder Principal None
Arthur L. Schwarz Principal None
Adam L. Starr Principal None
Melville Straus* Principal None
Kenneth Jay Tarr Principal None
Bernard J. Tew Principal None
Daniel S. Vandivort Principal None
Roger J. Weiss* Principal None
Stephen H. Weiss** Principal None
Hugh S. Zurkuhlen Principal None
Craig Whiting Principal None
Laurence Zuriff Principal None
<FN>
* Member - Executive Committee
** Chairman - Executive Committee
</TABLE>
(g) Sub-Investment Adviser: Wellington Management Corporation,
LLP ("Wellington").
C-38
<PAGE> 119
Wellington performs sub-investment advisory services for the
Registrant's Small Cap Growth Fund.
Wellington is an investment adviser registered under the
Investment Advisers Act of 1940 (the "Advisers Act").
The list required by this Item 28 of the partners of
Wellington, together with information as to any business profession, vocation or
employment of substantial nature engaged in by such partners during the past two
years, is incorporated herein by references to Schedule A and D of Form ADV
filed by Wellington pursuant to the Advisers Act (SEC File No. 801-15908).
Item 29. Principal Underwriter
---------------------
(a) Furnish the name of each investment company
(other than the Registrant) for which each principal
underwriter currently distributing securities of the
Registrant also acts as a principal underwriter, distributor
or investment advisor.
Registrant's distributor, SEI Investments
Distribution Co. (formerly SEI Financial Services
Company) ("SIDC"), acts as distributor for:
SEI Daily Income Trust July 14, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI International Trust August 30, 1988
Stepstone Funds January 30, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
CoreFunds, Inc. October 30, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
Boston 1784 Funds(R) June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Marquis Funds(R) August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Monitor Funds January 11, 1996
FMB Funds, Inc. March 1, 1996
SEI Asset Allocation Trust April 1, 1996
TIP Funds April 30, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
High Mark Funds February 15, 1997
Expedition Funds June 9, 1997
C-39
<PAGE> 120
SIDC provides numerous financial services to investment
managers, pension plan sponsors, and bank trust departments.
These services include portfolio evaluation, performance
measurement and consulting services ("Funds Evaluation") and
automated execution, clearing and settlement of securities
transactions ("MarketLink").
(b) Furnish the information required by the following
table with respect to each director, officer or partner of
each principal underwriter named in the answer to Item 21 of
Part B. Unless otherwise noted, the principal business address
of each director or officer is Oaks, PA 19456.
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ------------------- ---------------------
Alfred P. West, Jr. Director, Chairman & --
Chief Executive Officer
Henry H. Greer Director, President & --
Chief Operating Officer
Carmen V. Romeo Director, Executive --
Vice President &
President-Investment
Advisory Group
Gilbert L. Beebower Executive Vice --
President
Richard B. Lieb Executive Vice --
President, President-
Investment Services
Division
Dennis J. McGonigle Executive Vice --
President
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchison Senior Vice President --
David G. Lee Senior Vice President --
Jack May Senior Vice President --
A. Keith McDowell Senior Vice President --
Hartland J. McKeon Senior Vice President --
Barbara J. Moore Senior Vice President --
Kevin P. Robins Senior Vice President, --
General Counsel &
Secretary
Robert Wagner Senior Vice President --
Patrick K. Walsh Senior Vice President --
Robert Aller Vice President --
Marc H. Cahn Vice President & --
Assistant Secretary
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & --
Assistant Secretary
Robert Crudup Vice President & --
Managing Director
Barbara Doyne Vice President --
C-40
<PAGE> 121
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ------------------- ---------------------
Jeff Drennen Vice President --
Vic Galef Vice President & --
Managing Director
Kathy Heillig Vice President --
Michael Kantor Vice President --
Samuel King Vice President --
Kim Kirk Vice President & --
Managing Director
Donald H. Korytowski Vice President --
John Krzeminski Vice President & --
Managing Director
Carolyn McLaurin Vice President & --
Managing Director
W. Kelso Morrill Vice President --
Barbara A. Nugent Vice President & --
Assistant Secretary
Sandra K. Orlow Vice President & --
Assistant Secretary
Donald Pepin Vice President & --
Managing Director
Kim Rainey Vice President --
Mark Samuels Vice President & --
Managing Director
Steven Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & --
Assistant Secretary
Wayne M. Withrow Vice President & --
Managing Director
James Dougherty Director of Brokerage --
Services
Item 30. Location of Accounts and Records
--------------------------------
(1) National City Bank, 1900 East Ninth Street, Cleveland,
Ohio, 44114-3484, National City Bank, Columbus, 155 East Broad
Street, Columbus, Ohio 43251, and National City Bank, Trust
Operations, 4100 West 150th Street, Cleveland, Ohio 44135,
(records relating to their functions as investment advisers
and custodian); National City Bank, Kentucky, 101 South 5th
Street, Louisville, Kentucky 40202; National City Bank,
Indiana, 101 West Washington Street, Suite 645, Indianapolis,
IN 46255; and National Asset Management Corporation, 101 South
Fifth Street, Louisville, KY 40202.
(2) SEI Financial Services Company, 1 Freedom Valley Road,
Oaks, Pennsylvania 19456 (records relating to its function as
distributor).
C-41
<PAGE> 122
(3) 440 Financial Distributors, Inc., 290 Donald Lynch
Boulevard, Marlboro, Massachusetts 01752 (records relating to
its former functions as distributor).
(4) Allmerica Investments, Inc., 440 Lincoln Street,
Worcester, Massachusetts 01653 (records relating to its former
functions as distributor).
(5) Drinker Biddle & Reath LLP, 1345 Chestnut Street,
Philadelphia, Pennsylvania 19107-3496 (Registrant's
Declaration of Trust, Code of Regulations, and Minute Books).
(6) PNC Bank, National Association, 17th and Chestnut Streets,
Philadelphia, Pennsylvania 19103 (records relating to its
former functions as custodian).
(7) PFPC Inc., 400 Bellevue Parkway, Wilmington, Delaware
19809 (records relating to its functions as accounting agent
and administrator).
(8) State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110 (records relating
to its function as transfer agent).
(9) First Data Investor Services Group, Inc., 4400 Computer
Drive, Westboro, Massachusetts 02109 (records relating to its
former functions as transfer agent).
(10) First Data Investor Services Group (formerly The
Shareholder Services Group, Inc. d/b/a 440 Financial) 4400
Computer Drive, Westboro, Massachusetts 02109 (records
relating to its former functions as transfer agent).
(11) Weiss, Peck & Greer, LLC, One New York Plaza, New York,
New York 10004 (records relating its functions
as sub-adviser).
(12) Wellington Management Company, LLP, 75 State Street,
Boston, Massachusetts 02109 (records relating to its
functions as sub-adviser).
Item 31. Management Services
-------------------
Inapplicable.
Item 32. Undertakings
------------
(a) Registrant undertakes to furnish each person to whom a
prospectus is delivered a copy of the Registrant's most recent annual report to
shareholders, upon request and without charge.
C-42
<PAGE> 123
(b) Registrant undertakes to file a post-effective amendment,
using unaudited financial statements for the Registrant's Foreign Equity, Equity
Index, Core Equity and Real Return Advantage Funds which need not be certified,
within four to six months from the effective date of Post-Effective Amendment
No. 33.
(c) Registrant undertakes to file a post-effective amendment,
using unaudited financial statements for the Registrant's Small Cap Growth Fund
which need not be certified, within four to six months from the effective date
of this Post-Effective Amendment No. 35.
C-43
<PAGE> 124
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, Registrant has duly caused
this Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Philadelphia, Commonwealth
of Pennsylvania, on the 21st day of July, 1997.
ARMADA FUNDS
Registrant
/s/W. Bruce McConnel, III
-------------------------
Secretary
W. Bruce McConnel, III
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 35 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
*Leigh Carter Trustee July 21, 1997
- ---------------------------
Leigh Carter
*John F. Durkott Trustee July 21, 1997
- ---------------------------
John F. Durkott
*Richard W. Furst Trustee July 21, 1997
- ---------------------------
Richard W. Furst
*Gerald Gherlein Trustee July 21, 1997
- ---------------------------
Gerald Gherlein
*Herbert Martens President July 21, 1997
- ---------------------------
Herbert Martens
*Robert D. Neary Trustee and Chairman July 21, 1997
- --------------------------- of the Board
Robert D. Neary
*J. William Pullen Trustee July 21, 1997
- ---------------------------
J. William Pullen
*Richard B. Tullis Trustee July 21, 1997
- ---------------------------
Richard B. Tullis
*By: /s/ W. Bruce McConnel, III
- ----------------------------------
W. Bruce McConnel, III
Attorney-in-Fact
C-44
<PAGE> 125
ARMADA FUNDS
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Robert
D. Neary, hereby constitutes and appoints W. Bruce McConnel, III, his true and
lawful attorney, to execute in his name, place, and stead, in his capacity as
Trustee or officer, or both, of Armada Funds, the Registration Statement and any
amendments thereto and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission; and
said attorney shall have full power and authority to do and perform in his name
and on his behalf, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises, as fully and to all intents and purposes
as he might or could do in person, said acts of said attorney being hereby
ratified and approved.
DATED: April 11, 1997
/s/ Robert D. Neary
- ------------------------------
Robert D. Neary
<PAGE> 126
ARMADA FUNDS
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Leigh
Carter, hereby constitutes and appoints Robert D. Neary and W. Bruce McConnel,
III, his true and lawful attorneys, to execute in his name, place, and stead, in
his capacity as Trustee or officer, or both, of Armada Funds, the Registration
Statement and any amendments thereto and all instruments necessary or incidental
in connection therewith, and to file the same with the Securities and Exchange
Commission; and said attorneys shall have full power and authority to do and
perform in his name and on his behalf, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises, as fully and to
all intents and purposes as he might or could do in person, said acts of said
attorneys being hereby ratified and approved.
DATED: April 11, 1997
/s/ Leigh Carter
- ---------------------------------
Leigh Carter
<PAGE> 127
ARMADA FUNDS
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, John F.
Durkott, hereby constitutes and appoints Robert D. Neary and W. Bruce McConnel,
III, his true and lawful attorneys, to execute in his name, place, and stead, in
his capacity as Trustee or officer, or both, of Armada Funds, the Registration
Statement and any amendments thereto and all instruments necessary or incidental
in connection therewith, and to file the same with the Securities and Exchange
Commission; and said attorneys shall have full power and authority to do and
perform in his name and on his behalf, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises, as fully and to
all intents and purposes as he might or could do in person, said acts of said
attorneys being hereby ratified and approved.
DATED: April 11, 1997
/s/ John F. Durkott
- ---------------------------------
John F. Durkott
<PAGE> 128
ARMADA FUNDS
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Richard
W. Furst, hereby constitutes and appoints Robert D. Neary and W. Bruce McConnel,
III, his true and lawful attorneys, to execute in his name, place, and stead, in
his capacity as Trustee or officer, or both, of Armada Funds, the Registration
Statement and any amendments thereto and all instruments necessary or incidental
in connection therewith, and to file the same with the Securities and Exchange
Commission; and said attorneys shall have full power and authority to do and
perform in his name and on his behalf, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises, as fully and to
all intents and purposes as he might or could do in person, said acts of said
attorneys being hereby ratified and approved.
DATED: April 11, 1997
/s/ Richard W. Furst
- ---------------------------------
Richard W. Furst
<PAGE> 129
ARMADA FUNDS
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned,
Richard B. Tullis, hereby constitutes and appoints Robert D. Neary and W. Bruce
McConnel, III, his true and lawful attorneys, to execute in his name, place, and
stead, in his capacity as Trustee or officer, or both, of Armada Funds, the
Registration Statement and any amendments thereto and all instruments necessary
or incidental in connection therewith, and to file the same with the Securities
and Exchange Commission; and said attorneys shall have full power and authority
to do and perform in his name and on his behalf, in any and all capacities,
every act whatsoever requisite or necessary to be done in the premises, as fully
and to all intents and purposes as he might or could do in person, said acts of
said attorneys being hereby ratified and approved.
DATED: April 11, 1997
/s/ Richard B. Tullis
- ---------------------------------
Richard B. Tullis
<PAGE> 130
ARMADA FUNDS
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, J.
William Pullen, hereby constitutes and appoints Robert D. Neary and W. Bruce
McConnel, III, his true and lawful attorneys, to execute in his name, place, and
stead, in his capacity as Trustee or officer, or both, of Armada Funds, the
Registration Statement and any amendments thereto and all instruments necessary
or incidental in connection therewith, and to file the same with the Securities
and Exchange Commission; and said attorneys shall have full power and authority
to do and perform in his name and on his behalf, in any and all capacities,
every act whatsoever requisite or necessary to be done in the premises, as fully
and to all intents and purposes as he might or could do in person, said acts of
said attorneys being hereby ratified and approved.
DATED: April 11, 1997
/s/ J. William Pullen
- ---------------------------------
J. William Pullen
<PAGE> 131
ARMADA FUNDS
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Herbert
R. Martens, hereby constitutes and appoints Robert D. Neary and W. Bruce
McConnel, III, his true and lawful attorneys, to execute in his name, place, and
stead, in his capacity as Trustee or officer, or both, of Armada Funds, the
Registration Statement and any amendments thereto and all instruments necessary
or incidental in connection therewith, and to file the same with the Securities
and Exchange Commission; and said attorneys shall have full power and authority
to do and perform in his name and on his behalf, in any and all capacities,
every act whatsoever requisite or necessary to be done in the premises, as fully
and to all intents and purposes as he might or could do in person, said acts of
said attorneys being hereby ratified and approved.
DATED: July 17, 1997
/s/ Herbert R. Martens
- ---------------------------------
Herbert R. Martens
<PAGE> 132
ARMADA FUNDS
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Gerald
L. Gherlein, hereby constitutes and appoints Robert D. Neary and W. Bruce
McConnel, III, his true and lawful attorneys, to execute in his name, place, and
stead, in his capacity as Trustee or officer, or both, of Armada Funds, the
Registration Statement and any amendments thereto and all instruments necessary
or incidental in connection therewith, and to file the same with the Securities
and Exchange Commission; and said attorneys shall have full power and authority
to do and perform in his name and on his behalf, in any and all capacities,
every act whatsoever requisite or necessary to be done in the premises, as fully
and to all intents and purposes as he might or could do in person, said acts of
said attorneys being hereby ratified and approved.
DATED: July 17, 1997
/s/ Gerald L. Gherlein
- ---------------------------------
Gerald L. Gherlein
<PAGE> 133
Armada Funds
EXHIBIT INDEX
-------------
EXHIBIT # EXHIBIT
1 (h) Certificate of Classification of
Shares with respect to the Foreign
Equity, Equity Index and Core Equity
Funds.
(i) Certificate of Classification of
Shares with respect to the Small Cap
Growth and Real Return Advantage
Funds.
2 (b) Amendment No. 2 to Code of Regulations.
5 (l) Form of Sub-Advisory Agreement between
National City Bank and Wellington
Management Company, LLP with respect
to the Small Cap Growth Fund.
11 (a) Consent of Drinker Biddle & Reath LLP.
(b) Consent of Ernst & Young LLP.
<PAGE> 1
EXHIBIT 1(h)
ARMADA FUNDS
(A MASSACHUSETTS BUSINESS TRUST)
CERTIFICATE OF CLASSIFICATION OF SHARES
I, W. Bruce McConnel, III, do hereby certify as
follows:
(1) That I am the duly elected Secretary of Armada Funds
("Armada");
(2) That in such capacity I have examined the records of
actions taken by the Board of Trustees of Armada;
(3) That the Board of Trustees of Armada duly adopted the
following resolutions at the Regular Meeting of the Board of Trustees held on
February 10, 1997:
CREATION OF NEW SERIES OF SHARES.
- ---------------------------------
1. CREATION OF CLASS X AND CLASS X-SPECIAL SERIES 1 SHARES.
--------------------------------------------------------
RESOLVED, that pursuant to Section 5.1 of Armada's Declaration
of Trust, an unlimited number of authorized, unissued and unclassified
shares of beneficial interest in Armada (no par value) be, and hereby
are, classified into an additional class of shares designated as Class
X shares of beneficial interest;
FURTHER RESOLVED, that pursuant to Section 5.1 of the
Declaration of Trust of the Trust, an unlimited number of authorized,
unissued and unclassified shares of beneficial interest in Armada (no
par value) be, and hereby are, classified and designated as Class
X-Special Series 1 shares;
FURTHER RESOLVED, that all consideration received by Armada
for the issue or sale of Class X shares and Class X-Special Series 1
shares shall be invested and reinvested with the consideration received
by Armada for the issue and sale of all other shares of beneficial
interest in Armada now or hereafter designated as Class X shares of
beneficial interest (irrespective of whether said shares have been
designated as part of a series of said class and, if so designated as
part of a series, irrespective of the particular series designation),
together with all income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation
thereof, any funds or payments derived from any reinvestment
<PAGE> 2
of such proceeds in whatever form the same may be, and any general
assets of Armada allocated to Class X shares, Class X-Special Series 1
shares or such other shares by the Board of Trustees in accordance with
the Trust's Declaration of Trust, and each Class X share and Class
X-Special Series 1 share shall share equally with each such other share
in such consideration and other assets, income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any assets derived from any
reinvestment of such proceeds in whatever form;
FURTHER RESOLVED, that each Class X share and each Class
X-Special Series 1 share shall be charged in proportion to their
respective net asset values with each other share of beneficial
interest in Armada now or hereafter designated as a Class X share of
beneficial interest (irrespective of whether said share has been
designated as part of a series of said class and, if so designated as
part of a series, irrespective of the particular series designation)
with the expenses and liabilities of Armada in respect of Class X
shares, Class X-Special Series 1 shares or such other shares and in
respect of any general expenses and liabilities of Armada allocated to
Class X shares, Class X-Special Series 1 shares or such other shares by
the Board of Trustees in accordance with the Declaration of Trust,
except that to the extent permitted by rule or order of the Securities
and Exchange Commission and as may be from time to time determined by
the Board of Trustees:
a. only the Class X-Special Series 1 shares shall
bear: (i) the expenses and liabilities of
payments to institutions under any agreements
entered into by or on behalf of Armada which
provide for services by the institutions
exclusively for their customers who beneficially
own such shares; (ii) the expenses and liabilities
arising from transfer agency services that are
directly attributable to Class X-Special Series 1
shares; and (iii) such other expenses and
liabilities as the Board of Trustees may from time
to time determine are directly attributable to
such shares and which should therefore be borne
solely by Class X-Special Series 1 shares;
b. only the Class X shares shall bear: (i) the
expenses and liabilities arising from transfer
agency services that are directly attributable to
Class X shares; and (ii) such other expenses and
liabilities as the Board of Trustees may from time
to time determine are directly attributable to
<PAGE> 3
such shares and which should therefore be borne
solely by Class X shares;
c. no Class X-Special Series 1 shares shall bear the
expenses and liabilities described in subparagraph
(b) above; and
d. no Class X shares shall bear the expenses and
liabilities described in subparagraph (a) above.
FURTHER RESOLVED, that except as otherwise provided by these
resolutions, each Class X share and each Class X-Special Series 1
share shall have all the preferences, conversion and other rights,
voting powers, restrictions, limitations, qualifications and terms and
conditions of redemption as set forth in the Declaration of Trust and
shall also have the same preferences, conversion and other rights,
voting powers, restrictions, limitations, qualifications and terms and
conditions of redemption as each other share of beneficial interest in
Armada now or hereafter designated as a Class X share of beneficial
interest (irrespective of whether said share has been designated as
part of a series of said class and, if so designated as part of a
series, irrespective of the particular series designation), except to
the extent permitted by rule or order of the Securities and Exchange
Commission, on any matter that pertains to the agreements or expenses
and liabilities described in clause (a) of the immediately preceding
resolution (or to any plan or other document adopted by Armada relating
to said agreements, expenses or liabilities) and is submitted to a vote
of shareholders of Armada, only Class X-Special Series 1 shares shall
be entitled to vote, except that: (i) if said matter affects shares of
beneficial interest in Armada other than Class X-Special Series 1
shares, such other affected shares of beneficial interest in Armada
shall also be entitled to vote, and in such case Class X-Special Series
1 shares shall be voted in the aggregate together with such other
affected shares and not by class or series except where otherwise
required by law or permitted by the Board of Trustees of Armada; and
(ii) if said matter does not affect Class X-Special Series 1 shares,
said shares shall not be entitled to vote (except where otherwise
required by law or permitted by the Board of Trustees) even though the
matter is submitted to a vote of the holders of shares of beneficial
interest in Armada other than Class X-Special Series 1 shares.
<PAGE> 4
2. CREATION OF CLASS Y AND CLASS Y-SPECIAL SERIES 1 SHARES.
-------------------------------------------------------
RESOLVED, that pursuant to Section 5.1 of Armada's Declaration
of Trust, an unlimited number of authorized, unissued and unclassified
shares of beneficial interest in Armada (no par value) be, and hereby
are, classified into an additional class of shares designated as Class
Y shares of beneficial interest;
FURTHER RESOLVED, that pursuant to Section 5.1 of the
Declaration of Trust of the Trust, an unlimited number of authorized,
unissued and unclassified shares of beneficial interest in Armada (no
par value) be, and hereby are, classified and designated as Class
Y-Special Series 1 shares;
FURTHER RESOLVED, that all consideration received by Armada
for the issue or sale of Class Y shares and Class Y-Special Series 1
shares shall be invested and reinvested with the consideration received
by Armada for the issue and sale of all other shares of beneficial
interest in Armada now or hereafter designated as Class Y shares of
beneficial interest (irrespective of whether said shares have been
designated as part of a series of said class and, if so designated as
part of a series, irrespective of the particular series designation),
together with all income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation
thereof, any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, and any general assets of
Armada allocated to Class Y shares, Class Y-Special Series 1 shares or
such other shares by the Board of Trustees in accordance with the
Trust's Declaration of Trust, and each Class Y share and Class
Y-Special Series 1 share shall share equally with each such other share
in such consideration and other assets, income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any assets derived from any
reinvestment of such proceeds in whatever form;
FURTHER RESOLVED, that each Class Y share and each Class
Y-Special Series 1 share shall be charged in proportion to their
respective net asset values with each other share of beneficial
interest in Armada now or hereafter designated as a Class Y share of
beneficial interest (irrespective of whether said share has been
designated as part of a series of said class and, if so designated as
part of a series, irrespective of the particular series designation)
with the expenses and liabilities of Armada in respect of Class Y
shares, Class Y-
<PAGE> 5
Special Series 1 shares or such other shares and in respect of any
general expenses and liabilities of Armada allocated to Class Y shares,
Class Y-Special Series 1 shares or such other shares by the Board of
Trustees in accordance with the Trust's Declaration of Trust, except
that to the extent permitted by rule or order of the Securities and
Exchange Commission and as may be from time to time determined by the
Board of Trustees:
(a) only the Class Y-Special Series 1 shares shall
bear: (i) the expenses and liabilities of payments
to institutions under any agreements entered into
by or on behalf of Armada which provide for
services by the institutions exclusively for their
customers who beneficially own such shares; (ii)
the expenses and liabilities arising from transfer
agency services that are directly attributable to
Class Y-Special Series 1 shares; and (iii) such
other expenses and liabilities as the Board of
Trustees may from time to time determine are
directly attributable to such shares and which
should therefore be borne solely by Class Y-
Special Series 1 shares;
(b) only the Class Y shares shall bear: (i) the
expenses and liabilities arising from transfer
agency services that are directly attributable to
Class Y shares; and (ii) such other expenses and
liabilities as the Board of Trustees may from time
to time determine are directly attributable to
such shares and which should therefore be borne
solely by Class Y shares;
(c) no Class Y-Special Series 1 shares shall bear the
expenses and liabilities described in subparagraph
(b) immediately above; and
(d) no Class Y shares shall bear the expenses and
liabilities described in subparagraph (a) immedi-
ately above.
FURTHER RESOLVED, that except as otherwise provided by these
resolutions, each Class Y share and each Class Y-Special Series 1
share shall have all the preferences, conversion and other rights,
voting powers, restrictions, limitations, qualifications and terms and
conditions of redemption as set forth in the Declaration of Trust and
shall also have the same preferences, conversion and other rights,
voting powers, restrictions, limitations, qualifications and terms and
conditions of redemption as each other share of beneficial interest in
Armada now or hereafter designated as a Class Y share of beneficial
<PAGE> 6
interest (irrespective of whether said share has been designated as
part of a series of said class and, if so designated as part of a
series, irrespective of the particular series designation), except to
the extent permitted by rule or order of the Securities and Exchange
Commission, on any matter that pertains to the agreements or expenses
and liabilities described in clause (a) of the immediately preceding
resolution (or to any plan or other document adopted by Armada relating
to said agreements, expenses or liabilities) and is submitted to a vote
of shareholders of Armada, only Class Y-Special Series 1 shares shall
be entitled to vote, except that: (i) if said matter affects shares of
beneficial interest in Armada other than Class Y-Special Series 1
shares, such other affected shares of beneficial interest in Armada
shall also be entitled to vote, and in such case Class Y-Special Series
1 shares shall be voted in the aggregate together with such other
affected shares and not by class or series except where otherwise
required by law or permitted by the Board of Trustees of Armada; and
(ii) if said matter does not affect Class Y-Special Series 1 shares,
said shares shall not be entitled to vote (except where otherwise
required by law or permitted by the Board of Trustees) even though the
matter is submitted to a vote of the holders of shares of beneficial
interest in Armada other than Class Y-Special Series 1 shares.
IDENTIFICATION OF SHARES WITH FUNDS.
- ------------------------------------
RESOLVED, that Armada's classes or series of shares shall represent
interests in the investment fund of Armada as follows:
Class of Shares Investment Fund
--------------- ---------------
Class X and Small Cap Growth Fund
Class X-Special Series 1
Class Y and Real Return Advantage Fund
Class Y-Special Series 1
AUTHORIZATION OF ISSUANCE OF SHARES TO INVESTORS.
- -------------------------------------------------
RESOLVED, that the appropriate officers of Armada be, and each of
them hereby is, authorized, at any time after the effective date and
time of Post-Effective Amendment No. 32 to Armada's Registration
Statement relating to the Small Cap Growth and Real Return Advantage
Funds to issue and redeem from time to time Class X shares and Class
X-Special Series 1 shares representing interests in the Small Cap
Growth Fund, and Class Y shares and Class Y-Special Series 1
<PAGE> 7
shares representing interests in the Real Return Advantage Fund, in
accordance with the Registration Statement under the Securities Act of
1933, as the same may from time to time be amended, and the
requirements of the Trust's Declaration of Trust and applicable law,
and that such shares, when issued for the consideration described in
such amended Registration Statement, shall be validly issued, fully
paid and non-assessable by Armada.
IMPLEMENTATION OF RESOLUTIONS.
- ------------------------------
RESOLVED, that the officers of Armada be, and each of them
hereby is, authorized and empowered to execute, seal, and deliver any
and all documents, instruments, papers and writings, including but not
limited to, any instrument to be filed with the State Secretary of the
Commonwealth of Massachusetts or the Boston City Clerk, and to do any
and all other acts, including but not limited to, changing the
foregoing resolutions upon advice of Counsel prior to filing said any
and all documents, instruments, papers, and writings, in the name of
Armada and on its behalf, as may be necessary or desirable in
connection with or in furtherance of the foregoing resolutions, such
determination to be conclusively evidenced by said officers taking any
such actions.
<PAGE> 8
(4) That the foregoing resolutions remain in full force and
effect as of the date hereof.
/s/ W. Bruce McConnel, III
----------------------------
W. Bruce McConnel, III
Dated: June 18, 1997
Subscribed and sworn to before me this 18th day of June, 1997.
/s/ Georgeanna Griffith
- --------------------------------
Notary Public
My Commission Expires December 28, 1998
<PAGE> 1
EXHIBIT 1(i)
ARMADA FUNDS
(A MASSACHUSETTS BUSINESS TRUST)
CERTIFICATE OF CLASSIFICATION OF SHARES
I, Bruce McConnel, III, do hereby certify as follows:
(1) That I am the duly elected Secretary of Armada Funds
("Armada");
(2) That in such capacity I have examined the records of
actions taken by the Board of Trustees of Armada;
(3) That the Board of Trustees of Armada duly adopted the
following resolutions at the Regular Meeting of the Board of Trustees held on
August 30, 1996:
CREATION OF NEW SERIES OF SHARES.
- ---------------------------------
1. CREATION OF CLASS U AND CLASS U-SPECIAL SERIES 1 SHARES.
--------------------------------------------------------
RESOLVED, that pursuant to Section 5.1 of Armada's Declaration
of Trust, an unlimited number of authorized, unissued and unclassified
shares of beneficial interest in Armada (no par value) be, and hereby
are, classified into an additional class of shares designated as Class
U shares of beneficial interest;
FURTHER RESOLVED, that pursuant to Section 5.1 of the
Declaration of Trust of the Trust, an unlimited number of authorized,
unissued and unclassified shares of beneficial interest in Armada (no
par value) be, and hereby are, classified and designated as Class U-
Special Series 1 shares;
FURTHER RESOLVED, that all consideration received by Armada
for the issue or sale of Class U shares and Class U-Special Series 1
shares shall be invested and reinvested with the consideration received
by Armada for the issue and sale of all other shares of beneficial
interest in Armada now or hereafter designated as Class U shares of
beneficial interest (irrespective of whether said shares have been
designated as part of a series of said class and, if so designated as
part of a series, irrespective of the particular series designation),
together with all income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation
thereof, any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, and any general assets of
Armada allocated to Class U shares, Class U-Special Series 1 shares or
such other shares by the Board of Trustees in accordance with the
Trust's Declaration of Trust, and each Class U share and Class
U-Special Series 1 share shall share equally with each such other share
in such consideration and other assets, income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any assets derived from any
reinvestment of such proceeds in whatever form;
FURTHER RESOLVED, that each Class U share and each Class
U-Special Series 1 share shall be charged in proportion to their
respective net asset values with each other share
<PAGE> 2
of beneficial interest in Armada now or hereafter designated as a Class
U share of beneficial interest (irrespective of whether said share has
been designated as part of a series of said class and, if so designated
as part of a series, irrespective of the particular series designation)
with the expenses and liabilities of Armada in respect of Class U
shares, Class U-Special Series 1 shares or such other shares and in
respect of any general expenses and liabilities of Armada allocated to
Class U shares, Class U-Special Series 1 shares or such other shares by
the Board of Trustees in accordance with the Declaration of Trust,
except that to the extent permitted by rule or order of the Securities
and Exchange Commission and as may be from time to time determined by
the Board of Trustees:
(a) only the Class U-Special Series 1 shares shall bear:
(i) the expenses and liabilities of payments to
institutions under any agreements entered into by or
on behalf of Armada which provide for services by the
institutions exclusively for their customers who
beneficially own such shares; (ii) the expenses and
liabilities arising from transfer agency services
that are directly attributable to Class U-Special
Series 1 shares; and (iii) such other expenses and
liabilities as the Board of Trustees may from time to
time determine are directly attributable to such
shares and which should therefore be borne solely by
Class U-Special Series 1 shares;
(b) only the Class U shares shall bear: (i) the expenses
and liabilities arising from transfer agency services
that are directly attributable to Class U shares; and
(ii) such other expenses and liabilities as the Board
of Trustees may from time to time determine are
directly attributable to such shares and which should
therefore be borne solely by Class U shares;
(c) no Class U-Special Series 1 shares shall bear the
expenses and liabilities described in subparagraph
(b) above; and
(d) no Class U shares shall bear the expenses and
liabilities described in subparagraph (a) above.
FURTHER RESOLVED, that except as otherwise provided by these
resolutions, each Class U share and each Class U-Special Series 1 share
shall have all the preferences, conversion and other rights, voting
powers, restrictions, limitations, qualifications and terms and
conditions of redemption as set forth in the Declaration of Trust and
shall also have the same preferences, conversion and other rights,
voting powers, restrictions, limitations, qualifications and terms and
conditions of redemption as each other share of beneficial interest in
Armada now or hereafter designated as a Class U share of beneficial
interest (irrespective of whether said share has been designated as
part of a series of said class and, if so designated as part of a
series, irrespective of the particular series designation), except to
the extent permitted by rule or order of the Securities and Exchange
Commission, on any matter that pertains to the agreements or expenses
and liabilities described in clause (a) of the immediately preceding
resolution (or to any plan or other document adopted by Armada relating
to said agreements, expenses or liabilities) and is submitted to a vote
of shareholders of Armada, only Class U-Special Series 1 shares shall
be entitled to vote, except that: (i) if said matter affects shares of
beneficial interest in Armada other than Class U-Special Series 1
shares, such other affected shares of beneficial interest in Armada
shall also be entitled to
-2-
<PAGE> 3
vote, and in such case Class U-Special Series 1 shares shall be voted
in the aggregate together with such other affected shares and not by
class or series except where otherwise required by law or permitted by
the Board of Trustees of Armada; and (ii) if said matter does not
affect Class U-Special Series 1 shares, said shares shall not be
entitled to vote (except where otherwise required by law or permitted
by the Board of Trustees) even though the matter is submitted to a vote
of the holders of shares of beneficial interest in Armada other than
Class U-Special Series 1 shares.
2. CREATION OF CLASS V AND CLASS V-SPECIAL SERIES 1 SHARES.
--------------------------------------------------------
RESOLVED, that pursuant to Section 5.1 of Armada's Declaration
of Trust, an unlimited number of authorized, unissued and unclassified
shares of beneficial interest in Armada (no par value) be, and hereby
are, classified into an additional class of shares designated as Class
V shares of beneficial interest;
FURTHER RESOLVED, that pursuant to Section 5.1 of the
Declaration of Trust of the Trust, an unlimited number of authorized,
unissued and unclassified shares of beneficial interest in Armada (no
par value) be, and hereby are, classified and designated as Class V-
Special Series 1 shares;
FURTHER RESOLVED, that all consideration received by Armada
for the issue or sale of Class V shares and Class V-Special Series 1
shares shall be invested and reinvested with the consideration received
by Armada for the issue and sale of all other shares of beneficial
interest in Armada now or hereafter designated as Class V shares of
beneficial interest (irrespective of whether said shares have been
designated as part of a series of said class and, if so designated as
part of a series, irrespective of the particular series designation),
together with all income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation
thereof, any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, and any general assets of
Armada allocated to Class V shares, Class V-Special Series 1 shares or
such other shares by the Board of Trustees in accordance with the
Trust's Declaration of Trust, and each Class V share and Class
V-Special Series 1 share shall share equally with each such other share
in such consideration and other assets, income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any assets derived from any
reinvestment of such proceeds in whatever form;
FURTHER RESOLVED, that each Class V share and each Class
V-Special Series 1 share shall be charged in proportion to their
respective net asset values with each other share of beneficial
interest in Armada now or hereafter designated as a Class V share of
beneficial interest (irrespective of whether said share has been
designated as part of a series of said class and, if so designated as
part of a series, irrespective of the particular series designation)
with the expenses and liabilities of Armada in respect of Class V
shares, Class V-Special Series 1 shares or such other shares and in
respect of any general expenses and liabilities of Armada allocated to
Class V shares, Class V-Special Series 1 shares or such other shares by
the Board of Trustees in accordance with the Trust's Declaration of
Trust, except that to the extent permitted by rule or order of the
Securities and Exchange Commission and as may be from time to time
determined by the Board of Trustees:
-3-
<PAGE> 4
(a) only the Class V-Special Series 1 shares shall bear:
(i) the expenses and liabilities of payments to
institutions under any agreements entered into by or
on behalf of Armada which provide for services by the
institutions exclusively for their customers who
beneficially own such shares; (ii) the expenses and
liabilities arising from transfer agency services
that are directly attributable to Class V-Special
Series 1 shares; and (iii) such other expenses and
liabilities as the Board of Trustees may from time to
time determine are directly attributable to such
shares and which should therefore be borne solely by
Class V-Special Series 1 shares;
(b) only the Class V shares shall bear: (i) the expenses
and liabilities arising from transfer agency services
that are directly attributable to Class V shares; and
(ii) such other expenses and liabilities as the Board
of Trustees may from time to time determine are
directly attributable to such shares and which should
therefore be borne solely by Class V shares;
(c) no Class V-Special Series 1 shares shall bear the
expenses and liabilities described in subparagraph
(b) immediately above; and
(d) no Class V shares shall bear the expenses and
liabilities described in subparagraph (a) immediately
above.
FURTHER RESOLVED, that except as otherwise provided by these
resolutions, each Class V share and each Class V-Special Series 1 share
shall have all the preferences, conversion and other rights, voting
powers, restrictions, limitations, qualifications and terms and
conditions of redemption as set forth in the Declaration of Trust and
shall also have the same preferences, conversion and other rights,
voting powers, restrictions, limitations, qualifications and terms and
conditions of redemption as each other share of beneficial interest in
Armada now or hereafter designated as a Class V share of beneficial
interest (irrespective of whether said share has been designated as
part of a series of said class and, if so designated as part of a
series, irrespective of the particular series designation), except to
the extent permitted by rule or order of the Securities and Exchange
Commission, on any matter that pertains to the agreements or expenses
and liabilities described in clause (a) of the immediately preceding
resolution (or to any plan or other document adopted by Armada relating
to said agreements, expenses or liabilities) and is submitted to a vote
of shareholders of Armada, only Class V-Special Series 1 shares shall
be entitled to vote, except that: (i) if said matter affects shares of
beneficial interest in Armada other than Class V-Special Series 1
shares, such other affected shares of beneficial interest in Armada
shall also be entitled to vote, and in such case Class V-Special Series
1 shares shall be voted in the aggregate together with such other
affected shares and not by class or series except where otherwise
required by law or permitted by the Board of Trustees of Armada; and
(ii) if said matter does not affect Class V-Special Series 1 shares,
said shares shall not be entitled to vote (except where otherwise
required by law or permitted by the Board of Trustees) even though the
matter is submitted to a vote of the holders of shares of beneficial
interest in Armada other than Class V-Special Series 1 shares.
-4-
<PAGE> 5
3. CREATION OF CLASS W AND CLASS W-SPECIAL SERIES 1 SHARES.
--------------------------------------------------------
RESOLVED, that pursuant to Section 5.1 of Armada's Declaration
of Trust, an unlimited number of authorized, unissued and unclassified
shares of beneficial interest in Armada (no par value) be, and hereby
are, classified into an additional class of shares designated as Class
W shares of beneficial interest;
FURTHER RESOLVED, that pursuant to Section 5.1 of the
Declaration of Trust of the Trust, an unlimited number of authorized,
unissued and unclassified shares of beneficial interest in Armada (no
par value) be, and hereby are, classified and designated as Class W-
Special Series 1 shares;
FURTHER RESOLVED, that all consideration received by Armada
for the issue or sale of Class W shares and Class W-Special Series 1
shares shall be invested and reinvested with the consideration received
by Armada for the issue and sale of all other shares of beneficial
interest in Armada now or hereafter designated as Class W shares of
beneficial interest (irrespective of whether said shares have been
designated as part of a series of said class and, if so designated as
part of a series, irrespective of the particular series designation),
together with all income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation
thereof, any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, and any general assets of
the Trust allocated to Class W shares, Class W-Special Series 1 shares
or such other shares by the Board of Trustees in accordance with the
Trust's Declaration of Trust, and each Class W share and Class
W-Special Series 1 share shall share equally with each such other share
in such consideration and other assets, income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any assets derived from any
reinvestment of such proceeds in whatever form;
FURTHER RESOLVED, that each Class W share and each Class
W-Special Series 1 share shall be charged in proportion to their
respective net asset values with each other share of beneficial
interest in Armada now or hereafter designated as a Class W share of
beneficial interest (irrespective of whether said share has been
designated as part of a series of said class and, if so designated as
part of a series, irrespective of the particular series designation)
with the expenses and liabilities of Armada in respect of Class W
shares, Class W-Special Series 1 shares or such other shares and in
respect of any general expenses and liabilities of Armada allocated to
Class W shares, Class W-Special Series 1 shares or such other shares by
the Board of Trustees in accordance with the Trust's Declaration of
Trust, except that to the extent permitted by rule or order of the
Securities and Exchange Commission and as may be from time to time
determined by the Board of Trustees:
(a) only the Class W-Special Series 1 shares shall bear:
(i) the expenses and liabilities of payments to
institutions under any agreements entered into by or
on behalf of Armada which provide for services by the
institutions exclusively for their customers who
beneficially own such shares; (ii) the expenses and
liabilities arising from transfer agency services
that are directly attributable to Class W-Special
Series 1 shares; and (iii) such other expenses and
liabilities as the Board of Trustees may from time to
time determine are directly
-5-
<PAGE> 6
attributable to such shares and which should
therefore be borne solely by Class W-Special Series 1
shares;
(b) only the Class W shares shall bear: (i) the expenses
and liabilities arising from transfer agency services
that are directly attributable to Class W shares; and
(ii) such other expenses and liabilities as the Board
of Trustees may from time to time determine are
directly attributable to such shares and which should
therefore be borne solely by Class W shares;
(c) no Class W-Special Series 1 shares shall bear the
expenses and liabilities described in subparagraph
(b) immediately above; and
(d) no Class W shares shall bear the expenses and
liabilities described in subparagraph (a) immediately
above.
FURTHER RESOLVED, that except as otherwise provided by these
resolutions, each Class W share and each Class W-Special Series 1 share
shall have all the preferences, conversion and other rights, voting
powers, restrictions, limitations, qualifications and terms and
conditions of redemption as set forth in the Declaration of Trust and
shall also have the same preferences, conversion and other rights,
voting powers, restrictions, limitations, qualifications and terms and
conditions of redemption as each other share of beneficial interest in
Armada now or hereafter designated as a Class W share of beneficial
interest (irrespective of whether said share has been designated as
part of a series of said class and, if so designated as part of a
series, irrespective of the particular series designation), except to
the extent permitted by rule or order of the Securities and Exchange
Commission on any matter that pertains to the agreements or expenses
and liabilities described in clause (a) of the immediately preceding
resolution (or to any plan or other document adopted by Armada relating
to said agreements, expenses, or liabilities) and is submitted to a
vote of shareholders of Armada, only Class W-Special Series 1 shares
shall be entitled to vote, except that: (i) if said matter affects
shares of beneficial interest in Armada other than Class W-Special
Series 1 shares, such other affected shares of beneficial interest in
Armada shall also be entitled to vote, and in such case Class W-Special
Series 1 shares shall be voted in the aggregate together with such
other affected shares and not by class or series except where otherwise
required by law or permitted by the Board of Trustees of Armada; and
(ii) if said matter does not affect Class W-Special Series 1 shares,
said shares shall not be entitled to vote (except where otherwise
required by law or permitted by the Board of Trustees) even though the
matter is submitted to a vote of the holders of shares of beneficial
interest in Armada other than Class W-Special Series 1 shares.
IDENTIFICATION OF SHARES WITH FUNDS.
- ------------------------------------
RESOLVED, that Armada's classes or series of shares shall represent
interests in the investment fund of Armada as follows:
-6-
<PAGE> 7
Class of Shares Investment Fund
--------------- ---------------
Class U and Foreign Equity Fund
Class U-Special Series 1
Class V and Equity Index Fund
Class V-Special Series 1
Class W and Core Equity Fund
Class W-Special Series 1
AUTHORIZATION OF ISSUANCE OF SHARES TO INVESTORS.
- -------------------------------------------------
RESOLVED, that the appropriate officers of Armada be, and each of
them hereby is, authorized, at any time after the effective date and
time of Post-Effective Amendment No. __ to Armada's Registration
Statement relating to the International Equity, Equity Index and Core
Equity Funds to issue and redeem from time to time Class U shares and
Class U-Special Series 1 shares representing interests in the
International Equity Fund, Class V shares and Class V-Special Series 1
shares representing interests in the Equity Index Fund, and Class W
shares, and Class W-Special Series 1 shares representing interests in
the Core Equity Fund, in accordance with the Registration Statement
under the Securities Act of 1933, as the same may from time to time be
amended, and the requirements of the Trust's Declaration of Trust and
applicable law, and that such shares, when issued for the consideration
described in such amended Registration Statement, shall be validly
issued, fully paid and non-assessable by Armada.
IMPLEMENTATION OF RESOLUTIONS.
- ------------------------------
RESOLVED, that the officers of Armada be, and each of them
hereby is, authorized and empowered to execute, seal, and deliver any
and all documents, instruments, papers and writings, including but not
limited to, any instrument to be filed with the State Secretary of the
Commonwealth of Massachusetts or the Boston City Clerk, and to do any
and all other acts, including but not limited to, changing the
foregoing resolutions upon advice of Counsel prior to filing said any
and all documents, instruments, papers, and writings, in the name of
Armada and on its behalf, as may be necessary or desirable in
connection with or in furtherance of the foregoing resolutions, such
determination to be conclusively evidenced by said officers taking any
such actions.
-7-
<PAGE> 8
(4) That the foregoing resolutions remain in full force and
effect as of the date hereof.
/s/ W. Bruce McConnel, III
----------------------------------
W. Bruce McConnel, III
Dated: June 18, 1997
Subscribed and sworn to before me this
18th day of June, 1997.
/s/ Georgeanna Griffith
- ----------------------------------------
Notary Public
My Commission Expires December 28, 1998
-8-
<PAGE> 1
EXHIBIT 2(b)
ARMADA FUNDS
(the "Trust")
Amendment No. 2 to the Code of Regulations
------------------------------------------
RESOLVED, that Article IV Section 4.1 of the Trust's Code of
Regulations be, and the same hereby is, amended and restated in its entirety as
follows:
"4.1 NUMBER. The officers of the Trust shall be chosen by the Trustees
and shall include a President, a Secretary and a Treasurer. The Board of
Trustees may from time to time elect or appoint one or more Vice Presidents,
Assistant Secretaries and Assistant Treasurers.
<PAGE> 1
EXHIBIT 5(L)
FORM
ARMADA FUNDS
SMALL CAP GROWTH FUND
WELLINGTON MANAGEMENT COMPANY, LLP
SUB-ADVISORY AGREEMENT
AGREEMENT made as of , 1997 between NATIONAL CITY BANK (the
"Adviser"), and WELLINGTON MANAGEMENT COMPANY, LLP (the "Sub-Adviser").
WHEREAS, ARMADA FUNDS, a Massachusetts business trust (the "Trust"), is
registered as an open-end, management investment company under the Investment
Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, pursuant to an Advisory Agreement dated , 199_ (the
"Advisory Agreement") by and between the Trust and the Adviser, the Trust has
appointed the Adviser to furnish investment advisory and other services to the
Trust for its [ ] Funds and the Adviser has agreed thereto; and
WHEREAS, the Advisory Agreement authorizes the Adviser to subcontract
investment advisory services with respect to the Funds to the Sub-Adviser; and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish
investment advisory services to the Trust with respect to the Small Cap Growth
Fund and the Sub-Adviser is willing to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT AND DELIVERY OF DOCUMENTS.
(a) Intending to be legally bound, the Adviser, with the
approval of the Trust, hereby appoints the Sub-Adviser to
act as investment adviser to the Trust's Small Cap Growth
Fund (the "Fund") for the period and on the terms set forth
in this Agreement. Intending to be legally bound, the
Sub-Adviser accepts such appointment and agrees to furnish
the services herein set forth for the compensation herein
provided.
<PAGE> 2
(b) The Sub-Adviser acknowledges that it has received copies of
the Trust's most recent prospectuses and statements of
additional information with respect to the Fund. The Trust
will furnish the Sub-Adviser from time to time with copies
of all amendments of or supplements to the foregoing.
2. SERVICES OF SUB-ADVISER. The Sub-Adviser agrees that with respect to
each Fund it shall:
(a) Subject to the supervision of the Trust's Board of Trustees,
assist the Adviser in providing a continuous investment
program for each such Fund, including investment research
and management with respect to all securities, investments,
cash and cash equivalents in the Fund. The Sub-Adviser will
assist the Adviser in determining from time to time what
securities and other investments will be purchased, retained
or sold by such Fund. The Sub-Adviser will provide the
services rendered by it under this Agreement in accordance
with the Fund's investment objective, policies, and
restrictions as stated in the Trust's respective
Prospectuses and Statements of Additional Information for
the Fund and resolutions of the Trust's Board of Trustees.
(b) Place all orders for the purchase and sale of portfolio
securities for the account of the Fund with brokers or
dealers selected by the Sub-Adviser. In executing portfolio
transactions and selecting brokers or dealers, the
Sub-Adviser will use its best efforts to seek on behalf of
the Fund the best overall terms available. In assessing the
best overall terms available for any transaction the
Sub-Adviser shall consider all factors it deems relevant,
including the breadth of the market in the security, the
price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness
of the commission, if any, both for the specific transaction
and on a continuing basis. In evaluating the best overall
terms available, and in selecting the broker or dealer to
execute a particular transaction, the Sub-Adviser may also
consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act
of 1934, as amended) provided to the Fund and/or other
accounts over which the Sub-Adviser or any affiliate of the
Sub-Adviser exercises investment discretion. The Sub-Adviser
is authorized,
-2-
<PAGE> 3
subject to the prior approval of the Board, to pay to a
broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction
for the Fund which is in excess of the amount of commission
another broker or dealer would have charged for effecting
that transaction if, but only if, the Sub-Adviser determines
in good faith that such commission was reasonable in
relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of that
particular transaction or in terms of the overall
responsibilities of the Sub-Adviser to the Fund and to the
Trust.
(c) Maintain historical tax lots for each portfolio security
held by such Fund;
(d) Transmit trades to the Trust's custodian for proper
settlement;
(e) Prepare a quarterly broker security transaction summary and
monthly security transaction listing for the Fund;
(f) Maintain all books and records with respect to the Fund's
securities transactions effected by it; and
(g) Supply the Trust and its Board of Trustees with reports and
statistical data as reasonably requested.
3. OTHER COVENANTS. The Sub-Adviser agrees that it:
(a) will comply with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition
conduct its activities under this Agreement in accordance
with other applicable law;
(b) will use the same skill and care in providing such services
as it uses in providing services to similar fiduciary
accounts for which it has investment responsibilities;
(c) will not make loans to any person to purchase or carry
shares in the Fund or make interest-bearing loans to the
Trust or the Fund;
(d) will maintain a policy and practice of conducting its
investment advisory services hereunder
3-
<PAGE> 4
independently of the commercial banking operations of any
affiliated person of the Adviser. In making investment
recommendations for the Fund, the Sub-Adviser's personnel
will not inquire or take into consideration whether the
issuers (or related supporting institutions) of securities
proposed for purchase or sale for such Fund's account are
customers of the commercial department of any affiliated
person of the Adviser;
(e) will place orders pursuant to its investment determinations
for the Fund either directly with the issuer or with any
broker or dealer. In placing orders with brokers and
dealers, the Sub-Adviser will attempt to obtain the best
net price and the most favorable execution of its orders.
Consistent with this obligation, when the execution and
price offered by two or more brokers or dealers are
comparable, the Sub-Adviser may, in its discretion, purchase
and sell fund securities from and to brokers and dealers who
provide the Trust with research advice or other services. In
no instance, however, will securities be purchased from or
sold to the Adviser, any Sub-Adviser, the Trust's principal
underwriter or any affiliated person of either the Trust,
the Adviser, any Sub-Adviser, or the principal underwriter,
unless permitted by an order of the Securities and Exchange
Commission or applicable rules; and
(f) will treat confidentially and as proprietary information of
the Trust all records and other information relative to the
Fund and prior, present or potential shareholders, and will
not use such records and information for any purpose other
than performance of its responsibilities and duties
hereunder (except after prior notification to and approval
in writing by the Trust, which approval shall not be
unreasonably withheld and may not be withheld and will be
deemed granted where the Sub-Adviser may be exposed to civil
or criminal intent proceedings for failure to comply, when
requested to divulge such information by duly constituted
authorities or when so requested by the Trust).
4. SERVICES NOT EXCLUSIVE. The services furnished by the Sub-Adviser
hereunder are deemed not to be exclusive, and the Sub-Adviser shall be
free to furnish similar services to others so long as its services
under this Agreement are not impaired thereby. The Adviser acknowledges
that the Sub-Adviser may give advice and take action in the
performance
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<PAGE> 5
of its duties with respect to any of its other clients which may differ
from advice given, or the time or nature of action taken, with respect
to the Fund.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule 3la-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records
which it maintains for each Fund are the property of the Trust and
further agrees to surrender promptly to the Trust any of such records
upon the Trust's written request. The Sub-Adviser further agrees to
preserve for the periods prescribed by Rule 3la-2 under the 1940 Act
the records required to be maintained by Rule 3la-1 under the 1940 Act.
6. EXPENSES. During the term of this Agreement, the Sub-Adviser will
pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities, commodities and other
investments (including brokerage commissions and other transaction
costs, if any) purchased or sold for any Fund.
7. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Adviser will pay the Sub-Adviser and
the Sub-Adviser will accept as full compensation therefor a fee,
computed daily and payable monthly, at the rate of ._ % of the average
daily net assets of the Fund, minus such amount, if any, that the
Adviser has reimbursed the Trust in the event the aggregate expenses of
a Fund exceed the expense limitations of any state having jurisdiction
over the Fund.
8. LIMITATION OF LIABILITY. The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the
Trust in connection with the performance of this Agreement, except a
loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the
Sub-Adviser in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement.
9. DURATION AND TERMINATION. This Agreement will become effective as of
the date hereof and, unless sooner terminated as provided herein, shall
continue in effect until September 30, 1997. Thereafter, if not
terminated, this Agreement shall automatically continue in effect as to
a particular Fund for successive annual periods, provided such
continuance is specifically approved at least annually (a) by the vote
of a majority of those members of the Trust's Board of Trustees who are
not interested persons of
- 5 -
<PAGE> 6
any party to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, and (b) by the Trust's Board of
Trustees or by vote of a majority of the outstanding voting securities
of such Fund. Notwithstanding the foregoing, this Agreement may be
terminated as to any Fund at any time, without the payment of any
penalty, by the Adviser or by the Trust (by vote of the Trust's Board
of Trustees or by vote of a majority of the outstanding voting
securities of such Fund) on sixty days' written notice to the
Sub-Adviser, or by the Sub-Adviser, on sixty days' written notice to
the Trust, provided that in each such case, notice shall be given
simultaneously to the Adviser. In addition, notwithstanding anything
herein to the contrary, in the event of the termination of the Advisory
Agreement with respect to a particular Fund for any reason (whether by
the Trust, by the Adviser or by operation of law) this Agreement shall
terminate with respect to the same Fund upon the effective date of such
termination of the Advisory Agreement. This Agreement will immediately
terminate in the event of its assignment. (As used in this Agreement,
the terms "majority of the outstanding voting securities," "interested
persons" and "assignment" shall have the same meaning as such terms
have in the 1940 Act.)
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought. No amendment of
this Agreement shall be effective as to a particular Fund until
approved by vote of a majority of the outstanding voting securities of
such Fund.
11. MISCELLANEOUS. The Sub-Adviser expressly agrees that
notwithstanding the termination of or failure to continue this
Agreement with respect to a particular Fund, Sub-Adviser shall
continue to be legally bound to provide the services required herein
for any other Funds to which it is Sub-Adviser pursuant to this
Agreement for the period and on the terms set forth in this Agreement.
The captions in the Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and shall be governed by Delaware law.
- 6 -
<PAGE> 7
12. NAMES. The names "ARMADA FUNDS" and "Trustees of ARMADA FUNDS"
refer respectively to the Trust created and the Trustees, as trustees
but not individually or personally, acting from time to time under an
Declaration of Trust dated January 28, 1986 which is hereby referred to
and a copy of which is on file at the office of the State Secretary of
the Commonwealth of Massachusetts and the principal office of the
Trust. The obligations of "ARMADA FUNDS" entered into in the name or on
behalf thereof by any of the Trustees, representatives or agents are
made not individually, but in such capacities, and are not binding upon
any of the Trustees, shareholders or representatives of the Trust
personally, but bind only the Trust Property, and all persons dealing
with any class of shares of the Trust must look solely to the Trust
Property belonging to such class for the enforcement of any claims
against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
WELLINGTON MANAGEMENT COMPANY, LLP
BY:
--------------------------------
TITLE:
-----------------------------
NATIONAL CITY BANK
BY:
--------------------------------
TITLE:
-----------------------------
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<PAGE> 1
EXHIBIT 11(a)
CONSENT OF COUNSEL
------------------
We hereby consent to the use of our name and to the reference
to our Firm under the caption "Counsel" in the Statement of Additional
Information that is included in Post-Effective Amendment No. 35 to the
Registration Statement on Form N-1A under the Investment Company Act of 1940, as
amended, of Armada Funds. This consent does not constitute a consent under
Section 7 of the Securities Act of 1933, and in consenting to the use of our
name and the references to our Firm under such caption we have not certified any
part of the Registration Statement and do not otherwise come within the
categories of persons whose consent is required under Section 7 or the rules and
regulations of the Securities and Exchange Commission thereunder.
/s/ Drinker Biddle & Reath LLP
--------------------------------
DRINKER BIDDLE & REATH LLP
Philadelphia, Pennsylvania
July 21, 1997
<PAGE> 1
EXHIBIT 11(b)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Auditors" in the
Statement of Additional Information for the Small Cap Growth Fund in this
Post Effective Amendment Number 35 to the Registration Statement (Form N-1A No.
33-488/811-4416) of the Armada Funds.
/s/ Ernst & Young LLP
----------------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
July 18, 1997
